§ LORD PARMOOR had given Notice to ask His Majesty's Government—
§ 1. Whether it is possible to ensure that all payments made by Germany under the terms of the Treaty of Versailles should be applied, in priority to all other claims, to the restoration of the devastated districts in France and elsewhere.
§ 2. To what extent, in the opinion of His Majesty's Government, the prevailing conditions of unemployment are attributable to the poverty of consumers in Central Europe, and to the want of industrial and financial stability consequent on the maintenance of claims for huge indemnity payments, in addition to the payments required for the restoration of the devastated districts.
§ The noble and learned Lord said: My Lords, I put down two Questions to His Majesty's Government. They are closely associated in their purpose, but I found that I could not put them in one form. I have included the words "and elsewhere "in 113 the first. Question in order that it may be comprehensive, but the Question which comes to the front is whether payments for the restoration of the devastated districts in France may not be given priority of other payments to be made under the Treaty in order that they may be carried out as soon as possible.
§ The first Question is based on the urgent necessity, in my view, of meeting the just claims of France as regards the devastated districts. Until these districts have been restored there is not much prospect of a better feeling between France and Germany, and until there is a better feeling between France and Germany it is difficult to see how the general condition of unrest and unsettlement in Europe can be brought to a satisfactory end. It is neither more nor less than justice that the devastated districts of France should be restored at the first possible moment No one, will controvert that position if the terms can be carried out; and on the basis I have stated in the Question the terms can be carried out in the sense that Germany has ample capacity to provide payment for restoration, if that payment is allowed in priority of other claims under the Treaty of Versailles.
§ The time has come, I think, when we may approach this Question from a purely business aspect, and I adopt that attitude to-day I assume we arc all of one opinion that France should be compensated in respect of her devastated districts at the earliest moment, and that until that is done there is great difficulty as regards general unsettlement in Europe. The first step, therefore— and I wish to give your Lordships a few statistics on this point— is to obtain if we can some fairly accurate estimate of the amount required to restore these devastated districts The statistics I shall give have been supplied to me by one who is an expert on subjects of this kind. They are short, but they show that, after all, the amount required is comparatively moderate, and that the time has come when we might leave references to vague milliards.
§ The statistics are these. About 300,000 houses have been destroyed in the devastated areas, and the estimate which I have heard as to the cost of repairs by a person who ought to know is that on the average they can be restored at about £ 1,000 per house. That would represent a total amount of £ 300,000,000; a sum small in 114 comparison with the enormous amounts mentioned in connection with reparations and indemnities, and, indeed, no more than the annual amount which it was argued Germany could pay by way of interest. In addition to the houses destroyed, approximately 300,000 houses have been devastated. By that word I mean damaged, but not destroyed; and the same authority made an estimate that these damaged houses could be repaired, on the average, at about £ 500 per house, so that the total amount for houses damaged and destroyed would be £ 450,000,000.
§ I am not suggesting that this is an exact estimate, but it is near enough for the purpose for which I intend to use it. It is more difficult to estimate the damage which has been done to France as regards her mines, but there is no reason whatever to contemplate that this would come. to the huge sums which have sometimes been mentioned The estimate which I have seen has been made on the following basis. The pre-war output from the damaged mines in France was about one-twentieth of the output of our English mines, and that fact gives some idea of the amount of damage. Even if you had to repair all the damage it would fall very far short of the huge estimates of which we have heard. The only other head under which I need refer to the damage is that which embraces the ruined fields of agriculture. Nature begins to repair her ravages even after a devastating war, and although full compensation ought to be paid under a head of this kind, there is no reason to consider that the figure will be an abnormal or impossible one.
§ The result is this. If one allowed a large margin for contingencies, the amount required for reparations in France would not be more than one-third— not so much I think— of the total amount that is claimed for both reparations and indemnities. My case is t hat if France has a prior claim, as I think she ought to have and is entitled to have, the reparations would be within the capacity of Germany, and the work of restoration need not be delayed. I have in mind, of course, the arrangement, the admirable arrangement, which has been made between Herr Rathenau on the one side and M. Loucheur on the other. If that is somewhere about the figure, there is a concensus of opinion that Germany would have the capacity to pay. In fact, I think that is hardly questioned.
