Lords Sitting of 1 April 1919

Preamble
The Lord DOUGLAS (E. Howe)—Sat first in Parliament after the death of his father.
Several Lords—Took the Oath.

NAVAL, MILITARY, AND AIR FORCE SERVICE BILL.
Brought from the Commons; read 1a, and to be printed.
INCREASE OF RENT AND MORTGAGE INTEREST (RESTRICTIONS) BILL.
Message from the Commons, That they do not insist upon their disagreement to the following Amendments made by the Lords in the Increase of Rent and Mortgage Interest (Restrictions) Bill, but that in the case of the Amendment in Clause 5, page 4, line 22, they propose the addition, in subsection (4), after "letting," of the words "as a dwelling"—

LORDS AMENDMENT.
Clause 4, page 4, line 2, at the end of the clause insert the following new paragraph:
"(v) At the end of paragraph (a) of subsection (1) of section two of the principal Act there shall be inserted the following proviso:
"'Provided that if the rateable value of the dwelling-house on the said third day of August exceeds the standard rent as so defined, that rateable value shall, as respects that house, be deemed to be the standard rent.'"

LORDS AMENDMENT.
Clause 5, page 4, line 22, after subsection (2 insert the following new subsections:
"(3) The principal Act both as originally enacted and as extended by this Act shall have effect as if in proviso (vi) to subsection (1) of section one of that Act after the word 'until' there were inserted the words or in respect of any period prior to.'
"(4) Any rooms in a dwelling-house the subject of a separate letting shall, for the purposes of the principal Act and this Act, be treated as a part of a house let as a separate dwelling."

LORDS AMENDMENT.
After Clause 5.
Insert the following new clause:
Limitation on rent of houses let furnished.
"6.—(1) Where the occupier of a dwelling-house to which the principal Act, either as originally enacted or as extended by this Act, applies, lets, or has before the passing of this Act let the house or any part thereof at a rent which includes payment in respect of the use of furniture, and it is proved to the satisfaction of the county court on the application of the lessee that the rent charged yields to the occupier a profit more than twenty-five per cent. in excess of the normal profit and twenty-five per cent. as hereinafter defined, the court may order that the rent, so far as it exceeds such sum as would yield such normal profit, shall be irrecoverable, and that the amount of any payment of rent in excess of such sum which may have been made in respect of any period after the passing of this Act, shall be repaid to the lessee, and, without prejudice to any other method of recovery, may be recovered by him by means of deductions from any subsequent payments of rent.
"(2) For the purpose of this section 'normal profit' means the profit which might reasonably have been obtained from a similar letting in the year ending on the third day of August, nineteen hundred and fourteen."

LORDS AMENDMENT.
After Clause 5.
Insert the following new clause:
"Amendment of definition of standard rent.
"6. At the end of paragraph (a) of subsection (1) of section two of the principal Act, the following words shall be inserted:
"Provided that in the case of any dwelling-house let at a progressive rent payable under a tenancy agreement or lease the maximum rent payable under such tenancy agreement or lease shall be the standard rent."
THE LORD CHANCELLOR (LORD BIRKENHEAD): My Lords, I move t hat the Message from the Commons be now considered. I shall have to follow that by a Motion that this House do agree with the Commons in their Amendment; and probably your Lordships will think it convenient, if discussion be desired, that it shall take place on the second Motion.
Moved, That the Message from the Commons be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.
THE LORD CHANCELLOR: I move that this House do agree with the Commons in their Amendment. In making this Motion it may not be inconvenient that I should indicate the character of the only Amendment which has been sent up to this House from another place. It is purely verbal, and need not detain your Lordships for a moment. The result, therefore, is that, on all the Amendments upon which your Lordships insisted the House of Commons has accepted your Lordships' views. I will only add this, as one whose duty it, was to take some part in the discussions on the various stages of this Bill, and whose duty it may be to take some part, in similar stages on future Bills, that while I ventured respectfully to think that your Lordships might not be well-advised in insisting upon the first two Amendments, which were ultimately adopted by this House but not pressed, as far as the later Amendments were concerned I took from the start a strong view that your Lordships had very carefully and very usefully considered this Bill, and were entitled, as a result of that consideration, to give effect to your views, and might probably influence consideration in the House of Commons. Some comment was made upon the fact that even an Amendment of my own
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perished in another place. Your Lordships will bear me out that I supported with composure the loss of that Amendment, but I say frankly that I rejoice in its re-incarnation; and I congratulate your Lordships upon haying exercised an influence upon this Bill which in my judgment is wholly useful. I move that this House do agree with the Commons in their Amendment.
Moved, That this House cloth agree with the Commons in their Amendment.—(The Lord Chancellor.)
THE MARQUESS OF SALISBURY: My Lords, we have listened to the noble and learned Lord on the Woolsack with the greatest interest, and I am sure that the House will feel that he is to be congratulated on the accomplishment of the very difficult task which he had had to perform, for he had to associate his loyalty as a Minister of the Crown with his loyalty as a member of your Lordships' House, and I do not think anybody could have accomplished that difficult feat—for it is a difficult, feat—with more grace than the noble and learned Lord has just displayed. He has shown that, notwithstanding his position as a member of the Government, he does value the dignity of your Lordships' House and its proper treatment by another place. Our Amendments have been accepted, and we are very glad that this is the case. We are convinced, for our part, that they were founded upon such solid. principles that, the only reason why the House of Commons temporarily disagreed with them was that they were not led with that assurance and that firm hand which would have induced them, if they had given a little more consideration to the points, to have agreed with your Lordships in the first instance. They were, however, a little bit like sheep without a shepherd, and consequently they did for the moment, differ from the Amendments, as to which, on more mature consideration. I am certain no doubt could have been entertained. All's well that ends well, so far as these particular Amendments are concerned: and I should like to take this opportunity of saying how greatly indebted we are to the Lord Chancellor for the courteous way in which he has represented the Government all through the discussions upon this Bill.
Several NOBLE LORDS: Hear, hear.
On Question, Motion agreed to.

PUBLIC NOTARIES (ARTICLED CLERKS) BILL. [H.L.]
House in Committee (according to Order): Bill reported without amendment.
SOLICITORS (ARTICLED CLERICS) BILL. [H.L.]
House in Committee (according to Order): Bill reported without amendment.
GRANT OF ADMINISTRATION (BONDS) BILL. [H.L.]
House in Committee (according to Order): Bill reported without amendment.
ADVOCATES AND LAW AGENTS (QUALI- FICATION OF WOMEN) BILL. [H.L.]
Read 3a and passed, and sent to the Commons.
REPRESENTATION OF THE PEOPLE (RETURNING OFFICERS' EXPENSES) BILL.
House in Committee (according to Order): Bill reported without amendment.

THE FINANCIAL POSITION.
Debate on the Motion of Lord FARINGDON to resolve, "That the serious condition of the finances of the country calls for the exercise of the strictest economy in all directions," resumed (according to Order).
VISCOUNT MIDLETON: My Lords, I am afraid that there was some slight misunderstanding at the close of the debate on my noble friend's Motion last Tuesday, and that the noble Viscount opposite (Viscount Milner) rose under the impression that the debate was then to be terminated with his speech. I am sorry that there should have been any misunderstanding, but there were many Peers who desired to take part, and I think your Lordships will agree that had the debate ended with the speech, the roost important speech, of the noble Viscount, we should have been left with some feeling of anxiety as to tie effect which Lord Faringdon's Motion had had upon the Government.
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Looking back at one of the few discussions that we have had since the beginning of the war on the state of the country's finances, I recall that in 1915 the noble Marquess, Lord Lansdowne, replied on behalf of the Government to a very strong indictment, from this side of the House, in the formulation of which Lord St. Aldwyn took part. Lord Lansdowne said—
"The financial situation requires the greatest consideration which Parliament can give."
I do not think I should be misrepresenting what took place last week if I were to say that that was hardly the spirit in which the noble Viscount, Lord Peel, met the observations to which he had to reply. He assumed an almost jaunty air if I may say so with respect., and his language was certainly such as to discourage very largely the idea of retrenchment as being one of the main questions on which we were to dwell. The noble Viscount sad—
"In this case we want to call attention not so much to the necessity for economy, and not so much to the necessity for paying off floating debt and reducing expenditure, as to the need for further activities for the production of wealth on a large scale. That is far more important than the negative question of economies."
VISCOUNT PEEL: There is nothing "jaunty" in that.
VISCOUNT MIDLETON: That was the governing principle of his speech. It is really the principle of the "rake's progress." You are not to make both ends meet by spending less, but, somehow, by getting more. Even the noble Viscount, Lord Milner, who followed him, although he did not take that line, took one that I submit is almost equally dangerous. He said—
"The economy which is most important of all to my mind is the economy of effort, economy of national energy.…"
And he suggested borrowing, for the purposes of development, sums to the extent of£40,000,000 or£50,000,000. Now surely the whole question is summed up in what the Prime Minister in his last Budget speech said. He said that we have a huge expenditure, but he urged that it a healthy expenditure Healthy expenditure of a capital nature must surely he reproductive expenditure.
Several NOBLE LORDS: Hear, hear.
VISCOUNT MIDLETON: I may presently venture to say a word on the subject, and I will show my noble friend that expenditure of the kind he is contemplating has not been reproductive in the past. What we really want the Government to come to grips with is the question of the immense deficit and how long we are to continue to borrow to make up the deficit. Take the figures of the present expenditure as close on£1,500,000,000, as it is estimated at this moment. The noble Lord, Lord Inchcape, whose absence we regret, put the capacity of the country, without a great and prohibitive increase of taxation, at£700,000,000, and Lord Faringdon admitted that he was inclined to raise his own estimate of£500,000,000 to£700,000,000. Since these Estimates amounting to£1,500,000,000 were laid down, the Government have been giving away money with both hands. I believe I am absolutely within the mark when I say that the concessions which were made in a fortnight to the coal mining industry and the railways will together cost the Government and the taxpayer something like£100,000,000. Therefore, you are at this moment actually dealing with a total which, so far as I can see, is greater by£100,000,000 than was anticipated a few weeks ago. In these circumstances I submit that speeches such as those we listened to the other night are not calculated to give the Chancellor of the Exchequer that backing which, more than any other man in the country, he requires at this moment.
Several NOBLE LORDS: Hear, hear.
VISCOUNT MIDLETON: I believe Mr. Chamberlain to have a great deal of courage and an unlimited amount of public spirit. He requires both of these qualities, and we all, I believe, deeply regret when we find subject to attack the man upon whom the country must rest to pull it out of this morass. What I will try to lay down and ask your Lordships to consider are two points. The first is that the Government, whatever they may say, are not economising and are not giving any indication towards economy; secondly, that this policy of development, which may be of great advantage, is proceeding on the wrong lines.
With regard to the first point—economy—I am not going to labour the Reports of
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Committees. Two Committees, of my own knowledge, have been appointed with the object of promoting economy. The first, which was appointed in 1915, presented a unanimous Report. The Chancellor of the Exchequer of the day was in the chair, and the economies proposed by that Committee were cut down by the Cabinet and the House of Commons by more than 70 per cent. No stand was made. Another Committee was appointed to consider the immense increase of Government offices. They made recommendations. Nothing whatever was done. No more good was done to the country than if you called in a physician, who gave you a mixture, and you amused yourself by reading the label. Absolutely nothing followed.
When the noble Viscount ran through some of the items in this remarkable Paper, which I wish every man in the country and every boy in the school was forced to commit to memory, we were told of a few large sums which would be reduced automatically. I would like to ask your Lordships to consider a few of the sums on which nothing whatever has been done. Take the question of Food Control—£2,700,000—largely on staff. We had a remarkable speech six weeks ago in this House front Lord Devonport, and recently an equally remarkable speech has been made by Mr. Runciman. The figures which they gave were sufficient to make anybody pause as to the continuance of the Food Control. I cite only two or three instances. It was pointed out that whereas a good profit to a dealer is½d. in the£on meat imported, the Government were making 2½d., and yet were not apparently covering their expenses. That is where it goes—in staff, which a commercial man will not employ. Take margarine. Margarine fell from 1s. to 8d. per lb. within a few days of the Government giving up control. Commercial men can afford to do what the Government cannot.
Take again the awful fact, if it be true—and it has not been challenged—that wool is at this moment being sold to the trade by the Government, which possesses the monopoly, at 30 per cent. increase, while the wool is needed because every man is paying double for every suit of clothes he buys. And yet the control is continued. I believe that a large part of that£2,700,000 could go to-morrow.
Take shipping—£1,700,000—for staff. I am informed by those who know most

