STATE OF THE NATION

HC Deb 06 August 1947 vol 441 cc1535-96

Question again proposed. "That this House do now adjourn."

Mr. Speaker

Mr. Bower.

6.59 p.m.

Mr. Orbach (Willesden, East)

On a point of Order, Mr. Speaker. Before the hon. Gentleman proceeds, may I remind you that during the course of his speech he was responsible for making a statement which, I think, casts odium on the Members of this House and on other persons working within the Palace of Westminster. He made a statement to the effect that illicit and illegal transactions took place here in connection with both clothes and food rationing. I think the House is entitled to know whether the disclosures have been made to the Minister concerned, or whether the hon. Member intends to apologise.

Mr. Speaker

The hon. Member is responsible for what he says. He does not have to apologise because he makes what may seem to be a rash statement.

Mr. Orbach

Further to that point of Order, Mr. Speaker. Surely, the hon. Member has been responsible for a breach of Privilege, in that he cast odium on Members of this House?

Mr. Speaker

Not necessarily on Members of this House. After all, there are many other people besides Members who work in the Palace of Westminster, and lots of things go on of which we have no knowledge.

Mr. Bower

Let me say at once that I was not intending to cast any reflection upon any Members of this House. I did not specify by whom they were sold OI by whom they were bought; and I most definitely do say now that, as a matter of fact, no Members were concerned in the transactions to which I was referring—[An HON. MEMBER: "Did the hon. Member report it?"]. That is a matter about which I prefer not to say more at the moment.

Mr. Platts-Mills (Finsbury)

In view of the very grave charges made against some persons unnamed, will the hon. Member now give the House the benefit of his knowledge as to the sources of his information?

Mr. Bower

No, I do not propose to give any information regarding the sources of my information at the moment. I merely say that I do know for a fact that such transactions have taken place, and I make myself fully responsible for that statement. If it should be necessary to give any further information, or if it is desirable to do so, I shall be prepared to do so on another occasion. I do not choose to do so at the moment. As I was saying, a legally and officially recognised black market, is a contradiction in terms, because if it were officially recognised it would not be any longer a black market. But I ask the Government seriously to consider this expedient, if they really want people to work hard. It may sound outrageous to people in this country, and it may not even be possible, but I am convinced that this passion for equality, whether people work hard or whether they do not, and for what is wrongly called fair shares for all, will, if it is persisted in, ultimately bring this country to ruin and complete stagnation.

Finally I want to say this, as a back bencher who does not take a particularly active part in the proceedings of this House, but who, nevertheless, watches the situation fairly closely. I think we can detect a certain similarity between the position of this country now and its position in 1938 and 1939. The setting is, of course, different, because in those years the crisis was mainly international in character, whereas today it is mainly domestic; but, nevertheless, we are moving into a crisis in an atmosphere of party warfare and recrimination. Each side is really doing its best to score off the other right up to the very last moment. I lay the blame for that state of affairs on the Government, because, after all, it is their responsibility to create the right atmosphere and to give that leadership which alone could call forth that supreme effort from a united nation without which we shall never succeed in turning the tide.

Nevertheless, in that position in which we find ourselves, the responsibility rests on all of us. I think that we on this side of the House must refrain from saying anything which would tend to weaken enthusiasm for increased production among those sections of the community who support us—and they are very numerous. At the same time, I ask hon. Members opposite—and this does not apply to a good many—really to search their consciences, and to ask themselves whether they really are justified in continuing to use the same propaganda regarding such things as profits, private enterprise, and so on, which has served them so well in the past. Ought they really to continue to give the impression to their supporters that there is something immoral about profits as such, and that private enterprise is really nothing more than a necessary evil which has to be tolerated at the moment, but which is to be further truncated and curtailed at the earliest possible moment? I do not think they ought to continue to do that sort of thing, because I feel convinced that, unless both sides are prepared to exercise a certain amount of restraint in their propaganda, we shall never get that great, united national effort which alone can pull us out of our present difficulties. It may well be that, ultimately, the sheer force of circumstances will tend to mitigate the asperities of party warfare and pull us a bit closer together, but by then, as has happened in the past, it may be almost too late.

7.5 p.m.

Mr. Fernyhough (Jarrow)

Hon. and right hon. Members on both sides will understand that I follow a very distinguished Member of this House. She was a woman of great courage and great character. That does not of necessity make my task any easier tonight. We are discussing tonight another lady—old Mother England. In deference to Scotsmen and Welshmen and Irishmen I had better say old Mother Great Britain. The old lady is in great pain internally and she has got a few large external sores. There are those who would pretend that her present deplorable condition is due to Doctor Socialism, but we know that that is not true. We know that the old lady had these pains in 1938, because in 1938 we were failing to balance our export-bill. The pains certainly became more acute once war was declared, and had it not been for the blood transfusion that Doctor America infused into her, in 1941, it is certainly true to say that her crisis in 1941, 1942, 1943, 1944 and 1945 would have been greater than the crisis which the old lady is passing through at this moment. Further relief from the pain was given in the way of a loan, but now that medicine is running out and there is an element of doubt whether Doctor America is to continue to administer to the patient. But in any case the old lady is not ready for boxing up and burying. She feels that she can revitalise herself if her own sons and daughters, on whom she has a right to depend, rally around her as they have done in the past.

But when it is a question of all her sons and daughters rallying round her, it does mean all and not just a few. I appreciate that in this great battle for life the old lady, to a large extent, has to rely upon what I would call the forgotten sons and daughters, the unimportant sons and daughters; because in essence, if the old lady is to survive it is a question of production, and in the matter of production it is the unimportant people in the main, in society who become important. In other words, the old lady today has to look to the miners and not to the millionaires; she has to look to the builders and not to the bankers; she has to look to the engineers and not to the racketeers; she has to look to the shipbuilders and not to the shareholders; she has to look to the labourers and not to the lawyers; she has to look to the clerks and not to the sharks; in other words, to the men and women who do the hard, essential and the vitally necessary work for society. They are, once again, the men and women who can pull old Mother England through this great trouble with which she is faced.

If we are to overcome this crisis we must recognise the truth of what the folk of my party have said, right from the time Keir Hardie came here wearing a cloth cap, that there is no wealth except that which comes from work. That entails those who have been unduly critical of the people who do the essential work in our society themselves getting down to the task of rendering more useful service to the community than they do at present. What is needed now is a clarion call such as the right hon. Member for Woodford made to the nation in 1940, when he said he had nothing to offer except blood, toil, tears and sweat. This Government are in a position to say, if they can have that same blood, toil, tears and sweat, not that they have nothing to offer, but that they will have something real and tangible to offer at the end.

If Mother Great Britain comes through this struggle—as she certainly will if her sons and daughters rally round her in the manner she has a right to expect—when she is once again in a position to distribute favours, it will be her job to see that those favours are distributed to those sons and daughters who stood by her in her hour of need. In other words, we have to appeal again, in the main, to the people from the mean streets and back streets, the people who do the really hard, productive work. They are the backbone of the nation in this crisis, because this is a crisis of production. If we put it to the workers in productive industry that this is a fight against the age-long curse of the workers of this country, the age-long curse of poverty—because this is essentially a fight against poverty—then I am positive they will give their wholehearted support. If we get the response to which we are entitled in these days of difficulty then, without question, not only will old Mother Great Britain get well and strong again, not only will she have reason to be proud of her sons and daughters, but, great as her past has been, an even greater future will he before her because of that magnificent response to her appeal in her hour of need.

I appreciate that probably I have not followed the honoured custom of this House of not being controversial in a maiden speech. But when a question such as this is being debated, it is difficult not to say something which could be offensive to some Members of the House. If I have transgressed, I am very sorry indeed. But I feel keenly upon this matter, and I think the House would prefer me to be honest and sincere, and to know that I am honest and sincere, even though I may be offensive, rather than that I should make a cuckoo speech which was completely out of keeping, and quite unbefitting the times through which we are passing.

7.15 p.m.

Colonel Lancaster (Fylde)

It is my privilege and pleasure to congratulate the hon. Member for Jarrow (Mr. Fernyhough) on an excellent maiden speech. He had two advantages, in that he was speaking for an important industrial and shipbuilding constituency, and was following in the footsteps of a right hon. Lady who had the respect of hon. Members on all sides of the House. I am certain we can look forward with interest to further contributions from the hon. Member.

I propose to take up the time of the House for only two or three minutes, because there Was one point raised by the Prime Minister with which I felt I must deal. It was referred to also by the hon. Member for Houghton-le-Spring (Mr. Blyton) in his excellent speech, namely, the question of the half-hour extra work in the mining industry. My right hon. Friend the Member for West Bristol (Mr. Stanley) said that we should deal with the proposals of the Prime Minister, on their merits. It is necessary to say straight away that it would be a complete illusion if the country or this House were to imagine that as a result of an extra half-hour in the pits there would be any substantial increase in production. In saying that, I know I shall have the support of hon. Members who are familiar with coalmining. The only men in the pits who can increase production are the coal getters, the face men, and the overwhelming majority of those men work today on machine faces. Those faces have been constructed, laid out and organised on a system which allows of three cycles during the 24 hours, and it is impossible, by means of an extra half-hour, to achieve any additional production off those faces. The only way in which that could occur would be by an extension of those faces, which hon. Members will recognise would require a major physical reorganisation of the pits, and that could not occur overnight. That would be a long-term matter.

As long ago as last February I asked for a reconsideration of the 11-day fortnight. I ask again now. That is the only practical approach to this problem. An extra half-hour may mean slightly cleaner pits; it may mean a neater operation; but it will not produce the additional coal which we require. It would be a great mistake if hon. Members went away from this Debate with the impression that that extra half-hour will result in additional output. I am sorry to have to adopt this attitude in regard to what I am sure the Prime Minister put forward as a constructive proposal. I would challenge the Government on these two points. First, had this proposal the sanction and agreement of the technical members of the National Coal Board? I doubt it. Secondly, can the Government suggest that it will, in fact, mean any additional production? I doubt that also.

It is necessary to say these things, because we have come to the consideration of our economic position with a desire to see some solution. No solution lies in this proposition, and once again I ask the Government to reconsider this matter. The 11-day fortnight is a practical proposition, and the Government would be wise to think along those lines. It would be of a temporary nature, and need last only for the duration of this crisis. But that we should buoy ourselves with any false hopes in regard to the proposition of the extra half-hour would be wholly wrong. I do ask the Government to think again.

7.19 p.m.

Mr. Jack Jones (Bolton)

I desire to take part in this Debate, not so much because of the critical position in which the country is, but because of the need to give the people of the country the opportunity to learn the real facts. I believe that to spend even half a minute talking about what happened yesterday is but a futile waste of time. We cannot afford to stand in this Chamber today and talk about yesterday. Yesterday has gone. It is tomorrow to which we must look forward. We must find out how we are to get out of this mess. I do not want to start scratching old sores, and I do not want to be among those who would say, "I told you so as long ago as April, when I spoke about production."

I believe that the hon. Member for Jarrow (Mr. Fernyhough) hit the nail on the head, and as a member of his party I should like to congratulate him on his maiden speech. Mother England is, indeed, really sick. She cannot all the time keep having sicknesses and keep getting better, because the day comes when you meet with your final sickness. This country is beset by many evils. I am not a financier, but the position reminds me of the position which many families get into. I happen to be a justice of the peace, and I hear some terrible stories on the bench. I well remember the case of a couple who came before the court because they had had a quarrel. Like the Labour Party, they started off with all the good intentions in the world, but then they found themselves heading for rather difficult times. They decided to have a debate about the position, just as we have done. The husband said, "You know, Mary, you have been spending more than I have been earning. I have given you all the money I have earned, and in addition I find you have been borrowing. We cannot go on like this." His wife replied, "There is something I have to tell you. We should not be in this position if you had not been having a few odd days off from work."

It behoves all of us, from the Prime Minster down to the newest Member, to go into the constituencies and put the position fairly and squarely to the people. It is no use putting our head into the sands and thinking things will turn out all right. We cannot expect American good will to last for ever. Germany looks to us, for help. I go to Germany almost weekly, and I say to the German working man, "Look here, lad, you have to prove to Britain that you have done everything possible to help yourself, and to that extent we shall try to help you." We have to do the same to America, and show her that we are doing everything humanly possible to help ourselves. This is a job for the trade union leaders. It calls for real statesmanship and true leadership. I am dismayed at some of the stories I hear when I go about the country. I know for a fact that one of my colleagues has twitted me with being an enemy of the miners. That hurts me, because I was born among the miners and raised among them. I am no enemy of the working man. I am one of those working fellows who is prepared to tell the truth about what we have to blame ourselves for, which is rather different.

