WAR DEBTS: THE BALFOUR MEMORANDUM.

HL Deb 02 May 1929 vol 74 cc339-79

THE EARL OF BIRKENHEAD rose to call attention to the subject of War indemnities and to move that this House approves of the principle of the Balfour Memorandum. The noble Earl said: My Lords, I am extremely anxious that there should be no misunderstanding as to the spirit in which I approach this topic. I have no desire to establish any partisan advantage over the noble Lords who sit opposite. I have for some time been engaged in other affairs, but I have nevertheless reached a very clear conclusion that the matters which are related to the Motion which stands in my name required very earnest consideration from Parliament and from the Parliamentary Assemblies of other countries. To me it seems of primary importance that the matters raised in this Motion should be entirely divorced from the Election.

SEVERAL NOBLE LORDS

Hear, hear.

THE EARL OF BIRKENHEAD

These, surely, are not matters which ought to be made the subject of partisan attack in the constituencies. We ought to stand as a country solid upon these questions. So it appeared to me, not in any attempt to involve noble Lords opposite in a partisan difficulty, that I might, perhaps, do some service if I could secure some measure of agreement to principles which, in this matter, seem to me to be elementary. The very terms of the Amendment which stands in the name of the noble and learned Lord, Lord Parmoor, reassure me at least upon a very considerable point. How far that Amendment is acceptable will, of course, as is proper, be ultimately determined by my noble friend who leads the House; but I shall have some observations on principle which, however briefly, I hope to address upon that topic.

When the War ended those of us who were in office were confronted, as your Lordships will remember, with many problems. Not the least of them was the problem of the moneys which we owed and the moneys which were owed to us. Many different views were entertained, and were reasonably entertained, on the attitude which ought to be adopted by this country. It is still commonly said: "You were owed two thousands millions of pounds by your debtors in the course of hostilities." I have even heard it said that we were rash in the lavishness with which we poured out credits and money to those who supported us in those terrible days. Those who make these criticisms little understand how small a part money played in those dangerous days. Money simply did not count at all if you could get a new Ally in, if you could finance that Ally, and if by so doing for four or six months you might save one war situation. You were in a situation in which money ceased to have any contact with the position in which we found ourselves. So, with unstinted public spirit, this country poured from the garnered wealth of centuries its moneys in loans to our Allies. It is no exaggerated statement that by those subventions, and by those alone, we kept in the field those Allies whose sustained military contribution was necessary to the triumphant issue of the War. We never thought then in terms of money and the War was won.

Then there came the post-War atmosphere. I was a member of the Cabinet charged with as much responsibility as most of my colleagues with the problems of those days. How were we to face them? Upon what basis were we to consider the question of post-War liability? Were we to say to the nations whose efforts had been comparable with our own, whose sacrifices of manhood in some cases were greater than our own—were we to say to them: "Your debt to us is a thousand million pounds, or whatever the figure may be, and we propose in strict terms to require its repayment or to declare you bankrupt?" Or were we—and this was the alternative view—after our immense material contributions to this War, to say that after all something moral and spiritual may remain as the expression of the mood which enabled us and our Allies to win this War? We may have been entirely wrong to take that view, but we took it.

In the Balfour Memorandum, which—I believe I am betraying no Cabinet secret when I make this plain—was acclaimed as a masterly State document by every Liberal and every Conservative member of the Coalition Cabinet, a gesture was made which in my judgment upon its moral side was not inferior to the material contribution which this country had made in the conduct of the War. What was the spirit and the content of that proposal? It was this. We had lost, be it remembered, nearly one million men in all the theatres of War. We had flung into that War the garnered resources of a hundred years of peaceful and successful commerce. We had never counted the cost either in terms of men or in terms of money, and the question still remained with what attitude did we propose to face the post-War world and those who owed us money. We could have done it, as I have said, simply and solely by saying: "Whoever owes us money shall pay us the money that they owe us." We took, as I think, a nobler view. We took a view which, in my judgment, throughout the pages of history will be recounted as memorable, as ennobling the history of England.

That was the material contribution which we made to this War. And the terms of that decision were these. We took the view that those who fought side by side, travelled along the milestones which mark this bloody road, shall not make money, or lend money, or charge interest to one another, and no greater gesture was ever made by a country which suffered from the wounds which almost destroyed us in the War than that we should have said to the whole world, to those who inarched with us in the War: "We desire to make no money. You in another Continent, who fought by our side at the end of the War, you forego your claims if you are willing, and we will forego the claims which we have against all those who are indebted to us." It was our hope at the time the Balfour Memorandum received the unanimous consent of the Cabinet that these proposals might have been acceptable in the quarter whose decision was decisive. It was not found to be so acceptable. I attempt neither criticism nor complaint. The American nation, whose international charities, privately exercised, have been upon a scale which the world has previously never known, and whose humanity and sentiment no one has ever been foolish enough to impeach, did not in this matter take the view which inspired the Balfour Memorandum.

It is very important, in speaking upon matters so delicate, that I should make it plain that no English public man of any consequence with whom I have been acquainted has ever thought that there was the least justification for complaining that the American nation did not take this view. Had they taken it, it would, in my judgment, have most suitably concluded a great and a perilous comradeship in arms. We could not tell at the moment when we were responsible for the Balfour Memorandum what their view would be, and, in the result, they have decided. Let me make it again meticulously plain that there is not and there has not been any complaint in this country of the decision that they took; they were the masters of their own financial policy precisely as we are the masters of ours. But nevertheless it should go out to the world, and let it go out to the world with any power of impulsion we possess in this House, that we in Great Britain, at the end of the War, were prepared to forgive every Debt that was owing to us on the basis of a complete cancellation of Debts. And we have never had the credit in the world that we are entitled to in the world for that result. Such was the proposal of the Balfour Memorandum.