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about shipping that it would be an absolute advantage to the country if the whole Department had been closed down on March 31, or even a month earlier. But we are continuing to pay. Take the Labour Department£30,000,000.—for demobilisation. Have any of your Lordships had experience—you must have had—of going to the Labour Department. I can only speak with courtesy of Sir Stephenson Kent, who left his office to-day. I believe we have all reason to be indebted to him. But can anybody believe that the intricacies of every domestic servant can be followed out by a Public Department wit bout the most awful interlacing of inquiries and replies? I myself have had twenty or thirty communications about a single individual, and some of them have continued for two months after he was demobilised. The attempt which the Government made, not merely in the great trades but in every case, to follow it out through the Labour Department has led to the most extravagant expenditure and the greatest possible demoralisation of individuals, because nothing is so demoralising to an individual as carrying on a long correspondence on matters which ought to be settled by a stroke of the pen. Look at stationery. Four years ago a Committee of which I was a member was debating this question, and the Government were endeavouring to show on what grounds they had brought up the expenditure from£1,000,000 to£1,300,000. The expenditure of the country has never been so high; and what is it to-day—£5,200,000, or four times the amount. Bow can we have economy if that is the example set us by the Government?
There is the Foreign Office, Miscellaneous War Services—£3,500,000. Paris is at this moment one of the most expensive places we have ever seen. I wonder whether any one on the Government Bench will justify the enormous staff that has been sent to Paris, the palaces which have been taken, the Rolls-Royce motors which are employed, and the number of people, even Clown to the girl messengers, who have been equipped with outfits for this purpose. I cannot believe it can be really necessary for the purposes of the Delegation, and it is certainly not the way to impress any one with the desire of the Government for economy. I cannot help feeling—I will only take one moment in mentioning it—when I look at some other items, that we were fortunate that the noble and learned
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Lord on the Woolsack should have come here to occupy what I am afraid I must describe, in view of the figures I am going to quote, as an almost barren honour. I see that the law charges for the Government have arisen from£15,000 to£110,000. I can only congratulate those who represent the Crown under these conditions. The Judges in Ireland remain as they always have done. There is a Judgeship vacant now. I could give instances when Judges in Ireland have only had to work up to one o'clock in three days of the week, and yet the Government, at this moment of great national emergency, are proceeding to fill up the vacancy. I think it was Lord Buckmaster who said the other day that in the old days Government servants travelled with the greatest economy, and that however distinguished a member he was he was given, and I think properly, his first-class fare and one guinea per day for his hotel expenses. What happens now? I see that the excess travel—not the whole travel, but the excess travel—of the Chief Secretary to the Lord Lieutenant of Ireland was£1,000, or at the rate of£3 per day for every day in the year.
I will not trouble your Lordships with further instances, but I would like to say this. A large number of persons have received honours for their activity in spending money and the results which it is supposed to have produced. I should like any member of the Government to give me the name of a single person who, since the beginning of the war, has received promotion or honour for saving money. I do not wish to make a sinister suggestion, but I could give the names of several who have proposed reductions in establishments in some of these temporary offices and have found that their suggestions were very ill-received. Therefore I urge that an absolutely new era should be begun in which the Government should make it clear that there is now time and opportunity for the saving which must be made.
Before I leave this branch of the subject, I would venture to ask this of the noble and learned Lord on the Woolsack. The large donations which are given, like the unemployment donation, have never been voted by the House of Commons. Are they legal? Who has the right to make them without Parliamentary sanction? I know how splendidly the Prime Minister has worked throughout all this trying time, and I yield to nobody in my admira

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tion of his powers of work. But I should like to know, by what right has the Prime Minister, through a telephone message from Paris, or what right even has the War Cabinet itself, to decide that for six months enormous donations may be given at the public expense and without the sanction of Parliament? I think that the time has come for those donations to cease, and I venture to say that by far the greatest stroke of economy that could be made would be for the House of Commons to refuse and revoke these promises made by individual Ministers on their behalf, and before Parliament has been consulted.
But these matters, we are told, are comparatively unimportant compared with development. Development means, if I understand the noble Viscount aright, a great increase of Government trading. Lord Milner made good his suggestion by pointing out what had been done in Egypt, and how, at a moment of great tension of money, Lord Cromer wisely expended money for development which had repaid itself over and over again. I should like to ask the noble Lord to try and detach his mind from the position in Egypt, where the Minister who gave the money was an autocrat as to how it should be spent, and put himself in the position of the Chancellor of the Exchequer here, where he has no control over those who are going to spend the money he provides. What has been the course of Government trading in the past? If your Lordships will bear with me for a few moments I will give you some figures which will astonish you. Take the result of the telephones. The telephones were making a good income before they were taken over by the Government; yet there was a deficit in two years. The profit is now actually less than the royalty that was previously paid to the State. Has the service been improved? One hears an enormous number of complaints. I have myself heard the telephone service anathematised from that Bench, and I have heard poured upon the operators complaints in words which might even have led to the clearing of the Bench of Bishops. There has been absolutely no gain, so far as I know, through the taking over of the telephones by the State.
What is the position with regard to telegraphs? The telegraphs were bought for£10,000,000. In 1911 we were given figures showing that the loss to the country in respect of them was £21,000,000, and
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by now I dare say the loss is £30,000,000. The Committee which inquired into the matter recorded their deep regret that of all the enormous services managed by the Post Office hardly one showed any profits but the letter post. I can only give one solution of that—namely, the exaggerated and absolutely indefensible misuse of both the Post Office telegraphs and the cables by Government Departments. That, I think, explains to a very considerable extent the loss upon them. There is absolutely no check, and it is not only greatly to the disadvantage of the public but it is also to the public loss.
Take another Department, that of National Health. Friendly societies have dealt with that subject without loss, and in the case of the larger societies with considerable profit. In national health it was found that for staff in one part of the country—I am taking very large areas—the expense amounted to£28 per thousand, in another area to£36, in another to£51, and in another to£59 per thousand. No commercial firm could live for a day if their expenses were doubled and trebled at different places without different conditions, and yet the Government have never even discovered that this was going on, and it came as news to them when the Committee pointed out that this form of trading was most extravagant.
What about Woolwich? There was a time when Woolwich was the cheapest source of munitions of war. Is that so now? I leave the noble Lord the Under-Secretary to deal with that, but I very much fear that the time has long passed when that can be said of Woolwich. Look again at the railways. Under private employment they had a surplus of£50,000,000. Since the Government have dealt with them they have added£60,000,000 for war bonus. The eight-hours day costs£15,000,000 and their first offer to railwaymen cost£10,000,000 more. What the course which they have lately accepted will cost I do not know, but a profit of£50,000,000 has been reduced by wages alone to a deficit of£25,000,000 which has to be found from the public purse.
What has happened in regard to the collieries? I cannot spare more time than can be given to putting the matter into a sentence. An estimate, which has not been challenged, of the cost of the concessions already made gives a sum of

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£82,000,000—far more than the profits of collieries. Let it be remembered that the money which was taken from the consumer was to a large extent returned to the Government by the colliery owners in excess profits, and when you abolish excess profits yon abolish that source of revenue, so that the greater part of the£82,000,000 will fall upon the public. That is the result, I fear, of the trading in these two Departments.
Yet we are now asked to contemplate a very much larger development. The noble Viscount opposite rather gloried in the enormous activities at the Slough Motor Depôt, and pointed out that if the large number of vehicles to be repaired were not needed for the Army and Government service they would be offered for the transport service of the country. Hence, what we learn is that another enormous industry under Sir Eric Geddes's Bill, which is to cover transport of almost every description, is to be set up as a Government trading concern. Instead of considering what has occurred in the past and realising that Government trading, as trading, has been a failure, the Government are preparing, for a development which will make future Government trading compared with the present as the Atlantic Ocean is to the Irish Channel. I would urge a reconsideration of this policy on the Government. Depend upon it, not only are you not going to do a profitable thing for the public, but, I submit, you are stifling commercial enterprise, which is the one thing that we ought at present to stimulate. Many of these accounts from a commercial standpoint will not bear the scrutiny of Parliament, and I would plead with the Government that they should decrease Government energy in trading and increase the control which Parliament has hitherto given to them.
Recapitulating these mistakes is not a pleasant task. What we want to see is a way out of the present difficulty. I would ask the Government whether they realise that our first duty is to increase production, and our second to diminish prices. Until you diminish prices you will never stop the upward growth of wages. Are we doing our best to do either? Take the increase of production first. As an instance—and your Lordships will understand that these cases which I am citing do not cover the whole ground, but are merely instances—take what occurred last week. The noble
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Viscount (Lord Milner) told us that for the Slough Motor Depôt they had£15,000,000 worth of spare parts and 100,000 vehicles for repair; that is to say, an average of£150 of spare parts for each vehicle. I ask the Government, Are they not aware of the enormous demand of the trade at this moment for spare parts? It is the same in wool; it is the same with a great majority of the items which make up the untold estimate of£1,000,000,000 of Government stores. Would not the Government consent to sell these stores?—not what they actually require, of course—but to sell as largely as they can to the public, in order to put traders in a position to pursue their industry. I am not thinking only of motor cars but of the whole of trade. Having taken from the country an enormous amount of material of every description, tai long as the Government hold it up, so long will trade he in shackles.
Take the question of wages. Do the Government realise what they have done with unemployment pay? They have absolutely increased unemployment. I spoke of the journeys of the Chief Secretary just now. If the Government would give us one Treasury official, and spend half the sum on his journeys in Ireland which the Chief Secretary has spent, they could save£1,000,000 in a fortnight, by merely going to centres and stopping the influx of men who never try to get employment, and of others who have loft their employment in order to get unemployment pay.
There are many noble Lords who know more than I do on the question of agricultural wages, but I do not believe there is one man in this House who is not aware that the increase which it is now proposed to make in agricultural wages is likely to diminish—and at the earliest moment—the amount of land at present under the plough; and it is absolutely certain to prevent a very large number of demobilised men, who are seeking employment, from obtaining it. I find every day—and I believe it is the experience of everybody—that wages are so high that employers, who cannot be forced to take on the "hands," absolutely refuse. They will allow almost anything to happen rather than take them on at the present rate of wages. The only way in which you can decrease wages is by decreasing prices. I urge the Government to see whether they cannot take some prompt steps in this direction.

