CLAUSE I.—(Additional borrowing powers, etc.)

HC Deb 13 March 1946 vol 420 cc1120-66

3.30 p.m.

Mr. Assheton (City of London)

I beg to move, in page 1, line 8, to leave out paragraph (a).

We had rather been hoping that the right hon. Gentleman the Chancellor of the Exchequer would have been here this afternoon to deal with this important matter, but I understand that at the present time he is meeting a, deputation with regard to the problem of Japanese bonds. Although we need his presence here this afternoon, I hope he will give serious attention to what the deputation has to say, and I trust he will give to them a much more responsible reply than any he has so far given to the House.

When the Financial Secretary was dealing with this matter on the Second Reading of the Bill, he put the House in a rather grave difficulty. He explained that the Government were anxious to get the Bill before 31st March, and he went so far as to say that the difficulty for the House was unavoidable, since Clauses 2 and 3 of the Bill must necessarily be passed before 31st March. We quite understood his anxiety to get those Clauses, but we did not see any reason why he should get Clause 1. That Clause, to which this Amendment is directed, gives the Treasury very extreme powers with regard to borrowing. Up to now, there has always been, in recent years, a National Loans Bill introduced into the House after the Budget. On this occasion, the Clause, which covers the same business as that with which the National Loans Bill dealt, is part of this Bill, which is innocently called the Miscellaneous Financial Provisions Bill. One would not imagine from the Title, that this Bill was a very important one, but, in fact, it gives the Government powers to borrow the whole of next year's expenditure, and £250 million in addition. If the Amendment is not accepted, the Committee will have vested these enormous borrowing powers in the Chancellor.

I suggest to the Committee that it is not reasonable that the Government should ask for such extraordinarily wide powers until the Committee have heard from the Chancellor of the Exchequer how much he feels he is likely to want to borrow. If the Chancellor and the Financial Secretary are not in a position now to give some indication of how much they will want to borrow, and how much of next year's national expenditure will be met from taxation, I suggest that the Committee ought to insist on this Amendment being carried, and a National Loans Bill being introduced after we have heard the Budget Statement. The Budget Statement is, of course, the most important financial statement of the year, but it is rather an extraordinary procedure that the Government should ask the Committee to authorize, in advance of any information with regard to the Budget, such an enormous sum of money.

Many people in this country are be coming seriously alarmed at the rate of expenditure, and the extravagance of the Government. I know very well that in wartime, extravagance is very difficult to avoid. In time of war, the Treasury are gravely handicapped in carrying out their normal functions as guardians of the public purse. There are so many sudden changes of policy, events move so swiftly, the skilled technical manpower available to the Treasury is so scarce, that extravagance is almost inevitable in time of war. But now, I suggest, we must seriously examine every detail of our expenditure. The sums of money which it is proposed to borrow under this Bill may amount to £4,000 million or £5,000 million. In the years of highest war expenditure, there was no occasion when more than about half of our expenditure had to be met by borrowing, and, therefore, it seems a very odd proposal that we should be asked, in advance of the Budget and the Budget Statement, to give authority for such large borrowings as this.

For what are these very large sums of money wanted? Perhaps the Financial Secretary will tell us something about that. It is easy to see in what direction money is being spent. There is a vast continuing expenditure at the present time on warlike stores and equipment. ' We learned from Debates in the House only a week or so ago that more than 1,700,000 men and women are still employed in producing warlike stores and equipment. I do not know what the wages bill for such a vast number of people would be, but I cannot imagine that it would be less than £400 million or £500 million a year, if one calculates wages on the sort of levels at which they have recently been running. In addition, there is the vast cost of material, which also adds considerably to the bill. Again, there are large numbers of civil servants being employed. The latest figures in the statistical tables show that there are now 821,000 civil servants employed by the Government. That figure, of course, does not include industrial workers, but it takes into account a certain number of part-time workers. Comparing it with equivalent figures before the war, I calculate that, whereas there are now 821,000 employed, there were, before the war, somewhere between 400,000 and 500,000, an enormous increase. Many of the Estimates which we shall be examining later on will also, no doubt, be making great demands upon the Exchequer. I should very much like to examine closely the estimates of the Ministry of Works, the Ministry of Supply, and the War Office. We might then see where these vast sums of money are being poured out.

There is one aspect of the matter to which I would draw the attention of the hon. Gentleman. He has been engaged, as all his predecessors have been, in encouraging the National Savings Campaign. I ask him very seriously to consider the ill-effects upon that campaign of continued Government extravagance. It is a serious difficulty in the way of those who are supporting the National Savings Campaign to find that Government extravagance is not being curbed. It is not going to be easy to keep up the savings effort, and the Chancellor may not find it nearly as easy as in past years to borrow money. There are, of course, very great advantages to the borrower in obtaining cheap money; but of course cheap money is less agreeable to the lender than to the borrower, and it may be that, if money is very cheap, those who have some to spend or invest may be tempted to spend it as soon as goods become available, and some even may possibly encash some of their wartime savings.

The inflationary consequences of all these things will be very apparent. Up to now the true inflationary position in this country has not thoroughly revealed itself. At present, there is a concealed inflation, but I suggest that the true position is bound to disclose itself in due course. I have always thought that the estimate of 30 per cent. or 35 per cent. above prewar levels, which Sir William Beveridge and others have suggested as being the sort of level at which prices may settle down, is a very optimistic one indeed. I hope that the Chancellor and the Financial Secretary will keep a very close eye on the need for funding, which does not become any easier if the expenditure is still kept on a high level. I suggest to the Chancellor that he must remember that once the Bretton Woods Agreement is through, if it does come through —

Mr. Boothby (Aberdeen and Kincardine, Eastern)

It will now.

Mr. Assheton

It looks as if it will—he will not be able to continue the depreciation of the currency in the same way as in the past. I hope the Committee will realise the extraordinary dilemma in which they are being placed by the Government this afternoon. This Committee is being asked to pass a Bill which contains a Clause giving power to the Government to borrow money, and the Government have so far not been in a position to tell us what this money is to be used for, or how much of next year's expenditure has to be covered by borrowing. The Financial Secretary himself, in the Second Reading Debate, said: We are today asking the House to give us the authorities set forth in this Bill, before the House knows what the Budget may contain. That is a difficulty, but it is an unavoidable difficulty since this time in Clauses 2 and 3 we are asking for additional powers and provisions which it is essential this House should pass before 31st March."—[Official Report, 1st March, 1946; Vol. 419, c. 2297.] We recognise the need to borrow under Clauses 2 and 3 and also that it will be necessary to have a National Loans Bill at some time, during the next month or two, but we do not think it is an unavoidable difficulty. We say that the way to avoid it is to accept the Amendment to leave out paragraph (a) of Clause 1. If that is done, the Government will get all they heed for the present time, and they will then have to introduce the National Loans Bill after the Budget in exactly the same way as they have done annually in recent years. I see no reason why, in time of peace, we should adopt a procedure which this Committee was not called upon to adopt even in time of war.

3.45 P.m.

Mr. Norman Smith (Nottingham, South)

I have not been very deeply impressed, nor, I think have the Committee, by the somewhat self-contradictory remarks of the right hon. Member for the City of London (Mr. Assheton). What, after all, is he afraid of? He has spoken to us about the possibility of extravagance, but we have heard a great deal in the last few days about terminal charges and all the inevitable expenditure that must necessarily come at the end of a war. We have had it made clear to us that while there cannot be a substantial saving in 1946 there is every certainty of such saving in 1947 and thereafter. I happen to have a very long memory, and I well recall what happened at the end of the last war, when the National Debt went on increasing in 1919, 1920 and 1921. Is the right hon. Gentleman afraid of an increase in national debt? Is that what is troubling him? I can hardly think so because in his speech he expressed a very grave concern for the savings campaign. The savings campaign, whether right or wrong, has the effect of increasing national debt, piling up that heavy burden for posterity to carry.

I cannot, as I say, think what the right hon. Gentleman is afraid of. He used a very grim and ominous word which I do not like, which the taxpayers of this country will not like, and which, I think, this Committee will not like. It is a thing for which we have to keep our eyes skinned. He used the word ''funding." Is that what he is concerned about? Does he want the Government to exchange a low interest debt for a high interest one, to pay out 2½ per cent, or 3 per cent. instead of one-half or five-eighths of 1 per cent.?

I never heard such a hotch-potch of conflicting arguments as those used by the right hon. Gentleman. I have a feeling that, in this Committee, one either understands finance or one does not. If one does not understand finance, one is in the happy position of seeing the whole thing very clearly. If one does understand finance, one is in the unhappy position of not being able to see the forest for the trees. Before I sit down I should like to refer to the threat—I love to hear that threat—to my hon. Friend the Financial Secretary to the Treasury. It was to the effect that if the loan went through and we were tied to Bretton Woods my hon. Friend would not be able to allow the currency to go on depreciating as the right hon. Gentleman suggests it has been doing. I put it to the Committee that the powers for which the Government ask are perfectly reasonable, and that, even if they were not, nothing the right hon. Gentleman has said has given any cause either for hon. Members on this side to give way to them on their Amendment, or for any unfortunate taxpayer like myself to believe that things would be any better in the hands of the right hon. Gentleman and his friends.

Viscount Hinchingbrooke (Dorset, Southern)

I have never been able to understand whether the hon. Member for South Nottingham (Mr. N. Smith) is one of those people who understands finance or not. At times, it appears to me that he both does and does not. I wish he had been able to address himself to this Bill, because I assure him it gives ample scope for his intellectual powers and for his knowledge of the subject. In the remarks I wish to make to the Committee this afternoon— and which I hope will not be unduly protracted—I would emphasise that this is an important Bill, as my right hon. Friend has said, and that we must investigate it from many angles. I want to concentrate on five main considerations connected with Government borrowing policy. First, the unlimited sums which are asked for in this Bill; secondly, the system of Government accounting; thirdly, the increasing risk of inflation; fourthly, the future activities of the national savings campaign; and, fifthly, the Government policy of cheap money.

The Press, on the Second Reading of this Bill, entirely misapprehended it. They seized on the figure of £250,000,000, which is associated with the Civil Contingencies Fund, and ignored altogether the £2,700,000,000 odd which is now being obtained from various sources by the issue of Government stock. They called it an adjusting Bill. They quoted a few words of the Financial Secretary and left the public with the impression that only £250,000,000 was to be borrowed before the Chancellor was able to balance his Budget. That is entirely misleading. As the right hon. Gentleman the Member for West Bristol (Mr. O. Stanley) said on the Second Reading, and as my right hon. Friend the Member for the City of London (Mr. Assheton) said just now, this Clause gives the Chancellor power to finance the whole of the central Government expenditure by loan. It is, in fact, a Clause with the widest possible implications. At present, taxation provides about half the central Government expenditure, and therefore half the cover provided by this Bill is redundant and supererogatory. I am astonished that no limit, even one as high as £3,000,000,000), has been put into this Clause.

The Chairman

I am sorry to interrupt the Noble Lord, but he is referring sometimes to the whole Bill, sometimes to this Clause. We are dealing with an Amendment to the Clause.