115§ The other day I heard two speakers one after the other whose opinions coincided in this respect, and the coincidence of their opinions is strong corroboration of the view I am putting forward. One of these speakers was the German expert who took part in the Spa Conference, Professor Bonn, who spoke in most moderate language, and, recognising that justice to France was the first step to the advantage of France and Germany, thought there would he no doubt, if these reparation payments were allowed priority, that reparation could be carried forward without delay. The other authority was Professor Keynes. Everyone knows that Professor Keynes is an authority whose moderation is well recognised. It is thought sometimes that he is too moderate. I hope the noble Earl who is going to reply will not differ from that statement.
§ I want to say a word or two on this point, which affects this country very directly; that is, the priority of these payments for French reparations. I claim, as I have said, that they are due in priority- on the grounds of simple justice to France, and we, as her Ally, are the first persons who ought to recognise our obligations in that. respect I know perfectly well that all people in this country are anxious that fair justice should be done to our French Ally, but where I think the mistake is sometimes made is that they do not understand what ought to be done in order to give that desire for justice a practical form. Let me apply it in the present case. We know that the sums demanded from Germany at the present time are partly what are called reparation sums and partly indemnity sums, and the effect of my Question is to ask the Government whether the reparation sums could not be settled in advance of the indemnity claim. I am not for the moment saying whether the indemnity claim is a good claim or not; that arises, I think, out of my second Question. But whether a good claim or not; surely France has the prior claim as regards reparation of the ravages in the devastated districts.
§ Why do I address this matter particularly to His Majesty's Government? The reason is that under the reparation claims this country gets little or nothing— a. quite nominal amount as compared with the French claims. Under the indemnity claims, this country has, of course, large demands to make, and by mixing up 116 the indemnity and the reparation claims we really water down and postpone the payments which, in my opinion, are clue to our Allies in France in priority of all other payments under the Treaty of Versailles. What I want to ask His Majesty's Government particularly— if I may apportion my Question in the way in which I have spoken about it— is this: Do they doubt, in the first place, that reparation payments are somewhere within the margin of the figures which I have mentioned; at any rate within the margin of Germany's capacity to pay? Do they further doubt that the delay in payment is consequent upon watering down or deferring payments because they are mixed up with indemnity claims? And if so whether His Majesty's Government will not, as a matter of justice to our Ally, postpone our claims in regard to indemnities in order that the reparation payment may be satisfied in the first instance?
§ I am quite aware, as I said before, and I am sure I am not exaggerating, that we desire to do all that we can that is just and right towards our French Allies. Putting that in a concrete form, why cannot we agree to defer these indemnity claims, even if we do not release them altogether, in order that the continuance of this evil of the non-repair of the devastated districts in France may be put right? If justice is once done, a better feeling may arise between France and Germany. After all, geographically France and Germany have to live together as neighbours, and if England can do anything to moderate the animosity between those two countries and to further the area of hope and good feeling, surely we ought to do it. Now I come to the practical test. We can do it. We can, by postponing our indemnity claims, allow a sufficient sum of money to be paid to France for reparation to be carried out; and if we can do it, I am claiming that we ought to do it.
§ There is one other point arising from the first part of my Question. Beyond the justice of postponing our indemnity claims — and I put my case on justice, and on justice alone— there arises the question whether these indemnity claims can possibly be of any advantage to us at all. I want to deal with this more particularly on my second Question, but I think I might refer to what was said by Mr. McKenna in his widely reported speech at Chicago. He 117 is a man of great financial knowledge and experience. He said that, in his view, the payment of the indemnity claims meant a curse and not a blessing. By that he referred to the tendency to upset the financial and industrial conditions in Europe. I think I have said all that I need say upon my first Question on the Paper.
§ My second Question is this—
§ To what extent, in the opinion of His Majesty's Government, the prevailing conditions of unemployment are attributable to the poverty of consumers in Central Europe, and to the want of industrial and financial stability consequent on the maintenance of claims for huge indemnity payments, in addition to the payments required for the restoration of the devastated districts.
§ The main object of that Question which, of course, is closely associated with the first Question, is to call attention to, and to ask the opinion of His Majesty's Government upon, what I believe is the very close connection between unemployment in this country and the conditions which prevail abroad at the present time. I think it is not going too far to say that the curse of unemployment, if I may so call it— because there is no greater horror to the working classes than unemployment -is largely either created or aggravated because the effect of our foreign policy upon unemployment is not adequately appreciated. Unless it is appreciated, I think we shall have many times over what is going on at the present time. I do not refer, of course, to Bills which are being brought forward elsewhere, but we shall have a series of costly and temporary palliatives, while we avoid going to the real root of the difficulty. It is not until we appreciate that conditions on the. Continent, the abstraction of our foreign market, the interference with those who ought to be our consumers, constitute the real root of the difficulty, that we are likely to come to a firm and just determination.