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I know that everything which is said by individual members of this House must, of course, be treated as an individual opinion. But I would remind you that the appeal which I am now making has been made by far more potent individuals. The Government have in their possession the Report on the future incidence of charge and of credit, signed by the Governor of the Bank of England, among others. They warned the country unanimously that it is absolutely impossible for the Government to go on borrowing for expenditure which is not reproductive. And why has not the City spoken out more freely on this matter? Do your Lordships or the country think it is because they are insensible to it, or because they have no interest in it? I believe that, if you ask the leading men in the City why it is that they do not conic forward as a body to warn the country more loudly, you would find it is because they know that, if they did so, they would strike a blow at the credit of this country which the credit of this country cannot at this moment stand. And therefore, well knowing that what may be said by those of us who are not in that position cannot carry the same weight, I urge the Government to move in this matter before it is too late.
I venture to make these suggestions to them—and I do not think they will be challenged by any man whose financial experience may be much greater than mine. The first is that they should not be deluded by the excessive deposits at this moment in the banks. Those deposits are largely due to an inflated currency and to sums which have been made out of borrowed money which cannot at present be employed abroad. I suggest to the Government that within a very few months they may find those excessive deposits replaced by a great constriction both of deposits and of credit. The second point I would ask the Government to consider is what is happening in the iron and steel trades at this moment. The cost at which, in coal and wages, production is being carried on is such that it is inevitable that there will be a challenge from America, which may have a most far-reaching effect in stopping the development of trade, which the Government so much desire. If your Lordships would look at The Times newspaper they would find a long row of advertisements, begun in the last few days, from firms in America offering to supply what you may call staple industries, at
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prices which cannot be met in this country. And unless you are going to have such a tariff as we have never dreamt of, our producers must be under-sold. The only way to stop that is to use every power you have to enable them to produce more cheaply, and you can only do that if you give them the advantage of all that you have in your hands, and abolish that control which is stifling and shackling trade at this moment.
I happened to see the speech of my noble friend behind me described in one journal as a "gloomy vaticination." I rather doubt whether in a few months time you may not find that those speeches are replaced by that well known quotation from Proverbs in which it is said—
"Seest thou a man diligent in his business? he shall stand before kings; he shall not stand before mean men."
That is what we are asking for in the first place—namely, that these developments should be carried on with strict economy if they are to produce the results which the Government desire.
If the Government would allow me before I sit down to make one suggestion, it is that they would follow out the proposal—which we understood Lord Milner made on his own initiative without pledging the Government—that there should be a Committee to advise the Government in this matter. We are all familiar in desperate days with the idea of a Committee of Public Safety. I should like to see in these days, which are bad enough financially, a Financial Committee of Public Safety to which the Government should pay attention and which should be given powers and not be merely advisory. I believe that if they will consent to re-establish the Cabinet—not in the sense of bringing an individual Minister there to discuss with them his own proposals but in the sense of a broad check which ten or twelve men of public experience, who have other Departments to consider, may bring to bear on any particular proposal, and who are there constantly—I cannot help thinking that it would have a salutary effect, especially with regard to these proposals for Government trading.
What we want to see is a stoppage of this bureaucratic autonomy which is ruining the country; and I would also hope that we may see the re-establishment of the Treasury control which, by the

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consent of everybody, has become almost a thing of the past. In making these proposals I know that your Lordships have no power to put them into effect. We cannot touch an item of these vast Estimates. Our powers in that respect have passed away. But the country to a large extent looks to your Lordships for guidance, and in the troublous times which are before us I do not think that the Government can afford to ignore suggestions made with the highest desire to do public service, and without the acceptance of which we really are heading towards a catastrophe against which, in every debate in this House, members from all parts of the Chamber have protested, and the fatal results of which we hate clearly foreseen.
THE MARQUESS OF LANSDOWNE: My Lords, my noble friend was good enough to begin his speech by quoting words used by myself in this House in the year 1915, when it appears that, speaking on behalf of the then Government, I said that we regarded the financial situation with grave anxiety. If those words were appropriate then, I wonder what kind of words would be appropriate now?
Several NOBLE LORDS: Hear, hear.
THE MARQUESS OF LANSDOWNE: Since then we have been steadily rolling up debt at the rate of many millions a day, with the result which has been described by the two noble Lords who introduced this subject to your Lordships last week. I wish I could say that this debate, interesting though it has been, has greatly reassured me. We have been cautioned against undue pessimism. I think the noble Viscount, Lord Peel, warned us particularly against similes connected with Precipices. I will avoid them. I think it was my noble friend Lord Milner who said that it was unpatriotic to exaggerate these troubles. I entirely agree with him. But may I go on to say that it seems to me not lets unpatriotic to minimise the facts and to refuse to look in the face circumstances as serious as those which now confront us?
There seems to me to be one especial reason for which it is necessary to deal quite frankly with these questions at the Present moment. To my mind the whole future of this country depends upon the attitude of Labour, and in my opinion no pains should be spared to bring home to
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Labour the whole of the naked, unpleasant facts of the situation which we have to meet. There is, I think, a great danger that Labour may be ill-informed, if not misguided, by people who make it their business to misguide Labour. Nobody I am sure—certainly nobody in this House—will contest the right of Labour to demand an increase of wages commensurate with the fall in the standard of values; and I may go further and say that nobody will dispute the right of Labour to claim wages which will give them an improvement in the standard of life to which they have been accustomed. But there is a risk of these demands, reasonable though they may be, being pressed in a reckless and peremptory manner and with a failure to appreciate the consequences which must result from concessions of this kind. Extensive changes have to come. There is no doubt that there must be a great readjustment of the machinery of the production and distribution of wealth. But surely these changes must take time, and my fear is that if the pace is forced too recklessly we may find ourselves entangled in a very grave catastrophe.
Two facts seem to me to emerge from the discussions which have been proceeding with regard to this question of the reward of Labour. The first is this, that in present circumstances there is a very narrow margin available for distribution. The second is that at this moment business is actually being driven out of the country by the manner in which some of these extreme demands are being pressed. I do not think the fact can be doubted. One sees this kind of thing. In a report from Lancashire, that "the cost of production is outstripping what the overseas markets will pay;" in a report on India, that "if things go on as they are going, British industry may say good-bye to the Indian markets." I think my noble friend touched upon the question of tonnage. We are, I believe, 5,000,000 tons to the bad on the war; and it is notorious that, partly owing to this and partly owing to other causes, a great part of the coal trade which we used to carry on and which formed so important a feature in our industrial system has passed into American hands. One hears the same kind of thing about the steel trade. But I will not press that further.
The other evening Lord Haldane, in the course of a very interesting speech, said something as to the temper in which these

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difficult and delicate questions were regarded by Labour. He said that Labour knew quite well what was meant by the problem of production, and also what was meant by justice as between man and man. My Lords, these problems are extremely difficult, and I wish I was as sure as my noble and learned friend is that they were thoroughly understood by Labour. I think they are thoroughly understood by some of the Labour leaders. Nothing could be more statesmanlike or sensible than the advice given by men like Mr. Clynes and Mr. Thomas. But do the rank and file really understand the problem? I have great doubts. I am very much afraid that throughout the rank and file there still prevail the good old fallacies that the nation has a bottomless purse; that because you were able to rub along during the war you can go on rubbing along now; and that by some ingenious form of redistribution you will be able to provide ample rewards for everybody concerned in industry. I am sure of this, that unless we can prevail upon Labour to take a temperate and judicial view of these questions, we may find ourselves in a position in which the industrial greatness of this country will infallibly disappear. It is for that reason that I think discussions such as the one in which we are engaged may be of the greatest possible value in bringing home to Labour, and to all concerned, the true facts and the real inwardness of the present situation.
I should like to say two or three words with regard to the points taken by Lord D'Abernon in his very interesting and instructive speech. Lord D'Abernon sees quite well that a great part of our troubles is due to the alteration in the standard of value. I think he sees also that the trouble is not going to right itself rapidly; that the change must be gradual; and that while it is operating there will be a chronic difficulty in adjusting wages to the fluctuations in the purchasing power of money. Lord D'Abernon made an interesting suggestion upon that point. He said, "Let us set up some machinery for adjusting wages from time to time to these fluctuations." The suggestion was rather well received by Lord Peel. He said that it was a valuable suggestion, but he went on to say that it was a difficult one to adopt, because by and by prices would fall, and it might then be a more difficult and delicate matter to put down wages to the new and lower level. Then Lord Peel
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said, said with truth, that attempts were already being made to set up machinery of this kind. One of the reasons why I look forward so much to the general adoption of the Whitley scheme is because I believe these Whitley Boards or Commissions will provide an admirable means of bringing about, from time to time, the adjustment of these most difficult and delicate claims.
But, my Lords, the matter will have to be treated upon a systematic and intelligible basis, and I confess that I have been somewhat staggered during the last few days by the announcement referred to, I think, by my noble friend, that the Agricultural Wages Board has decreed a general rise of 6s. 6d. per week in the rate of agricultural wages. Lord Peel told us that His Majesty is Government anticipated a fall in prices. He gave us an estimate. He said that by the end of March the weekly budget of a labourer's family would have fallen by 1s. 10 d., and that by the end of May it would have fallen by 4s. One Department of the State announces this, with high authority, and another Department of the State promulgates an immense rise of wages in one particular industry—a rise which, I presume, can only be justified upon the hypothesis that the cost of living is going to be greater and not less than it was. The matter is a very serious one. An alteration in the rate of agricultural wages will, of course, mean a sympathetic rise in all wages. It will mean that the already distracted farmers will be more distracted than ever. I am afraid it may mean that they will base upon this new concession a further demand to have prices artificially kept up, in order to compensate them for the additional expense of production, and so you will get the old vicious circle—a rise in wages and then a rise in prices, followed by a fresh demand for yet another rise in wages. I dwell upon this because the history of this particular matter seems to be an illustration of what some of us sometimes think we detect—I mean a certain want of harmonious action between the different Departments of the Government.
May I say two or three words upon the general question of expenditure? It continues, and it must continue, I am afraid, to be on an enormous scale. It is obvious that you cannot pass all at once from