Viscount Hinchingbrooke

I apologise, Major Milner. I am speaking about the Clause. and about this Amendment which the Committee are considering. Clearly it is no use asking the Chancellor of the Exchequer to put any limit into this Clause. To him, no doubt, as to the right hon. Gentleman the Member for Wakefield (Mr. A. Greenwood) pounds, shillings and pence are meaningless symbols. Nevertheless, I think it very surprising that the Treasury, with its reputation for financial propriety, and exactitude in financial matters, should be guilty of taking a cavalier attitude, in framing a finance Bill. This Clause is sloppy in style and phraseology. It is also dangerous in intent, and I would like to examine with the Committee what are some of the dangers

The 1945 White Paper on the sources of war finance and the composition of the national income shows that out of a total Government expenditure of £5,900 million—I am dealing now in figures to the nearest £100 million— approximately half, or £3,100 million is provided by taxation; £1,000 million from miscellaneous sources, including depreciation in internal assets and increase of overseas indebtedness; and £1,700 million, nearly one-third of the total, by private savings. That £1,700 million is made up as to £800 million in small savings, including an increase in deposits in the Post Office and Trustee Savings Bank, and as to £900 million by an increase in corporation reserves and the reserves of public departments and local authorities. It is with sums of that order that we are dealing in this Clause.

During the war very few issues of industrial capital have been allowed, and consequently the outlet for savings has found almost total expression in the issues of Government stock. I would like to pause here to remark how unsatisfactory and inadequate to the needs of the times, is the present Government system of accounting. Successive Chancellors have sedulously refused to produce anything in the nature of a capital account or Ex chequer balance sheet. No one knows what are the assets of the Government on capital account. The Eleventh Report of the Select Committee on National Expenditure says that the Government's accounts are kept upon what they call "a penny notebook system." We know what are the outgoings of the spending Departments; we know what is the Ex chequer income from taxation and from increases in the National Debt. We know nothing about the composition of Ex chequer assets, and this at a time when nationalisation and State trading are turning—

The Chairman

Now the Noble Lord is out of Order. The sole question is whether these borrowing powers should be given to the Government or not. A review of the whole governmental policy is not permissible.

Mr. Stokes (Ipswich)

On a point of Order, Major Milner. Is it permissible to argue that the Committee should refuse to give the Government such powers because they have a wrong accounting system?

Viscount Hinchingbrooke

I am just about to pass from the point of the accounting system on to other matters.

The Chairman

There may be something in the hon. Member's point, but I do not think hon. Members are entitled to go into detail on that matter. They may mention it in general terms, but not in detail.

Viscount Hinchingbrooke

May I pass from that point and ask the plain question: Does the annual income derived from taxation go to construct permanent Government establishments? We suppose so, but no one knows how many factories are built by the Government out of taxation, or what is their value. Much more important than that—and it applies particularly to this Clause of the Bill— is whether the people's investments in the Funds go to provide old age pensions and other annual outgoings. It may well be the case. No one has the slightest idea, and I suggest to the Committee that that is an extraordinary position, and calls for some drastic revision of the system of Government accounting.

It is easy to say that the Government have not embarked on the course of devoting a large part of the revenue to the creation of profitable, permanent assets. Much more likely altogether the reverse of that is true, and the Government are devoting the proceeds of capital savings and investment to annual expenditure without any tangible return. That is exactly what the Government did in 1930 and 1931. I suggest to the Committee that that is a vicious financial practice, which brings private firms into bankruptcy, and great States into ruinous inflation. Are the Government sliding easily down that slope? I think they are, and fatuously, too. The saying of the right hon. Gentleman the Member for Wakefield about pounds, shillings and pence being meaningless symbols, is well known already to the Committee, but there are other examples as well. There is the Minister of Works, who, during the Committee stage of the Building Materials and Housing Bill, said he had no knowledge of the financial matters of his Department. Several times the Chancellor of the Exchequer and the Financial Secretary to the Treasury have come here and said that they do not know what our commitments are, and in Bill after Bill which the Government introduce are the sinister words, "No estimate of the charge to public funds can be given."

4.0 p.m

But much more serious than attitudes and words, are the facts and figures of the present situation. The National Debt has risen over the last six years, by an average of over £2,500 million per annum, and the fiduciary issue has also increased by £150 million per annum. The note issue has gone up from £660 million in 1939 to £1.615 million today. Average weekly industrial earnings in industry have risen from 53s. 3d. in 1938, to 96s. Id. in July last year, an increase of 80 per cent. The index of wholesale prices stands at 175 today against 100 in 1939, industrial raw materials at 200 and building materials at 158. The cost of building labour has risen 70 per cent. on 1938 prices. It is true that the working class cost-of-living index stands at 131, but that scarcely represents reality, because subsidies to the extent of £300 millions are included in it. Those subsidies themselves operate in an inflationary sense. Do not these figures point to a developing inflationary situation? Manifestly a man who invested £100 in war loan in 1939, finds that it is only worth £50 or £60 today in terms of current prices of goods and services. It is abundantly clear that the pressure of Government money today is, bit by bit, destroying the value of small savings.

It is a completely false economic doc trine that high taxation and a high rate of savings prevent inflation. That is the stock argument of the Chancellor of the Exchequer, and it simply will not wash. Look at the result of both today, after six years of war. The burden of the propaganda of the National Savings Committee is that self-interest and patriotism are served by investing in Government stock. But where is the self-interest, if at the end of six years the money is reduced by half, and where is the patriotism if at the end the nation finds itself landed in a financial crisis? When do we begin to introduce legitimacy into the activities of the Chancellor of the Exchequer and his collaborators in the national savings movement? I believe that the boundary line of propriety is what I said earlier— taxation for current expenditure, savings for capital investments. There must be some mean between the extreme view of the hon. Member for Ipswich (Mr. Stokes) who regards all savings campaigns as a racket, and the more general view that such campaigns are the very essence of virtue and wisdom. To refuse the Government any borrowing powers at all would obviously be to wreck the reconstruction programme, to reduce the strength of our Armed Forces, to destroy our overseas commercial connections, our propaganda services and to impair our prestige. On the other hand, to allow the Government to pursue their present course unchecked would inevitably impoverish the pensioner, and betray the trust which millions of small savers have reposed in successive Governments.

As my right hon. Friend the Member for the City of London said just now the Chancellor and the National Savings Committee must really think out afresh what their policy is going to be over the next few months. Let their appeal to the public be selective. Let it be calculated to promote investment in permanent assets. Do not let us have any more of these vague national savings campaigns which only find expression in higher annual outgoings. I shall certainly continue to attack such campaigns as the raw material for totalitarian equalitarianism at home. Hon. Members opposite might equally well attack them as the raw materials for imperialism over seas. Let us put this so-called mandate of hon. Members opposite to a practical test. Let the Minister of Fuel and Power, in conjunction with the Chancellor and the National Savings Committee, issue a prospectus for the re-equipment of the coal mines

The Chairman

The noble Lord is going too far. I did not follow his argument on the question of the national savings movement at all. Do I understand him to say that he is not agreeable to the paragraph appearing in the Bill on the grounds that the national savings movement is not desirable? If that is his argument, he has not made it clear. All the Noble Lord seems to be doing is to make a speech on the national savings movement, and he is not relating that to the question before the Committee

Viscount Hinchingbrooke

I was trying to make concrete suggestions for the future of the national savings movement, which would produce money directly related to investment and the production of goods, and not given to the Treasury to be spent on current expenditure, thus promoting inflation. I submit that that subject is strictly relevant.

The Chairman

If the hon. Member can relate his argument to the Amendment to omit paragraph (a) from the Clause, I will agree with him. But he is merely indulging in a general discussion of financial questions sometimes far removed from the Amendment. He must relate it to the Amendment.

Viscount Hinchingbrooke

I shall endeavour to follow your Ruling, Major Milner.

I make one more suggestion, and I assure the Committee that it is strictly relevant to the paragraph which we are proposing to leave out of the Bill. I have made a suggestion about the coal mines. I have another suggestion in regard to the Minister of Health, who wants local authorities to build houses. Why should that Minister take money in a round-about way? Why should people who object to his schemes be forced to pay for them? Let us have a housing loan accompanied by the fullest facts and details. It is sometimes said that we cannot identify a particular issue of Government stock, or a particular savings appeal, with the appropriate Department responsible for the expenditure. It is said that all the funds are gathered in by the Treasury and must be brought into the "kitty" and redistributed among the Government Departments. I do not see why that should be so. No private firm of which I know would operate in that way. Apart from the Services, I do not see why the Treasury should not emulate the best commercial practice. The fact remains that if the loan policy of the Government is not to be subject to continuous attacks from this side of the Committee, two things must happen. Inflation must be arrested by a, reduction in loan expenditure and a reduction in the note issue and in the fiduciary issue. Secondly, the impression must be removed that the Government are borrowing very largely for the purpose, not of capital investment, but of current expenditure. More than that, very much fuller information must be given of the character and objects of future loans.

May I say a word on the subject of cheap money? The irony of the present situation is that cheap money, or, to give it another name, an expansionist financial policy, was devised by the economists as a remedy for slumps and unemployment, whereas today we have over-employment and a boom in finance, if not in trade. In those days Lord Keynes was the fair weather bird, soaring aloft in an economic blizzard. Now he hovers there in the light of the sun of his own creation, while my hon. Friend the Member for East Aberdeen (Mr. Boothby) looks on him with adoring eyes. After years of education all political parties have come to adopt an expansionist financial policy as a fundamental part of their doctrine, but now what has happened? In response to the drive for cheap money our economy has switched, violently, from the trough to the crest, from the nadir to the zenith. Cheap money cured the patient of low blood pressure about 1940 or 1941, when the unemployment figures fell to negligible proportions. Now we are suffering from high blood pressure, and are still applying the same remedy—a sad commentary on the inertia of party policies. Cheap money is not a panacea for all economic evils. In a situation of over-employment and developing inflation no Government ought to be on a 2½ per cent, basis, least of all, in my opinion, a Socialist Government. I should like to see the Chancellor of the Exchequer get on to a 3½per cent., or 4 per cent, basis with the utmost celerity. The difference in money cost, for example, in a housing programme, is trifling, beside the rising cost of labour and materials which inflation is promoting from week to week. I doubt very much whether we have the right economic medicine at our bedside. It is incumbent on the Government to put up a much more elaborate defence of their policy on borrowing than they have hitherto seen fit to-do, and to be much more explicit on the terms of any future loans, and also on the character of future national savings campaigns.

