HOME AND OVERSEAS TRADE

HC Deb 05 November 1946 vol 428 cc1231-345

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. William Whiteley.]

3.58 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Belcher)

In normal circumstances this Debate would have been opened by my right hon. and learned Friend, the President of the Board of Trade. I am quite certain that all hon. Members will share my regret that he is unable to be here today, particularly as the cause of his absence is illness, and that they will join with me in the hope that it will not be long before he is back with us. The subject matter of the Debate is very broad. It is so broad that it is utterly impossible to cover it in any kind of detail, without occupying undue time, and I think it may be for the convenience of the House if I try to give a broad picture of what we in the Board of Trade have been aiming at over the last year since the end of hostilities, and some indication of how far we have succeeded in our objective, and of what yet remains to be done.

The problems facing this country at the end of the war were so different in quantity and in size from those which followed the first world war that they are, in fact, different in quality. During the last war, there was a far greater concentration on war manufacturing, a much more rigid shutting down of peacetime activities and, of course, a far greater destruction of our capital resources. In addition, our balance of payments position has been more adversely affected by wholesale borrowing and disinvestment abroad. Moreover, the economic destruction and dislocation this time have been more world wide than possibly we realised, with the result that practically the whole world today is faced with a grave shortage of food and raw materials—shortages which particularly affect us in view of our position as a country which, almost peculiarly, has to depend upon imports of both food and raw materials.

In the Board of Trade, we are concerned with two major aspects of trade and commerce. First, we are directly concerned with a large number of industries supplying consumer needs. We are responsible, in general, for industrial questions and of these export is, of course, of the highest importance. With the exception of food it is the Board of Trade which is responsible for the import programme, and of the Board of Trade which operates the import licensing machinery. I shall try to say something about most of these things, and those with which I do not deal will, I hope, be dealt with by my hon. Friend the Secretary for Overseas Trade, later in the Debate.

I take, first, the question of the industries supplying consumer needs. It was these civilian industries which the Board of Trade, during the war, were compelled to concentrate or shut, and which, consequently, started the postwar period with heavy handicaps. Let me give one or two examples. The furniture industry in June, 1945, was employing only 62,400 workers, as compared with 138,400 in June, 1939. The hosiery industry employed in June, 1945, 62,700, and in June, 1939, 126,400 workers. In the carpet manufacturing industry, there has been a reduction of something like 80 per cent. of the labour force, and in the cotton spinning industry—one of the industries about which we are now so much concerned—the reduction of workers has been from 184,900 in June, 1939, to 113,600 in June, 1945. These figures indicate the difficulties confronting these consumer needs industries at the moment, and there are others. These industries, at the end of the war, had a treble demand to meet. They had to meet the normal consumption level, the normal requirements of the population; they had to meet the arrears of wartime, six years of postponed purchases; and they had to meet the increased demand due to higher wages being paid generally throughout industry and commerce, through demobilisation allowances, and the virtual abolition of unemployment, except for some well defined areas. Therefore, it was not merely a question of getting back to prewar production.

Something more was demanded if the shortage of goods was to disappear. It is easy to appreciate that with our consumer goods supplies, during the war, running at about 50 per cent. of the prewar level, and with the tremendous destruction of household commodities and things of that kind in the blitz—one example comes to mind—the aluminium saucepans of housewives which were so recklessly taken away during the war, and which had to be made up at the end of the war—all this meant that there was a tremendous accumulation of demand. We had to meet this with less than 50 per cent. of the pre-war labour force, and with a labour force of a much higher average age, since there had been virtually no recruitment for six years. Many factories, also, were war damaged or evacuated; there was no new machinery; there was lack of maintenance or repair of the old; there was no young staff, and there was a lack of apprentices. These conditions were ruling a little over one year ago. Even during the war, when young men were directed, and every kind of machinery was available, when priorities were put forward, and things could be done almost regardless of cost, it took months, indeed years, to build up productive industry, such as the aircraft production industry. In the more difficult competitive conditions of the postwar world the expansion of the consumer need industries is a task of even greater difficulty.

The problem is fourfold. First, there is the question of factory space; second, labour supply; third, the supply of machinery; and fourth, the location of industry. As to factory space, there was occupied for war purposes, at the end of the war, 150 million square feet of space, most of which came from the concentrated industries. The first task was to shut down ordinary wartime manufacture, release, repair, and re-equip premises, or remove the stores in them to a more suitable location. A special section was set up in the Board of Trade to deal with this job, and a target was fixed to complete all clearance of industrial space by the end of this year. That target will, I believe, be achieved. In the course of it priorities have been arranged to release, first, the premises most urgently required from the national point of view.

Labour supply is more difficult. After the war, we wisely abandoned the direction of labour, and that meant that we could not, except by persuasion, get people into the industries where they were most urgently needed. The Ministry of Labour and Service Departments effected demobilisation with precision, smoothness and fairness, and, similarly, the Supply Departments reduced the strength of the munitions industries with promptitude. [HON. MEMBERS: "0h."] Well, it was a shaky start perhaps, but there was a very good recovery. We did not achieve, nor did we expect to achieve, a perfect balance in the distribution of labour. The swollen wartime industries, particularly the engineering industry, retained a greater labour force than prewar days by some 350,000 more people, many of them women.

As demobilisation progressed, more and more people entered civilian industries, but very seldom in the balanced numbers required. There has been, and still is, an acute shortage of women workers, although many more women are now employed. But that did not mean that those sections of industry most hardly pressed for production got their fair share. The labour went where it wanted to go and so far, from our point of view, it has not chosen to go wholly in accord with consumer needs. We shall have to consider the problem of these industries. They showed themselves to be, for one reason or another unpopular, because they were unable to recruit labour at a time when labour was not being directed. The unpopular industries have, by now, become clearly defined. The conditions in these industries have to be investigated, and steps have to be taken to try to make them more attractive for the labour they require—whether it is in regard to the wage level, the conditions of work, or the disagreeable nature of the work itself. In these industries steps have to be taken to try to improve matters so as to give them greater drawing power on the available labour. Compulsion having gone, something else has to be put in its place.

Mr. William Shepherd (Bucklow)

Will the hon. Gentleman tell us what steps are to be taken?

Mr. Belcher

There is constant consultation going on between the Board of Trade and both sides of industry, with a view to improving conditions, so far as is possible, in the various industries affected; and I think that the hon. Member must be aware of the activity which is going on in connection with the cotton trade to secure some improvement.

We come to the machinery side. There had been, of course, during the war a complete drying-up of the provision of peacetime machinery. The machine-makers had gone over to war production, and their factories have had to be re-equipped. In some cases, there had to be re-tooling before they could start to manufacture machinery to go into the factories—

Mr. Oliver Lyttelton (Aldershot)

Will the hon. Gentleman make it clear that he is not referring to the supply of machine tools?

Mr. Belcher

I am referring to the supply of machines. Machine tools may be included

Mr. Lyttelton

But are they included?

Mr. Belcher

Yes, of course, they are.

Mr. Lyttelton

That is a very remarkable statement.

Mr. Belcher

We had to consider the apportionment of this machinery between our home and our export trade. I shall, in a moment, say something about that. One of the difficulties was the small amount of information available about what was going to our consumer industries. This was one of the reasons why the working parties were set up. That information is now coming in, and discussions are taking place with both sides of industry and with other people affected.

On the fourth subject of allocation, we came up against the old problem of the development areas. As my right hon. and learned Friend spoke at some length on this subject to the House in last week's Debate, I shall not repeat what he said. But we had these large areas in which there was an excess of labour. Our policy was to take the work to this labour, and that could be only done by a large programme of factory building, running into several millions of pounds. That takes time, especially in the circumstances existing today, when we are trying to build all the houses we can. In those areas we tried to get a diversity to balance the supply to new industries on a scale sufficient ultimately to absorb the amount of labour likely to be spared from existing industries. These new factories will largely make consumer goods of the widest possible variety. In this way, we hoped by the autumn of this year to reestablish the labour forces so that the manufacture of home market orders was equal to that of mid-1939. That we have succeeded in doing. But that does not mean that every individual industry is up to prewar level—not by a long way. Most of the consumer goods industries have lagged behind because of their initial handicaps, and the capital goods industries are ahead of them. But in some consumer goods industries we are already ahead of the prewar figure. This is true of rayon, toys, hollow-ware, brushes, brooms, gloves and toilet preparations. In some, such as cutlery, we are not far below; while in others, especially textiles, we have come up against the utmost difficulty in their re-expansion.

There seems to be a popular idea that very little has been done to expand the supply of consumer goods. That, of course, is contrary to the facts. It is easy to see that the enormously increased demands—for the reasons which I have given—give the impression that the shortage continues as great as ever. I would like to give a few facts to show what is really the position. Retail sales, other than food, rose by 28 per cent. during the third quarter of 1946, as compared with the same period of 1945. [An HON. MEMBER: "Volume or price?"] That is volume. If we take the 1935 level of supplies as equal to 100, and compare with that base the figures for May-June, 1945, and May-June, 1946, respectively, we get these figures: Footwear, 1945, 58, 1946, 75; other clothing, 1945, 48, 1946, 65; furniture and furnishings, 1945, 26, 1946, 61; hardware, 1945, 45, 1946, 98. In all these cases, as hon. Members can see, there is room for improvement. A great deal more needs to be done, but there has been this increase in the supply of these very necessary consumer goods. These figures are the volume not the price and they do not include any element for quality. I am quite sure that in clothing, the average quality, since rationing and the utility range of goods came in, has been much improved. The factors which I have mentioned have not been the only difficulties.

In many industries, today, we are up against a world shortage of raw materials. This has reached a stage, in some industries, which may hamper any further expansion of production, and may cause a diminution. Apart from steel, there are lead, timber, leather, linseed oil and other materials which we cannot, at present, purchase from anywhere in the world. Furniture, for instance, is now limited to present production, even if that can be maintained, by shortage of plywood and hardwood. It is still 60 per cent. below prewar at a time of greatly increased demand.

Sir Arthur Salter (Oxford University)

Is the hon. Gentleman speaking of goods available for the home market, or is he including what is available for export?

Mr. Belcher

The figures which I am giving relate to production as a whole.

Sir A. Salter

If there has been an increase in exports, it means that the movement to the home market is not as great as the figures themselves suggest.

Mr. Belcher

That depends on what proportion of the production of the commodities I am talking about has been exported. I was talking about furniture, of which none at all is exported. Linoleum production is seriously affected.

Mr. Orr-Ewing (Weston-super-Mare)

The hon. Gentleman is talking about production of footwear. Surely, he has the figures of the export of footwear? And, therefore, surely he can give us the residue left for the home market? In that case we should get a clear picture.

Mr. Belcher

I have not discussed the footwear industry in detail. I have been discussing the furniture industry, but, without having the exact figures in mind I can assure the hon. Member that, so far as footwear is concerned, our exports are extremely limited. I was referring to the linoleum industry, an industry which is obviously most important at the present time, when so many people are setting up home for the first time, or setting up home again after their original homes were knocked out in the blitz. Because there are not adequate supplies of linseed obtainable, the linoleum industry has to remain restricted.

There is one further difficulty which affects all our industries, and that is the shortage of fuel and power. We hope we may get through this winter without any serious disturbance of production, but we can only be assured on that if we can secure a greater output from the mines. We are discussing with the National Production Advisory Council for Industry ways and means of dealing with this situation in respect of solid fuel, gas and electricity in case, unhappily, there should be a threat of interrupted production. Therefore, today our two main difficulties, apart from the fuel and power situation, are shortage of labour, particularly in the textile industries, and shortage of raw materials, particularly in steel, timber, leather, and linseed oil. We sought to alleviate these difficulties by substitution of raw materials, and the search is still going on, but sometimes by so doing we find that new shortages are created. We substituted steel for timber, and then we found that there was a shortage of steel. We proceeded to substitute aluminium for steel, and now we are up against a shortage of capacity for fabricating aluminium.

I now turn to the question of our overseas trade. That trade was delibertely sacrificed during the war for the purpose of making our maximum contribution to the winning of the war. It was obvious that when the war ended, first of all it would be necessary to re-establish ourselves in our old markets and to gain as many new ones as possible, and to do it quickly, so as to take the fullest advantage of the immediate sellers' market. We did not know, and we do not know now, how long it will last. What is certain is that if we lost that opportunity, it might never recur in time to enable us to rebuild our export trade. But there was another compelling reason. We had largely lost our overseas investments and the free imports they yielded before the war; and, on the other side, we had piled up a great sterling debt which will have to be paid off by the export of goods and services. This is one of our major difficulties at the present time. I would like to say a few more words about it, because, as it reveals the position in which we found ourselves in respect of our overseas assets by the end of the war, it reveals the very great contribution made by this country in that way.

We, who had been for so long the great creditor country, deliberately turned ourselves into a debtor country, and made our job much more difficult in the future. For many years before the war began, we had maintained in this country a standard of living higher than in most other places. It may not have been equitably distributed, but over all the standard of living in this country was higher than in most other places. That was due, to a very considerable extent, to the work of the industries of this country throughout the 19th Century, when they were the first in the field, and when they made investments abroad which brought, year by year, a considerable income of free imports, hundreds of millions of pounds worth of goods for which we did not have to pay by exporting out of the country. That, and the earnings of the merchant navy, were responsible for quite a large slice of our prewar imports. In fact, we could say that, setting one set of figures against another, all our wheat, all our meat, all our wool, all our cotton and all our tobacco came into this country for nothing; in other words, the total volume of the interest on overseas assets was sufficient to have paid for the whole of that import programme.

What has happened? We have disinvested quite a large part of those assets, and, on the other hand, we have accumulated enormous debts which will have to be served. Obviously, it was impossible for us to balance our overseas payments at once, and so we had to resort to the temporary expedient of loans from the United States of America and Canada, to help us to import our food and raw materials while we are building up our own industries and our exports again, thus working all the time towards a balance of overseas payments. We wanted to get our trade going again with as many countries as possible, and to help in the rehabilitation of the war-devastated countries from whom we might hope in return in the future to draw needed supplies. To that end we have had many negotiations. We are now, once again, beginning to get into normal trade relations with many of our old customers. The Argentine agreement, the interim agreement we have been able to make with the Soviet Union, and our current negotiations with France, are three typical examples of our activities in that direction. Then, of course, and even more important, there are the talks now proceeding in London as a preliminary to the international conference on worldwide trade generally, which we hope will take place in the spring. As the House knows, these discussions are directed towards securing agreement on a code of trade policy which will lead to a continuous expansion in the total world trade, which is the one thing we must always be seeking if we are to secure an improved standard of living for ourselves, for the citizens of the Empire, and for other people.

We are now having to buy a very large proportion of our requirements from dollar sources, since production in Europe and other areas has not yet sufficiently recovered to enable us to obtain the goods we want from those areas, but as far as exports are concerned, there is a continual pressure upon us to help in the rehabilitation of the devastated countries and to help in the development of Africa, India, and the Dominions. This means that our outgoings are largely in dollars, and the great part of our receipts are in currencies which are not exchangeable for dollars, and indeed, to a considerable extent, are not immediately exchangeable for goods. This is placing a very heavy drain on our dollar resources, and we must exercise the greatest care to see that we do not get our dollar funds exhausted before we have any chance of renewing them, either through exports to the dollar areas, or by obtaining for our exports currencies that are freely convertible. Whereas about 50 per cent. of our imports come from the American continent, only about 14 per cent. of our exports go there. So that within the general problem of the balance of trade there is, therefore, this further very critical problem of our dollar balance.

One thing, I am sure, is quite clear to the House, and that is, that exports are just as essential to a high standard of living as are consumer goods for the home market. We are continually being pressed to import goods of all kinds—manufactured goods, raw materials, food—so that our own people may have more of them, but that is quite impossible, beyond a certain very limited volume covered by our dollar loans, unless we pay for them by exports sent in exchange. We have fixed the target required to balance our overseas payments, and so to get us back to our 1939 standard of living, as 75 per cent. more exports in volume than before the war, and that target must be achieved before the dollar loans are exhausted. The earlier we can achieve it, the less of the dollar loans we shall have to take up, and the easier, therefore, will be their ultimate repayment.

That is the target at which the Board of Trade is aiming in export policy, but in so doing we are trying to see that both in capital and consumer goods our own people get the fullest possible consideration. I would like to assure the House of our desire and our determination to see that our own people do get the fullest consideration. We have not done badly at all so far, and I think both managements and workers are to be complimented on their achievements in very difficult circumstances.

It is interesting to compare our effort with that after the 1914–18 war. In 1919 the volume of British exports was only 55 per cent. of that of 1913, and in 1920 it was only 71 per cent. We have already passed the 1939 volume of exports in the third quarter of this year, and although there was a deep decline during August and September from the July peak, the October figures will show that the effect of the holiday period is past and that we are on the increase again. We now have 1,344,000 workers engaged in the export industries, a figure 45 per cent. above that of prewar which, considering the time lag between the beginning of manufacture and the export of the finished article, does not accord badly with our increased employment in exports. So far as machinery and equipment are concerned nearly every kind is subject to direction as to the division between the home and export markets. This division is under constant review in the light of changing circumstances. Some people seem to think that we could export all our production of these capital goods, but we must maintain a proper balance between the needs of our home industries and our export orders.

For instance, in the case of textile machinery, whereas two-thirds of the orders are for exports, only half the production is allowed to go for export, thus giving a larger proportion for the home market. In pottery machinery, another example where urgent re-equipment is necessary, according to the working party report, only token exports are allowed. The same could be said of other lines of manufacture, although each case must be determined on its own merits and circumstances and there can be no general rule. Hon. Members appreciate that if we were to give way to pressure in either direction—and there is plenty from both—to increase or stop exports, we should very soon run into an entirely impossible situation either for the home or overseas markets or both. One other factor to be borne in mind is that this country is traditionally the supplier of many commodities to our Dominions and Colonies, and to other countries which themselves have no such supplies. We cannot in this case leave them completely denuded; we must try to maintain a minimum export to meet their most urgent needs. This applies particularly to such commodities as textile goods of all kinds So, too, in cases where we want to obtain food or raw materials from overseas countries, we have frequently to supply packing materials, transport supplies of various kinds, and, in some cases, some consumer goods in order to stimulate and induce production.

I am aware of the desire of some hon. Members to discuss the future of Japanese trade, but in view of the outline of Government policy given to the House by my right hon. and learned Friend on 28th October I do not propose to add anything to what was then said. My hon. Friend the Secretary for Overseas Trade will be prepared to deal with such questions as may arise in the course of the Debate.

So much then for our objective and how we have tried to progress towards it. It must be clear to all of us that in 12 months we cannot expect to make a complete recovery from the disturbances of six years of war. Indeed, with the manpower available it is difficult to see how it is possible for us to do all these many jobs and a good deal more, like building houses, expanding our social services, and so on. We cannot, therefore, have all we want now.

Lieut.-Commander Gurney Braithwaite (Holderness)

Why did not hon. Members opposite tell the people that at the General Election?

Mr. Belcher

Someone must wait. Some things must be done later. The hon. and gallant Gentleman just interjected to ask why we did not tell the people this at the General Election. I can assure him that I did, and I am prepared to prove it to him if he wishes. If we had tried to satisfy everyone at once it would have led us to inflation. It is only by looking at the problem as a whole and not taking isolated instances that we can arrive at a wise division of our resources of manpower, machinery and materials. We have all got to hold back while production is built up by avoiding unnecessary expenditure—national savings come well into the picture there, and I, personally, shall be very grateful for all the help any hon. Member can give in this direction—and by not pressing for higher wages or increased prices. We cannot get through our difficulties if we are all going to look upon this as a golden opportunity of a shortage all round in which we can feather our own nests at the expense of the community as a whole.

One of the very important factors in this overall situation and in the fight against inflation is the price control policy. The Board of Trade in one way or another—some ways more satisfactory than others—controls the prices of nearly all non-food consumer goods. The strictest controls are exercised, naturally, over the most essential goods, and in this work the Central Price Regulation Committee and the local price regulation committees have played a vitally important part. I should like to take this opportunity of thanking all those who have helped in this work—many of them volunteers without payment—for they are the people responsible for the very great measure of success of this policy of price control in this country. Its success can be gauged by a comparison with the sequel to the first world war. After that war clothing, for example, rose to a price level of 300 per cent. above prewar, whereas now it is only 67 per cent. higher than in 1939.

Lieut.-Commander Braithwaite

There is not any.

Mr. Belcher

Part of this has been achieved by direct subsidies of utility cloths, but apart from these, the increase would be still well below 100 per cent. and it is by this machinery, coupled with the subsidies, that the cost of living has been held and the danger of a runaway inflationary advance of salaries and wages reduced.

I now come to what I regard, in the light of experience and of the facts which I have placed before the House, as the most important part of our whole programme. It is clear from these facts that we must very largely increase our production, if we are to satisfy the needs both of our own consuming public and the minimum exports which we must achieve as rapidly as possible. It is equally clear that, apart from comparatively small numbers in the development areas, we have no further resources of manpower that we can enlist once the demobilisation is complete. The only way out, therefore, is to increase our output per man hour throughout all our productive field, and at the same time avoid wasteful drawing off of manpower for other purposes.

The main factor which I feel sure is standing in the way of this increase is the psychology of unemployment for which we are not responsible but which was inflicted on this country during the last century, and particularly between the two wars. We must convince ourselves now that we have abolished unemployment, and then we must convince the public, and particularly the workers in industry, that full employment has become a fact, and will be continued and maintained by the authority and with the help of this House, and that the danger today is not of mass unemployment, but of lower standards of living due to the slow advances of the productivity of labour. It was in order to point the way to the achievement of this higher productivity that the working parties were set up, and I am sure the whole country is grateful to those men and women who have voluntarily laboured for many months at this task, and who have produced and will produce some very valuable reports pointing the way to improvements which can yield fuller production in the various industries examined.

This increase in productivity is equally the task of management and labour. Both have a contribution to make. What is essential is that both sides of the industry should be prepared to put behind them the methods and ideas which were associated with the era of mass unemployment and tackle this new era of full employment with open minds freed from all inhibitions. In a period of full employment, management needs to be more highly skilled and more conscious of the importance of the human element in the labour force. Greater attention must be paid to reequipment with modern machinery and the use of up to date methods. On the side of labour, all restrictions and the idea of spinning out the job to prevent unemployment later on—perfectly understandable with those who have come into contact with the long period of unemployment many of our people endured—have to go, in a time of full employment. However short or long the hours, all voluntary absenteeism during work hours must become a most exceptional occurrence.

On the Government side—for we come into this, because we regard the problem as tripartite—we are doing all we can to foster and encourage efficiency in every field, including that of Government administration. [Laughter.] Hon. Members may laugh. I merely state the facts. It is for those reasons that we offered to assist the British Institute of Management and that we have set up in the Board of Trade, a Production Efficiency Section, which is becoming the Mecca of many worried industrialists. [Laughter.] Oh, yes. Industrialists have told me themselves what they think about it. Hon. Members may laugh, but when one is adducing facts, the facts are not answered by laughter. A large number of industries, far larger than we can cope with at the present time because we have not a force big enough to deal with them, ask us for assistance and advice how they can improve their production efficiency. We are now examining the reports of the working parties in association with both sides of industry. We have already started to implement the recommendations in some cases. Others, of course, must wait for legislation, when that becomes possible.

