§ LORD ARNOLD had the following Notice on the Order Paper:—
§ To call attention to the proposals of His Majesty's Government with regard to the safeguarding of industries, particularly in relation to the White Paper issued on 3rd February last; and to ask His Majesty's Government for further information as to their intentions and policy with reference to these matters; and to move for Papers.
§ The noble Lord said: My Lords, the Motion which stands upon the Paper in my name is the natural outcome of the extraordinary position of affairs created by the Government with regard to their proposals for the safeguarding of industries. I should like to recall briefly to your Lordships some of the main features 296 of the situation with which we are faced. I do not think it can be denied that the majority of the electors of the country are opposed to Protection. That has been proved again and again, the last occasion being as recently as the General Election of December, 1923, a little over twelve months ago. Nevertheless, His Majesty's Government claim that, as a result of the Election which took place last autumn, they have a mandate for the safeguarding of industries. I deny that. I say they have no such mandate.
§ Now, what are the facts? The Labour Party stands for Free Trade and the Liberal Party stands for Free Trade. If the votes cast at the last Election for Labour and Liberal candidates are added together they exceed those given to the Conservative candidates by about half-a-million. It is true that deductions have to be made from the Liberal votes owing to the votes which were given to Liberal candidates by Conservatives under the various pacts. On the other hand, a large number of Conservative Free Traders voted for Conservative candidates, particularly in Lancashire and Yorkshire. Taking everything into account and striking a balance, I say that there cannot be any question that there was not a majority at the last Election for this policy of the safeguarding of industries. I do not think that even the Government themselves would claim that this mandate of which they speak goes any further than action upon the lines of Part II of the last Safeguarding of Industries Bill. But the Government were scarcely installed in power before they announced their intention of legislating for the safeguarding of industries in a way that went much beyond the proposals in regard to dumping, and so on, in the Safeguarding of Industries Act, 1921, and in a way, indeed, which is not distinguishable from a general tariff on certain articles.
§ The Prime Minister announced in another place, on December 17, that where under this new policy a duty was put on to guard against exceptional competition that duty would apply not only against the country from which the exceptional competition was coming, but would apply against all countries. Now this was certainly not generally understood at the General Election, and I need scarcely say that this announcement of 297 the Prime Minister caused the- greatest consternation and surprise. Those feelings were in no way lessened by the issue of the White Paper on February 3 last, which was a further elucidation of the Government policy. I shall have occasion to make very frequent references to this White Paper and the Board of Trade Committees, each consisting of five persons, set up under it. These Committees are to make various inquiries in regard to application for the new tariffs.
§ Turning to a consideration of this whole policy of safeguarding of industries, I ask—and I think it is well we should try to be clear—what is it that the authors of this policy are seeking to achieve? I will try, if I can, to come from the region of vague generalities down to something concrete. What is the object of the Government? Their object is, so they say, to deal with unemployment. The President of the Board of Trade stated in another place that the reason for this policy was to be found in the fact that we had at present about one and a quarter millions of unemployed persons. I am going to follow this out and try to see what is the case that can be made out for dealing with unemployment by this means. As a matter of fact, if the figures of unemployment arc analysed, it will be seen that the vast majority of the unemployed are in industries which cannot be assisted by tariffs. I mean trades or parts, of them which are mainly manufacturing for export, or industries like coal-mining, shipbuilding, and so forth. In point of fact, if the figures are analysed, it will be found that somewhere about three-quarters of the unemployed are in industries not only which could not be assisted by tariffs but which would be injured by them because their costs of production would be increased by tariffs. Therefore I say that the supporters of this policy are straight away driven back on to about one-quarter of the unemployed as their potential area of operations. I say "potential" advisedly, because in accordance with the rules in the White Paper many further deductions have to be made before the final area of operations is reached. Let me read the exact words of what the Committees are asked to take into accounts:—
§ "Whether the imposition of a duty on goods of the class or description in question 298 would exert a seriously adverse effect on employment in any other industry, being an industry using goods of that class or description in production."
§ Broadly speaking, those words mean, or should mean, that imports of raw materials and semi-manufactured goods must not be subject to the new duties, because otherwise industries will be injured which use goods of these classes in their processes of production. The position then comes to this: that in the end the supporters of this safeguarding policy are driven back for their field of operations on imports of fully-manufactured articles, but fully manufactured articles only constitute somewhere about five to ten per cent. of the total imports of the country. In a number of these cases the imports do not cause any serious unemployment. Also, in a number of industries making fully - manufactured articles in this country it cannot be said that the trade is one of substantial importance, and therefore, in accordance with the White Paper, such must be ruled out. Consequently, looking at the matter in the way which I have been doing, the final area in which this safeguarding machinery can be set up is decidedly small. I would ask the noble Viscount who, I understand, is to reply, if he would deal with those figures and tell us exactly what is the Government case.
§ A further point arises. The Board of Trade have to take into account the effect which the duties will have in injuring other trades. Any new duties must injure some other trades because, owing to the increased prices which will have to be paid on the articles on which the new duties are put, there will be less money to spend on other articles. Therefore the trades making those other articles will be injured. It is always so. Tariffs start a vicious circle, and no man can see the end of the mischief once you begin it. I think it will be seen from what I have said that if—I say "if" advisedly—the rules and regulations in the White Paper are strictly interpreted, the area in which these new duties could be imposed is small, but I have no hope whatever that the rules will be strictly interpreted, so that I think it is quite wrong to assume that not much will be done under these proposals. In all probability a great deal will be done under them, with much consequent harm to the trade interests of the country.299
§ I have no doubt we shall be told, as we have been told before, that those of us who oppose this policy see in these new safeguarding of industry proposals far more than is in them. I say that there are great potentialities in them. It is all a question of how the rules in the White Paper are going to be interpreted. As the Board of Trade Committees which are to interpret these rules are to be set up by the President of the Board of Trade who is a strong, almost I might say a fanatical, Protectionist, and as the members of the Committees will mostly, in the nature of things, I think, consist of Protectionists, it is clear that before very long almost anything might happen under these rules. It is all a question of interpretation. Even the Prime Minister, in another place, indicated that duties might be given to industries of great importance. If that is so it is, I think, inconsistent with the strict interpretation of what I believe I have shown to be the regulations in the White Paper. Moreover, the appetite of the Protectionist grows on what it feeds on, and no one who has read the debate in another place can doubt for a moment that if the Protectionists have their way this new safeguarding of industries will lead on in course of time to full Protection. I say that we who are opposed to this policy root and branch do well to oppose it as strongly as we can, and to state the case against it as fully as we can.
