CAPITAL GOODS (EXPORT PRICES) (Hansard, 8 July 1948)

§ Mr. Stokes (Ipswich)
I wish to raise tonight a matter of some considerable importance and urgency. I want to make it quite clear from the outset that my quarrel is not with the President of the Board of Trade, the Secretary of the Department for Overseas Trade, the Economic Secretary to the Treasury or the Financial Secretary, but with the Chancellor of the Exchequer himself. Whilst I appreciate that it may not be 706 possible for him to be here tonight, I wish to make it quite plain that I propose to continue this bombardment until I get a statement from him either in this House or in the country. It seems perfectly futile for him to continue to try to close what appears to a great many people to be an unclosable gap if he will not pay attention to some of the essentials which stand out a mile. I want to explain tonight exactly how I view this situation.
My claim is simply this: that we are paying a great deal too much for many of our imports and we are getting far too little for many of our exports, particularly the exports of capital goods. When millions of people have empty bellies those with food to sell can comparatively easily put up the price because people are more uncomfortable with empty bellies than with anything else; but equally it is true, the world over, that administrative organisations—the companies, the Governments, the people who organise the production of goods—are starving for want of capital goods. It is astonishing that we appear to continue to tolerate this exploitation—I would even call it fleecing—of our own pockets by those who sell food and continue to sell cheaply to them the capital goods which they desire to keep their economy going.
The Chancellor has told me in correspondence—correspondence running over many months, as mine has a habit of doing—that Ministers have repeatedly made statements agreeing with the view which I hold. That is an extraordinary statement, but it is very welcome and I do not cavil at it. But the only evidence I have been able to find is that to which the Chancellor refers in his letter of 29th May last—a speech by the President of the Board of Trade on 19th April. In a Debate which had been opened by the hon. Member for Devizes (Mr. Hollis) and in reply particularly to some points which I had raised about the prices for capital goods, the President said: I agree with what he— the hon. Member for Ipswich— said. But we must leave this to the manufacturers. We do not fix prices for capital goods. We must leave it to the manufacturers, in present conditions, to get what they can, subject to any protection in the matter of keeping their markets. We do not want them to try to fleece the foreigner. 707 Incidentally, let us be quite frank with our American and Canadian friends and others that they have been busy for a long time fleecing us. I do not make any bones about that when I talk to them. This was what the President said: We do not want them to try to fleece the foreigner. That would lose markets … —it always tends to lose markets, of course, except when bellies are con-cerned— … and we would suffer in the long term for what we had done in the short term."—[OFFICIAL REPORT, 19th April, 1948; Vol. 449, c. 1580.] I do not entirely disagree with what the President said but my grouse is that, whilst the Chancellor says this has been broadcast to manufacturers up and down the land, I cannot find any manufacturers who have heard it. I certainly have not. I have been in touch with one or two hon. and right hon. Members in the House and they have not. None of them was present in the Debate and they do not read HANSARD every day, although they should. It is no use leaving it to a casual answer to a back bencher by the President of the Board of Trade. What wants doing is the making of some announcement which the people mainly concerned can hear. That is why after all these months of unsatisfactory replies I am raising the matter tonight.
I made a very severe accusation against some of our friends overseas, be they of the Dominion or of our Allies, about the amount which is being charged to us on the import of food in particular, compared with prices of what we send abroad. I wish to support that by some figures. I refer particularly to the United States of America. In 1947 compared with 1938, and taking the index figure for 1938 as 100, for fresh fruit and vegetables imported from the United States, of which there was a very considerable quantity—something like 85,000 tons or 1,744,000-odd cwt.—the index figure was 293, three times as much.
The whole burden of my argument tonight is that whereas food costs us anything from three to four times as much as in 1938, we are getting only about twice as much for the capital goods we export. Perhaps hon. Gentlemen will keep that in mind as I quote these figures. It is not always useful to quote figures for 1948 708 because, owing to restrictions, the amounts involved are so slight, but take another food figure, fruit juices. In 1947 as compared with the figure of 100 in 1938—and incidentally the imports in quantity were nearly three times as much as in 1938—the figure is 517—five times as much. I agree that it was a much less quantity in the first five months of 1948. We then come to wheat, and although in statistics it is described as wheat, I am not quite sure that an amount of it is not barley, which has an important bearing on what I am going to say about whisky. Wheat, or grain, in 1947 was more than three times as expensive as in 1938. The quantity was half, I agree, and for a less quantity in 1948 the price has gone up quite considerably again.
