HL Deb 18 July 1928 vol 71 cc1116-68

, who had given Notice that he would call attention to Safeguarding and other Import Duties imposed since 1924, and move for Papers, said: My Lords, it is now a long time since a debate took place in your Lordships' House upon the policy of Safeguarding, and therefore no apology is needed for again discussing these matters. On the contrary, I think it is high time the situation was considered afresh, because the most extravagant and unsustainable claims are being made by the supporters of Safe guarding Duties as to what they consider them to have accomplished, and because we are apparently to have a further instalment of this policy put before the country at the approaching General Election. We are being told in various quarters and in various ways that the policy of Safeguarding has been a success, and many of its supporters appear to be hopeful that at last the traditional opposition of the British people to Protection can, by this small instalment method, be overcome. Well, my Lords, this is a world where human hopes and expectations are frequently falsified and this is particularly true of Protectionists.

Before I come to examine in detail the Duties which this Government has imposed, I must, though I can do it very briefly, remind your Lordships of the genesis of this Safeguarding policy, because we ought, if we can, to be clear about what it is that the Government is seeking to do by means of these Safeguarding Duties. We have been told by the President of the Board of Trade and others, that the real reason for these proposals is the fact that there is a large number of unemployed in the country, indeed, well over one million. The suggestion appears to be that this is largely due to foreign imports, and unfair competition, on account of inferior labour conditions and so forth, and we are told that these imports and this competition ought to be checked by Import Duties. Unfortunately, though, for the supporters of this policy, it happens to be the fact that the vast majority of the unemployed are in industries which could not be helped by Import Duties at all. They are in industries or trades wholly, or partly, manufacturing for export or else they are in coal mining, ship building and so on—that is, in industries not subject to foreign competition.

In point of fact—and this cannot be emphasised too often—if the unemployment statistics are analysed, it becomes clear that somewhere about three-quarters of the industries of the country not only could not be helped by Import Duties, but would unquestionably be harmed by them, because the cost of production would be increased. Thus, at the most, you are driven back upon somewhere about a quarter of the unemployed as the potential area of operations for this Import Duty or Safeguarding policy. I say potential area advisedly, because this proportion of about a quarter has again to be greatly reduced. This is due to the rules in the famous White Paper of 1925, regarding the imposition of Safeguarding Duties. These rules laid it down that one thing which has to be taken into account before a Duty is imposed is whether the proposed Duty on any particular roods would exert a seriously adverse effect on employment in any other industry using goods of that class or description in production. Obviously this excludes from the area of possible help a large proportion of this remaining quarter of unemployment. In many cases these Safeguarding Duties cannot be applied to help the unemployed in the industries in this remaining quarter without the risk of seriously injuring other industries by directly adding to their cost of production.

If, however, as is now being urged, there is to be more Safeguarding and the Safeguarding Rules are to be relaxed, and this provision in the 1925 White Paper is to be abrogated and Duties are to be applied more widely in future, then it is evident (the words of the White Paper indicate it) that unemployment will not only be indirectly caused by Safeguarding Duties—that, as I will show, always happens—but it will be directly caused as a result of extending Safeguarding. Thus, when the position is analysed and everything is taken into account, it becomes clear that Safeguarding Duties cannot constitute any kind of adequate policy for dealing with unemployment. Indeed, Safeguarding can only be applied to a fraction of our imports, unless it is directly to create unemployment, through its seriously adverse effect on other industries which use the safeguarded goods in their production. Hence, it is ridiculous to contend that these Safeguarding Duties constitute, or can constitute, any kind of adequate policy for dealing with unemployment. As a matter of fact, as I will prove, there is no evidence that the Safeguarding Duties which have been applied have led to any material decrease in unemployment in the industries concerned. But even if that were not so, even if there had been substantial reduction in unemployment in these industries, that result could only have been brought about at the expense of some other industry or trade quite apart from whether they use the safeguarded goods in their production or not. The simple truth is—and it cannot be too frequently or too strongly stressed—that you cannot by putting on Duties increase the total amount of employment in a country.

I think it is worth while in a few sentences broadly to consider the theory about this matter because it goes to the root of the Free Trade and Protection controversy. In this country—as in all civilised countries—there are imports of foreign manufactured goods. The Protectionists want to reduce these imports, but what they never take into account—though it has been told them times without number—is the elementary fact that if you reduce imports you thereby and to the same extent reduce exports. You do not by tariffs and you cannot by tariffs add to the total amount of trade in a country. On the contrary the inevitable effect of tariffs is to decrease the total amount of trade in a country. Let it be assumed that the expectations of the safeguarders are realised; let it be assumed that the imports of some safeguarded article, say gloves, are substantially reduced because of the Safeguarding Duties. Even so, that result will only be achieved, and can only he achieved, by injuring some other trade or trades. It is not always possible to say precisely which other trade will be injured; but some other trade will be injured because its exports will be decreased. Its exports will be decreased because they will not go out to the same extent as formerly. They will not go out to the same extent as formerly because goods for which they used to pay are not coming in to the same extent as formerly.

Not only will some other trade be injured in this way by reduction of exports, but, in addition to that, any new Duties must also harm trade in another way because, owing to the increased price which will have to be paid for the articles on which the Duties have been put, there will be less money to spend on other articles. Therefore, the industries and trades making and dealing in those other articles will be injured. Thus it always has been, and thus it always will be, because these are simple economic laws from which there is no escape, and under Protection you never can make the circle meet.

Now I come to the Safeguarding Duties themselves, and I am going to examine the position in detail, so far as time will permit in one speech. Altogether the Safeguarding Duties imposed or promised to date are eight in number. They are lace, gloves, cutlery, gas mantles, wrapping paper, pottery, buttons and enamelled hollow ware.


The number is nine, I think.


When the noble Viscount says nine I think he is counting gloves as two.


I am—leather gloves and fabric gloves.


Well, I am counting them as one, so that there is not much difference between us. I think it is simpler to treat them as one. Only the first five of these eight Duties, however, have been in existence for any length of time, and it is only in respect of these five industries that satistics are available over a sufficiently long period to lead to any sort of conclusions. I will, therefore, confine my remarks, so far as the results of Safeguarding Duties proper are concerned, to these five industries.

Before, however, I come to discuss these five Duties, I must call attention to a very important point in this whole controversy, which is, that the advocates of Safeguarding usually adduce in support of their case what has happened in the motor industry and the artificial silk industry. These, however, are emphatically not Safeguarding Duties. First, as to motors. Your Lordships will remember that the McKenna Duties—those are the Duties on motors and so forth—which had been abolished by the Labour Government in 1924, were re-imposed by this Government in 1925. These Duties were first put on by Mr. McKenna during the War for purely war purposes, and if an application had been made for a Safeguarding Duty for the motor industry, it could not for a moment have conformed to the rules laid down in the White Paper for the guidance of Safeguarding Committees. Foreign competition for our motor industry here came very largely from America, and as regards America there can obviously be no question of unfair or inferior conditions of labour and so forth. No, the Motor Duties cannot possibly, according to the conditions laid down by the safeguarders themselves, be regarded as Safeguarding Duties.

Neither are the Duties on artificial silk Safeguarding Duties. These Duties were put on by Mr. Churchill for Revenue purposes. They were, we were told, in the nature of a luxury tax, and there is indeed, though at a lower rate, an Excise Duty on artificial silk. Moreover, any claim that the Artificial Silk Duties are Safeguarding Duties can be ridiculed by the suggestion that Courtaulds were a depressed industry which needed safeguarding. Your Lordships will remember that Courtaulds themselves opposed the Duties and did not want them put on. Therefore, according to the theories of the safeguarders themselves, there is no kind of case that can be made out for these Duties as safeguarding ones. And—as I have shown—the same applies to the Motor Duties. Yes, but what happens? The safeguarders usually treat the Motor and Artificial Silk Duties as Safeguarding Duties, and in order to arrive at certain results and in their frantic endeavour to make out some sort of case, they lump together statistics regarding these two industries with figures of the five safeguarded industries of which I have spoken.

Now, it is perfectly well known—any schoolboy knows it—that both the motor and artificial silk industries have been expanding all the world over at an enormous rate; they are new industries catering for a huge popular demand and the statistics of these two industries would have shown some large increase in almost all respects in any country during the last few years whatever its fiscal system was. This is so obvious that it is not necessary to labour the point, but it is eloquent evidence of the poor results of the Safeguarding policy that its advocates have to bring in, as testimony to the virtue of their nostrum, statistics relating to these two industries with the suggestion—though it is grossly wrong, and they know it—that the expansion of the motor and artificial silk industries is due to Safeguarding. That the expansion of these industries is not due to Safeguarding can be clearly demonstrated. The artificial silk industry was growing by leaps and bounds long before Safeguarding was imposed, and as regards the motor industry it can be proved that it had great prosperity during the year when, owing to the Labour Government, the McKenna Duties were repealed. In that interval, when according to the safeguarders, disaster was to come to the trade, precisely the contrary happened. This is a matter of ascertained fact, not of wild talk or of speculation. So far as employment is concerned, there was, when the Duties were taken off, a great increase. In fact, employment increased quite as much as in most other years, and more than in some. Also, production and exports largely increased. Indeed, the expansion of the trade when the Duties were off compares very favourably with the expansion in any other equal period.

Here are great difficulties for the safeguarders, but I do not wish to overstate my case. The position is that the motor and artificial silk industries were bound to expand and are bound to expand both here and in other countries whether with, or without, Duties. My point is that if we are to examine Safeguarding, let us examine Safeguarding and not something else which is quite different, and which really has nothing to do with the policy of Safeguarding or the reasons for which safeguarding has been put forward and which, owing to special circumstances, cannot for the time being fairly be taken as illustrative of any fiscal system, whether Protection or Free Trade.

Before passing on, I must say a word about the Duties, on natural silk, as distinct from artificial silk. The Natural Silk Duties also are not Safeguarding Duties. They, too, are Revenue Duties and were imposed as part of the policy of taxing luxuries: Mr. Churchill explained this at the time. Hence, there is a Duty on natural silk itself, quite apart from its manufactures. Moreover, despite the Duties on natural silk manufactures, the silk industry, in this country is far from prosperous, and these Duties, even if they be counted as Safeguarding ones, do little or nothing for the Safeguarding cause.

