ECONOMIC POLICY

HC Deb 03 February 1943 vol 386 cc901-95

Order read for resuming Adjourned Debate on Question [2nd February]: That this House urges upon the Government the essential need so to direct their economic and financial policy as to ensure that employment, industry and commerce may be increased and developed after the war to the greatest possible extent, and for that purpose to co-operate to the full with other members of the United Nations."—[Earl Winterton.]

Question again proposed.

Sir Percy Harris (Bethnal Green, South-West)

The wording of this Motion will, I believe, meet with general acceptance, and there is no particular significance to be attached to the combination of names appearing on the Paper in support of it. As was rightly said during the opening stage of the Debate yesterday, there is common agreement among hon. Members as to the ends which we wish to achieve, while we preserve our freedom to differ on the question of the means to be adopted for securing those ends. One of my main purposes in supporting this Motion is to try to induce the Government to expose their plans for economic reconstruction after the war. My right hon. Friend who opened the Debate yesterday did his best to secure an expression of opinion from the Chancellor of the Exchequer. The right hon. Gentleman, in his reply, made, as usual, a very attractive speech, beautifully worded and sweet and charming in manner, but he was extremely successful in giving the House very little information about reconstruction after the war. He stated the problems, but he did not indicate what were his proposed remedies.

After all, it is not the responsibility of private Members to put forward plans for dealing with post-war problems any more than it is their responsibility to work out the strategy of the war. The Government surely have a sufficient number of Departments to deal with this problem. In fact during the last few months Departments have been springing up like mushrooms. What is wanted, however, is an economic general staff to analyse the industrial organisation of the country and to see how it can be adapted to post-war conditions—to prepare, in other words, the blue prints in readiness for the time when the armistice is reached. The Government have more or less bought up all the economists of the country. There is a galaxy of talent available. There are many distinguished men and women from the universities—Oxford, Cambridge, London University, the London School of Economics and others—who are experts in various phases of the problem. They are all now in various Government Departments, and I think it might be a good thing to bring them all together

Mr. MacLaren (Burslem)

And blow them up.

Sir P. Harris

—and get them to study these post-war problems. The Minister without Portfolio is obviously the Minister responsible, but he has no Department behind him and must inevitably depend on the work of other Ministers. I do not know why he should have the title of "Minister without Portfolio." At the end of the last war we had a Minister of Reconstruction, and it might be a good thing if we were to call the Minister in this case the "Minister of Industry" or by some such appropriate title. I am not very much in love with the title, which some people advocate, of Minister of Planning. We have a Minister of Planning, but I do think that the title of "Minister without Portfolio" is a rather unfortunate description, because it suggests that the Minister has no definite problem to deal with.

The economic problems created by the war are very serious, and they are going to be ten times worse at the end of the war. It was difficult enough after the last war. But in 1918 France had retained its independence and was a victorious Power, Italy was on our side and Japan was our Ally. The difficulties of the problem in present conditions will, as I say, be ten times worse, and, besides that consideration, we have, as was pointed out yesterday, to face the fact that this will be a debtor and not a creditor country, that the volume of our international trade is dwindling and that the whole situation after the war will be far more complex and difficult than that which existed in 1918.

How long Lend-Lease will go on after the war we do not know, but, as the very title suggests, there will come a time when indefinite credit from the United States will cease and some form of payment will be demanded. But in the main the United States Executive show a desire to treat not only this country but all the United Nations generously. Not only President Roosevelt, but Vice-President Wallace, Cordell Hull, Harry Hopkins, Sumner Welles, and various other members of the Executive have been making speeches showing comprehension of the European situation, I am not going to bother the House with quotations, but I would like to quote one passage from a speech by Cordell Hull, who is probably as great an influence in the United States as anybody. In May, 1940, he said: The far-reaching objectives of the Atlantic Charter cannot be obtained by wishful thinking. That might well be noted by the Chancellor, to be turned over in his mind. We in this country must realise that their achievement will be impossible if we follow a policy of narrow economic nationalism, such as our extreme and disastrous tariff policy after the last war. We must realise that our own prosperity depends fully on prosperous conditions in other countries as their prosperity depends on us. We must show now by our positive acts of collaboration with other nations of like mind that we are prepared to shoulder our full share of responsibility for building a better world. The fourth point of the Atlantic Charter involves the rehabilitation on a sound basis not only of trade but also of monetary, financial and other economic relations. That was a gesture which should have received an immediate response from this country. I know that the Chancellor's heart is all right, but it is unfortunate that he does not give a more definite response to such a generous gesture from Cordell Hull, which obviously represents the mind of the Executive in Washington. They have to face their critics and opponents. The Executive in Washington have a far more difficult task than the Government has here. They have very severe critics, not only among members of the Republican Party, but among some of their own party. The Isolationists are inclined, in recent months, to grow in strength. The Government in this country, therefore, should respond, not only by speeches but by showing willingness to make concessions to meet the American point of view. Cordell Hull makes the important admission that their extreme tariff policy is disastrous.

I am going to make a suggestion. I am afraid it will not meet with general approval. A response showing our readiness to reconsider the Ottawa Agreement would be a tangible evidence of our readiness to reconsider the whole economic situation. We have, I agree, obligations to the Dominions. I endorse what the right hon. Gentleman said: that Canada, Australia, South Africa and New Zealand came to our aid in this war without hesitation. Therefore, we could not go back on Ottawa without consulting them. But I believe that, in the light of the present trend of world events, the Dominions would be equally willing to depart from the Ottawa principle if, as a result, we could get understanding on economic problems with the United States and their collaboration in reconditioning world trade after the war. If the English-speaking peoples set an example, there would, I am convinced, be no difficulty. The other members of the United Nations, especially the Northern states—Denmark, Norway, Holland, and Belgium—would come in. That would not prevent an understanding with Russia, China, and others of our Allies.

Cordell Hull laid emphasis on the importance of a change in our financial system. The right hon. Gentleman yesterday spoke of the need for constructing again the international exchange system. I think there will be general agreement with this aim, but I trust that that does not mean re-imposing gold. Yesterday a former distinguished Member of this House buttonholed me and began criticising the failure of the right hon. Gentleman to make any reference to the golden calf. I read into the right hon. Gentleman's remarks that he does not visualise the reinstatement of gold. The United States now have the greater part of the gold stored in their cellars. Here again the right hon. Gentleman was vague. We do not want our international monetary policy to be left undecided until the war is over and chaos prevails. The time has come for the right hon. Gentleman to Hake his courage in his hands, or at any rate to open up discussion with all the other countries concerned, so that when peace comes trade will not be paralysed by the inevitable disorganisation of the international monetary system. There is at present no considered policy for dealing with this vital problem. I do not think the time of the right hon. Gentleman would be wasted if he visited the United States and if his visit resulted in agreement being reached between Washington and ourselves as to the form and shape of the international monetary system.

The time has come, too, when we should consider the internal monetary system. I do not think it is so bad as some people say, but there is a suspicion that all is not well with our internal monetary and banking system. The Minister without Portfolio, in his speech on the Address, said that money should be the servant and not the master; but he did not tell us how the servant should operate. I do not want to see after this war employees and employers kept apart by the tyranny of finance. One or two experts opposite no doubt will go into the problem of the money system, and I shall not attempt to say in a speech of this kind what form it should take, but perhaps it might be a good thing for the Chancellor of the Exchequer to consider whether the time has not come for the appointment, not of a Royal Commission, which works slowly, but of a Committee, perhaps a Departmental Committee, to report on the banking system, on the working of the Bank of England and its relation to the Treasury and also on the operations of our dozen or so of joint stock banks.

We do not want what happened after the last war to occur again. In 1919 there was a boom, and in 1921 there was a slump. Some people regard these trade cycles as inevitable, as acts of God, and believe that we cannot do anything to meet them and that it is not within the power of man to prevent them. The aim of sound finance is to try and iron out slumps and booms, but in future the Government will have to take greater and more open responsibility instead of hiding themselves always behind the Bank of England. Everybody knows the close relation of the Treasury and the Bank of England. If the Government would take the responsibility and make clear that they have an important part to play in manipulating finances, it would do much to create confidence. Certainly they have succeeded largely during the war, and if they can succeed in war, they could, with much greater intensity, meet with greater success under peace conditions.

Mr. Maxton (Glasgow, Bridgeton)

I have heard these phrases two or three times in this Debate. I know only the "slumps and booms." It seems to me to be a nice analogy, but does the right hon. Gentleman recollect that when we were at the top of a boom in the period between the two wars we had still over 1,000,000 unemployed? How do you iron that out?

Sir P. Harris

I am suggesting that finance, to use the phrase of the right hon. and learned Gentleman the Minister without Portfolio, should be the servant and not the master. We do not want to allow finance always to be charged with the responsibility for every slump and for the mass of unemployment. It is up to the wit of man to see whether something can be done to improve the machinery. Finance has operated efficiently and well under war conditions. If world trade is opened up and we get all the machinery of imports and exports that is vital to us going again—because we are dependent for our economic existence more than any other country on being able to draw our supplies from every part of the world, supplies of wool, cotton, rubber and food—if everything goes well, and trade operates and the finance system is efficient, we shall still have a very difficult problem to switch over from war to peace. It is not going to be easy. Total war has thrown the whole of our economy out of gear. The Minister of Labour has dragged away, with the approval of Parliament, the bulk of the men and women of this country from their ordinary vocations and put them either into the Services or into munitions or into any other industry than the one in which they are accustomed to work. It will not be a simple thing to get them back. It was difficult enough after the last war, but that was a comparatively small problem to what it is likely to be after this war.

There are many things we might think out. There again the Government ought to be prepared not only to have remedies in their minds—no doubt they are full of wisdom which is locked up in their own breasts—but to take the nation into their confidence. Anyone knows, in the light of our experience of the last war, that once peace comes there will be complete paralysis and mass unemployment again a year or two afterwards. I believe that a very great deal could be done by organising ahead large-scale training. Camps have been built and laid out all over the country for the purpose of training men and making them into soldiers, sailors and airmen. Within a few months they turn a clerk or a worker from a bank into a skilled soldier, sailor or airman. We ought to make plans now and collect evidence of the kind of craftsmen that will be required, and get the necessary instructors and plant, and make them available, so that when the war is over, instead of men and women going into camps to become members of the Fighting Services, they could be trained and reconditioned and become good civilians. But it would be necessary to think out the details. Here is where an economic staff would come in useful. We ought to be informed of the kind of craftsmen of which we are likely to be short and the kind of skill required. There will be, as there was after the last war, a superfluity of engineers, but there will, be a shortage in 101 other trades—in textiles and many of our staple industries, just as in this war we have wanted miners to go down the mines.

It is not only to the workers that the Government have an obligation; they have a direct obligation to employers. Factories have been closed or converted, industries concentrated and shops closed and men have been taken away from their factories and put into all kinds of occupations, but it has always been understood that, when the war is over, the Government will help them to get going again. That will mean that finances will be required. The Government have a responsibility to these men who have had their factories converted to war purposes, to help them to get going. When they get back to their old factories they will often only find a lot of broken machinery. Men will want assistance to get their ordinary channels of trade. They have lost their clientèle. They will find their goodwill gone and their employees scattered all over the country. I want to see—and I believe the House wants to see—every encouragement given to private enterprise to re-open, to start again and to expand, and, if necessary, capital should be made available. We want to encourage in every way the spirit of adventure, new ideas, new factories and workshops and new markets, and the State cannot stand by as a mere spectator.

The President of the Board of Trade has a great responsibility in the matter. I give credit to him. He has tried to understand many of the problems of industry during the war. They have been difficult enough. He knows about the cabinet makers. They find their factories closed, and they cannot get timber. They have to make utility furniture, and he has to come along to help to organise and assist them. Their problem is comparatively simple. After the war it will be far more difficult. It would be a good thing—and perhaps he will be able to do it to-day—to let these unfortunate manufacturers who have lost the work of years and who have had their factories closed down, and have willingly agreed to it in the national interest, know that they have a friend looking after their interests and that they will be helped to get going again. Though I am very much in favour of private enterprise, because it is that spirit of adventure that we want to encourage to get back the markets of the world, we must at the same time see that industry is not held up to ransom by monopolies or cartels. One of the most sinister and significant things between the two wars was the growth of monopolies and cartels. When those monopolies and cartels Are not necessary in the public interest, they should be rooted out, but if, as is very often the case, they are required for efficient production, I think the House will agree with me, they should be brought under public control. That does not necessarily mean that they should be nationalised or run by a Government Department, but they should be brought under control through the machinery of public utility companies or something where there are safeguards against exploitation by private interests of the smaller industries or manufacturers.

There are two or three commodities which lend themselves to such treatment. First, there are coal and power; secondly, there is transport; and, thirdly, there is probably steel. One of the most serious handicaps in engineering in many of our basic industries has been the international steel cartel which has always been something of a mystery. The steel industry was to have been brought, in return for protection, up to date and be modernised with new plant, but the industry failed to do so. We cannot allow that after the war. It may be necessary to see that steel is put into a special position and perhaps a public utility company formed in return for financial assistance or capital equipment.

The governing problem of our post-war policy must be to secure steady employment. The Chancellor in his speech yesterday coined a new phrase when he referred to "active employment." I do not know whether that phrase has any significance, but I suppose he means steady and regular employment. Most of us have accepted the principles of the Beveridge Report, but it will work only if unemployment is reduced to a reasonable level. Now we shall not stop unemployment by merely talking about it, or even by using the word "finance." Many schemes have been put forward by various organisations, including the Federation of British Industries, chambers of commerce and now Unilevers. I have my letter-box filled with proposals worked out in detail for solving the unemployment problem. We have to wait for the Government's remedies. I did not discover them in the speech of the Chancellor yesterday. In the past it has been the custom to meet depressions by contracting credit and raising the Bank Rate. Now a strong case has been put forward that that process should be reversed; that when trade is bad enterprise should be encouraged by cheap money or, as the President of the United States has said, by pump priming. A National Investment Board might be set up. This was put forward by my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), but his recommendations received scant sympathy in certain quarters. But it should not only help public works but in times of depression, recondition industry by improving plant and stimulating capital expenditure. One of the problems after the war will be the change-over from the kind of industry that has been vital to our war effort to the varying complex economic structures upon which our peace time industry is built.

Industry is not static. As the Chancellor pointed out, there are likely to be revolutionary changes in demand and in the methods of production. The trade unions have been rightly jealous of their privileges. During the war they surrendered them, and they are anxious to know that they will be restored when the war is over. The experience after the last war of dilutees was not fortunate. We do not want to see an over-crowded labour market in one particular industry while there is a shortage of skilled labour in other directions. One of the most vital needs in post-war reconstruction is to insist on a national minimum both for wages and nutrition and, I might add, the principle of family allowances. Once people were reassured of decent conditions in whatever occupation they might be working, and decent wages, the difficulty of mobility might be overcome. Once there are enough houses to go round, the reluctance of the ordinary man to leave his home will more or less disappear. I find that men do not move from one part of the country to another largely because if they give up their homes they will not be able to get others, and the break-up of their homes is a serious matter. That provides us with one of the most immediate remedies for our post-war problems. England will have to be rebuilt; the devastated areas will have to be repaired; there will be a terrific shortage of houses. Thanks to the Minister of Health, I understand that the number of houses that will be required in the immediate post-war years will be between 3,000,000 and 4,000,000. Half a million will be required for the accumulated arrears of slum clearance, 600,000 to abate overcrowding and 250,000 to replace bombed houses, while the ordinary rebuilding programme will make up the balance of those figures. That will give employment to an additional 1,000,000 men in the building trade far 10 years.

I had some experience after the last war of the London problem. There was a great willingness to go ahead with a large building programme, but it was held up because of a shortage of bricklayers, plasterers, and skilled craftsmen. They had left the industry for other trades, and the ordinary wastage had not been made up. There was a shortage, too, of materials of every kind, timber, tiles, bricks and light castings, and there was no organisation to make them good. If the Government could work out a programme in detail and use the new Ministry of Town and Country Planning with the Ministry of Health and get the good will of local authorities to train the necessary craftsmen, for whom there must be security and regular work for a period of years, that would be a substantial contribution to active employment in the post-war years. A real contribution will help towards the mobility of labour once there are enough houses to go round and at the same time will give employment to 1,000,000 men and add to the wealth of the nation.