I must, if you will allow me, take you a little more deeply into the confidence of those of us who were responsible at that time for the government of public affairs. I think I can do so without any violation of public secrets. We did not know at that time—nobody could know—what amount of money could reasonably be calculated as being in fact obtainable from our late Allies. We were determined not to adopt the attitude of bailiff in pursuit of a debt. That seemed to us entirely unsuitable to the circumstances in which we had waged that War. If I may give your Lordships an illustration, suppose at the critical moment, when the adhesion of Italy to the cause of the Allies was weighing in the balance, anybody had come to us and put that in terms of money, whether it were in millions or hundreds of millions of money, do you suppose that it would have deterred us from the attempt to induce a change in the position which might easily determine the result of that War? We were not so foolish. We never thought in the squalid terms of money, and if we had, we would have lost the War.

Now we come to the later stages. We had in the end to decide upon what basis we should deal with the admitted Debts of our late Allies. Let us clearly understand the general situation, because upon details I do not dwell. It is said that as a result of the War, £2,000,000,000 were owing to us from our late Allies, while our debt to the United States was roughly some £900,000,000. Those figures require a very considerable revision. When you talk of £2,000,000,000, you must remember that a third of that sum was owing to us from Russia—a third of £2,000,000,000. Well that nation, under the guidance of an immoral gang of adventurers and revolutionaries—world revolutionaries—has repudiated completely that Debt. A country with vast resources, which, sanely and soberly reconstituted after the War, could have repaid that Debt while still retaining its international reputation, has chosen, under this mad guidance, to repudiate it, and in my judgment it is slowly sagging into ruin. But we had to face the fact that a third of those £2,000,000,000 as an asset never existed at all since the War.

We had then to consider what were the realisable assets among our solvent creditors. It was said by Mr. Snowden (I think in terms not very wise upon the lips of a man of great public credit who in the vicissitudes of our politics might conceivably, not in the remote future, fill a high position) of our late Allies, without whose assistance we could not have won the War, that they were—I think his expression was, and it is one which I gravely regret and hesitate to repeat—"bilking" their international obligations. I cannot but believe that Mr. Snowden, for whom indeed I have a high respect, must have greatly regretted in his position, with his reputation, with his future prospects, that he should have used this expression of an Ally to whom we owe so much, while I make it equally plain that that Ally owes a great deal to us.

It may perhaps be contended that we could have obtained more favourable terms from France, from Italy, and from the other Allied countries. It may be so, but after all who can say? It is very easy for a critic after an arrangement has been made to turn round and say: "I could have made much more favourable terms." Mr. Winston Churchill conducted most of those negotiations. Some of your Lordships may admire Mr. Churchill more than others, but most of you, I think, will do justice to the fact that he is not only extremely able, extremely understanding, but that he is extremely persuasive. Here you have a Chancellor of the Exchequer, possessing qualities which are nowhere denied, and who had every interest in the world to make the best terms that conceivably were obtainable, conducting such negotiations. Do you really think Mr. Churchill, pressed on one side by an economy campaign, facing the charge of being a spendthrift upon another side, did not make the best terms? We know he did. I know, and all his colleagues know, that he did. We know the laborious result of his negotiations, how day by day, million by million, the matter was conducted upon a basis which was almost meticulous in its attention to the details of finance.

It may be that Mr. Snowden, had he been conducting this financial arrangement, would have been more successful, but what reason can be put forward for supposing that he would? All I know is that in 1923 the Labour Party, in its public Manifesto to the nation, placed on record among the very first of its claims for popular support that they proposed a generous Debt settlement.

LORD PARMOOR

Hear, hear.

THE EARL OF BIRKENHEAD

I thank the noble Lord. I am most glad. I should have expected from him assent to that. We all felt:—such was the spirit at least in this country, whatever other countries may have felt—that the true view was a generous Debt settlement. May I tell the noble Lord quite plainly that it was our object to make a generous Debt settlement? I am speaking of a period when I had still responsibility with my late colleagues. It was the object of all of us to make a generous Debt settlement, and at the same time we felt that the measure of the concessions we should make was limited by the reasonable economy and financial resources of the nations with whom we were dealing. France has happily emerged from many of the difficulties which pressed upon her at the time when our negotiations with her reached a decisive stage. It may be that had such a negotiation been resumed to-day, were it capable of resumption, some slightly better terms might have been obtained. Take the case of Italy. Italy is a country which, though politically of the greatest possible consequence in Europe, is one which economically is not rich. There were limits well understood by all competent authorities on international finance to the contributions which Italy could make. I do not, I am sure, exaggerate when I say that no one who dispassionately considered the situation of Italy and who considered it in the spirit of the Labour Resolution of 1923, would have thought it proper to ask more of Italy than we have asked.

The minor agreements need not detain us. They are all consequential and they were put upon the same basis. But this at least is worth noticing, that although we have paid and are paying and shall continue to pay to the United States of America upon a scale which Mr. Bonar Law hardly exaggerated when he said it would affect the scale of living in this country for a generation—although we are doing that, we have certain compensations. There was hardly anyone who believed in the year 1918, with the immense accession of American wealth which followed upon the War, that the sophisticated genius of British finance could retain for London the control of the finance of the world. Never could that result have been attained unless the golden and indispensable asset of British credit had been preserved. It was attained. I will not argue whether too dearly or not. The American settlement could have been attained in no other way and if that settlement had not taken place the financial supremacy of the world would have passed alsewhere. To our eternal pride this country, ravaged by a war in which we contributed more in terms of men than any other country but France, ten times more in terms of Navy than any other country, and more in terms of finance than any other country, is still to-day the financial centre of the world in the City of London. Let us take great and high hope from this circumstance.