Sir Frank Sanderson (Ealing, East)

Can the Parliamentary Secretary say how many reports have been received from working parties?

Mr. Belcher

I am not quite sure of the exact number. I think it is in the region of five or six. Through the National Production Advisory Council on Industry, and the regional boards, and in consultation with the National Joint Advisory Council, we are constantly discussing all kinds of ideas aimed at increasing production and efficiency. I would like to make it clear that it is idle to think of raising our standard of living unless we raise our productivity. If we merely increase wages, salaries and profits without a corresponding increase in productivity we shall be widening still more the already existing gap between purchasing power and available commodities, and will enter the wage-price spiral, in which wages never in any conditions catch up with prices. Money loses its value unless we make the goods it can purchase. That is today a very great danger, and that is why I say that we must hold back, on the one hand, with our money demands, and at the same time we must lay the foundations for a further advance in our standard of living by an increase in our standards of production.

I have no doubt that the job which lies before us is one which we can tackle. As a nation, and as a member of the British Commonwealth of Nations it is not beyond our power, but we can achieve our aims only if we realise that someone else cannot do it for us. It is a question of every shoulder to the wheel, an all out effort by every team in all our industries, a putting aside of any tendency to selfish opportunism, and a concentration on the problem of national recovery. There was a slogan during the war which might very well be carried into our civilian effort now. It was, "It all depends on me." It does, indeed, depend upon an intelligent, open-minded contribution by all three parties in the enterprise. The Board of Trade are anxious and willing to fulfil their obligations to that partnership of effort.

4.45 p.m.

Mr. Frank Byers (Dorset, Northern)

I am extremely sorry that the President of the Board of Trade is ill and unable to be with us today. I am sure that we all wish him a speedy recovery. May I add that I am grateful to the Government for putting up the two subordinate Ministers rather than a Cabinet Minister who would know very little about the subject?

We have listened to a speech which, by a series of careful omissions, has produced a very reasonable statement of aims, with the absence, the refreshing absence, of theoretical Socialism. I think the speech has commanded a good deal of agreement and support in all parts of the House. I could wish that the hon. Gentleman had paid a little more attention to the international economic set-up, as it is at the moment. I agree with him that the scope of this job is extremely wide. I hope that when his colleague, the Secretary for Overseas Trade, replies, he may say a few words on this aspect of the matter. Perhaps we are not paying enough attention to the actual economic set-up in which we are attempting to achieve our production and export drive.

The greatest bugbear in the field of international economics in the past has surely always been a fear of world depression. Even now we see, overshadowing so many of our discussions, that fear of world slump. It is well to realise that since the last world slump and the fiasco of the London Conference we have made great, and even revolutionary, strides in the machinery for countering world depression and world slump. We have the International Monetary Fund to provide a cushion, the International Bank for Reconstruction and Development to undertake public works throughout the world, the F.A.O. the international organisation which is discussing the question of buffer stocks. We have fairly comprehensive machinery for countering world depression. What I am afraid of is that in this country, on that side of the House and on this, we are still living in an atmosphere of rather narrow economic nationalism, or economic imperialism, which will not fit in with that international structure. I was delighted to have the assurance from the Parliamentary Secretary that the Government would support the international machinery to the full. But I wonder whether the Government really mean that, or are we just playing the old game of paying lip-service to international projects, without wanting or being willing to pursue a policy of give and take? I do not believe that any amount of national planning, nationalisation or Government ownership, or rigid centralised control, will prevent this country from being seriously affected by world depression. We may try to isolate ourselves, but we shall not insulate ourselves, from its effects. Our sole insurance against the tendency to world depression, is to support those international projects which create the necessary machinery, and to support them to the full.

I would like to be assured by the Secretary for Overseas Trade that we are quite willing to take the lead in supporting those international projects. We have to define our objective in peace just as much as in war. Our objective is not just national and international trade; it is a much higher one than that. It is the improvement of the standard of living of mankind throughout the world. We do it by achieving an increase in international trade. Let us keep the objective well in the forefront of our minds. We have the machinery which will guarantee us full employment if it is used properly, and the maintenance of a satisfactory income, and, through the buffer stocks, a system of keeping up the production of primary producers. We have all the machinery. I hope that the Government will support those projects to the full. It means give and take. It means that in this country we must be prepared to reduce the barriers to world trade. Do we mean business on that? The Americans, even with their high protectionist history, through the influence of President Roosevelt, Cordell Hull and others have committed themselves to the reduction of tariff barriers under the Mutual Aid Agreement and the Loan Agreement. Are we prepared to do the same? Are we prepared to give a lead in reducing barriers to world trade in order to make this international machinery work, and to increase and expand world trade, thus improving the standard of living of people throughout the world?

One thing we must remember is that if we want to achieve full employment through international cooperation, everybody must be in the scheme. We cannot admit exceptions. Everybody must play their part in this international machinery. I think that was the idea of the originators of this scheme. There is the case of Russia. We must do our utmost to get every nation into the machine. I am afraid we shall meet with some resistance on the part of countries not as highly industrialised as ours. They will say that they want high protection, at any rate for a short time. That will not assist this machinery. What those countries want is not high protection, but assistance in industrial techniques and industrial "know-how." Empire Preference, which is a form of discrimination by certain countries against others, will do a great disservice to this international machinery. I do not think it is compatible with this international machinery. We can assist the Colonies and the Dominions in industrial techniques and "know-hows." We can show them how to build up their industries as quickly as possible so that they can contribute to an expansion of world trade. I know this is not going to be acceptable to hon. Members above the Gangway, but this is the modern conception, and I believe that they are totally out of date. Many hon. Members on the other side of the House will probably agree with me. In the Chancellor of the Exchequer we have a declared advocate of Imperial Preference —[Interruption.] If proof were required from hon. Gentlemen above the Gangway of what I have said, there it is. I say to those hon. Members most seriously, that this is not just an election point. It is not just party capital on their side or anybody else's. While they have been out of office a whole new set of international projects has come into being as a result of a freer trade attitude very largely on the part of the Americans, with some support from this country. It is into that new set-up, that we have to fit ourselves in the future.

I turn to a matter to which I attach tremendous importance, the question of the production drive and the export drive. We have little to quarrel about in the Parliamentary Secretary's statement. All parties support the production drive and the export drive. We realise the position as it is today, that we have lost 25 per cent. of our national wealth during the war and have to pay back the American and Canadian loans and our foreign debts. We know we have to do all that, but is it sufficiently realised throughout the country that we have to do that to maintain our standard of living, not to improve it? It ought to be emphasised that we are, in fact, in danger of a reduction of our standard of living unless we can achieve the tremendous targets which we have set ourselves.

I want to deal with a few of the ingredients of this production drive, because I feel that our national survival depends on its success First, there is manpower. As we have been told today, and on many other occasions, the supply of manpower does not equal the demand, and unless supply and demand can be equated, we are told by the President of the Board of Trade we shall reduce our standard of living. In those circumstances, this does not make sense. We are short of manpower, and yet we have at the Home Office the epitome of Conservatism pursuing a very Tory policy of immigration, one which is not designed to attract skilled workers into this country. It is a policy under which, when one asks if German ex-prisoners of war who are "white" and are prepared to work here in the agricultural industry, may be permitted to do so, one gets a rude answer. In fact, the history of the pressure which has had to be brought to bear on the Home Office by hon. Members of this House to get any relaxation in immigration ought to be written up, because it is a staggering example of the progressive mind having to fight tooth and nail against Conservatism—the sort of thing we were used to before the war. I am glad to say that there are a number of more progressive hon. Members opposite who are supporting this drive to get more skilled workers into the country. It is on the Front Bench today that one finds the Conservative attitude which is preventing us employing the skilled manpower which could be avail- able. Surely it is possible to make more use of foreign workers who wish to come here, and who can be employed in this country without affecting the situation of our own people?

What about the actual demand for manpower? I agree entirely with the Parliamentary Secretary that we must cut down our demands, but I suggest sincerely that the Government themselves are among the worst offenders. We have still about 400,000 more people employed by Government Departments than we had in 1939. Surely, it is not Blimpish to suggest that that number could be reduced considerably. I am not suggesting that we could get down to the 1939 level. Of course we cannot. There have been great extensions of Government responsibilities in the meantime. But is there any review going on at the present time to try to prune these staffs? After all, in the war we had to prune very seriously what we called our administrative tail, in order to increase the teeth of the Armed Forces. We want more teeth in the production drive. Is anything being done to reduce the number of people employed in Government Departments today?

I do not know whether we can get any information on this, but I understand that a manpower survey has recently been made by the Cabinet. Is the result of that to be given to the House? Are we to know the conclusions which have been drawn from that survey? It would be of the utmost importance to all hon. Members to know what that survey produced. The Parliamentary Secretary also referred to output per man-hour, and it is reasonable to ask whether we are getting the maximum output possible. Although there are today as many people employed in the manufacturing industry on home market orders, as there were in 1939, even allowing for the increased demands, I do not believe that the volume of goods is as great as it was in 1939. I may have misunderstood the Parliamentary Secretary, but my own feeling is that there is, in fact, a considerable amount of inefficiency, waste of time, voluntary absenteeism and so forth, all of which is affecting the production drive and must be stopped. I do not pretend that any one man in this country has got the answer, but provided we can expose that as a situation, I think we shall have gone a long way towards altering it. On this question of output per manhour I would like to say a word on the question of incentive, and of the main incentives I agree that consumer goods are important. Taxation reliefs are equally important, and an increase in real wages is absolutely vital. I am not suggesting money wages, but real wages.

Mr. Sydney Silverman (Nelson and Colne)

You cannot eat it and export it as well.

Mr. Byers

Perhaps I might be able to answer that point. I would like to ask for this assurance, that as soon as we get into our export pipeline sufficient consumer goods to attract some sort of a balance of imports and exports, we should then consider seriously increasing very rapidly the allocation of certain classes of consumer goods to the home market. I feel that there are certain categories of consumer goods which are likely to provide a bigger incentive to the worker than others. I do not know how one would find this out, but I could make a guess. I may be entirely wrong, but things like labour saving devices, washing machines, vacuum cleaners, perhaps small cars—is it possible to place these consumer goods in certain incentive categories? Is it possible, for instance, to use the Gallup poll technique, to find out what people are really wanting; or does the Board of Trade know? Having done that, is it possible to give first priority to the diversion of that type of incentive goods into the home market as soon as we are approaching some sort of balance in our imports and exports?

As far as taxation is concerned, I will not dwell on that, but I hope that the President of the Board of Trade will bring pressure to bear upon the Chancellor, even to the extent of taking the risk of increasing the bottom limit of tax and a general reduction of taxation all round. My hon. Friends put this up in the last Budget Debate, and we shall continue to do so because we feel that taxation should be looked at, not merely from the point of view of revenue, but from the point of view of incentive. By the Chancellor it is looked at from the point of view of revenue, while the President of the Board of Trade looks at it from incentive. There is a case for coordination. I say quite frankly—and I think we are in agreement on this—that, as the Parliamentary Sec- retary said, no solution to the problem of incentive is to be found in a further increase in money wages. What we now require, if we can get it, is an increase in real wages by reducing prices to increase efficiency and increase output per manhour. That is perhaps not appreciated as much as it should be.

In this connection there is one thing which appears to me to be keeping prices at an artificially high level, and that is the action of the price rings and the very large monopolies and trade associations with restrictive tendencies. The existence of those things today after a year of a so-called progressive Government seems to me a shocking thing As far as I can see, no action whatever has been taken to break down these price rings, and we have a situation where the Government are not only doing nothing but, in certain cases, are actively conniving at the existence of the practices of these price rings. It is most difficult to expose these price rings because, if you ask a Parliamentary Question, you get an answer that it would be improper to give the allocation to individual firms, and so forth.

Let me give one example. The Accumulator Manufacturers Association, who make batteries for cars, receive an allocation from the Ministry of Supply of lead which is in short supply. The Ministry of Supply have evidence that the members of this trade association, when quoting prices for tenders, quote about 30 per cent. to 40 per cent. higher prices than non-members of the price ring. It is a usual practice but the non-members of the price ring cannot get lead. The Ministry of Supply is continuing to hand out the lead to the people who are in the price ring, and I say that that is prima facie evidence of a racket. I have brought it to the attention of the Board of Trade and to the Ministry of Supply. If that sort of thing is allowed, surely it will have a very damaging effect upon the whole production drive. Any tendencies which keep up prices artificially are not assisting the production drive at all. I hope it will not be long before some strong action is taken to deal with the question of these price rings which are keeping prices artificially high, and which must be acting as a brake upon the production drive.

As far as the export drive is concerned, I agree with the Parliamentary Secretary that we must support it to the full, but what I am slightly worried about is this: Are we making sufficient and detailed plans now to cope with the end of the sellers' market? That seems to me to be vital. We could live in a fool's paradise for three years and then discover that we were not ready to compete with lower prices, higher quality goods, increased efficiency, and so forth, at the end of the sellers' market and the beginning of the buyers' market. Again, I say that the whole question of restrictive practices in big business and in the trade union movement must be tackled. I am not for one moment blaming the trade union movement for these restrictive practices. I agree entirely that in the interwar years they were legitimate practices when there was fear of unemployment. I think they were a normal reaction to the type of Government which we had in power for a number of years, but we must now change that attitude and the attitude must surely be one not of fear of unemployment but of confidence in full employment. I hope that the Prime Minister is having some effect today with the Trade Union Congress, and that he will be able to persuade them to play their full part in inspiring confidence in the workers. I do not speak as a worker or as an employer, but it seems to me that there is a psychological problem to be overcome and the best people to do it are the trade union officials themselves. Once they show that they have confidence in the full employment policy, then I believe that these restrictive practices will certainly be reduced, and may well cease.

As the Parliamentary Secretary said, the scope of this Debate is very wide, and I do not propose to cover any more points. I hope that we shall recognise the magnitude and complexity of the task which is facing us. As I said at the beginning of my remarks, I was slightly heartened by the almost Liberal approach of the Parliamentary Secretary in his statement. I hope that will not embarrass him with his own supporters, but it is only by a courageous approach to this problem, and by leaving out doctrinaire considerations which are likely to intrude themselves and to cause uncertainty when we want stability, that we shall find the solution to this problem which we require.

5.9 p.m.

Sir Peter Bennett (Birmingham, Edgbaston)

Like the hon. Member for North Dorset (Mr. Byers), I commence by saying how much I regret the absence of the President of the Board of Trade today through indisposition. It is always a pleasure to listen to the right hon. and learned Gentleman's voice although one may not agree with his matter. There was a time when I was cross-examined by him and I did not like his voice on that occasion, but, since I have come here, I have come to admire the beautiful way in which he expresses his thoughts, even though I do not like the thoughts.

Before I deal with the remarks of the Parliamentary Secretary, I cannot allow the one main difference between my hon. Friend on the Liberal benches and myself to pass unnoticed. Of course, one expects a difference between the people who are on this side of the Gangway and those who sit with him. With me, for instance, Free Trade and Protection and preferences are not matters of religion; they are purely matters of expediency, and I do not hold to any dogmatic view; I am willing to look at any case in the light of the circumstances. When the hon. Member says that he knows of some radical change in the point of view of the United States, I wonder where he has got that information. I went over only two years ago to the international conference at Rye. I heard those American manufacturers say, "We are prepared to consider a reduction in tariffs." There were great cheers, and then we asked them what they meant, and they said, "We could take off 10 per cent. without it hurting us."

Mr. Byers

Will the hon. Member not agree that there has been a remarkable change in the attitude of the American Trade Department? How is it possible to get this international machinery set up, if the Americans are against us?

Sir P. Bennett

The American Administration are trying to lead their people, but I have had to deal with American manufacturers all my life. When I read the papers which, I think, were issued with the approval of the Administration, I found that before any changes could be made in tariffs, there must be a full inquiry with an opportunity for all interested people to bring forward their views. If I know anything of those inquiries, that will take a long time. I hope the Government, in answer to the appeal of the hon. Member for North Dorset to give a lead, will be very careful in seeing what is meant by the Government giving a lead. We do not mean any more unilateral disarmament, I hope. My friends and I have always been prepared to discuss with the Americans, or with anyone else, on the basis of something for something. But we object to being asked to do something for nothing, to make a gesture to show how broad minded we are, and then sit down to see what other people do.

Having left that controversial point, I would like to go on to questions on which we are more or less agreed. The present productive position in this country is misunderstood in many ways. There is an idea that because we are in a sellers' market, industry must be very prosperous and that we can get any price we like. That, of course, is not so. The Minister dealt with the dislocation caused in many industries, some of which were concentrated, while others wrecked their organisations in order to make something entirely different from that for which they had been planned. They are slowly getting back. There were industries, such as the chemical industries and others, which were fortunate enough to be on a continual process basis. They could go on making more or less what they had made before the war, and could extend their production. But the fabricating industries, and those which made munitions of war of a totally different nature from their normal production, are going through a difficult stage. Many are still working in "red ink"—which means that they are making a loss. They have the difficulties of intermittent sources of supply, and continual shortages. They have to search round the country for little bits of material to keep their factories going. There is waiting time, and lack of production. Motor cars are a case in point. Prices have been based on a higher output, but difficulty is found in attaining it.

When the Minister was talking about the "hard luck story," of dislocation and difficulty, I could not help thinking what a commentary it was on the position in which we find ourselves today. Supposing my business was in the difficult situation in which the Minister pictured our industries, what would he said of me if I chose that particular moment to make some drastic and rather difficult experi- ment? Suppose I considered that now was the time to give up manufacturing, and become a farmer, or something of that sort. Yet the Government have taken this moment, when industry is going through the most difficult period we have ever had in our history, to make experiments in nationalisation. We cannot get reorganisation without a flow. Our first effort ought to be to get the flow back. Then, if Socialism is to be tried, that would be the time to try it. I am not arguing its merits, or demerits, at the moment, although it must be known that I agree with the late Sir Alfred Mond, who said in this House that there was only one objection to Socialism—that it would not work. We should have waited until our industries were in a decent state of health, and every effort should have been concentrated on getting a production flow. But, instead of that, we are delaying our return to normality.

Mr. Belcher

I would like to ask the hon. Member if anyone has yet told him that the reason for nationalisation of certain basic industries is precisely to get the flow started, to which he referred.

Sir P. Bennett

That is a matter on which the hon. Gentleman and I must agree to differ. There have been matters on which we agreed this week, but that is one on which, as I think I told him, we have to differ. Let me come to the question of planning. I believe in planning, but I would point out that there are two varieties of planning. There is the slide rule method, known vulgarly as the "penny in the slot"—you put something in and wait for the results. There is also the business type of planning. When we make our plans in business, we always know that those plans will very seldom be carried out exactly as they are laid down in the first instance. So we lay our plans in such a way as to provide for alterations which the difficulties of the situation, human nature, and mistakes which people are bound to make will necessitate. The difficulty with planning by a Government Department, or by the State, is that it cannot be done in that elastic manner. The plan is laid down, and has to go through. In some businesses people lay down the plan, and leave it to the initiative of others to carry it out. In other cases the head man insists in doing everything himself. He sits on a stool, and opens every letter for fear one might get slipped under the pad, if he did not open it. In one business I know of, the boss has gone overseas, and there is complete stagnation because he is away.

I believe in giving general freedom to those who are doing the work; giving them general guidance, and leaving them to work out their own salvation in their own way. I believe we want more of that in the methods by which Government planning is carried out. It may be said that that is all right for business, but it cannot be done in a Government Department. During the war I was a temporary civil servant for five years, and I tried it out. We called the people together from different parts of the country and told them, "There is the problem, and these are the guiding principles. Carry the work out in your own way. Birmingham is doing it this way, London that way; what about Manchester coming and seeing what they are doing? "Those who know Manchester will know that if I had taken the Birmingham plan and said that that was the scheme they would have to adopt we would not have got far. It is difficult to expect Manchester to copy anyone. We got the results, each place doing its organisation in different ways, and we got the results with no Parliamentary Questions being asked about the problem we had in hand. When I was appointed chairman of the Automatic Gun Board, the Minister told me I had better get some independent people on it. I said, "No, sir," and he asked "Who are you going to get?" I said, "I am going to get the gun-makers." They were a difficult team, but we got them together and divided the job up and told one "You have that section," and another" You have this section." We used their idiosyncrasies and their awkwardnesses, and no Parliamentary Question was asked about the supply of weapons we had in hand.

Many of the difficulties from which we are suffering are not foreseen. There is lack of experience. Business planning is a very skilled job. It is not picked up in a few minutes by anyone who comes along. It is not even the ordinary civil servant's job. In saying that I have the authority of some of the best civil servants I have known. They have said "That is your job." It needs many years of experience, gained in a hard school. Why do the top executives in industry receive big salaries? Not because people like them or want to pay them those big salaries, but because they are the people who take the responsibility for big plans and for carrying them out from beginning to end. Remember, they are the people who take the risks. The manager who has a failure runs the risk of the sack. Proprietors and directors who make mistakes run the risk of ruin. We cannot expect civil servants, using our money and appointed by the Treasury, to take risks of that sort. Yet without that sort of risk, we shall never get business running again in the way we want to see it and need to see it.

It is a question not of control but of the rigidity of control. Take the steel shortage. The motor manufacturers were asked to take over shadow factories. They were told that the Aero labour, which was being displaced, was to be employed in them. That was stated in the "Board of Trade Gazette." In articles in the Press, and speeches by Ministers, it was stated that here was an example of what could be done. Yet within a short period, we find that these facilities cannot be fully used, because there is not enough sheet steel. Why? Other people are calling for their quota. But surely, when new schemes were being prepared, when programmes were being made out for other purposes, somebody might have added up the supplies and said, "There is only this amount of production in the country. We have asked these people to use so much in these factories, and we are allocating so much more, and if we add up the figures and they exceed the production figure which we can attain, someone will run into production trouble later." We get to the position where factories are laid out and men are ready to work in them, and we are told there is a shortage of sheet steel. There will be unemployment in some districts this winter, and men will be put out of work, because there is not enough sheet steel. We in business, have to take these risks and plan to meet them. I know that it is said that we hoped to get supplies from America, but in business we dare not lay a factory down on such a hope. We dare not do it without having a contract signed and sealed, and seeing that supplies would be available. One of the first things we do, is to see that we have a guaranteed source of supply before we start. That is only an example. An hon. Member mentioned lead. I will tell a story about lead. The Government are, today, allocating lead to various factories, and are saying, "Get your scrap back." But if one gets the scrap back, and cannot remelt it oneself—and everyone is not in a position to do that—one sends it to a smelter. He smelts it and sends it back, and the Government deduct from one's allocation the amount one has recovered from the waste lead. What sort of incentive is that to economy? A story told to me the other day by a builder sounds apocryphal, but he swears it is true. He got an order for some repair work and went with his licence to obtain wood. He found that there was not the wood available, so he said, "I can make use of some of that wood in that corner." The official said "You cannot do that. It is firewood. If you have a permit for firewood, you can have it but not otherwise." That sounds ludicrous, but from what I have seen of some officials, and the way they carry out instructions, I can believe it.