I close with some words which were used by the present Chancellor of the. Exchequer in 1939 in the Second Reading Debate on the National Loans Bill, which is repealed, by implication, in this Clause. They are my sanction for having addressed the Committee at such length this afternoon. They are: In the Debate on the Financial Resolution on Tuesday the Chancellor of the Exchequer said: '' It is obviously not in the public interest that the terms of a future loan should be the subject of debate and discussion before the issue is made.' In a certain sense that may be true, but in another sense I think it is profoundly untrue. It is of very great importance that Members in all parts of the House should express their view before the form of the issue is determined upon, in the hope of influencing the decision of the Government regarding the terms of the issue to be made. This is a moment when debate can do no harm and may do much good."—[Official Report, 9th November, 1939; Vol. 353, c. 459-60.] The speaker was the hon. Member for Bishop Auckland (Mr. Dalton), and I invite him now that he is Chancellor of the Exchequer to practise what he then preached.

4.15 p.m

Mr. Driberg (Maldon)

I shall be very brief in expressing the hope that the Committee will reject this Amendment, be cause I feel it may well be that, if certain tendencies which have not yet been checked are allowed to continue un checked, there will be need, in the financial year which we are considering, of unforeseeably large expenditure on certain services. I will give one example of that. It may be that my right hon. Friend the Home Secretary will find it necessary to take extra powers, and, therefore, to engage extra staff, in order to combat the revived and still insignificant, but growing, menace of Fascism in this country. I believe that, during the financial year referred to in the paragraph which it is sought to delete, we shall be feeling the full ill-effects of the meeting which is to take place tonight in the Albert Hall. I am referring strictly to the financial year referred to in the paragraph. Hon. Members may have seen a leaflet which has been distributed by the thousand throughout London to day, adorned with a swastika, advertising 2,000 free seats at that meeting —

The Chairman

The hon. Gentleman's remarks are quite out of Order. I cannot see that the question which he is now raising has any relevance whatever to the Amendment.

Mr. Driberg

With great respect, Major Milner, I am not sure whether you heard the opening of my sentence, in which I said that, in the financial year referred to in the paragraph which it is sought to delete, we shall be feeling the full ill-effects of the meeting which is to take place tonight in the Albert Hall, because there is a growing, although still small, menace, to check which, I believe, the Home Secretary may have to incur extra expenditure during the coming financial year. When right hon. and hon. Gentlemen opposite seek to delete this paragraph, it seems to me that they are seeking to defeat the prime object of the Bill, which is to make provision for certain obligations arising out of or in connection with the war. To my mind, one of our prime obligations arising out of the war is our obligation to those who died to resist this foul heresy of Fascism, which is flaunting itself openly at the Albert Hall in three hours' time.

Mr. David Eccles (Chippenham)

After the arguments of my Noble Friend the Member for South Dorset (Viscount Hinchingbrooke) there does not remain much for me to say as a reason why this paragraph should not remain in the Bill. It raises the whole question of the Government's borrowing policy, and if we are not satisfied that that policy is being properly carried on, I do not think we should give the enormous powers contained in this paragraph. I am not satisfied, for a particular reason. It seems to me that lately the Government's borrowing policy has become too much a Treasury game, in which cheap money is being pursued for its own sake. We all want cheap money, we all think it is a desirable thing, but low interest rates are useless, unless trade and industry can borrow the money at those rates. If one of the methods which is used to push, and cajole, and wheedle the price of 2½ per cent. Consoles to 100, is to prevent industrial borrowers from competing with the Government, we are not getting anywhere useful. If I might give a close parallel, it would be from the costs of house building. If we want to reduce the costs of house building, one of the easiest ways is to prevent any houses from being built; then, assuredly, costs will fall.

That object will be attained, but no one will get a home. We can do just the same thing with the price of money. If one has the power, as the Treasury has, to limit the number of borrowers, well, it is quite easy to firing down the price of money. I am very much afraid that has happened. The Chancellor of the Exchequer is now by far the largest speculator on the London Stock Ex- change. I know from my own experience it is a most intoxicating thing to see one's own stock creeping up and up and up. It is really most exciting in the morning to look first at the financial paper— demoralising but exciting. One can pursue a bull market for its own sake. It does nobody any good if the result of doing this with Government stock is to prevent really good borrowers from getting their money.

It cannot be in the national interest that we should borrow money at these artificially cheap rates to keep at work munition workers who are producing obsolete weapons, when sound borrowers who want to extend their production facilities for, say, civilian goods are kept out on the side line. If we look at this from the point of view of labour and materials, it is exactly the same. If we take up the labour and materials on un-creative work on the account of the Government, we prevent the labour and materials from being available for creative work in some other part of our economy.

I, therefore, ask the Financial Secretary to give us an assurance that this cheap money policy is not being pursued for its own sake by cutting down the number of borrowers so that, inevitably, the price of money falls. I have just one example which I wish to bring to the hon. Gentleman's attention. One of the results of this borrowing policy of the Government always making money cheaper is that capital values go up. Capital values of land and buildings have gone up a very great deal. That is directly the result of these enormous borrowings. Now a landowner or a farmer, if he desires to put up new buildings and to borrow money to carry on his business, finds when he goes to Agricultural Mortgage Corporation that he is allowed to borrow only two thirds of the prewar value of his land, on the basis that it is going to return to that value. That is what they tell him. The right hon. Gentleman's policy is making it certain that land and buildings will not return to that value. Therefore, we find men anxious to get on with productive work in the country who are prevented from borrowing the stun of money which they need to do that work, because of this Treasury manipulated cheap money policy. The Treasury has got its eye on the wrong thing. It has got its eye on figures of two and a half per cent. at 100 instead of having its eye on creating new productive capacity. No doubt, we shall not be able to delete this Clause, but will the Financial Secretary please give some assurance that the Treasury's policy is one that aims at production and not just at low interest rates.

Mr. Stokes (Ipswich)

May I go back for a few moments to the remarks addressed to this Committee by the Noble Lord the Member for South Dorset (Viscount Hinchingbrooke)? He presented a most astonishing argument. He complained of the cheap money policy of the Government. He likened it in his own mind to some process of blood pressure, and explained how in 1940–41 it was necessary to reduce the Bank rate to get cheap money in order to provide full employment. Has the Noble Lord forgotten that the war had just started —

Viscount Hinchingbrooke

That was not my argument at all. I said that, by 1940–41, when unemployment had been reduced to negligible proportions, we had been cured of the disease of low blood pressure.

Mr. Stokes

The point I wish to make is, had there not been pretty strong representations made to the Chancellor of the Exchequer at the time, money rates would not have been lowered. It had nothing whatever to do with the situation prevailing, but was merely the result of the increasing consciousness of the public that they were not going to put up with the racket of dear money in time of war. Be that as it may, there was one point in his speech with which I did agree. He complained that Chancellors of the Exchequer were disinclined to differentiate between capital and expenditure when presenting their Budgets. I agree with that remark; but how long were the Tory Party in power? How many opportunities have they had of presenting a different kind of Budget? Have they ever taken the advantage, which has so constantly been offered to them, to give the country a true picture on what is spent on capital account and what is spent on revenue? I am quite sure that the next Budget introduced by the Chancellor of the Exchequer will be much mere informative than anything of the kind introduced by any of his Tory predecessors.

The Noble Lord went on to say that the Government were sliding down the slippery slope of inflation. He complained that the Government were spending capital on account of revenue items. Here again may I ask has he forgotten that the war has only just ended, and that a war consists in spending capital on revenue items? That is what war is about, really. I think my Noble Friend has not a real conception of what constitutes wealth or capital. Capital is wealth used in the production of more wealth. When we get into a war we take our so-called surplus wealth and blow it to smithereens. Of course, we spend our capital on revenue items. We cannot get out of it on short term afterwards. If the time were appropriate, I should give the Committee a dissertation on the history of the last war and what happened in this connection. I do not know whether I should be in Order, except as a guide to my hon. Friend the Financial Secretary to the Treasury. There was talk about the effects, or likely effects, of inflation. Surely, that is the history of war again. Does the Noble Lord remember what happened last time? We started the 1914-18 war with a National Debt of £700 million. Then we had four years of nice war, and at the end of that time there was a National Debt of £7,000 million. He and his Party then started to reduce the National Debt. It was done so effectively that after 20 years, had it gone down? No—it had risen by another £1,000 million, to £8,000 million. Now we have a National Debt which is of the order, I suppose, of £22,000 million to £24,000 million. It is a mess that, somehow or other, has to be cleared up. Prices have to be adjusted in order to meet the new situation. It was in a state of war that that process took place. Perhaps it may be a salutary lesson to the peoples of the world not to engage in such a futile occupation.

Complaint was also made by the Noble Lord of the increase in the note issue. For myself, I cannot see that an increase in the note issue is, in itself, a bad thing. It seems to me that it must inevitably follow in times of full employment, as in wars when there are more jobs than people to fill them. Again, my noble Friend has a wrong conception of money. Before, in this House, I have likened money to a bus ticket. That is all that money really is. The fact that one has a bus ticket does not take one to the end of the route. One could put it on the pavement and sit on it, and one would still be on the pavement in the evening. So it-is with money. Money is merely a means of exchange. If we are to produce more goods, if we are to employ people fully, then it follows, as the night the day, that the note issue must increase in order to keep pace with the increased productivity.

Depreciation of war savings was another subject referred to by the Noble Lord. He said that everything the Government were doing was likely to lead Lo depreciation of the genuine savings of the people. I wonder whether he is right. I confine myself to this one point. Had he and his party got into power, and taken the advice, which he is now recommending, and put up the rates of interest, what would have happened to the genuine savings of the people in war loans? Down would go their value at once, without any hesitation. He knows that to be perfectly true.

4.30 p.m.

The Noble Lord got on one of his own hobby horses and said that I am always describing war savings weeks as '' rackets.'' That is a mild term compared with what I do call them. I have always described them as deceiving the people. I have always recognised that, if we are to have savings weeks, which must go on, in the conduct of our affairs in present circumstances, it is essential that the people should understand what they are doing. But to get people to believe that by lending their money to the Government it produces more tanks or aeroplanes, is just rank deception. That is what I have said. I certainly never followed the Noble Lord in his wickedness when he stood up in Dorset, and urged people not to indulge in war savings for a purely political issue —merely because he disagreed with the character of this Government and the aim they had in view. I never did anything of the sort. I encouraged them to put money away, but I told them not to be humbugged by the City financiers, who had only one end in view, and that was to raid their savings as soon as they could. [Interruption.] Unfortunately, I never have any money. I know hon. Gentlemen and right hon. Gentlemen on the other side always know much more about other people's private affairs, so I shall leave it at that.