I think I have now plainly established that the Duties on motors, artificial silk and also natural silk, are not Safeguarding Duties, and I have cleared the way for a consideration of the five Safeguarding Duties themselves. In discussing the results of Safeguarding Duties, it is necessary to make it clear that in certain important respects reliable official statistics are not available. In point of fact, nearly all the figures given by safeguarders in support of these Duties are not official, and some of them are demonstrably incorrect. Not only so, but the basis on which safeguarders make their calculations is often most misleading, and that, indeed, is why such a basis is chosen. It is chosen to try to make a case which is unsustainable when a more correct or, to speak candidly, a more honest basis is taken. For instance, in their statistics, safeguarders will often make comparisons as between the years 1925 and 1927, whereas it is much fairer—indeed it is the only proper way in arriving at conclusions—to make comparisons between 1924 and 1927. The reason for this is that in 1925 a Conservative Government was again in power and Safeguarding was already either a certainty or a virtual certainty in some industries. Consequently, trade in these industries at once became abnormal. Notably, imports were often rushed into the country so as to get in Duty free before the new Duty was put on. How, in these circumstances, can the year 1925 be taken as a fair one for comparing imports as between one period and another? Surely the proper way is to go back to 1924.

Now, speaking broadly, the safeguarders say that four results will follow from the policy of safeguarding an industry by a Safeguarding Duty:—

  1. (1) The Duty will reduce the imports of the safeguarded article;
  2. (2) By so doing the Duty will reduce unemployment in the safeguarded industry;
  3. (3) The exports of the safeguarded industry will increase;
  4. (4) The Duty will not raise the price of the safeguarded article to the consumer.
I will take these in order. First, as regards reduction of imports, the figure with which we should be concerned is, of course, that of retained imports; that is, of imports after deducting re-exports. So far as retained imports in these five industries are concerned there has been—as between 1924 and 1927, the proper years to take—a reduction which averages somewhere about 21 per cent., except in the case of gas mantles where, since the Safeguarding Duty, the British manufacturers actually pay the German manufacturers is. 4½d. per gross on British production to keep them, the Germans, out of our market. Apart from this, which in any case is a very small industry, the average reduction of retained imports in the safeguarded industries is, as I have said, somewhere about 21 per cent. This is inconsiderable, especially in view of the general fall in wholesale prices which has taken place during the years in question. The net result demonstrates how ineffective Safeguarding Duties have been in achieving one of their primary purposes, which is to check imports coming in. This is all the more true when it is remembered that Duties of 33⅓ per cent. are extremely high ones. Mr. Joseph Chamberlain, in his fiscal proposals, only suggested Duties averaging 10 per cent., even on manufactured goods. A further point is that some part of the decline in imports which has taken place is due to heavy stocks imported in 1925 and 1926, prior to the actual imposition of the new Duties, owing, as I have indicated, to the rushing in of goods to escape Duty. It will be interesting to see how the figures of retained imports work out over a longer period.

I now come to the question of unemployment in the safeguarded industries, and I say at once that, save in the case of lace, no reliable official statistics are available to show what has been the effect of the Safeguarding Duties on unemployment in the industries concerned. I wish the safeguarders also were sufficiently fair controversialists to say the same thing. They ought to say it because they know, that it is true. There are several reasons why there are no reliable official statistics available, the chief one being that the safeguarded industries are not big ones, and there are no separate Board of Trade unemployment statistics which relate definitely to these industries, as distinct from other industries.

The Parliamentary Secretary of the Ministry of Labour recently stated in the House of Commons that separate figures about the number of insured persons are not available in respect of the specific industries to which the Safeguarding of Industries Act applies, with the exception of those relating to the lace industry, nearly all of which is safeguarded. So far as lace is concerned, the latest available figures show that from July, 1924, to July, 1927, the number of persons in employment in the lace industry has increased by the monumental total of 188! It has increased from 16,579 to 16,767—that is an increase of 188. These are the latest available figures. It is possible that if he statistics could be brought down to date the increase may be larger—it could scarcely be smaller. It may, though, be larger as lace is rather coming into fashion again. In any case the statistics of several other industries, non-safeguarded ones, show an increase in employment due to some explainable cause. Before I leave lace, I must remark that when, a few months ago, the Chancellor of the Exchequer visited Nottingham, he did not say a word about the success of Safeguarding in the lace industry, and from that eloquent silence, I think we may assume that there was nothing sufficiently satisfactory for him to speak about.

Let me continue. Despite what I have been saying, despite alb fact that apart from lace there are no official statistics about unemployment in the safeguarded industries, we have all kinds of extravagant statements made by safeguarders about so many more men being employed here and so many more men being employed there owing to the Safeguarding Duties. In point of fact although there are, apart from lace, no official statistics available, there seems good ground for supposing that, as in the case of lace, there has not in general been much change in unemployment in the other safeguarded industries one way or the other since the Safeguarding Duties were imposed. In support of that statement, let me refer to one of the more recently safeguarded industries—the pottery trade. The Times, a few days ago, contained a passage about this trade which said that a small increase in unemployment reflects the generally dull condition of the Staffordshire pottery industry. Short time is being worked in most branches. Well, that is not a very good advertisement for Safeguarding as a cure for unemployment. But even if the position were other—


Is that in the translucent pottery trade?


It is a statement made in The Times dealing with Staffordshire pottery.


That covers a large area and it may not have anything to do with Safeguarding.


I am quoting a statement from The Times about the Staffordshire pottery trade. Even if the position were otherwise, even if in the case of one or all of the safeguarded industries there had been some considerable decrease in unemployment, it would not be remarkable, having regard to the artificial situation created by Duties. Take, as an example, any manufactured article, some part of the supply of which comes from abroad, and some part of the supply of which is made at home. If then you stop some part of the foreign supply coming in and as a consequence more goods of this kind are made at home, it is not surprising if in that particular industry unemployment is decreased. It would be surprising if it were not.

But that is not the end of the story. You are not told the remainder by the Protectionists. You are not told that this result is only achieved by increasing unemployment in some other industry, the goods of which used to be exported to pay for the goods which are not now coming in. Next, you are not told that because of the Safeguarding Duty the price is raised to the consumer, not only of those foreign imported articles which still come in despite the Duty, but also of all the home-made articles of the same kind. That is due to the simple economic law that you cannot have two prices for the same thing in the same market at the same time. That is how Protection works; that is why the home manufacturers want it; that is how the consumer is bled. Next, you are not told that the increased price which the consumer has to pay for the goods, owing to the Safeguarding Duty, lessens his purchasing power for other goods, and that the demand for some other goods will, in consequence, be decreased and some other trade or trades will suffer in this way.

Next, you are not told that owing to lessened imports and exports due to Tariffs, there is less work for our ships to do, and that one of our greatest industries, the mercantile marine, is bound to suffer, and that our import and export merchants and all who are dependent on them will suffer too, and those who are doing insurance and so forth, in connection with our foreign trade both in and out will also suffer. It is indeed scarcely possible to see the end of the injury which is done. But you are not told these things. All you are told by the safeguarders is that this particular benefit will or may result to industry A because of the application of their nostrum. You are not told about the injury to industry B and so forth. You are only told about the credit side; nothing is said about the other side, though on balance there is a big debit balance. What kind of result, what kind of right conclusion can be arrived at by unfair and one-sided propaganda of that kind?

Thirdly, the safeguarders contend that the exports of the safeguarded industry will increase. The reply to this is very simple. It is that with one very small exception they have not increased; they have decreased. As between 1924 and 1927—again the fairest years to take—lace exports have decreased by 32 per cent., glove exports by 13 per cent., gas mantle exports by 14 per cent., wrapping paper exports by 43 per cent., and in the case of cutlery exports there is an increase of 3 per cent. Combining all these results, there is in these five safeguarded industries a decrease in exports of about 24 per cent. This is not a light matter even after making allowance for the general fall in wholesale prices which has occurred in the period. Also, it must be borne in mind that this decline follows on a period of already greatly reduced export trade due to post-War effects and other causes. Let me emphasise that the figures I have given are official. They are not mere partisan statements like most of those made by safeguarders. Surely the safeguarders ought to cease making these baseless and demonstrably false claims about their policy having increased exports. I repeat it: exports have not increased, they have decreased.

The fourth claim made by the safeguarders is astounding in its boldness, not to say impudence. It is being definitely asserted that the imposition of a Duty on an article coming into a country does not increase the price of that article. In fact the safeguarders, or some of them, are now going still further and are actually contending that the effect of imposing a Duty on an article coming to a country is to lower prices to the consumer. These preposterous statements about prices not having been increased owing to Safeguarding Duties, or, indeed, having been reduced, are supported by the flimsiest evidence. They are supported by no official prices. There are no official prices for any of these safeguarded goods. The Government had to admit that in the House of Commons a few weeks ago. Nevertheless, we have all kinds of categorical claims made by the safeguarders. It is said, for instance, that the price of gloves to the public is no higher on account of safeguarding. No higher, my Lords! No higher than what? That is the point at issue. No higher than what? If the price of gloves is no higher than it was when the Safeguarding Duty was put on, it does not at all follow that the Duty has not raised the price of gloves. The whole question is: What would have been the price of gloves if there had been no Duty?

I have already said that there has been a general fall—I do not say in everything—a general fall in wholesale prices during the last few years. That has a considerable hearing upon the problem we are considering. What we are really concerned with is not what is the price of gloves now, but what would the price have been if there had been no Duty. It would have been lower still. That is the point and it is the only point. I must emphasise that another factor, in comparing the price of gloves now with the pre-Duty price, is the quality of the gloves. These statements of safeguarders about prices need to be checked off in relation to quality. In the case of several safeguarded articles, the quality has been reduced because of the Duty, and therefore the comparison is not being made between like and like. For instance, a woman buying a pair of fabric gloves now for 1s. 11½d. is getting an inferior article to the one she purchased at the same price before the Duty. I am told that the 1s. per pair fabric gloves have been almost knocked off the market by the Duty, and the poorer people who used to buy these very cheap gloves now have to a large extent to go without them.

Let me say something more about comparative prices as between the present time and before a Duty was put on. Let me take an instance from pottery, which deals with a fairly definite article and that is why I take it. Pottery is one of the newer Safeguarding Duties. It has only been imposed for a little over a year, and, in general, not much can be said about its results as yet. It has, however, been in existence quite long enough to show its effects on prices. Before the Duty a tea set of twenty-one pieces could be bought for 8s. 6d. or less. The price now for the same set is 11s. or more. That is a rise in price of at least half-a-crown. The duty on pottery is by weight, and according to my information this rise in prices amounts to at least the full amount of the Duty payable on this set. Also, as I have indicated, china is a definite article and in the instance I have given there has. I understand, been no change in quality and the comparison is between like and like.