Of course, it is not all the Government's fault. Mistakes are made by whatever Government is in power, but different people make different mistakes. What has concerned me for a long time, during the later days of the war, and during the Election has been the way people were misled by the very rosy pictures that were drawn of the new heaven and earth that was follow. The Minister has said "How can we expect higher standards of living under present conditions?" Yet our people were led to expect higher standards of living. What we ought to do first is to take every step to ensure the present standard of living is maintained. That is what is worrying me. A great war is not a method by which we shall increase the standard of living. We wasted our effort, through the necessity of turning it into weapons of destruction, and we smashed up and devastated the lands of some of our old customers. We are bound to have a difficult period, and at the present moment we are living on an overdraft. We in business know that an overdraft is valuable so long as one uses it wisely, and gets on one's feet while one has it, so that one is in a position to earn the interest and sinking fund on it. I am very much concerned because, at the moment, we are not doing that.

It may be said that I am a pessimist, but I believe that the people of this country are entitled to have the full truth told to them. Tell our people that we have lost our 19th century lead. We are no longer the workshop of the world, with the rest of the word as the "hewers of wood and drawers of water." We have largely reduced our forefathers' savings, to which the hon. Gentleman referred. We have few natural resources in this country. Coal is expensive. If we are to live, we have to export, some people say 50 per cent. others 75 per cent. more than prewar, and there was an estimate the other day that we have to export double what we did before the war. I think that is nearly true. We have keen competitors. There is the United States, with its enormous and closed market. Their manufacturers do not have any of the worry about preferences. They have that vast Continent of their own. In another part of the world we have heard, and shall hear again, of cheap labour.

We have no easy time ahead. It seems to me that this is no time to hold out hopes of an easier and rosier time. I do not intend to argue whether the 40 hour week is a good thing or not. If it means higher costs and lower production, it is a bad thing. If it will increase production and wages, we will look at it; but if it will make our goods expensive, the time is coming when the sellers' market will be over, and we shall have to fight against American, Japanese, and Continental competition, and people will be striving to keep alive, let alone have an easy time. The Minister referred to the development areas. I agree with the general tenor of his remarks. I think I can be allowed to do so, because we supported the Chancellor of the Exchequer, when he was at the Board of Trade, in getting that Bill through. My own organisation, before the war, went into South Wales and to Lancashire, employing thousands of people, and we hope to employ more. That is one way of helping, but do not let us reckon that that will answer the question.

The time will come when if we want the job we shall have to go for the job. That is inherent in the world's history. We cannot provide a job for every man at a particular place, just because he happens to live there. The migration which took place when the wells dried up and people went from one place to another, is one example of what I mean. In this country today we have inherited that tradition. We are a restless people, we are an amalgamation of all sorts of races that crossed Europe, that came from the Mediterranean, from Central Europe, from across the Narrow Seas, who were not content with the life they lived in other lands, and who came to this country and settled here because they could not get any further. We have the adventurous spirit. When America was discovered, some of our people went there, and when Australia was developed, many of our people went there. We have in our blood a spirit of adventure and restlessness. If we are to recover we must not say that every man will have a job found for him near the place where he lives. We must encourage them to move about when necessity makes it essential that they should. I do not believe that we have lost the spirit of adventure. I think today it is that spirit of adventure and initiative in our people which will put us right and, therefore, we must encourage and develop it. I believe in the future of this country. We have a great work to do, probably the greatest that we have ever done. We were saved from the edge of the abyss and I firmly believe that there was a divine purpose in that. We were saved in order to do something in the world, and to help other nations who are not as favoured, and who have not had our advantages in the past. We have inherited a very great tradition and, in the words which Shakespeare put into the mouth of Henry V before Agincourt: Now attest That those whom you call'd fathers did beget you!

5.31 p.m.

Mr. Wyatt (Birmingham, Aston)

I congratulate the right hon. and learned Gentleman the President of the Board of Trade upon the progress which his Department has made in the recovery of industry and in the increase of our export trade. Unlike the hon. Member for Edgbaston (Sir P. Bennett), I regard what has happened as evidence in favour of Socialist planning and not as an indication that this is a dangerous time to try Socialist experiments. I would like to follow the hon. Member for North Dorset (Mr. Byers) in his remarks about incentives for production and the importance of the export drive. I agree with him that as a general rule most of the people in this country do not fully understand the need for the export drive. I think that they are working as hard as they did before the war. I do not believe they are working as hard as they did during the war, because that necessary extra incentive provided by the war simply does not exist today and, so far, the Government have not succeeded in replacing the war incentive by a peacetime incentive.

It is all very well for Members of the Cabinet and important Ministers to make speeches about the need for the export drive and increased production. I am afraid that Ministers, however well-intentioned, do not realise that their remarks do not reach to the lowest level. The general public do not read the speeches as carefully as the Ministers would like them to do nor as carefully as the Ministers themselves would think justified. What is necessary is a continual plugging home of the fact that if people work harder they will benefit them-solves and not merely produce extra profits for shareholders. There is a great misconception in many industries that working harder merely puts money into the pockets of the shareholders and does not do the workers any good at all. It would be comparatively simple for the Board of Trade to undertake the same sort of campaigns that were undertaken by Government Departments during the war. It could be done pictorially. In every industrial town, every street should be filled with posters explaining the need for the export drive. It could be done in a series of posters which would explain the situation in a way that would come home to everybody, making it clear beyond any possible mistake. There could be a poster showing the relation between our imports and exports together with overseas investments before the war. Then we could have a series of posters showing how the loss of overseas investments had led to the necessity of an increase of 75 per cent. in our export trade. It could be demonstrated that it was impossible to secure a 75 per cent. increase in the labour force although we need a 75 per cent. increase in exports. Then there could be a final series of posters showing exactly what Britain and the ordinary man gets in return for the finished export goods—what it means in terms of food, boots, shoes, clothes, furniture, and all the other goods we need. We could show what it would mean to Joe Smith and Bill Jones and everybody else in industry if they worked harder.

The people just do not understand these rows of figures, noughts, percentages and so on, which are quoted by Ministers, unless they are explained in very simple terms. I think the remarkable success of the "Britain Can Make It" Exhibition is confirmation of my argument. The public have taken a very keen interest in that exhibition because there is something which can be understood easily, something which is on view showing what is being produced and which the workers will get soon. I am sorry that the President of the Board of Trade did not feel able to take that exhibition on tour, even if only in part, to provincial centres. But having made it clear to everyone exactly why it is necessary to work harder, the central problem still remains. It is impossible to increase the labour force by 75 per cent. Consequently, new methods of production resulting in increased output must be introduced. The obvious ones are the application of time study and motion study. Around both these methods of increasing production the most acute controversy is raging in industry at the moment. Very little is said about it in the open but amongst workpeople there is a great deal of violent feeling, both pro and anti, about time study and motion study. But whatever the workpeople may think about the situation, managements are getting ready to extend the application of those systems.

Even though the industrial workers as a whole may not like them, managements are certainly going to try to extend them. To deal with time study first, there are a number of obvious disadvantages attached to its application. First, there are different systems of timing in different factories, which makes for an uneven incidence, and varying methods of payment and work. The chief objection, however, is the unscrupulous way in which this method was used before the war to lower wages, to sweat labour, and, incidentally, to increase unemployment. In fact, the origin of time study, the Bedaux system, was regarded in most industrial centres as one of the most inhuman systems of work ever perpetrated by employers anywhere.

Mr. Lyttelton

I do not think the hon. Gentleman intends to mislead us. I hope he is not confusing the Bedaux system with time and motion study. These are distinct things and I do not think that some of the objections which he is raising to the former apply to the latter.

Mr. Wyatt

I hope the right hon. Gentleman is not confusing time study with motion study. Certainly I am not confusing either of them with the Bedaux system. All forms of time study are based on some form of the Bedaux system. They have a similar origin or background.

Mr. Lyttelton

No.

Mr. Wyatt

Time study, despite the right hon. Gentleman's interruption, springs originally from the system originated by Mr. Bedaux. Because it has been used in an inhuman way, workers and trade unions are highly suspicious of it, and I would be suspicious also. At present there are no common standards laid down in industry for the application of this system. Nevertheless, managements intend to extend its application and workers intend to resist any extension. When we reach the point at which there can be no more accommodation by either side on the present footing, there must be a "blow up." The mention of time study or motion study in a factory will cause a strike and obviously that will have a very bad effect on production. It is quite clear that we cannot remove the suspicions of time study unless the Government lay down authoritative standards, timing standards which cannot be avoided or overcome in any way without a "come back." As I understand the position of the Government on this issue, it is that they do not want to take any action by which they will appear to be interfering with the workers' pay packets. They think that it is a matter for the trade unions and individual workers.

On the other hand, there is an argument that many workers, once time study is introduced, find they like it. All the same, this problem still remains. Even though one may be inclined to dismiss the money incentive, it cannot be dismissed completely. There must be something in it. If somebody offers me 15 guineas to write an article, I respond far more favourably than if they offer me 10 guineas. I am sure that must apply to everybody—however much they are getting. This question is going to cause a lot of trouble, and I urge on the Government that it is high time that they held an impartial survey on all aspects of time study, and particularly the psychological effects on workers. Many reports have been written in the past, and they have concentrated on how great an increase of output per man hour is achieved by the application of time study. Very little has been done in the way of studying the psychological effect of the operation of time study over a long period, and I suggest that the Government should institute an inquiry of a very wide kind and go into every aspect of the situation. They should then lay down common standards for timing in industry and also make a regulation which would make it impossible for anybody to be a rate-fixer in a factory unless they had a Board of Trade certificate, in exactly the same way that the master of a ship cannot go to sea unless he has a Board of Trade certificate. If the master of a ship behaves in any way contrary to professional standards, he loses his ticket, and, in precisely the same way, the rate-fixer who behaves similarly would also lose his ticket, and that would be a guarantee that the management would not be able to "swing" anything over the workers. That would, very largely, tend to remove suspicion.

Motion study does present less difficulty, though it may be rather more inhuman if taken to its logical conclusion than time study, but I think that motion study should be included in a similar sort of inquiry. If the whole of this matter is brought out into the open, I am sure that both workers and management would welcome it, because, whatever other methods are used for increasing production, it may be that a fusion of one or both of these systems will have to be brought in. If we cannot raise the labour force by 75 per cent., we must raise the amount of output per man hour. The only way to do that is by scientific study of the whole problem, and I urge the Government to bring the whole thing within the scope of a proper inquiry, so that we shall all know where we stand. We shall know Which trade unions are for it and which are against it and which managements are for and against. Then the Government can give a lead which will give us common standards of work.

5.43 p.m.

Sir Arnold Gridley (Stockport)

I want to make only one observation about the speech to which we have just listened from the hon. Member for the Aston Division of Birmingham (Mr. Wyatt). His remarks were founded much more on theory than on practice, and, if he will allow me to do so without disrespect, I would make one suggestion to him, and that is that he takes the earliest possible opportunity of conferring on the points he has raised with his colleague from another Birmingham Division—the hon. Member for Edgbaston (Sir P. Bennett)—when I think he will learn a great deal that will be of more practical use to him for the future.

With others, I regret the absence of the President of the Board of Trade. Whatever our views may be, every one of us hopes that the right hon. and learned Gentleman's recovery will be speedy, and that he will soon be able to get back to his very responsible duties. I do not propose to make a long contribution to this Debate, but I have a few suggestions which I want to put, particularly before the Secretary for Overseas Trade, because my remarks are going to be addressed to that aspect of the problem in which our trade and industry are involved. I do not think that among those who are in any degree responsible for the employment of labour, whether on a large or small scale, there is any difference of view about the tremendous importance of endeavouring to secure, as far as humanly possible, full employment. I dislike the term "full employment." I think it is very misleading and may well mislead the workers as a mass, because full employment—that is, continued employment for every man and woman who wishes to work in industry—is something that not one of us, if we are honest, can possibly promise. What we should endeavour to get across to the workers in industry is that those of us who are in Government or management are anxious to do together all that it is possible to do to secure the highest level of employment, and that is by far the saner point of view. We may use all our collective wisdom to secure our foreign trade, and we may do everything we can do here, but we are dealing with an international question, and it does not depend solely on our efforts in Great Britain whether we are able to secure for our own people the highest possible level of employment.

The Government, with other Governments, at the moment, are engaged in discussions of the highest importance with some 16 other nations, and we do not yet know the result of their deliberations. Presumably, before the end of the year, a statement will be made informing Parliament and the country of the general conclusions which have been arrived at as a result of those deliberations which are now going on, but next year, there will be international discussions on trade and industry on the other side of the water, and much will depend upon our own employment here and upon a high level of employment in other countries whether the United States is going to be prepared to play with us or not. Therefore, I think it is as well that the Government should know—so far as I have been able to collect the views of industry in this country—what we expect our representatives, who will take part in these discussions next year, to endeavour to secure in the agreements which will have to be made.

First of all, we have heard a few words today about tariffs. We do not yet know what view the Government propose to take in response to the request from the United States that the elimination of tariff preferences should be agreed to. I profoundly hope, and I hope that every hon. Member of the party behind me agrees, from the point of view of the continuation of the British Empire and of the agreements between the Dominions and Colonies and the Mother Country, that there will be no question of the elimination of these tariffs. We may be prepared to consider some reduction in preferences, provided we get a quid pro quo from the United States, whose barriers against us and other countries are much higher than those between the Mother Country and our own Dominions. I hope that our own Government's representatives will agree that reciprocal tariff reductions are absolutely essential if we are to discuss that particular type of tariff, and that any reduction, once agreed to, must on no account be raised again a year or two later. Then, I think it must be pointed out most emphatically to the United States—a creditor nation, now that she has all the countries of the world in the palm of her hand, and with her tremendous monetary power—that, as a creditor nation, she must be prepared freely to accept imports in payment for exports, and in payment of the interest on the loans which she has given to us and to other countries.

The United States, with 40 or 50 States in one combination, wishes to be treated, presumably, as one economic unit. The U.S.S.R., with its huge expanse of territory and the satellite countries which have now, in some shape or form, been combined with it, will also expect to be treated as an economic unit. If that be so, then the British Empire with her Dominions and Colonies overseas has just as much right to ask to be treated as an economic unit. There is one very interesting sentence on the third page of Command Paper 6709, which says: No nation will seek to maintain employment through measures which are likely to create unemployment in other countries or which are incompatible with international undertakings designed to promote an expanding volume of international trade and investment in accordance with comparative efficiencies of production. What do the words: in accordance with comparative efficiencies of production mean? Are wage rates, hours of labour and working conditions to be disregarded or compared with ours? If they are disregarded and international trade becomes but a question of price where are we going to be with our standard of living which we are anxious, not only to maintain, but to raise in the years to come? That question has not been discussed. We do not know what those words mean, and it will be for the Government representatives, in the discussions which are to take place, to clear up, beyond any peradventure, any doubt there may be with regard to their meaning.

An International Trade Organisation is to be set up. It has been asked in this House this afternoon, what would happen if one country were to keep out. I presume that what the hon. Member for North Dorset (Mr. Byers) had in mind was that one really important industrial country might keep out. That raises a question of vital importance. Supposing one major trading nation refuses to come into the International Trade Organisation, would Great Britain be justified in coming into the organisation, having regard to the fact that our very existence depends on our overseas trade? That raises a very great question which will have to be faced.

One other point. Are there to be continuing subsidies, hidden or otherwise, which may be used by one nation to enable it to invade other nations' markets? That is another important question to be hammered out. In regard to the International Monetary Fund—if I am correctly informed—neither Russia, India nor Australia are yet signatories to it. The question arises, Are non-signatory nations to enjoy the benefits without the corresponding obligations of membership of that fund? There is a favoured nation clause to be considered. Are the existing favoured nation clauses between one nation and another to be allowed to continue even though the countries concerned keep out of the International Monetary Fund?

There is one final point to which I believe we all attach great importance because of the sad experiences which the world has suffered in the past. It is in regard to commodity surpluses. Supposing we have in the future, as we have in the past, enormous surpluses of products like coffee or maize, which, it will be remembered, had either to be dumped into the sea or used as feel instead of being utilised for human consumption, those surpluses will again threaten world and international trade. I hope that, when the nations discuss that particular point next year, they will make some provision whereby, when this threat arises, foresight will be exercised so that the country which is threatened with a surplus production and the country which is threatened with insufficient consumption, may be able to get together in order that, between them, these problems can be solved by efforts made to meet them before they arise.

I hope that we shall not have so much exhortation from Government quarters to the workpeople of this country to increase production. They know, as well as we who are concerned in management, of the tremendous importance of continuing to work hard, of the management as well as the workers working six days a week, and not going off to play golf at the weekend, leaving the workers to get on with their job. As the Parliamentary Secretary has said, we have all got to put our shoulders to the wheel. But it should be remembered that, in many works, a great deal more output could be obtained from the existing personnel, who are anxious and willing to produce it, but who are frustrated, like managements, by the fact that essential raw materials, such as castings from the foundries and sheet steel, which should be coming into the works to enable a steady flow of production to be maintained, are not forthcoming, which delays their work in consequence. Can we expect good work in such circumstances? The big problem which this Government have to face at the moment is the removal of these bottlenecks which are the biggest cause of diminishing production. If they would only apply their minds to that instead of paying so much attention to nationalising this or that industry, we should get back to prosperity much more quickly.

5.58 p.m.

Mr. Benson (Chesterfield)

I hope that the attitude of the hon. Member for Stockport (Sir A. Gridley), with regard to the necessity of every important nation in the world being a member of the World Trade Organisation, does not represent the opinion of the Opposition or of the Government. There is no real need why the World Trade Organisation should be completely embracing. That position, of course, is highly desirable, but there are really only two nations concerned—Britain and the United States, whose adherance is imperative. Prior to the war, they had between them something like 30 per cent. of the world's trade, and no other nation came anywhere near 10 per cent. If there are defections, it will be unfortunate, but unless there is defection of a very large number of nations, it is certainly going to be worth while to build up the World Trade Organisation. There is another point. If the hon. Gentleman will read the White Paper, he will find that unless a nation is a member of the Monetary Fund it cannot get any of the benefits. There is one further point of correction which I would like to make concerning the hon. Gentleman's speech. America is not a creditor nation but a debtor nation. She is in debt to the rest of the world to the tune of about a billion dollars, mainly on short account. If the hon. Gentleman looks at the "Economic Review" he will see that the figures were set out very care- fully by the late Lord Keynes in his last article. It shows that America is in debt to the rest of the world on short account to the extent of about five million dollars and that she is a creditor for about four million dollars on balances of a long term nature. It is rather an astonishing fact.

Sir A. Gridley

She has got all the gold in the world.

Mr. Benson

Yes, she has got all the gold in the world, or most of it, but it is gold that was sent in, not as payment for American favourable balances but as hot money, and just as hot money was sent in from France to this country in 1926 and 1927 and was withdrawn, so the hot money that has gone to the United States in 1936, 1937, 1938 and 1939 can be withdrawn. It is not American gold. It is being held in America in safe keeping, and it is a liability and not an asset. However, all these matters are set out in great detail by the late Lord Keynes in his last article.

Reverting to the speech of the Parliamentary Secretary to the Board of Trade, I suppose it is rather natural that he should have spent most of his time dealing with what has been done, although I think what we are more concerned with is the future, and very much so. Frankly, unpleasant and inconvenient as are our home shortages, what cause me a great deal more worry are the possible future shortages in our exports. Reference has been made to most of the points of trouble and difficulty. Sooner or later, of course, there will be a change from the sellers' to the buyers' market. Unfortunately, all these troubles seem to be likely to come on at the same time. Just about the time when a buyers' market arrives, we shall be faced with the problems of the amortization and service of our sterling balances and the American and Canadian debts. This can only be done by the export of goods. It must be remembered that additional exports mean additional imports, because our exports depend very largely for their raw materials on our imports. Therefore, we have a kind of vicious circle. To increase our exports we have to increase our imports, and then again increase our exports still further. Again, if we are to raise the standard of living of our people, we must increase our imports and so our exports. I think the 70 per cent. increase on 1939, as the hon. Member for Edgbaston (Sir P. Bennett) said, is a gross underestimate.

There is another point of difficulty which will become cumulative, and that is the inevitable loss of certain markets. It is suggested by the hon. Member for North Dorset (Mr. Byers) that it is our duty to industrialise the backward countries of the world. I will not pursue that point on moral grounds, but whether we do it or not, the industrialisation will take place. It is inevitable. Mention has been made of the speech of the President of the Board of Trade with regard to Japan—Japan being the bogy man. It does not matter much whether Japan's trade is rehabilitated or not. Japan has a population of about 80 millions There are 700 million Indians and Chinese who will ultimately be industrialised. The fact we have to face is that the industrialisation will take place, and it will do so at a steadily accelerating rate. It started generations ago. It was accelerated in the 1914–18 war. It has been accelerated in the present war and is continuing. But hitherto that industrialisation has taken place very largely as a result of blind economic forces. From now onwards it will take place as a result of a definite policy of the governments of the countries concerned, and that means that it will take place very much more rapidly. When industrialisation begins in a backward country, it generally affects textiles, iron and steel, if there are the adequate raw materials there, and simple engineering. One thing that is quite certain is that those" Dread and butter" exports—textiles, and iron and steel products—which have been the backbone of British exports, certainly up to 1929, will be lost to us in a short time, if they are not already lost. We cannot hope to compete in the home market of an industrialising country with cheap labour and the absence of long haulage. Japan competed with our exports of the cheaper textiles in the Far East. Whether Japan comes back or not I do not know, but in the next 10 years India and China will take that cheap textile market

Mr. Spearman (Scarborough and Whitby)

Would the hon. Gentleman agree that in the last 20 years the industrialisation of Australia and Japan has led to far greater imports in those countries?

Mr. Benson

Perhaps the hon. Gentleman will wait a few moments, because I see that the next point in my notes is "Bright spot." Although, as I say, industrialisation is going to hit certain specific "bread and butter" exports, it does have the effect of increasing considerably the income of a country, and a country's imports are largely a function of its national income. That does not alter the fact that it is going to blot out for us certain types of exports, and it means that we have got to shift our type of exports. It means that we have to leave the secondary type and get on to the tertiary type. We must get on to the more complex exports and those which hitherto have been more expensive. This country has specialised in high quality complex goods, but that specialisation has been in small quantities. In future we have got to change that practically to mass production. What we have to export will mean, in effect, luxuries to the newly industrialised countries, and luxury demand is very elastic as to price. It means we have to reduce radically the prices of what have hitherto been rather expensive specialities, and we have got to do it rapidly.

It is perfectly true, as hon. Members have said, that we must increase our industrial efficiency. Of course, we must. Any increase in our standard of living depends upon our industrial efficiency. However, although an increase in our standard of living is highly desirable, I would suggest that the fact that we have to meet a very heavy adverse trade balance, with the need for a continuous increase and expansion in our exports, means that expansion of exports is not only highly desirable, but absolutely imperative. Time is of the essence of the contract, and if we are to meet this colossal need for exports I do not believe we shall do it with our present industrial set-up. I do not believe our industrial set-up is adequately flexible enough to allow of that development taking place as a result of blind chance. The Board of Trade will have to do a very large amount of thinking and planning on this matter. I do not want the hon. Gentleman the Member for North Dorset to think that at the present moment I am being, as he said, ideological.

Mr. Byers

"Doctrinaire" was the word.