Compare this with our capital goods exports, first to the United States of America. It is extremely difficult to get detailed figures for different countries, but I have done my best, and the figures I give are endorsed by my own experience, and I do not think they are far strained. In 1938 the average price of our exports of capital goods—I am speaking particularly of machinery and heavy engineering Goods—to the United States of America, Cost £200 a ton. In 1947 they cost £430, which is only about 115 per cent. up compared with food which is 300 or 200 per cent. up on 1938. The iron and steel average in 1938 was £10 a ton and in 1947 about £25 a ton. Generally speaking heavy tools and machinery exported as far as one can extract from the statistical data available was just about twice as expensive to the United States of America in 1947 as in 1938.
As I say that compares with food being three times, four times and in some cases five times as much. Taking capital goods, the astonishing thing, when one looks at the position in reverse, is that whereas one would expect on the figures I have given to find the United States figures corresponding with our own, nothing of the kind is the case. Goods similar to those which cost £100 per ton when imported from the United States to this country in 1938 cost £307 per ton in 1947, almost three times as much. Even in a direct exchange of capital goods for capital goods we were disadvantaged.
I do not want anyone to feel that I am "taking a crack" at the United States. I am "taking a crack" at our own 709 Government's policy. As a commercial man I do not blame the other chap for getting as much as he can if he is given every encouragement to do so. My complaint is that we are giving it. Take Canada, one of our Great Dominions. In 1938 we paid about 7s. per cwt. for wheat and in 1947 20s. per cwt., three times more than in 1938. In the ordinary iron and steel trade we paid £10 per ton for imports from Canada in 1938; in 1947 we paid £30 per ton, again three times as much.
When one looks at the position the other way round what does one find? Machinery from this country to Canada cost £150 per ton in 1938 and £330 per ton in 1947 which is only just over twice as much. I am sorry to give so many figures as I know how much this House dislikes that, but there is no way of comparing the figures except by explaining how the figures do not balance. That can only be done by giving details. My hon. Friend will agree with me that that is fundamental.
I come to rather a different issue, or rather a different kind of case, concerning what I would call semi-luxury goods. Here the comparison is even more startling. I refer to whisky. Everybody in this country except the hon. Member for West Ealing (Mr. J. Hudson) who is not here tonight, complains that they have not enough whisky to drink. What are the figures? In 1938 we exported to the United States 4 million gallons of whisky at approximately 28s. a gallon, at any rate the total figure was £5,600,000. In 1947 we sent practically the same amount—4 million gallons—and the price was 40s. per gallon or £8 million, an increase of approximately 40 per cent. Yet we have been importing wheat, grain and barley to make the whisky at up to about four times the value of what they were in 1938. I cannot understand why the Government put up with the nonsense which the distillers tell them, but that is a different issue and I do not want to do more than call attention to it.
Even if the argument about whisky is that we should not sell as much if we put up the price, the majority of non-teetotal public of this country would be extremely glad if we sold half the quantity at double the price and kept the remaining half here. Incidentally it would be a 710 good revenue bearing commodity for the Government and the Exchequer. The same applies to Canada except that extraordinarily the price to Canada seems to be quite different from the price to the United States which perhaps the great pundits of the distillers would explain. So far as I remember, their argument in this House, as put forward by some one else, is that one cannot sell things at different prices in different countries. May I explode that at once? That is absolute unadulterated rubbish.
I have been in business for 25 years. I do not sit down and say "Here is my price, and this rules everywhere from Timbuctoo to the north of South America or the south of North America," or where-ever it may be. I study the markets. I do not find people are upset if I charge what I can get out of them. It is, with great respect, unadulterated bunk that these people put over, and it is done in order to safeguard their own markets, which I quite understand. But the Government in my view, should take a firmer line.