Another matter I want to refer to is agriculture. It is a most curious thing that in this Debate nothing has been said about agriculture, and I should have thought some reference would have been made to it. After all, more men are employed in agriculture than in any one other trade. It has proved what it can do under war conditions.

Earl Winterton (Horsham and Worthing)

I think my right hon. Friend is doing me and others rather an injustice in stating that no reference has been made in the Debate to agriculture. I said yesterday that we should increase our agricultural production, but that it was impossible to do so beyond a certain point.

Sir P. Harris

Then perhaps I ought to have said there was not sufficient emphasis laid upon agriculture. As the Member for South-West Bethnal Green, I do not intend to put forward an agricultural policy but I will say that it must play its part in reconstruction after the war and in absorbing surplus labour. I remember Sir Henry Campbell-Bannerman once saying in his pawky way that land should be less a pleasure house for the few and more a treasure house for the people. Agriculture must be put on sound lines. The Government have a Minister of Agriculture who goes about the country making speeches and vague promises. The Government have a responsibility to detail what their policy will be under peace conditions, because you cannot divorce agriculture from world trade. After the war agriculture must never become bankrupt again and be treated as a pauperised industry. It will mean a revolution in our land system if our farmers are to have a fair deal under conditions which will put them in at least as good a position as the farmers in Australia, New Zealand and the United States.

In conclusion, I will say that the nation is convinced that the Government can deal with mass unemployment if they have the will to do it. During the war it has been reduced by something like one per cent. The argument has been put forward that that has become possible because so many are in the Services. Those men and women, from an economic point of view, have been employed in unproductive work. I do not believe it is impossible, if the Government and the nation are prepared to face up to it, to prevent a reoccurrence of the scandals between 1918 and 1939, when there was queueing up at Employment Exchanges of willing men who were prepared to work but who were not able to find it. After all, during this war, with channels of trade closed and submarines infesting the sea, we have been able to keep going the economic life of the country without seriously injuring the health of the people. If we can reinstate trade on a different basis than before the last war, prevent economic nationalism, get co-operation between the States and at the same time recondition our own country we may yet be able to produce a state of affairs after this war that will satisfy the people that they have not fought in vain and that we have had the prescience and wisdom to work out plans to make society a decent place for all alike.

Sir George Schuster (Walsall)

I think we all owe a debt of gratitude to the noble Lord the Member for Horsham (Earl Winterton) for taking the initiative in putting this Motion on the Order Paper. I am certainly not one of those who think that the war is all over bar the shouting, but none the less it is not too early to start our Debates on the topics covered by the Motion. I think we are also very grateful—I am, at any rate—to my right hon. Friend the Chancellor of the Exchequer for his speech yesterday. I thought it was an admirable statement, and I am exceedingly glad that he had the opportunity to make such a statement. But I would like to add—and I am sure my right hon. Friend will not take it amiss—that his speech represented "the last word" in the type of speech which I would describe as a Second Reading Debate speech. We have got, after this Debate, to get on to the next stage, and what we have to consider is how we can get down to the consideration of the problems in more concrete form and get much closer to grips with the actual tasks that have to be carried out. It is indeed a very serious matter for the consideration of hon. Members and of the Government how we are to continue the realistic discussion of these wide economic problems. I venture to recall to the attention of the House a passage from an earlier address by my right hon. Friend the Prime Minister on this very matter—the Romanes lecture at Oxford in 1930—which I have quoted before in the House, but which I think bears repetition. My right hon. Friend said: It must be observed that economic problems, unlike political issues, cannot be solved by any expression, however vehement, of the national will, but only by taking the right action. Yon cannot cure cancer by a majority. What is wanted is a remedy. He went on to say: It would seem, therefore, that if new light is to be thrown on this grave and clamant problem— he was talking about the economic crisis at that time— it must, in the first instance, receive examination through a non-political body free altogether from party exigencies and composed of persons possessing special qualifications in economic matters. Parliament, therefore, would be well advised to create such a body subordinate to itself and assist its deliberations to the utmost. I do not know exactly how effect can be given to that general idea, but before I close my remarks, I shall venture to make a suggestion. The question of machinery, of how we are to consider these matters, is of very great importance.

There is one feature in this Debate which has certainly given me satisfaction. In one of the leading Sunday journals this week, I read an appreciation of the position in Parliament which said that a division was growing up in the House with reference to the Beveridge scheme and other generous social policies between the Mr. Cans and the Mr. Can'ts. I had intended to say I range myself unhesitatingly on the side of the Mr. Cans; but such a declaration of faith is hardly necessary, since I do not think any hon, Member who has spoken in the Debate so far has taken up the position of Mr. Can't. I think the general tone of the Debate has been, as I think it is right it should have been, that what we have to do is not to consider whether we are to have generous social policies, but by what means we are to make it possible for us to give effect to these ideas.

I will pass from these general observations to the main topic of the Motion. As the hon. Member for Chesterfield (Mr. Benson) said, it is impossible to cover the whole subject in a single speech. I must leave out much that I should like to say. I do not, for example, intend to follow up what my right hon. Friend the Member for South-West Bethnal Green (Sir Percy Harris) said in his challenge to the banking system. All I will say is that it is my humble belief that if the matter is inquired into it will be found that, in the relations between the Treasury and the Bank of England and through the Bank of England with the big banks, the Government have been able to devise in this imperfect world about as perfect a system for working this part of our financial machinery as could be found—a system in fact by which the Government make the best of both worlds, since they can get their own policy carried out whenever they want to, while, if they want to put the responsibility on to somebody else, they are perfectly free to do so. I do not want to talk about monetary policy, except to utter one word of warning. My right hon. Friend the Chancellor of the Exchequer, in a recent speech prior to this Debate, used an expression to the effect that we have kept away the disease of inflation. I would like to put it to my right hon. Friend in another way. He has been able to suppress the symptoms of the disease but he has, in the present situation, all the make-up for a very dangerous inflationary movement unless the Government are very wise after the war. I think that what my right hon. Friend said yesterday showed that he appreciates that danger.

But, in spite of dangers and great difficulties ahead, I feel that we can face the future with courage, and I would like to quote the well-known remark of Adam Smith when, in answer to a gloomy friend in the City, who foresaw national ruin, as men in the City very often have done during the last 150 years, he said, "Sir, there is an awful lot of ruin in a nation." That is right, provided it is one nation, and not two nations, as Disraeli saw them, or not a nation, as my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) said yesterday, in which there are two halves, one rich and one poor. It must be a united nation and it must be a nation which is working hard.

The keynote of all that I want to say to-day is that really we have two main tasks. The first is to make the people of this country understand the truth about the economic situation and convince them that everything depends on achieving the right kind of production, and the second is to make it clear to them beyond a shadow of doubt that the total product of the country's labour will be divided fairly and in the national interest. Looking back to the past, I think one may have reason for optimism. If any prophet in 1913 had ventured to prophesy what the state of this country would be 20 years hence, he would have been told that we could not survive it. Just take a few of the things which he would have had to forecast—the National Debt rising from £700,000,000 to £8,000,000,000, and the service on that debt increasing from £24,500,000 to a peak of £378,000,000; our expenditure on social services going up from about £62,000,000 to something like £500,000,000; our export trade being reduced in total from about one-third of the net industrial output to something not much more than one-seventh; our cotton piece-good exports reduced from over 7,000,000,000 yards to 3,000,000,000 yards; our coal exports from 73,000,000 tons to 39,000,000 tons, and so on. If anyone had painted that picture to the public, I have no doubt we should all have said, "We cannot survive it." And yet, 20 years later, what did we find? The national credit of the country higher than ever before and, according to all the standards—health, housing, food consumption, small savers' investments, expenditure on amenities and amusements—the nation was far more prosperous than 20 years before, and the process was going on.

But there were two great blots: first, the misery of mass unemployment, and secondly, the friction and disequilibrium in international trade that had the effect of preventing all countries from realising the full benefit of the technical advances in production that had been achieved and also undoubtedly was one of the contributory causes that led to the present war. We have much to learn from the past in encouragement, but also much to learn in warnings. We were very lucky in some ways in those years between the wars in the relatively high prices we were able to obtain for our exports compared with the very cheap prices at which we were able to buy imports, and whether we were wise in letting that relative price level remain, in the interests of the world, is a question that deserves consideration. But the two lessons which we must chiefly learn are the value of international co-operation and the absolute necessity for taking measures to prevent mass unemployment. It is quite clear, in general terms, what we need. We need maximum production of the right kind. That means producing the kind of goods that we want for ourselves, and that we can sell abroad, and—this is of vital importance—keeping the right balance between goods produced for consumption and capital goods for investment. We need to achieve that measure of production, and for that it is also quite clear what are the main requisites—good work by the rank and file, good management, true co-operation between management and workers based on a fair share of the product to the workers; full use of scientific research; wise directive control from the Government; and lastly, international co-operation.

The Motion concerns itself chiefly with things which the Government should do, and therefore, in what I have to say I propose to concentrate on that, much as I should like to talk of some of the other things. I would say that the main tasks of the Government are to exercise regulative control so as to avoid mass unemployment, to see that the country takes its place in international economic co-operation, and to handle what I would describe as the strategy of international trade. I want to know that the Government appreciate those main tasks. As regards mass unemployment, we have had a good deal of discussion about that, and several hon. Members have referred to what I regard as a very excellent study on the subject which was recently published in a pamphlet issued by Lever Bros. I think we ought to welcome that warmly as a serious and most valuable attempt to get to close grips with the actual problem Most of what has been said in this Debate and the general approach in that pamphlet has dealt with mass unemployment created by cyclical trade fluctuations. But that is only one of the causes. If the Government concentrate on that alone, I think they will be missing some of the main things that have to be attended to.

In the years between the two wars, of course this country and other countries experienced the booms and slumps of trade cycles, but underneath all that there were two other very important factors. There were, first, the terrific dislocations caused by the war to the British industries chiefly dependent on export trade. No treatment of the kind advocated for cyclical trade fluctuations, which I might describe as medical treatment, will cure the evil from which this country mainly suffered between the two wars—the complete loss of some of our main export markets. That required surgical handling. If hon. Members look back over the figures of employment—and they deserve serious study—they will find that if one takes coalmining, textiles, general engineering and shipbuilding, between the years 1923 and 1934—taking the last year before rearmament came into effect—something like 1,200,000 men were deprived of their expectation of employment in those industries and had either to hang about as unemployed or find employment elsewhere. That was a terrific factor in our situation. We may have dislocations of that kind to deal with after this war, and although they will be of a different nature, we must be prepared to deal with them.

Another very important thing to be taken into account is that it so happened that the beginning of the last war coincided with a period which I might describe as a change in the economic life of the world. The easy period of expansive development, based on the growth of the population in industrial countries and territorial expansion, had come to an end, and we had reached a period when, if we were to go on progressing in production for human needs, we had to turn over to the more difficult task of what might be described as intensive development. I would commend to the attention of the House a very interesting article on that subject which appeared in "The Times" on 27th November, 1942, by Sir Harold Hartley and also to the League of Nations publications to which he makes reference, particularly the Report on the Problem of Raw Materials published in 1937. I cannot cover that subject fully now, but I do want to emphasise that we must not be satisfied only with considering measures for dealing with cyclical trade fluctuations. We have to think much more deeply than that. If I might take a medical analogy, I would say that if we think only of cyclical trade fluctuations, it would be rather like dealing with a patient who suffers from rheumatic affections and treating him for the effects of these and forgetting that at the same time the poor fellow has a broken leg and is also undergoing one of the major changes of life which is seriously affecting his general constitution. These last two factors have to be taken into account. I should like to know from the Government that they have these two things in mind.

Now I want to turn to another point closely connected with what I have been saying. We have heard in many recent Debates what I imagine to be really the common view of the House now, which is that financial considerations must take a second place and that we must look rather for a broad economic policy; that a narrow annual budget outlook and the argument of the "empty till" are all out of date. Lord Keynes has written of the "humbug of finance." I accept the implications of these phrases; but they must not be swallowed blindly. The right hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris) quoted with approval the doctrine that finance is now a servant. That is right too, but it has also been well said that if finance is a servant, we have to see that we treat that servant properly. There are in fact some fundamental truths underlying the old rules of thumb about "making both ends meet," and we must not forget them. What I am leading up to is this: If we are going to forsake the narrow path of financial orthodoxy or the tenets of Gladstonian finance, and range at will over the wide spaces of "economic" policy, it is of the most vital importance that we should have good guides to lead us, and that those guides should either have a reliable map of the economic territory or at least a knowledge of its landmarks, skill to recognise its dangerous bogs and courage to call a halt and keep the nation out of them. There are indeed many temptations and dangers if you depart from that narrow way. Therefore I was particularly glad to hear what my right hon. Friend said about the Government's statistical records. Many of us have pleaded often in the past for a fuller and more enlightening statistical recording system. I need not, in view of the Chancellor's pledge, repeat that plea. But there are two things to add. First, we need not only good statistical records but interpretation of those records—the development of a technique which will make the public understand the truth that underlies them. Secondly, it is not enough only for us to improve our British system. I want to have some uniform system devised which can be adopted by other countries, so that all countries may keep their statistical records on the same basis. That would open the way to a great increase in the value of all the excellent work that has been done by the League of Nations and the Bank for International Settlements in compiling pictures of the economic structure of the world. I do hope, therefore, that the Government will take that up.

But all these things will take some time to develop and I want to urge something more concrete and immediate. There is enough material available, both in our own records, and especially in the United States, where they have recently devoted a great deal of attention to getting together full data on their economic structure, and also in the reports compiled by the League of Nations, to make it possible to prepare a fairly reliable picture of the world's economic structure. I want to urge then as a preliminary to settling both national and international economic policy that the Government should now arrange for the preparation and publication of a factual, study of the British economic structure and of the significance of its various parts. That will have to cover not only our internal system, but the ramifications of our connections with the rest of the world. It must be a strictly objective study, but it must be complete, showing the various parts in their right proportion, so that you can look at the picture and say, "If we want this, we cannot have that," or "It will have that effect." To have a complete picture is all-important since the controversies that arise on economic subjects either within a country and between one country and another, arise largely because particular groups of people see only one part of the picture. I am convinced that, if the public in each country were to see the picture as a whole, we should have a much better chance not only of agreement on our economic policy at home but also of international economic co-operation. I fully recognise that to prepare such a report is an extremely difficult task. The difficulty of selection, cutting out baffling detail and yet showing the true picture can only be overcome by a man of real genius. I want therefore to suggest to the Government that they should appoint Lord Keynes as a rapporteur to the nation or to Parliament on the economic structure of the country.

I want to impress the House with the need for having the picture put before us clearly. We are all so woolly about these things when we discuss them. Let me give two illustrations. How many members who speak as experts, and talk of the importance of our export trade, could say what proportion of our net industrial output is represented by our exports?

Mr. Maxton

Twenty per cent.

Sir George Schuster

The hon. Member is wrong. I do not claim to be an expert, and I have not studied the matter carefully for two or three years, but, when I last went into it, the most reliable statement on the matter was a bulletin published by the London and Cambridge Economic Service in August, 1935, and, according to that, by 1934 the net industrial output required for exports had been reduced to 16 per cent. of the country's total effort. That is a much smaller figure than most people realise. [Interruption.] That figure, I believe, represents in effect the amount of labour that goes into goods required for export.

There is another point on which we are all extremely woolly. We hear a great deal of the importance of small business enterprise. How many people can tell us what is the significance in the national economic structure, of small manufacturing businesses, say, those employing 250 hands or less? All our discussions on industrial development proceed on terms which imply that we are working towards monopoly, that the whole industry of the country is carried on by concerns like I.C.I., Vickers, and Unilevers, but in truth a very vast proportion of it is carried on by smaller undertakings, and we must not forget them when considering our policy for the future, and we should be fortified by accurate knowledge when we agree about these issues. To return to the proposal which I have put forward, I think it would as a national report be of great value to the House and the nation; but it would be of infinitely more value if what we do on those lines in this country were to be balanced and paralleled by similar action in the United States and among all the United Nations. A good deal of our study would, as I have said, have to cover not only our own domestic set-up but our relations with other countries and our place in the world. The same would apply to the United States. They could help us greatly. They have been doing an immense amount of pioneer research work lately. It is not for me to suggest the exact methods of collaboration. Possibly there might be a straightforward tie up between our side and their Committee for Economic Development. The great point is that there should be some joint major study of the basic economic position. I should like a message to that effect to go across to the United States. Will they join us in this so that we may discuss this matter with full information before the public in each country?