Then let us, a little relevantly to my Motion, consider how far this Balfour Memorandum, for which I ask your Lordships' support, has contributed. What did it do? It made a twofold contribution. One was material, one—perhaps the more important element—was moral. We said to the whole world: "Now, first as a business proposition, if our creditors will forgive us our Debt, though those who owe us money are far more numerous than those to whom we owe money, we will wipe out the whole account." I do not believe a more generous offer has ever been made by any country in the history of the world. That no such offer has ever been made by any victorious country at the moment of its victory is indisputable. In those circumstances it has been thought proper by a former Chancellor of the Exchequer, in a phrase which I think he himself must since have greatly regretted, to describe this as an "infamous Note." This, I confess, has amazed me. The Balfour Memorandum, assented to, as I have explained, by every Conservative member and every Liberal member of that Cabinet, may or may not have been the last word that we could have secured in a Shylock process of bargaining. It may or may not have been defensible; but how it can be described as infamous I cannot conceive. You might as well describe the Sermon on the Mount as infamous. Call it mistaken if you think so, but how it can be called infamous I simply cannot understand.

I would extend a most express invitation to the noble and learned Lord opposite. I know his antecedents in this matter. I know very well the great part that he has played in re-establishing the good feeling of Europe and the stability and prestige of the League of Nations, and I know very well how his mind must work on these problems, because, although I have occasionally criticised him with friendly freedom, at the same time I have observed that a certain consistency has marked his footsteps and that, on the question of the League of Nations and the peace of Europe, he has never varied. And I am sure of this, that he would never make himself a party to any proposal that would dissipate the Balfour Memorandum; nor could he do so, because he is as well aware as I am that upon the Balfour Memorandum has really depended every international financial arrangement that has been made in Europe since it was promulgated and agreed to. It has been upon the basis of the Balfour Memorandum that every one of the later financial accommodations has been arranged and, if you were to give it out to the world that Great Britain was renouncing the Balfour Memorandum, you would inflict a more grievous and irreparable wound upon the reputation and credit of this country than has been inflicted in the whole period in which I have been able to attend to public affairs.

I would therefore invite the noble and learned Lord most plainly to state that it is not the purpose of the Party with which he is associated to attempt to impair the authority of this Memorandum and of all that has been founded upon it. Indeed, the very terms of the Amendment which the noble and learned Lord has put upon the Paper show me that my purpose has already been achieved, because the noble and learned Lord's Amendment is in these terms:— to leave out all the words after 'House' for the purpose of inserting 'while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations, regrets that the settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers.' I have two observations to make upon this Amendment. While I shall follow the advice of my noble friend who leads the House as to the course that I shall adopt, there are two observations that I must make. I take first the second part of the Amendment. The noble and learned Lord regrets— that the settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers. It is rather a serious thing that the noble and learned Lord, leading the Labour Party in this House, should make that express charge, because it imposes upon him, if one analyses the thing a little more closely, the burden of showing in what particular case we ought to have charged more, where we ought to have stiffened up the bill, where we ought to have said to France: "We want £10,000,000 more," or to have demanded £10,000,000 more from Italy.

I would invite the noble and learned Lord, before he commits himself too deeply to that proposition, to remember that the United States of America have adopted precisely the same principle of the ability to pay on the part of all our debtors in Europe as we ourselves have accepted. There may be a slight variation in the dates of payment but, as to the ability to pay, they have accepted exactly that which we have accepted. Is the noble and learned Lord, with his great obligations to Europe, with the reputation that he has in the League of Nations, with his obligation to carry out the tradition which the Labour Party has always upheld of standing well with those with whom our international life must be spent—is the noble and learned Lord really going to get up to-day and criticise us because we were unduly lenient with any debtor Power, and is he going to identify the debtor Power to whom we were unduly lenient? I cannot believe that the noble and learned Lord would do so and, if in this particular matter he were the controller of his own destiny, I know perfectly well that the noble and learned Lord would have been as lenient as we have been in the difficulties in which we have been placed. It may be that he would have been more lenient in some respects, and perhaps he would have been right to have been more lenient. These matters are very difficult, and the man who dogmatises upon them is a man who has very little title to be listened to by the public.

The first part of the noble and learned Lord's Amendment requires very careful consideration. He proposes to move— That this House, while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations… These words fill me with surprise, because the purpose of my Motion is to move— That this House approves of the principle of the Balfour Memorandum. The only reason why I put this Motion upon the Paper was that I thought it was so injurious to the financial prestige of this country that in France, all over the Continent and in the United States of America, it should be widely circulated that a very distinguished man, a very able man, a very moderate man, a man who had held office as Chancellor of the Exchequer and who might reasonably expect to hold that office in the future in certain political developments, should describe this Memorandum as "infamous." If I had been told that this was just an error of expression, a momentary mood, that it did not represent the true opinion of the Labour Party, that the true opinion of the Labour Party was that it approves the principle of the Balfour Note, it would have been another matter. But the noble and learned Lord must allow me to give free expression to the mental predicament in which I find myself.

LORD PARMOOR

What is approved is in the subsequent words.

THE EARL OF BIRKENHEAD

Surely not. The noble and learned Lord says that what is approved is in the subsequent words. Believe me, if the noble and learned Lord will read his own Amendment, which I am sure he would enjoy, he will see that he is quite wrong. I will read the Amendment again. The noble and learned Lord proposes to move— to leave out all the words after 'House' for the purpose of inserting 'while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations '… Let us pause at that point. The noble and learned Lord does not suggest that anything which follows cancels the approval which is indicated in the sentence that I have read. I agree that there is a qualification, but it is a qualification which does not affect the main and governing principle. The qualification is:— regrets that the settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers. With that I have dealt, and the reason why I dealt with it first was that I wished to clear away the only point of controversy between the noble and learned Lord and myself, and I wished to concentrate in harmony upon the point on which I am in agreement with the noble and learned Lord. We find that that point is that the Labour Party in this House, and I suppose elsewhere, approves "the principle of the Balfour Note, which is in favour of the general cancellation of Allied Debts and of Reparations."