§ That is, of course, only one side. On the other side is the wasteful expenditure, as I call it, on naval and military armaments; and there is at the same time what I call in my Question the loss of markets through "the poverty of consumers." It does not need any economic subtlety, it does not need any inquiry into economic laws, to postulate that a pauper— and that is the position of many of our foreign consumers, or those who ought to be our foreign consumers— a pauper living in the poor ho-use is a very bad customer, and is 118 little likely to help us to get to the root of the evil of unemployment. It is not that our manufactured commodities are not wanted. They are badly wanted, but there are no available resources for payment, and, therefore, those who under prosperous conditions would be consumers of our manufactured articles have to go without them, simply because they are too poor to pay for them.
§
The views that I have expressed in my Question have been expressed in far more adequate language by the chairmen of the five great banks in this country, in their addresses to the banks' shareholders at different times, and. I might make an extract from the speech of one of these chairmen. I think that is the shortest way of bringing to the minds of your Lordships what is involved ill my Question. This statement, which I will read, is taken from the address of a banker to the shareholders at their last annual or half-yearly meeting—
The economic restoration of Europe should be to-day our first concern. If we neglect it our whole foreign trade will contract and decay. The commerce of the world must be cow-Limed as one vast whole, and, if a large section of it is severed from the rest, what remains will be gravely impaired. If the broken countries therefore are 'not restored, even the still solvent States will slip one by one into the general ruin. A remedy must he found and found quickly.
§ Now, accepting that statement, which I think would be accepted by the great mass of business people, it is not necessary to say more than that if those conditions prevail one of the largest sources of the evil of unemployment in this country must be due to the conditions abroad.
§ There was at one time— probably the opinion is fading away— an opinion that we could bring poverty and industrial impotence upon one of the great manufacturing nations of the world to our advantage, or at least not to our disadvantage; but the fallacy of any such outlook has been proved by events which have taken place, and I think there can be no greater mistake, with reference to our economic and industrial outlook, than to think that this country could possibly profit, or do other than lose, by artificial poverty created in Central Europe. That there is that poverty created in Central Europe every one knows who has travelled through it. A short time ago I had the advantage of travelling through large districts of Central Europe. You have only to go 119 there to see what the effect has been as regards the poverty of the people. In fact, I would put it more positively. I think in the long run there is no country so interested in the maintenance of international trade as ours, and it follows that there is no country more immediately interested than this country in the restoration of the foreign markets by which we profited before the war; and. until those foreign markets are restored I see no reason for thinking that we can adequately grapple with the great problem of unemployment here.
§ Let us consider for one moment how paradoxical is the position in this country at the present moment. On the one hand we are seeking to extend trade by what is known as the Key Industries Act. We are seeking to obtain trade by means of protection against the import of cheap goods from abroad, and while inflation is going on abroad the very tendency against, which the Key Industries Act has been passed is encouraged, so that even when you raise protective duties you cannot get the results you desire.
§ Now let me give an illustration of how, in my view, these indemnities are injuring the trade of this country. I was lately in Sweden, and I found that the coal which had been coming from this country was now being imported out of the indemnity coal paid by Germany to France; in other words, that the indemnity payment of coal alone has probably deprived the miners in this country of employment to the extent of about 20,000,000 tons a year.
§ LORD PARMOORI was saying that I had found it when I was in Sweden the other clay, and I went on to say that I believed that those indemnity payments were probably responsible for a reduced output in this country of something like 20,000,000 tons a year, with, of course, the corresponding difficulties which arise at the present time, particularly in the export districts of South Wales. That, of course, is only one of the illustrations. Take another, which I think Lord Newton will probably have in his mind; I mean the waste that is going on at the present time, in the endless Commissions, which do nothing except obstruct practical reform work, and every penny of the cost of which is waste and must be accounted for before 120 the evil of unemployment in this country can, to my mind, he brought in any sense within manageable limits.
What is the result as regards the problem of unemployment? I think— and I am not alone in that opinion— that you are merely playing round the real difficulty unless you consider the revision of the terms of the Peace Treaties. I do not want to criticise those who framed the Peace Treaties— they were framed under conditions of natural animosity and friction— but no one can read them without realising that the economic and industrial questions were in no wise sufficiently considered, and. of course, if you do not consider those questions, and consider also the effect of what you are doing, as regards markets and employment, you can only expect to have the evil consequences which in fact have followed.