§ I do not, however, intend to go seriatim through all the rules and regulations in the White Paper. I have already referred to some of them, and your Lordships will be familiar with the main provisions, but I think it is important to realise the almost incredibly difficult nature of the tasks which are placid upon these Board of Trade Committees of five persons who are to make the inquiries as to what duties should be imposed. Anybody who reads through the White Paper, and who has any real practical knowledge of business and industry, will know perfectly well that no body of human beings, whether it consists of five persons or fifty, is competent to decide in the required time all those questions that have to be considered by the Board of Trade Committees. It is frequently urged against the party to which I belong that no Government or official machinery could perform the work which would be put upon it in order to 300 carry out the policy of the Labour Party. I have often heard that point urged against us, although I have never agreed with that view, but I think I should agree with it if our proposals placed upon Government officials and Government Committees the tasks involved in this White Paper.
§ As I have said I do not intend to go seriatim through all the rules and regulations of the White Paper, but I should like to refer specifically to one difficulty, and that is the element of time. Even if all the questions in the White Paper could be dealt with by these Committees, the task would take so long that by the time the inquiries were finished conditions in the exporting country might have changed considerably. For instance, one of the grounds on which a safeguarding duty may be put on is the depreciated currency of a foreign country. Now, the changes in currency are so rapid and so great that if a Committee here at home is to keep pace with them it will have to sit continually, its task will never be finished, and the tariff rate will have to be constantly altered. These Board of Trade Committees are faced with almost impossible tasks and the results of their labours are bound to be unsatisfactory.
§ This safeguarding of industry policy is apparently mainly designed to deal with dumping. I will not go through the whole economics of dumping: that would be wearisome and many of the points are old. At the same time, it is well to bear in mind that a good deal of dumping from abroad has undoubtedly been to the great-benefit of the country because it has advantaged the consumers. Also, the dumping of raw materials and semi-manufactured goods has frequently been of great advantage to our manufacturers. However, it is mainly to meet dumping that the Government have put forward this policy. The Government, in putting it forward, would be in a much stronger position if they were able to point to better results from the dumping provisions of the last Safeguarding of Industries Act. But that is just what they cannot do. It is only fair to presume that the best defence that could be put forward of these provisions was the defence put forward by the Prime Minister in another place, when speaking on these matters last December. But any impartial person who reads what the 301 Prime Minister then said would come to the conclusion that as regards dumping the operation of the 1921 Act had been a disappointment to Protectionists.
§ One of the main industries which it was decided to safeguard was the fabric glove industry. Very well. When, the safeguarding (so called) duties were put on there were about twenty fabric glove factories in this country. Since then about three quarters of them have been closed down. If that is a sample of what is done under this policy it is quite clear that it is not efficacious. The truth—and I want to emphasise it because it is of great importance in the whole controversy—is that, quite apart from the harm they do to the country as a whole, tariffs arc no certain remedy at all against dumping. In many cases they will not suffice to stop dumping, and a tariff which might prevent dumping one month may not be high enough to prevent it the next month. And it is quite impossible to be constantly changing tariff rates. A somewhat similar reason which makes a tariff an unsuitable instrument for dealing with dumping is that dumping may be regarded as a temporary state of things—as I understand it, that is the Government case—but a tariff is not an appropriate weapon for temporary use because it cannot be put on and taken off at will. The White Paper says that the new duties are to be imposed for a limited period, but the vested interests which tariffs create do not like these limited periods and when the time comes for the duty to be taken off a great clamour is raised which it is difficult for any Government, and particularly a Protectionist Government, to resist.
§ I should like to ask one or two questions. I have not many to ask because certain information which I should like to have had with regard to the Government's intentions' and policy was given in another place. Some of that information was of a surprising character, a very surprising character indeed. I was greatly astonished to learn, judging from his words, that the Prime Minister expects the Government to be in a position to impose some of these new safeguarding duties in the forthcoming Budget. That is about two months hence. That, I think, will be really quite impossible if the Board of 302 Trade Committees are going to make their inquiries properly and thoroughly, and I desire to ask the noble Viscount who is going to speak for the Government whether it is the case that the Government really do expect to be in a position to impose some of these new duties in the next Budget? And if not, what is their policy? Suppose the duties are not ready by then, and that reports come in from these Board of Trade Committees during the summer and autumn, what are the Government going to do? Are they going to wait until there is an accumulation and then bring in one special Finance Bill, or are they going to wait until the Budget of next year?
§ But taking the Prime Minister's words as they are, let me assume that some of the duties will be ready for inclusion in the forthcoming Budget. Then, in accordance with the White Paper, these duties will be levied for a limited period; that is, for a series of years. What. I want to know is, what are the precedents for putting in a Budget, and therefore in the subsequent Finance Bill, duties which are to last for a series of years? The duties and taxes in a Finance Bill are usually for the current twelve months, and they are either continued or altered from year to year. I am aware, of course, that in a special Finance Bill, like the last Safeguarding of Industries Act, special duties lasting for a series of years are inserted; but what are the precedents for inserting in the main Finance Bill of the year duties which are to continue for a series of years? I do not say there are no precedents, but. I should be very much interested to know what they are—I am speaking, of course, of modern times.