I am glad that the Prime Minister mentioned the question of steel. Our boys in every steel plant in the country are doing all they possibly can and work is being carried on continuously for 168 hours a week. But I would utter this word of warning: I hope and trust that the Government will not think of slashing their rations. Even today they are not getting the food they deserve. It is hot, heavy and sweating work, and these men deserve a break. We have caused very little trouble, but I warn the Government that if they attempt to cut their already insufficient rations, they are heading for trouble. We have to face up to these things and tell the truth. I believe that the honest-to-God working miner is now beginning to find that the country needs his help, and I am certain that the miners will give it. I am certain of that, but I wish that we had asked them for their help earlier. We hear a lot of talk about clarion calls, but these are not the sort of things which inspire. What we want is a sustained effort and a week-by-week production in our factories until we get out of this mess.

I noticed last week it was stated we had some 696 Poles in this country, receiving £4 5s. a week for not doing a hand's turn of work. On the other hand, we have lodges who are refusing to work with the Poles. I always understood that Socialism was international. I always thought that we raised no barrier against any man, whatever his creed, colour or religion, when it comes to helping the country in which he lives. Any man resident in Britain, who is living within our Constitution, has a right, if called Upon to do so, to make his contribution towards helping us to recover. I hear that we have engineers who have refused to work, or are asking that certain Polish engineers engaged on vital work of creating coal-cutting machinery should be dismissed. These are things we have to face up to. We should have the guts and courage to talk about some of our failures, and to make an effort to put things right.

Our steel industry wants to do more, but again more coal is necessary. I pointed out at one of our recent meetings that the works in which I have had the privilege to work for 32 years closed down for a fortnight, the first time they had closed down since the General Strike of 1926. They closed down three weeks ago because they had used up their allocation of coal and had to put the rest of their coal to stock, with the result that 16,000 tons of ingot steel was lost. These are the things we have to put right. In Bolton, which is the finest textile town in the world, boilers are being fired with sawn-up rubber, and joiners' shops are being turned into sawmills to provide the power to keep our people going. They are putting to stock slurry and everything else which is not coal. I hope that the Prime Minister's call will be heeded, not as a call to an individual section, but as a call to the whole mass of honest-to-God working people in the country. I get around a good deal, and I say to the House, with all the sincerity and conviction I can command, that individually we are still the finest working people in the world, deserving the finest standard of life. Unfortunately, because of wars and economies, we find ourselves in this perilous position today. I appeal to all our trade union leaders, irrespective of their politics, whether they are Communist leaders, Socialist leaders, or those who have no politics at all, that the day is past when the political colour of a man matters; it is Britain first on this occasion in all things.

I could speak about the evils perpetuated by hon. Members opposite, but I would say only this: To change the Government now would only worsen the position. A Tory Government would lead only to the scratching of old sores. The Tories cannot put the position right. The only thing that can is the courage, skill, energy, drive and good will of the working masses. They are the people to whom we must appeal, and if we make the appeal to them I know that they will respond, and that we shall get through this mess. We can, and we must by our own efforts, build in our country the standard of life that Almighty God intended all decent Britishers should have.

7.30 p.m.

Colonel J. R. H. Hutchison (Glasgow, Central)

It is indeed a pleasure to hear the diagnoses of our troubles which have been given by Members from the benches opposite this evening. There appears at last to be a realisation of the depth of the difficulties into which we have drifted. It would have been gratifying and inspiring if this call for work had been made at any time during these past two years. Our national poet in Scotland once wrote, Oh wad some Pow'r the giftie gie us To see oursels as others see us! It is desirable and revealing occasionally to turn the limelight on ourselves and be able to see just how we look in foreign eyes. Under the Marshall Plan, which demands that this be done, 16 nations have come together, each with their eyes fixed on one another, and all eyes fixed on us, while the United States of America has her eyes fixed on all 16 of us. Let us see what exactly it is we look like to those who are scrutinising us so carefully. Members have heard foreigners use the expression "Mad dogs and Englishmen," and, consequently, foreigners expect to find paradoxes when they come to look at us. But surely they did not expect to find the absurdities and follies to which they have been treated during the past few years.

The first thing they saw was a great leader, who had led the country out of what they thought to be an impossible position to victory, cast out into the wilderness in favour of a party which certainly did not contribute to this country being ready to meet the great test through which it came. I have heard Frenchmen, who regard my right hon. Friend the Member for Woodford (Mr. Churchill) as the greatest of all war leaders, quote by the yard his wartime speeches, although unable to speak more than a few words of English. Foreigners have noticed the promises of impossibly better things, made at the time of the Election, fail one after the other. They will notice tomorrow, as the result of the Prime Minister's speech, that the target of 175 per cent. increase in volume of exports which we set ourselves not long ago, and which was cut down to 140 per cent. in the Economic Survey, is now to be cut still further. How with this reduced figure are we going to bridge the gap? It is always difficult to lead a whole nation into logical thought, and particularly difficult after a war, when minds have become distorted by war ideas and the impact of war, when all values of life and property have been written down to nothing, and sane finance and economy have been thrown overboard. It is the duty of any party aspiring to power to try to lead that thought back to true lines. That is what should have been done at the time of the Election, and should constantly have been done up till now. But there is a glimmering coming from the party opposite which now shows that they realise, at last, that great obligation.

A Government which believed—as I accuse this Government of teaching—that after all the waste of war any nation could enjoy a higher standard of living and a greater degree of leisure was flying in the face of inexorable economic facts which will bring down, and are certainly fringing down, this country to its knees. The eyes which are turned on us see an administration clogged by a mass of nationalisation which, at best, can only claim to bring advantages in the far-distant future, and which, in our view, will not even do that. They see legislation passing at jet-propelled speed through this House, and which is surely putting the "mock" in democracy. They watch a country which has recently been described as being an island of coal spending all its energies to bring foreign coal to Newcastle. They watch Ministers blowing hot and cold between complacency and anxiety. They hear the Minister of Fuel and Power, in one of his more optimistic speeches, saying, "There will be no fuel crisis." They hear the Minister of Food saying, "There is no need whatever for housewives and the people generally to feel that they will find it impossible to obtain at home, or from abroad, the food which they need."

They listen to the Chancellor of the Exchequer say, without a sign of reluctance or remorse, that the terrific sum of £3,100 million will be expended in the current year. They hear him use the words, "A new Britain has taken the cost of social security proudly in its stride. The money has been found." They ask where has it been found? In the United States of America? When next our emissaries go to negotiate for a further loan, will it be surprising if some there murmur, "Is their journey really necessary?" They may hear the small voice of the hon. Member for South Cardiff (Mr. Callaghan), at the time of the Budget, say, "To suggest that we shall have to go crawling to the United States for another loan, and that we shall be faced with hunger and unemployment, is a wild exaggeration." They rub their eyes, and ask themselves whether they are dreaming. Is not this exactly what is happening?

They notice that the shorter working week has been introduced into the coal mines, and take note of the fact that one hour's extra work a week on the five days would have produced all the coal which has been sent to Europe by America. They hear the Minister of Fuel and Power say, "If the five-day week does not work out, I shall say so." Has the right hon. Gentleman come to us and said so? All that he treats us to is occasional verbal vitriol, and the foreigners take note of the fact that vitriol is neither fuel, nor power, nor medicine. Is the extra half-hour to be worked as an emergency the answer to the problem? We have heard Members who are specialists in this matter say that it will produce no extra coal, and that in any case the extra half hour should be treated as an emergency matter. That is an utterly wrong attitude of mind. This extra half hour, if we are going to produce coal, would not produce enough in permanency to make ends meet. It is noticed that Ministers complain that the country is suffering from a labour shortage, but that more are in employment than before the war. It is known that there are more miners than in 1941, with more modern machinery, producing less than they did in 1941, and it is said, "Is the problem that there are too few workers, or is it not that there are too few people really working?" It seems to them that the Prime Minister's prospectus, which they will now see, will be inadequate, and will leave a big gap to be covered.

These foreigners look at the hoard of management, and ask themselves, "How impressive is this?" They have listened to the story of how the weather has affected crops and output, and they are not impressed. A Government that cannot make provision for that sort of thing is not half a government. "I've never 'ad a chance, guv'ner," is a familiar theme. All this reminds them of a film in which the Marx brothers—no relation to the propounder of Left Wing theory—were pummelling a patient who cried, "Hey, I am not the patient," whereupon they replied, "That is all right by us, we are not the doctors either." Is not that exactly what is happening? Here is industry being pummelled, slapped, and exhorted by Ministers, and being threatened with nationalisation and then expected to produce more. The foreigners who look at the benches opposite say, "These are not the doctors for Britain." They have looked for real leadership, and I am glad to have heard that pronounced again by Members on both sides. They note that heroic measures are necessary, but where are the heroes? Instead of direct, determined drive, all they hear is an amorphous mass of discordant thought. They saw a well-thought-out plan of conscription put forward by the Minister of Defence, reversed a few days later under pressure from the back benches. They notice the deference paid in all these matters to Transport House, They realise the Micawber-like attitude of waiting for something to turn up which actuates the Government.

All that turns up is one crisis after another. They think that the Front Bench belong to the cult of those who believe in economic fairies? Following the theatre in the presentation of Peter Pan, if you, Mr. Speaker, found it in your prerogative, and desired to call on all those who believed in fairies to clap their hands, the burst of applause it would attract from Members opposite would be really surprising. But it would not be the applause for Tinker Bell, or some starry beauty of the pantomime, but applause for Uncle Sam, beard, dollars, and all. This is the economic solution in which they have put too much trust. Let them learn to believe in themselves and really lead, and not look to Transport House, over their shoulder, for approbation or criticism. Then they might have a chance of telling the people of the country, who are waiting for a lead, and wanting a lead, where they should go, and set an example to the people which the country will, in very truth, follow.

7.41 p.m.

Mr. Zilliacus (Gateshead)

I will endeavour not to waste the time of the House so completely as the hon. Member for Central Glasgow (Colonel J. R. H. Hutchison). I will try to deal with the international aspect of our present discontents. It has been generally admitted that the cause of our present difficulties largely arises outside this country but, hitherto, most of the remedies discussed have been remedies within this country. In point of fact, of course, in order to meet this crisis we need a combination of internal measures and of policies in relation to other countries. The greatest single factor in the international economic situation is the policy of the United States. As the policy of the United States is one of the major factors on which we are relying, and has to be considered in relation to our troubles and how to get out of them, I will dwell for a few minutes on that policy.

I believe that a good deal of the unnecessary difficulties with which the world is wrestling and the unnecessary delay in the recovery of Europe are due to the fact that the United States after the last war as after the first world war hastened to remove controls and returned to unplanned private capitalism. If any hon. Member is interested in the disastrous results of this policy that ensued after the first world war, I would urge him to read the monograph of the Economic Section of the League of Nations Secretariat on the Recovery of Europe and the measures taken between 1919 and 1921. The spreading consequences of what has happened in the United States are, first of all, the premature and abrupt ending of Lend-Lease and then of U.N.R.R.A.; secondly, the failure to bring down tariffs and the consequent permanent export surplus, and thirdly, the rise in prices, which have deprived us of 50 per cent of the purchasing power of our loan.

The ways in which we have as a consequence begun to suffer acutely—we and other countries—from a dollar famine, and how the dollar famine and our other difficulties have been aggravated by the convertibility Clause and the nondiscrimination Clause in the Loan Agree- ment are familiar to the House, and I will not enlarge on them. It is, however, important to note that these developments with their repercussions on our present difficulties, show no signs of slackening in the United States. On the contrary, the President has gone through a series of protests and surrenders to forces which he himself described as enemies of the people and irresponsible and selfish. An anti-trade union law has just been passed over his veto and an anti-progressive witch-hunt is going on in the country and, finally, the President has signalised his capitulation by a proclamation——

Earl Winterton (Horsham)

Is it in Order, Mr. Speaker, to criticise the head of a friendly State? The hon. Gentleman has described an act of President Truman as "capitulation," and I understood that there was a well-known Rule of this House that one cannot criticise the head of a State—a President or King?

Mr. Speaker

I think, speaking from memory, that one must not use opprobrious epithets. One must not cast reflections on the head of a friendly State.

Earl Winterton

Am I to understand that "capitulation" is not, in your opinion, Mr. Speaker, an "opprobrious epithet"?

Mr. Speaker

I think that there must be some accusation of an unworthy motive.