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war expenditure to peace expenditure. My noble friend Lord Peel had a good expression in regard to this. He said that when war is over you will always have heavy terminal charges to meet. That is perfectly clear. One is tempted at this moment to ask whether the war really is over. I confess I see some extremely unpleasant indications which suggest to my mind that, far from the war being over, we may be at, the beginning of a new war—a new war, the scope and limits of which we none of us are able to predict; a new war which will oblige this country, which is by nature and tradition a great maritime Power, to undertake huge Continental operations in many different theatres of war and in pursuit of a policy which, so far as I am aware, has not yet been adequately defined by any British statesman.
My noble friend Lord Milner was able to administer some grains of comfort to us the other evening. He told us that the expenditure, which at full war level was (I think he said)£3,000,000,000 a year, had now dropped to£2,600,000,000 a year. He held out hopes that a year later it would go down to£1,500,000,000 a year, and that later on there might be a yet further diminution. That is satisfactory as far as it goes, but I am afraid it means that for a long time to come we shall still have to go on borrowing. I cannot conceive that it should be possible to provide t he enormous sum which will be necessary to meet even these diminishing claims without borrowing. My noble friend Lord Faber had something interesting to say the other evening as to the extent to which the resources of the class upon whose shoulders the largest part of this burden is thrown had already been tapped. I think he said that in many cases something like 12 s. in the£ was already extracted. I am inclined to think my noble friend puts it too low. If he had taken into account to the full local taxation, which is, as we all know, enormously high in many places, and if he had taken into account the provision which a prudent man will make for the payment of Estate Duties when they come due, I suspect that he would have found that we are already very near that 15 s. in the£ to which he thought we should some day be driven. There must be more borrowing, I am afraid; and this means, of course, that our vast Debt has got to become vaster still.
My noble friend the noble Viscount
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dealt with this question of the Debt. I tell him in all sincerity that I shall always be glad to sit at his feet in regard to financial questions, but I must add that in this case he seemed to me to wander away from some good old tenets upon which I have been brought up and which I cannot light-heartedly disregard. One of those is that that nation is best equipped, whether for peace or war, which carries the lightest burden of public debt upon its shoulders. Our Debt is certainly portentous, but my noble friend gave reasons for which he thought it was not necessary for us to be too much perturbed over the fact. He said, in the first place, that a great deal of that Debt is held in this country. I suppose we should, al of us, prefer to owe money to our fellow-citizens rather than to creditors outside, but debt is debt to whomsoever it is owing. Some one—I think it was in an epitaph on a drowned sailor—wrote the words, "The sea is always the sea"; and debt is always debt to whomsoever it is owing.
Then my noble friend made another point which impressed me. He said that a great deal of this money had been spent in improving the equipment of the country—a remunerative outlay. I see in a paper that has been lately published by Mr. Edgar Crammond I do not know whether his authority is a high one or not—that he considers that the result of this enormous expenditure has been to increase the productive power of the country by about 50 per cent. That is a very startling figure, and I only wish that my noble friend, or anyone else, was able to tell us that it is anywhere Lear the mark. The third point which my noble friend made was that the result of this expenditure was to increase the taxable income of the country. That is quite true; but surely it is necessary to keep constantly in one's mind the distinction between national income arising from savings, from the accumulation of wealth, and income arising, as this income does, not from the accumulation of wealth but from the accumulation of debt, which is quite a different thing. I remain deeply of the opinion that this huge Debt is going to be a terrible handicap to this country—
Several NOBLE LORDS: Hear, hear.
THE MARQUESS OF LANSDOWNE: We all hope that we shall never see another great war again. I am a firm believer in the policy of the League of Nations—
Several NOBLE LORDS: Hear, hear.
THE MARQUESS OF LANSDOWNE: I hope that the result of the establishment of the League of Nations may be greatly to diminish the risk of war; but we cannot make our arrangements upon that assumption yet, and, in fact, His Majesty's Government are not making their arrangements on that assumption. I have just been listening to an eloquent speech by the Secretary of State for War explaining the elaborate precautions that he proposes to take for enabling this country to bear its part in any great international struggle that may hereafter befall us. Should that time come, and should we be obliged again to go into the market to borrow, we shall certainly find that the vast National Debt which we have now contracted will seriously add to our difficulties, and make it—I will not say impossible to procure the funds that we want, but impossible to obtain them except on almost prohibitive terms.
It is, I know, easy to make these criticisms and much less easy to suggest what should be clone. May I make one or two suggestions very humbly to the House? In the first place, I hope it will be found possible before we are much older to release this country and the -industries of this country from the restrictions by which they are now shackled and embarrassed. I hope that some of us may live to see the end of all these "controls" and "guarantees" and "blockades." I was greatly comforted by a statement made the other day by Mr. Austen Chamberlain, the Chancellor of the Exchequer. This is what he said—
"The object of His Majesty's Government is to get rid of control and Government interference as quickly as it is safe and possible to do so."
Of course we all realise that the process of emancipation must be a gradual one. Mr. Chamberlain added—and I think this pleased me even more—
"Our first losses should be cut, and we should get to the natural prices as soon as possible."
Those, I venture to think, are sound principles, and I hope they represent the policy which His Majesty's Government intend to make their own. In the next place, if you cannot stop borrowing, and I do not think you can, can you not stop spending, or at any rate spending wastefully? Lord Midleton dealt so fully with that point that I need not say much about
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it. But that there has been wasteful and reckless expenditure nobody can have the slightest doubt. To my mind one of the most conspicuous cases of all is the extravagance of unemployed pay. We have had it in this House from the Minister of Agriculture that a man can remain idle for twenty-six weeks—half a year—and be in receipt of pay equal to, or perhaps in some cases exceeding, what he might have earned had he taken on honest employment. There is no doubt that all over the country there are at this moment men and women who could get work if they wanted to get it, and who do not get work because they receive for idling more than they could earn if they were bearing their share in the work of the country.
I think there are one or two noble Lords from Ireland in the House. They will bear me out when I say that the most outrageous scandal of all was the manner in which this unemployed pay was doled out in Ireland. I have heard no two opinions on that point. Men either refuse to work, or leave their work, in order to get unemployed pay. I heard the other day of a man, a casual labourer, who was employed for a few days on mending a broken fence. His employer very properly provided him with an insurance ticket. Armed with this insurance ticket when the mending of the fence had been finished he went off, and became at once the recipient of a stipend which he never could have earned in the open market.
Surely of all moments this is not the moment when this kind of extravagance should be allowed. There is complaint all over the country that you cannot get men. Any of your Lordships who try to get work done by contract in the country will receive the same answer, "We cannot take the contract because we cannot be sure of getting men to carry out the work." One is always tempted to mention things which happen to oneself. Let me mention this case. Not long ago a Government Department swooped down upon my home and requisitioned a great quantity of trees. I was sorry to part with them, but they had to go. It was part of the contract that they were to be removed by Christmas last. The trees are still there, or nearly all of them. The responsible officials are extremely civil, throw themselves upon the mercy of the court, and

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explain that it cannot be done because there are no men to do it. Is it not inconceivable that that should be the case at a moment when all over the country there are men drawing unemployed pay for doing nothing at all?
One hardly opens a newspaper without noticing some fresh manifestation of this disease—for I think it is a disease. Sometimes it is the erection of a building for 12,000 clerks somewhere in the suburbs, or it may be a huge telephone scheme for London, or national restaurants, or the creation of a. new "go-as-you-please" Department to increase the number (some people think the superfluous number) of those with which we are already blessed; and I suppose we may hear any day that the railways are going to be nationalised, or that His Majesty's Government are going, light-heartedly, to undertake the construction of the Channel Tunnel.
I do not desire to press the point further, because I believe that in theory we are really all of us of one mind. This debate will have done some good if it helps, ever so little, to bring back counsels of prudence and economy to a country which has been utterly debauched by five years of profligate expenditure.
THE MARQUESS OF CREWE: My Lords, there was no feature in the impressive speech of Lord Faringdon in opening this debate which I think impressed the House more than his admission that since he spoke on this subject last year he had seen reason to modify the opinions he then held. I may say, in passing, that the opinions which he expressed last year were in some degree in conflict with those of Lord Inchcape. I should like to support what was said by the noble Viscount behind me in uttering an expression of regret that the state of Lord Inchcape's health has necessitated his absence from the House for some time, and expressing the hope that he nay soon be completely restored.
The noble Viscount behind me has been one of the principal professors of economy in your Lordships' House for a long time past; and we are able to say that, whether noble Lords have in the past taken a specially optimistic view of the position of the country, or whether, like my noble friend, they have been in the habit of uttering a warning note, on this occasion wit bout exception every noble Lord who
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has spoken has used the same tone of doubt and warning, and has called the serious attention of His Majesty's Government to the position. This, of course, has meant that the Government have had to be, or appeared to be, on the defensive in the speeches they have made.
It has been pointed out by many of my noble friends that there has been to some extent an excessive use of the national credit, and that in particular instances there has been waste in actual expenditure. I think that it is a fairly safe rule to take that what applies to private credit and private economy may be in the main taken to apply to public economy and also to public credit. On the question of borrowing, on which much has been said by previous speakers, it is, I think, necessary to utter a caution that while borrowing ought not to be undertaken for remunerative purposes, yet even for remunerative objects it is necessary to bear in mind in particular how soon a return is likely to be realised from the expenditure which is made. There have been hundreds of individuals and hundreds of firms who have engaged in expenditure which, if they had only been able to hold on, would have proved sufficiently remunerative, but because they have not been able to keep going during the interval they have found their way into the Bankruptcy Court. We are not going to find our way into the Bankruptcy Court, but we have to consider that even in engaging in expenditure which we may call ultimately remunerative the country has to live meanwhile, and we must not hamper its resources too much during that interval.
My noble friend Lord Haldane spoke in terms with which I personally greatly sympathised upon the necessity of not economising too greatly on matters of education. There I am entirely with him, and even though it may be true that it may be a number of years—possibly a whole generation—before you can see the reward of your policy of education in terms of money, yet I believe that the return is so sure that this is one of the objects for which borrowing may be regarded as legitimate enough. Or take, again, the question of afforestation. Afforestation can hardly be made remunerative to the man who undertakes it on a large scale, unless indeed he does so when he is very young and lives to a considerable age.