That was the whole principle of the Balfour Note. We may have been right, or we may have been wrong; we may have been too generous—I am not at all sure that it is not very arguable that we were too generous—but that is the very principle of the Balfour Note. And we are faced with this amazing circumstance, that in the House of Commons the Chancellor of the Exchequer of the late Labour Government says it is an "infamous" agreement, and the noble and learned Lord in this House comes here and says that he approves the principle of this "infamous" declaration. Gould the Labour Party go into battle under a nobler standard "We stand united under the banner that we support this 'infamous' declaration"?

I only thought it proper to intervene in this debate because I feel a deep responsibility in the matter of the Balfour Note. I was a member of the Cabinet which unanimously adopted it, and I shall look back, so long as I take an interest in public affairs, to that supreme moment in which a financial decision so momentous was imposed upon us. We took it at a moment when almost a million men had perished under arms, and we took it at a moment when, as I have said, the accumulated savings of a hundred years had gone, squandered unstintingly upon the effort we had made, and I am sure of this, that when in the passionless pages of history this War is fully described, the moral and spiritual generosity of the offer which we then made to all our late Allies will not be counted much lower than the material contribution which we made to the struggle of the War.

Moved to resolve, That this House approves of the principle of the Balfour Memorandum.—(The Earl of Birkenhead.)

LORD PARMOOR had given Notice to move as an Amendment to leave out all the words after "House" for the purpose of inserting "while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations, regrets that the settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers." The noble and learned Lord said: My Lords, I rise to move the Amendment which stands in my name, but before coming to the terms of that Amendment there are matters of general importance which have been touched on by the noble Earl, Lord Birkenhead, to which I should like to call special attention. In the first place, may I say how entirely we agree with him in his desire not to make Party advantage out of a discussion of this kind, and still less to bring it within the stormy controversial atmosphere of Election politics? Perhaps I may just say, in addition, in passing, that I recognise the generous terms in which he referred to myself in one part of his speech, and I have always regarded what happened in old days, as he put it, as rather in the nature of friendly discussion between ourselves, which was carried no doubt to an extreme length.

The first point which one has to bear in mind is this, that the Labour Party has consistently adopted and followed what I regard, in the terms of my Amendment, as the leading principle of the Balfour Note. It is not the whole principle and it was on the difference between that and some other parts of the Balfour Note that Mr. Snowden properly, as I think, drew a distinction. There is no doubt whatever upon this point, which I am glad the noble Earl has recognised as part of the history of the times, and it was stated in very succinct terms by the Leader of the Labour Party, Mr. Ramsay MacDonald, when a discussion on this subject was raised in the House of Commons. On that occasion a suggestion was made that the Labour Party, either directly or indirectly, were desirous that there might be repudiation of international Debts and obligations already incurred. I think the answer of Mr. Ramsay MacDonald on that point was entirely conclusive—conclusive not only as regards the Labour Party, but also in his statement that no such policy could for one moment be encouraged or suggested so long as he was in the position of control and leadership. I am thankful, if I may say so—because I dislike matters of controversy perhaps more even than the noble Earl does—that on this occasion no such suggestion has been raised, or any hint given, that any attack would be made upon the Labour Party or Mr. Ramsay MacDonald under that heading. I may say this, too (and I hope I am as generous as the noble Earl to those from whom I differ an politics), that after Mr. MacDonald's explanation in another place, neither the Chancellor of the Exchequer nor the Foreign Secretary made any further suggestion of that kind at all—one of them recognising what had been done in finance and other matters by the Labour Leader, and the other bearing testimony to the peace policy and peace inspiration which has made the Leader of the Labour Party to be regarded as a great apostle of peace throughout the whole world.

I agree with what the noble Earl, Lord Birkenhead, has said, that no one can possibly suppose for a moment—he may be mistaken or he may not, that is another matter—that any attitude taken by Mr. MacDonald is an attitude which he would regard or consider as directly or indirectly of such a character as to be contrary to the great cause he has at heart; that is, the peace spirit and peace stability of the world. Just to put that matter beyond doubt, I should like to quote one passage from the statement of Mr. MacDonald in another place. I want to say one thing as regards the question which Lord Birkenhead most rightly put to me in reference to our attitude towards the Balfour Note, and this is what Mr. Ramsay MacDonald has said:— The Labour party's position has been laid down perfectly fairly on this subject again and again. Then he quoted from the Labour Party Conference as long ago as 1923. These are the words, and they are very important:— The Conference renews its repeated declaration that this country should adopt a generous attitude in the matter of Inter-Allied Debts as part of a general settlement of the Reparations problem. The attitude we always have adopted is the attitude to which I have already referred, that on the wider grounds (in which I agree with the noble and learned Earl) and not merely as a matter of financial bargaining, it was essential for the good of the world, and particularly of the industrial condition of Europe, that there should if possible be a general cancellation so far as we are concerned, both of Reparations and Allied Debts, in order that we might begin again, and regain as soon as possible through our credit in these matters—and I am glad to hear what the noble and learned Earl said upon that point—the financial headship of the world, which he tells us, and I do not doubt the fact, we still retain in the City of London.

Mr. Grenfell, Member for the City of London, referred to this matter in another place. I knew his father very well; he was a director of the Bank of England; personally, I do not know him. But what did he say on this subject the other night? I think it entirely corroborates the attitude which the noble Earl has taken to-day. I regret I cannot find the actual terms of his speech, but in substance he said, when certain statements and personal suggestions were being made in the House, that he hoped that such a matter would not be pursued to the detriment of this country, but that as patriots we should seek, in the direction which the noble Earl has pointed out to-day, to pull together for our common interest and the future of our race. That enables me to pass from what I may call the personal attitude of this matter, except for just one word that I have to say in reference to Mr. Snowden.