Mr. Benson

I am not now concerned with who are the owners of the export trade. I am concerned solely with its organisation. If it remains in private hands it will still require a tremendous amount of pressure and guidance from the Board of Trade if it is to adapt itself in the rather short time that we have. It means a development of a considerably larger industrial unit than is common in this country; it means an industrial unit with very much greater financial resources than the average industrial unit has at the present time; it means a very high standard of research and design; it means a complete reorganisation of our whole marketing system; it means that instead of the prewar individualistic marketing, if we are to break new ground—because the supply of new products means creating new markets—we must have cooperative marketing to an extent that we have never dreamed of before. Quite frankly, whether the export industries become publicly owned or whether they remain in private hands, I do not see that that adjustment will take place unless the Board of Trade contributes very much to planning, to guidance and to pressure.

I do not know whether the Secretary for Overseas Trade will have anything to say upon this, but I do hope that the Board of Trade is visualising problems of this kind, because now that we are re-equipping industry we are setting a pattern of British industry for the next 10 or 15 years. We are at a very crucial point, and we cannot afford haphazard re-equipment of industry. There is a colossal shortage of capital goods. The production of capital goods—which must be the outcome of saving—will be a very great strain upon our production, and we cannot afford the waste involved in haphazard re-equipment. It seems to me that there will have to be some planned economy. I am using that expression in a very moderate sense. I shall be very pleased to hear from the Board of Trade that it is not merely taking the short view, and regarding the closing of the present gap in our balance of payments as the be-all and end-all of its existence. The tendency for Government Departments to take the short view is unfortunate, but true. I do not know what other hon. Members have thought about it, but when readjustment of motor taxation took place I got a very bad shock. At the present moment the motor industry is undoubtedly contributing very materially to our exports. How much will it contribute when the American car comes into the market? We shall not then be able to sell our "buzz wagon" at the same price at which the Americans will be able to sell a great big saloon. However, the small engine has been already riveted upon this country, just at a time when we had the opportunity of making a complete change. It was riveted on this country by vested interests. Not all the manufacturers were guilty; some of them were enlightened and wanted the large engine and a different method of taxation, but the majority stuck to their vested interest in the small engine, which gives them very great protection. The Treasury had a vested interest in motor taxation, and was not prepared to give up temporarily a certain amount of its yield.

Mr. Alfred Edwards (Middlesbrough, East)

If the hon. Gentleman reads the former Debate on this subject he will find that I made a statement—which I am prepared to repeat now—that only one manufacturer, Morris Motors, stood out against it. All the others were prepared to take the progressive step.

Mr. Benson

I know that certain of them were, but the statement of the Chancellor was that they were hopelessly divided. I can hardly conceive of the motor industry being hopelessly divided if it was Morris Motors versus the rest. Be that as it may, the small engine is with us. From the short-term point of view of the manufacturers, of immediate exports and of the Treasury, it may have been the best policy, but from the long-term point of view, I think it was a grievous blunder. I hope that at the present moment the Board of Trade recognises that there is a long-term policy as well as a short-term policy. The skilled bridge player sometimes "ducks" a trick in order to take two tricks later on. The planning that we want from the Board of Trade is planning which will judiciously hold the balance between the needs of the present and the needs of the future. The needs of the present, so far as the home market is concerned, are very largely matters of very considerable inconvenience. Let me repeat, that the needs of the overseas market in the future are vital to the stability and foundations of this country.

6.19 p.m.

Sir John Barlow (Eddisbury)

I have a certain amount in common with the hon. Member for Chesterfield (Mr. Benson), in that he laid great stress on the export position. I, too, feel that is of the utmost importance at the present time. When considering this whole question we must remember the present compared with the 1938 figures, which are so often quoted by the Board of Trade. In 1938 the total exports were £532,000,000; the shipping income was about £100,000,000; the overseas investments, some £200,000,000, which we have been told are now halved owing to wartime sales, and other invisible exports amounting to £35 million. The whole of that total showed a deficit, as against the imports, of some £55 million. I regard it as unsatisfactory that we should base our target on the 1938 figures when they showed a deficit of £55 million. Looking back, one sees that the last year in which there was a favourable trade balance was 1935, and it amounted to only £33 million. In spite of the possibility of the trade figures being nearly balanced this year—that, no doubt, is what the Government are hoping for—we must take into consideration that exports to U.N.R.R.A. and to N.A.A.F.I., and certain shipments for rehabilitation and relief services, which are, I believe, included in the export figures. The 1938 figures are entirely unsatisfactory because, as I say, there was a deficit at the time.

Now the present figures, as has been admitted by the Parliamentary Secretary to the Board of Trade, are on an inflated value. To give one instance, the amount of cotton textiles exported is, I believe, larger in value, according to the last returns, than in the 1938 period. But if we look at the yardage, we shall find that reduced to about a third of the yardage in 1938. It is useless to think that all may be well if we balance our trade figures this year, because of the very high values which, we know, disappear very largely, at short notice; and also because of the very restricted imports. We all know we should like to import a vast amount of more raw materials and finished goods, but we have to try to balance imports and exports. Undoubtedly, more imports will have to be brought in, in course of time, but it is important to remember that they are very restricted at present. Another thing we have to remember is the presence of empty shelves in the shops. The population of this country are crying out for more goods, but they cannot have them because of the utmost necessity of supplying exports to all parts of the world. I should like to throw out one suggestion, which has been mentioned before when there was a discussion in this House on agriculture. I should like to point out to the Board of Trade that, although the output of agriculture has increased substantially during the war£it has been increased by anything from 30 per cent. to 8o per cent. in this country, according to the method of computation—I have little doubt that that production can be increased very much more still. That would save most valuable foreign exchange. Not only could agricultural produce be increased by adequate action on the part of the Ministry of Agriculture, but, I feel sure, considerable trade could be done by exporting certain livestock from this country to other countries urgently requiring it, and that would bring in foreign exchange.

The hon. Member for Chesterfield made reference to the cotton industry. I happen to have been concerned with that industry for many years. He described, very briefly, how it had fallen in size. I have looked up a few figures, and will quote some to show the diminution of the textile industry in the past few years. I see that if 1912 the production of cotton textiles was about 8,050 million linear yards. In 1924 that was reduced to about three quarters, to about 6,026 million square yards. A square yard is very little less than a linear yard in these computations. By 1937 production was down to 3,806 million. So, from 1912 to 1937, the production of cotton textiles was halved. It is important to see how the export trade suffered during that period as well. In 1912, 86 per cent. of textile production in this country was exported; in 1924, only 74 per cent.; and it went down until, in 1937, only 53 per cent. of production was exported, which is a very small figure, indeed. That industry supplied our great single export in most of the important years between the two wars. If it is true that other countries are building up to compete against us, so that we cannot recover the basic textile export business again I hope the Board of Trade are making quickly their arrangements to go into other business.

I shall be interested to hear tonight what the Secretary to the Department of Overseas Trade has to say about the Japanese competition which, we understand, may be expected in the years to come. In the early 'thirties I travelled to the East repeatedly, trying to sell goods in competition with the Japanese, and, to a less extent, with the Chinese textiles, and with their standards of living it was absolutely impossible, on level terms, for Lancashire to compete. That was a very serious thing to the whole of our exports, and to Lancashire, in particular, between the wars. I hope that we shall be told that when this Japanese competition comes again, the Japanese will not be allowed to sell textiles under world value prices. If they are—

Mr. Benson

Could the hon. Gentleman tell us what is the world value price?

Sir J. Barlow

Well, the price is, I should say, that at which the principal exporters of the world can produce and sell, for this purpose.

Mr. Benson

Does the hon. Gentleman really suggest that no country shall sell as the cheapest seller on any market of any article? Or do his remarks merely apply to Japan?

Sir J. Barlow

In this case, I should say that, as a defeated nation, this should apply to Japan. We in this country have suffered very materially, indeed, for many years from that competition. It was suggested that all their armament industries and their potential armament industries should be suppressed; and it has been suggested that this one industry, which can be so severe to us, shall be allowed to continue. I suggest that, possibly, our American friends are getting the best of the bargain in that case, and I am only saying that we should do our very utmost to protect what was one of our most important national industries. There is no doubt in my mind that the basic industries on which we have relied so much in the past are the cotton industry and the coal industry. the exports of which have practically disappeared, and that if they cannot be resuscitated the Board of Trade must have alternative schemes for, possibly, high class exports to take their place in the very near future. The present world demand, and the seller's market, are likely to disappear at an early date, and for that reason I hope the Government are planning suitably, so that there may be other materials of a more permanent nature to take their place.

I feel that the economics of the situation are often insufficiently understood by people in this country. In the very early days, if a man did not go out hunting and get his food, he very soon went hungry, and he knew the remedy. Nowadays, with ultra-civilisation and the very greatest division in industry, it is sometimes difficult perhaps for the producer of coal to understand that he must produce not only enough coal to supply the requirements of this country, both individual and industrial, but that there should also be enough to send perhaps to the Argentine to exchange for beef, on which will depend the size of his Sunday joint. In the same way the textile worker not only has to provide enough clothes for homes in this country, but a surplus to exchange possibly for rubber from Malaya, wheat from Canada or butter from New Zealand. These are very simple and crude economics, but owing to the great diversification of industry I feel that that point could be brought home better to the working people of this country and made more understandable to them than it has been up to the present time.

6.32 p.m.

Mr. Edelman (Coventry, West)

The hon. Member for Eddisbury (Sir J. Barlow) has very properly emphasised that British trade does not exist in a vacuum, but has a definite relation to markets and foreign competition. Already in this Debate reference has been made to competition in America, and I would therefore like to quote what an American business man said to me in the Middle West a month ago. He said, "American trade, like the American Navy, will go wherever it pleases." He meant by that that U.S. trade will use all the resources of American industry, undamaged as it was by the war and undiverted as it was to any great extent from home production to war production, in order to compete in foreign markets. During the war many of us saw in foreign countries American carpet-baggers in uniform following in the wake of the armies, for the purpose of staking their commercial claims in postwar markets. We know equally, that once American industry has fulfilled the de- mands of the domestic market—I see in the "New York Herald Tribune" this morning that it is anticipated that this will take place in 1947—it will want to erupt into the European market and those other markets which we in the past have considered to be ours.

It is true that United States business men may be disposed to lower tariffs; but what tariffs would they wish to lower? They will lower tariffs on certain raw materials, which they themselves want to convert into manufactured goods to assist their projected drive into the markets of the world. Although very properly we want to protect those markets with which we are concerned, and although I very strongly support the hon. Member opposite who said that we should not relax our Imperial preferences without a proper quid pro quo from the Americans, we will have very great difficulty in resisting American pressure if they produce a flood of cheap goods from abundant raw materials. We with a smaller amount of raw materials and relatively high labour costs may find it difficult to resist them, even with the aid of tariffs and preferential agreements.

If we turn from America to Russia, we see that Russia is also a rival of Great Britain in world markets, not so much in quantity of exports but rather in what she excludes. We know that Russia has been making bilateral trade agreements with many of the countries on her frontiers, and with other countries even beyond those frontiers. She has bilateral trade agreements with Denmark, with Czechoslovakia and with Poland, and on the Danube she has formed, with the riparian States, joint trading corporations in which she has 50 per cent. of the shares and the countries concerned 50 per cent. The effect of these trade agreements is to exclude both Britain and America. As we know, Russia, ideally, would like to have an autarkic economy, but if she cannot achieve that, she is anxious to obtain the greatest possible measure of economic autarky by means of such bilateral trade agreements. We cannot go very far economically with those countries, since we lack the political and military influence which the Soviet Union has. Nor have we the capacity to give (or withhold) liberal credits, which is the counter of American economic diplomacy to the economic diplomacy of the Soviet Union. We may very properly ask, therefore, What are we to do faced with this competition, on the one side from the great capitalist industry of America and on the other side from the Communist exclusiveness of the Soviet Union and its satellite States? Clearly in the first place we, who have a mixed capitalist and Socialist economy, must concern ourselves with basic production and get that right. Various hon. Members have made reference to productivity, and here again I would most emphatically agree with the hon. Member opposite who said that workers are sick and tired of exhortations. One of the reasons why they are sick of prods and slaps on the back is that they are fully aware that increased productivity does not depend merely on the worker working harder; productivity is a function of management, and unless managements recognise that they have as large a part to play in increasing productivity as have the workers, we shall not get that extra spurt forward which we should have and which we vitally need.

Some time ago, I went down a coal mine, in order to see at the coal face what was described as a highly developed system of mechanised coal production. There I saw a coal cutter standing idle. The conveyor belt was in motion and was being loaded manually by a group of three miners. That illustrates how an inept management and, if I may say so, a lopsided development of mechanisation in coal mining, have resulted in a condition in which however hard the miner works physically, his increased output will be proportionately small compared with the potential increase in output if mechanisation were properly and scientifically applied. Today, 72 per cent. of coal is cut mechanically and 71 per cent. is conveyed mechanically, but the intermediate process of loading, the process which should be mechanised in order to get the full benefit of mechanical cutting and conveying, is only mechanised to the extent of approximately 1.5 per cent. A great deal of the advantage of mechanical cutting is lost through the time-lag in manual loading. No amount of chivvying these miners would compensate for an ounce of commonsense which requires that mechanisation in mine or in factory must be properly balanced. This is an illustration of how managements must modernise their ideas and use modern equipment efficiently in order to play a full part in the production drive and thus increase output.

I referred before to America, and I do so again because an hon. Member opposite mentioned bottlenecks which he felt the Board of Trade should clear in order to assist industry. He referred in particular to the question of foundry workers. Why cannot we get an adequate supply of workers? There are many foundries in the constituency which I represent, and the reason for the shortage of workers is that, for the most part, our foundries are dirty, old and backward, and still have a 19th century tradition of organisation. In contrast, I should like to refer to the foundry of the Cincinatti Machine Tool Corporation which I visited and where I saw a modern mechanised electrical foundry. In that foundry, nothing of any substantial quantity was raised by hand if mechanical means could be used. And the works manager wore a white shirt and collar which remained white till the end of the day, owing to an excellent system of dust extraction in the workshops. If we are to compete with America, on their terms, we must modernise our ideas of management; we must modernise our ideas of factory organisation. And if we are to use the American Loan to the best advantage, we must see that we modernise our whole system of production with the purchase of up-to-date equipment.

I now turn to the question of the purchases which we are making from abroad. I feel that I detected a certain note of satisfaction in the references which have been made by the Parliamentary Secretary to the question of trade with the Soviet Union. This is a subject to which I have referred in the past in this House, because I consider that it is of vital importance, not merely to good relations between our two countries, but even more practically, to the success of our building programme, on the one hand, and on the other, the success of our machine tool industry of which Russia has been an excellent customer in the past and will again be in the future.

Mr. Belcher

I hope that the hon. Member will acquit me of any self-satisfaction about our negotiations with the Soviet Union. I am well aware of the enormous need of this country for the products of the Soviet Union and of their need for our products. I am not satisfied that everything that could have been done has been done, or that the negotiations have reached the stage when anyone could be satisfied.

Mr. Edelman

I welcome the acknowledgment of the Parliamentary Secretary that everything which could have been done has not been done. It has taken over a year to arrive at a situation in which we have given the Russians a discount of £5 million on the £40 million of equipment outstanding and lying idle for the whole year. I suggest that the depreciation in value of these goods during that period has amounted to something in the order of £5 million. In return for that we have extracted a promise from Russia of 25,000 standards of timber, which is sufficient for approximately 10,000 houses, but it is very unlikely that we shall get this timber before the Baltic ports are closed by ice. I do not intend to advance any criticism of the Board of Trade in the sense that they have been dilatory or unwilling to get on with the job of doing trade with Russia. I am well familiar with the Russians, because for many years before the war I negotiated with them for prolonged periods on behalf of my employers for timber, both in this country and in Russia. I am acquainted with their intransigence, and with the difficulty of getting any Soviet representative in this country to make a decision without prior reference to Moscow. It is precisely for that reason that I feel the Board of Trade should have sent a trade delegation to Russia to do business there much earlier in the year. America, which is a country capitalistic in its whole structure and outlook, has been willing to do trade with Russia; and I believe that unless we advance far more rapidly towards a comprehensive trade agreement with the Soviet Union than has been the case in the past, we may find ourselves in the position in which we shall try to repurchase timber from America which America has purchased from the Soviet Union. In enlarging the trade agreement which we have already made, I hope that the Board of Trade will recognise that Russia has the timber which we need to make a success of our housing programme, and that in turn we have the machine tools, the mechanical and electrical equipment, of which the Soviet Union is in such urgent need. In these respects our trade is complementary. I hope that everything will be done to stimulate reciprocal movements of trade between our two countries.

Finally, I wish to refer to the question of cooperation between the countries of the world for their mutual economic benefit, and also in the interests of goodwill which can only emerge as a result of that cooperation. During the war we had cooperation between ourselves and the Americans—and even between ourselves, the Americans and the Russians—through various agencies which we jointly established to win the war. We had the Middle East Supply Council and the Lend-Lease Organisation, and after the war the European Coal Organisation from which, unfortunately, the Russians abstained. These organisations brought the countries of the world together for the purpose of common planning for their individual and general interest during the war, and everybody hoped that when the war came to an end we would be able to use precisely similar organisations in order to have a planned economy in the world as a whole. I recognise that with America's reluctance to enter into boards, organisations and corporations of this kind it will be difficult, and in certain cases, may be impossible to make a success of them.

I feel that the Government should use every effort to induce the Americans to enter these organisations. One which I have particularly in mind is the World Food Board. I believe that we can persuade them to enter it. Surely Britain, one of the world's great markets and producers, is not without her bargaining power. Surely we have something which we can contribute to the pool whereby each of the contributors, not merely ourselves, may derive benefit. I believe that it is only through the revival of this kind of joint functional cooperation between ourselves, America, Russia and other countries of Europe and Asia, that we can create the reality of "one world." I feel that if in Palestine, for example, in the Negeb, there was a Joint Corporation consisting of Jews, Americans, British and Arabs, we could have an experiment in cooperation, which would not only benefit those who participated but would be a model to mankind. Trade is a basis of goodwill between nations. It we can foster international trade organisations, individually and collectively benefitting the nations, we shall have made not only an effective contribution to our own trade and economic security but to the peace of the world.

6.50 p.m.

Major Haughton (Antrim)

The Debate has ranged over such a vast field of trade happenings, possibilities and probabilities, that I do not imagine that the Minister who replies will be able to do more than answer a few of the points which have been raised, and if he is human—and I take him to be a very human person—he will choose easy ones. I hope that he will take courage and answer the challenge coming from different parts of the country, that Great Britain at this time is exporting too many machine tools, too much textile machinery, too many agricultural engines, implements and parts, and too much printing machinery. It is not so easy to get a the exact figures, but looking at the Statistical Digest, I see in Table 58 figures for the printing and bookbinding machinery which is being exported in ever-growing volume, and is running at about 33ቓ per cent. of the total now being manufactured. It is not so easy to get the figures for the others—the machine tools, textile machinery, agricultural engines and parts—but I am told that the general direction to the manufacturers making diesel engines and agricultural machinery is 65 per cent. for export and 35 per cent. for home trade.

No one in his right senses wants to cramp international trade. We all want international trade to expand, and we want it to expand rapidly, but is this allocation of British output as between export and home trade nicely balanced at this moment? As the hon. Member for Chesterfield (Mr. Benson) has said, home trade is the very essence of this contract. This problem is a very urgent one. It seems to me that by exporting all this machinery we are not so much doling out rope with which our foreign competitors can, if they are so minded, hang themselves, as launching a jet-propelled boomerang which may come back and deeply injure our British trade. I am old enough to remember the beginning of this century when our textile machines were competing very bitterly with the German machines and manufacturers for trade in Japan

They had to fight very hard for that, but we went a great deal further. I remember how Japanese students not only came to our universities, but were welcomed into our mills and weaving sheds. We know what the result of that was between the wars, when Japanese competition swamped British trade in India and the Middle East. I am not taking a narrow-minded point of view about this, I am looking at it from a realistic point of view, because I believe that at this time, when we are trying to move as rapidly as we can from war to peace production, this matter is worthy of great consideration.

I want to ask the Minister whether he is satisfied that the issue of export licences for this type of producing machinery is sufficiently well supervised, and whether the licences are sufficiently scrutinised. Many of the main arguments for the American Loan were that it would enable us to get dollars with which to purchase certain types of high-speed automatic looms, automatic machinery, and agricultural implements. That seems contradictory. Is our motto to be, "Sell to the foreigner, and let him finish the job"? We all want to implement the policy of full employment, and that should not be difficult to do today, in a sellers' market. The oddest thing I have met lately comes in the shape of an extraordinary letter from a Dutchman, who evidently has knowledge of negotiations that are brewing with the British Government, and of plans that are being considered for the manufacture of steel windows in Holland. This involves the steel sections being shipped, in the first place, from this country. Surely, we have enough constructional engineers in Britain to undertake work of this kind without getting it done on the Continent. So, I ask the Minister to consider these points, and to say whether the proportion of textile machinery which is being exported, is in fair balance with that which is being offered to the home trade.

6.57 p.m.

Mr. Alfred Edwards (Middlesbrough, East)

In order to emphasise one of his points a recent speaker in the Debate showed how a certain mine was incompletely mechanised and the money spent on mechanisation had been largely wasted because there had been no saving resulting from the original capital which had been invested. That seems to bear on what I want to say tonight. Downstairs, we have a public cafeteria in which we invested a certain amount of money to speed up the service so that, in the rush hour, people would be able to get their food quickly. It is well known that in cafeterias it is possible to serve 16 people per minute, yet we sometimes find that Members and their guests have to wait 16 minutes in our cafeteria to get what they want. One of the criticisms which I wish to bring against the Board of Trade is that there is no overall view of our industrial system which will prevent this kind of bottleneck arising. Some illustrations have been given today—and I want to give one or two others—about these bottlenecks, some of them very disastrous.

I want to support what the Parliamentary Secretary said about the need for quick exports, and perhaps what I might call prestige exports. I do not think that the Board of Trade had much time to decide which would be our best goods for export, but only which could be exported quickest. They must now learn the lesson that some wrong goods and articles are being exported. When the Chancellor of the Exchequer last year fixed on the motor industry a small engine—and, after all, he had the last say—there was a willingness among manufacturers to make a serious change at that time. My hon. Friend the Member for Chesterfield (Mr. Benson) pointed out that we are now determining the design of motor cars and other things for generations. Last time we discussed this question of motor taxation which determined the size of the engine there was only one manufacturer who stood out against the acceptance of a petrol tax. I believe that that manufacturer now realises that he made a very serious mistake. The Chancellor should now reverse that grievous error and establish, in his next Budget, a petrol tax which would free manufacturers and designers for all time by enabling them to make the most efficient engine, and not one which merely fits into a fiscal system.

Who of us who travel abroad ever saw an English car where it was possible to get an American car? Where in our Colonies are they going to accept these small cars of ours, when the larger American cars are available? Who abroad is going to pay the ridiculous price put on our small cars today when America has the cars to export? We are going to lose that market; we cannot possibly retain it. I agree that we had to export cars because that was one of the industries which we could get going quickly, and we could export quickly to bring in the necessary money, and show the world that we could pay our way. I know that the good done is incalculable, but, if we continue, the harm done will also be incalculable. Without these silly tax restrictions, we could build a car in this country equal to the American car.