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There again, if national afforestation is desirable, it is one of the objects to which borrowing might legitimately be applied. But there is a tendency and a temptation to borrow for purposes which cannot he considered even as remunerative as those which I have mentioned, and it is a tendency which I am certain ought to be severely checked.
On the last occasion Lord Buckmaster made allusion to the national wealth, and to the diminution in that wealth due to the war. It may, perhaps, be said that calculations regarding the whole estimated national wealth are of greater interest to those who pursue the study of statistics than as a guide to the practical conduct of daily life. But my noble and learned friend gave figures which formed, I think, a useful illustration in order to bring home to the House and to the public the due sense of what the loss by the war means. The figures involved—varying estimates were given of from£15,000,000,000 to£19,000,000,000—as representing the former national wealth are almost astronomical in their magnitude, and Lord Milner was not prepared to admit that the diminution of the wealth of the nation as a whole was anything like as great as was stated by my noble friend. The noble Viscount admitted, as of course he was bound to admit, that the disappearance of our foreign investments could represent nothing but a dead loss calculable in terms of this diminution, but he did not include in this estimate various other matters to some of which allusion has been made by the noble Viscount who resumed the debate to-day. Lord Milner did not mention the most grave matter from the point of view of national wealth, the diminution of our shipping—since, as we know, a considerable part of what was spoken of as our invisible exports was due to the command which we had of the carrying trade of the world and the freights thus earned, and our losses, as the noble Marquess has said, have been enormous.
But most of all, as it seems to me, the noble Viscount erred when he seemed to imply, because the debt was so largely held at home, that thereby it ought not to be regarded as a diminution of the national wealth. It surely stands to reason as the noble Marquess has pointed out, that pro tanto the interest which has to be paid on that debt every year diminishes the national wealth by diminishing the
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power of saving. All the accumulations of the past, in particular the foreign investments—and of course to a great extent the shipping—were the direct fruit of the annual savings of previous years, and if the country is reduced to a state in which those savings cannot be made, even though it is brought about by a different distribution of wealth (which may be in itself in some respects desirable), it is impossible to deny that the country is so much the poorer. Surely there is a fallacy involved in this belief that debt which is held at home is not really debt. There is no quotation more familiar than that of Dr. Johnson's, spoken of the Islanders in the West who sustained a precarious existence by taking in each other's washing; and if internal debt is not to be taken into account, you would only have to capitalise the two sums representing those laundry transactions and treat the total amount as representing the national wealth of that particular island. Or, because Germany has issued over£100,000,000 of paper currency—because the German debt is mainly contracted at home—you might on that basis argue that the national wealth of Germany has been so slightly diminished that you could hope to produce by way of indemnity stuns which I fear there is little prospect of any country which has been at war with Germany ever seeing.
I do not desire to touch on the questions raised by Lord D'Abernon, still less to engage in a controversy whether the future of this country is to be conducted on the lines of a return to a gold currency, or of a paper currency backed by a gold reserve held in bullion, though not in coin—a solution which, so far as my own opinion is worth anything, I should have thought was the one to which we might most hopefully look forward. Then there is the third view held, as we know, by some hold spirits who would dispense with gold altogether and would rely upon national and personal credit alone for the support of a paper currency. That last solution is not altogether unlike that which was adopted by Germany during the war—Germany, as we know, having worked by the creation of a certain number of loan banks, whose notes were treated, for the purposes of credit, as supplying a security equal to gold.
The other charge that has been brought, as we know, is one of waste and extravagance in certain Departments, upon which

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so much has been said that I do not desire to add to it. But I cannot help feeling that, with every intention on their part to create an impression in the country that they realise the gravity of the situation, His Majesty's Government have not somehow succeeded in convincing the country that they are prepared to take determined steps to correct it. That, I think, cannot be disputed. The qualities of the Victorian age are sometimes lightly spoken of, but if we could only reintroduce into the Government, and make the country believe that it had been reintroduced, something of that spirit of Victorian economy—I will not say the economy of Joseph Hume but, at any rate, the economy of Mr. Gladstone—if there could be some recrudescence of that stern and sometimes unpalatable economy, I am certain that the country would be grateful at once and still more grateful in the long run.
I have no wish to dwell on any of the special instances of what is believed to be Government extravagance, many of which have been mentioned in the course of the debate. But again I cannot help saying that the manner and tone in which the Estimates for the vast sums alleged to be necessary for the defence forces of the country have been put forward have done but little to produce in the minds of the country the conviction that the Government have economy at heart.
The noble Marquess dwelt forcibly on the payment for unemployment. I wonder whether His Majesty's Government realise the profound discontent on the subject of this unemployment payment which, I believe, exists all over the country in the minds of everybody except those who are receiving it. It so happens that I am able to hear of much of what is felt throughout the agricultural community. As the noble Marquess has said, the discontent there in relation to this particular subject is profound. But I do not for a moment say or believe that it is confined to that particular class, although I happen to know most of it. I believe it is widespread, and it is, I confess, to me astonishing, as the noble Viscount said, that no reasoned explanation has been made of the extension for another long period of this form of benefit, which, it must be evident, goes in a certain percentage of cases to altogether wrong hands, although what the exact percentage may be we have no means of knowing. But that it is considerable I
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firmly believe; because, if it were not so, it would be impossible that so many instances could be produced as are forthcoming from this and that trade of the monstrous harm which is being done by this system.
The noble Viscount, Lord Peel, apologised in the course of his speech for not being able to give certain figures, on the ground that it would not do for him in any way to anticipate the statement of the Chancellor of the Exchequer, who, by immemorial custom (which I think was the phrase he used) was entitled to shroud in the deepest mystery everything connected with the forthcoming Budget. Well, we have ceased to care very much for "immemorial customs." Many of them have gone by the board; and this might in this particular instance—though, of course, it is evident that the Chancellor of the Exchequer cannot and ought not to give any information which would enable traders to anticipate the effects of his Budget proposals—nobody would suppose that, if the Chancellor of the Exchequer proposed either to increase or to diminish the tax upon spirits, or dried fruits, or any other commodity, that he would make an announcement beforehand.
Yet I would urge what I have said before in this place—namely, that as things now exist the country is in my judgment entitled to something in the nature of what is called a continuous audit of its affairs. On the scale on which expenditure now exists I do not think that it is possible for the country to be content with a bare annual statement; and I cannot help feeling that very much more information might have been given each year by the Treasury as to the state of affairs in finance at the moment which would have enabled us to know, far better than we have in fact been able to know, how the country really stands in the matter of credit and debit. I remember that, so long ago as September, 1916, M. Ribot said that the position of the Finance Ministers in Europe after the war would be almost as difficult as that of those who were then responsible for finance. In my opinion the French statesman greatly understated the case. We all of its felt that Mr. Bonar Law had a most difficult task to carry through, but at any rate the country could see what the necessity of holding on at any cost was, and it was prepared to set its teeth. Now I think the country is more likely to gnash its

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teeth. Therefore I think that Mr. Chamberlain, in his control of the national finances, is an object demanding far greater sympathy than either of his predecessors who were responsible for the conduct of the war at the Treasury—or indeed, I may say, than any of the three. And when we consider that it is a£1,500,000,000 Budget which Mr. Chamberlain will have to present, our sympathy certainly does not tend to diminish.
The noble Viscount, Lord Milner, made one statement in the course of his speech to which I desire to call attention. In speaking of the expenditure which might be looked for in coming years, among various items which ought to be regarded as temporary, and which, therefore, made the figures in fact better than they appeared on the surface, he mentioned the bread subsidy of about£50,000,000 a year, and observed that this at any rate ought not to be regarded as a permanent charge. I do not know whether that statement of the noble Viscount was generally remarked. It was an obiter dictum, and I do not know whether it attracted public notice; but if it did, it would have spread most profound consternation among the agricultural community, because it is quite evident that if the corn production policy is to be continued at all, the subsidy, or guarantee, or payment, or whatever form it may take to the farmers, will have to continue. When the time comes that the price of wheat falls below the sum at which it can be produced at a fair profit for the farmer, one of two things must happen. Either you must continue to guarantee him the difference between the two prices, with a reasonable profit to himself; or you must cease to compel him to grow wheat. That is surely evident; and the cessation of this subsidy will unquestionably be the signal for the going back to grass of—I will not pretend to say off-hand, but I should put it at five-sixths if not nine-tenths of the land which has been ploughed within the last three years. Therefore, without desiring to argue this particular question, I feel bound on this financial debate to mention the fact that in my judgment this particular£50,000,000 cannot be regarded as much of an asset on the credit side for future years. I have no doubt that as a matter of fact the individual Ministers—and certainly the Chancellor of the Exchequer—realise the gravity of the situation, and I am in great hopes that Mr. Chamberlain
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will prove himself to be a custodian of the old Treasury traditions, and that he will be able to impress the force of those traditions—which has been, perhaps, not realised for a good many years by the Department in the manner in which it was twenty-five or thirty years ago—upon some of his colleagues who do not set the same value on it that he does.
The noble Viscount, Lord Peel—as the noble Marquess observed—objected to a quotation which was made of an opinion that we were somewhere near the edge of a precipice. I am bound to say that I think we are walking on a very narrow ridge indeed, and that it will be necessary to keep a very steady foot and a very clear head if we are to regain that power of balancing which we have lost to a great extent during the war, and which must be regained if the country is to reach the position which it held five years ago.
LORD EMMOTT: My Lords, every noble Lord who has preceded me this afternoon—and all of them, as it happens, have held high office in the Government of this country—has spoken with great gravity and earnestness of the serious position in which we find ourselves. I think I may say that this was the case with every noble Lord who spoke a week ago when this debate was initiated, and in that remark I include the members of the Government, for although they naturally deprecated undue pessimism and very naturally criticised some of the figures and arguments which were put forward, yet in reading what they said—for I had not the good fortune to be present—I felt that there was underlying all their observations a desire not to say anything which, being read by the mass of the people, would lead them to suppose that the present situation was other than a very serious one.
There were one or two observations of Lord Milner to which I should like to refer for a moment or two. I must say that I agree with him that the National Debt, so far as it is held in this country, cannot be treated as a deduction from the total national income, but all the same the interest on the National Debt is in effect a first charge upon the industry of the country, and hampers us in competition with our trade competitors, except in so far as they are also shackled with similar burdens. So far as I am concerned, my