§ One great objection to inserting duties which are to last for a series of years is, as I have already indicated, that dumping may be regarded as a temporary state of things, and this is particularly true at the present time. It is very important in considering this or any other fiscal question to remember that we are dealing with post-war conditions. That is, so I understand, the Government's justification for the proposals—that the world is in a state of great economic unsettlement. As a result of that some dumping from certain countries may be inevitable, and indeed it may be opposed to our interests as a whole to try to stop it. Let me give an illustration of what I mean. Suppose that in some foreign country the internal 303 demand falls off and credit is restricted, perhaps during a period of deflation. This is not an imaginary picture; it has happened, and will happen again. In those circumstances stocks of goods in that foreign country must be cleared somehow. The only possible course for such a country, if a great crisis is to be averted, is to export at reduced prices some of its accumulated stocks of goods. If that is not done serious financial difficulties, and, indeed, may he panic, will ensue in a country such as I am describing, so serious that its purchasing power might for the time being almost cease. In such circumstances its merchants would be unable to take our products and its ports would be, not closed to our goods but unable to take our goods. Accordingly, it may come about that if the imposition of these new safeguarding duties were to prevent the dumping of some goods in this country we may be doing real injury to our export trade.
§ To employ a homely illustration let me put it like this. Dumping for a country like that which I have been describing may be regarded as a sort of safety valve, and if there is no safety valve there may be an explosion which will inflict damage near and far. The illustration which I have just given shows how interdependent and inter-related all these trade matters are, and it exemplifies, I think, the difficulties and dangers of the whole policy of the Government. Once you begin to meddle with the course of commerce by tariffs it is very easy to do much more harm than good. I am certain that this policy, if it is pursued, will have serious reactions and repercussions and that it is the wrong way to go to work. It is mainly to that aspect of these problems that I would wish to address the brief remainder of my remarks.
§ Consider, for instance, the provision in the White Paper which is to lead to a tariff because of inferior labour conditions in some foreign countries. Supposing, under those provisions, it is decided to impose a tariff, for instance, against Czecho-Slovakia. Then, under the provision of the White Paper, that tariff will apply not only against Czechoslovakia but against every other country, including the United States of America. But if sweated goods were to be the test there probably would never be a case made out against the United States on 304 that ground. Nevertheless, under the Government's plan, goods from the United States would have to be penalised because of sweated goods coming here from Czecho-Slovakia. It is, indeed, a case of wrong doing being visited on innocent persons.
§ I want to put an alternative. Surely an infinitely better way of dealing with this problem of inferior labour conditions, at any rate so far as long hours are concerned, would be to ratify the draft Convention for an international forty-eight hour week that was reached at Washington. The last Government, the Labour Government, did good work in this direction. The Labour Minister in the late. Government went to the Continent and there met representatives from Germany, France and Belgium. They arrived at a unanimous feeling that a common ratification of the Washington Convention for a forty-eight hour week for the four countries was possible. What I ask is this? Will the Government proceed on those lines? Further, will they do anything to increase the authority of the International Labour Office at Geneva? These questions were asked in another place, but no reply was given. Why not? Surely we are entitled to some reply. I may meet with the same fate, but I ask again: Will the Government introduce a Bill, as the Labour Government did, to ratify the Washington Convention for a forty-eight hour week, and if not, why not? Can it be denied that such a measure would do more to reduce the hours of labour abroad than all these tariff proposals?
§ I say again that in this policy the Government are going the wrong way to work, and in conclusion I wish to consider for a moment which are the countries which are going mostly to be hit, or at any rate which may well be considerably affected, by this new policy. I think we ought to be clear about that. I will not say which countries are aimed at, but which countries are going to be hit. Take France, for instance. Everybody knows that France is suffering from, and is faced with, grave financial problems. Various remedies are being suggested to assist France in her difficulties. Judging from many recent speeches of eminent French statesmen, it appears probable that France will adopt a policy which will bring about a measure of deflation.305
§ During such a time we should, in all probability, be receiving here in this country increased or, to quote from the verbiage of the White Paper, "exceptional" imports of French goods at low prices. In those circumstances it may be presumed that a case could be made out for the operation of these provisions in the White Paper. Thus, it would come about that at a time when it is most desirable that we should retain good relations with France, and also when we are wanting money from her, we should be engaged in setting up tariffs against her. Further, these tariffs, if and when set up, would apply not only against France but also against the United States and other countries. In fact, it may well be that this policy would injure to a considerable extent France and the United States, both our Allies in the late war.
§ LORD ARNOLD
Their tariffs may injure us, but they also injure their countries more. That is my case. The noble Earl shakes his head, but in my opinion that is the answer. They may injure us, but they injure their own countries more, and they would do better to be Free Trade countries as we are. It must also be remembered that the imposition of new duties is very often followed by retaliation on the part of the countries affected. There is no reason to suppose that, if you are going in for this new policy, we shall escape the almost inevitable consequences. Indeed, there is every reason why there should be retaliation, because under this—I do not wish to use strong language—almost crazy policy of the Government all countries are to be treated alike, both guilty and innocent. Has this possibility of retaliation been taken into account by the Government in its calculations? I have seen no reference to it yet. Have they considered it? I am afraid that they have not. I am afraid that there are a good many reactions which will arise from this policy that they have not yet taken into account.