Mr. Zilliacus

I was describing what had happened. I did not impute any unworthy motive, and these are the terms in which President Truman has described his doctrine. He says: There is one thing that the Americans value more than peace. It is freedom, freedom of worship, freedom of speech and freedom of enterprise. He identifies freedom of enterprise with the values of Western civilisation and democracy, and concludes: The pattern of international trade that is most conducive to freedom of enterprise is one in which major decisions are made, not by Governments, but by private buyers and sellers under conditions of active competition and with proper safeguards against the establishment of monopolies and cartels. That pattern of trade that is least conducive to freedom of enterprise is one in which decisions are made by Governments. That was the pattern of former centuries. Unless we act and act decisively it will be the pattern of the next century. That is a declaration of diplomatic and economic and secondhand military intervention against Socialism in Europe and the world.

Mr. Brendan Bracken (Bournemouth)

Is it in Order to describe a statement made by the President of the United States as a "secondhand military intervention"?

Mr. Speaker

I was not listening, and I did not hear the actual words which were used.

Mr. Gallacher (Fife, West)

Is it not the case that, time and again, from the other side we get the most appalling references to Stalin, and there is nothing said?

Mr. Speaker

I did not hear anything said about Mr. Stalin. I think that we must be very careful as to what is said about the head of a friendly State. After all, we should hate it if the Americans said something very unkind about the Prime Minister of this country, no matter what one's politics might be, and naturally the Americans might resent the same kind of remark about their President.

Mr. Platts-Mills

When the hon. Member speaks of "secondhand military intervention" and what is really meant is firsthand military intervention, is it not better that he should say so?

Earl Winterton

Further to that point of Order. Although this to hon. Members opposite may be a laughing matter, it will cause a great offence in the United States, and I say that when the hon. Gentleman uses a direct term about the President of the United States and "secondhand military intervention" he should withdraw.

Mr. Wyatt (Birmingham, Aston)

Surely, while one may not inquire into the private behaviour of the head of a friendly State, if one describes policies which he enunciates as head of that State in terms which are reasonable, it is not offensive to the head of that State. We must be allowed to comment on policy.

Mr. Speaker

The policy of the country, of course, is one thing, and to refer to an individual is another. If the hon. Gentleman said that it was a secondhand administration——

Hon. Members

No.

Mr. Zilliacus

I am describing the policy of the United States outlined in President Truman's declaration of last March. I describe that policy as virtually a declaration of economic, diplomatic and secondhand military intervention against Socialism and the Left in Europe, and by "secondhand military intervention" I mean precisely and exactly what the United States Administration is now doing in Greece, where it has supplied the Greek Government with arms and munitions to conduct a civil war. That I think is accurately described as "secondhand military intervention." If hon. Members opposite are going to show so much emotion and sensitiveness at this stage I warn them that they will probably find their feelings altogether out of control by the time I have finished with them.

Earl Winterton

As the hon. Gentleman has referred to me, may I say I have no objection since it appears to be a catfight, but I do not think anybody of his character should attack the President of the United States.

Mr. Zilliacus

I do not really know whether what the noble Lord the Member for Horsham (Earl Winterton) said was quite in Order, and I would ask your opinion on it, Mr. Speaker, because I think he was passing a reflection on my character.

Mr. Speaker

I wondered too. The noble Lord said "anybody of his character" but it might be a very good character. [Laughter.]

Earl Winterton

It is all very funny.

Mr. Zilliacus

If I am taking up too much of the House's time, it really is not my fault. [Interruption.]

Mr. Speaker

I think there is too much interruption going on.

Mr. Zilliacus

The Marshall Plan was originally believed by optimists here to supersede the Truman policy and to be a different policy which stressed ideological faction somewhat less and was more concerned with the economic reconstruction of the whole of Europe. Unfortunately, it became clear after Secretary of State Marshall's second speech to the Conference of Governors of States that the so-called Marshall Plan, in fact, merely applied to Western Europe the policy outlined in the original Truman doctrine. That is a policy of social and ideological intervention in Europe. Moreover, in the United States, whereas the Administration proposes, Congress disposes, and that is more than ever the case in Presidential election year with a Republican majority in Congress pitted against a democratic Administration.

It is highly important, therefore, in gauging the effects of the Marshall Plan on our prospects, of reconstruction, to study the state of mind of American public opinion and particularly the state of mind of Congress. "The Times" Washington correspondent, who is a first-class authority on American affairs, on 4th August, in a very interesting despatch, described the attitude of American public opinion. The first point he made was that American public opinion very naturally and properly, stresses that United States assistance to European countries should be supplementary, and that European countries should be basically responsible for solving their own problems. That, I think, is a perfectly sound and reasonable point of view. But it places the main responsibility on us to help ourselves by measures of mutual aid and self help, and then let us see what extra help we can get from the United States.

The other point made by "The Times" Washington correspondent was: For the average American the recent history of Britain represents an experiment in Socialism, a system for which he has deep suspicion. … The number in this country who think of and wish well to Britain under a Labour Government is probably small. …At the mere wind of Socialism, the American buttons his coat and turns up his collar. Socialism is for him an advance along the road to Communism. That, of course, is the general "run-of-the-road" American opinion. But what about diehard Conservative American opinion? The "New York Herald Tribune" recently quoted a gentleman named General Wood, of the "Sears Roebuck Catalogue" and columnist O'Donnell, who pleasantly referred to the Marshall Plan as "Operation rathole" and said that it means that "the American taxpayer will shell out five billion dollars a year for a bunch of quarrelling bums." The "quarrelling bums" are ourselves and the other European States.

Earl Winterton

A very good description.

Mr. Zilliacus

I would not have ventured myself to apply it to the noble Lord, but if he thinks it fits——

Earl Winterton

That is the best description I have ever heard of the Socialist Party.

Mr. Zilliacus

Then we come to the attitude of Congress. First there are the leaders of American public opinion, like ex-Governor Harold Stassen, who is the progressive potential candidate of the Republican Party—whether he makes the grade or not is another matter—and is regarded as being most progressive and internationally minded. He has made a number of broadcasts in which he said that the condition for this or any other European country receiving American help should be that they should give up any further advances towards Socialism—any further measures of Socialisation. Senator Joseph Ball, in a broadcast—and he is also a fairly progressive senator, who is for the Marshall Plan and international co-operation—observed: If the real issue in Europe is between Socialism and Communism rather than between Communism and the free society, then it is hopeless and we had better conserve our resources for the inevitable conflict. As the House well knows there have been frequent statements in the American Press that the United States are anxious that the Labour Government should give up that part of their Election programme which calls for the nationalisation of the steel industry. And recently Mr. Alastair Forbes, in the "Sunday Dispatch," reporting this statement in the United States, with that peculiar conception of patriotism which attaches to the Party opposite, expressed the fervent hope that the United States would put pressure on our Labour Government to give up the programme which it was returned by the people to carry out, and to abandon the nationalisation of the steel industry. That, of course, is not something that a self-respecting Labour Government is prepared to do or which the Members of the Labour Party would tolerate.

What about Congress itself? What are our chances of getting this help in the near future from Congress? First, we have the "New York Herald-Tribune" despatch saying that: So strong is the economic isolationism in Congress that the Truman Administration does not dare call it back into special Session even to consider the Marshall Plan for fear that Congress would disapprove of it. The "Washington Post" on 9th July, in a very interesting despatch from its two star correspondents, Joseph and Stewart Alsop, reported that one of the most capable and best informed Senators, himself deeply convinced that the Marshall proposals were our last best chance, said he was very much worried because: The State Department is failing to protect its rear If Bevin and Bidault and the Europeans came up with a first rate plan tomorrow and Marshall asked for the necessary appropriation the day after, he would be turned down flat by an overwhelming majority in Congress. So much for the political difficulties and uncertainties in the way of our obtaining anything from the Marshall Plan. In fact, if Congress cannot discuss it this autumn and does not meet until January or February, that is Election year, and then, as an American newspaper, the "New York Herald-Tribune" says, in Presidential election year American politicians behave like bull moose in the rutting season. I take it that that means, without being too indelicate, that they rush about the political backwoods snorting and shaking their antlers and pawing up the earth. In other words, they do not behave rationally.

Mr. Bracken

How do they behave in Russia?

Mr. Zilliacus

Better than that anyway. Then we come to the report of the International Economic Policy Sub-Committee of the House of representatives, which first of all—[Interruption.] Hon. Gentlemen opposite do not like what I am saying because there is too much realism for them but they had better take it. I am doing the dishing out. This Committee recommended, first of all, that the condition for receiving any further loans from the United States was to accept supervision of those loans, as had been done in Greece. The second recommendation was that no States in Eastern Europe, the States in which the Communist Party were important, should be allowed to participate in obtaining the benefits of the scheme.

The third proposal was that the Ruhr should be handed over by us to the United States and incorporated in the American zone on America's own terms. Of course, as regards the non-participation of Eastern Europe and the introduction of American methods and capitalism into the Ruhr, we are seeing a good deal of the programme of this report being realised.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

The hon. Gentleman talks of the non-participation of the countries of Eastern Europe, but I always understood that they were invited to Paris and refused the invitation extended to them.

Mr. Zilliacus

But in point of fact they were asked only as an afterthought, and the whole thing was rushed through in Paris without any serious intention of bringing them into partnership. If we had meant business we would have referred the whole matter to the European Economic Commission of the United Nations. The fact that we did not do this laid us open to the suspicion that we were yielding to pressure by the Americans, who said that if Russia came in we should not get any credits from Congress. Finally, this report of the House of Representatives talks with approval of the Hoover letter—the programme outlined by ex-President Hoover for dividing up Europe into two blocks and organising and reviving big business in Germany and Japan as outposts of American capitalism against the Soviet Union and the forces of social revolution. That is the spirit of Congress and the lines on which we may be expected to be invited to co-operate. Apart from the political aspect there is the financial side and the question of how much money we are in fact likely to get. The maximum sum mentioned is 3,000 million dollars a year for about five years—that is, some £750 a year.

Mr. Bracken

How much

Mr. Zilliacus

I am sorry, I should have said £750 million a year, and that is for the whole of Europe and China as well. Incidentally, we are by no means first in the queue, a position which I believe is held by Greece. Congress, on the other hand, has never gone beyond a maximum of £500 million as the sum they contemplate as the overall sum to be disposed of in all the countries concerned, including China and this country. On top of that there are the economic difficulties and the question of what we can buy with the dollars if we ever get them. The Prime Minister referred- in his statement to the disappointing experience of U.N.R.R.A. and the failure of European countries to obtain rehabilitation goods for reviving their production. I know something about that, and can state that in Yugoslavia although it was possible for U.N.R.R.A. to get trucks from the United States, and a limited amount of spare parts, when they asked for machine tools to manufacture spare parts they found that there was nothing doing, because American manufacturers were not interested in supplying any European States with machine tools that would enable them to become independent of American supplies—even of spare parts. That same experience has been ours in the last two years in trying to obtain heavy machinery from the United States.

Mr. Bracken

Surely the hon. Gentleman should be aware that the attitude of the United States with regard to Yugoslavia is affected by the fact that they object very much to the murder of a number of their pilots flying over Yugoslav territory.

Mr. Zilliacus

Unfortunately, the failure to supply the machine tools occurred a long time before that incident and, in any case, it does not explain why we failed to get any heavy machinery from the United States—or, at least, why we have received a good deal less than we needed—unless, of course, the right hon. Gentleman thinks that because we have a Labour Government the United States manufacturers are not very keen on supplying us with these things. Another important factor is that the American railways are in a very bad condition because they were not maintained during the war and have not been restored since. They are in such poor condition that they can barely handle the existing volume of traffic and, because they have gone into private hands again, they prefer to transport light goods paying high freight rates such as radios, refrigerators and motor cars, and it is difficult to get them to handle wheat, let alone heavy goods, which pay low freight rates.

I think it is doubtful whether the United States would be capable of supplying European countries who have put up a long term plan with the volume and kinds of goods they want, with the priorities they ask, unless American economic life were replanned very much as it was during the war to supply lease-lend goods. I am profoundly sceptical as to the possibility of unplanned American capitalism delivering the goods on a sufficient scale. The conclusion I draw is that United States help, even if we obtain it, will be too late and too little, and there is a serious danger attached of political pressure of an undesirable kind. We must give up the idea that there is a Santa Claus on the other side of the Atlantic ready to come to our assistance, and must realise that we have to concentrate on measures of self-help and mutual aid in Europe and within the Empire and the Commonwealth.

Mr. Bracken

And Russia.