Many great men have had to change their minds and admit they have made a mistake, and the Chancellor of the Exchequer had better do so while he has the opportunity, before he definitely fixes on this great industry of ours this ridiculous limitation. While on the question of motor cars I would say this: I was driven by a friend in one of our cars, which has a very high reputation in this country and abroad. I said, "It is very nice to be in a good English car again, isn't it?" He said, "Yes, it is a very good car. I have just come from Switzerland and there they sell a tremendous lot. They have a fine reputation. This is a very good car but—" and he put his hand on a little door cover on the dashboard. It came off. He waved it at me. He then turned to the sunshade where the cover of felt was just falling away. He said, "How do you like my cigarette tray?" That came off—and about 10 things which that man showed me in a few minutes were of absolutely shoddy workmanship. "And that," he said, "will lose the goodwill which these people have built up over many years in Switzerland." I mention that because there is a tendency today, in rushing the things for export abroad, to forget that we have built up our reputation abroad on quality.

An hon. Member said that it is quality which has built up our industry, and he went on to say that we shall, in future, have to go into mass production. But we cannot mass produce quality goods. It is a contradiction in terms. America will always have an advantage over us in mass production. In quality goods, we shall always have an advantage over America. If we build on that, we shall build for all time. It is this lack of vision in the Board of Trade which really troubles me. When did we discover that there was a shortage of steel? Our manufacturers are now not able to continue their programmes and have to cut them down. Some industries, with which I am associated, have been told recently: "All your steel allocations are now withdrawn." One of my colleagues who spent three months in South Africa came home with a wonderful bag of orders. He had allocations and had begun to deliver, and everything was going beautifully and a magnificent trade was developin. The last time we put in our application for allocations to fulfil the increased orders that had come in, there was none at all. We were told that there were only allocations for the orders which we had in hand. That means that, instead of giving quick deliveries for all the orders coming in week by week from South Africa, we now have to say, "We cannot give delivery for 12 months." The result will be that we shall not get the business.

There is no one who is looking at the whole of our industrial system, and saying what goods must be produced at a certain time. We know our productive capacity in steel. We know how much we shall require for building factories, reconditioning our railways and building ships. We can determine all those things. I, and one or two of my colleagues, and hon. Members opposite, went to see Lord Woolton when he was the Minister dealing with reconstruction, and we asked, "What are your plans?" He admitted to us that not only did he have no plans, but that he did not have a Department. There has not been a serious effort to look at our industrial system, weigh up our capacities and make allocations. That has to be done. Can one imagine some of the great organisers in America allowing their immense output to be held up even for a small screw The whole organisation would be stopped, and they would be bankrupt in no time. What we want is a scientific find, which can map out all these things, so that everything comes together at the right time. No one should think of budgeting for more motor cars than there is steel with which to produce them. We have almost lost a very wonderful trade which we had built up in South Africa, just through allocations being withheld.

Earl Winterton (Horsham)

Is not one reason why we cannot get steel because we are not getting the right type of coal to produce the steel?

Mr. Edwards

I think that has a considerable amount to do with it. But if we had a scientific system of planning, we would never go beyond the coal stage in making our plans. It is necessary to determine what coal will be available, and to plan what quantity of steel that will produce. Otherwise, it is just a waste of time. We have to face that in the first stage and not in the last, or the loss is going to be the greater. Mistakes have been made. I am only concerned as to whether we are seeing those mistakes, and whether we are rectifying them now. We exported too much steel in the early days, and enabled foreign manufacturers to manufacture goods and compete with us in the foreign markets, while the people at home were held up, and starved. It would have paid us to have exported more manufactured goods. I remember the time when a manufacturer had every available machine held up for fractional motors. There seems to be no one to say, "Have we all the parts with which to make the machines?" We are wasting time, and we shall come to ruin, if we cannot do that. I am emphasising what is a great fear in my mind. This is not a Party matter, and I do not care who delivers the goods, so long as we can deliver them. I want to emphasise the common ground and not magnify our differences. Important Members of my party have said that only 20 per cent. of our industries are to be nationalised. Hon. Gentlemen opposite should not go around the country saying that there is wholesale nationalisation. That is false. [Interruption.] Hon. Members opposite will know next week what is anticipated in the very near future. If there is more than 20 per cent., that will be the time for them to cry.

Sir F. Sanderson

It will be too late then.

Mr. Edwards

Hon. Members will know within another week what will come before the House next Session. The point I wish to make is that if 80 per cent. of industries continue under private enterprise, we must not mess about with the rules of private enterprise. It is important that that should be realised. We cannot have it both ways. If we nationalise 20 per cent. of industries, and improve the productive capacity of the steel industry and other industries which are taken over, we shall do a tremendous amount to make more efficient those industries which are left under private enterprise. That will be a great service, even to hon. Members opposite who do not agree with our policy. If we can make this 20 per cent., the great industries, more efficient, we shall do a great service to the whole of industry. I agree that we shall have to stand or fall on the question of efficiency.

What frightens me is that when one goes into Government Departments, one finds there are many people in those Departments who think they are going to run our industries. They cannot do it. I see that my hon. Friend the Parliamentary Secretary nods his head. I take it he agrees with me. He will have to knock out of the heads of these people their belief that they can do that; otherwise, it will be too late. To give an example of a recent case, in connection with a company with which I am associated, I negotiated a contract with an American concern in Chicago to use one of their designs in this country. The proposition was to make the machines in this country instead of importing them from America. We said, "We will pay you for the design and manufacture them in this country." We obtained the rights on very reasonable terms, and after six weary months spent in trying to get a permit to do that, from the Treasury, the Board of Trade, the Ministry of Supply and everybody else, we were told we could not do it because it would involve a payment in dollars. It was a question of a royalty of five per cent. It took me a long time to convince even Treasury officials that a royalty of five per cent. would save 95 per cent. of the dollars that otherwise would have to be paid. Whatever Department I go to, in the end it always comes back to the Treasury. I would not say these things if I were not prepared to invite my hon. Friend the Parliamentary Secretary to investigate the matter and find out that what I am telling the House is true. In the end, in trying to track down the man responsible for doing that in the Department, it was discovered that it was done by a comparatively young girl who looked over the catalogues, and so on, and saw that that kind of machine was made in this country and thought it was not necessary to bring it from America. That sort of thing would be bad enough if it were the result of a short and snappy decision, but it ought not to have resulted in wasting six months of our time. This is not a criticism of my hon. Friend the Parliamentary Secretary or the President of the Board of Trade, but of the system—

Earl Winterton

It is not even a criticism of Socialism, of course.

Mr. Edwards

It is not. The noble Lord has been in the House during the period in which that Department has been built up. Was it built by Socialists? It was built by Governments of the noble Lord's own party, but I do not recall that he ever criticised it.

Earl Winterton

The hon. Gentleman is talking complete nonsense. Nobody criticised some of the actions of the last Government more than I did. The regrettable thing is that some of those who formerly criticised now meekly vote tor every Socialist Measure.

Mr. Edwards

I sat on the opposite side of the House long enough to know what one got for daring to say anything about Government Departments. I have even seen the noble Lord do some meek things when called into the Division Lobby. He has not always been so heroic as in these latter days.

Earl Winterton

I must point out to the hon. Gentleman that the three principal critics of the late Government were the Minister of Health, the Minister of Fuel and Power, and myself.

Mr. Shurmer (Birmingham, Spark-brook)

What company the noble Lord used to keep.

Mr. Edwards

I have one more criticism to make, and I would not make it if I did not think it was vital to do so. An American company recently wanted to set up a factory in this country, and the Treasury were willing to assist them. This is not a question of the Socialist Government; it is about a Department which I have never heard the noble Lord criticise. The Treasury wanted to make one condition, which was that the company, if they put up a factory, should use our new Finance Corporation for financing the business. I had to put it to them that I thought we wanted dollars, and that what they were doing, in effect, was to say that this great American concern, which wanted to put a factory in this country, should not bring dollars over here, but should borrow our money. I had a little correspondence with the Chancellor and he promised to look into the matter again, and I assume that, with his brain, he will see that that condition is quickly reversed.

How are we to get this industrial system of ours, a remnant of the organisation of the party opposite, transformed? It is a method which the party opposite built up. It is the party opposite which left this kind of organisation to us. We had to begin with what was there. My hon. Friend the Parliamentary Secretary and the President of the Board of Trade could not do very much in the first 12 months. They had to get the whole machine working. During the next 12 months we must radically reform this organisation. We must not let the people in the Departments get hold of industry, or we shall never regain the position we held before the war. If we are to recover the trade which, quite rightly, we deliberately sacrificed during the war, we must face the fact that the Americans had their commercial travellers in uniform throughout the war. If anybody questions that, let him read the interesting reports put out from Washington, boasting about how they had established American machinery and a desire for American products, how a whole range of them were not sold, but given away, in order to establish this wonderful market for American goods after the war. We shall not meet that kind of competition by sitting down quietly. I ask the Parliamentary Secretary to point out to his chief that we will not float into this prosperity, but must have a very powerful drive, which I have not yet seen. He should stop giving "pep" talks to the workers, and give a few "pep" talks to the people in the Departments.

7.20 p.m.

Mr. William Shepherd (Bucklow)

After listening so far, to what I think has been a very interesting Debate, and particularly the statement of the Parliamentary Secretary on the present position of the trade of the country, I am afraid that few industrialists, had they been in the galleries this afternoon, would be able to reconcile the position as outlined by the Parliamentary Secretary, with the everyday duties which they have to perform and the everyday difficulties which they are meeting. In so far as that picture was accurate it was a testimony to the employers and to private enterprise, but it did not represent in any way the complete sense of frustration which is pervading almost the entire industry of this country. The economics of the situation are important, but in a state of affairs such as that with which we are confronted, the spirit of the nation, and particularly the spirit of its industrial leaders, is just as important. In that respect I believe that it is possible to indict this Government very seriously indeed. I should like some hon. and right hon. Members to go over to a country such as, say, Belgium, and to sense the difference between the spirit which obtains there and that which obtains in this country.

Mr. Skeffington (Lewisham, West)

Is the hon. Gentleman referring to the widespread black market there?

Mr. W. Shepherd

I think that is an irrelevant observation. What is more important is that the Belgian industrialists and the Belgian people feel that they are going somewhere; they know where they are going, and they are on their way. That is not a position which exists in this country. I think there is at the present time a need for drive and energy which never existed before; yet all the Government do is to discourage those who must, to the greatest extent, display energy and drive. A great industrial nation so precariously balanced as ours relies more upon the energy and drive of its industrialists than upon any other section of the community. If we discourage those industrialists, if we frustrate them as we are doing at the present time, we cannot make progress in face of the difficulties with which we are now confronted.

I am not attempting today to blame the workers for everything that is going wrong: I am not attempting to blame them for the lack of output which we know does exist, because it is extraordinarily difficult to get output in the present set-up. I know myself how many times during these past 12 months I have said, "Next week we are going to get this output up to the right level." Next week we get it up, but the week after, the supply of materials falls off, and we are down again. That happens for two, three, or four weeks more, and we start all over again, but once output has dropped it is difficult to pick it up again. Workers and employers alike are all "fed up" with the present position, and until the Board of Trade can see that there is an adequate supply of materials available, we shall not get production. When I have said that, it is not the entire picture. The workers, in the main, in this country are not doing as good a production job as they could, and the problem is: How are we to overcome that?

The deathbed conversion of hon. Members opposite is not very helpful. For 30 years they have tried to poison the wells of industry and now that they have become the drawers of water they are realising what damage they have done. One cannot tell the workers for 30 years that the boss is a thieving scoundrel, who waxes fat at their expense, and then, overnight, turn round and say, "You really will have to put your backs into it, chaps. The boss is not such a bad fellow after all." What is more, the right hon. Gentlemen opposite cannot control their own organisation. Can they for one moment tell this House that the shop stewards are carrying out the policy advocated by the Parliamentary Secretary this afternoon? And what good is it to exhort the workers in this House, if at the factory level nothing happens at all? That is precisely what is taking place; the factory level is not operating, and the words of the Parliamentary Secretary today and those of the Prime Minister mean nothing at that level.

I turn for a moment to the question of exports in order to—if I may use an American phrase—"debunk" what the Parliamentary Secretary said about them today and what has been said about them for a long time. In the 12 months ended May, 1946, we exported £597 million worth of goods: in 1919 we exported £799 million worth.

Mr. S. Silverman

What did we export in 1921?

Mr. Shepherd

In considering the difference between those figures we have to take into account three other factors which I notice the Government never stress when putting these figures before the House. First, that in 1919 trade with Southern Ireland was internal, so that 5 per cent. has to be allowed for that. Of the figure for 1946, 3 per cent. went in supplies to U.N.R.R.A. and probably about 5 per cent. was accounted for by N.A.A.F.I. supplies. In this way the difference is magnified in a very considerable measure. In fact, the extra effort in 1946, when the total volume of production was probably two-thirds what it was in 1919, is very poor indeed. Should any hon. Member say, "Well, there is a difference between figures and volume," let me point out that the calculated difference in volume is that in 1946 the total volume of exports was only three quarters of the total volume in 1919, and that before making allowances for the N.A.A.F.I. supplies, the U.N.R.R.A. supplies, and the Southern Ireland trade.

Mr. Belcher

I think the hon. Gentleman is under what appears to be a common misapprehension. No one is attempting to make a comparison between the figures for export in 1919, and those in 1946. What one is doing is to compare performance in 1946, based on a target which is allied to the 1939 figure, with performance in 1919, based on a target allied to the 1913 figure, and that is quite a legitimate thing to do.

Mr. Shepherd

I think that has no relevance. What is true is that in 1946, with a total production very much higher than that of 1919, and with a situation which demanded more effort than the position of 1919, we are exporting only three-quarters of the total volume, and even less, since we have to make those allowances for various items which I have mentioned. Again, if one looks at the next year one finds that in 1920, the total value of exports was £1,334 million. When the Secretary for Overseas Trade replies I should like him to set a target figure and let us see whether he hopes to reach that figure in 1947. I only say these things because the Government have tried to mislead the country as to the alleged success of this export drive. We all want exports, and we all know the difficulties connected with them, but we are not getting the results we should, and we are certainly not doing as well as we did in the despised year of 1919.

I want to refer now to the question of quality. I have been very concerned about it, and I wrote a letter to the "Daily Telegraph" some six months ago, about the shoddiness of goods which were being exported from this country. It is doing immeasurable harm to a nation which has established what industrial supremacy it had on the basis of quality, and I hope the Board of Trade may take steps to see that the quality of goods which we export is the best possible in the circumstances. Secondly, the question of design is of paramount importance. In the past, while our quality was very high, we somewhat neglected the external appearance of many of the articles we sent abroad. Time spent on design is always well repaid. I look to the Government to set a lead giving every possible encouragement to those who are attempting to stimulate design.

I do not want to make too many unfavourable criticisms, and would rather make constructive suggestions. There are industries which could be assisted by the Government, if the Government were so minded. We have to face a difficult position, in which our aim should be to make the country as self-sufficient as possible. Industries such as those which make machine tools and farming implements and typewriters should be given some assistance. In nearly all the manufactured items we have to buy from abroad we are behind only because countries with large internal markets have built up a production level preventing our people from competing. The Government should take advantage of cheap capital to encourage firms to start industries in goods where our lack of an internal market prevents our establishing a successful industry because of the strongly entrenched foreign position.

I want to end by saying that hon. Members on all sides of the House have placed too much reliance upon getting some kind of ideal, international, economic set-up. The danger which seems obvious is that we are putting as much reliance upon some sort of international organisation to secure an economic level, as we did in 1919 on world peace. We are tending to make exactly the same kind of mistake in the economic field, as we then did in the international political field. We cannot secure our position, precarious as it is, by means of these international organisations, because of conflict within them. That conflict already exists, and means that those organisations will not operate effectively. Our job is to secure our own economy, to regard the Empire as an integral economic unit, to stand for Imperial preference, and to make our own industry as self-supporting as we possibly can.

7.33 p.m.

Mr. Sydney Silverman (Nelson and Colne)

I hope that the hon. Member for Bucklow (Mr. W. Shepherd) will not mind if I suggest to him that this is not the proper occasion for a funeral oration. Listening to him, one would think that this country had done very badly since the end of the war, had lagged behind, had not taken advantage of its opportunities, had not buckled to, had not been realist and had not attempted to recover some part of the tremendous price that it paid for victory. There is not a word of truth in that. The country has done extremely well. The Government are to be congratulated on the really amazing success they have had in so short a time in rebuilding the export trade, upon which, everybody is agreed, our standard of living must ultimately depend.

The hon. Member drew a comparison between 1919 and 1946. I wonder why. The year 1919 was the first after the end of the first world war, and 1946 is the first year after the end of the second world war, both difficult periods, both years in which it was not easy to show good results at once. The hon. Member says that the first difficult year after the end of the first world war was better than the first difficult year after the end of the recent world war. Suppose he is right—I do not know whether he is or not. How long did it last? How long did the boom last that was created in the first 12 or 18 months after the end of the first war? There were years between the two wars when no-one could have said that they were still paying the price of previous wars, when the first difficult years had been overcome. Hon. Members opposite seem to have a great passion for production nowadays. They say that we must bend all our efforts toward increasing production. What did they do in the 21 years between 1919 and 1939 about production? They kept unemployed, for 20 years, an average of two million of our best workers. Throughout the whole period there was never fewer than one million workers unemployed. Sometimes there were as many as three million—one million when trade was good and three million when it was bad, or an average of two million, throughout the whole of the 20 years. Was that because hon. Members believed in production, because they wanted to use all our resources?

Mr. Sidney Shephard (Newark)

Is the hon. Member suggesting that the Conservative Party kept those people unemployed deliberately?

Mr. Shurmer

Yes.

Mr. Silverman

I could hardly be as uncharitable as that, but sometimes when one listens to Conservative defences of policies during those 21 years one would almost think they did. I do not think they did. I think they could not help it, and that, on their principles, no one could have helped it. If we are to have a completely unplanned economic society I do not think we can expect to get full employment at the same time. Hon. Members opposite must make up their minds. They must decide, not we, whether those people were unemployed all that time because on the hon. Members' system they were not employed, though they could have been employed, or because hon. Members did not know how to employ them. I am taking the more charitable view of saying that hon. Members opposite could not have done it, given their economic and social outlook. The fact remains, as I say, that, during the whole of the period of over 20 years, two million people on the average remained unemployed. It was not because there was not a demand for the things that they could have made. Hon. Members in those days did not talk about the need for production. They talked about overproduction. They deliberately adopted a policy of restriction. Their Governments paid subsidies to people not to produce things.

Mr. W. Shepherd

If we are prepared to admit that the general view of an expansionist economy was not accepted, between the wars, will the hon. Gentleman say that his party also were guilty of the same error?

Mr. Silverman

No, Sir. Our party was never guilty of that error.

Mr. W. Shepherd

Will the hon. Gentleman say why the highest figure of unemployment between the wars occurred when his party was in office?

Mr. Silverman

Yes, because the party was never in power. [HON. MEMBERS: "Oh."] I am not trying to give the House echoes of a long-dead policy. I am giving the honest facts, and I am sure the hon. Member will give me credit for doing so.

Mr. A. Edwards

rose—

Mr. Silverman

Perhaps my hon. Friend will allow me to finish my argument. No doubt the hon. Member who asked the question will remember that in the period of 20 odd years there was, for 18 months, a minority Labour Government in office, at a time when the whole world was dragged down by the economic catastrophe which followed the failure of jungle economics. I am sure the hon. Member would not, in his calmer moments, attempt to say that you can judge an economic or a social era by taking out a small period of time in those conditions. If it were to happen again, the hon. Member would have a case. I am told that the actual highest figure was in 1932 under the so-called National Government, and then it was over three million.

I do not want, however, to dwell too much upon that point. What I am saying to hon. Members is that they really must make up their minds. In view of the actual experience that we have had of a completely unplanned society, are they now prepared to agree that if we are to get full employment, demobilise all our resources and get the maximum possible production out of such resources as we have, we can only do it by having a national plan strictly adhered to and strictly followed through? If they are not prepared to admit that, it is quite useless for them to exhort the Government to do this, that or the other. If they do admit that, they must cease these completely fatuous attempts to ridicule every effort the Government make to introduce order into the economic society.

I will say this for the Government, that in this field they have courageously and honestly resisted the temptation to do the cheap and popular thing. Anyone could have yielded to the desire of the hon. Member for North Dorset (Mr. Byers) and increased real wages, but one cannot increase real wages and increase exports at the same time. We cannot eat it and export it too. No doubt the Government would have got a cheap and easy popularity by restricting the development of export trade and devoting their energies to improving the standard of living at home. What would hon. and right hon. Gentlemen opposite have said about that? They would have said that in order to redeem flashy promises made during the General Election, the Government were sacrificing the future happiness and prosperity of the country. I congratulate the Government on, more than anything else, their honesty and courage in their economic planning. The results do much to justify the efforts which have been made. When people talk about the standard of living, let them remember that the standard of living of the vast majority of the working class of this country has been very much higher between 1914 and 1918 and 1939 and 1946, than it ever was in the so-called days of prosperity and plenty between 1919 and 1939. That is one of the hard, unpleasant facts which hon. Members opposite will do well to remember.

I asked leave to intervene in this Debate, because I want the Government to give further enlightenment, if they can, on a subject which is causing the greatest anxiety in what is now the principal export trade of this country. There was a day when coal was our principal export. That is so no longer. In these days our principal exports are the textile exports from Lancashire. They were deliberately sacrificed during the war for war purposes. That trade depends upon an export market, and it has been repeated by almost every speaker that the critical and key period in the rebuilding of our export trade is the next few years. What was the competition that Lancashire had to fear, and in fact, suffered from, during the years before the war? What would she have to fear in a normal world? In the first place, she would have to fear the technicological competition of America. America's textile industry is vastly better organised and more efficient technicologically than ours will be for many years to come. It is all very well to talk about having quality instead of mass production, but we cannot even maintain our superior quality unless the Lancashire cotton and textile industry can be completely re-equipped, re-tooled and re-machined. In its present condition it cannot compete for long in building up a new export trade. There is no way of protecting it from that. We will have to do our best and Lancashire will do its best, and I daresay that Lancashire will win.

But there is another form of competition we had to face in the old days, which we hoped we would never have to face again—the competition of what virtually amounted to slave labour in Japan. We had to compete in world markets with a Japanese textile industry which was able always to undersell and to capture ordinary markets because of the exceedingly low standards of labour obtaining in its industry. According to the statement made by the President of the Board of Trade last week, the Japanese textile industry is to be reconstructed. I have no complaint about that—none at all. I certainly do not share the view which was, I understand, expressed by an hon. Member opposite—I did not hear it myself—that because Japan had lost the war, the Japanese textile industry ought never to be reconstituted. That is not merely a wholly immoral point of view but also thoroughly bad economically—

Air Commodore Harvey (Macclesfield)

My hon. Friend who is supposed to have made that remark is not in the House and in fact he did not say that at all. I would ask the hon. Member to check up on the quotations he uses.

Mr. Silverman

If the hon. and gallant Member's hon. Friend did not say that, then I was not referring to that hon. Member's remarks—

Mr. Lyttelton

Perhaps it was a hypothetical man.