I will proceed to consider this matter of prices a little more in detail because it goes to the very root of the controversy. A member of the Government, Mr. H. G. Williams, Parliamentary Secretary of the Board of Trade, has stated that when a 33½ per cent. Safeguarding Duty is put on an article, it does not make any difference to the consumer. Indeed, he says quite definitely that none of the Duty is passed on to the consumer. He says that the Duty has been passed in part on to the foreign producer, in part, presumably, on to the importing merchant and possibly, in some cases, on to the retailer. Those are his words. Now, let us examine this statement. If it were made by anybody else but Mr. Williams, I would say that it shows an almost complete ignorance of business conditions. Does Mr. Williams really think that profits are so great, that here has been so little competition amongst foreign producers, importing merchants and retailers, that when a 33⅓ per cent. Duty is put on an article, the foreign producer, the importing merchant and the retailer can afford to forego between them 33⅓ per cent. of the import value of the article in question? Any such suggestion is sheer rubbish. There is no such margin of profits available to be divided up. If there had been, competition would long ago have reduced it in any one of these businesses.

Take an article, the import value of which is 20s. and add the Import Duty of 33⅓ per cent., that is 6s. 8d., and remember that this 6s. 8d. has to be paid and paid in cash to the Revenue authorities. Free Traders say this makes the import price 26s. 8d. and that in due course this addition of 6s. 8d.—at least that—will be passed on to the consumer. Mr. Williams says this is not so. He says that the fact that this 6s. 8d. has to be paid to the Revenue authorities does not make any difference to the consumer. The consumer does not pay it or any part of it. The 6s. 8d. is paid—that is, lost—by the foreign producer, the importing merchant and the retailer. They lose the 6s. 8d. between them. Does Mr. Williams really believe that? Does anybody believe it? His argument, so far as I can make it out, is something like this. I will try to interpret his language in what seems to be a reasonable way—that is, if anything can be reasonable in such unreasonable statements. The argument apparently is that of the duty of 6s. 8d. the foreign producer loses most. He ran afford to lose, say, 3s. 8d. The importing merchant comes next and he loses, say, 2s. and the retailer loses, say, 1s. Though the words of Mr. Williams, if they mean anything, mean something like what I have been saying, I ought to mention that if the duty of 6s. 8d. was shared between these parties, it would not be shared in the proportions which the words of Mr. Williams seem to imply. Import merchants and shopkeepers do not work on any such principle and noble Lords, with a knowledge of business—I see my noble friend Lord Hunsdon opposite—will confirm that.

However, according to Mr. Williams, the 6s. 8d. is paid by these three parties in some such proportions, and all this can be done to the number of tens of thousands of articles and yet the parties concerned can still find the business profitable. If this, or anything like it, were possible, the profits previously made must have been fabulous, and what were the competitors of these persons doing to allow such profits to be made? Of course, the reply to all this is that no such profits were being made, and the persons concerned cannot afford to pay the Duty between them in the manner suggested by Mr. Williams, and they do not pay it. It is the home consumer who pays it, he pays it directly through higher price or indirectly through decline of quality or through a combination of both of these factors.

Mr. Williams, in arguing as he has done, has evidently overlooked that he proves, or rather asserts, too much, His view that part of the Duty is paid by the importing merchant and part by the retailer is hopeful news for our importing merchants and our retailers. Protection, then, is to mean less profits for them. Is this the programme of the Unionist Party for our importing merchants and our shopkeepers? I say that is the argument of Mr. Williams, and if that is not his argument, what is his argument? In truth, though, our importing merchants and shopkeepers need not be alarmed. They will not have to pay the Duty. It is the consumers who need to be alarmed. It is they who will have to pay. I do not say that in some instances, in the first short period following the imposition of a new Duty, there might not be some foregoing of profits by foreign producers and importing merchants and perhaps retailers, in order to retain long-established connections until things readjust themselves. There might even for a short space be some trading at a loss; but these things will not continue. They cannot possibly continue and to suggest or say the contrary is merely an attempt to deceive the British public.

If the imposition of an Import Duty does not increase prices, if, indeed, it decreases prices, why does not the Government put a Duty on wheat? Why does the Government not give that protection to agriculture which so many of its supporters urgently desire? Why did Mr. Guinness, the Minister for Agriculture, tell a deputation of farmers that Safeguarding could not be applied to agricultural products because it would inevitably cause a rise in food prices in this country? That statement by a member of the Government blows to smithereens arguments being used and assertions being made by other members of the Government. If the safeguarders are right in their theories, why do they not apply these Duties to raw materials, for instance, to cotton and to wool? If the putting on of a Duty will lower the prices of these commodities, or if the foreigner will pay the Tax, why do we not have these advantages and thus give a much-needed stimulus to the cotton and wool industries? Of course, the reason why no such Duties are put on, or even proposed, is that a Duty does not lower prices but raises prices, and that the foreigner does not pay the Tax. Theory lays it down and experience has again and again proved it to be true, that the imposition of an Import Duty on an article raises the price of that article by, broadly speaking, at least the amount of the Duty. If sometimes there are cases, or seeming cases, to the contrary, it will be found that they are due to exceptional or temporary circumstances.

Before leaving the question of prices, I will call attention to certain figures recently given by Mr. F. W. Hirst about the prices of the new Ford cars in Detroit and in this country. The price in London is nearly double the price in Detroit. These are the figures:—The roadster in Detroit is £78 f.o.b but in London it is £150; the Tudor sedan in Detroit is £100 f.o.b. but in London it is £185; the sports coupé in Detroit is £112 f.o.b. but in London it is £205. There is not much evidence here of the foreigner paying the Duty. Precisely the contrary. After making every allowance for freight right to London and for intermediate profits, agents' charges and so forth, it is perfectly clear that at least the full amount of the Import Duty on motors has been added to the prices of the cars. It is the home buyer who is paying the Duty and not the foreign manufacturer. Before leaving this point, let me just mention that so far as effect on prices is concerned, it does not, of course, matter a scrap whether an Import Duty is a Safeguarding one or not. Any Import Duty will raise prices and, therefore, though the Motor Duties are not Safeguarding ones, I can take them as an illustration of the effect on prices of an Import Duty.

In concluding my review of the claims made by safeguarders, I wish to deal with one or two arguments which are being much used by them. The first is that under the cover of an Import Duty home manufacturers will have security, and thus will be able to organise their industry in a way that has not been possible before. This process, we are informed, will, by reducing overhead charges and by making various other arrangements and by large scale production, make it possible for our manufacturers to produce more cheaply. Indeed, we are told that in the end, despite the shelter of the Duty, the price of the article on the home market will be reduced and will be lower than it was before the Duty. The reply to all this in a sentence is that things do not work out in that way. That is not the experience in other countries where manufacturers work behind a Tariff. Instead of things being cheaper to the consumer they are almost invariably dearer because of the tariff. Indeed, one of the arguments of the safeguarders themselves is that behind the shelter of Tariffs, foreign manufacturers are so secure in their home market that they can afford to export at low prices and dump goods here. You cannot have it both ways and, in what I have just been saying, there is another instance of the contradictory and mutually destructive arguments used by safeguarders.

If we take in detail with a specific illustration this suggestion that manufacturers secure in the home market will reduce prices, it becomes plain what a strain is being put upon our credulity. Let me take an article of which the wholesale price is now 20s. That price will have been fixed in our market by competition between home manufacturers and foreign manufacturers. Very well. A 33⅓ per cent. Duty is put on the import price and the import price of the article will rise to 26s. 8d. and the foreign articles cannot come in below that. Yet, according to the safeguarders, we are asked to believe that in some unexplained and mysterious way our home manufacturers will then so re-organise their industry that they will be able to produce not at 20s. as before, but at, say, 17s. 6d., and more remarkable still that having done that they will sell in the home market at 17s. 6d., despite the fact that foreign manufacturers cannot now import below 26s. 8d. and, therefore, there is no foreign competition below 26s. 8d. Well, my Lords, people who will believe that will believe anything.

Of course, the almost invariable result of a Tariff is precisely the opposite. It is that instead of there being a lower price for the article, that is in the present case a price below 20s., the price is raised to, in this case, at least about 26s. 8d., that is 20s. plus the Import Duty. When it is said that behind the shelter of the Duty there will be a great reduction of overhead charges, and there will be large scale production and so forth, it is pertinent to ask if these things are going to be done then, why are they not done now? If these things can be done then, they can be done now and they should be done now. There is much more reason for them being done now in order to beat foreign competition. There is really nothing to prevent such arrangements being made now, and in some industries they have to a large extent been made. If, however, these changes are going to be effected under the shelter of a Duty, so far from the consumer benefiting he will suffer more than ever because it will be easier under protection for a virtual monopoly to be set up in many industries, and monopolies do not in general mean cheaper prices for the consumer. They mean dearer prices. With the present tendency towards combines, large scale production, rationalisation and so forth, it is, from the consumer's point of view, more vital than ever to retain Free Trade.

Another argument, which is being used in the ceaseless endeavour to obtain support for Safeguarding is its alleged effect in causing foreign firms to come into this country and open works here in order to manufacture behind the shelter of the new Duties. We are told, for instance, that in the past three years over thirty foreign firms, owing to Safeguarding, have brought their factories to this country and are now manufacturing their goods here and are employing 20,000 British workers. Time prevents me from dealing with this point as fully as I should like, and I must confine myself to making a few observations. I would first remark that the figures which I have quoted are not official and they must therefore be received with a good deal of reserve in view of the wild statements made about so many matters by safeguarders. There is, however, nothing new in foreign firms coming here from time to time. This kind of thing was going on in the years before the War. It was going on in those years when there was no Safeguarding, but when, nevertheless, trade was extraordinarily prosperous. As I say, official figures about foreign firms coming to this country are not obtainable, but there must have been periods before the War when foreign firms were coming here quite to the same extent, or to the same alleged extent, as during the last three years. Finally, on this point, it is necessary to keep in mind that the foreign firms which have come here, during the last three years, have done so because they are going to raise prices under the shelter of the Duty. But, in so far as prices are raised by the amount of the Duty, the general injury to other trades will occur, about which I have already spoken. Therefore, although this or that particular industry may have attracted foreign firms, the general result is very different from that which the safeguarders suggest by these statements.

Before I sit down, I wish to refer to one important result which has followed from the Safeguarding Duties, and the other Import Duties, about which the safeguarders never say anything, but about which something should be said. It is the calamitous effect of these Duties upon our re-export trade. Here again, it makes no difference, in giving figures to illustrate this point, whether the Duties are Safeguarding ones or not. Any Import Duties have a most harmful effect, upon our re-export, trade. The Safeguarding and other Import Duties imposed by the present Government have, to a, large extent, ruined that valuable trade in the articles concerned. Safeguarders never sufficiently realise that this is a great merchanting country, entrepôt country and that, owing to our Free Trade system, goods come in here from all parts of the world and go out to all parts of the world free from the harass and injury of Tariffs, rebates, drawbacks and so forth. At least, that is what has happened until recently, but if we are to have Safeguarding Duties this trade will be most seriously jeopardised though it is a most profitable one, profitable to the merchants concerned, profit able to our shipping industry both ways, profitable to our banking and insurance interests and so forth.