There were two occasions on which Mr. Snowden made certain statements in another place. In the first instance it was suggested that he had used words which at any rate might be construed as an intention on the part of the Labour Party if they came into power to repudiate existing international Debts and obligations. No one, I think, who knew Mr. Snowden could have put such an interpretation upon the language he used; but he explained quite specifically on a subsequent occasion that the repudiation that he had referred to was no repudiation—nor had he ever used the words—of Debts or obligations, but that what the words meant, when one really read them in the context, was nothing more than that it would be open at some future time to revise international agreements, provided that that revision could be undertaken by mutual consent, because, as he stated, changed conditions might make a revision of that kind absolutely necessary.

On that point, in justice to Mr. Snowden, I should like to quote a passage which lately came from a great international jurist who was well known in this country, where for some years he was Ambassador at the Court of St. James. It appears in the April number of the American review Foreign Affairs. Mr. John W. Davis, the American Ambassador in London from 1918 to 1922, and Democratic candidate for the Presidency in 1924, one of the great international jurists in the United States, whom the noble and learned Earl must often have met while he was here in legal circles, states the principle for the justice of which we, the Labour Party, contended, and for which Mr. Snowden contended, in these words—he is referring to the Debt between us and America:— The Debt incurred during the War has been adjusted upon terms mutually agreed upon after fair and full conference. Then he goes on to say:— And while no responsible statesman should foreclose the possibility of a reconsideration, that matter has not come to the front at the present time. That is exactly, as I understand it, what was said by Mr. Snowden. Not only is it what was said by Mr. Snowden, but it is absolutely true as regards the principle. Of course, repudiation is wrong.

SEVERAL NOBLE LORDS

Hear, hear.

LORD PARMOOR

I am glad to hear the "Hear, hears," for I am sure no one who ever heard me speak could possibly expect to hear any other note on the subject of repudiation. The whole historical position of this country has depended upon its definite character of performing all international conditions to which it has become on political grounds liable. I hope that there will never be a departure from that attitude. There certainly will not be by the present Labour Party, and certainly not so long as it is under the leadership of Mr. Ramsay MacDonald. But, on the other hand, changing factors may produce new considerations, which, in the interests of both parties, may make it advisable that the terms of some particular agreement should be reconsidered, and perhaps reconstituted. That again, I apprehend, is a thing that no one differs from. I have here many quotations, but I do not want to go into them, particularly after the wide and generous terms in which the noble and learned Earl has spoken, because I am sure that if he has read these matters carefully he will agree with what I am saying, as he has agreed with what I have just said, that we do not want to open these recriminations if it can be avoided, but that we want to go on as common patriots and, especially, to maintain throughout the world both our honour and our generosity.

The next matter he referred to was the question which is raised really in the terms of my Amendment— regrets that settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers. Perhaps the word "unfair" goes too far.

SEVERAL NOBLE LORDS

Hear, hear.

LORD PARMOOR

I say that because on this occasion, as I have sometimes tried to do before without effect, I desire to avoid all causes of controversy and difficulty. I feel that the generous atmosphere which we encouraged after the War was right. I feel that after a time of great common sacrifice it was the highest that our nation could do, to approach the question of Allied Debts on the most generous ground. Not to repeat myself, that ground so forcibly put by Lord Balfour was then and has been ever since the policy of the Labour Party. At the same time, we have to consider whether even in the most generous light, the policy we actually entered upon is in the interests of the nation, of the Empire, and of the world at large. The policy to which the noble Earl referred and to which I have been referring was not accepted. A general cancellation by which we could start afresh, having forgiven these large sums to our debtors and having forgiven all Reparations as against Germany, was found not to be practicable under the conditions then existing. It was not our fault. We made the offer, but it was not generally accepted.

The matters to which I think reference is made—as I say I regret the word "unfair" and I do not like the word—were these. According to a letter which appeared the other day in The Times, and I only quote it for that reason, Mr. Harvey, then Ambassador of the United States in this country, regarded the settlement (I will not call it the compromise) of the payment in respect of the American Debt as equivalent to a sum of £200,000,000 that we need not have spent upon it. Then again, if you look at the settlement with Italy and with France, I am the last person to attempt, nor is it the policy of the Labour Party to attempt to approach this question in what I might call a cheese-paring attitude. I think that would be wrong. But what has been the result? There is no more prosperous country at the present time than France. I am very glad of it. But the burden of our Debt, which is so heavy, and the difficulties of our unemployment do not exist in France to the extent to which they exist here. What we mean by this and what Mr. Snowden meant is that he thought the terms had been unduly generous—let me use that expression instead of "unfair." He thought that when the time came, as it was sure to come in the course of the historical future, both parties might be asked to agree to a revision, and in that revision, although he fully concurred in the principle laid down in the first part of Lord Balfour's Note, he was unable to concur in the latter part. Surely, that is nothing more than true statesmanship.

THE EARL OF BIRKENHEAD

Let me say that quite a very simple point divides us. I have listened with a large measure of agreement to the speech of the noble and learned Lord. Surely he would greatly relieve the difficult situation internationally if he would tell us whether or not he associates himself with the epithet "infamous" as applied to the Balfour Memorandum?