I may recall to the mind of the noble Earl who is going to reply what was said by the Leader of the House, the Marquess Curzon of Kedleston, on a former occasion, when we were suggesting the revision of the Peace Treaties with the greater knowledge that we have now, and in the absence of the feelings of friction and animosity which, naturally and necessarily, were to the front on the morrow of the war. He said that he did not regard the terms of the Peace Treaties, or one of them, because I wish to be accurate, as sacrosanct. Of course, they are not sacrosanct, and one of the wisest steps which anyone can take is to acknowledge that, Treaties of this kind may have been drawn up under a misunderstanding of the economic requirements of the European industrial countries, and, at any rate, to seek to put right those clauses of the Treaties which are inconsistent with the economic restoration of Europe.
I think that a new spirit in this respect is slowly awakening. After all, we arc business people, and, just as the bankers have expressed their view, so a very large number of business people have expressed the same view, that unless we realise that the cause of unemployment and the failure to obtain foreign markets is due to those terms of the Peace Treaties which, in our interests more than those of any other country, ought to be repealed or revised, then it is impossible to suppose that the evil of unemployment can be really grappled with, so as to get anything like a permanent or substantial remedy. There is no escaping 121 the incidence of economic principles and economic laws. You cannot make paupers of those who were your customers without losing them as valuable customers. You cannot go through those countries without feeling and seeing that, the very people who ought to be giving employment to the teeming population of this country have been put under most serious disabilities as regards their economic restoration by certain of the terms of the existing Peace Treaties.
THE FIRST COMMISSIONER OF WORKS (THE EARL OF CRAWFORD)My Lords, I am sure that the noble and learned Lord is fully justified in quoting the opinions offered by the chairmen of the great joint-stock banks in this country. They are men of great standing and wide experience in the commercial world, and everything they say always receives the most respectful attention. But I cannot help thinking that Lord Parmoor rather over-weighted the tendency of their remarks. He seemed to assume that those gentlemen combined to argue that the unemployment difficulties in this country were due to the Continental position. I really cannot accept such a statement as that in so absolute a form. The Continental position is, of course, a contributory cause of our unemployment troubles, but that it should be assumed to be the sole cause is, in my opinion, a most dangerous and, indeed, a most mischievous doctrine.
§ LORD PARMOORI never suggested, and no one would suggest, that it was the sole cause; I said it was a largely contributory cause.
THE EARL OF CRAWFORDYes, but there are other very grave causes as well. If it were not for that fact the ratio of unemployment in France and in Belgium, both of which depend upon the Continental system for their commercial existence, would be at any rate upon a parity with our own. I am afraid there is no doubt that the poverty of customers and of potential customers in Central Europe does exercise a grave effect on unemployment in this country, but there are other causes, and very grave causes, which equally contribute to that state of affairs.
I am really not in a position to comment upon Lord Parmoors estimate of the amount required for reparation. He said it was a comparatively small sum. He 122 estimated the cost of rebuilding of destroyed houses in France alone at £ 300,000,000, and repairs of damaged houses at £150,000,000, or £ 450,000,000 sterling in all. He gave no estimate of the reparation of the mines, and likewise he ignored the figure— which I suppose he has in his mind— as to the amount required to put agriculture again into heart.
§ LORD PARMOORI mentioned it; I could not give an estimate.
THE EARL OF CRAWFORDNo; but the noble and learned Lord also ignored— what is a very material factor— tire restoration of railways and canals, of public utility works, of public buildings, of churches, of factories, which in themselves form a gigantic addition to the figure he has suggested. Moreover, he paid no attention whatever to the dead loss which has accrued to France during the last seven years in public revenue and in private income through the interception of all fruits of labour during the war, and of its practical annihilation, then and subsequently, in the devastated areas. I therefore feel that Lord Parmoor is underrating the cash loss suffered by the French Republic. I do not know why Lord Parmoor so deliberately and so constantly excluded Belgium.
§ LORD PARMOORI said "or elsewhere." I took France as the leading instance.
§ LORD PARMOORI think France has so much the greater claim that, although I put "or elsewhere" in my Question, I limited what I said to France.