Let me give two or three figures to show what has been happening. I again take the years 1924 and 1927. First, I will take lace and net of all kinds. In 1924, the re-exports were £1,833,000. In 1927, they were £154,900. On these figures over 9/10ths of the trade has gone: Secondly, I will take silk yarn and manufactures. In 1924 the re-exports were £3,978,000. In 1927 they were £1,726,000—a reduction of well over one-half. Thirdly, I will take fabric gloves. In 1924, the re-exports were £109,533. In 1927 they were £35,054. That is a reduction of over two-thirds and there are other similar statistics. These figures are appalling. They show a serious loss of trade to this country without any compensating advantage whatever. I gave figures somewhat on these lines eighteen months ago, and the noble Viscount, Lord Peel, who was obviously much disturbed by them—


No, no, not in the least disturbed.


The noble Viscount attempted one explanation one day and then contradicted it with another, equally unsustainable, the next day, and finally took refuge in the plea that owing to the Duties there was a good deal of transhipment in bond going on in the articles concerned. His contention was that on account of these Duties, certain goods coming to this country are now kept in bond and go out again and do not pay Duty, and that if this were taken into account, these devastating figures of reduction in the re-export trade would be somewhat improved. I was always rather sceptical about this explanation and about how far it really would affect the results. No doubt transhipments in bond do account for a certain proportion of these appalling results; though, even if they accounted for about one-half, the remaining damage would still be bad enough. In order, though, to find out how far this explanation of the noble Viscount did affect the results, I asked him, upwards of eighteen months ago, to give the figures of transhipment in bond in the articles concerned. His reply was that they were not then available, but he would try to get them. He has never got them. He has never given those figures, despite the fact that the total transhipments in bond have been published. I ask the noble Viscount where are the missing figures and what are they? I again challenge him to produce them and if he does not do so, I think we may take it that the figures are not as helpful to the Government as they would like them to be.

I fear I have detained your Lordships at some length, but there are very big issues involved in this controversy, and even yet I have not been able to cover the ground nearly as fully as I should like. I have not, for instance, been able to speak of the Labour Party's policy for dealing with sweated goods from abroad. I did this fully the last time I addressed your Lordships' House on the fiscal problem, and I desire to change nothing which I said then. To-day I have done my best to discuss the policy of Safeguarding in so far as the limits of one speech permit. I trust at any rate I have said enough to show that those of us who are Free Traders—and we are in a great majority in the country—have good reasons for our faith. We do not adhere to Free Trade and oppose Protection obstinately. We are not clinging to some outworn fetish. We oppose Protection because both theory and practice prove that Protection would be a bad thing, especially for a country like ours with its vast overseas trade. We do not say that Protection is a bad thing for manufacturers and for vested interests, but we do say that it is a bad thing for the consumer and for the great mass of the people because it adds to the cost of living without compensating advantages, and because it means worse conditions of labour for the workers.

Nothing which has happened as a result of the Safeguarding Duties has upset our case in the least. On the contrary, if the safeguarders are frank they must admit that the results are surprisingly, nay, pitifully, disappointing to them. The truth is that contrary to what we are constantly being told, there has been no success of Safeguarding. If, however, the safeguarders take a different view let them have the courage of their convictions. If they really believe what they are saying then let them do the only honest thing and put a policy of Protection before the country. Let them put this matter fully to the test at the polls. Let them do that and they will find that their misrepresentations and mis-statements will avail them nothing. They will find that the country understands this issue and that Protection will once again be defeated by an overwhelming majority. I beg to move.


My Lords, we have listened to a long and very interesting speech from the noble Lord opposite, in which he has enunciated the pure theory of Free Trade, made an attack upon Safeguarding, and provided us with a very bountiful meal of statistics. I feel rather bold in endeavouring to answer the noble Lord, because I intend to make claims which he has already described as extravagant, unsustainable, baseless, impudent, flimsy, and sheer rubbish. As far as the theory of Free Trade is concerned I am not saying that it is a fetish, as the noble Lord has described it, but I would say this, that changes have taken place of very great importance since that doctrine was generally accepted in this country.

One of the changes is this. We were always taught by Free Traders, at school at all events, that if a trade decayed we were not to support that trade but that the workmen engaged in that trade were to find something else to do. Well, it never appeared to us very convenient for anybody who had been making machines to start making shirts, but it was possible. It is not possible now because the trade of this country cannot employ the labour of the country and we are face to face with this alternative: when an industry is decaying you either have to support that industry or to support the people engaged in that industry. The other change which has taken place since the old days seems to me this. The noble Lord referred to the security which the safeguarders desire. In old days we had that security. We were the workshop of the world. Roughly speaking there was nobody else to go to. When people wanted goods they had to come to us and our good will was our security. But our good will has to a great extent departed and with it our security. And therefore it is not unreasonable to suggest that if we desire security—and security is the basis of good trade—we should adopt the means that every other nation in the world adopts.

The noble Lord has pointed out a very large number of evils which he think will arise, or probably do arise, from Safeguarding. It is relevant, I think, to consider for a moment what the evils of the present position are. We have round about 1,000,000 unemployed, and the cost of maintaining those people is estimated at £100,000,000 a year. I believe that figure has been accepted generally. But whether it is right or whether it is wrong is of no importance because it means, as we all know, a huge monetary loss. And that is not all, because the people who are unemployed lose their desire for work, they lose their capacity for work, and, worse than all, they lose their self-respect because they are being pauperised. That is really a horrible state of things and all the evils that the noble Lord has spoken of seem to me to be nothing to compare with the present disastrous state of things. And if you remember at the same time that the yearly savings of this country have run off almost to nothing and that it is on those that the increased population has to live, the position is really very serious indeed, and we ought all, I think, to try to find a remedy for what is already a disaster and may be a very much greater disaster. My view of the possible remedy to apply to this state of things is this. First, increase inter-Imperial trade, and, secondly, safeguard the home industries. Those two are somewhat connected but I am dealing only with the second.

There are three things to which I believe all of us, except the noble Lord opposite, would agree as the things we need to improve the position of this country. The first—and with that, I suppose, we should all agree—is to reduce taxation, and when we talk about reducing taxation in this connection it is making the foreigner pay. The second thing is to increase exports and to reduce imports. That is to say, to sell more and to buy less. The noble Lord opposite will not agree with that. He says that by reducing imports you reduce exports. Even the most ignorant of us know that goods are paid for by goods; but we also know, those of us at least who are in business, that they are not immediately paid for by goods. When we were prosperous in the old days we sold more than we bought. We had a permanent favourable balance of trade. Yet, if exports are immediately paid for by imports, there is no sense in that expression and no truth in that expression. But there was truth in it then. What we did was continuously to sell more than we bought and the balance was not paid for with goods, it was given deferred payment; that is to say, this country made loans to the debtor countries and the balance which was not paid for by goods was met by promises to pay from the debtor countries. Finally, as those loans are discharged they have to be paid for by goods, of course. But that is the position to which we wish to return, with a favourable balance of trade. There is one other thing and that is to increase employment. That we all want. Those are the three things to which I referred.

I have endeavoured to find a fair comparison between a non-Safeguarding period and a Safeguarding period. I do not agree with the noble Lord about 1924 being a good year to take, because the McKenna Duties were on until August, 1924, and then were taken off. So that was certainly not a non-Safeguarding period.


In the figures of exports which I gave I was not dealing with the Motor Duties at all, I was dealing with five of the Safeguarding Duties.


The noble Lord said 1925 was not a good year, and I agree, because in 1925 the McKenna Duties were reimposed on July 1, 1925, and the Silk Duties and other Duties were put on in that year. 1927 is not a very good year, because in April of that year the Pottery Duties and the Tyre Duties were put on. With every possible desire to get a just basis of comparison, I have selected the first six months of this year, when all the Duties were in operation, and the first six months of 1925, when none of the Duties were in operation, except those for the key industries, which were in operation during the whole period. I cannot get the figures for June, 1928, so I have had to take the five months up to the end of May, and I should like to give a comparison of those five months. You will find that they are very different figures from the figures given by the noble Lord. I will first mention that in 1927 for the whole year the imports of safeguarded goods were £44,000,000, and the Duty, the increase of revenue—what the foreigner paid—was £11,700,000. That is a substantial amount. You can get those figures from the Customs Returns. I will give my authority for every statement I make.

Let us compare exports and imports in those two periods of five months. After allowing for the change in the value of money, which I have taken to be equivalent to a fall of 10 per cent. in prices, these results are shown by the Board of Trade figures. There was a decrease in the imports of safeguarded manufactures of over 30 per cent. in the first five months of 1928 as compared with the first five months of 1925. There is nothing remarkable in that. My only comment is that it shows that you can keep out foreign goods and that you can raise Revenue from foreign goods at the same time; though it is often said that you cannot. I may add that this decrease was not due to a general decrease in imports, because during that period the imports of non-safeguarded manufactures actually increased by over 21 per cent. But the figures of exports are those to which I wish to call the particular attention of your Lordships, for they show that during the same period there was an increase of nearly 28 per cent. in the exports of safeguarded manufactures and a decrease of 1½ per cent. in non-safeguarded manufactures. I might say here that whether the Duties on motor-cars or artificial silk are Safeguarding Duties or not does not interest me in the slightest degree. It is the Import Duties which produce these results, not the conditions under which the Import Duties are imposed.

I have the figures here for the first four months of 1925 and 1928—that is, of imports and exports—and also for the years 1925 and 1927. The only point about them is that they show that the figures I have given are progressive. These figures are made up from the Board of Trade returns so far as they can be, but they are not absolutely correct. Unfortunately, the Board of Trade do not in every case classify safeguarded manufactures separately. The noble Lord opposite has called attention to that and I hope he will support me in my request to the noble Viscount to impress upon the Board of Trade that as Safeguarding is an experiment it is most important that we should have all the particulars of the safeguarded manufactures classified separately. It is important also that we should have, I suppose from the Ministry of Labour, the proper figures for employment and unemployment with regard to those safeguarded manufactures. The Board of Trade figures, I say, are not correct. I give you as an instance wrapping paper, which is rather important and is safeguarded, and tissue paper, which is a small item and is not safeguarded. They are both taken together. So that the figures I have given are probably not absolutely correct, but they are near enough, and I say that with all the reservations that any of your Lordships may make they are primâ facie evidence that Safeguarding increases exports and diminishes imports. The noble Lord said that safeguarders always say that it will produce this result and that result. He may say that. What I say now is that it has produced the results which I have just given your Lordships, Anyhow, those are results which have happened after the Import Duties were put on.

I want to say a word on the question of employment. I do not know whose authority we are to take on this point except that of the Ministers of the Crown, the Parliamentary Secretary of the Board of Trade or the Minister of Labour. On November 10, 1927, the Minister of Labour showed with regard to employment in the four safeguarded industries of which there are insurance returns, that the number at work in June, 1927, was 10.2 per cent. more than in June, 1925.