I realise that the idea which I have only roughly sketched, is full of difficulties, but it rests on the belief that the people in all countries should as far as possible apprehend the truth and the whole truth of these economic matters, and not be left to be got at by the advocates of sectional interests. It rests on the further belief, for which we have had convincing justification recently, that the public is hungry for concrete, accurate knowledge—not vague phrases and pious expressions of principle, even the fine expressions of the Atlantic Charter, and certainly not sectional propaganda. It rests, further, on the belief that we shall never get international co-operation unless all nations are ready to recognise squarely each other's fundamental needs and unless Governments do their best to work out plans, designed not as a bargained compromise between conflicting sectional interests in one field or another but as a broad, generous measure for the prosperity and happiness of the common man in all. I believe something on the lines that I have sketched is possible and should be tackled immediately as a preliminary to framing national and international policy.

There are many other matters that I wished to cover, but I must conclude as briefly as possible. If we are to have this economic policy, if we are to get away from the narrow guidance of budgetary restrictions, we need a single unified direction of our economic policy. I ask myself where, in the Government as it exists to-day, does that direction rest. We have a Minister without Portfolio as co-ordinator for post-war reconstruction. We have had unhappy experience of co-ordinators, and none of us can feel very happy about that position. Apart from that, you cannot separate into watertight compartments post-war reconstruction and our long-range economic policy. I understand that under the Lord President now all these things are satisfactorily discussed together. That may be working very well, but it depends largely on the personality of the Lord President. That is not a satisfactory feature on which to rely permanently. I put it to the Government that this is an essential piece of machinery that must be considered. There are two alternatives—either to continue the work with informal consultations and committees under a member of the War Cabinet like the Lord President, or possibly to broaden the scope of the Treasury and let the Treasury be responsible for watching not only the financial implications of every Department's action but its economic implications. I have ventured to put that view before the House before. It is not a popular view, because some hon. Members fear what they call the "dead hand" of the Treasury. I do not share that view, for it is my firm belief that the Treasury can fairly claim Jo be the best Government Department in the world and that if we give it a job it will do it extremely well. If we give it the broader job of looking after the economic policy of the Government, it will rise to the responsibility. In any case this is a problem of the greatest possible importance to the country.

I have not left myself any time to deal with international economic collaboration, but much that I have said has reference to that. I only want to plead shortly that it should be taken seriously and interpreted widely. I want to see as early as possible an "economic Casablanca" working on data and reports such as I have already described. I want to press that these questions be faced in the heat of our common emergency when we may be able to forge together the framework of a policy in a way which will not be possible when we cool down to our domestic problems of peace. I want to press, above all, for publicity in these matters. We ought to be told what is happening; for example, what is happening in the negotiations and studies which are being handled by Sir Frederick Leith Ross's Committee. I am frightened of two great dangers: secretiveness and sectionalism. I want to let in the fresh air of public interest, and thus prevent conflicting sectional interests spoiling all our international arrangements. I am frightened too at these problems being discussed piecemeal. We cannot, for example, discuss the wheat problem by itself. It is part of the whole economic set-up. Therefore, I plead for publicity on these matters and a broad, generous approach to the whole problem.

My final word is this: We have been talking about economic matters and of material development, but these are not the only things that matter. Men need, it is true, a certain material standard, but our real aim must be to create a society in this country in which all will have the chance of a good life in the truest sense. Let us aim at that and face our task with courage. And if, after the war, we are a poorer nation, none the less, if we can work with a better spirit of comradeship and more equality, and if we are a busier nation, we shall be a very much happier nation.

Mr. Maxton (Glasgow, Bridgeton)

I noticed that the hon. Member for Walsall (Sir G. Schuster) occupied half the time that was taken by the right hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris), to the advantage, I think, of the quality of what he had to say. I will try to carry on the geometrical progression so far as time is concerned and to occupy half the time taken by the hon. Gentleman. I hope that whoever follows me will be able to say that my quality has also been improved in consequence or, at least, if it has not, that the House has not had to suffer me for so long. I am sorry that the right hon. Gentleman the Chancellor of the Exchequer is not in his place. I am not blaming him, for he has to attend to some of the grosser material things of life, and we know that the right hon. Gentleman spends so much of his time in the upper ether that we cannot object to his having to meet the same calls of hunger that the rest of us do. I have one or two things to say to him particularly. May I endorse what he said about the noble Lord's House of Commons patriotism in bringing this matter before us? It is right that we should face the scope of the Motion that he has moved. I take it that the House will only regard it as a preliminary general survey of the problem and that later on we shall get down to greater precision. We shall have to be quite sure that we know what the problem is.

A big number of the speeches that have been made, and particularly that of the Chancellor, made the assumption that the war will finish at a not too distant day—I hope that he is right—and that it will finish with the financial and economic position not substantially different from what it is to-day; that the outlook of the House of Commons and the composition of the House will be much the same as it is to-day; and that the political spirit ruling in the world will be very similar. That is a tremendous lot of assumptions. I hope that the composition of this House will not remain for an indefinite period in its present form. Remember that Conservative political thought dominated the House of Commons from one war to the other. Never once did another type of political thought get on top, and what an awful mess they made of all the problems with which we are dealing to-day. Never once did they formulate them aright. I remember one Conservative Minister of Labour, a respected Member of the House and a Scotsman, Sir Arthur Steel-Maitland, saying to us that really what was needed was a greater mobility of men in industry. I remember that the right hon. Gentleman the Minister of Health was then one of the critics on the back benches, no one then visualising the dizzy heights that he would reach. The Minister of Labour solemnly told us about a Welsh miner who had been retrained and who had been transferred by the Ministry, lock, stock and barrel at their expense, somewhere in Scotland to be a handyman on a gentleman's estate. That was how the Conservative Party were handling the unemployment problem.

Can hon. Members remember how Mr. Baldwin came in and told us one day with great pride that our West of England vegetable growers had got broccoli into the French market before the French growers themselves? I was pleased to hear it, because it enabled me to learn for the first time what a broccoli was. That announcement was received with admiration by Conservative Members. Young fellows who knocked about my place used language when I was a boy which I would hesitate to repeat, but there was one word which they used very frequently—"hooey." That was what the Conservative Party's attitude towards the unemployment problem was in the period between the two wars. "Hooey" was the one word that described it. The country will not stand another 25 years of that kind of nonsense. When the present Prime Minister took office he said that all he could offer the country was blood, sweat and tears. I listened to the Chancellor yesterday, and the only change in the programme which he visualised at the end of the war was that the blood was coming out and that, what would be left to the mass of the people was sweat and tears. If the Government think that the fellows who have gone 1,500 miles across the Libyan desert or sailed on submarines or flown in Spitfires will be willing to accept that as their future, they are making a great mistake.

Coming from the Clyde, I can say that we are very ship and shipbuilding conscious and that we watch with great interest the shipbuilding developments of the United States of America, of Canada and even of New Zealand and other parts of the world. We see that the shipbuilding potentialities of the world, counting only the countries on the Allied side, are sufficient to build in 12 months a merchant fleet bigger than what sailed the seven seas before the war. In those days immediately pre-war we did not have enough international carrying trade to keep more than a fraction of that fleet sailing. We had lochs on the Clyde which were used as parking places for unused merchant shipping that could not find freights. One year's labour and material on the present scale can reproduce the whole of the merchant fleet of the world. A ship once in the water can reasonably be given a 25 years' life. The shipbuilders of the world can replace the fleet of the world in 12 months. When they have supplied the world with all that it needs of this commodity for 25 years, what are my shipyard workers on the Clyde and the steel men who stand behind them going to do for the other 24 years? The right hon. Gentleman and others have said that we must look for export markets. That is one of the essential viciousnesses of the whole business. I always feel that as soon as you look for export trade you are thinking of cutting prices, thinking of a better show in the world market. As soon as you start to think about cheap prices you are thinking about low wages and long hours. Working for the world market represents only 1s6 per cent. of our total activities. We lived as a nation when our export market was only 16 per cent.

We ought to start to look at the home market, which represents 84 per cent. Let us supply that with food and clothes and housing and entertainment, the means of health and all other requisites. Let us look to the satisfaction of the home market first. In that I include the necessity of importing a lot of the things which it is necessary to import because we do not produce them ourselves and certain things which we could do without but which nevertheless add to the enjoyment of life. Having done that, then think of what we are going to export. That is the point at which to begin to examine the export market. In starting from the export market end and arriving at the home market one is going the wrong way round. In war we start to consider the home market and that is the essential reason why in war time we keep all right in the matter of booms or slumps. We say, "We have an Army, a Navy and an Air Force and we have to clothe and feed them as a first charge." That is the home market, and we make attending to that market the primary duty of the nation, and that is why we do not have in war time the same problem of unemployment that we have in peace time. Apart from looking ahead and examining this problem in an academic way I should be happier if I saw more Conservative Members of this House showing signs of getting rid of what I can only describe as their mean-spirited attitude towards the working class. I have pointed this out before, but no Conservative believes it. I know Conservatives in this House. In their personal relations they are kindly, generous and decent, but in their political thinking mean-spirited and niggardly, hating, one would think, the working class of their own country, frightened lest they should get half an inch. Consider all this racket about the catering business.

Mr. George Griffiths (Hemsworth)

Good shot, that.

Mr. Maxton

The employees there are men and women who have attended to them as they have attended to me—sweated, working all hours underpaid, over-wrought, badly housed, dependent on my mood and on the state of my pocket for what their income is likely to be at the end of the week.

Mr. Colegate (The Wrekin)

May I ask the hon. Member whether he objects to an inquiry into whether it is true that they are sweated and whether conditions are so bad?

Mr. Maxton

One of my resolves after 20 years' experience of this House is that if I can get the decent thing done to any section of the community without an inquiry, I will have it that way, because the overwhelming proportion of the inquiries that I have seen have been devices for doing deserving people out of something. I am glad for once to see a Minister who seems to be going ahead. Surely some of the men associated with this campaign against these poor little waitresses—

Hon. Members

What campaign?

Mr. Deputy-Speaker (Colonel Clifton-Brown)

I would remind the hon. Member that we have a Bill on this subject coming before the House.

Mr. Maxton

I only brought in that reference to the catering trade to illustrate a mood which I have repeatedly seen— this grudging spirit. The Socialist is often said to be a man who grudges the position of those who are wealthier than himself. I never did it in my life. I never grudged any man any material superiority. Throughout my life I have hated to see people poorer than myself, and every decent Conservative would hate it too. But look at their attitude towards the question of compensation to civilians for war injury, look at their attitude towards old age pensions, to every little thing that comes up. It is an attitude of grudging meanness. Why not start now in the middle of the war and say, "We will wipe out now all the obvious unfairnesses and injustices that there are"? I am sorry, I had not meant to be so long, and I will conclude by saying that I hope that the next time this House comes to debate this general topic, as I hope it will be debated, it will be put in a more definite and concrete way.

Mr. Loftus (Lowestoft)

Any discussion on the Catering Bill has been ruled out of Order, and therefore I cannot follow the hon. Member for Bridgeton (Mr. Maxton) in his remarks, but I would refer to his attack on the Tory Party and on the attitude of the British working man. I am proud of the record of the Tory Party in their relations to the British working man and in their defence of his rights. It was the earliest Tories of 100 years ago, Sadler and Taylor, who started the agitation for the first Factory Act.

Mr. Maxton

I will make them a present of Shaftesbury, Sadler, Taylor and Disraeli, but you cannot live for more than 100 years.

Mr. Loftus

The inspiration of Disraeli and the tradition of Disraeli live to-day in the Tory Party and guide their attitude towards the whole nation, including the working classes. Disraeli was the first man in this country who drew attention to the deplorable condition of the working classes and who pointed out that England was divided into two nations, the rich and the poor. But I want to turn to the main object of this Debate, the Motion on the subject of trade and employment. For the first few years after the war there will be, I think, ample employment, and while in some respects there has been national appreciation in the sources of production and in the new factories there has also been very heavy national depreciation. Property of all kinds has been neglected for years, houses, factories and roads have deteriorated, machinery will want renewing and so on. The first point I put to my right hon. Friend is that we shall want to keep a very careful balance immediately after the war between those employed on capital outlay and on doing repairs to overcome the depreciation and those employed on the production of consumable goods, because if we employ too many to overcome the leeway in repairs we shall not have enough people producing consumable goods. That will be a difficult problem to face.

I am sure that we shall never get a permanent solution of our unemployment problem unless we decide to restore a prosperous agricultural industry. It was pointed out yesterday by an hon. Member that we have lost a great deal of our foreign investments, equal to some £200,000,000 a year. He pointed out, also, that new countries like the Argentine are more and more switching over to industry. During the war these new countries, South and Central America, as well as Australia, New Zealand and India, have built and are building great industries, manufacturing what they used to get from us. It is no use having pious aspirations about this matter. It is no use denouncing economic nationalism in those other countries; no nation, once it has built up those secondary industries and established a more varied and higher standard of life for its people, will sacrifice it in order to save or encourage British exports. We have to face that fact.

The great days of the 19th century, when we were the great exporters of the world and supplied, all over the world, markets eager for our goods, have gone and gone for ever, and we have to face that fact. Assume that we have lost £200,000,000 or thereabouts of interest on foreign investments that came to us each year. We were told in yesterday's Debate that, because of that loss, we had to export £200,000,000 worth a year more than we did before the war. I do not accept that opinion. Why not produce £200,000,000 worth more food in our own country than we did before the war? We could easily do it. Instead of sending our manufactured goods abroad to pay for our food, let us pay our own agricultural population with the manufactured goods we produce here, for the extra supply of food that that population will produce I am certain that the solution of lost markets for our exports is to develop new markets in our own country and in our agricultural countryside so that our manufacturers will there have new markets which can easily produce £200,000,000 or £300,000,000 a year more food than before the war. If we tackled the problem on those lines, we might incidentally find that we had solved other problems as well. We might find that we had solved the unemployment problem and, in very large part, the problem of improved national health. We might find also that we had solved the problem of stopping or decreasing the centralisation of population in great cities. Therefore I plead for consideration of that aspect of the matter.

I turn to our export markets. I recognise that we must have exports and imports, but the only object of exporting goods should be to import goods which we desire and cannot readily produce for ourselves. We have, of course, to import raw materials for our industries. We have to import rubber and such luxuries as tea and coffee, and we therefore have to export to pay for them. Many speakers yesterday expressed apprehension about difficulty in paying for those necessary or desirable imports by our exports, but I do not share those apprehensions. We certainly have a problem of exports, but let us realise that the countries producing the goods which we want to import have an equally grave problem in finding markets for their goods. The one overwhelming interest of the countries producing coffee, wheat, rubber and so on has been to find markets and not to destroy their goods because of inability to sell.

On any reasonable and sensible method of international exchange I foresee no difficulty. I think we shall have to make modifications in our financial system and in international exchange, and I would suggest that the basis of the new system must be to make a reality of the theory that exports are paid for by imports. We have so to organise our international system of money exchange that the exporting country is paid in the currency of the importing country, which it must use directly or indirectly to purchase the goods of that country. The hon. Member for Bridgeton pointed out—I agree greatly with much that he said—that the obsession on our export market may lead in the future as it has led in the past to a demand to reduce the prices of our goods in world markets and that the way to reduce those costs would be by reduction of wages in order that we might sell our goods in the markets of the world. That was his argument.

I remember some 12 years ago, at the worst time of world slump, being engaged in controversy on that particular point. A friend of mine had written to me using the argument that we had to reduce wages in order to sell our goods abroad. I pointed out to him that it would be just as reasonable and logical to go to the people of Brazil who were burning coffee because it was unsaleable and tell them to reduce wages in order to sell coffee in England, or to go to the rubber planters of Malaya and tell them to reduce their wages to vanishing point, saying, "Your rubber is now 1½d. a pound and is obviously too dear because people are not buying it. You have to reduce the wages." It is an utterly illogical argument. It is also extremely immoral and cruel. I have always condemned it and always shall condemn it. Under a proper system of international trade I hope that we would cease to hear those arguments used and that the dilemma would not arise.