Icome to my last point on this question of a policy of cheap money. I hope the Government will continue with their policy of cheap money. When the noble lord talks about the slippery slope in the policy of this Government and of the implication in this Bill that the Government are going to be spendthrifts—which I do not accept for a moment—may I remind him that, despite all the pressure and the representations made again and again to this House and to the late Chancellor of the Exchequer, urging that he should borrow money more cheaply than was done during the war, the Treasury discount rate went up from about one-half per cent. before the war, to over one per cent. since the war started. That was for no reason whatever except that the City told the Chancellor of the Exchequer to do it. What does this Chancellor do? The right hon. Gentleman has said "No more of this; we will put the bill rate down again," and the effect of reducing the bill rate week by week is, I think I am right in saying, an annual saving of £12 million sterling, and I call that a very satisfactory step and one which, had it been taken when we urged it five or six years ago, would have saved this country something of the order of £70 million. Looking at the facts of the case, if the country were asked to judge which Chancellor of the Exchequer, of the group of Chancellors whom we have had in the last seven years, was likely to bring the country through to a satisfactory solution—satisfactory in the true sense, not the City sense, of the word—of the financial problems facing us, I say, without doubt, that the verdict would be in favour of the present Chancellor.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

If the hon. Member for Ipswich (Mr. Stokes) again does me the honour of asking me to dinner at his house, I warn him that the first thing I shall do will be to make a bee-line for his bedroom, in an effort to find the stocking wherein he keeps all his savings. I agree with the right hon. Gentleman the Member for the City of London (Mr. Assheton) that this Bill ought to have been introduced after the Budget; and that we should then have had some idea of its effect, and also more facts to guide us. At the present moment, we are completely in the dark as to the intentions of the Government, and also on the facts.

I also agree with the right hon. Gentleman the Member for the City of London when he says that current expenditure is excessive. It always is. I have never known any Government in the history of the country whose current expenditure was not excessive. It is, at the present moment; but more so than it has ever been before. But I part company with the right hon. Gentleman, when he says that he sees a great danger of inflation, arising out of this Clause. I do not think that this Clause is an inflationary Clause at all; and, personally, I want to see money kept cheap. I do not quite know what the right hon. Gentleman had in mind when he spoke about funding operations; but, if he meant that we want to fund on more expensive terms, I do not think that is going to do any good. Alternatively, I do not see how we can make money much cheaper than it is.

Mr. Assheton

There is some advantage in using a time of cheap money in order to fund it.'

Mr. Boothby

Yes, of course. I am entirely on the side of the right hon. Gentleman there; but I should have thought that the current interest rate was so low, that it is difficult to see how we can get it much lower. I do not believe that inflation is caused by borrowing, as such. I believe that inflation is caused by the fact that the amount of money in circulation exceeds the amount of goods produced; and I believe that there is only one real answer to the problem. I think we have got to increase productivity. I do not think that the answer is to cut down the money in circulation at the present moment, but rather, at all costs, to increase the productivity of this country. I think that is what we should concentrate upon, to the exclusion of everything else, for almost nothing else matters today in our economic life.

Now I come to my main point. I believe we shall not get a quick increase of productivity in this country unless we lower taxation now, and, particularly, taxation on earned incomes; unless we put more goods into the shops, so as to give people some incentive to work; and unless we remove petty and vexatious controls at the lower levels. In order to carry out this policy, I think that, for the next two years, at any rate, a substantial borrowing policy is essential. I do not want to see loan expenditure reduced at the present critical moment in our national affairs; and taxation, in consequence, either increased, or maintained at its present exorbitant, and, as I think, quite unjustifiable, level. We are still convalescent. That is why, other things being equal—and I regret that we have not had more information—I would be glad to see the Government use the powers which this Clause gives it to borrow pretty extensively until we can get a healthier economic position; and I cannot go into the Lobby against them, should there be a Division.

Before you came into the Chair, Mr. Beaumont, Bretton Woods was mentioned; and it was pointed out by the right hon. Gentleman the Member for the City of London that, if we continued to borrow on this scale, we might not be able to maintain the exchange value of sterling at the present rate. I suggest to the Financial Secretary that the less the attention the Government pays to this unpleasing forest, the better it will be. The Bretton Woods Agreement has already been shown up as a monstrous piece of —

The Deputy - Chairman (Mr. Hubert Beaumont)

The hon. Member's remarks are rather wide of the Amendment. Perhaps he will get back to it.

Mr. Stokes

On a point of Order. May I point out that the Noble Lord deliberately saddled the hon. Member for East Aberdeen (Mr. Boothby) with worshipping at the shrine of Lord Keynes over Bretton Woods?

Mr. Oliver Stanley (Bristol, West)

Although the hon. Gentleman no doubt knew why you had risen, Mr. Deputy-Chairman, I confess that I did not know. Could you state what was the point of Order on which you gave a Ruling?

The Deputy-Chairman

The hon. Member's remarks seemed to me to be going away from the Amendment and tending to widen the Debate, which is not desirable. It might be perfectly true that the Noble Lord did introduce the subject of Bretton Woods, but, as the hon. Member for Ipswich (Mr. Stokes) refrained from referring to it, I hope the hon. Member for East Aberdeen (Mr. Boothby) will also refrain.

Mr. Mitchison (Kettering)

Did not the hon. Member for Ipswich (Mr. Stokes) introduce the matter?

Mr. Norman Smith

Was it not the right hon. Gentleman the Member for the City of London (Mr. Assheton) who introduced it?

Mr. Boothby

On that point of Order, I would submit to you, Mr. Beaumont, that, anxious as I always am to be as good as possible, it was the right hon. Gentleman the Member for the City of London who first raised the issue of Bret-ton Woods, on the specific point that if we gave to the Government the powers they ask for in this Clause we may not be able to hold sterling against the dollar. He was fully and ably answered by my hon. Friend opposite, in a speech with which I am in complete agreement. I merely wish to say that I think that it is strictly relevant to the argument that these borrowing powers, if granted to the Government, may prevent them holding the exchange value of the £ at this fantastic rate; and I submit that I am entitled to address myself to that argument. However, in deference to your Ruling, Mr. Beaumont, I will not do it at any length. I will content myself by saying that I hope the delegates to the Bretton Woods Conference at Savannah are now enjoying themselves at the taxpayers' expense. They will achieve nothing more than that. We shall not be able to hold the £ at 4.2 to the dollar any more than the French will be able to hold the franc at 480 to the £. To attempt to stabilise exchanges in the world's present condition is something which can never be achieved, and borders on insanity.

I will now leave this topic, and deal in conclusion with a question which has been raised in almost every speech— the question of increasing the National Debt— because that, in effect, is what this Clause is bound to do. The Noble Lord the Member for South Dorset raised the matter specifically; and, as he was speaking, a chord was struck in my memory which carried me back mentally to Lord Macaulay's "History of England," and carried me physically into the Library of this House, where I dug out the volume. I will quote one or two of the observations Lord Macaulay made upon the subject of the National Debt, as I think it is a good thing for this House sometimes to revert to the wisdom of the past. Our own is not always so very profound. Discussing the National Debt, Lord Macaulay wrote, in volume IV: Such was the origin of that debt which has since become the greatest prodigy that ever perplexed the sagacity, and confounded the pride of statesmen and philosophers. At every stage in the growth of that debt, the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt, it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt went on growing; and still bankruptcy and ruin were as remote as ever. When the great contest with Lewis the Fourteenth was finally terminated by the Peace of Utrecht, the nation owed about fifty millions; and that debt was considered, not merely by the rude multitude, not merely by foxhunting squires and coffee house orators, but by acute and profound thinkers, as an incumbrance which would permanently cripple the body politic. Nevertheless trade flourished; wealth increased; the nation became richer and richer. Then came the war of the Austrian Succession; and the debt rose to eighty millions. Pamphleteers, historians and orators pronounced that now, at all events, our case was desperate. Yet the signs of increasing prosperity, signs which could neither be counterfeited nor concealed, ought to have satisfied observant and reflecting men that a debt of eighty millions was less to the England which was governed by Pelham than a debt of fifty millions had been to the England which was governed by Oxford. Soon war again broke forth; and, under the energetic and prodigal administration of the first William Pitt, the debt rapidly swelled to a hundred and forty millions. As soon as the first intoxication of victory was over, men of theory and men of business almost unanimously pronounced that the fatal day had now really arrived. So we go on, through war after war, until we come to: The wars which sprang from the French Revolution, and which far exceeded in cost any the world had ever seen, and taxed the powers of public credit to the utmost. When the world was at rest again the funded debt of England amounted to eight hundred millions. 4.45 p.m.

Lord Macaulay continued: It was in truth a gigantic, a fabulous debt; and we can hardly wonder that the cry of despair should have been louder than ever. But again that cry was found to have been as unreasonable as ever. After a few years of exhaustion, England recovered herself. Yet, like Addison's valetudinarian, who continued to whimper that he was dying of consumption till he became so fat that he was shamed into silence, she went on complaining that she was sunk in poverty till her wealth showed itself by tokens which made her complaints ridiculous. The beggared, the bankrupt society not only proved able to meet all its obligations, but, while meeting those obligations, grew richer and richer so fast that the growth could almost be discerned by the eye. … It can hardly be doubted that there must have been some great fallacy in the notions of those who uttered and of those who believed that long succession of confident predictions, so signally falsified by a long succession of indisputable facts. To point out that fallacy is the office rather of the political economist than of the historian. Here, it is sufficient to say that the prophets of evil were under a double delusion. They erroneously imagined that there was an exact analogy between the case of an individual who is in debt to another individual, and the case of a society which is in debt to a part of itself; and this analogy led them into endless mistakes about the effect of the system of funding. They were under an error not less serious, touching the resources of the country. They made no allowance for the effect produced by the incessant progress of every experimental science, and by the incessant efforts of every man to get on in life. They saw that the debt grew; and they forgot that other things grew as well as the debt. I submit that the Committee should take encouragement from this dissertation.

Mr. Montague (Islington, West)

Is it not true that it is generally agreed that Lord Macaulay invariably sacrificed accuracy to style?

Mr. Boothby

It seems to me that in this case he combined the two with admirable skill. I may not have done justice to him in my reading; but I am sure the prose must have given great pleasure to all hon. Members present this afternoon. Lord Macaulay concludes by rightly observing that those wise philosophers greatly overrated the pressure of the burden; they greatly underrated the strength by which the burden was to be borne. That is profoundly true. I am quite sure that this country, as after every war it has undertaken for the last two centuries, can survive quite easily the burden of debt which presses upon it at the present moment, on one condition—that the people of this country get down to work. If the Government can persuade the people to work hard in the next two or three years we shall come through, and they can borrow what they like. If they cannot persuade the people to work hard, then we shall not come through, whatever happens.

Mr. Mitchison (Kettering)

It is, I believe, well established that the pillars of financial orthodoxy are at any rate supporting if not actually sitting upon the Benches opposite and it is heartening to some of the financial heretics who may, no doubt, be found on this side of the Committee to discover such startling differences of opinion. In the discussions on this Amendment which have reached to the very limit of relevancy, we have seen the most violent difference of opinion between the hon. Gentleman the Member for East Aberdeen (Mr. Boothby) and Lord Macaulay speaking together on the one side, and the Noble Lord the Member for South Dorset (Viscount Hinchingbrooke) on the other. The one side would, if I understand it rightly, confine us to such limits of financial purity that in South Dorset, at any rate, one would in the first year after the war be compelled not to borrow save for purely capital purposes. That is a very remarkable result at the end of six years of war. On the other hand, we were urged with equal eloquence by the hon. Member for East Aberdeen to borrow as freely as we could, in order that by so doing, we might be relieved of the burdens of taxation.