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Lords, figures about the total national wealth estimated in capital never interest me very much. I think such figures applied to industries are valuable and interesting, but calculations of the total amount of the capital wealth of the nation are generally made upon the basis of so many years' purchase of certain kinds of national wealth; and in that form the really vital thing seems to me to be the total national income, and not the total national capital. Dealing with the national income and the national Estimates for this year, I should like to say that I am not altogether satisfied with the defence made of the Civil Service Estimates by Lord Milner. I believe these Estimates conceal the fact that there is great expenditure still upon munitions, for which there is only a token vote, which is arrived at on the supposition that very great sums will be received for the various articles t hat are being sold.
I notice that my right hon. friend Mr. Winston Churchill, in another place last night, spoke about an expenditure in the Array Estimates of£39,000,000 in bringing to an end certain munition works, and of another£7,000,000 for carrying out and completing other munition works, which it was found to be more economical not to scrap at once. I do not know whether there is, in addition to that expenditure, also a great sum spent under the head of the Ministry of Munitions in the Civil Service Estimates. If so, there is a double expenditure on that account. The most gratifying thing that the noble Viscount said was that in the first year of peace the Civil Service Estimates of£495,000,000 were likely to be reduced to half or less than half. A sum of about one-half of£495,000,000 is, of course,£250,000,000, and one wonders where the economies are to come from. The£87,000,000 loans to Allies is, of course, plain enough; so also is the£50,000,000 for bread subsidies. One hopes to get rid of them, although I am not sure whether we are going to get rid of the bread subsidies. But where is the other£113,000,000 to come from? Is it partly from the£7,000,000 put down for the purchase of housing materials. That, I take it, is the beginning of a huge Government expenditure upon a great scheme of housing, and therefore is likely to be recurrent for years to come. Is it to be on the£31,000,000 for Civil Demobilisation and Resettlement? I understand that that is the fund from which the present unemployment pay comes. If so, the
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rate at which they are spending that money at present is not£30,000,000 but£60,000,000 a year. That scheme, which was launched immediately before the General Election, is announced by the Government itself to be subject to very great abuse. It is certainly encouraging idleness among many people, and it will require a great deal of courage on the part of the Government to do away with it entirely. I confess that. I should be very glad to see some of that courage displayed.
The discovery of the silver mines of Potosi which led to economic upset at the beginning of the seventeenth century led also. I believe, to the creation of the bad old Poor Law, which lasted for two centuries. It would be a strange thing if the economic upset of this war should lead to another kind of subsidy, which would, after great trouble, have to be done away with years hence. I am perfectly certain that t he Government, like all sensible men, desire retrenchment just as much as we do, but I do not know that they have hitherto given us much hope that their desires are going to be effective. The recent crisis with regard to the miners and transport men was, I think, as a crisis, extremely well handled; but the fact remains, as the noble Viscount said at the beginning of the debate this afternoon, that the net result of the settlement means that another£100,000,000 has to be paid to the workers in those two industries, and that this money must be found, either directly by each one of us in our several capacities, or indirectly through the Chancellor of the Exchequer.
In these circumstances it is all the more necessary that we should understand as soon as possible what the total national income is going to be, and what share of that national income is required for taxation, and what is left for division between Capital and Labour, and, above all, what margin of saving there is going to be; because it is vital and essential that there should be a margin for saving. Then after that there is another most important matter. We shall want to know as soon as possible—and it becomes more urgent every day that we should know soon—how we are going to fare in competition with other countries, our trade rivals in the past, but against whom in the past we have been able to conduct a fairly successful competition. In those circumstances I welcome very warmly the cordial sympathy shown by Lord Milner a week

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ago to the suggestion that there should be appointed a Committee of financial experts, trained and impartial economists, who should look into the matter and advise the Government as soon as possible about this question. I hope that before the close of this debate we shall have more than sympathy, and a definite promise from the Government that this Committee is going to be appointed.
I am afraid that when I last spoke in your Lordships' House I struck a pessimistic note. After all, I have been interested more or less in a trade which competes in every market in the world and which is now suffering under heavy depression. Had I been master of a great monopoly which, protected in the home market under present conditions, could practically charge what it liked, I dare say I should have taken a more rosy view of things, but at any rate I am perfectly ready to give reasons for the faith, or lack of faith, which is in me. When I spoke last I gave reasons for my belief that the amount of profit paid to the wealthier classes, after excess profits had been deducted, in the last year or two was extremely small and more than counterbalanced by the present rate of taxation—that is to say, that the net income of the wealthier classes is. I believe, smaller than it was before the war began. I gave reasons for that, with which I will not trouble your Lordships again.
Since then I have had the opportunity of reading and of studying—it is worth study—a pamphlet written by that eminent statistician, Mr. Bowley, called "The Division of the Products of Industry," in which he examines, with a great wealth of figure and argument, the figures of certain prewar years. In regard to the figures of 1911 he shows that the gross amount of unearned income—including, in this case, the larger salaries as well as the unearned income—which could by any stretch of the imagination be diverted from capitalists to labour, or in any other way, was£550,000,000. Out of that,£60,000,000 went in those days in taxation, and£230,000,000 was saved at home in addition to what was saved out of the income of foreign investments, leaving the sum of from£200,000,000 to£250,000,000 as the maximum which could, by any stretch of the imagination, be transferred from the wealthier to the less wealthy classes.
This figure, I notice, coincides with the figure used by my noble friend Lord Buck
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master in his speech a week ago. It is a strange and significant thing that the extra amount paid during this war to the coal miners and transport workers alone—representing one-sixth of the total number of workers in this country—is equivalent to a similar amount of from£200,000,000 to£250,000,000. I am not sure, indeed, that it is not fully£250,000,000. The total advances in wages that have been made to workers during the war are calculated by some authorities at£800,000,000 and by others at£1,200,000,000. Now the importance of these figures is in the fact that the revenue from Income Tax and Super-Tax last year was not£60,000,000, as it was in 1911, but£291,000,000. I believe—and I gave reasons for the belief when I spoke last in your Lordships' House—that the total amount of extra income going to the wealthier classes during the last year or two has been only£100,000,000 in the gross, but even if it were£200,000,000 it is clear that the whole sum has already gone in extra taxation.
We all know that the cost of living has been enhanced, and although I dare say a great many wealthy people have cut down their establishments—I know they have—still these establishments cost them a good deal more than before for the mere necessaries of living, and, seeing that nearly all the saving in this country comes from this class, the wealthier class, it is becoming a very vital and serious matter whether there is any "saving margin" left in present conditions. Therefore we do want at the earliest possible moment to see whether the Government demands will leave any margin for that purpose. In order to find this out, I earnestly beg for a definite promise of a Committee to look into the questions referred to by Lord Milner.
Several NOBLE LORDS: Hear, hear.
LORD EMMOTT: The latest figures published are already two years old, seeing that another financial year has just ended, but the Inland Revenue authorities must have later figures, which could very soon be collated, grasped, examined and reported upon by such a Committee as Lord Milner suggested. The sooner that Committee can begin its labours the better, because the sooner it will report. The information is necessary both to show Income Tax-payers of the wealthier class the necessity for economy and saving from

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the national point of view, and also to show the workers that, unless we can produce more and can sell what we do produce in competition with other countries, we cannot make ends meet or pay for the imports that are necessary for our comfort and convenience. This country will not be made "fit for heroes to live in" simply by perorations. It will only be so made by resolutely facing the future, and by all classes co-operating in hard work and thrift to build up the nation's industry once more and to replace the capital that has been destroyed.
Before I sit down, and connected with this matter of building up our industry again, I want to say a few words on the question of restrictions, both export and import restrictions. A good deal has been said by some of your Lordships about "controls." I have looked into that matter recently—I have had the opportunity of doing so—and I must say that I think the Government have made a great and successful effort to get rid of a large number of "controls," and in regard to that matter they have gone a very long way; but there remains the question of export and import restrictions. It is perfectly obvious that if our commercial classes are to face the future they must know where they stand. They cannot know where they stand until they can make their contracts knowing they can fulfil them. They cannot make contracts knowing that they can fulfil them so long as they are hampered by export and import restrictions. I have been too long connected with export restrictions not to know the damage that, has been done by, them.
From the British point of view the restriction on manufactured goods to what we know as "List C" countries, neutrals adjacent to Germany, should be withdrawn. What harm can be done now by allowing manufactured goods to go to those countries, even if some went through to Germany, or even with the view of some being allowed to go through to Germany? Even if that larger measure is impossible—and I know it is impossible to arrange these matters in two or three days with our Allies—cannot traders be allowed to complete their old contracts, many of which have been in existence for years and which were stopped by that fatal embargo I imposed in October, 1917—an embargo against which I protested in private and
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never cease to protest. Why cannot these contracts, at any rate, be completed and our traders be allowed to send goods which are waiting and have been waiting for a year or two ready to be sent to these countries? Our competitors are invading the markets and they can get orders where we cannot. Our traders cannot ask for orders when they have not delivered their old contracts and cannot get certificates from the controlling authorities in those countries to enable them to complete the orders. Our traders cannot complete them, and so naturally American sellers can go and say "We will take orders; we shall be able to send you the materials you want"—of course, expecting that Peace will be made before the time comes when that promise should be implemented. So much for export restrictions.
Now; let me say a word or two about import restrictions. These came into being owing to the tremendous difficulties in which we were at one time placed in regard to shipping. It was absolutely essential and necessary to cut down all imports that we could possibly do without, and naturally His Majesty's Government cut down the imports of manufactured goods to a very large extent. After the Armistice was signed the Board of Trade made an heroic effort to get rid of a great many of these import restrictions by giving general licences for the import of goods which were prohibited. Perhaps they went too far. I know that some of the officials of my old Department thought they were going too far at the time. At any rate what they did led to a considerable outcry on the part of some of the trades that had been protected, and, this outcry having occurred, the general licences were withdrawn without the position having been examined in detail. It is rather a pity that His Majesty's Government had to plunge from one policy to another in that way. It. is this kind of thing which leads to uncertainty and trouble.
I am not going to trouble you with any account of my having resigned from the Consultative Council that was to have considered this question of import restrictions in detail. I have been treated by His Majesty's Government, by every member of it, and in particular by Sir Albert Stanley, the President of the Board of Trade, with the greatest courtesy and consideration, and I am not going to say out bitter word because I do not feel in any way bitter about the matter I would