Mr. Zilliacus

Certainly, and the U.S.S.R. I am coming to that. Western Europe alone is unsatisfactory because it is too lopsided from an economic point of view, too unstable politically and too divided socially. Among the rather odd assortment of States we have is Turkey, a bankrupt military dictatorship keeping an Army twice as big as it can afford on American dollars. Then there is Greece, whose reconstruction programme, now that British pounds have given out—we spent £132 million on Greece—is American dollars, to subsidise the black market and to feather the nests of corrupt politicians and tax-dodging profiteers. The Austria of Chancellor Fig1 is also kept hovering on the brink of collapse by American dollars, and it has not much of a reconstruction programme. The Italy of de Gasperi and the present régime of France, with the Ramsay MacDonald of France, Prime Minister Ramadier, in charge, are not doing so well either, because the plain truth is that without the participation of the trade unions and the working class in postwar Europe you cannot get very far in reconstruction and self-help. The Scandinavians are standing aloof and are not anxious to be drawn into the political and ideological alignment pursued by the Truman policy. That leaves us with Portugal, Iceland and Benelux.

The policy of developing the Commonwealth and Empire is a valuable one but it cannot suffice because it is long-term and will require a great deal of capital. There is no escaping the vital necessity of giving priority to establishing good economic as well as political relations with the States of Eastern Europe and the Soviet Union with the planned economies of these countries, which really are helping themselves and helping each other and normally produce a surplus of food and raw materials. Of course, in order to do this—and I come immediately to this point since hon. Gentlemen opposite are asking for it—the first thing for the Labour Party to do is to dissociate itself sharply and completely from the anti-Communist Jihad in which hon. Gentlemen opposite see fit to indulge. After all, the Communists do happen to be a decisively large part of the working class trade union and political leadership of most of Europe, and particularly of those countries' with which it is vitally important that we should trade in order to obtain food and raw materials. While I do not suggest that we should apply the principle that the customer is always right, nevertheless, I do not believe that we will do much business if we use shot guns and rat poison as instruments of negotiation with the powers of Eastern Europe. The Communists are rather' like the islanders whom the indignant explorer who landed on their shores described as "morose and intractable savages, who, when fired upon, do not scruple to retaliate." We can no longer afford the tragicomic spectacle of the Foreign Secretary playing Sancho Panza to the Don Quixote of the Leader of the Opposition, tilting at the windmills of anti-Communist, ideological fanaticism.

I think it is time that the Labour Government stopped plodding dully in the wake of the old warrior, who is already prancing towards the third world war, brandishing his 1919 ideological tomahawk and ululating his Russian intervention war whoops, with tremolos and variations that he appears to have borrowed from the Central European chiefs whom he slew and scalped so doughtily only yesterday. The Government should no more be intimidated by the Tory blood and thunder foreign policy than they are impressed by their milk and water home policy. If there is anything more manifestly unnecessary and unwanted at this juncture in our affairs and the present state of the world than a milk and water home policy, it is a blood and thunder foreign policy.

The Tories' idea of defence is to put this country in pawn to Uncle Sam in order to be able to wave a tinny and hollow-sounding mailed fist at Uncle Joe. Fortunately, it is now generally realised that we can no longer afford that kind of foreign policy.

We are committed to a drastic cut in the Forces. It is nearly a year and a half ago, to wit, on 4th March, 1946, that I urged and begged the Government to cut the Forces drastically and also to cut or share their so-called world peace commitments which, so far as they are not prepared to share them are not genuine world peace commitments but imperialist hangovers. I am glad that at last the Government are proceeding along the line which I begged them to follow a year and a half ago. What I would like us to do as an immediate measure in order to deal with the situation is to offer to the Russians to split the difference on the Anglo-Soviet trade treaty. The million tons of cereals we would get from them this year would be valuable not only in themselves, but would also bring down prices of cereals in the United States and all over the world, as has already happened in other directions. A more long-range measure I would like to see is that we should, frankly and bluntly, say that we can no longer consider ourselves bound by Articles 7, 8 and 9 of the American Loan Agreement. We ought to recover our freedom of action.

I would like to see us propose to the International Trade Conference at Geneva that they should revise the most-favoured-nation-clause on the lines suggested by the League Economic Committee before the war. That would give us the right to conclude tariff preferences with groups of States, provided that those preferences were open to any outside State willing to make equal cuts in its own tariffs towards the group. Above all, I want us to make a new start in our foreign policy, to recast its mental and moral foundations, and to stop being intimidated by the party opposite in our foreign policy, as long ago we ceased to be impressed by their lack of policy in home affairs. We should take our stand boldly on our Socialist principles, and should get together with the countries of Eastern Europe and with the Soviet Union. That would not mean we should have to part company with America, but we should be in a better bargaining position. The way to Washington on terms that would bring us there as an equal partner and a leader in European reconstruction instead of a bankrupt suppliant, lies through Prague, Warsaw, Belgrade and Moscow.

8.13 p.m.

Mr. Quintin Hogg (Oxford)

I congratulate the hon. Member for Gateshead (Mr. Zilliacus) on his ebullient performance after his defeat at the party conference. I had begun to be afraid that his long absence from our debates presaged a change of heart, but I am glad to note that he has come back again entirely his old self—although he did not deliver this speech on the occasion of our Debate on foreign affairs, when perhaps it would have been more appropriate.

If the House will bear with me, I desire to bring the Debate back to the point at which it was left by the Prime Minister this afternoon. After all, with due respect to the hon. Member for Gateshead, we are primarily concerned in the Debate, not with the shortcomings of America, however many valid criticisms we may find of that great country, but with what we are proposing to do to get out of an extremely menacing crisis. I think hon. Members opposite will agree that that is our main purpose in this discussion.

The right hon. Gentleman the Prime Minister began his speech by saying that he was not going to make a purely party speech. With respect to him, I think that was a wise decision. There are, of course, many things which must be discussed in a Debate of this kind which divide us deeply, but it was wise to begin by emphasising certain things about which we are united. We are all gravely anxious about the crisis in which our country stands. We are all confident of our country's future despite the difficulties, which appear at times to be overwhelming. We believe in our country and mean to see that it survives, despite any errors of statesmanship which may be committed by its leaders. Furthermore, we may say we are determined about this, that deeply as we differ about matters of importance and principle, we are all determined to pursue our differences according to the laws and mechanism of Parliamentary democracy—no small thing in a country where differences are as deep as they must be at the present time.

Therefore, I may say at once that, to that extent at any rate, the Prime Minister's appeal for national unity does not fall on deaf ears so far as this side of the House is concerned. I say that despite some rather provocative remarks which are made by hon. Members opposite from time to time. I suggest to them in all seriousness that if the Prime Minister, the leader of their party, is going to call on all sections of the community to unite behind a drive for production, they do not particularly assist that demand when they accuse us, as they have today, and as they have on many occasions past, of being members of a party of parasites, and unscrupulous exploiters of the poor who do not love their country. The senior Member for Oldham (Mr. Fairhurst) used practically that language and the hon. Member for Norwood (Mr. Chamberlain), in a supplementary question yesterday, fresh from his moral rearmament triumphs, used the very word "parasite" to which I object. That is not the way to national unity. I can say to hon. Members opposite that however offensive they may be to hon. Members of this party, we love our country no less than they do, and we will give our country that same devoted service they would expect to give it themselves, whatever they may say about us and however they may traduce our motives or our characters.

There is a sense in which national unity at the present time is not a possibility. I wish to emphasise the degree to which it has become impossible. The Prime Minister has more than once—today was only one of a series—appealed to us to recapture the spirit of Dunkirk, and when it has been pointed out to him that the spirit of Dunkirk was founded upon a common policy in which all the Members of the then Government agreed, he has replied with the specious argument, in which no doubt he sincerely believes, that because the Labour Party won the Election it was wrong for the occupants of these benches to ask them to desist from their programme of nationalisation and Socialism to which they were committed in their Election manifesto. The Prime Minister has said—I go with him so far—that hon. Members opposite sincerely believe in their policy. But they must also recognise that we on this side, who at the nadir of our fortunes at the last General Election had the support of some nine million of voters, sincerely believe that it is that very policy of Socialism which is largely responsible for our misfortune. They may think it absurd that we should hold this belief, but they must reckon with the fact that we do hold it, and not only do we hold it but it is held also by those who support us in the country—a very large portion of the community—who are entitled to make their voices heard. When, therefore, the right hon. Gentleman asks for national unity, my reply must be the same as it was in March; that no national unity is possible on a political basis unless the Government call a halt to nationalisation.

Mr. H. D. Hughes (Wolverhampton, West)

Is it not the case that the Labour Party, and the workers who support the Labour Party, went into the war effort and the Dunkirk spirit under private enterprise with which they disagreed as strongly as the Conservative Party disagree with Socialism?

Mr. Hogg

The hon. Gentleman has failed to get the point, which is that the whole nation supported the war effort in 1940 because they all believed, whether they were Socialists or Conservatives, that the policy to be pursued was to win the war by all means possible without regard to their private political convictions, but we cannot go into a similar political unity now because we believe that the very policy which is proposed is the actual cause of our miseries. It is for that reason, and not any want of patriotism on our part, which must lead us to reject the proposals which the Prime Minister made this afternoon.

Mr. Follick (Loughborough) rose——

Mr. Hogg

So many hon. Members wish to speak that the amount of concessions I can make in this Debate must be less than usual. I hope the hon. Gentleman will acquit me of discourtesy. The Prime Minister seemed to me to touch the centre of this matter in that part of his speech when he said that it was easy to be wise after the event. I think he used the phrase "jobbing back." But we have not been wise after the event. I can think of none of the factors mentioned by the Prime Minister this afternoon, not one of them, which could not have been foreseen by an averagely intelligent child of 16 in the year 1945. I can think of none of them which was contained in the 1945 Election Manifesto, and hon. Members opposite must really reconcile themselves to the belief that we on this side of the House are going to say up and down the country that they got power by a fraudulent prospectus, that they have proved themselves incompetent to govern, and that they are pursuing political and economic principles which, if pursued indefinitely, will lead us into even worse disaster. It was obvious in 1945 that this country had emerged from the war in such an economic condition that we must necessarily either have to endure what we are now enduring—a sharp drop in our standard of living—or we should have to obtain from abroad a line of credit to tide us over the transition period——

Mr. Shurmer (Birmingham, Sparkbrook)

And what about the programme of hon. Members opposite?

Mr. Hogg

It was obvious, therefore, to anybody that our duty, when we obtained the line of credit—which any intelligent child could have seen was insufficient for the purpose—was both to husband that line of credit enough and to take immediate and urgent steps to make us self-supporting as soon as possible. That was the manifest duty of any respectable Government of this country in 1945, and the case of the Opposition is this—not merely that these present austerities would never have occurred under a Conservative Government, but that they ought never to have occurred under a reasonably competent, a reasonably efficient and reasonably patriotic Government of a Socialist persuasion. These things are unnecessary, and they have always been unnecessary. They are the direct result of a want of planning and a want of foresight by a Government which describes itself as an administration of planners.

Mr. Shurmer

If the hon. Member suggests that this austerity is unnecessary, will he tell me how it is that, in a previous crisis, his party put over 850,000 people on the means test and robbed them of their savings?

Mr. Hogg

I thought the hon. Gentleman had something useful to contribute to the Debate. The fact is—[HON. MEMBERS: "Answer."] I am talking about our present economic difficulties. The fact is that this Government have been guilty of the same mistake three times over, and each time the mistake has been in a more important matter and has led to consequences each time more severe. The first time was in the early spring of 1946 when the maladministration of our food situation led to the resignation of Sir Ben Smith. The second was the fuel and power crisis in the spring of this year when the maladministration of our coal industry ought to have led to the resignation of the Minister of Fuel and Power. The third occasion is now, when the maladministration of our economic situation should certainly lead first to the resignation of the Chancellor of the Exchequer, and secondly to the dismissal of this Government, and the Dissolution of Parliament.

In each case the mistake has been the same. In each case the country was faced with a prospective crisis, which could easily have been foreseen, and which ought to have been dealt with in time. In each case it could have been dealt with in time, not so as to avoid all hardship, but so as to incur a hardship far less than that which has in fact been incurred by the policy of putting off the evil day. That was true in the case of food, that has been true in the fuel crisis, and still more has it been true in the dollar crisis which we are discussing today.

Mr. Richard Adams (Balham and Tooting)

In view of what the hon. Member said in his last few sentences, why does he not deal with his own opposition to bread rationing?