I would not have ventured to intervene had it not been for the result which appears to have been produced upon the Noble Lord the Member for South Dorset. It was refreshing to hear him praise the patriotism of those who contributed to war savings. It therefore became all the mere puzzling to discover why he considered it necessary to throw all possible public discredit upon war savings as soon as they were asked for by a Government with the political complexion of which he disagrees. It is difficult to discover any reason whatever for the attitude which is so noticeable in his public speeches. There have been moments in the discussion when it seemed to be the object of hon. Members opposite to prevent the Government taking borrowing powers at all. The fact was more properly and 'sensibly put by the right hon. Member for the City of London (Mr. Assheton), who objected merely to the stage at which this proposal was brought forward. What does that come to? The right hon. Gentleman recognises that Clause I is, as I believe it to be, in the usual form of a National Loans Bill following upon the Budget. There is nothing unusual in that provision; it is standard form. Giving this authorisation to the Treasury involves no exceptional gift of powers. The only objection is that this provision is intro- duced in one Bill, when it might have been made the subject of a second Bill. I suspect an attempt to induce the Government to make two Bills where one would have been sufficient and to delay, to that extent, the progress of the Measures which the Government have in mind.

Is there any substance in the objection? Is it not true that, when the Budget statement is made it includes a statement of the expenditure and of the taxation contemplated? From those two statements can we not clearly discover the amount of money which has to be borrowed in one form or another? Surely it is at that stage that we shall exercise control over the amount of public borrowing during the year to come. Clauses of this character are no doubt necessary, but the Debate upon them must, in my submission, always come on the Budget, and on the Finance Bill which follows it. It is ridiculous to object to a provision of this kind being brought in before instead of after the Budget, when the substance of the matter, and the whole point at issue, will have to be debated in the course of those Debates For those reasons I suggest that the Amendment has no other object than delay, and to make the Government bring in two Bills where one will clearly suffice for the purpose, and of preventing the very interesting discussion which has emerged. One remarkable cat came out of the bag, if I may use that metaphor. It was interesting to hear the hon. Member for Chippenham (Mr. Eccles) defend, with such conviction, higher interest rates and assert that a policy of cheap money' was bad for the country because it brought a lower return to the investor.

Mr. Eccles

It will be within the recollection of the Committee, that I said that cheap money was desirable. We all want it, but the industrialist must be able to borrow at cheap rates. Otherwise cheap money is just a farce. I said that if money became cheaper and cheaper as a result of preventing people from borrowing, that was not a good policy. I want money to be very cheap.

Mr. Mitchison

I still find it difficult to follow the hon. Member's meaning and to understand whether he says it is good or bad that money should get cheaper and cheaper. If I have in any way mis- understood him, I apologise for doing so. In view of the national needs, it seems that the further the policy of cheap money can be pushed the better for the country. If it is bad for this or that industrialist to be unable to borrow money at the moment, his claims must come second to the claims that are made for money and capital expenditure in response to public needs.

Mr. Walter Fletcher (Bury)

I have been dealing with finance for 25 years, but I must ask to be classified as "ignorant," according to the hon. Member for South Nottingham (Mr. N. Smith). I leave to him the role of sole repository of the financial wisdom of the House. The hon. Member for Kettcring (Mr. Mitchison) unconsciously joins me as one of those clearly ignorant of finance, in view of his misunderstanding of the clear speech of my hon. Friend the Member for Chippenham (Mr. Eccles).

The Clause we are discussing foreshadows possible inflation in the future and is a confession of inflation in the past and in the present. That may not be so dangerous as the Committee might imagine. We may indeed be near the end of a wave of inflation and at the beginning of a correcting wave of production. I heartily agree with my hon. Friend the Member for East Aberdeen (Mr. Boothby) that if the wave of production grows under the mass exhortation which is to be turned upon it during the next few weeks, under the spotlighted and distinguished exhorters sitting opposite, we may just narrowly escape the worst effects of this inflation. It is no use shutting our eyes to the fact that inflation, in its best known form, is with us. We have" over-expended. The ratio of our currency and of our fiduciary issue to assets is all wrong. This is the natural result of the war effort. If the corrective volume of output is effective, we shall come through fairly well. One method of reducing the amount of money that the Government may need, under the blank cheque for which they are asking us so glibly today, is if they cease the bad practices that they have got into regarding the purchase of commodities; I add to this their failure to stimulate our very valuable invisible exports.

One of the chief gibes thrown at this side of the Committee on more than one occasion has been the reference to "private un enterprise." I will reply by saying that nothing is worse than to see what has happened to the handling of commodities by some "Government in-experts" who have had charge of the situation during the past few years. Not so long ago we had a Debate on rubber and rubber prices, and during the Debate on Malaya it became clear that in that commodity alone, as in the case of tin, we were mishandling our opportunities, resulting in excessive Government expenditure. It has also resulted in the loss of gold dollars which we need so badly.

5.0 p.m.

I would, therefore, urge that at the first possible moment the Government, in their drive for exports and production, should devote more time and attention to the invisible exports of the country. They must affect the actual figures in this Clause very materially, and they must equally affect the extremely vital form of trade in which this country specialises and for which it has been known throughout the century. Sooner or later, whether we have Bretton Woods, "Bretton brambles," or any other form of" Brettonry," we shall undoubtedly come to a period when something like open markets and the open evaluation by others 'outside this country, both of our currency and of our trade, can be made. If, during the intervening period until that day arrives, by inaction and by devoting too much time to our visible exports, we fail to stimulate the vitally important source of permanent revenue, we shall regret it. We must make London, Liverpool and our other towns the commercial and financial centres of the world or we shall pay very dearly for our lapse.

The old stock arguments which might be used against open markets no longer have any value. Under a reasonable measure of control, the opening of commodity markets with maximum and minimum prices—not a fixed price—is clearly called for. We cannot make water run along a straight line, but we can make it run between two banks of a canal. We want maximum and minimum prices. I submit to the Government that one way of reducing the amount of money for which they ask in this Clause is to have an energetic policy to open our commodity markets in this country again, to see that our ports and warehouses will not in five or 10 years' time have grass growing between their cobbles while there is activity at rival Continental ports. Let us bring this country back to prosperity, and rehabilitate it as the leading and trusted entrepÔt centre and broker of the world.

Sir Arnold Gridley (Stockport)

In case there should be any misconception as to the views which are held by those whose political faith coincides with mine, I want to say that I am a convinced apostle of the policy of cheap money. I think it is of vital significance, for many reasons. We were told to what the growth of the National Debt has mounted since before the first world war until today. It was £700 million in 1914, £7,000 million in 1918, and today it is somewhere in the region of £24,000 million. Whether we can afford that huge debt or not depends not on the amount of it, but on the cost of servicing it. The cheaper we can service it by a cheap money policy, surely the more advantageous it is to the whole nation.

With regard to the policy of full employment, I was, in conjunction with business associates of mine the other day, wanting to raise a million of money. I have been borrowing for the last 40 years, but never have I been able to borrow money more cheaply than at this moment, and it was very pleasant to be able to go to the public and raise a million of money at the unheard of rate for preference shares—3½ per cent. The result of that issue was that £1 million was subscribed more than three times. The whole of the money is being spent on capital works. One can see how important this policy is if a large scheme of improvements were to be contemplated, as I think it will be, on our railway systems in the near future. A great many millions could be spent in improving the railways in many directions. Greater electrification schemes would be of advantage to the country and would provide much employment. A great deal depends on whether the money to be spent on these great "capital works can be raised on cheap terms or not. We have had Questions asked in the House during the last few days as to whether the barrage scheme on the Severn is to be proceeded with. That scheme will cost between £18 million and £20 million. A great deal depends on the rate at which the money can be obtained and on the cost of servicing it. One could go on giving illustrations of the great importance of a cheap money policy. Therefore, I for one, hope the Government will proceed along those lines, always provided—and here I entirely agree with what has been said by some of my hon. Friends—that under the control of investments, those powers shall be wisely exercised and not be too rigidly imposed. When any good industrial activity desires to expand and raise money for the purpose, I hope the Government will deal with matters of that kind in a big, broadminded way and not in a narrow political sense.

The difficulty I find in this part of the Clause which we are seeking to have omitted from the Bill is this. The Financial Secretary will remember that I made a short intervention during the Second Reading Debate, when I said that I had some difficulty in understanding how this money was to be spent, because we had had no information. I reminded him that a few weeks before, the Prime Minister had said that what the nation wanted were more facts and information. I hope the Financial Secretary has come here today prepared to give us a good deal more information than he was able to give during the Second Reading Debate. I am looking forward to getting fuller information from the Financial Secretary, and I hope he has it with him.

There is one other point to which I wish to refer. Under this Clause, and under many other powers and Measures which the Government have now on the Statute Book, or which are in process of finding their way there, the Government are being armed with very wide powers of all kinds. Among those powers they will have the authority—far wider authority than they have at this moment even—to go in for trading of various kinds. I do not know whether any hon. Gentleman can tell us what are the Government's activities—how many people are employed in various places, and so on—but that is information which we are certainly entitled to have. It is easy for anyone to say that Government expenditure is not proceeding at an extravagant rate—it may or may not be—but I for one shall not be prepared to accept such a statement until I have some information which justifies me in doing so.

What we lack today is information. During the war, when expenditure was so high, we had a committee which could go down and see things for themselves, see the expenditure that was going on on the spot. Shortly after the new Government came into power it was asked from this side of the Committee that that committee should be reconstituted for the time being. I think the Government would have been wise had they acceded to that, in their own interest. If they had had a committee of that kind, upon which the party opposite would have the majority, it could have made reports which might have buttressed the present Government against any charge of extravagant expenditure. It is all very well for us to have an Estimates Committee, which looks into what Government Departments propose to spend, and a Public Accounts Committee which goes into public expenditure after the money has already been spent well, or wasted. What I think we want is some body in between, at a time when national expenditure is running at a very high rate, to examine how the money is being spent, where it is going and whether it is being spent wisely or economically.

When we have information about the Government trading activities I hope that the account keeping will not be of the penny note book kind which we have heard referred to in an earlier speech. I hope that accounts will be kept and presented to this Committee on well understood commercial methods. We ought to have—this has been stressed before and I hope it will be stressed again—both capital and revenue accounts in the national trading accounts. I am not sure that the whole financial expenditure of the country ought not to be divided up between capital and revenue. I hope our present Chancellor of the Exchequer will not see the difficulty which former Chancellors have apparently seen in presenting the national accounts on that basis. I am sure we shall have to come to that as time goes on, with the constantly increasing rate of national expenditure, which we hope some day will be reduced at any rate below its present figure. When it has been, I think we can look forward, as trade expands, to a gradually increasing prosperity. The rising national expenditure makes it all the more important that we should be able to look at the national accounts and to have them presented in a manner which can be understood by the common man. I defy anyone to understand them on the present system under which they are presented.

5.15 p.m.