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only observe that if there was any misunderstanding I do not think I am to blame for it. Whether the Council misunderstood what the Board of Trade's policy was, or whether the Board of Trade misunderstood how extraordinarily difficult the problem was that they had to deal with and did not take steps to deal with it in the best way, I really am quite unable to say. But on the broad question, which does really matter, I want to say a word or two.
An embargo, or prohibition, subject to licence on import is, of course, an unusual and must be a temporary proceeding. Russia, America, and Spain, which before the war had the highest import tariffs of any country in the world, never resorted to an embargo on imports, and therefore it is obvious that in peace time it is quite impossible to maintain for long an absolute embargo or prohibition subject to licence on imports. Diplomatic reasons alone would make it impossible. It is useless to shut our eyes to the fact that these restrictions operate against our Allies alone, and yet it is obvious also that it is perfectly fair to give trades, which have been diverted from peace work to war work, time to turn back before the market is flooded by the import of goods from other countries. That is equally obvious. But the longer this embargo or prohibition lasts the more numerous are the new claims for protection made by various industries, and the more vehement becomes the outcry of interested people against any relaxation. If they had their way these protected trades will not agree to any relaxation on September 1, and they will not agree to it until the Greek Kalends.
It seems to me, sometimes, as if the whole manhood of this country had gone out to fight, and that there was no real manliness left in the trade of the country. People have become so used to control that they seem to regret its being taken away. I hope that this mood will soon alter. In the second place, granted that there must be a moratorium in some trades—it would be only fair and right in some cases—it is rather hard on employers, and particularly on workers, in other industries which are very depressed at the present time, industries which are dependent on foreign trade, that they should be asked to pay more for their soap, matches, pottery, glass, &c., in order that certain other trades may be protected in this country. It is really a most undesirable position,
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and it adds to the hardness of their lot that they should have to pay more although they are unemployed and relatively impoverished.
In the last place I do not know whether the Government quite understand, or anybody who has not looked into this question understands, how impossible it is to conduct a system of license fairly, as between individuals, and also as between nations. In the case of any commodity, of which you are allowing a certain proportion of imports to come in, you have to fix a certain year, or at any rate the tendency is to fix a certain year, and say "We will allow 25 per cent. or 50 per cent. of what was imported during this standard year to beimported now." That means that youstereotype the traders who did the trade of that year. Some traders did more than the average in that year, and some did less. The man who happened to do more in your standard year, of course, benefits, and gets an unfair advantage. The man who did less is at an unfair disadvantage. I found this out in the War Trade Department in regard to export licences, and towards the end of the war we were dropping altogether this consideration because we found it worked so unfairly, and because it shut out enterprise. The new man could not get in, and it is the new and enterprising man who does so much to get our business. He is shut out by this system of licensing.
I need not pursue the question of nations because it is perfectly obvious. Canada has been complaining, and justly complaining, of this fixing of a standard year and saying that so much per cent. of the imports for that year shall come in. Say it is the year 1916, when Canada was doing all she could to help us, when her trade was upset and interfered with, when she was not able to send imports of the ordinary kind to us, I think it is grossly unfair that Canada, or any other of our Dominions, should be shut out in this competition owing to a war year being chosen as the standard year. Canada complained, and the result is that the War Cabinet have decided that there must be no restriction against imports en manufactured goods from the British Empire without the express consent of the War Cabinet itself.
Take another case. I heard of a complaint the other day from Belgium that it is unfair we should allow such a large proportion of matches coming in to be sent from Norway and Sweden. It is

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unfair, if Belgium can make matches, as Belgium was our Ally while Norway and Sweden were neutral. You cannot work this licensing system fairly, and the sooner we can get rid of it and replace it by something better, the better it will be for all concerned. I hope that this unusual and obviously temporary proceeding may be done away with as soon as possible. I have only another word in conclusion. I lay emphasis on this question—the restriction of our trade, whether import or export, because we are told, and quite properly told, that our production must be increased. I want to point out that in some trades it is not of much use increasing production because you cannot find any purchasers for the goods that are produced. I hope that this is a temporary condition of things, but I must point out that orders will not come in full measure, either at, home or abroad, so long as our trade is shackled by these restrictions, and therefore do let us get rid of our restrictions as soon as possible.
VISCOUNT GOSCHEN: My Lords, the financial aspect of this question has been so fully discussed already that I do not wish to touch upon it. I merely want to support two suggestions which have been made during this debate. The first is that which was made by the noble Lord who has just spoken—that a Committee should be appointed to inquire into the maximum bearing capacity of this country in taxation. I believe that a Committee of this sort would be of great advantage, for two reasons. First of all it would collect a great amount of valuable information; and, secondly—what I believe would be equally important—it would shed light on what is to a great many people a most obscure subject, that of finance.
This brings me to the second suggestion which I wish to support, and which I think was rather implied by the noble Marquess, Lord Lansdowne. What is really wanted also is an educational propaganda in the country with regard to finance. I am quite sure that if there is a want of trust in the Government—a want of trust as to whether their financial policy rests upon a sufficiently sound basis to invite the confidence of others—this want of trust arises not from any wilful misunderstanding on the part of the people but from unwilling ignorance. If there is a subject on which the majority of the people are ignorant it
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is the subject of finance and the financial condition of the country. I believe that until you educate them upon this matter you will never get real economy among all classes. There are a great many people who really do not understand how the war has been paid for. They do not know whether the war has been paid out of capital, out of income, or out of loan. Perhaps I might say, in passing, that there has been one great advantage in the increased number of people who have been investing in loans, and it is this. I hope that we will get an increased number of people who, through lending their money to the Government, will be anxious to see that that money is properly and wisely spent.
I am sure also that there is a very large number of people who do not know how the incidence of taxation falls in this country. As has already been pointed out, you have what I believe to be a state of ignorance in the country with regard to these points, just at the very time when the industrial world is asking for a large expenditure of money on increased pay and better conditions all round, all of which will take large sums. If there is to be a wider distribution of wealth, there must be a wider distribution of the responsibility of citizenship, and if you are going to have a larger number of people demanding an increasing improvement in their economic position, you want that increased number of people to see that the economic strength of the country is at the same time increasing. The noble Lord who last spoke referred to the necessity for an increase in production. The noble Marquess, Lord Lansdowne, said that he was not quite sure whether those who are engaged in industry really understood the financial condition of industry and the basis upon which it rests. If I may say so, I agree with him. They may realise that exports pay for imports, but I wonder whether there are really very many who understand thoroughly what invisible exports are. Are there many who realise that during this war we have mobilised a large block of foreign investments, and in that way have eaten into our invisible exports, which is one of our strong lines of defence, and that if we are going to make this good it will be necessary that we increase production, and that we shall have to depend in future more upon our own efforts than upon foreign investments?
I should like also to support what was said by Lord Emmott, that the restrictions

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which are now being placed on trade should be eased as soon as possible. I realise to the full the difficulties that there are in the way, but our traders have energy, enterprise, and ability, and they have the means, and what they ask for at the present moment is a freer hand in order that they may put their energies and ability to the fullest possible advantage. Quite lately I was re-reading some words which were written in 1885 by my father before he was Chancellor of the Exchequer, and I was, if I may say so, very interested to see how the warnings which he gave in those days and the prophesies which he made have been justified at the present moment. There was one essay which he wrote upon "Laisser faire and Government interference," in which he was examining the changing relations between Government interference and individual liberty. There is nothing so wearisome as quotations, but perhaps I might quote one from this essay which sums up what I have been endeavouring to say. He said—
"Let us pay the cost when national duty or national sentiment requires it, but let us know that we pay, and accept the effect with a full and conscious knowledge of the consequences."
I believe that this is as true at the present day as it was then. What we desire to know is how we are paying for the war, and what we want the people to do is to realise the consequences which the payment of this money will impose upon the country.
EARL BRASSEY: My Lords, I do not wish at this stage of the evening to detain your Lordships for many moments, as most of what I desire to say has been said, and better said, by other speakers. But I wish to enforce this point. If the country is to meet the burdens about which so much has been said during the course of this debate, the trade and industry of the country must be conducted at a profit and not at the expense of the State. The noble Viscount who opened the discussion this afternoon, and other speakers, alluded to the railways, to the coal-mining industry, and to agriculture. The effect of the increase in wages on the railways and in coal-mining, and that proposed but not yet, I am glad to say, sanctioned as regards agriculture, will be that all those industries will work at a loss, and if they are to be carried on at the present scale must be carried on at the expense of the community.
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The noble Lord opposite thought that the Government had ably handled this question of the demands from the miners and railwaymen. I beg respectfully to disagree with hint. I think that the Government, while recognising that the workers should have a different position in industry from that which they had in the past, while recognising the right of the workers to an increased and an equitable share in the profits of industry, while recognising the right to a reduction of hours wherever possible, should have told the coal miners and the railway workers that there was no justification for raising their wages until the vast numbers of others not then demobilised had been demobilised and were in employment. I believe that the workmen engaged in those industries would have recognised the justice of this contention. The British workman, as Lord Leverhulme said the other day, is the most amenable to argument person in the community. I fear that the Government have been too prone to appeal to the lowest instead of the highest ideals of the British workman. I cannot help feeling that if the Government, instead of insisting on an Election last autumn, in the course of which many rash and lavish promises were made, had remained in office during the trying period through which we are now passing, we should have been in a very different position from that which we are in to-day.
LORD CLIFFORD OF CHUDLEIGH: My Lords, some few years ago I took up a statistical investigation in connection with the Statistical Department of Tasmania. I handed the result of this investigation to one of the Judges of the Supreme Court, who wrote that, after reading it, he came to the conclusion that it was not the working classes but the saving classes which wanted legal protection. You have been living on capital during this war, and there is a day of reckoning coming which demands the utmost amount of economy. That fact and the necessity for economy are not understood by anybody in this country, nor do they understand the enormous evils which the neglect of that economy entails on us, on our children, and on their children. If we are to push our trade forward it must be by providing every means of competing with other nations, not by hampering us with restrictions; it must also be by united effort on the part of employers and employed.