Mr. Hogg

If the hon. Member will look up my speech in HANSARD he will see that what I said on that occasion has been proved abundantly right. I said that the bread rationing scheme as then presented was the ill-thought-out and over-complicated scheme of a cocksure and inexperienced administrator."—[OFFICIAL REPORT, 18th July, 1946; Vol. 425, c. 1466.] I was referring to the exchange of points and B.U's——

Mr. Shurmer

The hon. Member does not want B.U's for points, he wants it all his own way.

Mr. Hogg

I well remember that on that occasion the hon. Member for North Hen-don (Mrs. Ayrton Gould) reproved me, and said the interchangeability was a brilliant device on which we should congratulate the Minister.

Mr. Shurmer

The hon. Member for Oxford (Mr. Hogg) was on the playing fields of Eton whilst the unemployed were marching the streets and going hungry.

Mr. Hogg

The hon. Member for Sparkbrook (Mr. Shurmer) has anticipated me in the remark I was going to make. I have at last learned what the song in the heart of the Chancellor of the Exchequer really is. It is not the "Red Flag," it is "The Eton Boating Song."— "We all swing together"—and swing together the right hon. Gentlemen undoubtedly will, unless the political roundabouts take them away in time. We are living in a world of economic make-believe created by the Front Bench opposite. We are told there is a shortage of coal, a shortage of labour, a shortage of dollars, but for all practical purposes there is just as much coal in the ground as there ever was——

Mr. Shurmer

Go and get it out.

Mr. Hogg

—and as we could legitimately hope to win in a life time We are told there is a shortage of labour, but there are available for work in this country far more men and women than there have ever been. We are told there is a shortage of dollars, but there are far more dollars in the world than ever before. There never have been so many dollars in the world. It is only that our great Socialist Government cannot get the dollars—[HON. MEMBERS: "Oh."] No, Sir, the real truth about the matter is this—there is no shortage of labour, there is a maldistribution of labour. There is no shortage of coal; there is a failure to produce it. There is no shortage of dollars; there is a failure to produce those goods which will exchange for dollars. The case for the Opposition is that the Government, by their policy, have directly contributed to, if they have not actually created, all these failures.

I will deal, first, with the shortage of labour. There has been no wages policy throughout the whole history of this Administration. Yet a wages policy was one of the first things which a planning Government should have produced. Although there has been considerable control of prices there has been no price policy either. Still worse, there has been no planning whatever of the balance between our capital expenditure and our expenditure on current account. These three factors, taken together, are the cause of our present crisis. I am not in the least impressed with the various excuses and alibis put forward by the Front Bench or from the back benches opposite I am not in the least impressed by the talk of this rise in dollar prices. Hon. Members who put forward that argument talk like children. What did they think dollar prices would do? Did they think they would fall? Did they think they would remain stable? Anyone who has the slightest grasp of the most elementary economic principles must have known that dollar prices would rise, and, knowing it, have taken urgent and necessary steps in order to deal with the crisis when it came. Instead of that, we are told that this rise in dollar prices has caught this, Government of planners unprepared. They ought to get out and make room for a Government which can foresee the facts.

Look at the want of balance between the reward for skilled labour and the reward for unskilled labour. Look at the want of balance between the man who produces much and the man who produces little. Look at the swollen non-essential trades, and the labour-starved trades which produce commodities which every one needs and wants.

Mr. Shurmer

The fashionable West-End clubs.

Mr. Hogg

Thank the Labour Government for it, because no one else is responsible. What is the reason we have such a plethora of workers in the football pools, for instance, and so few in textiles? The reason is that right hon. and hon. Gentlemen opposite, in their superior wisdom, have so far controlled the essential trades that they cannot pay wages which compare with those of the non-essential trades, which they did not control. That is the reason. I challenge a single hon. Member opposite to deny it. So paradoxical, so utterly wanting in plan, so utterly wanting in economic knowledge or political sense, have been that Front Bench, that they have permitted this to happen under the flag of planning itself. That is what they have done in two years of power—swollen the non-essential trades and starved the essential ones, and thereby produced the crisis.

That simply illustrates the general choice which this country will sooner or later have to make. The Minister of Health, the other day, in a speech in which at last appeared some elements of realism said, in sharp contrast to many speeches from the benches opposite, that it really did appear in the last resort that appeals to ideological patriotism were not enough to create production in this or any other country. That, strange as it may seem, is not simply a piece of political cynicism; it is also a moral proposition, because while it is wrong for the individual to exploit the community, it is also wrong for the community to seek to exploit the superior skill or energy of any particular individual.

There are two incentives which move mankind. There is the incentive of the totalitarian—the incentive of the stick—and the incentive of free enterprise—the incentive of the carrot. No country can avoid the use of both incentives, to a degree. There is no country so free that it does not employ the stick and there is no country so totalitarian that there is not some element of the carrot introduced, at any rate to those higher grades in the managerial state which are so well supported in our more highly developed Socialist labours. But, in the last resort, the Government sooner or later will have to make up their minds upon which of these incentives they are going to place their reliance. I am very much afraid that, little as he may have intended it, the Prime Minister this afternoon announced the first tentative moves of the Government towards the application of the totalitarian incentive of the stick. There are only two ways out of this crisis. One is to compel people to do what is necessary and the other is so to affect the economic laws that they provide an incentive for the people to do what is necessary.

Mr. Cobb (Elland)

Has the hon. Gentleman read Corinthians 13?

Mr. Hogg

The hon. Gentleman was not in the last Parliament or he would have known something about that. [HON. MEMBERS: "Answer."] I am anxious not to take up the time of the House unduly because I know that many other hon. Gentlemen wish to speak. Nevertheless the hon. Gentleman has challenged me and under the taunts that I have not answered him, I will answer now. He asked whether I have read Corinthians 13, the Hymn of Love. Yes, I have and I have sometimes noticed the sad contrast between those who call us parasites in the name of what they claim to be moral rearmament, and the sentiments indicated in that passage. As I see it——

Mr. Ronald Chamberlain (Norwood)

The hon. Gentleman appears to be looking at me. When I referred to parasites yesterday, I was not referring specifically to him; nor was it in the name of any particular cause.

Mr. Hogg

The hon. Gentleman does not refer to me as a parasite, but apparently his Christian charity does not extend to other people. According to the doctrine to which the hon. Member for Elland (Mr. Cobb) referred, all men are brothers and there are not some who are parasites and some who are not. I leave the hon. Gentleman there. It is a point which is inconsistent with his profession. I will return to the point on which I was challenged. I suppose by his objection that the hon. Gentleman thinks that Christians must believe that the only motive which ought to animate people in working hard for their country is simply a love of their neighbour without hope of reward. I am afraid that I do not agree that that argument is theologically correct. It is not illegitimate in this world for people to work for their livings, for their wives and their families. Hon. Members opposite, many many times in this House, have appealed, and in my recollection never in vain, to the honourable and dignified position which a worker, whether with head or hand, holds because he really does want for his wife and family some reward in return for the service that he gives.

Mr. Chamberlain

The stick or the carrot?

Mr. Hogg

I say most earnestly to hon. Gentlemen opposite that the Minister of Health, when he gave vent to this doctrine in words not dissimilar to my own, was not attacking their idealism but was appealing to their commonsense, which some of them sadly lack.

I have been led off the path of what I intended to say, but I want to make two more short points in conclusion. In the last resort, the choice which the Government will have to make is ultimately a choice between a totalitarian state, however mitigated by the tolerance and decency which we know exists among hon. Members opposite no less than here, and some return to the price structure. It may be that we shall make different choices, but, at any rate, let us know what the choice is. Their approval of a return, if only temporarily, to the direction of labour is a clear indication of their faltering steps towards totalitarianism. I beg hon. Members to turn back before it is too late. The price structure had many faults, but some, and indeed most, of them can be mitigated.

I would have liked, and I hope on another occasion to indulge the temptation, to answer the hon. Gentleman specifically upon the problem of unemployment, but I say in all sincerity to him, although perhaps I have not as much right to say it as those who are actually unemployed, that I sincerely believe that even if those who were unemployed for long periods before the war had a choice between a totalitarian system and a free system, even with these faults, which I am sure can be cured, they would be with me in choosing the latter.

I said in March that the publication of the Economic White Paper marked an end of the mandate of this Government. It marked an end of its mandate, because, when they went to the country with the little pamphlet "Let Us Face The Future," they went to the country with what was intended to be a comprehensive programme. The publication of the White Paper in March rendered it inevitable that this Government should now seek to impose upon, the people austerities and restraints which, however necessary some may be, are still austerities and restraints for which they have not a shadow of a mandate at all. They are governing this country, not by any mandate which they have received from the electorate, even if their policy is wise, but governing it upon the certainty that they can control the votes of over 200 hon. Members opposite.

That being so, there is only one honourable course for them to take, and that is, at the earliest moment, to advise His Majesty to dissolve this Parliament and go to the people with their new programme. If they win, good luck to them. They will have won according to our Parliamentary democratic methods, but if they do not win, then, at least, we shall have a Parliament more capable of giving rise to that national unity for which the Prime Minister has, I fear, appealed in vain this afternoon. This House of Commons has many virtues. Most of us have made many friendships in this Parliament but, from now onwards, we are going forward in uncharted waters without a vestige of the right to govern in the light of the changed circumstances of the case.

8.44 p.m.

Mr. Ronald Mackay (Hull, North-West)

The right hon. Gentleman the Member for West Bristol (Mr. Stanley) said that the argument of the Tory legacy had worn thin, and, having listened for the last half-hour or more to the hon. Member for Oxford (Mr. Hogg), I am beginning to think that the Tory legacy has worn very thin indeed. The hon. Member suggested that the only course open to the Government was to resign and go to the country. I would remind him that there have been by-elections during the last two years, in all of which seats held by this party have been won by Members of this Government and I challenge him to give any case in the last 50 years of a Government which came back from a General Election and survived two years without losing a by-election.

Mr. Hogg

Then the hon. Gentleman need have no fear about the result of a General Election.

Mr. Mackay

The hon. Gentleman ought to realise that, in such circumstances, there is no need to put the country and the people to the expense of holding a General Election.

Mr. Hogg

The hon. Gentleman knows that his party would probably lose 100 seats.

Mr. Mackay

The hon. Gentleman says that we might lose 100 seats, to which I reply, "Complete rubbish." The events of the last two years show that we have not lost any seats which we held, and that is a perfect answer to the hon. Gentleman's point. I want to turn to the general aspect of his speech. He said that the policy of Socialism was responsible for our misfortunes today. I do not want to weary the House tonight by going through the whole of the things he tried to say—we are used to the effusions to which he gives vent from time to time—and I do not think he will think I am unfair when I say that the essence of his speech is summed up in the words that the policy of Socialism is responsible for our present misfortunes. I thought—and this is where I agreed so much this afternoon, as I often do, with the right hon. Member for West Bristol when he told us about the Tory legacy which we had inherited being very thin—that it came ill from hon. Members opposite to come to this House in 1947 and to talk about the responsibility of this Government for the economic misfortune which, in the main, is the result of their own misgovernment between 1919 and 1939.

Mr. Hogg

Try something else.

Mr. Mackay

We expect to have these interruptions from hon. Members opposite when they have things thrown at them which are unpalatable, and, no doubt, as the evening goes on, we shall get more of them.

I want to look at this whole problem. We are confronted with the question of the balance of payments, and with the fact that this year we are faced with an export deficiency which the Government are finding it difficult to bridge. At a later stage, I want to come to the question of how the Government are going to bridge this gap. We have been told that the deficiency at the present time is due to the policy of Socialism. I remember, back in 1932, the then Conservative Chancellor of the Exchequer trying to justify the tariff policy of the late Mr. Neville Chamberlain by suggesting that we had to have tariffs in order to balance our payments, because we were in a bad position in those days. I suggest to this House that ever since 1913 we have been in a bad position in regard to the balance of payments, and that it is a long-standing problem which has confronted this country for 25 years, and which the Tory Governments in the past would never face. Their policy of tariffs and Imperial Preference provided no lasting solution to the problem.

Prior to 1913, this country was able to buy whatever it wanted with its exports and its other services, without relying in any way on the interest from its overseas investments. At that time, our overseas investments were always reinvested, and led to more exports. The first world war made it necessary to sell a portion of our overseas investments. I would like to remind the House, in view of what my right hon. Friend the Prime Minister said this afternoon, that we recovered from that position within five years of the 1914–18 war. We had as many overseas investments in 1927 as in 1914. We recovered from that position, but at no time from 1920 to 1939 was this country able to pay for its imports with its exports and services. Each year, we had to draw on the interest from our overseas investments. The House should be reminded, because it seems to be important, that for three years before the 1939 war we had an adverse balance of payments which would have required about a 20 per cent. increase in exports to put it right. We are told by the hon. Member for Oxford that this adverse balance of payments is due to the policy of Socialism. No doubt the hon. Gentleman was referring to the Socialism of the late Mr. Neville Chamberlain and of the Tory Government in the years 1937, 1938 and 1939. Why is it that we had a deficiency in our balance of payments in those years, even taking into account the whole of the interest on our overseas investments? I am afraid the suggestion of the hon. Member for Oxford is just a little too shoddy.