The fact is that the more these proposals are examined the more indefensible 306 and dangerous they appear, and I should like to indicate an alternative policy. I have great personal respect for the Prime Minister, and I am sorry that it is so seldom that I can agree with anything he says, but there were certain words in his speech on this proposal on December 17 which were, I think, very notable. I will, if I may, read them to your Lordships. He said:—You cannot get the trade conditions that are in my view essential for really good trade until you get an improvement in the general conditions of Europe. You must have real peace in Europe.I think that those are very wise words, but I submit that the unsettlement and the tariff difficulties that will follow the imposition of these new safeguarding duties will not help to bring about that better state of things in Europe of which the Prime Minister speaks. On the contrary, these new duties will mean friction and difficulty. Allow me to remind your Lordships that the International Financial Conference which was held at Brussels in 1920 unanimously adopted a resolution urging—I will read your Lordships the exact words—
that the States which have been created or enlarged as a result of the war should at once arrange for the unrestricted interchange of commodities in order that the essential unity of European economic life may not be impaired by the erection of artifical economic barriers.This policy is not carrying out the spirit of this Resolution at all.
I say that the Government at home would be much better employed if, instead of trying to construct new tariff machinery, they would devote themselves to the work of bringing about those better conditions in Europe of which the Prime Minister has spoken. By that means they would do more than anything else to help trade and commerce, and I say that the Government have a great deal of work to do in this direction. Conciliation in Europe has received a setback since the Labour Government went out of office. There was a better spirit prevailing last year, and I contend that the foreign policy of the Labour Government which produced that better spirit is a wiser line to pursue than the proposals in this White Paper. If His Majesty's Government will bend all their energies to the work of European settlement they will do more in one year for trade and 307 commerce than they will ever do by tariffs.
Finally, I draw attention to the fact that for two decades the Protectionists in this country have been bad prophets and unsafe guides in regard to nearly all the statements which they have made, the proposals which they have advanced, and the expectations which they have held out. I will not detain your Lordships by giving, as I could give, instance after instance of how wrong they have been, but I submit that the record of the Protectionists for the last twenty years is not calculated to inspire the least confidence either in their diagnosis of trade conditions or in the remedies which they have suggested from time to time for dealing with industrial and commercial problems, and there is not the smallest ground for supposing that the provisions contained in this White Paper are any more wise, or less wrong, than their previous proposals which now stand discredited and condemned. Therefore I say that we who are opposed to this whole policy are right to do all we can—it may not be much—to resist it and to oppose these attempts to meddle with and dislocate the delicate and complicated mechanism of overseas trade. I shall very much appreciate if, in the course of the debate, I can have some reply from the Government on the points I have raised.
§ THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL)
My Lords, one of the difficulties that I have in replying to the speech of the noble Lord on the safeguarding of industries and the questions which he has addressed to the Government, is that he has covered such a very wide field and asked me to reply on foregn affairs as well as on fiscal policy. I trust he will not mind if I leave the question of foreign affairs aside, because if I deal with the question whether conciliation in Europe has gone forward or backward as a result of the coming into powder of the Conservative Government, I am afraid that I should have to travel over a field rather wider than the subject before the House. I do give the noble Lord some credit for audacity, which I believe is a great quality in a speaker, because he has 308 denied altogether that there is any sort of mandate for this Government to bring in these safeguarding proposals.
§ VISCOUNT PEEL
Another noble Lord says "Hear, hear." Lord Arnold arrives at that conclusion by a rather peculiar process. He does not look in another place at the overwhelming majority of the Conservative Government, but he chooses to add Liberals and Labour together and to assume that all those who belong to the Liberal and Labour Parties are strong Free Traders and against the safegarding of industries. Adding them all together he says that a majority of votes was given in the country for Liberal and Labour candidates over those recorded for the Conservatives. I leave for the moment the easy way in which he brushes aside the verdict of the country as so expressed at the General Election, but I really must say this to the noble Lord: He must not assume that we in this House, although we are not representatives, are totally ignorant of the opinions in the other place and in the country. If the noble Lord had only scrutinised the Division Lists in the other place he would have seen that several members of his Party were found to be not supporting the views which he has advocated strongly in this House.
I was going to say something also about that point of mandate. Very often there is a great difference of opinion as to whether a Government has, or has not, received a mandate for any particular proposal that is brought forward, but I confess that in my innocence of what the noble Lord was going to say I thought that point was hardly arguable at all. Perhaps the noble Lord will allow me to quote an extract from the Election address of the Prime Minister, in which he says:—While a general tariff is no part of our programme, we are determined to safeguard the employment and standard of living of our people in any efficient industry in which they are imperilled by unfair foreign competition, by applying the principle of the Safeguarding of Industries Act or by analogous measures.Then I would ask the noble Lord to listen to this part of the address:—Without such provision the carrying out of the policy embodied in the Dawes Report, in itself desirable as calculated to 309 secure German Reparations and to restore stable economic conditions in Europe, might only prove disastrous to ourselves.Does the noble Lord really insist on his contention after that statement has been most specifically made by the Prime Minister in his Election programme?
After this subject has been mentioned, I should think, by every candidate who stood on the Conservative side, it exceeds almost audacity to come down to this place, which I agree is not representative like the other House, and to tell us there is no mandate or no right for this Government to bring forward this measure for the safeguarding of industry. How much evidence does the noble Lord require? How many times does this need to be repeated by the Prime Minister or Leader of the Party before it is sufficient, in the opinion of the noble Lord, to give the Government authority to act? If a statement so explicit, so clear and so definite is not to be accepted, it is really hardly worth while for the Prime Minister or Leader of the Party to write out any programme or faring forward any manifesto.