LORD PARMOOR

I think I ought to answer that question quite frankly. I do not like the epithet. But I do not put the weight on what I may call terminological—I think that was the expression used by the Chancellor of the Exchequer at one time—exaggerations which find their way into discussions of this kind. I want to be perfectly frank. I am not in the least criticising Mr. Snowden. He is stating his own view. He was quite right to state it, and not only quite right to state it, but quite right to state it in the language which he thought was appropriate to the evils with which he was dealing. But I say quite frankly to the noble Earl—I do not think there is any concession about it, we are dealing here with a matter of great international interest and we want to deal with it in the widest grounds—I was not thinking of controverting the criticism which he attached to that parcular word. But I may put this to your Lordships and to the noble Earl. Many of us, perhaps he and I if I may put us together in that respect, in our arguments have used epithets which afterwards we would rather not have used; not that we did not believe that they were right but because they were capable of a double contraction. What we owe to Mr. Snowden as, I believe, the most economical and financially-minded Chancellor of the Exchequer we have had in recent years, is so great and so much in the interest of what the noble Earl called British credit and British capital that I think it would be absurd in such a matter as this to overlook the real and sound principles which underlie the whole speech of Mr. Snowden in order to direct attention to a particular epithet which, perhaps, we should not have used ourselves.

There is only one other matter to which I think I need refer. To my mind it would be an infinite misfortune if in the controversy which has arisen, a controversy rather of words than of substance, any word or action could or should be so construed as to put back that great and vital question of world peace and world security. I do not believe that is the case, and I thank God for it. You will not persuade foreign politicians that Mr. MacDonald is not earnest in his peace policy. You will not persuade them that Mr. Snowden is not equally earnest, the one having been Prime Minister and the other Chancellor of the Exchequer in the Labour Government. I think we must rejoice with great satisfaction that, so far as I have been able to read or to understand, no real question has been raised in foreign countries that what was said either by one or the other could even in a remote degree interfere with the progress of the peace spirit in Europe and in the world. Europe and the world owe a deep debt of gratitude for the action of Mr. MacDonald at the London Conference in 1924. Everyone knows that that was not a final settlement and could not be a final settlement. Mr. MacDonald and others have constantly stated that when the time comes, and when the final settlement is ready for arrangement and agreement, the people of this country will find that no Party is more deeply patriotic than the Labour Party, and that no statesman is more beloved for his peace policy throughout Europe than Mr. MacDonald. I beg to move.

Amendment moved— Leave out all words after "House" and insert "while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations, regrets that the settlements made by Conservative Governments on behalf of this country have imposed unfair burdens upon British taxpayers."—(Lord Parmoor.)

THE MARQUESS OF READING

My Lords, we have no wish to enter into discussion relating to international agreements made by His Majesty's Government, nor on this occasion do we desire to examine with meticulous care the language used by Mr. Snowden in another place. The only observation that I would make, after listening to my noble and learned friend Lord Parmoor, is that it is a pity, if he is correct in suggesting that Mr. Snowden spoke as public speakers sometimes do rather in haste and not intending the full meaning of his language, that Mr. Snowden has not taken the opportunity, more particularly when dealing with international affairs, to rise in his place and express his regret. I cannot but think that that would be conduct more worthy of a manly and honourable gentleman.

LORD PARMOOR

I wish to contradict that. I think Mr. Snowden was perfectly satisfied he was using the right terms—epithet I mean. The noble Earl asked me whether I should use it. I said I did not think I could.

THE MARQUESS OF READING

All I can say is this. If, with all the experience of advocacy of my noble and learned friend through a long term of yeans, and with all his loyalty to his Party, he can find nothing better to say than what he addressed to your Lordships in answer to the question from my noble friend Lord Birkenhead and in speaking to the Amendment, I cannot but think his answer was the best that could really be made, and did in truth represent the actual facts of the case. But I pass from that. There is one important question raised in this debate, and I rather gather there is nothing in controversy except the mere language of the Amendment. I say that after listening to my noble and learned friend. Whatever our views might be regarding the international agreements entered into, whether we approve or disapprove them, we desire to state emphatically that we should hold firm to the principle of continuity of contractual international obligations entered into on behalf of the nation by His Majesty's Government. The reputation of this country for carrying out its obligations in good faith must beyond all question be maintained. There should be no room for doubt among other nations regarding the course that would be pursued by a Government formed by another political Party. That Government would still be His Majesty's Government, and would still be bound to honour the pledged word of the nation given on its behalf.

LORD MELCHETT

My Lords, my excuse for intervening in this debate is that, like the noble Earl who moved this Resolution, I was one of the members of the Administration at the time, and I very well remember the discussion that took place when Lord Balfour first introduced his Note to the Cabinet. I do not want to traverse too much of the ground which has been gone over before, but I think it right that we should recall for a moment the circumstances under which this Note came to be written. It will be remembered that after the War and after the Peace Treaty, for a period there was what you might call a moratorium on the subject of Reparations and Allied Debts. The world was too scarred and bruised in the War for Allies or combatants to make much progress. From 1918 to 1922 these great financial matters really lay in abeyance. Conversations were taking place from time to time between Governments and Conferences were being held, but neither was any principle being laid down nor was anybody really paying anything.

But in 1922 this position really received a check by the intimation to the British Government from the American Government that they required us to begin payment of the 5 per cent. interest on the loan which was contracted for by us and also they were anxious that we should enter into immediate negotiations to fund that loan. It was really this request, very courteously made and very firmly insisted on, which led to the necessity of the Balfour Note, which was addressed to the Allied Governments with the intimation that the American Government was asking us to pay them something and that we must really begin to ask our Allies to pay us something too. That was the commencement of the Note, the text of which I hold in my hand. The principles which the Balfour Note tried to establish are two. I think part of the confusion which has arisen in the discussion to-day is due to the fact that there are two principles, and not one, involved in the Balfour Note. The first principle which the Balfour Note endeavoured to lay down was this: that the British Government was prepared to surrender its share in Reparations, then estimated at £1,450,000,000—an estimate which is much larger than the amount calculated to-day—if a general cancellation was made, including all Allied Debts and including our Debt to America. On the figures then existing it would look as if we were making a very large sacrifice.