This is where I wish to say a few words of criticism of the Government. The problem with which we are confronted today would have had to be faced by any Government. We are not in this crisis because of the war, although the Bill with which we shall have to deal in the next few days says that we are. The war merely accentuated the situation. If there had been no war, we would have had a crisis of this kind, though of not such a large dimension. [Interruption.] The hon. Member for Oxford laughs, and one expects him to laugh when he hears a few reasonable arguments with respect to this problem. I wish to detain the House for a few moments to deal with the points which have been put before us by the Prime Minister, and I wish to say how completely disappointed I am with the way in which he has faced the problems, as indeed a lot of us on this side of the House are disappointed. The magnitude of the problem does not appear to be recognised. We are not concerned so much with short-term remedies, necessary though they are—and I appreciate the difficulties of the Chancellor—but we are greatly concerned to see that a long-term policy is formulated based on what is a correct diagnosis of the position. We must get our foundation right. If we felt that the long-term policy was right, we would put up with any sacrifices of a short-term nature.

So much of the discussion has proceeded on the basis that our balance of payments is out of equilibrium. We are told by the Prime Minister that we are going to try to balance the position between the Old and the New World. That is something which we will never see happen. The world has changed. I wish to direct the attention of the President of the Board of Trade to this problem, in the hope that he will deal with it when he replies. The whole argument which has been put forward in the last two years has been on the basis of multilateral trade, of increasing international trade and getting rid of trade barriers, with all of which we agree in the main. But if one takes one's mind back to the time of the American Loan, one remembers the speech which the late Lord Keynes made in another place when he argued the whole position and said that our policy was one of getting back to multilateral trade. I will not weary the House by quoting the speech, but I would like to refer to two points in it. He said in that speech, and later in an article in an economic journal: Putting one thing together with another, and after pondering all these figures, may not one feel himself justified in concluding that the chances of the dollar becoming dangerously scarce in the course of the next five to ten years are not very high? I found some American authorities thinking it at least as likely that America will lose gold in the early future as that she will gain a significant quantity. Indeed, the contrary view is so widely held, on the basis (I believe) of mere impression, that it would be a surprising thing if it turns out right. And later: Perhaps one may be left for the moment to form his own judgment, in the light of the above, of the most probable order of magnitude of the American favourable balance of visible trade in the post-war environment. An average of $2 to $3 billion a year over a period of years beginning in 1947 looks to me fully high on the basis of present expectation. Who will argue now we are not short of dollars? And he said that if we assessed the export surplus of America on an average of two or three billion dollars, we would be putting it high—he said "fully high"—on the basis of present expectations. Yet it is obvious that we are going to face an export surplus this year, not of two billion dollars but 12 billion dollars.

For two years, with obvious sincerity and an enormous amount of energy the President of the Board of Trade has made an attempt to get back to the field of international trade as we knew it in the old days, on the grounds that we are a country whose life blood depends on international trade. If that is so, our life is ebbing slowly to its close. We are living in an entirely changed world. Though international trade has been increasing over the last 30 years, international trade in manfactures, which is what this country is interested in, has been going down. We are confronted today with the request to increase exports by 160 per cent. in the last six months of next year, on the basis of 1938 exports. But of our exports in 1938, 25 per cent. were in certain raw materials, coal and other things of that sort, which, I think, it is common opinion to say, we shall not be able to export this year or next. Therefore, we are going to rely entirely on exports of manufactures, which means that the target of 160 is an export target of 200 per cent. of 1938 in manufactures.

I do ask the Government to think of this thing, and to realise that that is completely impossible. It is impossible for two reasons, if only for two The first is that the production of manufactures over the world in the last 30 years has gone up 100 per cent.—it has doubled, roughly—but trade in manufactures in the last 30 years has not gone up at all, and, in point of fact, it has gone down and in the last six or seven years, in the main industrial countries of the world, of which this is one, it has gone down 20 per cent. since 1913. If that is the trend, surely we have got to realise that, because of tariffs, because of the industrialisation in other countries, and the increased production of manufacturing industries in different parts of the world, the mutual advantage which comes from international trade in manufactures becomes smaller.

So we have the position today that while trade in raw materials and in food is going up—and we see that all the time: the production of food and raw materials in the last 30 years has probably gone up about 50 per cent. although the trade in them has gone up by 25 per cent.—in manufactures, on which we depend for an increase in our exports, there has been a trend, towards a reduction, since 1913, particularly since 1930. It is a trend which the Tory Government in 1929 and 1931 tried to put right by tariffs and other things—by the Ottawa Agreement, and other things of that kind—but they did not right it. I am not raising this in any party sense at the moment. I am trying to get down to the fundamental economic problem, which is this. We are faced today by the fact that the development of the 20th century is very different from that of the latter part of the 19th century, that international trade is not today as it was in the 19th century, when we were the workshop of the world. By the end of that century we could afford to buy a lot of imports, process them, and export them; but we are confronted today with the fact that the quantity of the things we ourselves import and export as manufactures will not ever even get back to the level of 1929. I doubt really if world trade in manufactures will get back to the 1929 level—so where is our increase? The whole tendency in world trade of manufactures is downward.

If this is so—and I ask the Government to take up this argument—but if that is so, we are facing a problem which is a very different one from that raised by the hon. Member for Oxford, which was the problem of Socialism. It is not that at all. We are producing today only a tenth of the world's manufactures as against three-tenths at the end of the last century, and we are exporting today only one fifth of the world's manufactures as against two fifths at the end of the last century. We are in an entirely different position, largely because of the rise of America.

I do not want to weary the House with details of the enormous extent to which American production has increased. I get very weary of hearing hon. Members talking of soft and hard currency areas. There would be no problem of that kind if America put into the world sufficient dollars. We were never a big exporter to America. We never sent more than 6 per cent. of our production to the United States. But when I hear the right hon. Gentleman the Member for West Bristol say we must be independent of America, I wonder what he looks at and thinks of. Does he not realise that our exports have for the last 20 years always gone exactly the same way as the national income of the United States? Not because we are big exporters to America, but because we sell goods to countries which have already sold goods to the United States and got dollars in that way. Until those dollars are made available in different parts of the world we are not going to get back to the position we were in before the war. Hon. Gentlemen opposite shake their heads, but surely these are the facts? Surely the United States bought rubber and other goods from Malaya and we were able to export to Malaya and get dollars in return? We have never relied on exports to America to buy raw materials elsewhere The convertibility we are worrying about is only a problem because other countries of the world are short of dollars. This is not, as the Prime Minister tried to suggest this afternoon, due to the war, because the countries who are short of dollars and who are controlling their dollars today are countries like the Argentine, Mexico, Canada and Sweden, to mention only a few on the list who have dealt with this problem recently.

In this fifth decade of the twentieth century we are in a position in which American production, trade and investment is so great that her export surplus today is the best part of 12 billion dollars: Her export surplus is twice her total exports in 1938; her production today is four times what it was in 1938. It is ludicrous to talk of multilateral trade. Russia plays no part in world trade; America dominates three-quarters of world trade, and there are left only a number of small nations who can never stand up to that unless we have Lend Lease, and "that sort of thing again. During the five war years 30 billion dollars were given away to the world, and, therefore, things went on. I put it to the House that since 1929, the year of a great economic crisis, no country in the world, except Germany, has ever recovered from that crisis; no country ever got back to its production or trade in volume or value, apart from Germany, except during the war period.

Mr. Nigel Birch (Flint)

And America.

Mr. Mackay

America did not up to 1939. She did during the war, but she did not in peacetime. And she did it during the period of the war only because of the war and because of Lend-Lease. At the end of the war, we ended Lend-Lease, and we then had U.N.R.R.A., which finished last year. Then we are surprised that there should be a shortage of dollars in the world, when we still have not overcome the problem which caused the crisis in 1929, which is the problem of a dollar shortage all over the world.

I desire to make two suggestions which I consider ought to be taken into account at the present time. It worries me that the Government—and the Prime Minister in his speech this afternoon—should think only in terms of short-term remedies. The Prime Minister did not realise, or acknowledge the fact, that the crisis we are now facing is an accumulation of 20 years' development; there have been 20 years during which the position has been changing. Obviously, the two wars made the position infinitely worse than it otherwise would have been; they accentuated the problem. We must face the fact that we are now in a world in which we cannot rely upon the export of manufacturers to the extent that we did before. I pay tribute to the President of the Board of Trade for the way in which, for two years, he has done his best to raise the whole level of exports. But I do ask him to bear in mind that before the war the trend was always on the way down, that America has a market of 120 million as against our 45 million, that we are unable to compete with the rising mass production on which America can rely, and to realise that we, therefore, have to look at this problem from an entirely different point of view.

Today, we have been given a series of short-term remedies which do not add up to a bagatelle. We are to cut timber imports by ten millions as if that will help. Since the conclusion of the war with Japan we have spent more on our overseas commitments than we have received from the whole of the American Loan. This is the crux of the problem and it is not being faced. This afternoon, we have been told that it is intended to cut our Armed Forces. In 1946 we spent £300 million on our Forces overseas. We were told that we would spend £175 million this year; but it must be over £200 million at the moment. These are figures which ought to be tackled. We must face the fact that we cannot afford the luxury, whatever the necessity, of spending the sum which went on our Forces overseas last year. We must withdraw our Forces from Palestine, Germany, and from other parts of the world so that we can cut this expenditure which, in the last resort, comes down to dollar expenditure. But we must face the problem of other cuts as well. Obviously, we can improve agriculture, and at the same time cut films, petrol and similar items, in order to have more for raw materials which go into exports.

But those are all short-term problems, and I suggest that there are two really serious long-term problems which ought to have the consideration of the Government. The first is that we must rationalise our industry, and apply Socialist methods in the doing of it, in order to see that we obtain ten times greater efficiency in our industry than we have had before. For the last ten years, every Member sitting on the Government Front Bench has been saying that private enterprise is inefficient, and that the Socialist method is the method of approach. Now we are in a crisis, it is time we applied our Socialist ideas. It means nationalisation of steel, of which we heard nothing today, and it means stepping into a lot of inefficient industries.

If we are to compete with America and other countries of the world, we have to learn the art of mass production. That means that in most industries we have to reduce the number of firms operating to two or four. I have already spoken on the problem of building. There we have the utmost inefficiency There are 40 different types of prefabricated houses out of the 80,000 being built. Since when has that been mass production? We have the same thing happening in the motor car industry. We have to standardise manufacturing of all kinds. The Government have to step in and lay down the conditions under which this standardisation is to be done, and we not only have to reduce the number of firms within an industry, but reduce the number of industries and concentrate on high quality and capital goods. I do not know whether this new Bill is for the purpose of stepping in and reorganising industry.

For 50 years this country has lived on the fat which has come from its external investments. Today, in Australia, they are producing steel cheaper than in this country. That is in a country with only a few million people, and they are doing it because they have not been living on the fat of investments abroad—I admit they have iron ore and new machinery. They are producing steel at £1 to 30s. a ton cheaper than in this country, and we cannot afford that position to go on. I ask the Government to realise that they have to put their house in order on a long-term basis. For years we have been saying that private enterprise is inefficient, and that a Socialist Government will come in and make industry efficient. That is our job, and that is the way to meet this crisis.

The second thing is bluntly to face the fact, and why not face it and get rid of this cant and humbug going around the country, that we can still go on living as we did 50 years ago? We are a small country which is not big enough to mass produce, and you cannot survive in the 20th century unless you have a market big enough to mass produce. The only way to do that is to set up in Western Europe a customs union and a common currency. This may need imagination, but let us face the fact that American prosperity today comes not from the fact that the Americans are more intelligent than the Europeans, or that they have greater resources than Europe. If we look at the resources of the 14 countries who came to the Paris Conference a few weeks ago, it be found that they have greater resources in raw materials than the United States.

If a free trade market of 200 million people is brought about, you will create an area within which there is an ample source of supply for raw materials and which is big enough to give this country and Europe the markets needed for survival. It may not be realised that of the 10 billion dollars of manufactured goods that went into the world trade before the war, 7 billion came from Europe. It may be a bit of a come-down for this country to regard itself as a European State, but that is the way to build up an economic structure for Europe. I ask the Government to think of this much more seriously than they have done. The problem that confronts this country is so great, and so great is the need for long-term policies, that it is necessary to build up such an area in which there can be multilateral trade, and to get rid of our old ideas.