While on the subject of the export trade, we ought to recognise that there is a fixed limit to our exports formed by the amount of goods we import and subject, of course, to allowances for interest received on foreign loans. We can only sell goods for which we have received imported goods and gold. We can lend abroad by means of foreign investments, but the limit of exports is the three things added together: the amount of goods we import, the amount of gold we import and the amount of our services—chiefly foreign loans, insurance services and so on. If we accept that statement, we must also accept that if owing to changes in the home trade, you export more of one commodity, you must export less of other commodities. If, for instance, a new industry arises, say motor cars, in this country, and we export motors on a great scale, we should have to export less of cottons or coal, unless we increased our imports considerably to pay for our increased exports. That is the position. There is a fixed limit of exports. As we expand one branch of exports, others diminish, unless we import more, or lend more.

Sir Frank Sanderson (Ealing)

Will my hon. Friend allow me to interrupt him? He will no doubt be aware that, taking the average of the three years preceding the war, we imported approximately £900,000,000 worth of goods and exported £500,000,000.

Mr. Loftus

Yes, Sir, and the balance of £400,000,000 was made up, in round figures, of about £250,000,000 interest on foreign investments and £150,000,000 in services of various kinds. I shall deal with the subject of foreign investments in one moment. There is another point we should bear in mind, and it is that if we increased our-agricultural production by £200,000,000 or £300,000,000 a year after the war, compared with before the war, we should either have to import, and therefore export less or raise the standard of living of our people so that they could consume £200,000,000 or £300,000,000 a year more goods.

Mr. Moutague (Islington, West)

If that is the real essence of the problem, what is the hon. Member's reaction to the suggestion that we should set up a nutritional standard in this country and see that the people got it by making the supply of elementary foodstuffs a social service? Is not that the way out of our agricultural problem?

Mr. Loftus

That question opens too wide a subject, and I cannot deal with it now. I was referring to foreign investments. At least two speakers in the Debate argued that after the war our policy should be to build up again our overseas investments. I sincerely hope that we shall do nothing of the kind. I am one of those who criticise the whole policy of investments overseas on a great scale. I want to put to the House to-day certain objections to that policy. I believe that if we attempt to revive that policy after the war, we shall involve ourselves in perpetual trouble, perpetual slumps and booms and international ill will. The first thing to remember is that the great slumps of the past have always followed a period of very heavy overseas investment. The great slump of 1873 was immediately after the great period of foreign lending when we exported capital to North and South America. Then came the slump of the 'nineties which is attributed by Sir George Paish to excessive loans overseas. In that slump he points out that the price of food fell to a level which reduced the farmers of all nations to poverty. Those were two bad slumps. The worst slump the world has ever seen was, of course, the last great world slump of 1929–30–31 and so on. Let us look at what happened immediately before that slump. Between 1919 and 1929, the U.S.A. and Great Britain lent overseas nearly £4,000,000,000. I knew and I prophesied that that period would be followed by a world slump, from past precedents, and it happened. Therefore that is one reason why I criticise the policy; but there is another reason.

The late Lord Mancroft, who as Sir Arthur Michael Samuel was for some time Financial Secretary to the Treasury in this House, estimated that in the 60 years before 1914 we had exported on foreign investments goods to the value of about £6,000,000,000 and that we had lost £2,000,000,000 of those capital investments at least, and probably £3,000,000,000. I want the House to realise what that means. That was wealth created by the people of this country and shipped on loan overseas. It consisted of goods created by our people and sold for credit overseas, and it was lost without any return of any kind. I may get the answer that capital losses are inevitable; yes, but if you have a non-paying business such as a harbour it may be a valuable national asset though it is of no value to the shareholders. In the world to-day there are many such capital assets outside this country created by our people but a dead loss of national wealth. Indeed "The Times" Trade Supplement, commenting on Sir Arthur Samuel's statement, said that for all the use they were to this country these goods might just as well have been sunk in the Atlantic—this £2,000,000,000 or £3,000,000,000 worth of goods.

There is another criticism of the policy. I would give it from the words of the famous economist, Professor Pigou. Foreign investment or favourable balance of trade means a lower standard of life for the nation as a whole than its production would allow them to have. The words he uses are as follow: A favourable balance of trade means refraining from the import of goods to which we have a claim. He goes on: It follows that Labour must be less well off in terms of things in general. In other words, if you lent overseas, say, £100,000,000 in one year, you could have used this amount to import goods and you have not done so. You have exported these goods and refrained from importing in exchange. When I think that 100 years ago the standard of life in our big cities was deplorable, the conditions of the working classes in those cities were deplorable, and that even then we were struggling for a favourable balance and achieving it and exporting goods on credit and refraining from importing goods in exchange. I confess that is a strong argument to me against resuming large-scale foreign lending.

A very grave argument against foreign loans is this: Debtor nations must erect tariffs against our goods. The debtor nation must export far more than she imports. I will give proof of that statement. In 1932, when he was Prime Minister of Canada, Lord Bennett raised the Canadian tariff enormously. He was criticised in the Canadian House of Commons but defended himself in these words: He said that every day of the year Canada had to find a non-trading export of 1,000,000 dollars a day. In other words, Canada had to export in payment and interest to overseas investors, or outside investors in the United States and Great Britain 1,000,000 dollars worth of goods a day as a tribute before she could commence paying for imported goods. I give another case. When Austria was in a very bad condition after the last war the League of Nations issued a loan to Austria. The condition of the people in Vienna was deplorable. They were actually fishing up fats from the drains to eat. Ac that time the League of Nations sent a financial commission to Vienna to report on the financial situation, and they instructed Austria to restrict imports in order to find an excess of exports wherewith to meet the loan obligation. There again is an instance where a debtor nation must restrict imports in order to obtain as great a favourable balance as possible of exports to meet loan obligations.

Mr. Benson (Chesterfield)

May I put a question? The hon. Member has drawn a very strong and wide indictment against the export of capital as impoverishing the exporting country. Does he suggest that if wealthier nations had not irrigated the undeveloped parts of the world by the export of capital, we should have been better off?

Mr. Loftus

I would answer that by saying it has led to unhealthy development. The new nations, such as Canada, go in for monoculture of one crop year after year for export, thereby causing soil erosion, which is a menace to humanity; it has led to the over-development of one industry for export, as, for instance, Brazil concentrating everything on the coffee industry; it has led in Peru, as "The Times" Trade Supplement pointed out some years ago, to the unhealthy development of copper export and the entire neglect of agriculture. In Australia it has led to the concentration of huge populations in cities. In that vast country over half the population is in five or six cities. In Sydney there is a bridge between the city and the suburbs. It costs Australia an export of £1,000 a day in goods to have that amenity, and this when her countryside is largely undeveloped. The proper export of capital was originally that of people going overseas to settle down and develop the country by a proper system of intensive cultivation for home trade, not huge farming for export in order to meet interests on loans. Another thing in the search for overseas investments is that it leads to high interest rates at home. After the last war we exported £200,000,000 capital to Germany at a high rate of interest. That meant high rates of interest for home borrowers.

I would like to develop the argument still further, but the final thing is this: If we and the United States and other great countries start searching the world for new territories to develop, for new countries to exploit, it will only lead to international ill will and friction, and incidentally you will be forced, in your search for the profitable export of capital, to build factories in the new countries to destroy the export trade of your own factories in this country.

I would say a final word about what was mentioned yesterday and to-day with regard to private enterprise. I think the hon. Member for Walsall (Sir G. Schuster) alluded to small industries in this country. I sincerely hope that we shall so direct our economic policy after the war as to encourage the small man. At present I am afraid that by our taxation, by our legislation, by our administration we are encouraging huge monopolies and are discouraging, even to the point of extinction, the small independent man. I feel we must alter that to get a healthy economic order after the war. I would appeal to the Labour Benches, not by a quotation from a Tory or a Tory newspaper, but from a Socialist writer, G. D. H. Cole, in the "New Statemen" of 1941, where he wrote as follows: It is a clear lesson of recent history that democracy cannot be real unless it rests on small groups as its basic unit, on groups small enough to be competently administered and led by men of normal stature and make up. This should make even Socialists wary of tearing up by the roots any small man's refuge that is left in a world so ridden by hugeness. It should make them regard the farmer, the shop keeper, the small manufacturer, not as obstacles in the way of universal centralisation but as valuable checks upon a dangerous agglomerative tendency. I agree with that statement by that eminent Socialist. I feel to-day that we want to encourage the small man for many reasons. I will mention only two. He is the safeguard of liberty. The small man of property, and property which is well distributed, is a valuable defence of liberty against any totalitarian tendencies of the State. I feel further the small man of property is the typical English citizen and will preserve the national character and that national initiative which have made us the great nation we are. Therefore in this world after the war, with totalitarian tendencies arising in every country, including our own, do let us seek to use our economic policy to establish the small independent man, to establish well distributed property so as to maintain the old individual liberty which has always been held in such high honour by our country.

Mr. A. Edwards (Middlesbrough)

May I ask the hon. Gentleman a question? Surely there is a very serious fallacy in his statement that when a man goes abroad with his capital that is very different from the export of capital? Surely it does not make any difference from the point of view of the nation?

Mr. Loftus

Surely there is this difference. A country like Australia, with great debts owing to this country, means that this country is rather in the position of an absentee landlord drawing investments in the same way as the Irish absentee landlords of earlier days lived here and drew rents from Ireland.

Mr. Leslie (Sedgefield)

The hon. Member for Lowestoft (Mr. Loftus) made reference to the position of agriculture in this country. With much of what he said one can agree. The commodity boards would bring both the producer and consumer into touch. The real cause of the trouble in agriculture has been that the farmers have been far too individualistic. They have failed to co-operate as they did in Denmark and New Zealand, and both these countries certainly offer an object lesson to the Government of this country. The Noble Lord who opened this Debate yesterday expressed certain views with which we can all agree. I was particularly struck with one statement that he made: It should be realised to a greater extent than it is in this House that the country is interested at the present time in questions concerning a fairer distribution of internal wealth, far greater equalisation of opportunity and a social plan of value, like the Beveridge Report. Those things should be effected not on political grounds, but on both practical and ethical grounds."—[OFFICIAL REPORT, 1st February, 1943; col. 771, Vol. 386.] The speech of the Chancellor of the Exchequer was somewhat like the curate's egg, good in parts and bad in parts. At one period he was quite progressive, but subsequently he qualified his statements. The future, in his estimation, is not altogether rosy; but I think there is no need for us to be pessimistic. Let us hope for the best, and strive for the best. We are in duty bound to carry into effect the Atlantic Charter, to which the Prime Minister has set his seal. The United States and Russia are equally bound. Points four and five of the Charter are of particular importance. Surely those points mean the elimination of discrimination in international commerce: the reduction of tariffs and other trade barriers, in order to expand production and employment, and the exchange of goods, to secure and improve labour standards, economic advancement, and social security. In this connection the economic and financial section of the League of Nations Secretariat should play a part, and there is work for the International Labour Office. Let me remind the House of what the Foreign Secretary said on reconstruction, on 2nd December: The I.L.O. has struggled manfully, and with considerable success, to remove certain of the evils which are among the root causes of war: low standards of living, insecurity, and unemployment. Unless we can cure those evils, no peace structure can be enduring. The I.L.O. must be strengthened and developed. I should like it to become the main instrument giving effect to Article 5 of the Atlantic Charter."—[OFFICIAL REPORT, 2nd December, 1942; col. 1259, Vol. 385.] That was endorsed by the Paymaster-General and the Deputy Prime Minister. On two occasions I have asked the Foreign Secretary what steps the Government are taking to procure any programme of post-war economic collaboration with the United States and Russia in order to carry into effect the objects of the Atlantic Charter, the Lend-Lease Agreement and the Anglo-Russian Agreement. The sooner that is done, the better for the world in general. It would give hope of brighter days to the people now groaning under Nazi domination. Other speakers have agreed that after the war most of our foreign investments will have gone and the Empire will have changed in ways that will make a return to a system of preferences almost impossible. Our international needs and our international commitments will be such as to make it vitally necessary for us to take joint action with the United States and Russia. I cannot do better than to quote a far-seeing, very wise, authority on international relationships, who said recently: When war is done the drive for tanks must be a drive for houses…the drive for physical fitness in the Forces must become a drive for bringing death and sickness rates in the whole population down to the lowest possible level.…We have to make freedom from want a reality. The drive for an all-out war effort by the United Nations must become a drive for an all-out peace effort based on the same co-operation and willingness to sacrifice.…Just as the people of democracy are united in a common objective to-day, so are we committed to a common objective to-morrow. We are committed to the establishment of a real democracy. Those are the words of a representative of the United States. They ought to go down with emphasis, not only in this country but in the United States and Russia.

Major Conant (Bewdley)

The Chancellor of the Exchequer reminded us yesterday that the war is not yet won. I feel it is always wise when we are discussing post-war trade, as we shall frequently do, to remember that the conditions of the world and the conditions of this country may be very different indeed when the time comes to put into effect any plans which we may make and any proposals which we may advance. We are discussing problems of which we can at present see only the bare outline. We can see many of the difficulties, and how very great they will be: we can devise means of circumventing those difficulties; but we cannot do more than plan in outline. I cannot agree with the right hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris), who criticised the Chancellor of the Exchequer for not going into details. To take one example, let us consider the position of our Far Eastern trade, upon which the standard of living in this country has depended to so great an extent in the past. All we know is that ultimately the territories we have lost will be reconquered. We cannot tell the extent to which they will be damaged by the enemy, to what plantations will be broken down, or how long it will be before trade in the Far East will be redeveloped. We should be very wise to consider post-war trade before we consider the suggestions of Sir William Beveridge for redistributing national income. It is upon the success of our efforts to restore trade after the war that those plans must depend. It is most unfair to the country either to pretend that trade restoration can take second place or to attempt to put a date to the Beveridge proposals, regardless of whether we consider them sound in principle or not.

If we consider that the post-war period we are discussing commences when fighting stops, and that we are not considering the period following the official termination of the war, we can, for purposes of discussion, divide that period into two stages, which will obviously overlap but which will have very distinctive features. The first is the stage of reconstruction, when we shall be working in the closest co-operation with the United Nations. We shall pass gradually from that into the stage of international trade, when we and other nations will have to pay our own way. When we enter the stage of reconstruction, the state of Europe will be chaotic, the extent of the chaos depending on how long the war lasts. In "The Times" yesterday an interesting article referred to the problems of reconstruction in Europe, and pointed out that it was to our own commercial interests, apart from our moral duty, to play our full share in reconstruction. It is obvious that we might attain a certain advantage by the removal of competition from the lower labour standards of Europe, but in the long run we can attain permanent improvement in our standards of living only by improving the standards of others. During that period we shall presumably be maintaining an army of occupation in Europe, to keep order and to ensure the carrying out of the peace treaty. One cannot foresee the extent of demobilisation, but probably we shall have to maintain for many years considerably larger Fighting Services than we have been accustomed to maintain in times of peace.

This will place a great strain upon the industry of this country. We must bear that in mind when considering the organisation of future trade. It will be necessary that Government control over industry, over labour, management, and capital, should be continued; and control then will be infinitely more difficult than it is to-day. So many people will say, "We have been fighting for freedom; we have fought for the right to work where we wish; we have fought for private enterprise; and you have given us a type of Socialism far more drastic than that proposed by any political party before the war." There is a need for educating the country on the necessity for continuing control of industry in the immediate post-war period. Gradually we shall pass to a stage of normal trade, when we shall have to pay our way. It is to that stage that most of the speeches in this Debate have been directed. Our ultimate objective must be freedom from want. Our first objective can be said to be the provision of regular work, at good wages, without war-time restrictions upon industry. I stress the fact that restrictions must be removed. It is easy, of course, to abolish unemployment, to provide regular work, if you maintain control. Germany and Russia did so before the war, but only by the greatest restrictions upon the liberties of the subject, which no Englishman would wish to see cantinued.

We pass to the final stage, the provision of freedom from want, which means added social security and the expansion of our social services to provide for all the varied wants of the nation. That can come only as our foreign trade develops. I do not agree with the hon. Member for Bridgeton (Mr. Maxton) that foreign trade does not matter. Our present standard of living depends to a great extent on the way we have developed foreign trade in the past. For many countries foreign trade is not a necessity but a luxury. To us it is a necessity, and, as far as one can see, it always will be.