Mr. Gallacher (Fife, West)

I do not propose to follow the hon. Member for East Aberdeen (Mr. Boothby) into Bretton Wood, unless I am satisfied that it is a bit clearer than the maze I see in it at the present time. I have always had the idea that in a Bill of this kind we are giving the Government power to borrow money to pay interest for previous borrowings. The more we go on borrowing, the more the borrowings accumulate, and the more we have to borrow. I think it is about time that process was stopped. The hon. Member for Stock-port (Sir A. Gridley) said that, at the beginning of the 1914-18 war, our National Debt was £800 million, and at the end of the 1914-18 war it was £7,000 million. Where did that £800 million arise from? From the Boer war. We are still paying interest on money that was borrowed in the Boer war. How much have we paid on the money we borrowed during the Boer war? Why do not we say that the time has come to stop it, that they have had more than they are entitled to? Finish it; liquidate that debt. In 1914 we borrowed money. This is 1946. We have been paying, interest for 32 years. Is it not time that it was stopped? They ought to be told they have had enough. We ought to liquidate that debt, finish it off, pay them no more.

Lieut.-Commander Gurney Braithwaite (Holderness)

I am trying to follow the extremely interesting argument of the hon. Member. Is he advocating that His Majesty's Government should now pay off the debt? Is that what he means when he says "liquidate "? If he is not going to pay it off, how is he going to pay interest in the future?

The Deputy-Chairman

I cannot allow-the hon. Member to be tempted by that question. We would be out of Order.

Mr. Gallacher

I would pay them no more. They have already got more than they are entitled to, far far more. Let us take an example of what it is the other side want in connection with borrowing. The other day we had the case of a local authority which, 20 years ago, borrowed money from the Prudential at 7 per cent. They asked the Prudential to accept repayment so that they could borrow cheaper money, but the Prudential refuses to accept repayment and the contract carries on for a considerable time. If the local authority got £1,000,000 that means it has paid back to the Prudential £1,400,000 and still owes £1,000,000. Can anybody say it is just that a local authority should pay back £1,000,000 after paying £1,400,000? That is what Members on the either side have been living on; that is how to get rich quickly, but always at the expense of somebody else's labour. Nobody can justify that sort of thing. On one occasion I heard an hon. Member on this side of the Committee talking about a local authority paying 6 per cent, on a loan they got 20 years ago. The Government should put a stop to this robbery that is going on. They should limit this borrowing by putting a finish to the continual payments where already those who participated in this business have obtained far more than they have loaned.

The big problem before the Government in connection with finance and in connection with this borrowing—a question I have already raised with the Chancellor recently—is the question of providing the local authorities with interest-free money in order to get houses. Attention has already been drawn to the fact that the solution for this question is the production of commodities. If we can get a greatly increased production of commodities, then we can meet all our obligations. How are we to get the increased production of commodities that we desire, if the masses of the workers have not got decent homes, if they are packed into single rooms, and unable to get the amenities of life to which they are entitled?

The local authorities have the job of building homes, and they cannot do it because there is not a local authority in the country that is not overburdened, not with cheap money but with dear money. The Noble Lord the Member for South Dorset (Viscount Hinchingbrooke) is our anti-savings Member, but I would be prepared to go with him to the local authority in his constituency and look over the books, and I will guarantee that his local authority, like mine and every other local authority represented here, is overburdened with heavy interest payments because of dear money, so much ' so that it is almost impossible for them to carry out their responsibilities.

I was speaking at a meeting on this question of finance in my constituency one day—not that I am a financier, I do not want anyone to accuse me of being a financier—[Laughter]—I consider it to be a subject for libel—and a doctor came on to my platform and said that he had been to the local authority and had learnt that they had borrowed £35,000 some 30 years ago, repayable in 1965. In 1965 the local authority will have paid in interest alone £90,000, and will have the £35,000 still to pay. That is what the hon. Members opposite live on. That is what they want—dear money. I say that such continued payments should stop. After the original sum borrowed has been paid, through interest payments plus a certain small allowance, it should be finished up, and no more payments made. If that were done, we might get a little more production, because hon. Members on the other side would have to look for work. If we are to solve our financial problems we must have increased production. Only the workers can give us that, and to get it from the workers, the Government must have power to borrow and use money at the cheapest possible rate, in order to make sure that the reforms to which the Government are pledged are carried out at the speediest possible rate.

Mr. Drayson (Skipton)

When this Bill was read a Second time it was not introduced 'as a streamline Measure, nor did the right hon. Gentleman flourish the pamphlet "Let us Face the Future," because in this Bill we have to deal very realistically with the future, and it will not be very pleasant. Clause 1, to which I particularly wish to refer, virtually provides the Chancellor with a blank cheque to draw any amount he likes. So that he can continue his rake's progress of painting the City red. The trouble with the Chancellor of the Exchequer at the present time is that he thinks he is doing well because he has a rising gilt-edged market. He does not realise that what is more important than a firm gilt-edged market is prosperous British industry. What would it profit the Chancellor if he reduced the interest on our National Debt by a half of one per cent, if, at the same time, our industry was so crippled, or not adequately encouraged, that it could not take its proper place in the race for world recovery? This Clause also strikes a rather depressing note, because it points out quite clearly to the general public, although they probably know it already, that there will be a large deficit in our Budget for the current year. There is, however, no attempt in this Bill to tell the public just how big that deficit will be. If there were some limiting amount in this Clause, say £1,000 or £2,000 million, there would be some encouragement; and it might help the savings movement, as people would know what amount had to be raised by borrowing up to the end of the financial year on 31st March, 1947.

What the general public want to know particularly is what steps the Government are taking to reduce this very large deficit. Many hon. Members have spoken on that point this afternoon. I see very few signs of any real economy drive on the part of the Government. We have heard that there is to be a production drive, and I would suggest that the two things go hand in hand. Can we not have some sort of inquiry into the swollen Ministries, dotted up and down the country in our luxury hotels, and appearing to the local inhabitants to be doing extremely little productive work? We know there are hundreds of thousands of workers on wartime production. I cannot think of a more soul destroying occupation than having to make armaments which are known to be already obsolete. We believe that there is something sinister in the Government's motive in keeping people on such employment. They are frightened of a rising unemployment figure. But they must be prepared to accept a small measure of unemployment while we are converting our great industries from a wartime to a peacetime basis.

What are the Government doing about the vast dumps of materials all over the country? The ordinary man in the street is justified if he feels that perhaps this deficit could somehow be reduced if those vast stocks of materials were made available to him right away. There has been criticism this afternoon of the Government's dealings in commodities through- out the world. I would suggest that here again is an example of how the Government are about to miss their market. The time will come when these things will no longer be required, and they will then be so rotted as to be completely useless. The Lord President of the Council said the other day that we are now engaged in what he called "Operation Carey Street.". I suggest that the Chancellor has misread his instructions and that he is engaged in "Operation Carey Street," because that is undoubtedly where we shall be if he carries on with his present restrictive policy. Is he making any attempt to build up a national economy that will be able to support this large and increased National Debt? We have heard this afternoon that these obstacles have always been overcome in the past. But the times Macaulay was writing about did not suffer from the sort of Government we have in this country at the present time.

I believe that the large National Debt we have could well be supported by an economy in which free enterprise was given full play in every walk of life. We may be approaching a position in our national finance where it will be hard to imagine any Britisher wanting to subscribe to the Chancellor's loans. It may be considered unpatriotic to support him in his folly. Business restrictions must be removed. Every encouragement must be given to the country. I submit, and this has already been mentioned this afternoon, that taxation on the lower income groups should be still further reduced. Make overtime free of tax. Do not let it be that part of earnings which suffers the greatest burden of tax in any worker's pay packet. At the same time, fill the shops with goods for the people to buy. Instead, Waste and destruction all around we see; Their only cure is bills and £ s. d.

5.30 p.m.

Mr. Spearman (Scarborough and Whitby)

Like my hon. Friend the Member for Stockport (Sir A. Gndley) I want to express the views that are so widely held on this side of the House in favour of cheap money. There are many benefits to the State from cheap money. Perhaps not the least—it is the only one to which I shall refer—is the easing of the burden on the taxpayer. It is, I think, a very remarkable thing that while the National Debt should have increased during the last 20 years by some 300 per cent., by the clever handling of the debt service on it the increase in the annual burden has gone up by only something like 30 per cent. But I should like to emphasise this point, that if the Government fail in meeting the menace of inflation by the more delicate and certain weapons that are within their power they may have to revert to this extremely clumsy and upsetting means of dear money—an evil, but a lesser evil than the social injustice and dislocation of real inflation. I think that if the Government fail in the methods they should adopt they will have to be prepared to face using more unpleasant methods.

We are all agreed on the necessity of the Government's borrowing money at this time, but in view of some of the things that have been said on the other side of the House it would be reassuring if the Financial Secretary to the Treasury would state quite clearly that the fact that the Government have the powers and the fact that they are able to borrow more cheaply does not mean that for those reasons they are going to spend more than they otherwise would. We are sometimes rather led to think by hon. Members opposite that they are of the opinion that the more the Government borrows the more the Government can spend. In actual fact the amount that can be spent is absolutely limited to the amount the State can produce and the amount that the wretched consumer can be prevented from using himself. The State cannot spend more unless more is produced except by diminishing the resources of the consumer, so it is of the very greatest importance that this simple truth should be made quite clear on every occasion by the Government.

I should like to refer to one point made by the hon. Member for Ipswich (Mr. Stokes), who is in and out of the Chamber so often. He is not here now. I think that for once, perhaps, he was a little in a state of confusion when he referred to the fact that dear money would upset the savings of the people. That, of course, is not so at all. What it might upset would be the speculators. I do not know whether he was considering himself or considering that point of view, but on this side of the House we are not so interested in the speculators as in those people who have invested their savings, and who are not so interested in the capital value in whether their stocks go up or down. What matters to them is the purchasing power of their money and that, indeed, might be taken from them, and would be taken from them if we had inflation. Dear money cannot possibly cause inflation. Dear money can only be a help towards preventing inflation. It is a clumsy weapon but it may be a necessary one which we should have no hesitation in using if the worst occurs.

Mr. Oliver Stanley (Bristol, West)

We have had a long and interesting Debate on this Amendment. I had hoped that the length of the Debate would have afforded some opportunity at the end to the Chancellor of the Exchequer to share in the interest. We quite realise that at the beginning he had to be absent meeting the deputation of bond holders, but it certainly has been a long meeting, and I do not know whether his loyal subordinate ought not to telephone to the Treasury to find out that he is none the worse for it. [Interruption.] Well, perhaps it would be better to telephone to Scotland Yard to find out. We have had a Debate which has been remarkable for its breadth, and, equally, for its depth, although I confess that in listening to some of the speakers I have heard the clattering hooves of hobby horses which have been ridden by them before. But the Debate that has taken place does offer a very tempting selection for any speaker who wishes at this stage to reply to it.