Mr. Silverman

I do not know whether I would call him a hypothetical man. It may very well be that my information was mistaken. If it was, I withdraw and apologise for any imputation in what I have said, but I was informed that the view had been expressed that the Japanese textile industry ought not to be reconstituted because, after all, they were responsible for the war and had lost it. If that was not said, I am very glad. We can, therefore, all agree together that the Japanese textile industry ought to be reconstituted. In that case, we can take it as common ground in all sections of the House that there is no complaint to be made about reconstituting the Japanese textile industry. For my part, I make none, but I feel entitled to complain, and I do complain, that in the plans for reconstituting that industry, the Government are apparently doing nothing whatever to protect the labour standards of the Japanese. I make no apology at all for speaking from Socialist benches in this House in defence of the labour standards of workers in Japan or China or India or anywhere else in the world. One is entitled to make that claim and defence irrespective of other considerations. I do not think it is wrong to say that that claim may rightly be reinforced by saying that our own economic welfare demands it too. Our Lancashire cotton industry ought to be protected from unfair competition by low wage standards in Japan or anywhere else in the world. If I understood the President of the Board of Trade correctly, nothing whatever is being done about that. He was pressed on the point by myself and other hon. Members and he said: Japan, like ourselves is an industrial country, ill-endowed with raw materials and fundamentally dependent upon its export trade. It has lost its overseas assets and Empire, and its total population of 80 million will henceforward be concentrated in the home islands. The economic recovery of the country will therefore be beset by acute difficulties. His Majesty s Government are fully aware of the damaging effects which low-priced Japanese competition had on our export trade in many fields before the war. This competition derived much of its effectiveness from low labour standards and from Government manipulation of exchange, subsidies and other methods which can be regarded as inconsistent with proper commercial standards. That is all right, but what is proposed to be done about it?

It will be His Majesty's Government's policy to endeavour to eliminate such unfair competition, not only in Japan but wherever it arises, by international agreement and in any way that offers. That is very cold comfort—" in any way that offers." But what way does offer? By international agreement? Is there any such international agreement? Have any proposals been made for any such international agreement? Is there any prospect whatever that in this key period, Lancashire will be protected against unfair competition of this kind by international agreement?

Mr. Thornton-Kemsley (Aberdeen and Kincardine, Western)

Nothing whatever.

Mr. Silverman

What international agreement is there? And do not let hon. Members opposite talk too loudly about it. After the last war there was the Washington Convention on Hours which this country, under years of Conservative Government, failed to ratify and, having failed to ratify it, they used competition by low labour standards in Japan in order to depress still further the low labour standards in Lancashire. Where are the steps now for international agreement? Our export trade must be recaptured in these next few years and the Japanese textile industry is to be rebuilt for export purposes, if I understand it correctly, in these next few years. Unless, therefore, we are to govern the industrial conditions in these next few years with that kind of protection, what is to become of Lancashire?

Apparently the right hon. and learned Gentleman was himself not altogether satisfied with the "international agreement" or "any way that offers" which was contained in this statement because, when he was pressed in supplementary questions, he said first: We hope that, as part of the reconstruction of Japan, such standards of labour will be introduced. But are they doing anything to implement the hope? Lancashire cannot live merely by hope. We want to see something. We do not want to have to face unfair competition. We do not want our labour in Lancashire to have a kind of competition with labour in Japan, to see who can live on least, in order to sell the cheapest in some foreign market. It will not do merely to hope. When the right hon. Gentleman was pressed to state whether proper standards of living would be imposed as a condition of the reconstruction of Japanese industry, he said: It is not the intention, at the present time, at any rate, so far as any decision has been taken to impose any particular wage standards in Japan. The intention is to try to develop a Japanese Government such as will itself impose certain standards."— [OFFICIAL REPORT, 28th October, 1946; Vol. 428, c 270 and 271.] How long will that take?

Mr. Lyttelton

Ten years.

Mr. Silverman

We are dealing with this critical period in which our export industry has to be rebuilt. I know perfectly well that we are only one party to the bargain, and that we cannot dictate the conditions. I quite understand that, and I do not suppose for a moment that this lack of protection would have been chosen by His Majesty's Government, if they had been able to dictate. I recognise that they cannot dictate but only negotiate. But surely they would have been entitled to say to their partners in this matter, "We, too, in Lancashire, have an export industry that has lost something during the war and needs to be reconstructed. While we are ready and anxious to meet fair competition from anybody in any part of the world, it must be fair competition, and we must be protected now, when you are reconstructing this destroyed industry in Japan." Surely we would have been entitled to say that, and if we did, who would resist it? In whose interests is it that no proper labour standards are to be imposed on the Japanese when this industry is rebuilt? Who stood in the way? Who resisted and rejected whatever representations His Majesty's Government made on that matter? While I am on that subject, would it be indiscreet to ask who is to reconstruct the Japanese textile industry? Who is to provide the capital? Who is to provide the machines? Who is to provide the raw materials? Japan is not. Presumably we are not, because we are complaining that we have not enough to ourselves.

Mr. Erroll (Altrincham and Sale)

Surely Japan has very considerable textile machinery capacity in her own country? Has she not plenty of looms of her own, that might come over to this country?

Mr. Silverman

I do not know, I have not been there. However, I understood from the general tenor of the statement which the President of the Board of Trade read to the House the other day, that there had been great destruction in Japan, and that it would be necessary not merely to allow an export trade to be built up, but to reconstruct the industry. I do not know whether I am wrong, but I assume from that statement that it was the actual mills, looms and machinery that needed to be reconstructed, and that the people's houses and raw materials would have to be supplied and living provided while the goods were being made, while they were being exported, and while they were being sold, and that some of it was to be used for exacting reparation payments in due course. I am asking, Who is to provide the initial capital? Is it America? If it is, if the United States of America are to rebuild the textile industry of Japan, is it America who is refusing to have proper labour standards imposed during the rebuilding of that industry? Surely the United States of America are not going to play the same game as was played by the Conservatives in this country in the second part of the 19th century? They built up a great export textile industry on child labour—

Sir Patrick Hannon (Birmingham, Moseley)

No, no.

Mr. Silverman

Do not say that. Children used to go to the mills at the age of six and work 10 and 12 hours a day.

Sir P. Hannon

That was a century ago.

Mr. Silverman

No, it was not a century ago. The hon. Gentleman must find out. It was not a century ago when they had halftime labour from the age of 12. Halftime in the mills and halftime in the factories was not abolished in Lancashire until the middle of 1920—

Mr. Lyttelton

What about Magna Carta?

Mr. Silverman

—after the last war. When Lord Shaftesbury, a great Conservative Prime Minister, at the expense of the industrialists of Lancashire made the first tentative efforts to have proper factory laws, what was done? We sent our machines to Japan and our skilled workers to Japan where there were no labour standards, and built up in Japan by British capital the very competition that we complained of in all the years that followed. Is America going to do that? Are they waiting for the collapse that will some day come to America unless they learn to control and plan their affairs as we are learning to control and plan ours?

Sir P. Hannon

Will the hon. Member forgive me? It has been the policy of the Conservative Party for years to prevent child labour being employed in factories. Has not the Conservative Party made the supreme contribution in that problem?

Mr. Silverman

The hon. Member really knows better than that, and must not assume that I do not. I know he has been at this game a lot longer than I have; but I am not nearly as innocent as he seems to assume. It certainly is not true. But it would be disquieting in Lancashire if a Socialist Government in this country were to acquiesce in the building up of a textile industry in Japan without proper labour standards and protection against unfair competition, particularly if it were to be built up by American capitalism in a further attempt to depress labour standards in the rest of the world, especially in Britain.

I have been longer than I ought to have been—perhaps I have been led away a little. I hope my hon. Friend who is to reply will be able to say something to relieve the growing anxieties of those in the textile industry of this country. They are very real anxieties. We have been through very hard times between the wars, when textile workers went home after a 48 hours week with 10s. or 12s. in their pay packet, with no unemployment relief, and no relief from the Poor Law because the Poor Law had been used to subsidise rating. Owing to antedeluvian methods of assessing wages, they were kept idle in the factories, and went home with very pitiful amounts in their wage packets. They had a very bad time indeed, and they hope that they will not have a bad time again for those reasons. They are looking to this Government, which they have elected, to see to it that they are protected from that kind of thing. They know that in insisting that they shall be protected, they are not only striking a blow for good economics at home, but striking a blow for good morals everywhere in the world.

8.3 p.m.

Lord Willoughby de Eresby (Rutland and Stamford)

The hon. Member for Nelson and Colne (Mr. S. Silverman) has occupied some of the time of this House explaining how he and his friends, as saintly Socialists, have done so very much better than the wicked Tories during the period between the two wars. If he gets any cold comfort from that, I certainly do not grudge it to him. I suggest that possibly all of us would do better to consider the problems of the moment. I cannot see that any useful comparison can be made between the conditions of today and those which prevailed in the 1930's. The problem then was that of over-production, and under-consumption. The problem with which we are faced today is that of under-production and over-consumption.

Mr. S. Silverman

Over-consumption?

Lord Willoughby de Eresby

Overconsumption of the amount of goods coming on to the market. Before, it was a question of too many goods coming on the market, and not a big enough measure of consumption. Today it is exactly the reverse. There are not enough goods coming into the market for the money which is in the hands of the people. I would be the first to congratulate hon. Members opposite if they had solved the difficult problem of over-production and under-consumption, with its unemployment and many other horrible features. I suggest, however, that before they start crowing that they have solved that difficult problem, they should wait until they have to face it in its full severity as we had it before the war, and they should direct their attention at the moment to the very different problem which faces us today.

My reason for intervening in this Debate is because I believe the ratio at present fixed by the Government between goods made available for export and those made available for the home market, is wrong. I believe it is economically unsound, and bad in its psychological effect on the country. May I say to the hon. Member for Nelson and Colne that I pay full tribute to the President of the Board of Trade for what one might call his policy of self-denial or self-mortification. I think it is a brave thing to sacrifice a very great deal for the export trade, instead of letting it go on to the home market. But I am afraid that does not prevent me from saying that, in my opinion, it is wrong. I know the percentage which is available for exports varies as between one industry and another. In my constituency, firms are working on a basis of 65 per cent. for export, and 35 per cent. for the home market. I know also that farmers alongside those factories are held up in their work for lack of implements, the selfsame implements which are sent abroad for the benefit for foreign countries. We are all too familiar, unfortunately, with queues and the answer of the empty handed salesman that he cannot meet our needs because what we require has to be sent to help the export drive. I do not believe we can ever build up the export trade except on the sound basis of the home market, and satisfied home demand. I believe there is a very intimate connection between the unsatisfied home demand and the unfortunately low figures of production per man-hour throughout industry.

The latest figures in my possession, which were largely confirmed by the Parliamentary Secretary this afternoon, show that the volume of exports from manufacturing industries stands now at 117, or 17 per cent. higher than in 1938. At the same time, the labour force employed in the manufacturing industries dealing with exports, is 50 per cent. greater than was employed in 1938. I am sure the Government, and everyone in the House, will agree that it is far from a satisfactory state of affairs that our export should be only up by 17 per cent. on the 1938 figures, while the number employed is 50 per cent. more.

Mr. Marquand (Secretary for Overseas Trade)

Has the hon. Member realised that there must necessarily be a time lag between the taking in of labour, and the output of the export industries?

Lord Willoughby de Eresby

Of course I have realised that, and I think that the figures as they have been quoted by the Parliamentary Secretary are somewhat alarming at this moment, more than 12 months after the end of the war. We are in a kind of vicious circle today. On the one hand we have the Government saying to the productive workers of this country, in the words of the Lord President of the Council, "Go to it, boys. Work harder; earn more money," and we find the productive worker saying in return, possibly in less polite language, "I am bothered if I do. If I earn more money it is taken from me, or a large measure of it, by the Chancellor of the Exchequer. If I save more money, I am merely offered a beggarly 2½ per cent. on a Government security."

So—possibly not unnaturally—every now and again he takes a day off in the open air, goes to the dog races or some other place where, with luck and good judgment, he can invest his money to show a tax-free return considerably higher than 2½ per cent. Thus we seem to go round in this circle, the Government, on the one hand, screaming for greater production, the President of the Board of Trade, in more measured terms, asking for more goods to help him in his export drive, while the worker remains reluctant to work harder without some tangible reward, in the form of goods in the shops, in return for his extra effort.

Somehow or other we have to break this vicious circle. Otherwise, there is no question, in my opinion—a fear which has been indicated by other speakers in this Debate—that sooner or later we shall have to reduce our standard of living in this country. I believe that this vicious circle can only be broken by a revision of our present export policy, and allowing more goods to find their way into our shops and new machinery to find its way into the factories, fields and mines in this country. I recognise that such a revision in our export policy, at the present time, involves an element of risk. It is taking a gamble, but I think it is a gamble which we can take today, and which we shall not be able to take in the years immediately ahead.

The Parliamentary Secretary and other speakers have referred to the American Loan. I do not intend to argue whether we were right or wrong to accept the Loan on the terms on which it was offered. That is a question which has already been decided, and, rightly or wrongly, we have purchased a breathing space for a few years, at the expense of the future. I would, however, like to make this point. Whatever may be the material, or even monetary, benefits which we have derived, or which have resulted from this Loan—and I would not in any way attempt to minimise them; they are very great indeed—the psychological effect on this country has, unfortunately, been deplorable. The sense of urgency has unfortunately gone, and the crisis with which we were faced at the termination of Lend-Lease has now been postponed until 1950, when we have to start payment instead of drawing on this Loan. To my mind, no number of "pep" talks at this moment from the Lord President of the Council or anybody else, or appeals for the "Dunkirk spirit," will convince the country of the seriousness of our economic position, or stimulate the output of those engaged in production. As I have already said, we have bought a momentary relief at the expense of the future. I hope I am wrong, but as I see it, the crisis still lies ahead of us, and may well have to be faced by this country in trade conditions which will be less favourable than those which exist today.

The President of the Board of Trade undoubtedly has his difficulties to get the necessary amount of exports, but they are difficulties mainly of an internal nature, and, as we know, never before has there been such a demand from foreign markets for British goods. When 1950 arrives, when we have to start payment on the American Loan, we may well be faced, not only with high costs of production and low output at home, but also with the full blast of foreign competition in the world markets just at that crucial moment. I feel that we should today be using this breathing space, which we have bought at the expense of the future, not merely to boost our exports, but to build up the energy and vitality of our own people, to re-equip our own industries and factories to face the trials and tribulations which, I think, lie ahead. We can only build up the energy of our people and increase our output by pouring more goods into our own shops. Possibly I am supported in this contention by what was said only last Friday by the Financial Secretary to the Treasury in the Adjournment Debate. He said: It I were asked why some people today may not be working as long hours as they might I would say that one reason is that there is very little to buy in the shops. He then gives two other reasons—war weariness and the monotony of our diet—and he ends by saying: All these things combined to suggest to them. . that is the productive workers— . . in some cases, that at the moment at any rate, it is not worth while working too hard or earning more than they need to keep their home going because after all there is very little on which to spend the money"—[OFFICIAL REPORT, 1st November, 1946; Vol. 428, C. 1017.] I feel also that we should re-equip our industries by giving them first call on all the machinery which we are producing and not allowing it to go overseas to reequip factories abroad which may in time become our competitors. I implore the Government in all seriousness not to ignore the human side of this problem. I know it is very easy for the Treasury or the President of the Board of Trade to assess our reserves of foreign exchange, and to plan on paper how much we should today export to pay for our essential imports and, again, how much we must export in 1950 not only to pay for our essential imports then but also to meet the interest on our debts. I have no doubt that the President of the Board of Trade with his very fine brain has got it all "buttoned up," and planned out on paper, but in my experience what always breaks down or kills economic planning, or even paper planning, is the psychological effect. The fact remains that we shall not secure increased production on which any plans can be based, if the Government continue to deny goods to the shops for the workers. That is the only acceptable reward today for extra work and harder labour. We shall not get increased production if we deny industry the new machinery which is needed for its re-equipment, after the overstrain and overwork of six years of war.

I readily admit that to revise our export trade policy, and put the emphasis rather on the home market, is a gamble. I think that there are times in life when a bold decision must be taken if we are to win ultimate victory. That time has now arrived. I think it must be abundantly clear to all that neither nationalisation, the prospects of nationalisation, nor even "pep talks" from a member of the Government, will cause the desired increase in production. Let the Government have the courage now to modify their present export policy, laying the emphasis on the home market. When this is done, I am confident that British workmen and British industry, properly equipped, will rise to the occasion, as they have done in the past, and see us not only through our present difficulties but also through the crisis which, to my mind, lies ahead.

8.20 p.m.

Mr. Frederick Lee (Manchester, Hulme)

I thought that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) did the House a great service when he brought us back from the doleful atmosphere which several hon. Members had introduced as far as our accomplishments in the postwar period are concerned. I read with very great satisfaction the statement made by the Leader of the House at a Press conference the other day about our production in heavy industry. I felt that it is altogether appropriate for us to be shown that the productive levels of industry are running at a far higher figure than ever before in very many of the more important products. The fact that these levels are still quite inadequate, against even our own domestic demands, mainly owing to the cost of steel being prohibitive, constitutes a tremendous challenge both to Government and industry. I feel that these figures reveal a most remarkable recovery—certainly, in my opinion, a recovery which cannot be competed against by any other country throughout the whole world.

I am not only concerned, however, with the actual figures of recovery—the actual physical amounts now being produced. I am concerned in asking my hon. Friend whether we are, in fact, using the restricted amount of material which is available to the best purpose. That has been questioned in this Debate, so far as the motor industry is concerned. Are we really sure that a concentration on motor production is, in fact, the best type of production, either in the interests of world recovery or of our own economic future? Are we sure that, by using up a large percentage of our restricted fuel supplies on the production of such things as motor cars, we are going to serve our own better interests on a long-term policy? I feel certain that those hon. Members who have spoken of the export of machine tools are on a pretty good line. I know something of the engineering industry, and it is no exaggeration to say that the engineering industry of this country today is stocked with American machine tools, and it is altogether unbelievable that a nation such as we are, with a great industrial background and a background of highly skilled craftsmanship, should have to depend for a large percentage of our machine tools on imports either from the United States or anywhere else.

Sir P. Hannon

Is the hon. Gentleman aware that, in this country today, we are producing some of the finest machine tools in the world?

Mr. Lee

I think that, if the hon. Gentleman had listened to what I said, he would have found that I pointed out that, in this country, where we have, perhaps, the greatest reserve of skill and craftsmanship in the world, machine tools for our own industry—though it does seem paradoxical against that background—are coming from abroad. I suggest that we should concentrate upon the production, so far as steel is concerned, of things which are going to be creative—rather than upon motor cars and commodities of that type which will bring no return as far as we are concerned.

Sir P. Hannon

They bring American dollars.

Mr. Lee

This question of the reserve of craftsmanship in this country should not be overlooked when we find that the machine tools which are being imported into this country are designed, in the main, because of the chain interest in productivity in the United States. The large engineering factories in this country that I know do not, and never could, depend upon mass production. One can readily remember fitters who for 40 years have been engaged in producing, say, switchboards, and so on, and who have never produced the same switchboard twice in all that time. We rely implicitly upon retaining this degree of craftsmanship on which we in this country pride ourselves.

My hon. Friend the Member for Nelson and Colne spoke about textiles. I was going to cover that point, but my time is too short. Much of the equipment in the Lancashire cotton industry is obsolete, some of it having been made before 1900. In the last few months, I went to Southern Persia with a Parliamentary Delegation and visited a textile factory in Abadan where the average age of the worker was 13 or 14. Every piece of equipment in that factory was a 1938 or 1939 model, and yet we are asking our textile workers, with their obsolete machinery, to compete with such factories. When the Parliamentary Secretary refers to more space, and so on, which is desirable in order to increase our production, is he satisfied with the manner in which the royal ordnance factories of the war are being used at the present moment? I know that not only at factory level, but at executive level, very many of the important trade unions in the engineering industry are much concerned at what they feel is the lack of policy and the waste, not only of floor space, but of batteries of modern machines which could help us considerably in many of our lines of production.

I think I can say with some certainty that much of the trouble which my right hon. Friend the Minister of Fuel and Power is now finding in trying to get mining gear could be solved by the use of the royal ordnance factories for that purpose. It was regrettable that our idea of burning more oil had to be curtailed because we could not get sufficient oil burning equipment in the short space of time. Oil-burning equipment does not take a lot of producing and our experience shows that during the miners' strike, when firms turned over to oil-burning, this was done in a very short space of time. If my hon. Friend would consult with the Minister of Supply in order to get more priority in the use of our royal ordnance factories instead of using them as at present, he could get a greater degree of productivity from that source also. I believe that much of the work which, at the present time, is being put out to private contractors is being sub-let to the royal ordnance factories because it does not yield the average rate of profit. In my opinion, much of our housing parts could be made in that way.

I agree with what has been said about exhortations to workers in industry. I had to do that sort of thing for five or six years, and I know that the workers are sick and tired of it. It is necessary that we should tell the workers that the time when an increase in production, whether by the introduction of new machinery or new methods, meant unemployment for a vast number of them has now gone. We should show them that they can give of their best and reach their productivity maximum without having any fear that, as a result of that position, they will find themselves drawing unemployment pay within a week or two. That is a fear which many of us have experienced, and often it meant many months of unemployment. I suggest that the Government should consider setting up production boards to run these great industries on which the trade unions and the employers federations should be represented. I believe that along those lines we can bring confidence to our workers and assure them that their production effort will mean, in the earliest possible time, not a few hundred thousand unemployed, but to all of them a shorter working week.

8.30 p.m.

Mr. Oliver Lyttelton (Aldershot)

I would very much like to refer later on, if I have time, to the very interesting speech of the hon. Member for Hulme (Mr. Lee). He has a wide experience and knowledge of the subject on which he spoke. I must begin however by express- ing my very sincere sympathy with the President of the Board of Trade at having been laid low by influenza, and I am very glad to hear that that indisposition is not likely to be of long duration. I would like to express my still deeper sympathy with the Parliamentary Secretary for having to make a speech on the Board of Trade brief. I have been President of the Board of Trade twice during the last six years, and I hope it will not be considered offensive or indiscreet if I say that large parts of that brief were very familiar to me. They have been lying in the archives of the Board of Trade for many years, and I think it would have been very much better if they had remained there instead of having been brought to light. We had a very jejune exposition of the position of this country and of our dependence upon exports and so forth. We must not complain, but I had hoped that all that stuff which I have seen so often would not be trotted out.