I do not wish to bore the House with an increasing number of detailed figures, but I do want to suggest this as a possible line of consideration. In 1947 our exports from this country in volume were, at the 1938 level plus 10 per cent. The value was 226 in 1947, taking the index or 1938 as 100. In other words, 125 per cent. above what they were in 1938. The imports, on the other hand, very interestingly, were, in volume, practically identical, but the value has gone up to 267. In other words, we were paying about 40 per cent. more for the same volume of imports in 1947 as in 1938 than we were getting for the same volume of exports.
It is no use the Chancellor of the Exchequer sitting back and being complacent about the situation today, because it is getting steadily worse. I do not understand why the public are not beginning to understand this. Quite seriously, but for Marshall Aid we are going steadily and absolutely bankrupt. Unless people do understand it they will not pull up their socks and do something. I know my own countrymen fairly well, I have lived among them all my life. I know that when they understand what they are up against they do things.
But now we get miserable Ministers trying to make a case for their own 711 Departments and giving wrong facts to the public. I think that somebody—the Lord President of the Council, or the Chancellor of the Exchequer, or the Prime Minister—ought to go down with a hammer and slam them on the head and say, "You must not do that, you are misleading the public." They all want to make a case for their own Department. It is like a fifth form school boy who wishes to make out that he is doing a good job. But if in the process the public is misled so that they do not make the extra effort required, it is going to be absolutely disastrous.
I should like in the few minutes which the Economic Secretary does not want to occupy to say a few words about some of the fallacies which I think are indulged in. The first is that it is time we abandoned this silly slogan of "too much money chasing too few goods." It raises the impression that it is the fault of the money. It is not the fault of money at all. Money is an absolute humbug. Any Government can "make" money. It is just a matter of operating a printing press to make it. It has no real value at all. It is not linked to anything at all. To tell them that too much money is chasing too few goods is like saying that if we put a pile of money in the middle of the floor and set fire to it, things would get better. The situation is not going to get better at all. We are not going to get more goods that way. What we should say is, "Too few goods—let's have more." What we have to explain is that we have to produce more goods otherwise we are not going to have more. It does not matter twopence how much money we have if there are no goods. We have to produce more.
Fallacy No. 2 is this. I have heard several very competent senior Ministers say this, and I am surprised at their ignorance. They urge manufacturers to have a bigger turnover and make less profit. Quite frankly, as an industrialist who has not yet been in the bankruptcy court, I fail to see how we are to follow that policy, unless we are determined to get into the bankruptcy court. If we want to get there that is precisely the way to do it. If you have a bigger turnover, if you are a competent person, you must make more profit though it may be at a less rate. There should be no stigma 712 attached to so doing. That ought to be made clear to the ordinary rank and file up and down the country.
I come to the question of exports. I do not know how you are to get the export manufacturer, particularly of capital goods for export, to charge more for his goods and get a higher output if he is told at the same time that it is a cardinal crime to make more money. Again, I do not think that you can do it. The businesses with which I am concerned—and this is over about 20 to 25 years with the two concerns—have been engaged in the export trade up to not more than half, but about that, of their capacity. Before the war we always examined our markets and, unlike these ridiculous people who make whisky and sell it abroad, we do not sell the same goods at the same price everywhere. We find out what we can get and we get as much as we darned well can.
As a rule, we cannot get more than we can get at home. The situation today is quite different. The world is crying out for capital goods. I have carried out a survey of each of the countries with which we deal in both companies and with one small exception, everybody wants capital goods and, as far as we can see, they will continue to want them. In fact, we get as much if not more—I do not say more than that—for the capital goods we export compared with what we get on the home market. No exporter will do more than that so long as the stigma attaches to making too much money. He will not do it. He is looking at his export market and saying, "Obviously, all I need to do is to charge as much as I need in order to keep a balanced picture for my shareholders. I must not make too much money because I shall get kicked in the pants if I do. Therefore, although I could get more, I will not take it. I know that by not taking too much I am cultivating goodwill and that is good for me."