I am, however, rather emboldened by the action of the noble Lord and the late Government, because the speech which he has made has been a direct attack upon any sort of safeguarding of any industry in any circumstances. Now that is a perfectly clear issue, and my question is why, if the Labour Party believed in it, did they not act up to it when in power? They had the right and the duty, if they so considered it, to repeal the old Safeguarding of Industries Act. Why is that Act still upon the Statute Book? Why, although they were in power for some ten months, was not the slightest attempt made by their leaders to repeal Part I of the Act, which dealt with key industries? Possibly I may be wrong, and the noble Lord may not be speaking on behalf of his Party, but only expressing his own individual opinion. I think it is not unfair to say that the noble Lord has not always been a member of the Labour Party. He was once a strong member of the Liberal Party, and it may he that he is not so much expressing the opinion of the Labour Party as trailing clouds of glory, as it were, of the Party to which he once belonged. But, I ask again, why were not the dumping provisions of that Act repealed. After all, definite action was taken in the 310 Budget by the Labour Chancellor of the Exchequer. He repealed the McKenna Duties. He must have considered these things, and it must have been deliberately, of malice prepense, that he allowed to remain on the Statute Book not only Part I of this Act about the safeguarding of key industries, but also the whole of the dumping provisions. And I confess I cannot reconcile the argument used by the noble Lord to-night with the action of his Party during the time that they were in power.
The next difficulty I feel in dealing with the speech of the noble Lord is this, that in the first part of his speech he poured scorn on these rules, and he told us that he thought nothing could be done became these rules were so complicated and impossible to apply It is true he safeguarded himself by saying that almost anything might happen. I suppose almost anything might happen, but I do not think those are considerations which shorten the sleep or increase the anxieties of ordinary practical men.
There are one or two further specific points to which ho alluded. The question of fabric gloves is one that he raised and that is a very interesting question. I remember very well old discussions about fabric gloves. A great disturbance was worked up in Manchester, and it was said that if you put any duty on fabric gloves then all the trade in the yarn that goes from Lancashire to be worked up in Germany would be checked, possibly stopped, and even if you had a few more gloves made, in this country, you would suffer far more by the check put upon that yarn trade to Germany. I made some inquiries at the Board of Trade as to whether any such effect followed. I was told that nothing of the kind had happened, and therefore all those fears and anxieties have proved to be utterly fallacious. It is true that the number of people employed in the fabric glove trade has lately been reduced, but why is that? It is not the fault of any duty, it is the result of the changeableness of feminine taste. Two or three years ago, when this matter was being discussed, all these young women were wearing fabric gloves, and I understand that now they prefer some other kind of glove. I do not think that any duties you could put on could make full allowance for all the variations in feminine taste and fashion.
311 I am sorry to be a little discursive, but I am trying to follow the different points taken by the noble Lord. He said, first of all, that this method of applying the duties would be wholly impracticable, first, because the men who sat on the Committees would he unfair and probably biased.
§ LORD ARNOLD
I distinctly did not suggest that. I was merely pointing out that in the nature of things it was almost inevitable that the majority of members of these Committees would be Protectionists, and if the noble Viscount will think of the parts of the country from which they would come, and what their associations are, I think it will be realised that they must be Protectionists. I did not say they would be unfair, but I said they must be, for the most part, Protectionists.
§ VISCOUNT PEEL
I think I expressed the same thing rather more briefly by saying that, in the opinion of the noble Lord, these men would be biased, and if you are biased you cannot be quite fair. The noble Lord suggested that they would take some time. After all, if you are to put on these duties, after making all these investigations, and seeing that all the conditions set out in the White Paper are fulfilled, it must take a certain time. The only other method would be to put on the duties at once, and then have the investigations, and I am sure the noble Lord would be even more indignant than he is now if that method had been taken.
One of the stronger points on which the noble Lord relied was this. He asked why, if you are importing goods from, let us say, Czecho-Slovakia, or any other country in Europe, and it is shown that those goods are produced under worse conditions of labour and lower wages than they are in this country, and the other conditions are also fulfilled, are you also going to put on that duty against a country like the United States where wages are probably higher than they are in this country? May I explain how that problem arose, because your Lordships will remember perfectly well that in the Safeguarding of Industries Act you had what are called discriminatory duties, and not general duties; that is to say, the particular duty was put on against a particular country which suffered from debased or depreciated currency. Great 312 difficulties arose from that system, because, if you put on a specific duty against those goods coming from that one country, clearly you would be infringing the most favoured-nation clause; and it would be impossible to maintain your whole commercial system, based on the most-favoured-nation clause, if you put on those specific duties against particular countries. There was also another practical reason, and one quite as urgent as that, because if you were to put duties on goods from a specific country you had to have certificates of origin of the goods, not only from that country but also from the adjoining countries through which these goods might pass. That, of course, created a very great practical difficulty. The result of that was that the Government, learning by experience, decided that when the duty was put on it should be a general duty; that is to say, against all countries.
But the noble Lord then says, in effect: "Ah, but you might be putting on the duty against a country where there was not such depreciation, or where the wages were higher, as in the case of the United States." Obviously, if the larger amount of the goods came from a country like the United States, even though we were suffering rather severely from that competition, no duty would be put on. But if the goods did come from one or more countries where the conditions set out in the White Paper were fulfilled, then the duties would be put on; but they would be put on against goods which came mainly from countries where the conditions prevailed, though they would also incidentally, no doubt, be placed on goods coming from the particular country referred to, which only contributed a very small percentage in many cases to the amount of goods that came into the country. Therefore I think that, both on the ground of complying with the most-favoured-nation clause, and on the ground of doing away with all these difficulties about certificates of origin, it is much simpler and more businesslike, if you are going to put on a duty, that it should be a general duty, and not one directed against a specific country.