I have taken a note of some of the points raised. They include the need for Government economy; the merits in one case or demerits in another of the national savings movement; the danger of Fascist meetings at the Albert Hall; the advantages of cheap money; the merits of Lord Keynes; the effect of housing conditions on the production of goods; and finally, the whole theory of interest. Faced with that galaxy of choice I have been quite unable to decide which of these interesting topics to which to devote myself, and so, I think, I will devote myself to the Amendment on the Order Paper, and the reason why it was put down. I am encouraged to do that out of mercy to the Home Secretary. It is always as well to do the Home Secretary a favour if you can, because you never know but that the time will come—[Interruption.] He has been sitting there patiently on the Front Bench, and all the time, despite the courteous look on his face, I have felt he is more interested in the future than he is in the immediate present. [An Hon. Member: "Is that in the Amendment?"] Well, perhaps it is not wrong to be merciful. The primary point for which this Amendment was put down, and which has enabled such a very interesting discussion to take place, was to call attention to what we on this side think to have been a quite unnecessary alteration in the procedure of the last six years, an alteration which has resulted in the House of Commons being asked to take a decision of great importance without knowing the necessary facts on which to take it.

Nobody on this side, in putting down this Amendment, wants to deprive the Government of borrowing power to make up the inevitable deficit in the first full year after the war between what is raised by taxation and what has to be paid out in services. Nobody thinks, however great the efficiency of the Government in effecting economies, that, in fact, in that first year, any Government could balance those two figures. We all agree, therefore, that the Government must have these powers. We say that there is no reason why this year the Government should not have done what Governments have done in the preceding six years, and that is, first to make a Budget statement, giving us an estimate of the financial requirements of the year, together with an estimate of the extent to which these powers are to be used and the relationship between taxation and borrowing. When the House of Commons has all the facts, then the Government can ask us for these powers which we shall be glad to give them.

I was very depressed by the speech of the hon. Member for Kettering (Mr. Mitchison), particularly as he had the supreme advantage of being educated at the same school as the Chancellor of the Exchequer and myself. Although I was prepared to see one back slider in the case of the Chancellor-of the Exchequer, I was depressed to see yet another Member who had not fully benefited from that education. He advanced the astounding proposition that it was ridiculous to object to the House of Commons being asked to pass the Bill first and hear the arguments afterwards. How far has the hon. Gentle- man deteriorated from that intellectual level which I know he reached some 30 years ago. The Financial Secretary said that he was in a dilemma; it is this dilemma, or what I would call the doctor's dilemma, which we are trying today to resolve. We quite realise that, with the exception of this Clause, the other Clauses have to be through by 31st March, and we are perfectly prepared to give them to the Government, but there is no need why these borrowing powers should be taken before the Budget.

The effect of the Amendment is to give the hon. Member the opportunity, which I know he wants, of making a full disclosure to the Committee of all the facts and a full estimate of all the possibilities, before the powers are taken. We on this side of the Committee were sorry for the hon. Gentleman when this matter was debated before. He was so obviously anxious to give all the information he could, and it was only the stern injunction put on him by the Chancellor of the Exchequer which prevented him doing what his conscience urged. We want to resolve that conscience, and to give him an opportunity to provide us with the fullest information which this Committee has a right to demand. Therefore, while we make it quite clear that we believe the Government must have borrowing powers, this Bill ought to be introduced at the proper time, which is after the Budget statement, when we should be prepared to facilitate its passage by every means in our power. We cannot assent at the present time to the Government having these enormous powers without any explanation of the extent to which they will be needed.

5.45 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I agree with the right hon. Gentleman the Member for West Bristol (Mr. Stanley) in that we have had a long and interesting Debate. It has roamed fairly widely, and Members have found an opportunity by one means or another, as he said, to ride their particular hobby horses. The speeches he said have had breadth and in some cases depth and to that I am not going to add length if I can avoid it. The right hon. Gentleman knows, none better than he, that it is impossible for me to accede to his request and anticipate what the Chancellor of the Exchequer will have to say when he opens his Budget in a few weeks' time. I therefore stick to the Amendment. It seeks to take out of Clause 1, which is one of the main operative Clauses of the Bill sub-paragraph (a), which gives the Government power to borrow during the financial year 1946-47 up to the gross amount of Supply granted; plus £250 million in order to tide them over the period between 1st April, 1947, and such time thereafter as is necessary until another Bill of the same kind can be introduced and carried through this House. In answer to what the Noble Lord the Member for South Dorset (Viscount Hinchingbrooke) said about the wording of this paragraph, I have to say that we have exactly copied the words of the National Loans Acts passed annually through the House since 1939. Therefore, if he finds the wording sloppy I can only tell him that it is rather late in the day to discover it. At any rate, this form of words has been sufficient during the war to cover what has been needed.

Speaker after speaker has indicated that by giving us the powers of this paragraph the Government will be taking what they described as unlimited powers to borrow money. That is not true. The Committee knows quite well that all we are asking for is power to borrow to cover a possible deficit or the outturn of the year 1946-47. I have come to the House as has every Financial Secretary each year during the war. The only difference between previous occasions and this—and the House frankly faced it and discussed it at some length during the Second reading—is that the House on previous occasions has heard the Budget statement of the Chancellor of the Exchequer before being asked to grant these powers. The fact that the Committee is not fully seized of the expected deficit on the next financial year is, as I said on Second reading, a dilemma which the Government realises. But it is essential that we should have this Bill before 31st March, that is, before the Chancellor makes his Budget speech, because there are other provisions in the Bill which it is necessary we should get through by that date. It is not essential by itself, I agree, that this particular paragraph should be passed by then. Nevertheless there are checks which would prevent excessive borrowing by the Chancellor of the Exchequer. These will continue to reside in this House. There is no real reason therefore why the Committee should not give us these powers a few weeks in advance of the normal date.

Viscount Hinchingbrooke

Will the Financial Secretary tell us what he means by "sufficient checks" and exactly what are the checks on borrowing? There may be checks on expenditure, but what are they on borrowing?

Mr. Glenvil Hall

The check on borrowing is that the Chancellor of the Exchequer cannot borrow in excess of the Supply voted by this House. I said during the Second Reading Debate—it emerged quite clearly then and the point was made I think by other speakers—that although the Government are taking these powers, they do not intend to borrow up to the full total of the Supply granted. They cannot borrow beyond the amount of supply granted by the House and that in itself is a check. The Civil Estimates have been published and also the Defence Estimates and the House is well aware what the total will be. It will be impossible for the Chancellor of the Exchequer to borrow in addition to the total Supply which the House has .granted and I might add that the House has not, so far, granted the major part of next year's Supply on the Votes. Therefore, the House will, in a very real sense, continue to control the borrowing powers of the Government. I think that is the answer to the right hon. Gentleman and other hon. Members who have expressed doubts whether these borrowing powers should be given.

I can say however, in addition, that the Chancellor of the Exchequer confidently expects that during the next financial year, that is 1946-47, the pro-portion of Budget expenditure to be met from borrowing will be appreciably less than it will be in the present financial year. I might also add that if anything like these borrowing powers are necessary for the financial year 1947-48, it is hoped that it will be possible to consider the necessary legislation after the Budget statement is made by the Chancellor of the Exchequer, if he continues to hold his office, or by his successor. During the war years the House gave these powers year after year. I have today given an additional assurance, and the House has the knowledge that, if, after the Chancellor of the Exchequer has opened his Budget, it feels dissatisfied with his statement, it can, with the machinery open to it, stop Supply. That is the real check. I hope, therefore, that the Committee will now allow us to pass on to the next Clause or, if the Opposition still feels

dissatisfied, that we shall take the matter to the vote.

Question put, "That the words proposed to be left out stand part of the Clause "

The Committee divided: Ayes, 288; Noes, 144.