I have seen Lord Balfour's Note to which this extraordinary epithet has been applied. I was reading it again this morning. It is one of the finest State documents ever produced and is worthy of the one who produced it and worthy of the nation in whose name he sent it. He used there the language which he uses himself to perfection, and which I think is worthy of repeating at this juncture. That was really the spirit that animated the Government and, I am sure, the people of this country and the Empire, in the proposals that were then made. He said:— But can the present world situation be looked at only from this narrow financial standpoint? It is true that many of the Allied and Associated Powers are, as between each other, creditors or debtors, or both. But they were, and are, much more. They were partners in the greatest international effort ever made in the cause of freedom; and they are still partners in dealing with some, at least, of its results. Their Debts were incurred, their loans were made, not for the separate advantage of particular States, but for a great purpose common to them all, and that purpose has been, in the main, accomplished. That was the spirit and the attitude then, and it is that spirit which has been characterised by the extraordinary adjective of "infamous" by a statesman in a moment which we can only think was one of temporary mental aberration.

That was the spirit in which the Note was sent. But there were two aspects of that Note, as I want to point out. One was general cancellation. That was the ideal, but as practical people we realised it might not be possible. The second point we laid down was that in no circumstances would we make a profit out of our Allies as the result of the War, and that whatever happened we would be satisfied if we could obtain either through Reparations or in interest from our Allies a sufficient sum to balance our interest on the American Debt. That has been the keynote of the whole of the negotiations which have taken place and which are now being criticised. It is that keynote of the Balfour Note that has not been accepted by Mr. Snowden. What we would like to know is whether it is accepted or not by the Labour Party. I have here the OFFICIAL REPORT of the House of Commons and you will see from that how the matter developed. Mr. Snowden began by attacking the Chancellor of the Exchequer on the subject of the Debt settlement. No doubt, as an ex-Chancellor of the Exchequer, he thought he could have done better. Well, I have been engaged in many negotiations of many kinds in a long business career. I have been at negotiations when I have been convinced that nobody could have got a better bargain, but I have not been surprised when those who were not there thought they could have made a better bargain. That is an illusion which remains, and Mr. Snowden suffers from it.

I would merely like to point out what really is the gravamen and the serious part of Mr. Snowden's attack. He said:— Perhaps the worst feature of all in the agreements which the right hon. gentleman has made is this: that if ever we get more from those annuities and German Reparations than our payments to the United States we have to reduce the amount of the annuities to be received from our Continental debtors. We have never subscribed, let it be remembered, to the principle of the Balfour Note. I think that was an infamous Note.

MR. CHURCHILL

The Labour Party?

MR. SNOWDEN

The Labour Party. Certainly we did not. And we should hold ourselves open, if the circumstances arose, to repudiate the conditions of that Note. Certainly we should."

Let me point out that it is not the question of cancellation which he is dealing with but it is the second point, and the really important question is whether that principle is accepted or is not accepted.

That point has not been dealt with at all. The noble Lord is in a very difficult position. He obviously did not like either Mr. Snowden's language or his policy, and with great loyalty he dwelt on the virtues of Mr. Ramsay MacDonald, which is the obviously easy way out. We do not want to interfere with the internal difficulties of the Labour Party—far be it from me to add to them, I know they are large enough already—but we are entitled, I think, to ask whether that principle is accepted, not in the interests of any Party, or of this country even, but of Europe—because Mr. Snowden's speech produced an almost stupefying effect in Europe. You had only to open a French newspaper the next day to see the absolutely stupefying effect of his speech. I know the noble Lord has taken great interest in League of Nations affairs at Geneva. He knows that the cooperation of the French Government at Geneva is absolutely essential for world peace. Does he really think that a speech in which it is stated by the ex-Chancellor of the Exchequer in the Labour Government that France has repudiated her Debts much as Russia has done, and that a Debt settlement made by her would certainly be re-opened by him because it had not been formally ratified, is a method of obtaining French support in great international problems on which we are engaged? Obviously not, and nobody knows that better than the noble Lord. If he were sent to Geneva to represent a Labour Government he would be equally as busy explaining there the real meaning of what was actually said as he has been in the House of Lords this afternoon.

But even more important is the fact that to-day we have five ratified treaties. There are five treaties ratified and the only one not formally ratified is the French Treaty. It is absurd to come here and tell us that all he wished to say was that if both parties to an agreement wish to alter it by mutual consent they are open to do so. Surely an ex-Chancellor of the Exchequer does not get up in the House of Commons to deliver a long speech to tell us that. It would be an insult to his intelligence to maintain that that was all that Mr. Snowden wanted to propound to the nation and to the world at large. Are we to understand that these five treaties are settled and that it is only the one not formally ratified that is open to further discussion? That is another very difficult point. Let me say that this haggling about terms is an extremely shortsighted business policy. What really was the foundation from a business point of view underlying the Balfour Note and the settlement of the American Debt? It was that it was of the utmost importance to the people and to the industry of this country that the financial situation of Europe should be cleaned up as quickly as possible. Who suffered more from disturbed exchanges, from inflation and disturbed monetary conditions than British industry? Who had most to gain by quick decisive action in endeavouring to get these problems settled? We had. I assure the noble Lord that we have gained infinitely more by making this settlement than we should have done if we had haggled about another half per cent. or another million a year.