The noble Lord went further in his argument and said that if you are going to put a general duty of that kind on one article it might grow, and in time a general tariff would be established. I do not allude to the definite engagement 313 given by the Prime Minister that he was not going to support a general tariff, but I would ask anybody to look at all these conditions set out in Section I and Section II of the Procedure and Enquiries for the Safeguarding of Industries. And I think I have the sympathy of the noble Lord to some extent in that, because, after all, he seemed to fear that not enough would be done, that it would be almost impossible to do anything, that these gentlemen sitting on these Committees would find that it was almost impossible to apply these complicated rules. But I would point out that, although several countries might possibly, in their trade, fulfil the conditions of one or more of the principles laid down in the White Paper, yet there could not be a very large number of industries in the different countries which fulfilled all those conditions, and that therefore the fears of the noble Lord as to the large extension of this business are really chimerical.
He also used another argument which seemed to me almost to answer itself. He told us that almost all goods, except those which were fully manufactured, were used for other purposes and other businesses and therefore would suffer if a duty was put on against them. Put the noble Lord has only to read this White Paper to see (hat this is one of the very points which are taken into consideration and that if they would affect trade, employment or business, the duties would not be imposed. So that I think the fears expressed by the noble Lord in regard to these rules would be dissipated if he gave them careful study. I could not help thinking that the fear and indignation of the noble Lord really arose not because these things were likely to lead to a general tariff, but because they would not lead to a general tariff, and that if it was possible to prove that they would lead to a general tariff no one would be more delighted than the noble Lord himself.
He is hampered in his attack by the very fact that those matters are so carefully guarded and safeguarded in these rules that it would almost pass the wit of man to establish a general tariff on their basis. In fact, one has heard criticisms on the other side—that these rules are rather too complicated, that it would be difficult for the different businesses to jump all the hedges and fences on this long course before they could arrive at 314 their goal, and that they would be still exposing the unfortunate virgins of British industry to the attacks of the ravening dragons of international competition. Therefore, I think the fears, hopes and anxieties of the noble Lord pretty well balance each other. One point to which I should like to allude is the difference of procedure under the Safeguarding of Industries Act and under these proposals. The noble Lord referred to it, I think, but did not dwell upon it at great length.
§ VISCOUNT PEEL
No; but I have to refer to it to some extent because of the melancholy results which may occur to your Lordships' House. Under the previous system your Lordships had an opportunity of discussing the Safeguarding of Industries Bill; but at a certain stage of the Bill it was discovered that it had been certified by the Speaker and was really a Money Bill; so that while your Lordships were exercising all your ingenuity in discussing the different principles of the Bill and displaying all the keenness of your logic in criticising its definitions, you were unable to alter the Bill, and all that your Lordships could do was to send certain Amendments by way of suggestion to another place. But another place stood upon its privilege and refused even to discuss them. In this particular procedure I am afraid your Lordships will be in the same position.
I agree that under the new procedure, where these particular duties are to be imposed by Finance or Revenue Bills, there will be full opportunity in another place, on all the long stages through which Financial Bills pass and with full knowledge of the published reports of the Committees, to discuss them, but I am afraid they may only reach your Lordships' House in the form of Finance or Revenue Bills which, under the regulations now obtaining, your Lordships will be unable to discuss. That, I think, is a melancholy result of this change. But I do not think it is a very great change because, as I said, the other Bill was also treated as a Finance Bill. But there is no question that Parliament in the House of Commons will have greater power of dealing with these duties than it could have when they were imposed by Orders of the Board of Trade which had only to 315 be approved by a positive resolution of that House. May I remind your Lordships that under the old procedure when the House of Commons was not sitting;, or was not likely to sit for a month or so, a duty could be put on and could be levied for a certain period as an interim measure pending the House of Commons' sanction? In the case of gas mantles that duty was put on and was levied for several months. Therefore, from the point of view of the full control of the House of Commons over finance and duties, the present procedure is an advantage over the last.
The noble Lord has said that he did not say anything about that and did not allude to it. I think he ought to have alluded to it. Had he given full credit to the subject, I think his conscience ought to have been pricked by the suggestion that under the new regulations the House of Commons has far greater power of dealing with these matters than under the old procedure. In not alluding to that fact I think he showed a lamentable indifference from the point of view of the powers of that House and of control over the Government. I regret very much that as this general attack has been made on the whole policy of the Government, credit should not have been given by the noble Lord for this alteration in procedure, which may have been disappointing to him but nevertheless comes fully and carefully within all the promises and undertakings made by His Majesty's Government and has restored to another place the full control of all finance. Though this seems to be an indifferent matter to the noble Lord it is to your Lordships, deprived as you are of your powers under the Parliament Act, a matter of the greatest interest.
§ EARL BEAUCHAMP
My Lords, to those of us who for years past have advocated the Free Trade cause in this House it is a matter of no little satisfaction that the noble Lord who placed this Question on the Paper for discussion this afternoon has come to help us in our fight. I am not sure whether he spoke for a united Party or not. On the whole I am inclined to think that he did not, and I shall venture to explain to your Lordships my reasons for making that statement. The Party to which the noble Lord belongs is in a somewhat peculiar position. We all know where the old 316 historic Parties stand in this matter. Generally speaking, noble Lords opposite and the Conservative Party are in favour of Tariff Reform. There were, indeed, some few distinguished members of that Party who were famous as Free Traders and some of them are still to be found in their ranks, though there are not so many as there used to be. In the ranks of the Liberal Party it is true, I think, that if I were to examine through a microscope the exact opinions of some of my noble friends I might find that they would deviate a little from what I would consider to be the strictly right way; yet on the whole the Liberal Party is a Free Trade Party.
The position of the Labour Party is different altogether. I do not attach very great importance to the departure from the strict canons of Free Trade which was inaugurated by the late Government when they embarked upon the protection of sugar beet in this country. Apart from that we find a strong fissure in the ranks of the Labour Party upon this question. We find this really important fact, that the most important portion of that Party are themselves really and truly Protectionists. It is just that section of the Party which had. I think, the greatest influence over the policy of the Government last October and November which now declares itself to he opposed to a Free Trade policy.