Let us increase world trade, but we ought to do that in an enlarged area, in which this country and other countries of Europe can trade. If we start doing that we shall build up an area which can provide the raw materials we require, and the manufactured goods which the continent of Europe requires. I apologise for delaying the House so long, but, apart from 1940, there never was a time like this. We are now facing the greatest problem that any country has ever had to face. A hundred years ago Pitt told the country that we could save ourselves by our own exertions, and Europe by our example. We saved ourselves by our exertions in the last war. We must now set the example. This country has a chance of reorganising its industries and putting them on a basis which is really efficient, modifying private enterprise by Socialist ideas and getting rid of its inefficiencies, and getting real order instead of our present inefficiency. We should call the countries of Western Europe together to build up an area in which the peoples can live together and trade. Let us concentrate on long-term remedies, because that is the real problem to face.

9.12 p.m.

Mr. John Henderson (Glasgow, Cathcart)

I have been in the Chamber for four and a half hours continuously, and I have listened to many interesting speeches. The speech of the hon. Member for Gateshead (Mr. Zilliacus) caused considerable amusement and merriment, but when the public have unfolded to them tomorrow the full story, as told by the Prime Minister, I can assure him that they will find nothing to be merry about. As the hon. Member for North-West Hull (Mr. Mackay) has just said, this nation is faced with a problem of the greatest magnitude.

When the Prime Minister sat down, after making his speech, I looked at the faces of Members on the Front Bench, and other Members of the party opposite. They portrayed anxiety, fear, and dread. The hon. Member for Bolton (Mr. J. Jones), in a remarkable and forthright speech, asked, "What are we going to do about it?" There has been a lot of talk in the House today, and when I sit down another dozen or so Members will rise to try to catch your eye, Mr. Deputy-Speaker. The whole of tomorrow afternoon and evening will again be spent in Members talking about this crisis. I suggest that what the nation wants is less talk; it wants real action. This House could do a big thing if it would send a message of encouragement to every section of the community. There is not the slightest doubt that additional sacrifices will be demanded from the common people. Working men will be directed, with all the inconvenience that that will cause, and housewives will face further cuts in essential food supplies. Industrialists—everyone from the top to the bottom—are to be asked to carry further sacrifices. A message of encouragement and of our sincerity to the nation would, I think, be a noble thing and help to spur on the men to increase production. If whoever is replying on behalf of His Majesty's Government would bring in the necessary legislation to reduce the salaries of Members of Parliament from £1,000 to £600 this would show our sincerity, and that we are prepared to make some sacrifice when calling upon other sections of the community to do likewise.

9.15 p.m.

Mrs. Ridealgh (Ilford, North)

Listening to the speeches from the other side, I have been wondering whether hon. Members had completely forgotten that we had passed through six years of the most devastating war which the world has ever known—not only destruction of men and materials but devastation of whole countries. When they talked of a change in Government, I was reminded of what happened in the '30's when we had Tory Government—the dire poverty and unemployment in 1939 which resulted in one-third of our population suffering from semi-starvation, and more than one-half of our people not having sufficient of the right kind of food to eat because they had no money to buy goods. I am wondering what would have happened if a Tory Government had been returned after six years of war on top of the problems which they have built up before the war. I was pleased to hear from the hon. Member for Oxford (Mr. Hogg) that hon. Members on that side were prepared to give devoted service to the country. I thought to myself, ye shall know them by their fruits and I hope that they will give more than lip service to this country in its time of need. I am glad that most of us in this Chamber recognise that strong measures will have to be taken and that planning will have to be carried out, if we are to pull out of our difficulties. We on this side are wholeheartedly with the Government in any action that they may take that will help to avert the greater crisis that we see ahead of us. One of the measures which I particularly welcome is the reduction of the Forces but, like many of my colleagues on this side, I would welcome a still greater reduction. I would like to see our Forces brought back from Greece, Italy and Germany, leaving a minimum of Control Commission personnel in Germany.

I agree with the decisions that have been put forward to increase the targets in our basic industries and agriculture. Many of the technical details have been dealt with by hon. Members on both sides of the House, and I would like to deal with more simple but very necessary matters if we are to get the full support of our people. I want to deal with the things that affect our people very closely. The Prime Minister asked us to put forward suggestions, and I want to suggest certain actions which, although they may not show any immediate benefit, will at least have a very good psychological effect. If the people of this country believe that real equality of sacrifice is aimed at, then they will have a greater incentive to give of their best. Therefore, I say that, first and foremost, we must deal with high dividends and profits. It is no use asking our people to work harder if, in working harder, they are merely increasing the already high incomes of a few people.

That is no incentive at all to our people nor is the fact that we still have many idle people in the country and many who are in non-productive work. There are plenty of pleasures for the idle as well. I was glad to hear the Prime Minister's statement on the proposed restrictions on foreign travel, and I hope he will place restrictions on some of the pleasures like Ascot races. Personally, I should like to see all able-bodied persons who are doing non-essential work being placed on essential work. There would be the necessary protection, but we have to do something about all these people doing unnecessary work.

Sir W. Darling

What is unproductive work? Can the hon. Lady give us an indication?

Mrs. Ridealgh

Such as pools and work of that kind which we can do without.

While I am dealing with these points I know that I am expressing the wish of a great many people in this country when I suggest that lavish arrangements should be avoided for the forthcoming wedding of Princess Elizabeth. The general opinion amongst the workers is that it would not be right to spend large sums of money on this wedding when we are asking the workers themselves to economise even in the necessities of life. I know there will be thousands of people who will want to see the wedding, but I am quite sure that an austerity wedding will be much more appreciated throughout the whole of the country.

We are appealing to those of our people who are producing the necessary goods and services and unless those people are assured that all others are also being made to pull their full weight in working for the benefit of the whole community, then their enthusiasm to do so is going to be considerably damaged. There is one thing I should like to say and that is with regard to our Government factories. The workers in Government factories have a feeling that their production—and I say their production—is carrying too many unnecessary officials and administrative staffs. I hope that full inquiries will take place and comparison will be made in relation to the prewar ratio of established staffs and the actual producers, because the workers in those factories are considerably disturbed at the present state of affairs. I hope the Minister will note the reply given by the Minister of Supply in answer to a Question asked by my hon. Friend the Member for West Woolwich (Mr. Berry) regarding this particular point. The answer is given in Monday's HANSARD.

Wages, too, are a great incentive to work but when a skilled worker can take a day off his work and it will only cost him 5s—a skilled worker told me that that was what it would cost him if he took a day off—I consider that this state of affairs is an incentive to a worker to take a day off rather than a deterrent. I hope the Chancellor will take special note of that and try to remedy it so as to give a greater incentive to our people and to the men at work. In this austerity period ahead it would be greatly appreciated if the workers in essential industries could be given additional rations. That would please the workers in the countryside and also housewives would not oppose the putting of restrictions on restaurant meals. As to the proposal that coupons should be given up for meals in restaurants, this could be done by a scheme of points rationing and the points could be interchangeable so that if not used for meals, they could be spent by the housewife on points goods, and would at least make her feel that she was not being given such a raw deal. In the circumstances where she has to provide all her family meals from the meagre ration she would feel that she was being given a little extra help.

I have said before in this House, and I say again, that the splendid job of the housewife is not being fully recognised. I know that the right hon. Gentleman paid a tribute to the housewife today but I hope that in this new austerity period which we are expecting our housewives will be given some priority. We depend too much on their job of keeping their families healthy, content and happy. I hope that the appeal to housewives to enter into full time and part time employment will be successful, but to ensure that, it is necessary that wherever possible, the maximum convenience is created for those with heavy responsibilities, and in particular, for those in industry. One very important way of easing the housewife's burden would be to remove the necessity for her to stand in queues or to travel from shop to shop to find the goods that she needs.

The shorter the supply of goods the more important is it that there should be fair distribution, and this can be managed much better if the goods that are scarce are allocated to distributors in proportion to their registrations. It would be extremely convenient for the busy housewife if she could obtain her fair share of goods without having to crawl round the shops like her less busy sister who is anxious only to obtain all she can whether she needs it or not. I make the plea to the Minister of Food that he will consider allocating the goods which are scarce, on the basis of the number of registrations. He has already done this in relation to dried fruit, and I am quite sure that he could extend the scheme which would be really helpful to the housewife since she would be able to buy most of her goods in one shop. It will also help the shopkeepers who have catered for the housewife's needs in the past and are still trying to do so.

In this respect I want to make special reference to the Co-operative movement of which I am a member. No other trading concern has given so much loyalty and support to this Government and to the people of this country during these difficult times. We have made no demands for high profits, we have raised no objections to the reduced retail margins, and at the same time we have consistently supported the Government by increasing our holdings of Government stocks. I know that it is only right that a Co-operative movement should loyally support the Government, but I think that the Government also have a duty not to make things more difficult for that movement and its members, most of whom are ordinary workers. The datum line of distribution compiled on the 1939 figures is based on a period when poverty in industry and in the agricultural areas affected a great many of our workers. They were unable to buy the things which they can now afford, but because they could not afford them in 1939 while other shops in the richer areas obtained them, a larger quantity of goods is now being directed to the areas where the non-workers are to be found. They are still getting the cream. There is no fairness or equality of sacrifice, which we shall have to have if there are to be further cuts in commodities. The Minister admits that the 1939 line had an anti-social effect in canalising foodstuffs to the pleasure areas rather than to the working areas.

The Co-operative movement caters for most of those who are working. Since 1939 it has increased its membership by three quarters of a million, which represents about two million of the population, yet we are still tied to 1939 quotas. About 25 per cent. of the registrations are going through the Co-operative movement, yet only 16 per cent. of the pointed goods go to the Co-operatives, thereby causing inconvenience for millions of Co-operative housewives. There are approximately 26 foodstuffs which are in short supply and most of them are included in the points scheme. The theory that a consumer can buy points goods anywhere is something that does not work, because points goods in short supply are almost invariably refused by retailers to customers who are not registered with them for straight rationed goods. A great deal can be said for allocating those supplies on the basis of rationed goods.

We have complaints coming in from Co-operative societies regarding difficulties and handicaps due to the datum line distribution. Our membership are constantly complaining that goods are in other shops but they are not to be had in the co-operatives. It is no use saying that the co-operative movement gets it fair share until goods are shared out according to the number of actual and definite customers. The general question of datum line distribution is boiling up again and will be intensely acute in the days ahead. I therefore appeal to the Government to take notice of one or two of the suggestions that I have made, which will ease the troubles of the housewife and will give an incentive to the working class of the country to give their full support to the Government.

9.34 p.m.

Mr. Nigel Birch (Flint)

The hon. Lady for North Ilford (Mrs. Ridealgh) is certainly a believer in equal misery, but when she says that the workers of this country cannot be expected to put forward their best unless the Royal wedding is an austerity one I think she is both wrong and insulting. [HON. MEMBERS: "Why?"]

Historians, writing in the future, will find it strange and difficult to understand that the Government have delayed so long in taking any steps to deal with the crisis in our balance of payments which is the inevitable result of their policy, and which could so clearly be seen to be coming on. All my hon. and right hon. Friends have been predicting it for the last two years; every foreign nation has been predicting it. The British Press, with the exception of the "Daily Herald" has performed a great national service in pointing out precisely what was going to occur. Everyone has told them. Why has nothing been done? There was a most interesting article last Sunday in "The News of the World" by a very distinguished gentleman called Lord Dukeston. The article was called, "The people must be told the truth." The sentence I want to call to the attention of the House is this: Everyone competent of forming a judgment upon economic matters has been aware of the coming crisis for a considerable period; but with the knowledge of the strain we endured as a nation during the war, we have delayed this crucial problem until such time as the morale of our people enabled them to face it. Lord Dukeston is a nobleman of some weight and influence in the party opposite. He is an ex-President of the T.U.C. When he said, "We have delayed …" I presume he means that the Trade Union and Labour movement has done so. Whether he thinks that morale is better than it was after-the Election when we are told that people danced in the streets to celebrate the Socialist victory, I do not know. His view was that it was right to suppress the truth because the people of this country had not got the courage to face it.

Mr. Follick

What did Baldwin do in 1935?