Will the noble Lord say to which four industries that reply refers? There are motors and artificial silk, which are not safeguarded industries.


The one that it, does not apply to is, I think, photographic and scientific instruments, because there is no information with regard to that; but it applies to the other four. No doubt this increase in employment is greatly due to the establishment of factories in this country by foreign firms. Whether they came into the country before or afterwards I do not know, but about 30 of them certainly came in afterwards. Even in lace—I would like the noble Lord to listen to this—which is a decaying industry, the Parliamentary Secretary of the Board of Trade (that is the Board of Trade) stated there were, roughly speaking, 2,000 more people employed when he spoke in March last than when the Duty was imposed. The noble Lord opposite challenged Mr. Williams. He has a perfect right to challenge him; but this is on the authority of the Board of Trade, which is the best we have in this country.


I will reply to it.


I have given your Lordships certain figures and I have given my authority for each of them, and, subject to any reservations which your Lordships may make, I say they appear to show that Safeguarding produces a substantial Revenue, that it does not raise prices to a corresponding extent if at all, that it increases exports and diminishes imports, and that it increases employment. I suggest that the figures appear to show that our experiment in Safeguarding has been successful and, therefore, that its operation should be extended. I would like to answer a point which the noble Lord raised at the end of his speech. He was complaining of the fall in the value of imports and re-exports. This is what was said by the President of the Board of Trade on December 22, 1926:— The figures of imports and of re-exports include for the period prior to the imposition of the Duty, goods in transit on through bills of lading. Since the imposition of the Duty such transit goods have been for the most part transhipped under bond. It has long been the practice to exclude goods transhipped under bond from the general figures of imports and re-exports.


My Lords, you have heard two most interesting speeches and I do not wish to delay you from the various occupations and avocations which come round about six o'clock by making a prolonged speech. But I should like to deal as shortly as I can with one or two of the arguments advanced by the noble Lord who has just spoken. When I have done that I should like, if I can hold your patience for a few minutes longer, to deliver the remarks which I prepared in anticipation and before I heard the speeches, in order to lay them before your Lordships. The last speech, however, contains so much which I think requires an answer that I will deal with some of the remarks made in the course of it before I go to the more general points which I wish to make.

In the first instance, the noble Lord opened his contribution to the debate by adverting to the old theory that was held, I suppose, by the hard-hearted economists of the nineteenth century, that if an industry is decaying it is better to let it die. He advanced, as I understood him, the opinion that nowadays we are more kindly disposed to the weaklings, and that we desire as far as possible to keep them alive. I am not sure whether we ought so to desire, but if we do, I think it is due more to the teaching of noble Lords from the Bench on my immediate left than to those more orthodox teachers who instructed us in economics in our earlier days. It is, I believe, economically sound that economic change should be left to follow its own road. Industries which are decaying are probably those which ought to decay; they are losing command on the peoples of the world; they are no longer meeting the immediate and pressing needs of the world, and it is a mistake, it is an unkind kindness to the capital employed in those trades artifically to try and maintain them alive when, by modifications, by adaptations those who are employed in them can find modern methods of applying their ingenuity to the benefit of themselves and of the world.

It will be in the minds, anyhow, of noble Lords who come from the North that such modification and such adaptation has constantly been going on in the intelligent and adaptive North. On the Tees, on the Tyne, industries which were flourishing in the middle years of last century are now as dead as the dodo. They died and they were replaced by other industries, in some cases cognate to them but in other cases different. The chemical trades of the Tyne, I believe, entirely vanished in the 'sixties and 'seventies of the last century, but despite the death of those industries the Tyne showed itself capable, during the last part of last century of a perfectly wonderful power of recuperation, of absorption and of creation of work and employment for the men of Newcastle, of Gateshead, of Middlesbrough and so on. If we had had in force then the theory just now advocated, if the idea that it was necessary to maintain the statu quo, to support industries which exist, had been entertained then, is it not possible at least that those who are responsible for industry—and by those responsible I mean the employers and the employed together—would have come to this House and to the other House with a demand that something should be done by the politicians to help them out of their difficulties?

I have grave doubt as to how much politicians can do to help people out of their difficulties. I am fairly confident that the best way of getting out of a difficulty is to get out of it yourself by your own ingenuity. If this country falls back upon State aid, whether it be in the form of grants to unemployed workmen, or whether it be in the form of support of decaying industries, in whatever form it is given, to whichever side of the industry it is given, I fear that you will encourage that tendency to lean up against something, which is not, I believe, a characteristic of the British character. Though it sounds a cruel thing to say, it is better that decaying industries should die than they should be kept alive by artificial means. I believe we have it in us to recreate industries that will be more virile and successful than those which die owing to the change of conditions.

If I may give one more example, I will do so. It is well known to your Lordships that the trade of Middlesbrough was primarily an iron-mining and pig iron production one in the latter part of the last century. It has now entirely changed. It has changed in this, that while in the 'seventies, 'eighties and 'nineties Middlesbrough primarily was a blast furnace town producing pig iron, it became, owing to the enterprise of men in Yorkshire, a centre of steel manufacture, steel rolling and steel construction. Though at the present moment it must be admitted that the steel industry in that part of the country, as in many other parts of the country, is in a serious condition, yet I believe, if the remedy were left to be applied by the men who are themselves in the trade, as was formerly done, it would be the only reasonable and the only safe method to apply at the present time. This, no doubt, is old-fashioned policy, but I am not sure it is not the sound one. I am quite certain that the more you do for men outside themselves the more they will expect you to do for them.

The noble Lord's remedies as I understood them, were two—preferential trade, which, as he said, does not form part of this debate, and Tariffs. He said: reduce taxation by making the foreigner pay. That method has been debated in this House and in another place for now, I think, some thirty odd years, and we have not yet come to a conclusion on the point. I can hardly hope anything I can say this evening will contribute materially to that ancient discussion. For my part I will only say that I have not yet seen a workable method of making the foreigner pay. We are told to sell more and buy less. That may be a very sound injunction to give us if we are over-spending ourselves, if we are importing by means of realising our foreign investments, or if we are importing by means of raising loans from foreign countries—in that case I think the advice to sell more and buy less would be a perfectly admirable advice. It is an advice which might very well be given to other parts of the British Empire rather than to the United Kingdom with a considerable amount of wisdom, but I am not quite sure that that advice to us here is advice which we most need.

I do not believe that we are at the present moment over-spending ourselves by means of realising foreign investments, or by means of borrowing, but that we are paying our way, and as long as we are doing that, as long as our imports are in fact paid for by our exports in the widest possible use of that term, including services rendered for other things, then I am afraid the advice given to us to sell more and buy less is not very effective or very useful, unless it be that in selling more and buying less we are enabled to invest still more abroad. Figures of our oversea investments are not always easy to get at, but I think on the whole the economists and bankers and those who are concerned in the big issuing houses in the City of London would say we are now, and have been, investing a surplus of our exports in foreign countries, but when we have done that we are not going thereby to shut out the importation of foreign goods or Dominion goods, because, after all, foreign trade is foreign trade as far as our domestic situation is concerned whether it is carried on between us and Australia or us and France.

If we are to accept the noble Lord's advice and sell more and buy less it is only postponing the larger buying which must give us the larger importation that must come in due course if we are not going to lend our money at a rate of interest which is nothing at all, and we shall, if we make foreign investments, undoubtedly increase not our immediate importations in the year in which we make the investment but the subsequent importations which come here in payment of the interest on our investments or loans that we have made to foreign countries or the Dominions. If we sell abroad we must import or if we import we must sell abroad, and, though the importation may be temporarily delayed if our exportation is in the form of loans and investments in foreign countries, yet in the long run these things will balance either in the form of interest on capital or in direct return for the services, material or otherwise, which we have rendered. I am not quite sure that the advice to sell more and buy less helps us a very great deal.

Now I must come to another point. There was a certain amount of discussion between the noble Lord on the Front Opposition Bench and the noble Lord who spoke last as to which was the better period to select for comparison. The noble Lord selected the first six months of 1925 and the first five months of this year. If he is going to choose those years those were the only months he could choose. I do not think he quite appreciated the argument the noble Lord, Lord Arnold, used in respect of that year, 1925. The year 1925 was a year of a certain amount of political agitation. There was an expectation of changes in Tariffs, which were subsequently realised, and everybody knows that when Tariffs are expected to be changed and when in fact the expectation proves to be a reasonable one there is considerable dislocation of importation tion in anticipation of the change of Tariffs expected. Therefore, I think the noble Lord, if he will give the matter further consideration, will see that the year 1925, though at the moment these particular Tariffs were not in operation, is not a fortunate year to have selected.

I am not going to enter into lengthy statistical arguments, because I think it is better at the present time rather to confine oneself to the more general discussion. I want, if I may be allowed to do so, to associate myself with him in pressing His Majesty's Government to give us all the information that is at their command regarding the effect of Safeguarding of other Protective Duties, for there are other Tariffs which are in effect protective though they may not have been imposed with that intention. It would be extremely valuable if we could have statistics showing the influence on trade and the influence on employment in each trade which in fact is protected. I am not very much concerned as to how this protection arose, whether it arose under the Safeguarding of industries or whether it arose tinder the McKenna Duties which were imposed originally without protective intention, although I think from the very commencement they have been to some extent protective. After all, when one is talking about Tariffs one has to consider what is the effect and not what was the intention of those who imposed them.

The intention of those who imposed them was in some degree to make the foreigner pay. Well, let us find out whether the foreigner has been made to pay, and whether there has been increased employment in the particular trade which is touched by the Tariff. Let us find out, if we can, whether that increase in employment has been counterbalanced by any reduction of employment on a general scale, for after all it may be a very great injury to the industry of this country to increase the production of motor cars while reducing the production of the staple industries upon which this country largely depends. I will not argue now that the mere fact that we exclude foreign motor cars does immediately and directly hit our cotton trade or our shipbuilding trade. I think it might be argued—I should be prepared on another occasion even to argue it myself—that there is a close connection between the goods exchanged between this country and foreign countries and that you cannot, in the classic phrase Which we all learned at school in studying economics, exclude the import without at the same time preventing the export—but that we will leave for the moment.