I am glad to be able to quote to your Lordships a few sentences from what some of them have said. It was Mr. Graham, the late Financial Secretary to the Treasury, who, at the I.L.P. Summer School at Scarborough in August last, said this:—I have often thought in my own mind that a tariff is more or less possible in certain definite spheres. I have discovered in the Socialist back benches, where all true moderation resides, a powerful Tariff Reform Party, and you must adjust your own differences with them.Then I turn to Mr. Wheatley, a still more important member of the Labour Party, who used these words in the course of a speech at Glasgow in December last:—I appeal to you not to allow yourselves to he fooled into believing that the fight on the question of Free Trade and Protection is one in which you are at all vitally interested. The conflict between Free Traders and Protectionists is a conflict between rival sections of capitalists, and is not a conflict in which the interests of the working classes can or will be fundamentally 317 affected. Free Trade has not prevented slums growing up, and Free Trade can do nothing to remove the slums that have grown up under it. Under the Free Trade banner, beneath which you are invited to march, have grown up all the housing shortage, all the poverty and deplorable conditions, and that general state of working-class life which it is the Socialists' mission to remove. So you must not be humbugged into believing that you are advancing the cause of the working class one iota by taking either side in the contest which is now about to begin.Mr. Wheatley went further in an article which he contributed lately to the Glasgow newspaper called Forward. He used these words:—Free Trade is outrageously anti-Socialist. It is anarchy in trade. Trades Unionism wisely violates the principles of Free Trade.In those circumstances, much as I welcome the support of the noble Lord, I ask myself how far he is likely to be supported by the whole of the Party behind him.
We realise with pleasure the fact that the noble Lord himself, and the noble Viscount behind him (Viscount Haldane) trailing with them clouds of glory when they came to rest upon the Government Benches some twelve months ago were largely equipped with ideas that they brought with them from the Liberal Party, and amongst that equipment nothing was stronger that their Free Trade opinions. I only wish that I could think that the opinions to which the noble Lord has just given utterance were fully shared by members of his own Party. I cannot help thinking that he would indeed be performing a very useful service to the cause of Free Trade if he would address the speech which he has just made to your Lordships' House to the members of his own Party
For my own part, I am not one of those who would impute any blame to His Majesty's Government for having in any way departed from, the pledges which were given in the course of the last General Election. It scorns to me that they have, with most meticulous care, done perhaps nothing which could fairly be described as having gone outside the pledges and promises then made More than that, I would venture to say that, in their anxiety to keep within these limits, they have created additional difficulties for themselves. The feeling 318 of myself, and I think of the real Free Traders, is that we dislike the scheme so much that we are not very much disposed to enter into all the details of it. The methods by which the matter will be brought before your Lordships' House or in another place are comparatively immaterial compared with our fundamental objections to the whole of the system, and for those reasons it will not be necessary for me, I am glad to think, to trouble your Lordships at any great length this afternoon.
We note the fact that a large number of important industries are entirely outside the scope of the Government's intentions. Coal, shipping, transport and agriculture, employing between them a large majority of the workers of this country, will not in any way be affected. I confess that I find the instructions somewhat difficult to understand, not so much perhaps in their immediate application as in the method by which they will be used. How difficult it will be for a really independent Committee to consider the exact tearing of such phrases as these—that the industry is of "substantial importance"; that the imports are in "abnormal quantities"; that trades arc subject to "exceptional competition." Then they have to consider the various goods, whether it is possible that they should be profitably manufactured, and whether employment would be seriously affected by their importation.
There is one phrase, an ominous phrase, to which I think attention was called by the noble Lord, Lord Arnold, who, in the course of his reference to the instructions, pointed out that industries are to be included in which employment is "likely to be seriously affected." Political prophecy is one of the most dangerous forms of amusement, and the course of the last few years has shown us how political prophecy in the domain of economics has been one of the most difficult things. To take the simplest of all the instances. During the war, especially during the last year or two of the war, it was a commonplace of all politicians to expect an immense amount of dumping into this country from Germany. That never materialised, as we expected it would, and, having made a mistake of that kind, it seems to me very dangerous that we should give authority to a Committee to impose a tariff in so nebulous a form as 319 is suggested by cases where employment is "likely to be seriously affected."
There are, of course, a certain number of small points to which we Free Traders attach some importance. We would very much wish the consumers to be represented before the Committees who are going to enquire into this matter. The consumer, after all, has no means of expressing himself. He is not organised into a body, and, therefore, although his interests are really the most important of all, he is not likely to be heard, nor his interests to be considered, by the Committees. I confess that I should like to feel sure that the statistics which will be given to these Committees are likely to be subjected to the criticism of some expert. There are a number of matters, such, for instance, as the difference between money wages and real wages, which ought to be examined very carefully before any action is definitely taken upon them, and the Board of Trade, which has to deal with this matter, will deal with it so far as we can see under the instructions, upon the advice of a really partial witness, and, after they have decided upon that somewhat insufficient evidence, then the matter will go before the various Committees.
I would venture before I sit down to draw the attention of His Majesty's Government to a very interesting little work which has just been published in America dealing with these very points. The Carnegie Corporation in America, amongst many other very useful organisations, maintains an Institute of Economics, which is entirely independent of political Parties, and which tries to place facts that are in controversy before the people of the United States in order that they may form their opinion upon them. This Institute has lately published a little book called "Making the Tariff in the United States." It was published in the last months of last year, and I shall venture to quote a few short quotations that bear particularly upon the present controversy. The writers say:—Congress … has been aware that the public hearings on which reliance was chiefly placed for assembling information were attended in the main by those who had some special interest to serve, that the worth of the matter presented at the hearings was impaired by bias, irrelevancy, unsupported assertion and sometimes by 320 intentional mis-statement, and that it was often impossible to distinguish what part was true and what was false. Congress has therefore tried several means of protecting itself against the importunity of predatory interests.The authors go on to explain how very ineffective the various methods have been.