Many hon. Members have referred to the considerable difficulties facing our foreign trade after the war. It will be far more difficult to revive our export trade than it will be to revive trade at home. We ourselves can decide the steps necessary to revive trade in this country, but we shall have to agree with other nations in deciding how to revive international trade. We should start our considerations within the Empire, not for the purpose of cutting out any State—the United States of America, or the U.S.S.R. or China—but in order that the family may speak with one voice. Clearly the problems of Dominion and Colonial trade after the war are going to be far more difficult than they were before war broke out. The interests within the Empire are not how complementary, but that is all the more reason why we should settle our own internal trade problems. Before, we get down to international discussions we should work out these plans within the Empire itself. Our aim should be, as hon. Members have said, the removal of trade barriers and, above all, the improvement in standards of living throughout the world. I cannot believe that by seeking to improve our own standards regardless of the interests of others we shall secure any permanent results. We must work towards the improvement of standards throughout the world.

What is to be the position of agriculture after the war? Hon. Members have touched upon it. We have at last obtained conditions in the farming industry which are comparable to those in other industries. Those conditions cannot be allowed to revert to the conditions which existed up to the time of the war. Sooner or later some policy will have to be devised. It is not of urgent necessity, because obviously for many years after the war agriculture will remain in a comparatively prosperous condition. Are we going to allow ploughed lands which have served us so well in times of trial to fall back to grass? Are we going to compel the people of this country to buy their food at home? We have to decide upon a definite policy. Unless we do so, there is a real risk of the industry meeting the same fate as befell it after the last war. The war has disorganised our internal and our export trade to an infinitely greater extent than ever before. The trade of the whole world has been disorganised to a similar degree, but there is this consolation, that the world will have an opportunity to take stock of its resources. It will have the chance of re-organising the distribution of its resources, and upon the success attending these efforts will depend the future happiness and comfort of mankind.

Mr. Shinwell (Seaham)

My Noble Friend the Member for Horsham (Earl Winterton) deserves our appreciation for having raised this interesting and vital Debate. Undoubtedly, after the organisation of what we hope will prove to be a successful war effort, the subject of post-war economic policy is the most formidable of all our problems. If we fail to solve internal and international economic relations, we shall, in spite of our war successes, be deprived of complete and lasting victory. Let us not approach this matter in any spirit of pessimism. We are all conscious of the pre-war position, of the vast unemployment, of the social distresses of that period, of the insecurity, of which we have every reason to feel ashamed. Nevertheless, we are a nation possessed of huge resources. We have great technical skill at our command. Our workers possess remarkable craftsmanship; indeed it is second to none throughout the world. We are in fact, in spite of all that has been said, still a nation of high qualities. It is necessary to face the future realistically and to avoid all fantasy and what the Chancellor of the Exchequer described as wishful thinking. It is moreover, of the greatest importance to show a readiness to shake off orthodox and outworn methods. We have tried everything in war largely as a result of improvisation, for there was little planning and little foresight, as we well know. We have devised expedients of all kinds. Many have proved successful; they dovetailed into the war effort, and what we have attempted and succeeded in accomplishing in war, we can equally achieve in the days of peace. A nation capable of this huge war effort, starting almost from scratch, capable of organising almost the whole of our resources, our national manpower, and capable of expending thousands of millions of pounds, fabulous sums, in that effort, is capable of applying itself assiduously and successfully to the reconstructive arts of peace. There is no task, however formidable, we will not attempt, and, in my judgment, there is no task so formidable that it is beyond our successful efforts.

Therefore, I do not approach this subject of post-war economic policy, of exports and imports and the maintenance of a standard of life such as we desire, in any spirit of pessimism, nor do I seek to paint the picture of the future in sombre colours. Everything depends not so much on the statement of our objective, for upon that objective we are almost all agreed. I detect in the speeches common agreement. From the excellent opening speech of my Noble Friend, who spoke with such forthrightness and sincerity, right up till we heard the speech of the Chancellor of the Exchequer, I detected common agreement on the objective which we desire to reach. But that is not our problem. The problem is to devise the machinery, the method, and the manner of approach. It is because of this, which is the essential ingredient in the problem, that I found the speech of the Chancellor of the Exchequer somewhat disappointing. It seemed to me that the Chancellor was aware of our needs, of what was required, but was clearly unable to visualise the kind of machinery necessary in order to reach the objective. Moreover, as it seemed to me, he took the miscellaneous assortment and threw them higgledy-piggledy into the shop window, so much so that I find it exceedingly difficult to detect the necessaries of life.

It is easy enough to throw phrases about—and that is the easiest thing in the world for most of us—and to indulge in clichés, many of which have served their turn in the past, but we must look beneath those assertions, those highfalutin' utterances, those clichés, in order to ascertain the real substance of the case presented. First of all, may I venture to indulge in an interrogation, not an uncommon practice in the course of our Debates? I would like to know—and I would not be at all surprised to learn that other hon. Members are in the same position—whether the speech made by the Chancellor of the Exchequer was a Government pronouncement. Let me explain. Naturally the Chancellor of the Exchequer is a member of the Government. I do not mean anything offensive by saying "naturally." In so far as the statement emanated from the Government, I want to probe a little beneath the surface. Was that speech, in all its arguments and contentions and its manner of approach to a solution of the problem, its references to the financial difficulties and liabilities for the future, and its suggestions about possible devices and machinery to be used in the execution of certain schemes and plans, a Government pronouncement? In other words, does that represent fully, completely, wholeheartedly and without qualification and reserve the opinion of every member of the Government? That is an important question, although I say so myself. We cannot have the Government speaking on post-war issues with two voices or, it may be, many voices. We want to know where we stand.

Let me furnish an example, a very modest one, but one which will suffice for the purpose. The Chancellor, in the course of his observations yesterday, said, "We must allow free enterprise its place in the post-war world," He seemed to emphasise the need for it and, indeed, we have just had a speech from the hon. and gallant Gentleman opposite which endorsed what the Chancellor said. In fact, there have been several speeches of a like character. However, I am not concerned with the hon. Members; I mean no disrespect, but they are back benchers. I am concerned with the Government. When the Chancellor said what he did say about free enterprise, did that represent the Government's view, and does it represent the view of my right hon. Friend the President of the Board of Trade? It is very important, and I shall tell him why it is important. Because a return to free enterprise means a return to a policy of scarcity. It means a return to the policy of restrictions. It means a return to those days, not so far away, those dark, gloomy, depressing days of industrial dislocation and devastation when the winds of unemployment swept across the face of the derelict areas of this country, when certain people in high places decided to close down shipyards and suspend the production of iron, steel, coal and even agricultural produce. I commend that to my hon. Friends opposite. All that was done in the name of the policy of scarcity. At that time it was the accepted policy of capitalism, which is represented in the main by many of my hon. Friends opposite.

I ask the Government to say frankly, categorically and not obliquely or evasively whether they intend to return to the policy of free enterprise, to place power, industrial and economic power, which represents social power, in the hands of a comparatively small section of the community however able, intelligent and enlightened they may be, so that the destiny of millions shall be placed in the hands of the few? That is a fair question, and I ask for an answer. I see that the Secretary for the Department of Overseas Trade is present and is making comments which have not reached my ears; but have reached the ears of the Minister of Production. I hope they are intelligent and favourable comments. Obviously, if they are not favourable, they are not intelligent. However, we are very glad to see him here occasionally, although we sometimes wonder what he is doing. The question applies to him just as much as to my right hon. Friend the President of the Board of Trade. We are concerned with overseas trade, as I shall show in a moment. If the Chancellor's observations on this important matter represented the views of the Government, the errors of the past would be repeated. I shall expect a reply from my right hon. Friend.

I want to direct the attention of Members to the real substance of this Debate. I have heard some interesting speeches, some muddled speeches, speeches which were just a hotch-potch of past economic policies, a mongrel mixture which will lead us nowhere. Let us face up to the problem. What is our common objective? First, it is full employment, to secure for every able-bodied person the opportunity of engaging in employment that is well-paid, consistent with modern living and producing things that are worth while. I take it that there is common agreement on that objective. What is the second and equally important objective? It is the maximisation of production—a term often used by economists and well understood. It means using the whole of your resources and developing them in so far as is physically practicable having regard to circumstances, internal and international. Full employment is essential, as I shall show. There is no question of not wanting it; it is imperative. We want, first of all, to increase the national income, because unless there is increased national income, it is clear that you cannot pay out large sums without incurring grave responsibility, and not only financial responsibility. You must have full employment in order to increase output of the goods that are worth while, thus increasing the national income, but there is a still more important reason which I am sure will commend itself to hon. Members. We have to meet the challenge of the future in spite of all that has been said about international co-operation. Let us be realistic. There are nations which possess huge productive forces greater than ours and which have greater populations. Comparatively speaking, we are a small nation. Apart from the Commonwealth, we are 45,000,000 souls, whereas America has a population of 130,000,000 and Russia 160,000,000 and there may be a reorganised Europe on a federal basis—who can tell?—with a population of 80,000,000 to 120,000,000, organised not merely politically but economically.

Economic organisation on federal lines already exists in Europe. To a large extent it has been established by the Nazis. Dislike their politics as you will, the economic Germans are there, and we must take cognizance of them. A small nation such as ours, comparatively speaking—a nation possessing high qualities, great skill and technique and great traditions, but having, comparatively speaking, a small population and small resources alongside the huge resources of other nations—must meet that challenge, and, therefore, we must maximise production to the limit. There must be no waste of any kind.

Let me for a moment deal with the question of full employment. I said there was common agreement about that. But what kind of employment? Hon. Members opposite may say that, of course, we must have full employment in order to produce for export, but as many of them have remarked, and as was implied in the Chancellor's speech, we must so regulate wages as not to impose too heavy financial burdens on entrepreneurs and manufacturers because otherwise we shall be faced with unfavourable competition from abroad and our goods will not enter the markets of the world. That is the old argument which we have heard over and over again.

But the situation has changed. How has it changed? Everything we are saying is based on the assumption of victory. That is obvious. But a victory for whom? A victory for the United Nations. Who are the United Nations? The United States of America, the Commonwealth, to begin with and in particular. Are we likely to face competition from the United States of America? Perhaps, in the absence of effective international co-operation. Are we likely to face competition from the Dominions in the absence of effective economic arrangements? Let us remember the creation of secondary industries in the Dominions. But if that is the competition that will be forthcoming, those countries are countries having high wage rates and high living standards. Certainly we shall not need to reduce the wages of our workers in order to meet that kind of competition. Therefore, the argument disappears. It may be that we shall have to face a regenerated Europe after a period of years and competition from Czechoslovakia, if it still exists, and from other countries in Europe. But the real element in competition is not so much wages costs as efficiency. Something has emerged, as is well known to the President of the Board of Trade, during this war. It is this. Many refugees have come to this country—Czechs, ex-Germans, and many others—and they have created industries. It is a remarkable fact—I speak knowing the facts, and I know my right hon. Friend will agree—that as a result of industrial efficiency such as they have been able to promote they are able to produce much more cheaply than many British manufacturers. They can pay high wages quite readily because the methods and technique they employ have more than made up for the additional wages costs. That is the lesson that must be learned by British manufacturers.

There is another reason why wages must not be reduced. We simply cannot afford it, and least of all hon. Members who represent agricultural constituencies. I have often been interested to hear what has been said about agriculture in the. House, knowing nothing about the subject myself; but I do know that if every worker in this country, every craftsman, every skilled and unskilled labourer, with their families, could reach the standard of living of the average Member of Parliament, it would solve the problem of agriculture. Let them eat as much as we can eat because we can afford it. I am lumping together all Members of Parliament; I could make distinctions, but I shall not do so. That is the way out of the difficulty. We must not seek to reduce wages and reduce standards of living, which were always too low in normal times. We ought to be ashamed of the wage rates that were current in the inter-war years in the mining industry, in agriculture, in textiles, and elsewhere.

Mr. Gallacher (Fife, West)

And in engineering.

Mr. Shinwell

And in engineering. There were few exceptions. We must raise the standard of living in order to absorb production. There is the solution of the problem, stripped of all the verbiage, all the nonsense, and all the fine sentiments. Synchronise production with consumption; that is how to deal with the problem.

Sir Cyril Entwistle (Bolton)

It is not so easy to do.

Mr. Shinwell

I agree. It depends on the manner of your approach. I want to say a word or two about maximum production. Of course, we must maximise production, but everything depends upon the nature and character of the product. If it is left to free enterprise, as some hon. Members, but not all hon. Members, opposite intend; or as the Chancellor of the Exchequer intends, what will they produce?

Mr. Colegate

What the consumer wants.

Mr. Shinwell

What they want the consumer to want; what will produce for them a high profit.

Mr. Colegate

Nonsense.

Mr. Shinwell

It is clear that there is a difference of opinion about this. What I say to hon. Members opposite is that unless we prepare to exercise Government direction in relation to the character of our production, we cannot reach a solution. I want to know whether this can be left to private enterprise.

Mr. Colegate

It can be left to the consumer to decide what he wants.

Mr. Shinwell

The hon. Member says it can be left to the consumer, but which consumer—the consumer with £2 10s. a week or the consumer with £2,000 a year? What is the use of talking on those lines? Unless in the post-war period the Government are prepared to present plans laying it down quite definitely and without reservation that no private person is allowed to do this, that or the other thing which may be detrimental to the public interest, I am afraid our victory in war will turn to ashes in the mouth. We shall be back again in the old devastation of the inter-war years. There is something more. We have to make up our minds on certain fundamental issues. When I hear hon. Members talk about capitalisation of industry and how we should use our finance, investments and the like, I remind myself that there is something even more potent and more important. It is this. Can we make up our minds whether we wish to be an agricultural nation or an industrial nation?

Mr. Colegate

Why not both?

Mr. Shinwell

Some people want the best of both worlds. I will tell the House why it cannot be so. You can promote agriculture up to a certain limit in this country beyond which it is dangerous to go because you will adversely affect the industrial position. Is not that obvious? I am trying to get down to brass tacks. Take, for example, what is called self-sufficiency. People say we must produce all we possibly can from our own soil. I entirely agree with them, if we produce the right kind of things, consistent with the right kind of economy we should employ in relation to our manufacturing prospects and the like. But suppose we were able to produce all the food we want. I am putting the supposition so that hon. Members will see the absurdity of their arguments. If we could produce 100 per cent. of the foodstuffs that we require, does anyone suppose that we could build up a great Mercantile Marine after the war, that we should find work for the men who live in the constituency of the hon. Member for Bridgeton (Mr. Maxton) who work in the Clyde shipyards? You cannot have it both ways. Therefore what the Government must do is to tell the House and the country how to make up their minds on this very fundamental issue. What is it that we want to produce? Do we want to produce wheat in abundance, which we can get from other countries cheaply? Do we want to produce butter in abundance, which New Zealand wishes to sell us, and must sell us if she is to buy any of our exports? Are we going to produce more meat? There, I agree, the people of this country have never consumed as much meat as they ought to. They do not consume anything like the amount consumed by the citizens of the United States. We ought to be producing more meat, more eggs and more milk. There is a great field of possibilities lying open to us in the consumption of more liquid milk. That is the way to help agriculture. But do not, whatever you do, help agriculture at the expense of the industrial and manufacturing interests of the country. You have to make up your minds what you want. Moreover, when I hear Members talking about the need for international co-operation, I ask them, Is it possible to promote anything in the nature of self-sufficiency and still maintain the desire for international co-operation? International co-operation depends for its very being on the readiness of Governments and nations to renounce their economic sovereignty. They must be prepared to fit in to the economic needs of all the other countries, and, of course, it must be mutual. It cannot be exclusive.

May I say a word about the subject of exports, which has obsessed many Members? I am going to treat it in perhaps an unusual fashion. We need trouble very little about our exports, for the simple reason that, unless other countries are prepared to buy our goods, they will discover that it is impossible for us to buy theirs. I agree that trade does not take on a bilateral character. It is multilateral. It is true that in Canada they are developing secondary industries. The question they have to consider is whether they can afford to develop secondary industries, which means not taking manufactured goods from us, if we say, "We are sorry, but we cannot take your butter and your cheese." They have to make up their minds equally with us. The problems are not ours alone. They are the problems of every country in the world. Even the great United States, with their almost illimitable resources, their great stocks of gold and their great industrial capacity, upon which even the war has hardly made an impact, have their troubles. Their problem is to know how to dispose of their surplus.