I agree that it is not the responsibility of the Government to lay down the law to the manufacturers as to what they should charge. I agree that would be absolutely silly. The markets differ everywhere, even with capital goods, and nobody knows it better than I do myself. The matter must be left to the manufacturers to a very large extent. The Government ought to encourage them to charge as much as they can get, especially in hard currency areas. That ought to be 713 made widely known. The way to make them do it, having regard to this huge demand which exists for capital goods today, is not to put out a great publicity statement. I do not want that. I would be content if I could find out any of the statements which either the Chancellor of the Exchequer, the President of the Board of Trade, the Secretary for the Department of Overseas Trade, the Financial Secretary to the Treasury or my hon. Friend the Economic Secretary to the Treasury has made to any of the manufacturers. The only one I can find is the one made by the President of the Board of Trade, which I quoted. I consider that that is entirely inadequate.
All that the manufacturers need to be told is that no stigma attaches to making profits. [HON. MEMBERS: "Hear, hear."] Wait a minute. I have not finished yet. Let us be frank about it, because they will have to do it. It is quite time that the national corporations realised that no stigma attaches to making profits. One cannot run businesses at a loss or on a balance. There must be a margin on the right side. I beg both my hon. Friend and the Lord President of the Council, whom I am glad to see here on this celebrated occasion, to emphasise to the Cabinet that what matters is not the making of profits but the way in which they are distributed. Obviously, it must benefit the people as a whole if we can get 15 or 20 per cent. more for a proportion of our capital goods exported. That must reflect itself on the balance sheets. We will not get manufacturers to do it unless they realise that they do it without stigma, and that the stigma attaches not to making more but to the wrongful distribution of what they have made. I hope that, after this Debate tonight, in the few minutes which I have left to the Economic Secretary to reply, there will be at least some assurance from him that he will bring the matter to the attention of the Chancellor and ask him to go to it.

§ The Economic Secretary to the Treasury (Mr. Douglas Jay)
The hon. Member for Ipswich (Mr. Stokes) told us that his quarrel was with the Chancellor of the Exchequer, and that he really did not care in the least what I said.

§ Mr. Stokes
Oh, no.

§ Mr. Jay
I assure him that I will bring this matter to the attention of my right 714 hon. and learned Friend. I do not expect that the hon. Member will pay any attention to what I have not now got the time to say. I think there was a great deal of horse sense in what he said, and I hope his speech will be widely read by his fellow manufacturers. I hope he himself will do all he can to broadcast his speech to other members of industry.
The hon. Member's main point was that we are paying very much more for the goods we buy from abroad in relation to before the war, and I said that myself in a Debate two days ago on the European Recovery Programme, when my hon. Friend was not here, and it was not so well received by hon. Members opposite as my hon. Friend's speech tonight. I quite agree that it is all too true, and it is a very important truth, and one of our main economic problems today. It is one thing to say that we are paying too much and quite a different matter to do something about it. In the case of export prices, which is what the hon. Member was talking about, it really is not mainly a matter for the Government to decide. I will make one pronouncement on behalf of the Government, and that is that we would like everybody in industry to read his speech. I will go as far as that.
There are two views on this question of export prices. The first and simple view is that, since the higher the price charged the more foreign exchange is earned, we should charge prices as high as the traffic will bear; this was the hon. Member's point of view. The other point of view is that if the prices charged are too high, they will have an impact on what we can sell, and we might rose valuable export markets in the long run. Our view is that the manufacturer is better fitted than the Government to look after that. It seems to us, that, since 80 per cent. of industry will still be run by the private manufacturer, this is really a matter for him to decide.
My hon. Friend mentioned whisky, and he reminded me of the couplet: I often wonder what the Vintners buy, One half so precious as the goods they sell. Whisky is an interesting case in which the Government, since the war, have been encouraging the manufacturers to charge more for their goods in foreign markets, and in which the manufacturers have been very disinclined to do so. Who was right 715 in that particular controversy I would not like, at the moment, to say. Obviously, we do want to see the highest prices charged for exports and the highest amounts of foreign exchange earned consistent with retaining our markets in the long run. I think that that, briefly, is the Government's attitude in this matter. We think that in particular cases it is for the 716 manufacturers to decide, and we shall be very ready to see it decided in that way, after having given due weight to what the hon. Member has said.