After pointing out the extent to which tariffs have raised prices, they continue like this:—It sounds paradoxical but it is true that high duties will not always eliminate foreign competition. Not much attention has been given to this fact; it has been naively taken for granted that if foreign goods are excluded from the home market, domestic producers will invariably be relieved from competition with them. This mistaken belief has continued for the reason that there has been little investigation of the effects of high duties on the course of international trade. Those who hold the belief overlook the fact that very often competition exists not only in the home market but also in the other markets of the world, and that suppressing it at home tends to increase it and make it more difficult to meet abroad.I will give one other quotation which bears upon the matter to which the noble Viscount, Lord Peel, devoted some portion of his remarks. Dealing with retaliation they say:—The countervailing legislation of foreign countries has reduced in appreciable measure the benefits commonly imputed to Protection. A better domestic market has been secured for some industries at the loss of foreign markets necessary for other industries.The experience of the United States, put forward as it is in this work produced by an impartial authority of a high economic character, is really one that deserves the attention of your Lordships' House and His Majesty's Government.
But I am not anxious to dwell upon the details of this matter. We are so entirely opposed to the principles which underlie it that it would be a waste of time to try to improve it, or to make suggestions for the improvement of the method by which these duties are to be imposed. We are content with the fact that we believe now, as we always have believed, that Free Trade does provide the workers of this country with the best possible opportunities, and that the wages in Free Trade England are higher than they are in any other country within the limits of Europe. The country in which wages are the second highest, Holland, is also a Free Trade country. In these circumstances 321 we remain unconvinced and unrepentant Free Traders.
§ LORD ARNOLD
My Lords, before we pass to another subject I should like to say just a few words in reply.
§ LORD ARNOLD
I did not move. I understood that the Motion on the Paper gave me the right of reply. The noble and learned Viscount on the Woolsack asked me if I moved, and I said: "Not at the moment." If I am not allowed to reply I will, of course, resume my seat. I am a comparatively new comer to your Lordships' House and I did not realise that I had specifically to move for Papers in order to have the right of reply. Perhaps with the assent of your Lordships I might be allowed to say two or three words. I was quite under the impression that I had fulfilled all that was necessary in order to preserve my right of saying something at the close of the debate.
§ THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS CURZON OF KEDLESTON)
May I intervene for a moment in order to explain the position to the noble Lord? If a noble Lord de sires to have the right of reply he has to move for Papers. That Motion gives him the right of reply, and a strict interpretation of our Rules gives him no right to speak a second time except in correction of his own remarks.
§ LORD ARNOLD
I am much obliged to the noble Marquess for his courtesy. It was a misunderstanding. I was under the impression that the words on the Paper fulfilled all that was necessary, and when the noble and learned Viscount on the Woolsack asked me if I intended to move, I said I would not move at the moment. I hope I may be allowed in the circumstances to say just a few words in reply. I assure your Lordships that I shall be only a moment or two. The reply of the noble Viscount was somewhat disappointing because I asked for certain specific information on quite definite points, points which I thought it was perfectly proper to raise, and I therefore had some hope that the information might be given to me. But it was not. I was not told whether the Government had any intention at all in regard to ratifying the Washington Convention, or what the procedure would be 322 in regard to a Finance Bill if the duties were not ready for the Budget. No attempt was made to deal with the points I raised with regard to the analysis of the figures of unemployment.
However, I pass that by and I come to the noble Viscount's remarks on the question of mandate. I would remind the noble Viscount that he must not overlook the fact that there is a section of his supporters in another place who are not supporters of this policy, and if you take that into account, quite apart from the analysis of the votes, I maintain that it is by no means clear that the Government has its mandate. Moreover, in the quotation he gave from the address of the Prime Minister, it was specifically stated that it was not the intention of the Government to introduce a general tariff, but these proposals will lead, if they lead to anything, at any rate to a general tariff on certain articles, and that was not understood at the time of the General Election. The noble Viscount asked why the late Government did not repeal the whole of Part II of the Safeguarding of Industries Act, 1921. My reply is that it really was not worth while for them to do so.
§ LORD ARNOLD
That comes to an end next year. We were only in office a few months and we had a great many things to do. We repealed the McKenna Duties, a much bigger thing than the repeal of Part II of the 1921 Act. I think we had a very good record when we were in office on the question of Free Trade, and I was very sorry to hear the remarks of the noble Earl, Lord Beauchamp, on this particular point. If I may respectfully say so, I do not think he was altogether wise in the remarks he made. The final test in all these matters is the Division Lobby. Listening to the noble Earl, one would imagine that when there is a Division in another place on some question of Free Trade every member of the Liberal Party votes in the right Lobby. But that is not so at all. I remember an important-Division in another place last year on the question of Preference, a singularly difficult Division, and if the noble Earl will look at the Division Lists he will find that the Party to which I belong stands the test of an analysis of figures very much better than the Party to which he belongs. 323 His picture that all is well in his own Party and that Liberals vote for Free Trade in all circumstances simply will not bear close investigation. Last year we had a debate on Preference in this House in which I took a small part in holding up, as well as I could, the banner of Free Trade. I was followed by Lord Emmott, one of the colleagues of the noble Earl—a noble Lord who comes from Lancashire, supposed to be the home of Free Trade—and I was surprised to hear him make certain observations which in my opinion were quite inconsistent with the Free Trade position. Therefore, if we are to have these matters brought up the noble Earl will forgive me if I remind him of one or two experiences of the past. I am sorry I did not move my Motion in the right way. I will correct that another time. I had thought of moving for Papers, but, I will not do so at this late hour.