That brings me to something which is perhaps of primary importance. I have read the terms of the Atlantic Charter, and I applaud its fine sentiments. Equally I have read the speeches of Henry Wallace, Sumner Welles and John Winant, all estimable gentlemen, portraying high ideals. I equally recognise the fine idealistic spirit of President Roosevelt. But he is not America, neither is Mr. Winant, nor are the other gentlemen to whom I have referred. They have their ideals, but they do not represent the economic views of the people in control. If international co-operation depended on President Roosevelt and Mr. Winant—I hope I may be forgiven for mentioning the name of the Ambassador—and Mr. Sumner Welles, it would be successful. But it depends on the denizens of Wall Street, on the farmers of the Middle West, on the motor manufacturers of Detroit and the steel manufacturers of Pittsburg. There are a great many considerations. I detect, in my reading of the American Press, and in information conveyed to me, certain economic trends which appear to me to indicate that, unless something is done to arrest it, the United States will proceed along the path followed by financial and industrial interests in this country in years gone by. They will seek to make their investments in every part of the world, and for a time there will be advantage to themselves and to their country, but in the long run disaster will come, as indeed it came to us in the loss of exports and in the diminution of our invisible exports, because you cannot live at the expense of your neighbours. You can only live and be comfortable if your neighbour is living comfortably and decently also. The basis of international co-operation is a high standard of living, the highest possible, for the people not only of this country but of the United States, China, Russia, India, our Colonies, backward countries and devastated Europe. I did not agree at all with the hon. Member who spoke about a possible return to Ottawa. I think Ottawa was fatal. You cannot build a ring fence round the Empire.

I want to make a suggestion. The Government might very well create an economic council independent of them-selves. I agree that the Government must study and investigate, but, after all, they are limited by the fact that they are the Government. I should prefer to see them setting up an independent economic authority—industrialists, trade union representatives, Members of this House, economists, technicians and scientists—and let them examine every aspect of the problem that we are discussing to-day. They ought to get to work now. There ought to be no delay. I hope the Government will examine that proposal and see whether it is possible to put it into operation. We have to make a firm declaration that we are ready to enter into arrangements with other nations throughout, the world in order to reach the primary objective, namely, the raising of the standard of life of the people. Moreover, we must agree at the end of this war to take the power of investment out of private hands. We must agree that something will be done to bring the key industries and services under public control. We must also agree to develop scientific research in every direction. Let us reflect on the past. Let us consider what happened in the inter-war years. Let us consider the sacrifices of our gallant men on the high seas, in the air, and in the various theatres of war, and as we reflect on those sacrifices and the errors of the past let us say, "Never again."

Major Thorneycroft (Stafford)

I feel that the chief quality which the House will demand of any speech of mine at this stage of the Debate will be brevity, and I shall seek to satisfy the House at least on that point. It is a privilege to follow the hon. Member for Seaham (Mr. Shinwell). I shall not attempt to reply in full to his speech because, after all, my right hon. Friend the President of the Board of Trade is on the Front Bench for that purpose. I listened to it with mixed feelings. I admired, as I always do admire, the hon. Member's great eloquence. I admired the conviction with which he spoke and his debating skill, but at the end of his speech, while he had convinced me that something was seriously wrong with the present state of our affairs, he did not leave me much clearer as to what should be done to put it right. He persuaded me, although I needed no persuasion, that the standard of living of our people had to be raised, but he did not bring to my mind constructive proposals for bringing about that happy state of affairs. I am not sure that at this stage in our history—and I say this with some hesitation because the hon. Member is a much more experienced Member of the House than I am—it helps matters very much to make the debating point which he made, that the political background of the Chancellor of the Exchequer is different from that of my right hon. Friend who is to reply. The one thing which will prevent us from solving the great problems with which we, are faced will be to enter into party strife across the Floor of the House.

The House is grateful to the Noble Lord the Member for Horsham (Earl Winterton) for initiating this Debate. We should be grateful to him also for the manner in which he did so. If the Noble Lord has any faults—and I do not think any of us would admit that he has—it is that he sometimes makes needlessly provocative utterances. He introduced this discussion, however, in such a manner that we can consider the problems with which we are faced, calmly, without party arguments and without reopening old political sores. My hon. Friend the Member for East Wolverhampton (Mr. Mander), who is a neighbour of mine, tried to divide the Tory Party into those who were over a certain age and those who were under it. I can assure him that no division of that kind really exists. The problem which we are discussing is an important one because, on our ability to solve it hangs the future of the next 20 years and possibly at the end of that time the question whether we shall indulge in war or peace.

I will try to indicate the lines along which we should seek to solve that problem. The promoters of this Motion and other hon. Members have emphasised the need for co-operation with the other United Nations. It is obvious, and everybody agrees about it, that if we are to go back to the old system of scrambling for the markets of the world and of bitter trade rivalries we shall be faced with exactly the same difficulties and problems that we experienced in the 20 years between the last war and the present one, and that therefore we must develop some system of international co-operation. If we are to say to the Government, "Go to the other United Nations, agree with them, make arrangements with them about where we are going to trade," we must also say to the Government, "We will give you some power over the production policy of this country." Let me illustrate what I mean by a practical example. If the Government agree, say with the United States of America, that Great Britain could export motor cars to the Argentine but not to Brazil, we must also give the Government power to see that the motor cars are produced and are in fact exported to the Argentine and not to Brazil. The Noble Lord who moved the Motion suggested that this state of affairs might be brought about by our economic and financial policies. These are wide terms and may include a multitude of different methods. I am bound to say that I agree with other hon. Members that the old financial methods, the old political palliatives that we have tried in the past have undoubtedly failed. If the history of the 20 years between the last war and this one has taught us nothing else, it has taught us that lesson. If we learn that lesson we may avoid the same sad sequence of events—a world immediately after the war in which everybody is clamouring for goods, industrialists are rushing into the easiest markets trying to get the quickest turnover and the largest profit, and at the end of those three years in which there was a kind of financiers' paradise, the same slump, the same misery, squalor, wretchedness and eventually war.

That is the picture we must avoid this time. That was first brought home to us in the slump of 1929, and since that period there have been three schools of thought. There have been the totalitarians who believe in outright compulsion; the new dealers and the planners who believe in self discipline; and the school of laissez faire about which I will not say too much as I do not want to enter into needless controversy. Let us frankly admit that before the war the totalitarians met with a great measure of success, at least in reducing and indeed eliminating unemployment in their own countries. So successful were they that they even went to war in order to impose their system upon the rest of the world, with the result that the planners have had to plan as never before. How far are we going to keep control of the plans and schemes after the present conflict is over? I do not want to enter into a discussion as to whether Socialism is a feasible solution or not. I cannot do it in the time available. The right hon. Gentleman the Member for South-West-Bethnal Green (Sir P. Harris) suggested some great economic staff. I only want to utter this one word of warning. Do not let us try to do things too big and fail. General Smuts, when addressing the House some time ago, said something which was very wise. After the last war, he said, we failed mainly because we tried to make our schemes too grandiose. Let us this time be modest and practical.

There are two steps I would suggest that the Government might take. One, as a matter of principle, is that they should take a much more active part in promoting the selling of British goods abroad because that is a matter in which the totalitarian States excel. The other is that at this moment they should give a lead to some of those industries which have to start up immediately after the war, such as the knitted goods industry, which has contracted during the war. Let the Government say, "Here is a likely market that we hope to give you: get your designs out now so that they will be ready as soon as the war is over, and you can jump into full production." Those are practical methods which I feel could be adopted forthwith.

Other hon. Members have dealt with this matter on a somewhat wider field, but all of them have made, and probably everyone who speaks is entitled to make, some reference to the Beveridge Report. I want to say only this about it, that people are asking "Can we afford schemes of this kind?" We spent 20 years asking whether we could afford reforms or not. That type of argument relates to a situation which has disappeared, to a world in which high taxation of a very few men, was used to provide inadequate benefits for a very great number of people. We have passed that stage. The contributions which we are asking from people now are not to be made in pounds, shillings and pence, but are to be contributions of labour, endeavour and effort. We cannot sell schemes like that on the basis of three-pence for a shilling. We have to go to the men and say "You must make sacrifices," and to the employers and say that they must accept a greater control over production, must allow the workers to have a bigger part, not merely as regards the wages paid but as regards the quality of the goods produced. We must tell the workmen that no longer can they sit in some remote Welsh valley, starving mentally and physically, because they cannot accept a proposal to be separated from their homes, removed to another part of England and taught another trade. These are hard things to ask of any man, yet these are the things we must do, and these are the sacrifices the people must accept, if we are to succeed in providing social security in the future.

Major Sir Edward Cadogan (Bolton)

I hope that the President of the Board of Trade will be more indiscreet than was the Chancellor of the Exchequer. I put my name to this Motion with the object not so much of making a speech or of listening to speeches on world economics, as of discovering whether those admirable principles which the Chancellor of the Exchequer enunciated in his speech were going to be translated into practice. It is one of the most urgent subjects which can come before the House, yet we have had no reply from the Government. The hon. Member for Seaham (Mr. Shinwell) evidently extracted rather more from that speech than I did. I confess that at the end of it I felt just as ignorant as I did when it began. I had hoped that the Chancellor would, at least, have had some interesting announcement to make on what was the Government's policy, possibly that he would inform us that yet another Ministry had been set up to inquire into this all-important subject. That is not very fantastic, because only last week Parliamentary sanction was given to the establishment of a new Ministry whose rather anomalous function will be to explore the possibilities of every conceivable plan for the rehabilitation of this country except the one plan upon which success can be based. I feel that before the Government set about planning the superstructure at least they should lay the foundations. It is just because I am as solicitous as any other hon. Member that the plans for the transfiguration of the old world shall, materialise as soon as possible that I am insisting that the plan upon which all other plans depend should have precedence. Unless that is conceded our investigations in other directions will be a mere waste of our time, our resources and our opportunities.

We have been told that we cannot expect the Government to apprise us of their proposals for the conduct of business and industry and trade because the post-war circumstances are much too conjectural to allow them to do more than touch the fringe of the subject. If we are to be told that it is premature to approach our Allies and our Dominions with the object of concerting a policy of post-war trade, all I can say is that surely it is infinitely more speculative to concern ourselves with plans, the merits of which we cannot possibly appraise unless we know where we stand. I would ask the Government to take us into their confidence. There never was a more golden opportunity for resolving these problems internationally. Never before in history have the minds of Americans and Englishmen been in so close and so mutual an understanding, arising from their common efforts and their common sacrifices. Never has there been a more favourable opportunity for an interchange of views with the Soviet Republics, whose people, by their heroic achievements, have evoked the admiration of every shade of political prejudice in this country. Who knows what reactions may be created after the war? Who knows what jealousies and animosities may not be engendered to cut right across a favourable and satisfactory settlement unless, while our mutual attachments remain unimpaired, we are ready with a broad-based plan which will inure to the prosperity of our peoples?

One of the questions I want to ask the President of the Board of Trade is whether there are trade delegations operating in the United States of America, in the South American Republics, in China, in the Soviet Union and in our Dominions? Only a day or two ago we were told there was a Pact between Canada and the United States. Are we concerned it that? Have we any representatives working on that? Hitherto we seem to have devoted our attention to one side of post-war planning and one only, devising specifics for curing the illnesses of States without curing the effects of disease in the body politic. There has been no attempt to discover the causes of our infirmities.

I do not want to allude to the Beveridge Report, but I will say this, that Sir William Beveridge has protested, and I think with every justification, against a particular form of criticism which has been brought against his scheme. It has been said that he makes no provision whatever for employment, that his scheme does not provide one individual with one day's work. Work is one of the assumptions—assumption C, I think it is—on which the success of the scheme depends, but the scheme does not claim to give anybody a day's work, except a large number of administrative officials. Hon. Members who have been industrious enough to read the Report from cover to cover—and that is more than a day's work—will no doubt agree with that statement. The function of Sir William Beveridge is that of a doctor who provides the specific to cure the invalid, and not that of the scientist who institutes research into the causes of disease in order to find a remedy. The scientists sit on the Government Front Bench and they are looking much more complacent than the circumstances warrant. I agree that in this imperfect world it will be impossible to eradicate illness altogether, and we cannot dispense with the services of the doctor, but at least we can, by wise planning hope to be able to reduce illness to a very low point indeed.

I would now say a word about security. In recent years we have heard a great deal about it, but State assistance cannot provide assistance for anyone. Therefore, to make State assistance the cornerstone of your new structure is surely a confession of weakness and a revelation of impoverishment of ideas. We are becoming, as a nation, too assistance-minded. I am hoping that when the war is over, our merchant vessels, again, heavily laden, will ply the seven seas and that we shall become commercial-minded again and a nation of shopkeepers—I am not afraid of the expression—inspired and invigorated by the profit motive. I am not scandalised by the profit motive. Nor were the leaders of the Soviet Republic. They quickly discovered, in their great experiment, that the profit motive has the essential concomitants of efficient work and punctual result.

Security can only be attained, as far as it can be attained in human affairs, by the fulfilment of two conditions. The first is that finance, industry and commerce should be planned upon a rational basis. That is the permanent condition upon which our prosperity depends. There is a second condition. I must not go into it at length or I shall be out of Order. It will probably be inevitable that, for a time at least, the United Nations will be called upon to maintain a powerful military force, to which we shall have to make a considerable contribution, until we have devised some more effective expedient against wars of aggression than any hitherto suggested. There has been no conspicuous mention of that form of security by the planners, although it was just the neglect of it in pre-war years that landed us into the second great world calamity. Its and a similar neglect will land us into yet another.

It is common practice in these Debates on post-war plans to adduce statements about what the men at the front are supposed to be saying. In this regard, what the soldier says is evidence of the trend of popular feeling among the people to whom we owe most. I receive a number of letters from all sorts and conditions and types of the younger generation who are serving in the front line, and I find that the kind of security about which they are anxious is not that which the State provides. It is not mentioned. They are anxious about the security which work alone can give. The man serving at the Front no more wants the bounty of the State than he wants the charity of the individual. He wants to assist himself. We shall, therefore, betray him if we do not make it our first consideration to plan for him appropriate and remunerative employment, and the only way in which we can be successful in that quest, is for the Government to apply themselves without delay to the inter-related problems of finance, industry and trade. I feel some diffidence in speaking about finance, but it is the duty of every Member to insist that the Government should give their best attention to a matter of such urgent importance. The problems that claim the attention of the Government are those of wages, exchange and the methods by which the war in all its implications—war damage and everything else—is to be financed now and hereafter.

As to wages, I am willing to concede to the hon. Member for Seaham (Mr. Shinwell) that if we can establish an equilibrium between world production and world consumption, if wages are paid, on whatever scale, which will keep consuming power in step with producing power, we need not fear that there will be any tendency towards inflation. Are the Government addressing themselves to this all-important problem in any other way than by patching up dispute after dispute, on no coherent or consistent principle except that of postponing the day of reckoning? Have the Government hitherto displayed the smallest indication that they have a wages policy, other than one of drift from one predicament to another still worse? I leave the problems of exchange to the experts, although, as the Noble Lord said yesterday in opening the Debate, the experts differ fundamentally on the matter. No doubt the dispute on the respective merits of a single international currency at agreed rates of exchange, subject to revision at stated periods, will go on merrily until the Government take a hand.

I would say a word on our vast commitments, present and prospective, which all lead back to the problem of taxation. The Chancellor of the Exchequer alluded to this matter. There is a new problem in direct taxation. In 1913, on the eve of the last war we spent on the Social Services, including education, £93,000,000. On the eve of this war we were spending on the same services the fabulous figure of £544,000,000. On the question of whether we can afford it or not, I would draw the attention of the House to a new aspect of taxation, which is that the phrase "Exchequer contribution" has hoodwinked the public. The Exchequer contributes not one farthing except what, at great cost in administration, it extracts from the pockets of the people. It is egregious nonsense to say that there are three parties to State assistance, the Exchequer, the employer and the employed. Individuals or corporations of individuals pay it all. The Exchequer contribution is paid for by the taxpayers, who are becoming more and more identical with the beneficiaries of assistance as more and more of the lower-grade incomes come within the ambit of the Income Tax. Gone are the days when wealthy corporations and individuals paid the whole bill. That have certainly not profited considerably by State assistance from those days.