There were one or two points in the speech of the Parliamentary Secretary, who I am sorry to see is not in his place at the moment, to which I would like to refer. There was one point about machine tools to which he referred, when he was discoursing, with a sob in his voice and not a song in his heart, about all the difficulties of reconversion. He mentioned the difficulty of what he called machinery and machines. He mentioned machine tools and I interrupted him. He misunderstood me, I think, but for some reason which I have never been able to fathom, the present Government have removed the engineering industry from under the control or from under the wing of the Board of Trade, and they have put it under the Ministry of Supply. If there ever was an industry which ought to remain in the ambit of the Board of Trade, it is the engineering industry, because it supplies tools with which so many other industries work. However, that is by the way. But the Parliamentary Secretary must realise that one of the exceptions to his statement about reconversion is that of machine tools. We have derived great benefit in our reconversion programme from the large number of machine tools, many of which, as the hon. Member for Hulme has mentioned, are of American manufacture and were supplied under Lend-Lease. When the Parliamentary Secretary got to that part of the typescript which dealt with the cases which are good for the Board of Trade, he mentioned the production of various consumer goods which he said was improving. But, of course, as he is fully entitled to do, he left out or was completely silent about those parts of the case which are not so good. I do not complain; that is quite a legitimate Parliamentary tactic. No mention was made of the black area of household textiles. I am thinking particularly of sheets and carpets. In the matter of sheets, for example, the Statistical Digest—the "Seagreen Incorruptible"—from which I am quoting, maintains a complete silence on this question. I expect they are very difficult to get. One of the most crying needs, as I am informed on all sides, of the consumer today is for household textiles such as sheets. People get priority dockets, but one cannot go to sleep under a priority docket. One must have something more substantial than that. Then there is cutlery, of which supplies for this market are running at about 45 per cent. of the prewar figures; forks and spoons, 31 per cent. and radio 46 per cent. Therefore, I hope hon. Members will not be deluded by what the Parliamentary Secretary said into supposing that the position of consumer goods is, in any sense, satisfactory. It is very far from being so. The only part of the Parliamentary Secretary's gloomy recital from the Board of Trade brief was when he got on to one or two of these consumer goods. He also mentioned, as did my noble Friend the Member for Rutland and Stamford (Lord Willoughby de Eresby), that the level of the workers in the export trade was 145 per cent., and the volume of exports, I think I am right in saying, was 97.6 per cent. during the quarter ended June. Well, of course, the Secretary for Overseas Trade found it necessary to intervene with a genteel interruption saying, "Is the hon. and gallant Gentleman aware that there is some lag between the entry of workers into a particular industry and what they produce?"—one of those blinding flashes of the obvious to which we are sometimes treated. We are aware of the fact. But is the Secretary for Overseas Trade aware that that will not serve to explain the 145 per cent. level in the export trade and the 97.6 per cent. volume of exports? However, I do not wish to dwell on that point too long.

I now turn to the production drive, and I want to divide my remarks into a very short dissertation on the production drive and on the export drive and a few remarks about Imperial Preference. I have not had an opportunity of seeing the evening papers, but I suppose that at a meeting this afternoon the Prime Minister has been exhorting the trade unions that greater effort is required if we are to reach a higher standard of living. He is now doing exactly what I said he would do about six months ago, going away from Government by planning and starting to enter that very dubious area of government by exhortation. Politicians as a whole, when their plans fall down, resort to exhortation of other people rather than exhorting themselves to do some of the things that are necessary. However, I hope it is successful. I think that once again we see a Saul amongst the prophets. This afternoon we have seen other Sauls, notably the hon Member for East Middlesbrough (Mr. A. Edwards), who made an extremely fine defence of private enterprise, and showed how the Government were falling down in all features of their national plan. There was another Saul who had found the profit motive; he was a different kind of Saul, namely, the hon. Member who informed us, in another blinding flash of the obvious, that he would rather write an article for £15 than an article for £10. I do not think that for the moment the profit motive was found wanting.

Of course, the Government have taken fright over the level of production. Some months ago in the House I produced figures about the disturbingly low rate of output per man week, and I have received no satisfactory explanation whatever of the causes to which the Government attribute this very serious falling off. I am glad the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) has just come into the Chamber, because one of the striking things about this Debate—and I am sure he hopes it is not a feature which will be oft repeated—is that I find myself in a very large measure of agreement with what he said. I am sorry to digress from my main point but he emphasised, I think quite rightly. that the export trades of defeated countries cannot be just wiped off the map if they are not to be permanently on our charge. At the same time, the hon. Member expressed the gravest apprehension, which I share, lest their standard of life and standard of working conditions should be depressed so low that the competition coming from those countries would be grossly unfair. I took the opportunity when the hon. Member came into the House of acquainting him with the very unpleasant piece of news, that I very largely agreed with what he said.

The hon. Member for North Dorset (Mr. Byers), in his very thoughtful speech attributed some of the serious falling off of output, as I do, to the lack of incentive. I should say, in parenthesis, that my own experience is that output per man week is somewhat better than it was; but it still falling far short of what we should like to see. There are no goods in the shops for men and women to buy. If the Government would be a little less theoretical and a little more human, they would realise that the paradox is true, that by giving a little more for home consumption, we should actually improve the amount which we have available for export—not very much perhaps, but they really ought to look into this more closely. I do not want to deal with the subject of incentive any further.

I turn to the matter of the Government's production drive again, and their plans for bringing it about. It is the Government's own planning in many commodities, which is leading to the serious industrial hold-up. I naturally look, first, to the non-ferrous metals, in which trade I spent a large part of my life. If we look at lead, for example, we find the allocations of lead are about 50 per cent. of the manufacturers' requirements today. For example, the production of lead-covered cables is governed by the amount of lead which is available to the cable industry, and no amount of exhortation, even made with the eloquence which the Parliamentary Secretary displayed towards the end of his speech, is going to get up the production of lead covered cables—often a most valuable export. The lead is not there. The Government, of course, made a mess of the lead business. They refused to renew contracts at the end of the war, and found themselves in a very weak negotiating position with the Combined Raw Materials Board. Here was an instance where the planners were wrong. If we look at zinc, we find that in this matter the Government "havered" between August, 1945, and February, 1946, with the result that the whole of the surplus zinc went to the United States. The reason why the Government "havered" was because their economic planning section informed them that zinc was going to be plentiful; but, actually, it turned out to be scarce, and the economic planners were wrong. Very sad. The same is true of copper. The Government thought that copper was going to be plentiful. They got that out of the Cabinet Secretariat, I suppose. But, actually, it turned out to be scarce, and if there had not been one or two serious strikes in Canada, the copper using industries would have been in the greatest difficulties. All along—even now—the supplies of copper have been extremely marginal, and this hand to mouth position has been a serious bar to increased production. The planners were wrong.

These instances have great significance in relation to the policy of block purchase. I have shown that in the instances of these three metals the Government read the state of supply and demand entirely wrong. They read the state of supply and demand wrong in cotton, because they chose to raise the prices the day before the American market collapsed, and prices reached the statutory limit at which dealings are automatically suspended. They read it entirely wrong in the case of linseed. Or if they did not, what is the explanation of the sudden and violent rise which followed the Government's negotiations? Again, the planners were wrong. I said in the Debate on the closing of the Liverpool Cotton Exchange that financial retribution would dog the Government's footsteps if they pursued the system of block purchase, but I little thought, even at that time, that that retribution would follow so closely on my words.

I do not want to go deeply into these subjects. We shall choose another opportunity, and we shall probe to the very bottom the cost to the taxpayer of these frivolous and foolish policies. But this is not the time. I would refer rather to the very welcome reopening of the rubber exchange, which seems to show that the Government are beginning to have an inkling of their past mistakes. I was much interested to notice that the Secretary for Overseas Trade confessed that the plentiful supplies of rubber were a surprise to him. Here again we see that the planner has read the market entirely wrongly; in fact there are very few occasions when he is likely to read it aright. [HON. MEMBERS: "Why?"] Because one man's opinion, or one bureau's opinion, is the worst possible judge of the state of an international commodity. I warn the Government Front Bench, who are now wagging their heads, that in cotton and rubber their epitaph will be: Oh what a surprise, Two lovely black eyes. This motto will be written over the desk of many other civil servants who are engaged in trying to read the vagaries of supply and demand in an international market.

I turn now to one of the great bottlenecks which is causing a hold-up in production. I refer to castings. Everywhere the manufacturing industries are seriously perturbed about the short supply of castings. Why is there a shortage? It is because labour cannot be induced to go back into the foundry industry. [HON. MEMBERS: "Bad conditions."] I am glad hon. Members are following my argument so closely. The men will not go into this industry, because they have seen the advantages of working in the light industries where conditions are much better. They do not go back into what will always be a heavy and dirty industry, however much the conditions are improved—and they ought to be improved. I am not making an argument, I am talking facts, and the fact remains that the foundry industry is short of labour.

Dr. Morgan (Rochdale)

Is it not short of labour because the men suffer from a dangerous disease, which, so far, has never been recognised in this industry for the purpose of claiming compensation?

Mr. Lyttelton

I am saying that the conditions in the foundry industry should be improved, but I am dealing with facts, and the fact is that labour cannot be induced to go back into the foundry industry. This, like many other cases, proves the contention which I have frequently made in this House, that it is impossible to plan priorities of production unless one is willing to direct labour, and it is our opinion on this side of the House, as it is upon the other side, that that is socially undesirable, even if it is not politically impossible. On both points I am sure the Government agree; in fact the Parliamentary Secretary used the words—he will correct me if I am wrong—"When we wisely abandoned the direction of labour." I agree with that. It is wise to abandon the direction of labour, but unless the Government are going to direct labour, a national production plan is quite impossible. You collect a number of raw materials, and you are not willing to put in the labour to make them into things. So you cannot have planned production unless you are willing—and I do not think you should be willing—to direct labour. The Socialist general in the battle has got the ports and the railways, he has got the ships and the ammunition, the only thing he cannot do is to tell the troops whether to advance or retreat.

Mr. S. Silverman

This new-found agreement between the right non. Gentleman and myself has not lasted long. I should like to know whether he is saying that there ought to be or ought not to be a national plan.

Mr. Lyttelton

I do not think there ought to be a national plan in this detail.

Mr. Silverman

That begs the question.

Mr. Lyttelton

It does not beg the question at all. I really cannot go into all of it. What I really meant was that there should be a national policy, but that no attempt should be made to pull industries about by the nose and fit them into a sort of Government mosaic. If that is the Government's idea I think it is absolutely necessary that the human element, which alone can make production live, should also be directed. And I have said that that is socially undesirable and politically impossible.

We have the spectacle today of various Ministers being concerned in this question, and in particular the Prime Minister, the President of the Board of Trade, and the Lord President of the Council. We are very much bewildered on this side to know who is really responsible for the trade of the country, whether it is the right hon. and learned Gentleman, the President of the Board or Trade, or the Lord President of the Council—they both say a great deal, but it is unfortunate that what they say is seldom in harmony and still more seldom in unison. It would be a great advantage to know who is in charge, and perhaps the Secretary for Overseas Trade will tell us when he replies. The two main causes of the lag in production are, firstly, the Government's action in not getting enough goods for home consumption—they should look at that again, because too much theory and too little humanity—

Mr. Belcher

Would the right hon. Gentleman indicate just which consumer goods he has in mind, when he says we are not keeping sufficient here?

Mr. Lyttelton

I will answer that question with a counter-question. [HON. MEMBERS:" Oh."] It is perfectly clear. I will not take advantage—I would never shoot a sitting rabbit. When the hon. Member in his heartening figures gives the proportions which have been exported, I will give him an answer. But he said that he would not give us the figures, except in two cases.

The other thing which is causing lack of production, exhortation or none, is the tragic bungling and mishandling of raw materials. In many cases, that makes the exhortations merely vague. We all welcome the Government exhorting us to produce more, and I am sure that they will not take it amiss if we exhort them to do some obvious things which will help production. They should provide more consumer goods, more incentive, more free markets run by people who understand commodities, and who make fewer mistakes than those who do not understand them, and give more attention to the need for getting rid of bottlenecks, rather than launching out on new plans of nationalisation which will only increase the area of anxiety and dislocation.

I turn to the export drive. I am much disappointed by its results. The Government have publicised the results as if they were a Government achievement. They have not much achievement to publicise. We are very far away from our target. That is the stark fact we have to face. We are far away from our target in the strongest sellers' market that the world has ever seen. Total imports have been running at £107 million per month, and total exports—I am talking about the last six months—are of the order of £77 million. My hon. Friend the Member for Bucklow (Mr. Shepherd), in an excellent speech, reminded the House that the export figures are swollen by the sellers' market, and by the inclusion of supplies to U.N.R.R.A. and other importers who are really ourselves in another shape. I think it is necessary to stress the export of capital goods. I am thinking particularly of textile machinery, printing machinery, and locomotives. I do not want to overstate the case, but I suggest that at this time we are, by our reorganisation and reversion, allowing too much machinery to go abroad. This is dictated by the Government's desire to swell the export figures at almost any cost. It is a shortsighted policy.

Yesterday, we had some remarkable figures about locomotives. Locomotive production is one of the causes of our difficulties on the railways today, not wagons so much, as was suggested. I ask the Government to watch carefully whether the export of locomotives is not being overdone. As for textile machinery, everyone knows that much of the re-equipment of our mills is being held up by the long delivery dates which are quoted by the manufacturers of that machinery. Yet exports of textile machinery have been running at well over 3,000 tons a month, and rose to as high as 5,000 tons not longer ago than last August. These figures are approaching the prewar figures. We are extremely short of printing and bookbinding machinery, as any university Member of the House will confirm. In August, our total production amounted to £342,000 worth, of which £135,000 worth was exported. In June, the production was £408,000 worth, of which £188,000 worth was exported. The proportion appears to be rising. I think the emphasis is a little out of balance. No one on this side of the House would defend the idea that we should keep all our own machinery for our own use. Later, we shall have to export more machinery. But what I am suggesting is that, at the moment, we are swelling the export figures at the expense of our ability to export consumer goods later.

Before I sit down I want to refer to the international trading organisation, and the suggested charter. This point has been raised by more than one Member, and I think there was a suggestion that we on this side have no cause for any anxiety on this subject. So far as I know, negotiations are taking place on the suggested charter for an international trading organisation of the United Nations. In a document which was issued by the United States Department of State our anxieties are pointed by a paragraph which reads thus: Each member other than a member subject to the provisions of Article 28, shall, on the request of any other member or members, enter into reciprocal and mutually advantageous negotiations with such other member or members directed to the substantial reduction of tariffs, or to margins of protection afforded by State trading on imports and exports, and to the elimination of import tariff preference. These negotiations shall proceed in accordance with the following rule. … I would draw the attention of the House to the juxtaposition of the two phrases, "the substantial reduction of tariffs," and "the elimination of import tariff preference." That is a serious matter, and we should like to have some definite undertaking from the Government that they will not close these negotiations, and face the House with a fait accompli—not become bound—until we have had an opportunity of discussing the bargain which is contemplated. There are some of us on this side of the House who think that in this matter we want not only a quid pro quo; we want about 30s. for every "quid," and we regard, with the greatest apprehension, discussions taking place, without the knowledge of the House, on subjects involving these very significant words. I hope that the Secretary for Overseas Trade will renew the pledges which we had given us, and will give us a further pledge that no conclusion in these matters will be reached without an opportunity of full discussion in this House. We have had an interesting Debate tonight. It has ranged over a very wide field, and it is high time that I sat down, before I get on to another subject.

9.1 p.m.

Mr. Hopkin Morris (Carmarthen)

It is not a matter of very great surprise that the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) finds himself in agreement with the hon. Member for Nelson and Colne (Mr. S. Silverman). Very often my hon. Friends and myself are invited, in these days, to join the party above the gangway or the party across the Floor of the House.

Mr. S. Silverman

Now the hon. and learned Gentleman can join both.

Mr. Hopkin Morris

This very important Debate has provided a very good reason for my joining neither. The hon. Member for Nelson and Colne, in one part of his speech, favoured protection for the Lancashire cotton industry in certain circumstances. In the other part of his speech, he charged the right hon. Gentleman and hon. Gentlemen above the Gangway with responsibility for the high figure of unemployment between the two wars. He charged them with a figure of unemployment, ranging from 1,000,000 at its best to 3,000,000 at its worst. There is a very easy analysis of the period between the two wars; I think, a completely mistaken analysis.

Mr. Silverman

What is the mistake about it?

Mr. Hopkin Morris

The mistake which arises from the agreement between you both. At the end of the first world war, all that we had to do in order to see the striking contrast between the position before 1914 and the position after 1918 was to compare the two maps of Europe. Take the map of Europe before 1914 and the map of Europe after the war, and compare the two, and the first thing that strikes the eye is that there is scarcely a frontier on the postwar map in the same position as on the prewar map, with the exception of the North-West and the South-West corner of Europe. Moreover, upon the postwar map, there are seven countries which do not appear upon the prewar map. What do these countries do in the postwar period? What every one of these countries, ourselves included—and that is the responsibility of hon. Members above the Gangway—did was to seek to make themselves self-sufficient and self-satisfied.

Mr. Silverman

The hon. and learned Member did not hear my speech.

Mr. Hopkin Morris

Yes, I did.

Mr. Silverman

Then the hon. and learned Member will, no doubt, remember that the only kind of protection which I sought was protection from unfair competition, not by means of any tariff or restriction of trade, but only by having such sanctions as would make the altered standards in the competing countries comparable with our own.

Mr. Hopkin Morris

It does not matter what form the sanctions take; they are still sanctions and still restrictions on trade. I am against that.

Mr. Silverman

Is the hon, and learned Gentleman saying that, speaking for his party, he is against a common international endeavour to maintain proper standards of wages and labour conditions all over the world? Has the Liberal Party sunk to that?

Mr. Hopkin Morris

The hon. Member must understand what I am trying to say. I am not opposing good international standards. What the hon. Member was saying, if his words had any meaning, is that if there is low wage competition on the part of Japan, there must be protection for the Lancashire cotton industry.

Mr. Silverman

I did not say anything of the kind. I devoted a considerable part of my speech to saying that I had no complaint of any kind about the reconstruction of the Japanese textile industry and its exports, too. What I asked for was that labour conditions in Japan should be such as to make the competition fair. I still want to know whether the Liberal Party are against that.

Mr. Hopkin Morris

In that case I fail to understand what agreement there is between the right hon. Member for Aldershot and the hon. Member for Nelson and Colne. The misunderstanding is between them. The present interpretation which the hon. Member puts upon his speech is very different from the interpretation put upon it by the right hon. Member for Aldershot. I was dealing with the postwar position. Every one of those countries tried to make itself self-sufficient and self-contained. The fault which I find with hon. Members of the Conservative Party is that they diagnosed the case wrongly. They thought they could get over the unemployment difficulty and meet the situation in Europe by imposing a series of duties of one kind and another, quotas, licences, and what not, all of them a restriction on trade and all of them contributing to the unemployment problem. What they failed to realise, and what everybody, perhaps, in every party failed to realise, was that they were dealing with a Europe that was preparing for war, and war alone. When such a situation arises, it ought to be taken as the first warning of war. I have been a Member of the House for a long time, and an eminent Conservative, Lord Hugh Cecil, as he then was, one of the acutest brains in the House, spoke time and again from the Conservative benches warning the Government of his own party what they were leading to. It was a warning which time has shown to have been true.

We have heard tonight two very noteworthy speeches from the benches opposite, the speech of the hon. Member for Chesterfield (Mr. Benson) and the speech of the hon. Member for East Middlesbrough (Mr. A. Edwards). Their speeches contained a warning which the Government should note carefully. The hon. Member for East Middlesbrough complained that hon. Members on this side were charging the Government with endeavouring to nationalise every industry. He said that that was not true. He said that the Government did not intend to nationalise more than 20 per cent. of the industries of this country, the other 80 per cent. being left to free enterprise.

What is important about that is that if that is made clear industry and trade will know exactly where they are. The first essential thing about a tariff and a free trade system is not that a tariff might not be sound enough provided it is kept uniform over a long period. I do not believe that it is good at any time, but if it is kept at a uniform level on the same goods over a long period of time so as to cover the long contracts, it does not disturb the market very much. It then has the same operation.

Mr. James Hudson (Ealing, West)

It ceases to protect.

Mr. Hopkin Morris

It hampers industry and manpower when we change the level of the tariff and the length of its reign. That is the sign of a war economy. The hon. Member for East Middlesborough made the same point tonight with regard to nationalisation. If 80 per cent. of industry is reserved for free enterprise we cannot, as the hon. Member said, play about with the rules of free enterprise. That is a very important point to remember. The hon. Member for Nelson and Colne congratulated the Government upon, their achievement after this war. Let us test that achievement. I am not complaining, because there are great difficulties in their way, but the Government themselves are not satisfied. The speech of the Parliamentary Secretary this afternoon was not that of a satisfied man. He went out of his way to make that expressly clear in terms. The complaint of the President of the Board of Trade is about production, as was that of the Prime Minister earlier.

There is one thing to be said about production that needs to be remembered. Production for the sake of production is not to be demanded. I place the emphasis upon production. In the inter-war years the emphasis was placed on trade, and what was the result? The agricultural countries over produced and could not sell their produce in a world market; it did not reach the consumer and the result was that they had to destroy it.

Earl Winterton

I had a long experience of this when I was at the India Office. The hon. and learned Gentleman has the argument completely wrong. The point was that the industrial countries were not prepared to give a price for goods produced by the peasants in India and elsewhere which enabled those wretched peasants to live. That was what was wrong.

Mr. S. Silverman

Before the hon. and learned Gentleman replies to that point may I say that we are now right back to the argument we had a few minutes ago about maintaining international standards of living?

Mr. Hopkin Morris

I will answer the noble Lord's point first. The agricultural countries, first of all, over produced.

Sir Wavell Wakefield (St. Marylebone)

Under consumption was the trouble.

Mr. Hopkin Morris

That is another way of saying the same thing. In the industrial countries the position was met, as has been said by the hon. Member for Nelson and Colne, by one, two, or three million unemployed. This arose from the whole position of the restriction of trade imposed by every country. The hon. Member for Nelson and Colne asks about international standards. This is the only point upon which I am in agreement with him.

Mr. Silverman

Everyone agrees with me at some time.

Mr. Hopkin Morris

The trouble is that the hon. Member does not agree with himself. When one comes to international standards there was a complete absence of international understanding. Trade is not merely a question of production. A country must produce so that its goods reach the consumer, and the consumer must be able to buy in the cheapest market. The hon. Member for Nelson and Colne raises his eyebrows. Why else should the producer produce goods?

Mr. Silverman

He might produce not only to buy in the cheapest market and sell in the dearest, but because people needed the products of his labour.

Mr. Hopkin Morris

Let me take coal. People need the product of the labour of the miner. Coal in the earth is no use at all. It may be potential wealth, but it is not wealth. Coal becomes wealth only when the consumer puts it on his fire.

Mr. Scollan (Renfrew, Western)

When the miner digs it out.

Mr. Hopkin Morris

When he puts it, as a consumer, on his fire. The miner is a consumer of other goods also. Coal is wealth only when the consumer uses it, and when it has reached the consumer. Therefore, the sole purpose of production is to produce an adequate amount for the consumer in the cheapest market. That is the importance of the international market. Say what you will, Nature has distributed the raw materials of the world unevenly. Nature has distributed agricultural resources unevenly. We must have international understanding in order to meet that situation. The whole position in the inter-war period grew up because there was no international understanding. There was a complete absence of it, every country playing for its own hand.

Earl Winterton

May I ask the hon. and learned Member one further question? Were not his party in power with an enormous majority, before 1914? Does he say that there was no unemployment then, and no international understanding?

Mr. Hopkin Morris

Does the noble Lord compare the unemployment between the two wars with the unemployment in the nineteenth century?

Earl Winterton

It was terrible.

Mr. Hopkin Morris

The noble Lord may say that it was terrible, but between the two wars there was unemployment, not only in this country, but in every country in the civilised world, on a scale that was not comparable with anything in the nineteenth century. That is the situation I am talking about when I refer to unemployment; not unemployment as the result of the trade cycles of the nineteenth century but unemployment created by the mental outlook that existed. Trade is not merely a matter of exchange. It involves a good deal more than that. Trade involves the social and mental outlook, the various legal systems affecting contract in various countries; in fact, it involves the whole social and political outlook.