I would like now, if I may, to deal with the more general question. This debate, though in terms directed towards the consideration of the Safeguarding of industries, must be allowed and has been allowed to roam over a rather wider field, and, indeed, it has come very nearly to a full-dress debate on the whole Tariff question. That is almost inevitable, for when a Safeguarding of Industries Tariff is imposed I think we must say definitely that it is imposed in order to give protection to certain trades which are supposed to need it. The terms of the Act under which it is imposed make that quite clear. Nor do I think it will be disputed that while the Government felt themselves bound by their pledges not to impose a General Tariff, they felt themselves entitled under statements made at the General Election to consider individual industries one by one as the case might demand. I think they are entitled to do that under the statements made. I am not complaining of any departure from the pledges they gave. That they were mistaken in making those statements I am prepared to argue and they will no doubt be prepared to answer the arguments I advance, but there is no accusation of breach of faith. The accusation, if there is an accusation at all, is that by so doing they have created expectations which in the nature of things it will be difficult, if not impossible, for them to fulfil.

In the minds of a large number of their supporters this was regarded as making an experiment on a working model scale. I am quite certain that a very large number of those who supported the imposition of a Safeguarding of Industries Tariff have done so with the view of being able to show the people of this country that a Tariff upon gloves, or a Tariff upon one thing or another, is really not such a very terrible matter as the Free Traders of this country would have them believe. They say: "Well, you have a Tariff in this or that industry and what is the result? Are you very much worse off? In the case of gloves, are you worse off? In the case of motor cars or tyres, are you worse off? Well, a little worse off on tyres but not a great deal on gloves." In the minds of those who supported this the desire was to get a working model to show that it does not result in the evils which Free Traders say will result from a General Tariff. A small dose of arsenic is less injurious than a large one and a very small dose may do no harm at all, but the more you add to it the nearer you get to the danger point. At the present moment these Tariffs are comparatively insignificant. You cannot with these small invasions of the doctrine of Free Trade point to any particular industry that is injuriously affected by that departure because the departure is so small, but if you add to those invasions the more you add to them the less effective will they become for the benefit of those concerned in getting them and the more injurious will they become to those who are not getting the benefit of them.

You have a dozen classes of articles at present subjected to a protective Tariff, if I may use that term; for in effect, if not in intention, that is what it is. A General Election comes—it will come. I suppose, next year—and those who believe in the imposition of Tariffs will go to the country and point out how little harm and how much good has come to the motor industry, to the glove industry or what not, and will get rather wider authority from the people of this country to do still more on the lines that they have been following tentatively, quietly and cautiously during the Parliament that has come to an end. It may be that they will persuade the people of this country that it is a good thing to extend this policy, to have in the first place a wider definition of industries that need safeguarding; and then to require no definition at all; and finally to demand that all industries should be safeguarded. The people of England hate a logical argument but they do understand facts when they are before them. If you attempt any sort of logic they think that you are a highbrow, a tiresome person who is chopping logic with them.

It is quite possible, therefore, that the noble Viscount, if he adopts the platform that I have suggested he may possibly adopt, will succeed. I do not know what the result of the Election will be, but it is possible that the noble Viscount will succeed with the electorate and get some sort of mandate for a great extension of the Tariff system of which we have a small working model in the present safeguarding of industries. As he succeeds, so logic will cease to be logic and will become experience, and as he reduces the external trade of this country by excluding foreign articles, so, insensibly and by degrees, people will see that the credits created in this country by the importations of foreign articles will cease to be created, that they will no longer be available to be spent upon the purchase of British goods for exportation. IL will be discovered by the noble Viscount and by the people that, with all the good will in the world, there are some important interests to which he will not be able to give protection. He will not be able to protect shipbuilding or the shipping industry in this country. He will not be able to protect effectively the cotton industry, and he will not be able to give any material help to the engineering industry. You cannot effectively protect an industry which is largely an exporting industry. You can protect industries that are in competition with imports, but our immense position in the world has been due and, I believe, will continue to be due to the fact that we supply the world with an immense amount of exports. This country of ours is an exporting country and, in an exporting country above all others, I would suggest that to experiment in Protection is unwise and dangerous.

There is one last word that I wish to say. The Cinderella of our industries has been mentioned—I mean agriculture—in relation to Safeguarding. We all know that her claim must be disregarded, for to impose Tariffs upon agricultural produce is to infuriate the vast majority, which in this country is industrial, by an increase in the price of things which the housewife buys for the dinner table. I think almost everybody will agree that a Tariff on agricultural products is a very remote contingency. It will be almost the last that will be imposed and almost the first to be taken off again if, as I anticipate, when you have your Tariff you infuriate the people of this country into turning you out and putting those who maintain that Free Trade is a safer system into power. Even if a Tariff were imposed to assist agriculture, that Tariff would have a very uncertain tenure of office. I think it has been admitted by almost everyone that agriculture is not likely to benefit under this system. It may benefit under various other palliatives, such as long-term and short-term credits and the various agricultural policies that are put forward from different parts of the House. It may benefit or it may lose by those policies. This is not the time to discuss them, nor do I feel capable of doing so. But that agriculture is going to get anything out of a Tariff, I for one absolutely decline to believe. To agriculture one can apply the lines:— The hungry sheep look up, and are not fed, But swoll'n with wind, and the rank mist they draw. Rot inwardly, and foul contagion spread. That, I am afraid, will be the unhappy position of the agriculturist. He will be swollen with wind, the wind of the politicians who address farmers at the General Election, and he will be fed with foul contagion.

I do not advocate—Heaven forbid that I should!—that we should have a protective Tariff on agriculture. It would be the worst thing in the world for agriculture, as I believe it would be the worst for any industry. It would raise hopes which would not be fulfilled, and to raise hopes in the minds of the people of this country is, I think, a somewhat unpatriotic thing to do. We have had quite enough promises held out to the electorate—promises of a new heaven and a new earth, promises of a country fit for heroes to live in and promises of greater wealth and greater prosperity. All that we can do is to smooth the way a little for those who must work for themselves. That is perhaps the basic reason why I support the Motion, or at any rate the idea behind the Motion before the House, for I think that it would be an unfortunate thing for the country if it were persuaded that it has any remedy in Protection, by whatever name it is called.


My Lords, one of the difficulties, as has often been said, that confronts the member of the Government who replies in a debate is that there is often a certain amplitude about the debate that is not indicated in the Motion that is put down. We have had from the noble Lord who has just spoken a very interesting and, if I may say so, a very eloquent speech on the general merits of Free Trade. My difficulty is that, though I should like to discuss the general theory of Free Trade, though I should like to follow the "primrose path of dalliance," unfortunately, in the short time that I am allowed, if I did so I should have to neglect my duty of dealing with the Safeguarding Duties that have been imposed since 1924. The noble Lord who has just spoken, and certainly the noble Lord, Lord Arnold, belong to what I may call the dogmatic school. I do not. I am a humble follower of what I may call the scientific school. I think that things develop differently under different circumstances and different expedients, and that the duller but, I believe, the more useful method is not to indulge in general theories about Free Trade and Protection but to try experiments, to examine figures, and to draw deductions from facts, and on those things to base your action rather than on a few theories set out very clearly in some of the text books a hundred years or more ago.

Lord Stanley spoke, I thought, with a certain pathos. His view was that trades which were suffering and decaying ought to decay. He attributed certain virtues to nature, which I believe was a doctrine strongly held in the 18th century, and thought that interference in these matters by the State was probably unwise and almost certainly foolish. He told us also that he was strongly against any assistance to British industry, and I admired the vigorous nationalism with which he stood up for the British character, which he said must stand by itself and help itself, and not get any assistance from the State. I think that might be very satisfactory if that example were followed by other States, but that is not so, and, as we know, in many ways the great influence and power of the State is brought in to assist the trader and the manufacturer.

I look sometimes with envy on Lord Arnold. I wish sometimes I could be so absolutely certain as he is, not only that my own opinions are entirely right, but that everybody else is not only wrong but criminally negligent, and permanently criminally negligent, in remaining wrong. It is a most delightful attitude of mind. It is, I think, rather rare in this House. I can hardly think of any other instance of a noble Lord who himself is such an admirable example of permanently held dogmatic views which are wholly uninfluenced by change, or fact, or the movement of time, or anything of that kind. I listened with great pleasure to a re-statement of certain Free Trade doctrines by Lord Arnold. He will pardon me for saying that I have heard them before. They had a very familiar ring in my ears. They sounded almost as pleasantly as the quotation from "Lycidas" given us by Lord Stanley of Alderley, and they date from about the same period.

There was one observation by Lord Stanley of Alderley with which I very much sympathise, because he states his views in a way which—it may be my particular idiosyncracy—appeals to me rather more than does that of Lord Arnold. He said it really would be an interesting thing if we did examine that old Free Trade dogma—Lord Arnold will pardon me for even questioning one of his dogmas—that you may put Duties on a class of articles and improve the production of that class of articles, but probably by so doing you may be injuring other aspects of our trade, and in fact You cannot increase production by Duties. That is a very interesting thing to investigate, because the ordinary man when he sees the beneficial results of Duties on certain articles, when he is told that that is all right but certain injuries are being done elsewhere, which one is unable to specify and cannot explain, will probably, in his own British illogical way, be inclined to stick to the Duties on specific articles, rather than be terrified by these general considerations.

There was only one other point which perhaps I may refer to in Lord Arnold's speech, because he surely went even beyond his own foundations when he asked: If Duties do not raise prices, why do you not put a Duty upon wheat? I am sorry to disappoint Lord Arnold, but I do not think, from what I know of thin Government, that there is the least chance of their putting any Duty on wheat at all. May I say that the obvious distinction between wheat and manufactured articles would have struck any observant man, and I rather regret that an argument of this kind should have been addressed to a House so competent and not reserved for the wider atmosphere of the platform, because I think it is fairly obvious that the production of wheat in this country is a restricted amount.


I did not ask that the Government should put a Duty on wheat, but I pointed out that their own Minister of Agriculture had said he could not do it because it would raise prices.


It is quite obvious why it is not relevant to the discussion of some of these Duties, because, as everybody knows, the amount of wheat consumed in this country is seven or eight times the amount which we grow, and the difficulty of expanding the production of an article like wheat is immense, whereas in the case of manufactured articles there is no limit to the production in the factory, and it can be done far more quickly than the production of wheat, and hence the price is more easily brought down. I do not, however, want to dwell upon so elementary a point as that. Leaving these very attractive general considerations I ought to deal with the actual points raised by the debate, arising out of the proposition laid down by Lord Arnold. My difficulty is this, that really a different state of facts, figures and considerations apply to every one of these safeguarded articles, and I feel it is a little tedious to go through them all and state the facts as to unemployment, increase of employment, prices, imports and exports. I should really tire your Lordships if I dealt at length with all those points, but I will endeavour to crystallise the discussion if I can, which was really diverging on to General Tariffs and into speculating as to whether the growth of Duties on particular articles would in time so far deceive the British people that ultimately they would be brought to embrace the general policy of a General Tariff.