I put down a Question recently to the Chancellor of the Exchequer asking the total number of individuals whose Income Tax had risen above the Income Tax exemption figure. The answer I received was not up to date. It was that the figure was something in the nature of 10,000,000. It has risen since that time. As you redistribute income, so you redistribute Income Tax and the more ridiculous becomes the anomaly of the State taking away with one hand the benefit it gives with the other, at immense administrative cost, for which the taxpayer also pays. Surely the right hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris), whose name is associated with the Motion, is still a sufficiently devout Gladstonian to agree with me that it would be better than this sleight of hand performance if the money were left to fructify in the pockets of the people. I do not know in what year Mr. Gladstone said that, but I only know that he did say it, and I hand that maxim about taxation on to the Chancellor of the Exchequer.

I represent an industrial town in the North where the staple industry in normal times is one of the most considerable of our export trades. The cotton industry has had its future jeopardised by the exigencies of war. The managers and operatives in that industry will, I am convinced, give me their sanction to tell the House that they do not rely for the security of themselves or their industry upon schemes of national assistance and so-called Exchequer contributions, which they pay themselves. They are wise enough to appreciate that their prosperity depends upon the natural laws of supply and demand. Whereas given the raw material and the labour their productive capacity is limitless, they want to know how they can revive the demand for what they themselves produce. They know that the remedy is not to curb production but to increase consumption until a balance is established between the two. I want to know how this is to be brought about. I am sure that they agree with me that any plan with that objective takes precedence of any plan upon which enthusiasts with light hearts and light heads are working off so much of their superfluous energy at the moment.

How, then, are we to revive our export trade? We can surely agree that the prosperity of one nation depends upon the prosperity of all the other nations with which it trades. A corollary to this proposition is that competition for an export surplus is no longer desirable. But if it be true that the higher the standard of living in other countries, the higher will our standard of living become, I would like to ask the Government this question. At present many of the countries that exported to England raw material, foodstuffs and commodities are themselves absolutely destitute, down and out, suffering from the depredations and spoliation of the Axis Powers—the Scandinavian countries, the Low Countries, France, the Balkan States. Is it to be supposed that they will recover their prosperity immediately? What are the Government doing about that? There will be all the problems of exchange, shipping, and so forth in these countries to which the Government must address themselves, or there will be no question of higher standards of living in those countries helping our standards in this country. I do not wish to be misinterpreted. I am no pessimist, no defeatist in these matters. I believe that if the Government, in conjunction with our Allies and our Dominions, are capable of devising a sound economic policy we shall ultimately be able to realise some of our most extravagant dreams. But it is upon trade, not upon State assistance, that we shall rely for recovery after the war. We should, therefore, concentrate on the solution of financial, commercial and industrial problems.

Schemes of State assistance may defeat their own object in the peculiar circumstances in which we shall find ourselves after the war. I have already stated two of my main objections to them. One is that they are a cure, not a prevention. Another is that they are paid for by the beneficiaries themselves. But there is a still stronger reason. Although State assistance may create consumers, it does not create producers, whereas the prosperity of our trade and commerce will create consumers who are also producers. State assistance entails the operation of a vast bureaucracy which rivets still more firmly its shackles upon industrial initiative and enterprise in business. Prospering trade gets rid of this devastating encumbrance. Worst of all, State assistance is a dangerous counter in the hands of the aspiring politicians at Election time.

In my youth I read for history schools at Oxford. We were encouraged in the pursuit of these studies to make ourselves familiar with the political history of the 18th century. There was one feature which caught the eye. That was the bribery and corruption which permeated and prostituted all ranks of human society. We flatter ourselves that we are rid of this pernicious influence in our public affairs, but are we not substituting another form of corruption far more insidious? At least in the days of Sir Robert Walpole politicians bribed with their own money. Nowadays we bribe with the resources of our fellow-citizens. There is a strong temptation for a candidate unhampered by any rigid scruples to denounce the niggardliness of the Government in State assistance and to promise his support, if returned to this House, for larger sums of State largess, taking to himself quite undue credit for a wider sympathy with suffering humanity than the candidate who places a more conscientious interpretation upon his duties as a representative of the people.

I wish to say finally that if the Government are concealing an impoverishment of ideas upon the industrial and commercial future of this nation by throwing dust in our eyes with schemes of State assistance, I will be no party to such a conspiracy. I would prefer to be deprived of the privilege of representing people in this House than to advocate doles as a solution of our economic problems. I do not wish to see the next generation growing up spineless, and I do not wish to see us sink to the level of a nation of pensioners. I want a message from the Government that I can take back to my constituents assuring them that every effort is being made by the Government to plan for world trade and recovery, by which, alone, our people can become once again proud, self-respecting, and above all, self-reliant.

The President of the Board of Trade (Mr. Dalton)

We have had a wide-ranging Debate for two days on a Motion equally wide in its range, for which we are grateful to those who put it on the Paper. I cannot hope to deal with all the many points which have been raised by many speakers, but I will seek to deal with a number, particularly those which have been referred to by more than one hon. Member. May I begin by saying something on the subject of controls, which has been referred to by several hon. Members, notably to-day by the hon. and gallant Member for Bewdley (Major Conant) who I think is not, at the moment, in the House, who made a very thoughtful and interesting speech emphasising the problem of maintaining controls in the post-war period and getting the public to see that the need will be even greater then than now. The hon. and gallant Member for Stafford (Major Thorneycroft) also referred to the same subject. On this matter of controls my right hon. Friend the Chancellor of the Exchequer yesterday made a number of observations on behalf of the Government which I think would well repay close reading in the OFFICIAL REPORT. My right hon. Friend prepared the mind of this House and of the country for the continuance of many of our war-time controls in the immediate post-war period, and he said, among other things, this: We shall need to maintain for a time at any rate a considerable measure of control of our economic life, and I believe that the majority of our people are prepared to accept this not only as inevitable but also as in their best interests."—[OFFICIAL REPORT, 2nd February, 1943; col. 816, Vol. 386.] I am sure he is right. The notion of controls, of rationing, is regarded by people in time of war as being fair. When there is shortage they regard it as right that the Government should intervene to make sure that these short supplies are distributed in the most effective fashion for the war effort and most effectively from the point of view of equitable distribution. My right hon. Friend the Chancellor went on to say: It may well be that it will be desirable to continue the policy of the stabilisation of the cost of living and the prices of goods in common use on the lines we are maintaining to-day. He added: Two other controls which I think"— and this is very important— would be regarded generally as in all our interests are the control, of the release of raw materials and the control of issues of capital, in order, in the case of the latter, to see that capital irrigates those developments which are nationally most important and to help, with other measures, to make it available on reasonable terms."—[OFFICIAL REPORT, 2nd February, 1943; cols. 816–7, Vol. 386.] All that is extremely important, and I am very glad my right hon. Friend put the matter so clearly, in order that our public opinion may be educated on the matter. It is not the first time that a Member of this Government has spoken broadly in this sense, but he developed it in more detail. The Foreign Secretary, in a notable speech at Leamington on 27th September, 1942, said: But if, once again, we seek to drift back to the good old times, which were not really so very good for many among us after all, if we imagine that all controls can be swept aside or that we can return to the economic anarchy of the old days.…then certainly we shall bring not only discredit but disaster upon ourselves. And it will be well merited. Nor have Labour Members of the Government been silent on this matter. I conclude my quotations with one from a speech by my right hon. Friend the Minister without Portfolio, on 1st September last: So long as these shortages last we regard it as inevitable that we must continue with a system of rationing so that what is available is fairly shared. These quotations state, in varying forms, with varying emphasis, one doctrine, which is held by all Members of His Majesty's Government. We are entitled at this stage of the war to look back to the immediate post-war period of 1920, in order to learn from experience of errors committed then. It is common ground among all parties that grave errors were committed then which it is within our power to correct, in the light of that painful experience and of developments of technique and of policy evolved during this struggle.

The Noble Lord, to whom for the way he moved this Motion we are indebted, was particularly insistent on the importance of avoiding the inflationary experience which fell to our unhappy lot last time. A considerable part of the inflation last time took place not during the war itself but in the two years following the war, when there was a complete failure to control prices or to exercise any of these other controls to which my right hon. Friend the Chancellor and others have referred. It is an extraordinary fact—and I would like the House to bear with me while I cite one or two figures from a very extraordinary passage of history in the last post-war period—that after the last war demobilisation presented no problem at all from the point of view of employment. I will give reasons why that was so in a moment. There are morals to be drawn from this simple recitation of facts. At the end of January, 1919, we had demobilised nearly 1,000,000 men, within two months of the end of the fighting. By the end of March, we had demobilised more than 2,000,000. By the middle of February, 1920, the full demobilisation of nearly 4,000,000 fighting men had been completed. During all that period there was no unemployment problem. I will give illustrations to my hon. Friend the Member for Seaham (Mr. Shinwell); he need not look at me in that interrogative way. Not only did we bring back into employment in civil life the Fighting Forces of that time, but we transferred to peace production a great army of munition workers. There were no complete unemployment figures, such as we have now, but there were very valuable trade union evidences, and the trade union percentages show an unemployment figure of less than 2½ per cent. throughout 1919–20. Even in the engineering, shipbuilding, and metal trades, which are especially susceptible to unemployment, the unemployment percentage was just over 3 per cent. It was not until the summer of 1920, six months after this dual process of demobilisation had been completed, that the slump caught us. Having no plan, and having failed to control prices and to control our economic transition from war to peace, the slump caught us badly, and unemployment rose rapidly. The trade union percentage, which had never been above 3 per cent. and had been down to 2½ per cent., rose rapidly to 15 per cent., and in the case of the engineering, shipbuilding and metal trades 22 per cent. I apologise for having introduced this brief story, but it has a bearing on our present problem. If you allow inflation you will temporarily solve your demobilisation and unemployment problems, but only, as the Noble Lord has said, at the cost of an abundant reaction later on. The Noble Lord was right when he said that we must plan better this time.

Then there is the question of prices. During the last war wholesale prices rose from an index figure of 100 at the outbreak of the war to 226 in 1918, and continued to mount until they reached 295 in 1920. In other words, wholesale prices rose by 1920 to nearly three times what they were at the outbreak of war, a large part of this being a post-war increase, and they collapsed to 182 in the slump year of 1921. This time we have done much better, and the Government are entitled to collective credit. If there are to be differential bouquets I suppose that, just as I would claim credit for anything that has gone well at the Board of Trade, my right hon. Friend the Chancellor is entitled to credit for anything that has gone well in his Department. On the matter of price control and price statistics, it is worth observing that in the fourth year of the war wholesale prices are held at an average of 155, as against 100 at the beginning of the war. This has been done by well-directed subsidies in certain directions, and it has prevented the price level getting out of control, as happened last time. There is much to be said for continuing this policy into the transition period.

Reference has been made by the hon. and gallant Member for Bolton (Sir E. Cadogan) to cotton, and other hon. Members are interested in the subject. Let me point one more ugly moral from the last post-war period. Let me relate this again to what was said on behalf of the Government by the Chancellor of the Exchequer. We cannot allow cotton prices, profits, and flotations to run riot again, as they did after the last war. It was not the fault of anybody in the cotton industry; it was not the fault of the cotton operatives, nor was it the fault of the cotton employers, except in so far as some of them may have listened to the siren voices of London financiers—being simple-minded Northcountrymen, unaccustomed to metropolitan trickery. But what happened to the price of cotton? Cotton cloth rose from an average of 3d. per yard in 1913 to 9d. in 1918, to 1s. in 1919—observe the continuing rise after the war was over—and to 1s. 5d. in 1920, by which time there was an increase of some 400 per cent. on the pre-war prices. It then fell to 11d. in 1921 and to 8d. in 1922, but before the fall began the company promoters had bought up mills and floated them upon the public as new ventures with much increased capital, and during this boom mills changed hands at fantastic prices. Mills previously valued at £1 a spindle changed hands at the level of £8 a spindle, and some years later when the machinery in these same mills was being scrapped under the redundancy scheme those spindles which were £8 had declined in value to 5s. In the meantime quantities of savings had been lost, including the savings of a large number of operatives in the cotton industry, who wisely or unwisely, in this case unwisely, had invested their own small savings in the cotton mills themselves. I have mentioned these matters in order to give basis to the observations made by the Chancellor of the Exchequer yesterday that in the post-war period we should continue not only the control of prices, to prevent this violent price fluctuation to which I have referred, but also to control all capital issues to prevent the flotation of companies of this character which evidently contribute nothing whatever to national productivity or well-being. It is a definite example of the principles indicated by my right hon. Friend yesterday.

I turn to another control problem which I know is causing some concern in industrial circles, and that is the question of the disposal of Government surplus stocks. There again we have the actual example from the end of the last war of what to avoid. At the end of the last war there was set up a Disposals Board, which acted upon the principle of selling as rapidly as possible at any price obtainable all Government stocks of goods. Motor tyres in particular were sold by the Disposals Board for 5s. and resold by various gentlemen who had just bought them to the public for £6. That was not even good business for the Treasury, as my right hon. Friend will be the first to admit. This time I have no doubt we shall proceed on different lines. I suggest that this time we must neither drift nor be driven by shortsighted interests into getting rid, as quickly as possible by sales at any price to whoever will come forward to bid, of these large stocks, which will be greater than last time, of goods desirable and necessary for post-war purposes. We must on this occasion have an orderly disposal which will have regard, on the one hand to the interests of consumers. We must not allow profiteering at the expense of consumers, particularly in consumer's goods. On the other hand, regard must be had to the interests of producers in the proper timing of these disposals in regard to stocks and current production.

May I turn to deal with another matter about which I have been invited to say something by several hon. Members who have spoken? The right hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris) asked for more particulars as to what was being done with regard to post-war trade, and a number of other hon. Gentlemen have asked the same question. As this is only the first of a number of Debates that will take place on these post-war subjects, may I be allowed to say a few words as to what is being done in the Board of Trade itself, for which I am responsible, in regard to these post-war problems? We are still greatly absorbed, as Question time in this House demonstrates, by various immediate problems, problems of shortages, problems of the maintenance of essential minimum civilian supplies and problems of organising utility production, price control, fair shares for small retailers, the finding of factory and storage space for war stores. We have found some 64,000,000 square feet—a very large figure—of storage space for war stores alone, all of which is filled and more is demanded. We are also much occupied in helping other Departments, particularly that of my right hon. Friend the Minister of Labour, in the full mobilisation of man-power and woman-power for the war effort and for munition production. None of that must be relaxed. I am sure that in all post-war Debates it is the assumption of every Member of this House that we must not in any way allow post-war considerations in the minds of any business men or any other section of the community for a moment to prevent or limit his continuing to make his maximum contribution towards bringing complete victory as soon as possible.

But, having said that, and that we are not at the Board of Trade relaxing in the least degree in regard to our immediate war problems, I have made arrangements for an intensified study of post-war problems. Consultations are now going forward systematically, both with certain national bodies whom I will mention in a moment and also with particular industries. First, with regard to national bodies, I have instituted a series of consultations in which I myself have already met representatives of the Association of British Chambers of Commerce and of the F.B.I. and also officers of the Trades Union Congress. I hope shortly to meet either the full General Council of the Trades Union Congress or a sub-committee thereof, as may be preferred, and I have also invited to meet me representatives of the Parliamentary Committee of the Co-operative Congress, of the National Union of Manufacturers, and of the British Employers' Confederation, and I hope, having had this series of consultations with these national bodies, to be able to draw up a plan embodying points that are common ground as between them and to pursue further with them a closer study of problems which emerge upon the national plane as distinct from the plane of individual industries.

In the second place, I have set on foot approaches to particular industries, to their trade associations, and I have asked that in the first instance the following matters shall be discussed, industry by industry. First of all, what in the view of the trade associations concerned are the main obstacles in their view to the restoration of full activity in their industry within a reasonable period, say, a period of six months or 12 months after the cessation of hostilities? What do they consider, industry by industry, are the chief obstacles in the way of their making their full contribution to employment and trade activity in this country? How do they consider that these obstacles can best be overcome, and at what point do they wish the Government to intervene to assist them in the matter? I wish to get a conspectus of this, not merely a series of generalities. One may have very interesting discussions with a body representing employers or trade unions or commercial interests on national lines, but I wish also to have the thing explored industry by industry with regard to the particular problem of each.