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According to the investigations I have referred to we found that it took three years to put by the£3,000 or£4,000 capital necessary to pay£100 a year for the next thirty years. During this war we have spent£5,000,000,000 or£6,000,000,000 in unproductive expenditure. That sum must be made up; otherwise it will react on the living power of the rest of the population. We found that a drop of£5 or£10 through protective duties in the production of the country in any one State meant a drop of one person in every 1,125 in the population; and the cost of this war will mean a fall in population during the next fifteen or twenty years of 3,000,000 or 4,000,000, compared with the population in 1913. If you are to prevent that you will have to make an economy of 15 per cent. in the wages paid in future compared with the wages of 1913.
Another thing that is entirely lost sight of is this. During the war there has been a great amount of repairs to buildings and machinery put off. In 1905 in Australia we had an increase of 15 per cent. in our national returns, compared with the previous ten years, but of 80 per cent. of that increase during that and the next two years not a penny went into wages or new trade. The whole of it was taken up in paying for repairs to machinery and implements that had been postponed during the previous seven years' depression.
You have to meet all these economies, and you have to remember at the same time that the war has not only created a fictitious value in prices but has always the result of causing an undue and unnatural increase in the circulation of wealth. You could not carry on the war without increasing the circulation of wealth, and the increase necessitated an inflation of prices. Those prices cannot go down until the cost of production and of labour has gone down first; then they will follow as a matter of course. In the meantime you have established huge Departments that are not necessary in peace time, and you have to curtail all those Departments and bring them back to normal peace conditions. All this calls for an amount of economy that few people stop to consider.
Under these conditions we must be very careful to curtail our expenditure. The cost of this war means increased taxation. Some people think that the people pay the taxation, but the poor pay it equally;
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because out of the difference of 1s. 8d. between the incomes under£100 and the incomes over£100, 11 d. returns to the worker and the poor in fresh employment. The whole cost of the interest on that has to come from every member of the community, rich and poor alike, and you have a largely increased interest bill to meet in order to pay the cost of this war. All these considerations demand the greatest economy on the part of the Government, and the greatest facilities for the further stimulus of business and production in the future.
THE MARQUESS OF SALISBURY: My Lords, there has been a series of questions addressed to His Majesty's Government to which no reply has been given. I do not wish to comment with any desire to blame His Majesty's Government on account of their silence this evening, because we were favoured with some very adequate speeches—indeed much more than adequate, very able speeches—by several members of His Majesty's Government on the last occasion when this Motion was before your Lordships' House. Still, the fact remains that certain questions have been put which have not been replied to. I do not know whether the Government would be prepared to reply to them now, or whether they would prefer that we should repeat them on a future occasion.
The principal question to which I refer is as to whether they will agree to the appointment of a Committee of experts to inquire and report upon the taxable capacity of this country and its recuperative power—I do not, of course, attempt to use words which would be adequate to form the reference to a Committee. But a Committee of experts has figured very largely in these debates, and received the blessing of no less an authority than my noble friend Lord Milner. I am quite aware that Lord Milner was careful to say that he spoke in his personal capacity, but in whatever capacity he speaks it is a matter of great importance, and we shall be very glad to hear from the Government whether we may consider that the personal opinion of Lord Milner is adopted by his colleagues as a whole and that this Committee will be appointed.
We are all the more anxious for a reply to this question because of the attention which has been called in the course of these

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debates to the rather lax methods which have grown up during the war of demanding money from the Treasury. I am not going into this at length, but I take it that it is clear that no member of the Government has power to spend money without the consent of the Treasury. I mean by this that they have no legal power. I speak, of course, in the presence of the noble and learned Lord on the Woolsack, but I take it that, whether it is the Prime Minister or a subordinate Minister, he has no power whatever to spend one halfpenny of public money except in so far as it is authorised by the Treasury. I fancy that is the law, though it is a law which in recent times has been more honoured in the breach than in the observance. I should like to know whether I am right in stating that to be the law. Secondly, if it is the law, I desire to know whether we may have an assurance from the Government that the laxity which has prevailed hitherto will come to an end. These things were permissible in time of war, but the sooner we can resume the practices and the precautions of peace the better it will be for the country. We cannot go on in that reckless way.
Therefore we would like to put these two questions to His Majesty's Government to reply to now—though I will not press them to do that—or on a future day. The first question is, Will they assent to the appointment of a Committee of experts to make the financial inquiries to which I have referred? The second question is, Will they engage that the legal obligation which rests upon every member of the Government not to spend the money of the country without the consent of the Treasury—
VISCOUNT MIDLETON: And of Parliament.
THE MARQUESS OF SALISBURY: Yes, and of Parliament—will be obeyed in the spirit as well as in the letter? Those are the two questions that we have to put to His Majesty's Government, and I will ask them whether they will give me a reply.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (THE EARL OF CRAWFORD): My Lords, I shall not detain your Lordships more than a few moments; still less do I desire to enter upon the manifold subjects which have been raised during the present
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debate. Lord Midleton invited us practically to revise the decision taken by the Government, fifteen years ago to control the telephones. I do not interest myself very much in telephones, and I dare say the Government has made a serious loss upon the telephones; but for those of us who live in remote parts of the country, let me say that the advent of Government control of the telephones has been a godsend. Those who live in outlying districts where no remunerative service could be expected from a private firm can be at least thankful that Government control has extended the service to us, as indeed it has also done in postal work. I do not intend to go into that, nor indeed to traverse the interesting views of Lord Emmott about import and export control. It is an extremely interesting subject upon which I should very much like to offer my opinions to your Lordships; but at this time of night, and bearing in mind the actual terms of the Motion before the House, I do not think it desirable to comment on it, especially as I had no notice that this particular matter was being raised. On the general question of de-control—to which Lord Goschen, I think, and one other member of your Lordships' House referred—again, I should much like to speak, as I myself hold strong views upon the subject. I propose, however, to limit my observations to one or two points which have arisen to-day and on the previous occasion.
In the first place, as to the suggestion that an expert Committee should be appointed to inquire into the taxable capacity of the country. That proposal has in the last few moments been enlarged very much by the noble Marquess, Lord Salisbury, who suggested that it should also inquire into the recuperative power of the country. This raises a much wider issue. It. raises the whole question of (we will say) public transport., of the development of coal, of sea-fishing, of communications, of aeronautics, of a hundred and one things which I do not think are necessarily relevant to the smaller inquiry which was suggested, and for the moment I am prepared to answer only about the taxable capacity proper. The suggestion was first made by Lord D'Abernon, but an investigation is at this moment going on as to how far such an inquiry is necessary—in other words, how far the Revenue authorities desire information upon this question of taxable capacity which is not

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already at their disposal. But let me remind your Lordships that this is emphatically a question for the Chancellor of the Exchequer, and for the moment I am not in a position to make a definite announcement upon the subject. My noble friend Lord Milner, however, is making it his business to go into the matter with the financial authorities, and I hope that before long he will be in a position to state whether in their opinion this form of inquiry is going to be of assistance.
VISCOUNT MILNER: The last word, of course, must come from them.
THE EARL OF CRAWFORD: From the Chancellor of the Exchequer.
THE MARQUESS OF SALISBURY: Hear, hear.
THE EARL OF CRAWFORD: My noble friend Lord Goschen raked the question of propaganda. Here, again, I do not propose to offer any final opinion. Everybody wants the economic situation to be studied; everybody admits that knowledge on the subject is not always correct, in fact is very often the contrary. But I would ask your Lordships to make certain, before pressing strongly for Government propaganda, whether the Government is the best agency to conduct a propaganda of that character; whether it is the best medium for conveying information to the public which the public is likely to assimilate in a sympathetic manner. That is a problem which your Lordships should consider. For my part I am not at all certain that an economic propaganda on such subjects is not more liable to provoke than to allay controversy if it arises from any Government which is supposed to be supporting its own economic views and pushing its own parti pris.
The last point to which I wish to refer is the question of Treasury control. Lord Salisbury said that it was lax. Treasury control has never been lax, but it has constantly been overpowered by superior claims arising out of the war during the war. The Treasury is much blamed in these matters, but the Department, so far as my experience goes, has never relinquished or abandoned its right to try and check public expenditure. It has often failed to do so.
THE MARQUESS OF SALISBURY: suppose that when that happened it was always a breach of the law?
THE EARL OF CRAWFORD: Oh, dear no. What happens is this. The noble Marquess himself has been in office. A Department comes forward and says to the Cabinet, We want to spend£1,000,000." The Treasury fights it, but is over-ridden by the Cabinet. The Treasury, none the less, has done its best to limit and to control expenditure; and, as I can state of my own knowledge, the Treasury has throughout been doing its best to cut down expenditure. But circumstances have been too much for the Treasury. That is not, however, the point raised by Lord Salisbury. The noble Marquess said that the Departments were spending money illegally. If that were so during the war, I have no doubt that the Treasury will take good care it will not occur again.
THE MARQUESS OF SALISBURY: Hear, hear.
THE EARL OF CRAWFORD: For my part I do not know of any such case. Lord Salisbury no doubt has something in his mind, and will, I doubt not, let us know what it is so that we can investigate that particular transaction. But that is a different thing from the Treasury being overborne—the Financial Secretary or the Chancellor of the Exchequer being one of a number of colleagues whose views are sub-ordinated to those of other members of the Government. Lord Midleton ob-observed that the Government had treated the matter in a jaunty manner, but he completely misunderstood the speech of my noble friend Lord Peel if he thought there was any levity in his remarks. On the contrary, neither Lord Peel nor Lord Milner treated the matter with anything except the greatest earnestness, and with profound conviction of its importance; and so far as the Government are concerned we have indeed already announced that we are willing to give earnest of our sense of its importance by accepting the Motion which has been placed upon your Lordships' Paper.
VISCOUNT MIDLETON: The noble Earl has not quite dealt with the question which I asked. There are hundreds of cases, I know, in which Treasury control has been

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overruled by the superior necessities of the war; but what I desire to know is this—take a question like the unemployment donation, which is not part of the ordinary expenditure of the country but a new expenditure. Is it illegal or legal for either the Prime Minister or the Cabinet to grant that and begin to pay it without the consent of Parliament?
THE LORD CHANCELLOR: My Lords, being as I am in complete ignorance of the detailed facts upon which the noble Viscount founds his question, he will not expect from me a very considered view; but the question which he has addressed to me, if I understand it, does not present very great difficulty. No Minister and no collection of Ministers possess any power of spending public money unless under the direction and authority of Parliament, expressed or implied; but it may, and must, very frequently happen, sometimes in small and sometimes in great matters, that a Department has to face a demand for expenditure which has not been contemplated actually by Parliament; and it is very evident, if such a case arises sometimes in peace, that it is more likely to arise in a great war in which the very existence of the community is menaced.
I am not aware on how many occasions it has arisen in this war, but it would not surprise me if it had arisen very often, and I should imagine that if and when it had
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arisen it would present itself in this way. A Minister would require, perhaps when Parliament was not sitting, certain expenditure. The position of the Minister would be this. He would say. "I am responsible for the provision of this article. I have not at the moment, because Parliament is not sitting, the means of obtaining Parliamentary assent. I take the risk that Parliament will be satisfied with my explanation"—that is, Parliament and the Treasury; indeed it is not useful to distinguish them, because the Treasury has no force in these matters which is not derived from Parliament—"I take the view that when I have explained the matter to Parliament, Parliament will support the decision which I have reached." The position of a Minister, whether great or small, or of a collection of Ministers, which we call the Cabinet, is the same; he or they must stand or fall by the ability to persuade Parliament that what has been done was right, was called for by the necessities of the times, and ought to be supported by the sober judgment of Parliament, as it would have been if circumstances had allowed the Minister to present the claim to Parliament.
On Question, Motion—That the serious condition of the finances of the country calls for the exercise of the strictest economy in all directions—agreed to.
House adjourned at twenty-five minutes before eight o'clock.