At the present time we are still, as regards imports, the greatest importing country in the world, and also still a great free market, and all the Duties of which we have been speaking, which have been put on since the War, really only cover about one-twentieth of the imports which come into this country. Therefore we are not dealing with General Tariffs, but with a very small corner in the whole of our great trade. I am putting aside, of course, from the Duties which have been altered since 1924, the great Revenue Duties like those on tobacco, tea, spirits and so on, but I must mention, and I want to deal with, some of those Duties called the McKenna Duties, which undoubtedly have a safeguarding effect, but from which I think Lord Arnold showed some desire to escape, because they were, according to him, not technically Safeguarding Duties. He wanted to confine that proposition to the Duties referred to in the White Paper issued by the Government in 1925.

And Lord Arnold had a very good reason for that, as I shall show. He did not say a word about the most striking and most useful and fruitful case of Safeguarding Duties, that is, the Duties on key industries. We have not heard a word from the noble Lord on that, and perhaps the reason is that, though the Labour Party—unfortunately, as I could show on figures, if necessary—did abolish, but only, happily, for a short time, what were known as the McKenna Duties (and they were re-imposed and extended to some extent by the present Government) yet—and this is greatly to their credit, and shows their degree of fiscal wisdom—they did not interfere in any way with the key industries. They were imposed for five years in 1921, they came to an end in 1926, and were re-imposed for another ten years. But surely it is the height of pedantry not to deal with those particular Duties, because they were actually imposed under a Safeguarding Act, and if you are going to be nice about words, really you can apply the word "safeguarding" rather to those particular Key Industry Duties than to those which were imposed under the White Paper of the Board of Trade.

With regard to silk, that really does come into the Notice of the noble Lord, because he says he is dealing with Import Duties imposed since 1924. I do not want to dwell on the Silk Duties for this reason, that an Excise Duty was imposed at the same time, and I do not, want, therefore, to claim that the Silk Duties were of a protectionist character But I think it is fair to point out that with this Import Duty and an Excise Duty on, the advance and development of the silk trade has not been stayed, because it is common knowledge that silk manufacture, especially artificial silk manufacture, has made immense development during the, last three years. Nor do I think I need say anything about the Dyestuffs Act, because that did not proceed by way of Import Duty, it proceeded by way of licence, although I really should like those noble Lords who have not examined into it to see what a scientific development under that system of prohibition and licence there has been in the dye industry—the number of chemists now employed, and the number of chemical products, some of them eighteen or twenty vocables long, whose names I will not pronounce before your Lordships, but which are certainly becoming established in this country.

Lastly, there is what I may call our technical friends, the Safeguarding Duties established under White Paper 2327. The noble Lord, Lord Arnold, has very correctly called attention to two points in connection with those Duties. One is that they are only applied under certain very specific and stringent conditions. The industries have to satisfy the Committee which was set up that they meet all those conditions. In addition to that they have to show—and that would seem to be rather a depressing conclusion for Lord Stanley of Alderley and Lord Arnold—that they do not injure other industries, and they have to show that they are carried on with reasonable efficiency. There are not many of these Duties. First of all, a certain number failed to pass through the preliminary sieve of the investigation by the Board of Trade. Only eighteen of them were brought before Committees, and of those nine failed to jump all the fences set up in the White Paper, and as a result only nine Duties were imposed. And I have to make a further deduction, that the last three, the Duties on enamelled hollow-ware, buttons and table-ware of translucent pottery, have been so recently imposed that it is not possible, except by prophecy, to say anything about the results that they are having. Therefore we are reduced to six Duties. Lord Arnold said five, because he wished to lump together leather gloves and fabric gloves. I draw a distinction between leather gloves and fabric gloves. I do not wish your Lordships' minds to be confused as between those two, and I will deal with them separately.

There is another proposition, too, and that is that these particular industries are industries that were doing badly, and industries that are doing badly, even with a Duty, cannot expand as rapidly as certain industries which are on the up-grade, and which might themselves be protected by a Duty. That is a certain handicap upon them. Another thing is that, unfortunately for the purposes of experimental investigation, they have not lasted very long, they have been on only for the last two or three years. Again, they, like the whole of our trade, were subject in the year 1926 to that shattering misery of the General Strike, followed by the coal strike, which has terribly embarrassed our trade; and indeed in looking at every particular industry you have to examine its particular conditions and its world conditions, and deduce from them those which may have been affected by the particular Duty imposed.

I will say a word or two about lace, because here again, I think, the noble Lord complained that there was only an increase of 200 or 300 employees in that trade in the last three or four years. That number, by the way, bears a very good relation to the numbers engaged in that industry, but the industry was in a very bad way indeed. Lace has been suffering everywhere, the fashion has been passing away. Nottingham was in a deplorable condition, but fortunately this decay—this destruction almost of the industry—was entirely arrested, as everyone would tell you if you went to Nottingham. It was arrested by this Duty, and though no Duty can re-create fashion yet it has given that industry an admirable breathing space. The industry has been able to employ a larger number of workpeople, and now I believe to some extent the tide has turned, fashion is to some extent altering, and the popularity of lace curtains and the growing demand for artificial silk lace have compensated to some degree for the loss of trade in cotton lace trimmings. That is a great advantage to have obtained by that Duty.

The other Duties I must go through rather rapidly. As regards gas mantles, the result of the Duty on them was that an arrangement for division of markets was reached between the British manufacturers and the German Mantle Convention and some associated manufacturers in other countries. It is just to observe that, but for that Duty, there would have been no such division, and in that way the mantle manufacturers have gained. I will not say that there has been a large development in the mantle industry because, through the tremendous development in electric light, the consumption of gas mantles has been to some extent decreasing.

Then let us take leather and fabric gloves. Here I entirely concur with what was said by the noble Lord, Lord Stanley of Alderley. We really have not, I think, accurate separate figures enough to form scientific conclusions with regard to specific trades concerning some of the figures of unemployment, production and so on; but I can say something about these fabric and leather gloves. In 1925 the total production of leather gloves was about 413,000 dozen pairs. In 1926 and 1927 the production reached about 592,000 dozen pairs. The manufacture of fabric gloves, which is, of course, a small industry, was 135 per cent. higher in the last quarter of 1927 than in the same quarter of 1925. Stated in terms of employment, there were, during the fourth quarter of 1925, 7,430 persons employed in the leather glove industry and 8,232 employed during the same period of 1927. These figures relate to 82 per cent. of the industry. I thought that the noble Lord, Lord Arnold, was rather contemptuous about, some of the increases in employment. On the contrary, every 50 or 100 men added to employment in these industries is a great gain to the country and a great relief to our rates, our Unemployment Fund and to everything else. I do not despise any addition to employment, considering the large numbers of unemployed and the necessities which we are under of meeting unemployment. I say again, because I know this will give pleasure to the noble Lord, Lord Arnold, as regards prices that some grades of foreign goods, some grades only, were slightly higher in price. But prices, I am sorry to say to the noble Lord, have not risen by the amount of the Duty. I present him with that depressing fact.

Then there has been a considerable development in packing and wrapping paper on which the Duty was imposed for five years in May, 1926. One great paper company, the Inveresk Paper Co., has embarked on the production of what is known as kraft paper since the Duty came into operation, and has installed three new machines at a cost of £1,250,000. Again, in West Hartlepool other factories have been set up, while at Aylesford an old concern—and this shows that old concerns when assisted by Duties recondition themselves to meet new facts—has decided to erect a large plant for the manufacture of kraft paper, which will produce some 300 to 400 tons of this paper per week. I have made those few remarks about five or six of the industries. When I have completed my remarks I want to give a very short summary of what I conceive to be the whole position. But as regards tableware or translucent pottery, I am afraid The Times cutting, which was read out by the noble Lord, was a little deceiving because it dealt with the whole pottery industry, whereas this particular Safeguarding deals only with table-ware of translucent pottery, commonly known as china.

I hardly like to speak in terms of moderation about the enormous contribution that has been made to the development of scientific instruments in this country by the Key Industries Duties which, of course, were another form of Safeguarding. They had the advantage of a longer run because they were started in the year 1921. But in 1926 when they were about to come to an end, a Committee was set up which investigated their operation. That Committee found a great many things; among others, that under the shelter of the Duty great improvements had taken place in the making of scientific glassware. They said that it was unsurpassed by and, indeed, surpassed the best foreign makes. It has been said that sometimes not the best qualities of things are made under this Duty, but here you have the testimony of an impartial Committee to the fact of quality. Again, the University laboratories, who are not bad judges in a technical matter of this kind, considered British laboratory porcelain at its best to be equal to the best pre-War imported ware. There was also a great expansion of output in mathematical drawing instruments. One firm produced in 1925 four times the number of instruments that it manufactured in 1921. They say something about the development of the British magneto industry and the manufacture of arc-lamp carbons. They state also that the manufacture of fine chemicals, which are essential for so many industrial and medical purposes, has received an impetus. There are many instances where a foreign monopoly has been entirely broken and a new chemical, fully equal to what was produced in Germany and elsewhere abroad, has been made in this country. That was the Report made in 1926.

But I do not want to dwell on something even as old as two years ago, because since then the developments have been continuous. Let me take as an instance the case of analytical reagents. Before the War sixteen British manufacturers made approximately 1,330 out of a total of nearly 5,000. In 1925 the same sixteen firms with six others were responsible for some 2,400 products included in List H of the Board of Trade. To-day one firm alone lists 3,500 of these products, and the purity of the products is just as important and admirable as is the amount of the increase. A number of highly scientific substances, such as synthetic perfumery chemicals, organic accelerators for the rubber industry, organic solvents such as isopropyl alcohol and others with some rather long names which I omit, are now being produced as a result of the Act. A very important substance in the manufacture of aeroplane dopes, Butyl alcohol, which has hitherto been supplied by America and Germany, is now, as the, result of the Act, about to be made on a large scale in this country. I do not wish to weary your Lordships by going through optical glass, microscopes and all those things. We have the skill and the people who can do the work. We have the chemists, the mechanicians and the mathematicians, and with this little assistance which the State is able to render there has been, I am not using any exaggeration, a real revolution in the manufacture of all these technical, scientific and mathematical instruments, and I say quite roundly that if that was the only result of these Duties it was well worth the price.