Mr. A. Bevan (Ebbw Vale) rose—

Mr. Dalton

I think I know what the hon. Member is going to say. I will answer that in a minute. I wish to know whether there are any bottle-necks in each particular industry which we can assist in breaking. The second question I wish industry to consider—and I have asked each of those so far approached to consider it—is, What is the probable condition of their capital equipment at the end of the war?

Mr. Bevan rose—

Mr. Dalton

I think I can answer my hon. Friend.

Mr. Bevan

The right hon. Gentleman is too clever by half to-day.

Mr. Dalton

I am asking each of those industries whether they will indicate how far they consider that the modernisation of plant on a considerable scale will need to be undertaken at the end of the war, and when we have an answer to that question it may be that I shall have to approach my right hon. Friend the Chancellor of the Exchequer to see how far he can assist. In the third place, I am inquiring of each industry which we are approaching what new products have been developed as a result of new inventions and so forth, and what new varieties of existing products or completely new products can be placed upon the market—

Mr. Bevan

Has the right hon. Gentleman asked the Primrose League?

Mr. Dalton

Not up to the present, but may I proceed, because it is conceivable that I may have answers to some questions that are not without interest even to my hon. Friend? I have made it clear to all concerned in the group of industries that I am approaching that before any important decision is taken by the Board of Trade arrangements will be made for consultation with the trade unions concerned. I have suggested to the trade associations that some of these questions—although I leave procedure to them—might be discussed through any joint machinery which may exist within their industry, and I know from contacts I have made in certain directions that that procedure will be adopted in a number of cases. These questions need to be answered industry by industry rather than generally, because until we get a picture of the post-war problems confronting the separate industries we shall not be able to estimate the total volume of employment on which we may reasonably count, nor the obstacles which must be overcome if we are to achieve it.

May I refer again to cotton? I paid a visit last September to Manchester, and I there made contact with all sections of the industry and asked them very specifically to prepare for me, either separately, section by section, or jointly, as they might prefer, their plans and proposals for the post-war development of the industry. I discussed with them their wartime and post-war problems and I gather that certain discussions have been going forward on post-war matters in the cotton industry, and before long I am likely to get representations from them. I have also lately taken the opportunity to visit the Potteries, an industry which is very important both for the home trade and the export trade, and I was told that no President of the Board of Trade had visited the Potteries for the last 20 years. I was also told that on the last occasion his visit was limited to a few hours and that there was no record of any President of the Board of Trade having spent a night in the Potteries. I therefore spent two nights in the Potteries.

Mr. G. Griffiths

And the right hon. Gentleman is still alive.

Mr. Dalton

Yes, I am still alive. I had an extremely interesting time. This industry, in many respects, is in the forefront, although it is not on such a large scale as the cotton or coal industries. It is an important industry, not merely because it is furnishing very important supplies by way of utility ware for the home market, and so helping to its utmost capacity to overcome the shortage of crockery, but also for the future a most important export industry, the craftsmanship in the industry being extremely good. There, again, I have asked them to go into their problems, war and post-war. There is the closest co-operation between the employers' federation and the trade union concerned, and I am looking forward to further representations from them.

Perhaps I may add one further local point. I am planning next month to visit the West Riding of Yorkshire and there to have discussions, again on both war-time and post-war problems, with the woollen and worsted industry at Bradford and the clothing industry at Leeds. I am very grateful to the Leeds clothing industry for the way in which they have responded to the appeals I have made to them both for increased production and in respect of various concentration schemes which we have lately been carrying through with their full co-operation. Finally, in terms of what is being done at the Board of Trade, I would like to refer to my hon. Friend the Secretary to the Department of Overseas Trade, who, for a considerable time, has been acting as Chairman of a Committee which has been doing most valuable work, the Committee about which I answered a Question yesterday put by my hon. Friend the Member for Oxford (Mr. Hogg), the Committee on Post-War Export Trade. That Committee has collected a very great deal of useful material on the special problems of restarting the export trade after the war. They have had discussions with some 52 industries, representing more than 50 per cent. of our export trade in terms of value, including some of the most important, such as cotton, motor vehicles, and others, and they are by no means at the end of their work and have approached a further 36 industries, large and small. I have enumerated all these activities—

Mr. Shinwell

Is that all the Secretary to the Overseas Trade Department is doing?

Mr. Dalton

No, that is not all, but it is all that I am telling my hon. Friend now. Export trade is a very important matter, whatever views may be held about it. I have briefly enumerated all these activities in order to demonstrate that we are, as the right hon. Gentleman the Member for South-West Bethnal Green wished we should be, by no means supine or inactive at the moment with regard to these post-war problems. May I turn to the problem of exports and comment upon some of the remarks that have been made in this Debate? I was glad to find that my hon. Friend the Member for Sea-ham was in complete agreement in his emotional approach to this matter with my right hon. Friend the Chancellor of the Exchequer. The Chancellor declared yesterday that he was neither defeatist nor wishful and my hon. Friend to-day said that he entirely agreed with that, and that he for his part indulged neither in pessimism nor fantasy.

Mr. Shinwell

Not on exports.

Mr. Dalton

I think so.

Mr. Shinwell

No, on the broad question of economic policy.

Mr. Dalton

That includes exports; but in any case, as my hon. Friend said, differences do not arise so much in our general-approach to the matter as at a rather later stage when we come to detailed application. The general approach to the matter of exports is, I judge, fairly well agreed. Nobody wants exports for their own sake. When British labour has gone into the making of goods we would prefer, other things being equal, to use them ourselves. Unfortunately, in this hard world other things are not equal, and we have very often to export them because, unless we do export them, we cannot obtain from outside this island the food and the raw materials which are indispensable if we are to maintain our present standard of living, much less to increase it to those higher figures to which we aspire. We do not want exports for their own sake. We do not want to throw away uselessly the produce of British labour. In this period of war, when everything is abnormal, and under the conditions furnished by the generosity of America and Canada in terms of Lend-Lease arrangements, I have been able, as President of the Board of Trade, to retain in this country for the use of our own civilian population considerable quantities of goods which would normally have had to be exported in order to pay for imports which for the moment do not have to be dealt with on a cash basis. In that way utility clothing, crockery and many other articles have been retained in this country by the deliberate prevention of exports. They have been retained in this country in this abnormal period in order that our own people may have the use of them, but when we enter the post-war period the necessity will reimpose itself of exporting enough to import into this country those things which it is quite impossible to grow at all in this country, such as raw cotton, tea, bananas and the like, or alternatively those things which, except at prohibitive and absurd cost, could not be grown in sufficient quantity in this country to satisfy our proper national demands. That is the sole justification, and a very serious justification, for a substantial export trade.

Several speakers have pointed out that since the outbreak of the war our position has been rendered more difficult through the decline in the total of our so-called invisible exports. That is a fact of which we have to take account. But I think it is reasonable, as the Chancellor of the Exchequer said, and as the hon. Member for Seaham echoed in other language, that we should face this matter without any undue pessimism and without exaggerating it beyond reasonable limits. My own picture is that if we are able to create a situation of expanding world trade in which, instead of having increasing congestion of the channels of international trade, we are able to wash away some of these obstructions—and it is to the interest of no country more than our own to wash them away and get trade flowing in more ample volume between different countries—I believe other countries will be as desirous of buying our goods from us—such goods as we can spare from our total national production—as we should be desirous of purchasing from them what we need in the way of food and raw material. I noted the remark of an hon. Member opposite, "on condition that we make our export industries really efficient." He emphasised that, and so do I. I believe there is no reason why we should not find a ready sale abroad for all these articles which we can spare from our national production, and I agree with the hon. Member for Bridgeton (Mr. Maxton). I do not for a moment accept that the way to make our export trade efficient is to cut wages and reduce standards in the export trades. The Government do not accept that, and it should be possible in such a situation as I am describing to have wages and conditions in the export trades in no way inferior to those in the trades making for the home market.

Reference has been made to international discussions. We are already constantly in touch with foreign Governments and with the Governments of our Dominions and of the United Nations. The hon. Member for Sedgfield (Mr. Leslie) emphasised the importance of keeping in touch both with the United States and with the Government of the Soviet Union. We completely accept that, and we are in touch with them on these matters in the frankest way. I am hopeful that well before the end of the war, well in time to take effect when peace comes, we shall have devised satisfactory arrangements for an international agreement, in the terms of the Mutual Aid Agreement which we signed with the United States, with all like-minded nations who desire with us appropriate international and domestic measures for the expansion of the production, employment, exchange and consumption of goods. The hon. Member for Bilston (Mr. Hannah) yesterday paid a tribute to the Wheat Agreement as the forerunner of other such international plans, and it is encouraging to find that even at this stage of the war, when we are still some way from the end, it has been possible for the four greatest exporting nations as far as wheat is concerned—the United States, Canada, Australia and the Argentine—to agree with us, the greatest importer, on an international instrument which provides, on the one hand, for steady prices in the future and abundant supplies and for what the Vice-President of the United States has called an ever normal granary, and, on the other hand, sets aside as an immediate measure a substantial pool of wheat and flour to be used for the relief of Europe when our armed forces shall have brought liberation to these enslaved lands. That agreement is a forerunner and it is the intention of the Government in due course to enter into other agreements on the same lines with appropriate variations.

I will say a word or two on the subject of full employment as the object of our policy. My right hon. Friend the Chancellor of the Exchequer spoke of it yesterday, but he called it active employment. I do not think there is much intention of making differences between us about these terms. "Full employment" is the term used by Sir William Beveridge in his Report, where it is described as the condition of unemployment amounting to not more than 8½ per cent. of the insured population. So stated that is not, of course, full employment in anything like a literal sense, and my hope would be, as I am sure it would be the hope of my right hon. Friend and other members of the Government, that we should be able to do a good deal better in the post-war period than the lowest that would qualify for full employment under Sir William Beveridge's definition. Our general purpose is to secure that we will come as near as we can to a state of affairs in which every man or woman who is fit and able to work and desirous to work is able to get work under suitable conditions regarding wages and the like. Our greatest failure—and this I think is common ground—in domestic politics between the two wars was the toleration of the failure to cure mass unemployment continuing year after year particularly in certain distressed areas. Only twice within living memory have working people known the realities of full employment, each occasion being during a world war. It will be very hard to persuade people that you cannot do nearly as well in time of peace as you can in time of war, and it is right that it should be hard for us politicians of all parties to persuade them of so fantastic a paradox. Generally speaking, it is not the fault of the individual workman or the fault of the workman's employer that he is out of work. The faults lie elsewhere and it would take a long time to state them. The responsibility is not that of those immediately affected, and it is the duty of the Government and the duty of the House of Commons to help the Government to make suggestions and to find ways and means by which a repetition of this scandal can be prevented.

May I say a word about the distressed areas? The cause of continuous unemployment in the distressed areas by general agreement was twofold: first, the lack of diversity of industries within the areas—and this has a bearing upon policy which I will make clear in a moment—and, secondly, the continuous state of depression in a single industry, sometimes coal, sometimes cotton, sometimes shipbuilding, on which an area was too much dependent. Therefore, the cure for this must be, on the one hand, to do our utmost to maintain and establish those staple industries on a proper footing and to give proper facilities for employment in them, and, on the other hand, as a second line of defence and as a very necessary line of defence in any case, the diversification of industry within those areas.

May I mention a visit which I paid to West Cumberland, one of the pre-war depressed areas, in November last? I went there because in that area there are now a number of industries working under the general responsibility of the Board of Trade. New industries have been brought into that area to a most remarkable extent. Very great credit is due to some of those resident in West Cumberland for the energy and initiative with which they have succeeded in attracting new industries to that area. Whereas in old days West Cumberland was almost wholly dependent upon coal, iron and steel and agriculture, there have now been brought in a number of other industries with good post-war prospects, including high grace alloys, electrical equipment, clothing manufacture, silk, tanneries and other enterprises. These are now operating, in addition to the old industries, which the war has to some extent revived, of coal and iron and steel—now much modernised in West Cumberland—and agriculture, and it looks as though, and I hope it is true, that this particular area is now well set in terms of diversity of industrial equipment for post-war production as well as for war-time production, and that it will be able to avoid in the future the fate which has befallen it and other distressed areas in the past. I suggest that this example leads to the conclusion that we should seek to provide as part of our post-war plans similar arrangements in the other distressed areas of the pre-war period, and also in areas which were not distressed in the pre-war period but which may look as though, if there should be changes in demand, they may become distressed in the post-war period.

This leads me to make an observation on State factories. My hon. Friend the Member for Chesterfield (Mr. Benson) raised the matter yesterday. I should like to say that this also is a matter to which attention is being actively given The end of the war will find us equipped with many large, new, up-to-date factories which have been making munitions. Some of them will still be needed to make munitions after the war. That goes without saying. But others will not be needed for that purpose, and they should be used whenever possible to produce civilian goods. These new establishments, set up during the war, paid for by public money, may well be used either as a home for new industries of a civilian character or as homes for some of the old industries whose present premises are out of date. They would undoubtedly benefit by transfer to better and more modern surroundings.

Earl Winterton

And more healthy surroundings.

Mr. Dalton

Certainly, more healthy surroundings, taken out of the grime and the gloom, out of the old insanitary surroundings, in which so many of our nineteenth century industries were carried on. There are great possibilities for such transfers. I have set on foot an investigation into the possible post-war uses of these factories. I am most anxious that we should explore well in advance, before final decisions are taken, what are the best possibilities for these factories after the war, particularly where—and this is the connection with distressed areas—these factories are situated in pre-war distressed areas where it has been proved that employment was insufficiently diversified. Large sums of public money have been sunk not only in the factories and in the plant but in providing roads, electricity, gas, water, sewers and the like, and it is possible for new townships to grow up in the neighbourhood of some of these factories—not all of them, because not all are suitable—which would be a very great improvement upon some of the old centres of population in which work has gone on for so long.

I repeat that we should approach these post-war problems neither belittling the difficulties in front of us nor with a feeling of defeatism or pessimism. Since the last war, power to destroy has grown enormously. We could never have made such a mess of some of those German cities during the last war as the Air Force have done lately. Closely related to our power to destroy has grown our power to rebuild. The one thing is linked with the other. What man can destroy man can make again. After the war last time, we recovered comparatively quickly, as compared with the pessimistic expectations of many, the standard of life of the pre-war period. By 1924, it has been calculated, we had got back to the same real income per head as we had had before the war; in other words, it took six years from 1918 to get back to our average pre-war standard of living, six years which contained inflation, deflation, slumps, heavy unemployment and the rest. We should be able, if we put our backs into it, to get back to pre-war standards more quickly now, and then to make a fresh advance.

I referred to the possibility of an expansion of international trade. We are to bring that about by international agreement. We need, no less, an expansion in our own home market and in the standards of production and consumption among our own people. I suggest that our watchword after the war should be "Expansion" rather than "Restriction." We were cursed by restriction schemes in the period between the two wars. It must be expansion but not inflation; stability of prices, but not stagnation, order in our schemes, but not undue rigidity. Just as we shall win this war only by making the best use of all we have and throwing everything in, whether it is human or whether it is material wealth that we cast into the furnace of the common interest, so I believe that if we can go on doing that in the less dramatic days of peace, we shall succeed, as we did not succeed last time, in winning the peace after we have won the war. In peace as in war we shall need high courage, firm determination, much resourcefulness, and plenty of hard work in order to overcome formidable difficulties, which should not be under-estimated, and to make the most of the great opportunities which will open out before us.

Lieut.-Colonel Sir William Alien (Armagh)

I understand that the Adjournment takes place in a few minutes, but I want particularly to point out to the right hon. Gentleman that, though he is in touch with the cotton industry and with the industry in Yorkshire, to look after their interests, he said nothing about the linen industry of Northern Ireland. We are in touch with the Government, and are doing everything we can for the prosecution of the war to ultimate victory, but I would ask the Minister to get into touch with the linen industry of Northern Ireland as he is with those other industries. I want him to go direct to this industry and not through the Government of Northern Ireland—which is a most important matter. As to the dumping of superfluous stocks, I would point out that no part of the Empire has suffered more from it than the linen industry of Northern Ireland. We had millions of yards of aeroplane cloth dumped on the market and threw many of our people out of work.

Question put, and agreed to.

Resolved, That this House urges upon the Government the essential need so to direct their economic and financial policy as to ensure that employment, industry and commerce may be increased and developed after the war to the greatest possible extent, and for that purpose to co-operate to the full with other members of the United Nations.