We are faced with a situation in which States are taking a much greater measure of control over industries than they ever did at any time before. I am not entering into the merits of that process at the moment. I want to keep within my time. It raises the importance of one thing. I am glad, for personal reasons, of the great achievements of the Secretary for Overseas Trade. He has been visiting various countries and, I understand, has been successful in obtaining understandings and agreements. It is important that those international understandings should not be bilateral. They should be multilateral agreements. All countries should be brought in. Bilateral agreements create suspicion. They may be successful for a time but they create suspicion in all those areas which are outside it. That is the Liberal case for inter-independence. I know it is unfashionable to talk of Liberal doctrine, in the twentieth century.

Major Cecil Poole (Lichfield)

It is not profitable, by the sound of it.

Mr. Hopkin Morris

No, it is not, and it is not popular, but Europe is a shambles because Liberalism and the Liberal way of thought are unpopular. It is not merely in this country that the Liberal voice is not heard. It is not merely this country that it does not influence. Liberals are exiles in Spain. They do not influence affairs in Russia. Unfortunately, they do not influence affairs in Asiatic countries either. It is a tragedy, I admit, but has anyone any delusions and is anyone proud of the result and the resulting state of every grade of society in the different countries of Europe? Does anyone expect to re-establish trade and industry to give employment to the maximum number of people throughout the world, unless we first of all establish peace and a liberal way of life—

Sir P. Hannon

Would the hon. and learned Gentleman tell the House whether the Ottawa Resolutions of 1932 did not make a substantial contribution to full employment?

Mr. S. Silverman

A substantial contribution to the war.

Mr. Hopkin Morris

I have not touched on Imperial preferences, in view of the time at my disposal, but it is a great fallacy to believe that they cement the Empire.

9.21 p.m.

Mr. Marquand (Secretary for Overseas Trade)

I greatly appreciate the gesture of the hon. and learned Member for Carmarthen (Mr. Hopkin Morris) in sitting down before he had quite finished his speech in order to give me an opportunity to reply to the large numbers of points that have been raised. I also thank him for the courteous references to myself. It is very difficult to reply to everything that has been mentioned tonight—indeed, it would be quite impossible in the time at my disposal. I shall resist the temptation to cross swords with the right hon. Member for Aldershot (Mr. O. Lyttelton) on the question of bulk buying. I hope, too, that another occasion will arise when I shall be able to tell him about the advice offered to me during the rubber negotiations about the prices we ought to fix for rubber.

I hope that this Debate will have served one purpose. Hon. Members of both sides of the House thought we were not fully discharging our duty to tell our people. The hon. Member for Edgbaston (Sir P. Bennett) said we ought to tell our people what the situation was. I hope that this Debate—reports of which may appear in the Press—will contribute to that job of telling our people, which we certainly want to do. Have the people ever been told so much before? There is this green book, called the Digest of Statistics, which even the right hon. Member for Aldershot, with his vast acquaintance with trade and industry and his well known ability to handle statistics, finds essential at the present time. That never existed before the war, nor anything like it. Those accustomed to deal with statistics in those days had the greatest possible difficulty in finding all sorts of information which is now available—

Mr. Lyttelton

I am sure that the hon. Gentleman would wish to acknowledge that the origin of that book was during the life of the Coalition Government.

Mr. Marquand

Certainly, but it is going on, and in it is now printed a great deal of information which was not given at that time and which I know could not be given for reasons of secrecy and so on. My point is nothing to do with competition between one side of the House and the other. The point is that that information is available. This sort of information is not food for the general public. It must be translated into simpler terms and taken to the people. I hope that hon. Members on all sides of the House, even though they may disagree with us in detail in some of the things which we are doing, may undertake that task. We have sent out large amounts of information to hon. Members on both sides, and I hope they find it useful. We are anxious to carry on this business of explaining to the people the present economic situation as far as is reasonably possible by the cooperation of both sides of the House. I would remind the hon. Member for Edgbaston and the hon. Member for Aston (Mr. Wyatt)—as they did not appear to know it—that we are undertaking a very considerable effort along the line of trying to make the facts known. I wondered whether they had seen our advertisements in the newspapers. They over-simplified the position, but we have to over-simplify it for the general public which cannot be expert in these things. I would invite hon. Members to come to the Board of Trade as soon as they conveniently can to see the posters. The hon. Member for Aston mentioned posters. We have posters to explain these things, we have all kinds of attractive pictorial publicity in the form of charts and pictures in order to explain—

Mr. Wyatt

My complaint was not that there were not any posters but that they were not sufficiently displayed in the streets of industrial towns or in the factories.

Mr. Marquand

I am sorry; I misunderstood my hon. Friend. We are certainly trying to display them, but I will draw the attention of those responsible to the need for a wider display. However, I would like to draw the attention of hon. Members to the fact that these are to be seen, and I would be glad if hon. Members would give us any helpful criticism they can.

If I may summarise it in a sentence, I have the feeling that the substance of this Debate was that we were adjured to plan for the future. We were told that the past is all very well, and all very interesting, but what about the future? I agree, of course, that the future is more important than the past, but I do say that the performance in the past is some evidence of our ability to plan for the future, and I claim again that the performance to date in our export drive, is a proof of our ability to plan and see ahead. The achievement for the month of July was 120 per cent. of the average monthly volume of the year 1938. The figures for August and September, as my hon. Friend said, went down, but the figure for October was £90,800,000 on our nearest estimate. It was £92 million in July, £91 million in October, showing a recovery from the holiday period which my hon. Friend mentioned. That represents a substantial achievement.

We have been criticised for using the year 1938 as the basis for our figures, but we are not doing that. Our target is calculated on what we require to bring our balance of payments into equilibrium. There is a difference of opinion as to whether the target is sufficient. The hon. Member for Chesterfield (Mr. Benson) thought we ought to have said 200 per cent. instead of 175 per cent. That may be, but those who calculate these targets are, after all, in possession of a very wide range of information which is not always available to private Members of this House. The target is calculated on an estimation of what is required to bring the balance of payments back into equilibrium, and it is expressed in terms of the export trade for 1938. The target itself is not based on the 1938 figure. If we took the 1919 exports or the 1928 exports it would make no difference; what we are doing is expressing what we wish to achieve in terms of a particular base year, and we measure our achievement in relation to that particular base year. Any base year would do for which we had a reliable figure to put our figure against. I think it was the noble Lord the Member for Rutland and Stamford (Lord Willoughby de Eresby) who went further into detail about these figures. and suggested that an achievement of something over l00 per cent. of the volume of export was not satisfactory in view of the fact that the quantity of labour engaged had increased to 135 per cent.

Mr. Lyttelton

One hundred and forty-five per cent.

Mr. Marquand

I beg pardon, 145 per cent. I would like to point out in explaining that, not merely that there is a lag between the intake of labour and the production of goods by that labour; not merely that. When we claim 100 or 120 per cent. volume of exports, we are taking our total exports, including coal, in the base year when coal exports were fairly substantial, including coal in the present year when coal exports were fairly negligible. The export figures include coal, but the labour figures do not. The labour figures refer to manufacturing industry only. That is a point that hon. Members might like to bear in mind when they criticise these figures in future. I would like hon. Members to see the graph, and will undertake to try to display it in some convenient place in the House, so that hon. Members might see the remarkable way in which the curve of intake of labour is followed or paralleled—if I may use that term in relation to a curve—by the output of goods. The time lag is three, four, or six months and all the way through, as the intake of labour is increased, so, after a given period, the output of exports is also increased.

I watch these figures extremely carefully and I do know what I am talking about. Every piece of our present export trade is planned in detail, and the proportion between home and export trade is worked out for every commodity exported. It is discussed with the trade concerned and, in the case of important capital goods, like machinery, the opinion of the consumer is also taken into account before the export target is fixed. These export targets for machinery are fixed by my right hon. Friend the Minister of Supply, and his advisers, and not by the Board of Trade, although, of course, the Board of Trade advice is taken into account. If the Board of Trade have, perhaps, a bias in favour of exporting too many of these capital goods, because of their natural anxiety to increase exports, the Ministry of Supply are not likely to have that bias, because their anxiety is for home production. The views of consumer industries are taken into account, as well as the opinions of producing and exporting industries.

I can understand hon. Members wanting to know—and it is a very reasonable question—whether we are carefully balancing the needs of our home industry in machine tools, and capital plant generally, against the needs of the export trade. I can only assure them that we are. I cannot go into the details of every one of these things. But when they suggest that there may be too much exporting of machinery or machine tools, I ask them to be very careful and very accurate—more accurate than some hon. Members have been tonight—about precisely what they mean by those words. The right hon. Member for Aldershot says that surely the Government cannot be in difficulty about machine tools, because of the great production that took place during the war. There was a great production, and there was a large surplus of machine tools of some kinds. There is, nevertheless, a shortage, and a difficult production position of some others—not very many, but nevertheless, of some. So my hon. Friend was perfectly correct when he said that machine tools are included in the problem.

I will tell the right hon. Member for Aldershot what they are. He may suggest that they are relatively unimportant. Woodworking machinery, as he knows very well, was not produced in quantity during the war, because it was very little required for war production. The whole of the woodworking industry was a problem, and it was difficult to know what to do with its labour and capacity. Woodworking machinery is needed now for furniture production. Our metal working industries require machine tools of kinds which we found were not available, and they had to be increased, or supplemented, by imports. More striking still is that we need die presses for making motorcar bodies, which are very necessary at the present time. So there are pockets in machine-tool production in which we have a problem. In some cases we are supplementing our own supply by import. I am sure that no one on any side of the House is going to criticise us for that. But when hon. and right hon. Gentlemen including the right hon. Member for Aldershot, criticise us for exporting too much machinery and products of this kind, and in the next breath criticise us for exporting too much of consumer goods, where do they expect us to get the necessary volume of export trade?

Someone referred to steel sections being sent to Holland. It is very regrettable in a sense that all the steel sections available cannot be used in the housing programme in Great Britain. If hon. Members could come with me on some of my visits abroad to negotiate these trade agreements which we have to make from time to time, and heard what our foreign suppliers say to us, they would know why it is necessary sometimes to send exports which we can only barely spare from our own home needs. If they came to Holland or to Denmark, and asked the Dutch for cheese or the Danes for bacon, they would get the answer, as we got it, "Where are the textiles, where is the steel?" and "We are not interested very much in your fountain pens or your toys," or some other exports of that kind which perhaps hon. Members might be willing to let them have—though no one in any quarter of the House who has criticised the policy has suggested what he would export instead. If they are not going to suggest something else which may be exported, the only way out is to borrow more.

I hope it will be possible to leave tonight in the minds of hon. Members, and in the minds of the public who may read this Debate, the extreme seriousness of our position. We borrowed money from the United States of America to buy time. But the value of that money has dropped since we borrowed it, and that is a very serious factor in our present situation, which makes the situation tonight a good deal more serious than we thought it would be when we debated that Loan in this House 12 months ago. The situation today is more serious, because, as I have said, of the rise in prices in the United States of America, and of our dollar imports, which are larger now than they were before the war—I mean larger in proportion to our total imports—necessarily so, because stricken Europe is unable to supply us with the old quantities. That, as I say, is a very serious position indeed, and it makes it necessary, whether we like it or not, not to relax but to intensify the export drive. That is the present posi- tion. We cannot avoid it, and I believe that no Government could avoid that choice.

May I say a word or two more about some consumer goods? Of our present exports, about two-thirds consist of goods which never appear in the shops at all—chemicals, iron and steel machinery and a lot of things of that kind, and one-third only of consumer goods. Those consumer goods which are exported are worked out down to the smallest thing by the export target method which the right hon. Member for Aldershot, I think, invented while he was President of the Board of Trade during the period of the "caretaker" Government. The right hon. Gentleman incidentally, at that time, when he invented and brought forward this idea of an export target, said he hoped that, as time went on, the sights would be raised. I hope he is not moving from that position tonight, though something of what he said sounded suspiciously like it.

Mr. Lyttelton

No.

Mr. Marquand

Each one is fixed with careful regard to the needs of the home consumer. They are constantly varied and reviewed. They are being changed all the time. With regard to the necessity for incentives to production, the greatest incentive throughout the world, and not only in this country, is textiles. People feel the need for replenishing their wardrobes perhaps more acutely than anything else except the need for shelter. Our exports, not of clothing, but of textiles, from which clothing is made, are running, in the case of wool, as has been stated often enough, at about 18 per cent. of total production, and in the case of cotton at about 16 per cent. of total production.

We dare not put them lower. If we took the whole of the 16 or 18 per cent. and put it into the home market, how many more coupons would that involve? It would be very few indeed. To add 8 per cent. to 82 per cent. would not increase the total amount available to the home consumer by a very large proportion. It would be roughly one-fifth, and that would not help the home market very much. It would be absolutely fatal to take those textiles away from the export trade now, because textiles are what we need to induce producers overseas to send us foodstuffs. We have made special drives and a special effort to send textiles recently to Siam, of all places. We did that because, if we send textiles, we might get rice. That was the only way we could get rice from the Siamese producers. Why did we need rice? We are not eating rice at home, as everyone knows. We needed rice to send to Malaya because we get rubber from Malaya. These may be elementary demonstrations, but they need to be made in view of what has been said tonight. If we take the question of crockery, the export target for decorated crockery is one hundred per cent. No decorated crockery is sold on the home market today. Why? Because any housewife in this country, if offered the choice, would rather have a white plate with bread and butter on it, than on a decorated plate with nothing on it.

I must press on to wider and less detailed questions than export targets. I come to the question of competition from the low wage countries—from Japan in particular—with special reference to the textile industry. Fortunately, this problem is not so immediate as some of my hon. Friends are inclined to think. It is a serious problem which I do not wish to minimise, but I will give hon. Members this reassurance: Perhaps the problem is not so urgent as they might imagine. The effects of the war upon Japanese industry are very severe indeed, and it is bound to be some time before Japanese production can be increased to proportions which hon. Members might regard as threatening. Current production assessed for the months May to August, 1946, which is the highest level that Japanese production has reached since the end of the war, expressed as a percentage of the production of 1936, was for cotton yarn, 7 per cent. Today they are producing 7 per cent. of the quantity they produced in 1936. They are producing 4 per cent. of rayon, and 2.7 per cent. of cotton piece goods. I could quote other figures about coal, soda ash and caustic soda but there is not time. I want to make the point that the problem is not pressing on us so fast and so hard as might be expected from some of the remarks made tonight.

Mr. S. Silverman

Of course, these are the figures before the foreshadowed reconstruction had begun.

Mr. Marquand

Certainly. I merely wish to make the point about the length of time which we have, in which to prepare for the eventual restoration of the Japanese textile industry. The time we have in which to lay our plans may be a little longer than the hon. Member for Nelson and Colne (Mr. S. Silverman) thought. That is the point.

How should we deal with this problem? I wish to make some remarks about the Lancashire cotton industry. First, there is a most significant fact, which was not mentioned during this Debate, that that industry today has only two-thirds of its prewar number of workers, and that the cotton working party, composed of experts representative of both sides of that industry and knowing it very thoroughly, scratching their heads, as it were, and trying to find a solution to this problem, cannot point to any way in which that number is likely to be increased very substantially for years to come. I hope, indeed, I am sure, that the hon. Member for Nelson and Colne is doing his best to encourage the people of Lancashire to go into that industry, but it is a fact that the workers have gone into engineering and aircraft factories, so that the war has accentuated a tendency, which existed before the war, for labour and resources to shift away from the older staple industries and the comparatively simple or crude industries to the newer, more complicated and highly finished industries. It is impossible that we shall be able to get the prewar quantity of textiles for a very long time to come unless we can, as we are trying to do, mechanise the industry and increase the output per worker. If we can do that, not only do we increase the quantity of output, but its competitive power. Do not let us get the idea that low wage industries are necessarily competitors to be feared. The high wage industries of the world are the best exporters in the world, in many cases. Consider the United States automobile industry, situated a thousand miles from the seaboard in Detroit. drawing its iron ore from places further away, even getting some raw materials from the coast, involving long hauls, and, nevertheless, being able to compete in the markets of the world with anybody else's production, and pay some of the highest wages ever paid in history.

I would like to see the Lancashire textile industry getting into that sort of stride—an organisation in which it was a high-wage, highly efficient industry able to meet competition from low-wage industry which may not be so efficient. We ought, at the present time—I wish we could—to concentrate much more on exports in textiles to the dollar markets. I have to refuse the most tempting offers from important business undertakings—great chain stores in the United States—who want to buy more of our textiles. I have to turn all these down and send them empty away, and it is very disheartening for a Secretary for Overseas Trade to do that kind of thing. I have to do it, because there is not sufficient output coming along, and we cannot raise the export target in textiles at present without injuring our own people, and because we have to share out this paltry 16 per cent. of total output with various markets of the world, such as Siam, which I have mentioned. I very much regret it—

Mr. Rees-Williams (Croydon, South)

Surely, the danger as we see it is that this highly mechanised American industry will combine with the Japanese, equally mechanised, and with its slave labour, and that that will be a competition, which we shall not be able to face?

Mr. Marquand

I have not quite finished what I wanted to say about this. I want also to say that what the critics complain of is unfair competition. They do not complain, I take it, of fair competition, but of the competition by depreciated exchange, competition by placing false labels on the products, such as took place before the war and was done by the Japanese. That sort of competition we certainly hope will be entirely ruled out by the rules of the new trading organisation, and we hope it will be possible, when the time comes to make the Peace Treaty with Japan, to ensure that she abides by the rules of the new trading organisation. Unfair competition by very low wage standards and exploitation of labour, can best be dealt with, as the hon. Member for Nelson and Colne said, by an international convention through the agency of the International Labour Office, and I hope that my hon. Friend has sufficient trust in the present Government to know that we, at any rate, would see to it that that Convention would be finally endorsed by the British Government. It must be remembered that, in the long run, we cannot raise the real wages of the Japanese except by giving them the opportunity to sell their goods in the world markets. We cannot envisage that future in which, by refusing the Japanese all export opportunities, we condemn them to starvation, or, by refusing those opportunities, we condemn ourselves to subsidise them for ever in a state of semi-starvation. Neither of those alternatives is tolerable to a civilised community and so we must face the re-entry of Japan, but, as I have already tried to indicate, we will take all the safeguards that lie within our power. I hope to be able to say something before I sit down about our proposals in regard to the International Trade Organisation.

I was going to say something about the danger that British industry might suffer from a world depression, but I am afraid there is no time to do so. If I may put the point briefly, I think that what we might have to anticipate in the near future may be something like the slump we experienced in 1921. We are getting near to 1921, as it were, at the end of the second world war—a situation not unlike it, though in many respects unlike what it was in 1921 when we had a brief depression. I believe that British economy, controlled as it is at the moment, with our better understanding of an expansionist policy, our greater technique for dealing with these things, our superior position in having a central economic plan and much greater economic information than we had in those days, could resist the effects of a temporary depression such as we had in 1921. In 1921, the rest of the world climbed out of that depression pretty quickly, but we did not, because we adopted the policy of deflation and so got ourselves into a sort of morass from which we did not really escape at all until the lately finished war came upon us.

I believe that our whole system of economic planning and control is sufficiently good and that our industry has proved its resilience sufficiently well to enable us to cope with a depression of the 1921 type. We must be prepared for the possibility, at some later date, of a world depression of a much more fundamental type, such as we had in 1929. I, personally, cannot see a big depression of that kind occurring in the world for some years to come in view of the acute shortage of goods all over the world. The 1929 depression was one of scarcity in the midst of plenty. But we have not yet reached the stage of plenty. Therefore, I believe that we still have a little breathing space in which to make our plans for meeting the dangers of a real depression. I wish to assure the House and hon. Members who are anxious about this that we are devoting a good deal of the time of expert staffs to research on these problems, to considering where the demand for our exports will be likely to come from when the sellers' market disappears, to considering what markets it will be best to cultivate and to considering what types of production have the best opportunity of producing the goods which will sell in the markets of the world.

I regret to find that, on the whole, manufacturers and businessmen at the present time are not sufficiently alive to the need for looking ahead at these problems. We have found a certain frigidity on their part in regard to business forecasting and market research. Businessmen in this country should be a little more prepared than some seem to be to take advantage of the modern technique of market research.

Mr. Lyttelton

indicated dissent.

Mr. Marquand

The right hon. Gentleman shakes his head scornfully, but why he should wish to take up an antedeluvian attitude in these matters, I do not know; I should have thought that this was a piece of modernity which would have appealed to his heart.

Mr. Lyttelton

This is most interesting, but why one should be lectured about the need for market research when every large business devotes a very great part of its activities to this thing, I find it difficult to understand.

Mr. Marquand

I see; it is the right hon. Gentleman's dislike of the obvious. I am sorry to have misunderstood the toss of the head. I think that is all I can say on that point.

I must now pass to the subject of the International Trade Organisation talks. I was going to say something about our general approach to this problem, about the reasons why we feel that multilateral trade is more desirable and essential to the interests of this country than bilateral trade negotiations. However, I will pass that over because, after all, it was dealt with fairly fully in the Debate on the American loan. We did say when we endorsed in principle the American proposals, that we did so on the understanding that we would consider the views anti observations of other Governments when the time came. The present conference being held in London is a preparatory committee appointed by the Economic and Social Council to prepare an annotated agenda for a larger conference of countries which will meet in the spring. We are beginning to take the opinions of the other countries, as we undertook to do when we gave our endorsements to those proposals. Let me make it clear that there is no discussion going on at the present time in any way like detailed tariff bargaining. There is not at this time in London any question of bartering preferences against tariffs. In regard to the question of preferences which has been mentioned tonight, I can, of course, repeat without any qualification whatsoever the undertaking which was given by my right hon. Friend the Prime Minister. We are not departing in any way from what the Prime Minister said, and there is no need for me to remind the House of what he said.

I might clear up a possible misconception about the Draft Charter which the United States Government have circulated among the delegates to this conference. The Draft Charter is one of the working documents in use at the present conference in London. It is not the main agenda of that conference. It is an American document. It is not a British Government document at all; we took no part in framing it, and so we are not necessarily committed to any single word in that charter. It is a very useful working document which the conference is finding extremely interesting and valuable in the course of their discussions. We are discussing the general principles which should govern international trade. We are discussing the general principles of commodity policy, commercial policy, tariffs, quotas, subsidies and industrial development in under - developed countries. We are discussing those matters with countries like India, China and some of the Latin-American countries which are vitally interested in the problem, and we are seeking to reach agreement with those countries as to the ways of diversifying their economies and the way of raising the standard of living of their peoples, which, I submit, is the best way to approach this problem of the competition of the less developed countries in the world with our own industry. That is the kind of consideration which we are raising in this discussion. We are also discussing the question of State trading.

That is an outline, and I have time to give no more than an outline of what the conference is about. It is not yet the main conference, but I do say that this matter is an urgent one, and we feel satisfied already by the conversations so far as they have gone, that we have found such a good measure of agreement between us that we are looking forward with some optimism to the main conference when it meets next year. We are trying in the conference to make constructive proposals of our own. The British Government are presenting to the conference proposals on full employment because, in our view, the most important approach to the problem of wider international trade is not so much the removal of the barriers, though that is necessary, as the constructive effort to provide full employment and a rising standard of living for the peoples of the world.

It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.