THE EARL OF CRAWFORDI remember he put in the words "or elsewhere," but if he refers to his speech to-morrow morning he will see that in the opening remarks of his speech he rather washed out those words. However, I take it from him that what he said with regard to France would coeteris paribusapply to Belgium. But the idea that payments must he applied. in priority of all other claims, to restoration of the devastated areas was actually considered during the peace negotiations, and was expressly rejected at that time. And 123 it is pointed out to me that certain payments made by Germany under the various chapters of the Treaty, apart from the reparation chapters, such, for instance, as those in connection with the clearing house arrangements, obviously could not be diverted towards the restoration of the devastated areas. Again, the Treaty expressly provides that priority is to be given for the repayment of sums incurred by the Allied Armies of Occupation; and finally, that 2,000,000,000 of gold marks were to go to Belgium— I believe in priority of all other payments— irrespective of the Belgian claim on reparation. So that the suggestion in the Question that all these things are to be disregarded, and that the restoration of the devastated areas is to take precedence of everything else is, I am afraid, unless there be universal acquiescence among all the Allies, impossible under the terms of the Treaty itself.
The second part of the Question is more difficult to answer, because it deals with matters of opinion and argument. I have already referred to two aspects of Lord Parmoor's Question, and, although lie did not lay particular stress upon the Austrian position, I should like to add a word to supplement what he said on that subject. It is quite true that the existence of these heavy claims must stand in the way of recuperation. That, 1 fancy, is conceded. But the King's Government, and most of the other Governments concerned, have agreed to release the liens on Austria held by them in order to assist Austria to raise an external loan. Unfortunately, there are technical and constitutional difficulties which have prevented the United States Government releasing its liens and, so far as the plan of reconstruction depends upon those foreign credits, the matter is held up pending action by the United States Government, which, however, I am told it is hoped may see its way to intervene.
Meanwhile the Austrian government is making serious efforts to do its part in the work of restoring financial order, and the Government, in concert with the Government of the French Republic, has been able to secure some temporary assistance for Austria through banking channels, and 1 understand that the first instalment of this assistance has already been provided. In general terms, the inter-Allied debts and the claim upon Germany for reparation are factors of importance in the present financial and industrial position not merely of 124 this country but of the commercial world as a whole. I fear that the main and fundamental explanation of these prevailing conditions is the very elementary fact that the world has been impoverished in an untold and incalculable fashion by the years of war through which we have passed— war upon a. scale which is, happily, quite unprecedented.
§ LORD NEWTONMy Lords, I should not have intervened in this discussion but for one sentence which fell from my noble friend who has just spoken. In rebutting the arguments of the noble and learned Lord, Lord Parmoor, the noble Earl stated that if the facts were as he believed— that is to say, the facts relating to unemployment— the case in France would be parallel to the case here. Without professing to be a political economist, I submit that there is no parallel whatsoever. France is almost entirely a self-supporting country. France is not dependent upon foreign trade at all. The position in this country is entirely different and, so far as that goes, it is different not only from France but from any other country.
§ LORD NEWTONIt is not often that I hear anything from the noble and learned Lord opposite with which I agree, but upon this particular question I am to a certain extent in agreement with him, and I have risen mainly for the purpose of corroborating what he has stated in regard to Central Europe. Anybody who has the slightest acquaintance with the conditions in Central Europe— and I often wish that noble Lords who are responsible for the policy of this Government had opportunities of visiting these countries— can come to one conclusion only. It is a painful and humiliating conclusion, but it is perfectly obvious that the deplorable economic conditions which prevail in Central Europe at the present time are most undoubtedly due to the Peace Treaties made with Hungary and Austria respectively. I will go so far as to say that until the Entente Powers— the Great Powers— realise the fatal mistake which they have made and have the courage and the honesty to admit it, economic prosperity will never return to that part of the world.
§ LORD PARMOORMy Lords, I have no right of reply and I do not want to 125 reply to the noble Earl, but may I ask him one question in reference to what he said about Austria Everybody knows that the difficulty arose because some action had to be taken by the Legislature in America before they could join with the other countries. Has the noble Earl any information as to how far that has gone? Has an Act already passed through Congress giving in substance to the Secretary of the Treasury of America and four gentlemen associated with him sufficient powers to deal with these matters without going back to Congress, thereby freeing the hands of America to join with other countries in aiding Austria?
THE EARL OF CRAWFORDI think it would be convenient if the noble and 126 learned Lord would put that down for Thursday
§ LORD PARMOORI will do that.
§ LORD PARMOORI did not refer to Austria because I thought; that was going on at the present time.
THE EARL OF CRAWFORDPerhaps the noble and learned Lord would put that down for Thursday, when I will give a carefully considered answer.
§ House adjourned at five minutes past five o'clock.