Division No. 99.]	AYES.	[5.55 p.m.
Adams, W. T. (Hammersmith, South)	Ede, Rt. Hon. J. C.	McAllister, G.
Adamson, Mrs. J L.	Edelman, M.	McEntee, V. La T.
Allen, A. C. (Bosworth)	Edwards, Rt. Hon. Sir C. (Bedwellty)	McGhee, H. G.
Allen, Scholefield (Crewe)	Edwards, N. (Caerphilly)	McGovern, J.
Allighan, Garry	Evans, S. N. (Wednesbury)	Mack, J. D.
Anderson, A. (Motherwell)	Fairhurst, F.	Mackay, R. W. G. (Hull, N.W.)
Anderson, F. (Whitehaven)	Farthing, W. J.	McKinlay, A. S.
Attewell, H. C.	Fletcher, E. G. M. (Islington, E.)	Maclean, N. (Govan)
Austin, H. L.	Follick, M.	McLeavy, F.
Ayles, W. H.	Foot, M. M.	MacMillan, M. K.
Ayrton Gould, Mrs B.	Fraser, T. (Hamilton)	McNeil, H.
Bacon, Miss A.	Freeman, Maj. J. (Watford)	Mainwaring, W. H.
Baird, Capt. J.	Gallacher, W	Manning, Mrs. L. (Epping)
Balfour, A.	George, Lady M. Lloyd (Anglesey)	Marquand, H. A.
Barstow, P. G.	Gibbins, J.	Martin, J. H.
Barton, C.	Gilzean, A.	Mathers, G.
Battley, J. R.	Glanville, J. E. (Consett)	Mayhew, C. P.
Beattie, J. (Belfast, W.)	Gooch, E. G.	Messer, F.
Bechervaise, A. E.	Goodrich, H. E.	Middleton, Mrs. L.
Beswick, Flt.-Lieut. F.	Greenwood, Rt. Hon. A.	Mikardo, Ian
Bing, Capt. G. H. C.	Grenfell, D. R	Millington, Wing-Comdr. E. R
Binns, J.	Grey, C. F.	Mitchison, Maj. G. R.
Blackburn, A. R.	Grierson, E.	Monslow, W
Blenkinsop, Capt. A.	Griffiths, D. (Rother Valley)	Montague, F.
Blyton, W. R.	Griffiths, Rt. Hon. J. (Llanelly)	Moody, A. S.
Bowden, Flg.-Offr. H. W.	Griffiths, Capt. W D. (Moss Side)	Morgan, Dr. H. B.
Bowles, F. G. (Nuneaton)	Gruffydd, Prof. W. J.	Morley, R.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)	Gunter, Capt. R. J.	Morris, P. (Swansea, W.)
Braddock, T. (Mitcham)	Guy, W. H.	Moyle, A
Brook, D. (Halifax)	Haire, Flt.-Lieut. J. (Wycombe)	Murray, J. D.
Brooks, T. J. (Rothwell)	Hale, Leslie	Nally, W.
Brown, George (Belper)	Hall, W. G. (Colne Valley)	Naylor, T. E.
Brown, T. J. (Ince)	Hamilton, Lieut.-Col. R.	Neal, H. (Claycross)
Brown, W. J. (Rugby)	Hannan, W. (Maryhill)	Nichol, Mrs. M. E. (Bradford, N.)
Bruce, Maj. D. W. T.	Hardy, E. A	Nicholls, H. R. (Stratford)
Buchanan, G.	Haworth, J.	Noel-Baker, Capt. F. E. (Brentford)
Burden, T. W.	Herbison, Miss M.	Noel-Buxton, Lady
Burke, W. A.	Hewitson, Capt. M.	Oldfield, W. H.
Butler, H. W. (Hackney, S.)	Hicks, G.	Oliver, G. H.
Callaghan, James	Hobson, C. R.	Orbach, M.
Champion, A. J.	Holman, P.	Paget, R. T.
Chetwynd, Capt, G R.	House, G.	Paling, Rt. Hon. Wilfred (Wentworth)
Clitherow, Dr. R.	Hoy, J.	Paling, Will T. (Dewsbury)
Cluse, W. S.	Hubbard, T.	Parkin, Flt.-Lieut. B. T.
Cobb, F. A.	Hudson, J. H. (Ealing, W.)	Paton, Mrs. F. (Rushcliffe)
Cocks, F. S.	Hughes, Emrys (S. Ayr)	Paton, J. (Norwich)
Coldrick, W.	Hughes, Hector (Aberdeen, N.)	Pearson, A.
Collick, P.	Hughes, Lt, H. D. (W'lverh'pton, W.)	Peart, Capt. T. F.
Collins, V. J.	Hutchinson, H. L. (Rusholme)	Perrins, W.
Colman, Miss G. M.	Irving, W. J.	Poole, Major Cecil (Lichfield)
Comyns, Dr. L.	Janner, B.	Popplewell, E.
Cooper, Wing-Comdr. G.	Jeger, Capt. G. (Winchester)	Porter, E. (Warrington)
Corvedale, Viscount	John, W.	Porter, G. (Leeds)
Cove, W. G.	Jones, A. C. (Ship'ey)	Price, M. P.
Crawley, Flt.-Lieut. A.	Jones, D. T. (Hartlepools)	Pursey, Cmdr. H.
Daggar, G.	Jones, P Asterley (Hitchin)	Ranger, J.
Daines, P.	Keenan, W.	Rankin, J
Davies, Edward (Burslem)	Kenyon, C.	Rees-Williams, D. R.
Davies, Clement (Montgomery)	King, E. M.	Reeves, J
Davies, Ernest (Enfield)	Kinghorn, Sqn.-Ldr. E	Reid, T. (Swindon)
Davies, Harold (Leek)	Kinley, J.	Ridealgh, Mrs. M.
Davies, Haydn (St. Pancras, S.W.)	Kirby, B. V.	Robens, A.
Davies, R. J. (Westhoughton)	Kirkwood, D.	Roberts, Sqn.-Ldr. Emrys (Merioneth)
Davies, S. O. (Merthyr)	Lang, G	Roberts, Goronwy (Caernarvonshire)
Deer, G.	Lavers, S.	Roberts, W. (Cumberland, N.)
de Freitas, Geoffrey	Lee, F. (Hulme)	Robertson, J. J. (Berwick)
Diamond, J	Levy, B. W.	Rogers, G. H. R.
Dobbie, W.	Lipton, Lt.-Col. M.	Sargood, R.
Dodds, N. N.	Logan, D. G	Scott-Elliot, W.
Douglas, F. C. R.	Longden, F.	Segal, Sq.-Ldr. S.
Driberg, T. E. N.	Lyne, A. W.	Shackleton, Wing-Cdr. E. A. A.
Dye, S.	McAdam, W.	Sharp, Lt.-Col. G. M.
Shawcross, C. N. (Widnes)	Thomas, I. O. (Wrekin)	Westwood, Rt. Hon. J.
Shinwell, Rt. Hon. E.	Thomas, George (Cardiff)	White, C. F. (Derbyshire, W.)
Shurmer, P.	Thomson, Rt. Hn. G. R. (Ed'b'gh, E)	White, H. (Derbyshire, N.E.)
Simmons, C. J.	Thorneycroft, H.	Whiteley, Rt. Hon. W.
Skeffington-Lodge, T C.	Thurtle, E.	Wigg, Col. G. E.
Skinnard, F. W.	Tiftany, S.	Wilkes, Maj. L.
Smith, Capt. C. (Colchester)	Titterington, M. F.	Wilkins, W. A.
Smith, Ellis (Stoke)	Tolley, L.	Willey, F. T. (Sunderland)
Smith, H. N. (Nottingham, S.)	Tomlinson. Rt. Hon. G.	Willey, O. G. (Cleveland)
Smith, S. H. (Hull, S.W.)	Turner-Samuels, M.	Williams, D. J. (Neath)
Smith, T. (Normanton)	Ungoed-Thomas, L.	Williams, J. L. (Kelvingrove)
Snow, Capt. J. W.	Usborne, Henry	Williams, W R. (Heston)
Solley, L. J.	Vernon, Maj. W. F.	Williamson, T.
Sorensen, R. W.	Viant, S P.	Willis, E.
Soskice, Maj. Sir F.	Wadsworth G.	Wills, Mrs. E. A.
Sparks, J. A.	Walkden, E.	Wise, Major F. J.
Stamford, W.	Walker, G. H.	Woodburn, A.
Steele, T.	Wallace, G. D. (Chislehurst)	Woods, G. S
Stephen, C.	Warbey, W. N.	Yates, V. F.
Stokes, R. R.	Watkins, T. E.	Younger, Hon. Kenneth
Stross, Dr. B.	Watson, W. M.	Zilliacus, K.
Stubbs, A. E.	Webb, M (Bradford, C.)
Summerskill, Dr. Edith	Weitzman, D.	TELLERS FOR THE AYES
Symonds, Maj. A. L.	Wells, P. L. (Faversham)	Mr. J. Henderson and
Taylor, R J. (Morpeth)	Wells, W. T. (Walsall)	Captain Michael Stewart.
NOES.
Aitken, Hon. Max	Glossop, C. W. H.	Nicholson, G.
Amory, D. Heathcoat	Glyn, Sir R.	Nield, B. (Chester)
Anderson, Rt. Hn. Sir J. (Scot. Univ.)	Gomme-Duncan, Col. A. G.	Noble, Comdr. A. H. P.
Assheton, Rt. Hon. R.	Graham-Little, Sir E.	O'Neill, Rt. Hon. Sir H.
Astor, Hon. M.	Gridley, Sir A.	Orr-Ewing, I L.
Baldwin, A. E.	Grimston, R. V.	Peake, Rt. Hon. O.
Barlow, Sir J.	Hare, Lieut.-Col. Hn. J. H. (W'db'ge)	Peto, Brig. C. H. M.
Beamish, Maj. T. V. H.	Harvey, Air-Comdre A V.	Pickthorn, K.
Birch, Lt.-Col. Nigel	Head, Brig. A. H.	Pitman, I. J.
Boles, Lt.-Col. D. C (Wells)	Headlam, Lieut.-Col Rt. Hon. Sir C.	Ponsonby, Col. C. E.
Bossom, A. C.	Henderson, John (Cathcart)	Poole, O. B. S. (Oswestry)
Bower, N.	Hinchingbrooke, Viscount	Prior-Palmer, Brig. O.
Boyd-Carpenter, J. A.	Hollis, Sqn.-Ldr. M. C.	Raikes, H. V.
Bracken, Rt. Hon. Brendan	Holmes, Sir J. Stanley	Ramsay, Maj. S.
Braithwaite, Lt -Comdr. J. G.	Howard, Hon. A.	Renton, D.
Bromley-Davenport, Lt.-Col. W	Hudson, Rt. Hon. R. S. (Southport)	Roberts, Maj. P. G. (Ecclesall)
Buchan-Hepburn, P. G T.	Hurd, A.	Robinson, Wing-Comdr. Roland
Bullock, Capt M.	Hutchison, Col. J. R. (Glasgow, C.)	Ropner, Col. L.
Butcher, H. W.	Jarvis, Sir J.	Sanderson, Sir F.
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)	Jeffreys, General Sir G.	Shephard, S. (Newark)
Carson, E.	Jennings, R.	Smith, E. P. (Ashford)
Challen, Flt.-Lieut. C.	Keeling, E. H.	Snadden, W. M.
Channon, H.	Kerr, Sir J. Graham	Spearman, A. C. M.
Clarke, Col R. S.	Kingsmill, Lt.-Col. W. H.	Spence, Maj. H. R.
Clifton-Brown, Lt.-Col. G.	Lambert, Hon. G.	Stanley, Rt. Hon. O.
Cooper-Key, E. M.	Langford-Holt, J.	Stewart, J. Henderson (Fife, E.)
Crookshank, Capt. Rt. Hon. H. F. C.	Law, Rt Hon. R. K	Stoddart-Scott, Col. M.
Crosthwaite-Eyre, Col O. E.	Legge-Bourke, Maj. E A. H.	Stuart, Rt Hon. J.
Crowder, Capt. J. F. E.	Lindsay, Lt.-Col M. (Solihull)	Studholme, H. G.
Cuthbert, W. N.	Linstead, H. N.	Sutcliffe, H.
Darling, Sir W. Y.	Lloyd, Maj. Guy (Renfrew, E.)	Taylor, C S. (Eastbourne)
Davidson, Viscountess	Lucas-Tooth, Sir H.	Taylor, Vice-Adm. E. A. (P'dd'ton, S.)
Digby, Maj. S. W.	Lyttelton, Rt. Hon. O.	Thomas, J. P. L. (Hereford)
Dodds-Parker, A. D.	MacAndrew, Col. Sir C.	Thorneycroft, G. E. P.
Dower, Lt.-Col. A. V. G. (Penrith)	Macdonald, Capt. Sir P. (I. of Wight)	Thorp, Lt.-Col. R. A. F.
Drayson, Capt. G. B.	Mackeson, Lt.-Col. H. R.	Touche G. C.
Drewe, C.	McKie, J. H. (Galloway)	Turton, R. H.
Dugdale, Maj. Sir T. (Richmond)	Maclay, Hon. J. S.	Walker-Smith, D.
Duthie, W S.	Maclean, Brig. F. H. R. (Lancaster)	Ward, Hon. G. R.
Eccles, D. M.	Macmillan, Rt. Hon. Harold	Wheatley, Colonel M. J.
Eden, Rt. Hon. A.	Macpherson, Maj. N. (Dumfries)	White, Sir D. (Fareham)
Erroll, Col F. J.	Maitland, Comdr. J. W.	White, J. B. (Canterbury)
Fleming, Sqn.-Ldr. E. L	Marples, A. E.	Willink, Rt. Hon. H. U.
Fletcher, W. (Bury)	Marshall, D. (Bodmin)	Willoughby de Eresby, Lord
Fox, Sqn.-Ldr. Sir G.	Mellor, Sir J.	York, C.
Fraser, Maj. H. C. P. (Stone)	Molson, A H E.	Young, Sir A. S. L. (Partick)
Gage, Lt.-Col. C.	Morrison, Maj. J. G. (Salisbury)
Galbraith, Cmdr. T. D	Morrison, Rt. Hon W. S. (Cirencester)	TELLERS FOR THE NOES
Gammans, Capt. L. D.	Neven-Spence, Major Sir B.	Commander Agnew and Major Conant.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

Clauses 2 to 6 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without Amendment; read the Third time, and passed.