§ 46. Mr. Arbuthnotasked the Prime Minister whether the speech on 28th July by the Minister of Local Government and Planning on the effect of the freezing of dividends represents Government policy.
§ The Prime MinisterI did not understand my right hon. Friend's observation to be a statement of policy.
§ Mr. ArbuthnotWhen an ex-Chancellor of the Exchequer makes this statement:
My friend Gaitskell's speech, whatever else it has done, has thrown the Stock Exchange into complete disorder, and that's good fun, anyhow,what interpretation does the Prime Minister put upon it other than that the Government regard it as good fun deliberately to throw the Stock Exchange into complete disorder? Does not the Prime Minister think that this Government cynicism betrays a careless disregard for the thousands of small investors who have been so badly affected by it?
§ Mr. R. A. ButlerWill the Prime Minister take this opportunity of publicly dissociating himself from the observations made by his colleague?
§ The Prime MinisterI am quite willing to answer, but I gathered that other hon. Members opposite wanted to put further questions. I was asked whether this was a statement of policy. It is not a statement of policy. It is a remark made, I should gather, in the way of a humorous observation.
§ Mr. DonnellyHas the attention of my right hon. Friend been drawn to the statement of the Chairman of the Penguins, published in this morning's newspapers? Will he take steps to circulate in the OFFICIAL REPORT the letter that the Chairman of the Stock Exchange has published so that hon. Members have some light reading in the Summer Recess?
§ Mr. R. A. ButlerMay I ask the Prime Minister if he is aware that in whatever vein of humour this observation may have been cast—and that we find very difficult to accept—the observation has caused 1460 great upset in very important financial circles and is creating the impression that the Government treat these matters of the financial integrity of the City of London and other places with levity? Will he take this opportunity of making a responsible statement on this subject?
§ The Prime MinisterI really cannot believe that people have so little sense of humour as to take a remark, which was obviously thrown out by way of a joke, as a serious matter at all. I really think, judging from what I know of the members of the Stock Exchange, that they have a more vivid sense of humour than that.
§ Mr. Henry StraussIf the Prime Minister thought that that remark of his right hon. Friend was funny, does he not think that the remark was sufficiently disgraceful to win promotion for the right hon. Gentleman in His Majesty's present Government?
§ Mr. Emrys HughesIs the Prime Minister aware that the miners in my constituency could not sleep last night because of this?
§ Mr. ArbuthnotDoes the Prime Minister himself regard his right hon. Friend's remark as funny?
§ Mr. JenningsIs the Prime Minister aware that the most successful part of is Majesty's Government's policy is the nationalisation of poverty in this country?
§ Mr. R. A. Butler(by Private Notice) asked the Chancellor of the Exchequer whether his attention has been drawn to the fall of share values amounting to many millions as a result of the recent announcement of Government policy, and how he proposes to restore confidence,
§ The Chancellor of the Exchequer (Mr. Gaitskell)I understand that the industrial ordinary share index has declined since Thursday by six points, or about 4½ per cent. I cannot agree that from the point of internal financial stability this decline, following as it did upon a rise of 17 points—or over 12 per cent.—in the last three and a half months is undesirable. Both the rise in share values and the sharp increases in dividends which gave rise to it had inflationary consequences. The proposal to limit dividends during the period of re-armament, which I announced last Thursday, is in- 1461 tended to check these consequences, which would clearly have become even more serious had they continued, and will thus help to maintain confidence in our ability to win the battle against inflation.
§ Mr. ButlerIs the right hon. Gentleman aware that there are many people of modest means—pensioners, widows, and others—[Interruption.] I say this partly in answer to an observation made about his mining constituents by the hon. Member for Ayrshire, South (Mr. Emrys Hughes)—there are many people of these modest means whose holdings have been very much reduced as a result of both the manner and the method of the Chancellor's announcement of Government policy a few days ago? What psychological value does the right hon. Gentleman think he has so far gained from the nature of his operation?
§ Mr. GaitskellFrom the figures I have given, it is clear that the decline in values is only about one-third of the rise in values that had taken place beforehand. I cannot agree that persons who invest their money over a long term need necessarily suffer any damage from the decision we have made.
It is, after all, only a proposal that dividends should be maintained, and not increased, over the period of re-armament. Those who are prepared to hold their shares for that time clearly need suffer no disadvantage so far as the value of the shares is concerned. As for speculators, I do not think we need worry too much about them. As to the further part of the supplementary question, I certainly think that the decline in stock market values, which, as I have said, is of a relatively modest character, has already had valuable disinflationary consequences on the economy.
§ Mr. Arthur LewisCan the Chancellor tell us how his first reply would affect the well-known firm of Courtauld's?
§ Mr. ButcherWill the right hon. Gentleman publicly dissociate himself from the remarks of his right hon. Friend the Minister of Local Government and Planning?
§ Mr. GaitskellMy right hon. Friend the Prime Minister dealt very adequately with that.
§ Mr. Emrys HughesHas the right hon. Gentleman realised that the directors of Scotch whisky companies are so disgusted about this that they are threatening to sell their shares and go to work in the coal mines?
§ Mr. JenningsDoes the Chancellor of the Exchequer agree that his action was obviously put forward as a sop to the T.U.C. and will have no disinflationary effect on the country at all?
§ Mr. AlbuWould my right hon. Friend agree that the return to ordinary shareholders in public companies in recent years, together with the capital increment due to the increase of share values, has been greatly in excess of either the interest or risk involved in the holdings?
§ Sir John MellorIs the Chancellor of the Exchequer aware that the companies which have been most adversely affected by his statement are those which have been most moderate in their dividend declarations during the last few years?
§ Mr. GaitskellThe fall in share values, of course, on the whole has been greater in respect of those companies which increased their dividends most.
§ Sir J. MellorIs that not very unfair?
§ Sir Richard AclandWill my right hon. Friend take note that the rise in share values which took place until his announcement, at a time when many people were suffering an enormous diminution of income owing to re-armament, is something the Opposition seemed to think was quite all right and about which they would have done nothing?
§ Sir Ian FraserIs the right hon. Gentleman aware that the suggestion that only rich people are affected is quite untrue and that within the last year Parliament has given powers to many bodies, including the Miners' Superannuation Fund and other workmen's funds, to invest in equity shares, and that, therefore, an action of this kind affects the interests of all classes, including the working class and miners?
§ Mr. GaitskellThese figures of the distribution of property do not bear out any suggestion that ordinary shares are held in large quantities by the poorer sections of the community.
Brigadier ClarkeHow much money was lost to the Treasury in Death Duties due to the fall caused by the right hon. Gentleman's statement, and will he look into it?