There are only two more points that I want to dwell upon. I must not leave out the poor McKenna Duties as they might feel a little out in the cold. The noble Lord opposite tried to push them gently aside because they were not technically Safeguarding Duties. But they are Safeguarding Duties. No doubt, they were imposed in the first place for Revenue purposes but they have, as is well known, a considerable protective effect. The noble Lord felt that, and he tried to reduce its value by telling your Lordships that there was a great increase in production all over the world, and a great motor development. I dare say there was. But if that motor development had not taken place in this country we should, no doubt, have been buying from, and selling something other than motor cars to, other countries. The development is undoubtedly a very satisfactory one. In 1925, the number of insured work people actually at work in that trade was 191,000, leaving out the odd figures, while in 1928 it was 215,000, representing an increase of 24,000 or a percentage increase of nearly 13. If you will look at the figures of exports they are remarkable. We are told that if you put on a Duty it must increase the prices and that if you increase the prices it is more difficult to export. It is so obvious and simple no one can doubt it: But here you have the stubborn facts against you. When you examine the matter you find that the exports were £6,550,000 in 1924; 29,400,000 in 1925; £8,977,000 in 1926; and £10,000,000 in 1927. That wants explaining. The prices in this country have not been raised; therefore a sort of miracle must have happened. Something, at any rate, has gone wrong with the absolute smoothness of the working of the Free Trade dogma.

This also is worth examining. I do not say that it would shake Lord Arnold's faith, but people a little less dogmatic than he is may suffer somewhat in their certainties. The same thing really has happened with tyres. I have a list of four American companies, one Italian company and one French company which have actually come and settled in this country and will employ British labour, because it is British labour that is employed, with the exception of a few key workers. I am not going to quarrel with foreign firms who come into this country and employ British labour in these days when we want everybody to be employed. I am sorry there should be any doubt upon the subject. As regards musical instruments, again the figures are important, though perhaps not quite so striking as in the other case. As regards the production of pianos, it has been reported in the Press that during 1927—these are not official figures necessarily—100,000 new pianos were produced and that production in that year was a record since 1913. Great Britain was the only one of the piano-producing nations whose output was definitely on the upgrade. That is another very remarkable fact. I agree with the noble Lord opposite that Duties are not everything; I am not suggesting they are; but I say that they do in these carefully-judged and selected cases give a great opportunity, if properly used, to set free the great productive energies of this country. I leave silk alone, except to say that silk under the Duty has flourished exceedingly. After all, Free Trade cannot do everything. With all its Free Trade Lancashire, I am sorry to say, is not doing at all well with its cotton industry.

Now let me give a very short, summary of the general results. I am very careful to exaggerate nothing, but merely to state everything as it is. Looking upon this matter as a scientific investigation, I think it would be wrong to try to build one's own views on facts or figures that were not carefully tested. It would seem that unemployment in many of the industries covered by these Duties has shown substantial improvement. There has been a marked increase, especially in the motor, silk and artificial silk, and leather glove industries, in the number of people employed, and the decision of certain foreign manufacturers to establish factories in this country as a result of the Duties has absorbed a large number of British workers. Imports in general are now lower than in pre-Duty years, while in many instances there has been a steady increase in the export trade. There does not appear to have been any advance in the price of commodities covered by the Duties, and in some cases prices are lower.

The motor industry continues to expand. Production has increased and employment has, on the whole, been good. Two foreign manufacturers, both French, have established factories in this country since 1925. The Duty on tyres is held to have been responsible for the establishment of six factories in this country by foreign manufacturers. The gramophone trade has substantially increased, and lace and real silk have held their positions fairly well. The cutlery trade has been fairly steady, and the manufacture of safety razor blades is now extensively carried on in this country. The production of leather and fabric gloves is on the up-grade and some important developments have occurred in the wrapping paper trade. The china ware trade in the home market has not been as brisk as was anticipated, but imports are lower while the overseas trade has maintained a fairly satisfactory level.

In the time that I have had at my disposal I have tried to run over as rapidly as I could some of the results of these Duties. Some of your Lordships will no doubt differ from the conclusions I have stated, but I submit, whatever may be the mysterious, far-reaching effects on other industries, these Ditties have made a substantial contribution to the level of British employment. There have been very important developments in many of these trades and that is worth keeping, especially at this time when, from various causes, we have so many people out of employment. With over a million unemployed it would seem to me to be almost a wanton thing that in response to the demands of theorists, basing their views so often on outside facts, we should again throw these people so employed into the arena of unemployment, and turn away from the real and tested facts so far as we have been able to deduce them from the experience of the last seven or eight years. I hope, therefore, your Lordships will reject the Motion of the noble Lord opposite. It is true he makes a harmless request for Papers but, if he is going to divide upon it, I hope your Lordships will express your disapproval of the general principles which he has enunciated by voting against the Motion.


My Lords, at this late hour I will only speak for a short time, more particularly as it was unfortunately necessary to speak at considerable length at the opening of this debate, not, if I may be allowed to say so, at undue length as fiscal speeches go. Those of your Lordships who have been in the other House know that speeches on fianancial and fiscal questions last from one and a-half to two hours. We have been discussing a great subject and there has not been a fiscal debate in this House for about eighteen months. Therefore I trust that I shall be pardoned for the length of my speech.

The noble Lord, Lord Hunsdon, is always a pleasure to listen to because of the obvious sincerity with which he speaks and because he speaks with a great deal of practical experience of the matter. I would like to reassure him on one point, which I think will be pleasing to him. He said the yearly savings of the country have run out. I know that is an error, knowing the official statements so far as one can get them. The figures were given to the Colwyn Committee about two years ago by Mr. Coates, one of the ablest Inland Revenue servants this country ever had. He said our savings were £500,000,000 a year. I think the lowest estimate given to the Colwyn Committee was £400,000,000 a year. Taking into account the change in values and making all adjustments, our savings are not very much less than they were before the War. Having regard to post-War conditions I think that is a very satisfactory result.

The noble Lord unfortunately made, if I may say so, the mistake of uniting with the five safeguarded industries to which I referred the statistics about motors and artificial silk, and the noble Viscount opposite also did the same I am not going into that again. What I have said on that point stands on record. It can be proved that these industries were growing very satisfactorily, apart from the Duties. It can be proved they have grown everywhere, because they are catering for a huge popular demand, and I really do not think the noble Viscount opposite would claim that such expansion of the motor trade is due to Import Duties. Lord Hunsdon did claim it. But if the noble Viscount does claim that, I must ask him how it is that when the Duties were taken off the expansion of the trade was most satisfactory, much the same in all respects as before they were taken off. We know that these trades are catering for a huge popular demand, just as is the gramophone trade. But the prosperity of these trades is accompanied by decreased demand in other trades.

The noble Viscount twitted me about not having spoken about the key industries. If I had done so my speech would have been a good deal longer than it was. The whole question of key industries is in a totally different category. I should be quite prepared to deal with that on another occasion. The noble Lord opposite, Lord Hunsdon, gave what he said were statistics of four safeguarded industries, but really he is in error. He included motor cars and artificial silk, and the Parliamentary-Secretary for the Ministry of Labour, in a reply in the House of Commons only a few days ago, pointed out that these were not really safeguarded industries. I have been dealing to-day with safeguarded industries proper. If we are to have an extension of Duties, what came into my mind again and again when the noble Viscount was speaking was, why do not the Government apply them to steel? Why do they not? They stand shivering on the brink. Why do they not make up their minds? They may stand shivering so long that if they do not make up their minds there will be no brink to stand on. The noble Viscount knows perfectly well that many of the things that he said do not bear the slightest, investigation.

I come to lace. Lord Hunsdon said there were 2,000 more people employed in the lace industry than used to be employed. I have here the official reply, dated April 25, to a Question in the House of Commons, and the figures are exactly as I gave them. The number insured on July 1, 1924, was 20,350 and on July 1, 1927, it was 18,170, but you have to take into account the number of unemployed and the result is a net difference of 188. If there are 2,000 more employed there are no official figures to prove it. These are the latest figures. If there are other figures they are not official. Even if you do get an artificial increase in employment it is not much to increase 20,000 to 22,000. Then we were told to think of the effect on the Revenue, and a figure of £11,000,000 way given. But that includes, I think, the revenue from motor cars and artificial silk Duties and all such revenue is paid by the consumers in this country. It is not paid by anybody else. Not only is that so, not only do the consumers in this country pay the £11,000,000, but they pay still more because the price of the home article is raised.

The noble Viscount, Lord Peel, says I am uninfluenced by changes. I have not seen any changes. I submitted to a very close examination, so far as I could in one speech, exactly what happened in these industries and I say that the result of these Safeguarding Duties must be pitifully disappointing to those who advocate Safeguarding. The noble Viscount tried to make out, and so did Lord Hunsdon, that exports have increased. They have not increased. They have decreased by 24 per cent., unless you take in artificial silk. I was rather surprised to hear such statements being made in this House. It would not be surprising to hear them made in speeches outside by supporters of this movement, but I did expect here to hear something a little more in accordance with the known facts. The noble Lord charged me with twitting the Government when I asked whether the Government were going to put a Duty on wheat. My point was that the Minister of Agriculture said the Government would not put a duty on wheat because it would raise the price. Then, when he came to the glove industry, the noble Viscount seemed to attribute to me a sinister design in uniting the two classes of gloves.




I am glad to hear that. It really was not so. I regarded the Duty on gloves as one Duty. To all the figures which the noble Viscount gave I could reply most satisfactorily if time permitted. He said that certain gloves had gone down in price, but I am informed that leather gloves, which come in from Italy and Czecho-Slovakia, are not the same quality of gloves as came in before. Yon have to take into consideration not only price but quality. Then, when he talked about pottery, he claimed that there was more work. But pottery is dearer than it used to be. We have admitted again and again that if you are going to put a Duty on an article you may get a certain amount of artificial employment in that particular industry. He said nothing about the damage done to other industries. As regards pottery I quoted a statement from The Times showing that the industry is not doing very well and that short time was being worked.


I do not like to interrupt but what I said, as a matter of fact, was that the Duty was put on such a short time ago that really there was hardly time enough to see how it works. The statement of The Times applied to the whole trade.


I said that it was one of the newer Duties. I have not the official information available to the noble Viscount. I had to get the best information I could, and it is often difficult to get, but a statement in The Times is something which deserves respect and that is why I quoted the statement from The Times. I do not think I need say more now. I think it would be a very good thing if later in the year we had another debate. But I would like to point out that the noble Viscount said nothing about transhipment and did not attempt to combat what I said about the devastating harm done by these Duties on our re-export trade. I showed that in one trade nine-tenths had been wiped out, in another more than half, and in another two-thirds. The noble Viscount had not a syllable to say in reply. I would like to ask him—I asked him eighteen months ago—to try to give figures regarding transhipment. If he will not do so, then will he and his colleagues cease to say that if there is any injury done to the re-export trade it is due to transhipment in bond? It is not fair. Let us have figures. I had intended to ask your Lordships to divide on this point, but I do not think in the circumstances that would be the best way of getting what I want. I hope, however, that the noble Viscount will either give careful consideration to my request and use his influence with his colleague, the President of the Board of Trade, to give figures, or if not, that he and other members of the Government will cease to say that much is due to transhipment in bond. In the circumstances I will not press for a Division and I ask leave to withdraw my Motion.

Motion, by leave, withdrawn.