Mr. Birch

It is very difficult to reconcile that with what the Prime Minister said today and even more difficult to reconcile it with recent performances by the Chancellor of the Exchequer. It is only three weeks ago that the Chancellor of the Exchequer when winding up the last Debate on our balance of payments said: We shall conceal nothing from the people of this country, and shall continue to tell them the facts, as we have done in the past."—[OFFICIAL REPORT, 8th July, 1947; Vol. 439, c. 2165.] One cannot reconcile Lord Dukeston's article with that and still less can one reconcile Lord Dukeston's visit with some of the more exuberant utterances of the Chancellor of the Exchequer. Early this year he said: There will be no financial crisis—our present financial controls are strong enough to prevent that. It is difficult——

The Chancellor of the Exchequer (Mr. Dalton)

Read on. Read the rest of it.

Mr. Birch

I have not got it, but that is what the right hon. Gentleman said. He has said the same sort of thing many times. The explanation is difficult to find. It may be that all hon. Gentlemen opposite suffer from that chronic malady of politicians of the Left described by the great Lord Salisbury as "the essential cowardliness of optimism."

It was not difficult to tell what was going to happen. The cause was staring us in the face. We have been living a lie for the last two years. As the Prime Minister pointed out, we lost 25 per cent. of our wealth during the war and we were faced with the task of rebuilding our wealth at the end of the war in a world which was politically and economically distracted. In spite of all that we have behaved as if we were far richer than we were before the war. That is the answer to the hon. Member for North West Hull (Mr. R. Mackay). In spite of that we have said that we will have shorter hours and higher wages, put up our exports by 75 per cent., have a larger building industry than before the war, make good the whole of the war damage, make good our arrears of maintenance, and have great schemes of colonial development. The House must reckon that these great schemes of colonial development have to be financed in the short run out of the resources available to the people of this country. We also said that we would have vast capital schemes for the re-equipment of our industries. It is these capital items which are the most important of all. On top of that, entirely wantonly, the Chancellor has imposed his absurd monetary policy. All these things do not add up. How can they possibly add up? What we have seen is a massive refusal to live within our means. That was bound to result in a foreign exchange crisis. There is nothing new in a country living beyond its means. It has often happened before, but it has always resulted in a foreign exchange crisis, and that is a basic fact which I hope the House will bear in mind.

There are many things with which one can distract attention from this fact. We can talk about everything since the Fall of Man having been the fault of the Tories, we can talk of Eve being the first member of the Housewives' League, and by such means we can distract attention from what is going on. We can do it also by this double attitude towards America. We get the Foreign Secretary calling them moneylenders, and, at the same time, hon. Gentlemen opposite saying that they have a moral duty to support our prewar standard of living. We can go on distracting attention like that. Then, there is Article IX. It will be a heavy burden, it was a hard condition when it was imposed, as my right hon. Friend the Member for Woodford (Mr. Churchill) said, but I, personally, doubt very much if, so far, it has had a great effect either on the sources from which we buy our imports or on the destination to which we send our exports. Whether, in the future, we have special arrangements with the Empire or with the Western bloc or with Eastern Europe, the fact we have to remember is that these countries will have an understandable preference for being paid for the goods they sell, and being paid in goods at the right price and of the right quality. There is no easy way out.

On convertibility, I would say this. Obviously, it has been responsible for part of the acceleration of our loss of dollars in the last month or so, and it may well be that the Government have shown their usual level of competence in dealing with this problem. The point I would like to make is that, basically, what is going on now is something very old-fashioned and very familiar—a flight from sterling. The world is trying to sell our currency, which they believe to be overvalued and unsound. That is what is going on now. We have to reckon that no system, whether multilateral, regional or bilateral, can work if we are inefficient, high-cost producers and if our trade is so unbalanced as it is now. Hon. Gentlemen opposite have preached on this subject for many years. They have preached the doctrine that "all men are paid for existing, and no man must pay for his sins." That is a Hubris, which is always followed by Nemesis.

We have tried to hold on to an untenable position, and we are now seeing a series of disorderly retreats to unprepared positions. First, we get the 48 hour retreat on conscription, and now, the Prime Minister gets up at three minutes to 12, only three weeks after the last Debate, and announces another disorderly retreat. I would say that the Prime Minister's speech showed every sign of haste in preparation and disagreement behind the scenes. It was vague; we never got down to any details, and, though the speech contained a cer- tain number of figures, none of the figures were added up so that the people of this country could see where they were. We were told that £144 million worth of food from the hard currency areas per annum would be cut, but we were not told what this was going to mean in rations, which is precisely what the people want to know. Surely, it should be possible to tell us what it is going to mean? Then as far as the actual cuts in imports were concerned again the figures are difficult to add up, because the £144 million cut from hard currency areas may possibly be balanced by imports from soft currency areas. It seemed to me, adding them up in the best way I could, that the conclusion was that the total of these cuts was less than one-quarter of our visible adverse balance. That is not counting invisible imports, and not counting our special difficulties over hard currency. Therefore, the conclusion the country will draw is that we are still leaning very heavily indeed on American support, and if we do not get that support we shall be in a desperate position. On the question of raising targets I would say this: if we cannot hit the target at 100 yards it is not likely that we shall hit it in 200 yards. I think that is a perfectly adequate comment.

I wish to make comment on that direction of labour. We are told it is to be a limited direction of labour. Possibly I do not carry the whole of my hon. Friends with me, but I am passionately opposed to the direction of labour. I believe it is slavery. How many hon. Members opposite said during the conscription Debate that it would lead to industrial conscription? It is all very well to say that it is only limited direction—that we have slaves in this country, but there are not such a lot of them. That is an argument which goes very ill with the Prime Minister's peroration, when he said that what he was standing for was moral values.

The Prime Minister made an appeal to trade unions for longer hours and not to press for wage increases. I have a good deal of sympathy with trade union officials on this matter. Trade union officials have a tremendous negative power, but their positive power is not so great. The trade union official is paid to get better conditions for his men, paid to fight for them. If you put all the aces into the hands of the trade union official and say, "You must not play them," a very dangerous position is produced. A senior official may say, "I am all right, because if I succeed I will get my garter and a seat on the gas board and all will be well," but whether he will carry his men with him I am more doubtful. I believe that this is breaking up yet another valuable British institution. On the things that really count, on the Budget and capital expenditure the Prime Minister was vague, and I defy anyone to understand what he meant. I do not think that he understood himself. As for saying that what will be reduced is the number of "spivs," that must be wrong, because there are to be a great many more controls, and the one thing on which "spivs" will thrive is controls.

What we are seeing is Socialism working out in precisely the way my hon. Friends have always predicted it would work out. There are three stages we have always predicted. First, the honeymoon, then the stage of increasing muddle, frustration, multiplication of controls and increasing poverty, and the third stage is the stage of extra-Parliamentary Government, and the loss of civil liberty. During the honeymoon period you spend your money, and what you can borrow as well. That is what we have done, and that stage is over. Now we are trying to escape the consequences by the second stage, the multiplying of controls and the employing of large numbers of people to prevent other people from making things. We are gradually becoming a coupon State, a ration-book State and a permit and docket State. In addition, we are threatened with differential rationing.

The real danger of all these things is that they kill the monetary incentive. We have seen in Germany precisely what occurs when that is done, when one's docket, one's ration card is worth more than one's wages. Whatever the damage may be in our zone in Germany, it is still one of the richest parts of Europe. It is prostrate and starving, for the very reason that the monetary incentive has been completely killed. The other day, the Minister of Health said, very rightly, that if one is trying to get someone to work ideology is not enough. The 20 million people in the concentration camps in Siberia, and the timber camps in the Arctic are dying witnesses to that. It is very true. Ideology is not enough, and we are killing the monetary incentive.

That brings us inevitably to the third stage, the stage of direction of labour and the abolition of civil rights. What I would like to know about this direction of labour is, What sanctions are to be applied to someone who either does not go where he is directed or does not do any work when he gets there? What is to happen, because it is no use having the direction unless there is some sanction? That takes us straight on to the slave State.

Mr. Pickthorn (Cambridge University)

Could we have the Chancellor's attention?

Mr. Birch

I see no basis whatever for a fruitful compromise between our ideas and the ideas of hon. Gentlemen opposite. Whatever they may wish to do, they are being led on to the slave state. Therefore, I rejoice that my right hon. Friend has said that there will be no Coalition. To join up with a party which is morally and intellectually bankrupt would be mad. People like the hon. Member for Cheltenham (Mr. Lipson), who wrote in "The Times" this morning that party warfare should come to an end, are either people who have no foresight, or people who do not believe in absolute values—who have no real convictions. Anyone who can see what is happening, those who believe in absolute values, cannot think it could ever be right to compromise in any way with what is going on now.

There is no need to abandon the free society. The system works perfectly well. I wish the hon. Member for North-West Hull (Mr. R. Mackay) was in his place. He was one of the indignant virgins of Socialism who wrote "Keep Left." In that they said that after previous slumps the free system recovered and touched new peaks of productive power, but this never happened after the slump of 1929. That is not true. The index of industrial production in America was 119 per cent. in 1929, 113 per cent. in 1937, and was 189 per cent. in the first quarter of this year—two years after the war. In America there is no maldistribution of labour such as we have here. The standard of living is higher than ever before. It is not an accident that the dollar is a hard currency; the Americans are producing things which people want. Here also, in the decade of 1929–39, which included the slump years, the real national income per head, including the unemployed, rose at least as fast as it did during the average of the 19th century, which was the period of the most rapid economic advance in history. I would say to the gentlemen who wrote "Keep Left" that their conclusions and recommendations are on precisely the same level as the facts which they adduced.

The answer is that the system does work. We can have prosperity and liberty under it, and we can have it under no other system. The return must be gradual. The first thing we have to do, and I wish the Prime Minister had insisted more on this, is to adjust our expenditure, particularly our capital expenditure, to our means, and not treat the situation as the Chancellor of the Exchequer does, as consisting of watertight compartments. He says, "I have a wonderful Budget. We have a terrible balance of payments. I have got a wonderful monetary policy but the terrible thing is that wages are going up." We cannot treat these things in watertight compartments. Clearly we must realise that if in fact we do not adjust our capital expenditure to our savings, fresh loans are only water on the sands. All the economists have said that. The Bank for International Settlements in a most interesting report the other day pointed it out in great detail. There is an admirable article by Mr. Roy Harrod in the "Daily Mail" today putting this forward. Lord Brand in another place made a most weighty speech on the subject. Practically every economist has spoken on the same lines. The Liberals, now crowding the benches there, put forward precisely the same point. It is those people of great weight and intelligence to whom the Chancellor of the Exchequer was referring when in his Budget speech he said their policy was intellectually wrong and morally reprehensible. I am bound to say that I prefer their judgment to that of the right hon. Gentleman, particularly in view of some of his more exuberant statements, such as when he said: Our achievement is already great and our plans open up still more splendid vistas for the future of our native land. That was intellectually wrong and morally reprehensible. It out-Shinwells Shinwell. These are the people to whom we are now asked to give dictatorial powers. The Prime Minister has rejected a return to the free society. He says he will go on with Socialism. He is now advancing to the third stage that I have indicated, the stage of the abolition of civil liberty. The people of this country have paid for their seats at this performance and hon. Gentlemen opposite have decided that the doors will not be opened until the third act of the farce is completed. I suppose we may draw some consolation from the fact that they will never ask for tickets again. But there are desperate dangers during this period to our standard of living, to our whole way of life, to our values and to our position in the world. In these anxious days we shall need—anyway those of us who oppose the Government will need—all the faith, strength and energy of which we are capable. I feel that in this country the ship of State is like a vessel which is trying to fight to keep off a lee shore during a storm. It is fighting desperately to keep off the rocks. I would say of the ship, as a poet once said: She moves—with all save purpose lost To make her offing from the coast; But, till she fetches open sea Let no man deem that he is free.

9.58 p.m.

Mr. Driberg (Maldon)

I will not attempt to follow the hon. Member for Flint (Mr. Birch) through the fairly wide panorama of gloom that he has attempted, because I have promised to speak very briefly, as I think that most of us on the back benches who are successful in catching your eye, Sir, should attempt to speak on this occasion. I want, therefore, to deal only with one limited but important subject which has not been stressed in this Debate. So far as I can recall, it has been raised only once—by the hon. Member for Leominster (Mr. Baldwin) who spoke first from the back benches opposite. I refer to the subject of agricultural manpower. It seems to me that this is the most urgently critical aspect of the whole manpower situation. With food cuts in prospect I beg my hon. Friends who re present urban constituencies to consider this problem most earnestly. Other industries besides agriculture are under manned, but there is no other industry in the country which was asked, as agriculture was asked this afternoon, for a 20 per cent. increase in output and which has to face——

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