The Prime Minister, the other evening at the Bankers' dinner, gave the facts about the American settlement. What are the facts? America did make very considerable concessions which she need not have made. If she had insisted on her pound of flesh we should be paying £50,000,000 a year instead of £33,000,000. People have told me here and in America that a better bargain might have been made. I ask again, how do they know? What is more essential than to have made a better bargain is that we should never give the impression that we will re-open or wish to re-open the question. We have an advantage, which I can assure the noble Lord from my intimate knowledge of America, where I have many friends and business interests, is incalculable. The settlement put us right away on the map, not as being a country which had to be asked for payment, not as a country which had to be threatened, but as an equal country with the United States, saying: "We will settle our Debt. We will regain equality in the markets of the world of finance with you." That was worth more millions than to have gone on trying to tell the United States what they ought to do. We should have lost the amazing advantage of our gesture and of the good will we have won.

I am sure that in this great international situation, just as in a large business concern, the first thing you want to determine is whether it is a good thing to make a bargain. Having determined that great principle, it is better to make a bargain which some people do not regard as the best possible one than to make no bargain at all. I feel sure that the Balfour Note, issued as it was by a great man in great circumstances and on a great occasion, will stand throughout history as a great State document, and it will always be said that the carrying out of that policy in its entirety will have assisted the stability, the progress and prosperity of the world far more than would have been the case if it had not been adopted.

LORD JOICEY

My Lords, after the debate that we have heard I think your Lordships will agree that it was very wise of the noble Earl to bring forward this important question. I doubt whether anything in recent years has created a greater sensation among the commercial classes of this country than the statement that was made by Mr. Snowden, when he gave the impression that, if a Labour Government came into office, they would repudiate the conditions that had been arranged by a previous Government. I think it was very wise indeed of the noble Earl to bring this matter before your Lordships. There is no doubt whatever that the general feeling throughout this country is that which has been expressed by the noble and learned Marquess, Lord Reading, when he said that we were not accustomed to break any contracts which we made and that where our honour was concerned we should carry out any conditions that had been arranged by our Government.

From the speech that has been delivered by my noble and learned friend the Leader of the Opposition I gather that the words which were used by Mr. Snowden did not really express the view that he had in his mind, though, when these words were taken up and turned in a different way by the Press and others, they had a very ready hearing from all commercial people in this country. I am very glad indeed that this matter has been cleared up. So far as I have been able to gather from the noble Lord the Leader of the Opposition there seems to be very litle difference with regard to this matter, and I think that if my noble and learned friend would take away the last part of his Amendment, in which he finds fault with the conditions of our bargain, there would be nothing left but an acceptance on his part of the general view. I hope that my noble and learned friend will remove these words or withdraw his Amendment, because I really feel that there is very little difference of opinion on this question among all Parties in your Lordships' House.

LORD THOMSON

My Lords, I rise to support the Amendment moved by my noble and learned friend Lord Parmoor, and in so doing I think it seems necessary to clear up some misconception as to what that Amendment exactly means. We say:— while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts … What we mean is really what the noble Lord, Lord Melchett, said—namely, that there are, in fact, two principles involved in that Note. I yield to no one in my admiration and respect for Lord Balfour, but I submit that there is a world of difference between the two principles expressed in that one Note. The first principle is a magnificent gesture, an invitation to general cancellation all round. That is a principle under which we, as a nation, would have made great sacrifices, but so would the whole world, so would America, so would our Allies.

The second principle, under which we demand only sufficient from our Allies to pay what we borrowed on their account from the United States of America, involves sacrifices by ourselves alone and by no one else in the world. I submit that this is a state of affairs which, more especially in the altered conditions, is not fair to the British taxpayer. We have unsolicited testimony to that fact from various sources. If your Lordships will permit me, I should like to read what an American authority says on such a subject, for example, as our Italian settlement. This is the view of the Institute of Economics in New York:— When the British-Italian War Debt account has been entirely liquidated, Italy will have, in effect, paid Great Britain no interest whatever and only 73 per cent. of the amount actually borrowed. In the case of the United States, Italy will have paid at the end of the sixty-two year period of payment all of the money borrowed during the War and, in addition, 759,000,000 dollars in interest. So far the United States seems to have fared better than Great Britain in the Debt settlement; with Italy, since, if all the payments are really made, the American Treasury will have received twice as much as the British, although originally the United States loaned to Italy less than did Great Britain. I submit that, though one likes to be generous—and, speaking for my Party, we were entirely in favour of a general settlement with sacrifices all round—in the case of a country like ours, with a large number of unemployed persons and industrial depression in many of our staple industries that we should be sacrificing more than a rich, prosperous and generous country like the United States does seem a little unfair to our taxpayers.

THE EARL OF BIRKENHEAD

I hope that the noble Lord will not think me discourteous if I intervene to ask a specific question, because this is rather important. Will he tell me, on behalf of the Labour Party, which of our debtor nations we ought to have dealt with more severely?

LORD THOMSON

I do not wish to discriminate between nations at this moment. I think that we have been—let me say badly represented in this matter. I think that we ought to have been able to get from any of our debtor nations as good terms as the United States got.

THE EARL OF BIRKENHEAD

So we did.

LORD THOMSON

If the noble Earl will forgive me, I have just read a statement by the Institute of Economics—

THE EARL OF BIRKENHEAD

Quite wrong. If we make allowance for the difference in dates of payment, the terms upon which the Americans settled with the debtor nations of Europe are hardly distinguishable from our own. There may be a difference in the dates of payment, but there is no real distinction between us.

LORD THOMSON

I do not want to differ from the noble Lord on a point of detail, but this was the Institute of Economics in New York.

THE EARL OF BIRKENHEAD

They were probably quite wrong.

LORD THOMSON

I submit that that is not an argument.

THE EARL OF BIRKENHEAD

It is an assumption.

LORD THOMSON

It is an assumption on the part of the noble Earl.

THE EARL OF BIRKENHEAD

If the noble Lord wishes me—

SEVERAL NOBLE LORDS

Order, order!

THE EARL OF BIRKENHEAD

I will give him the facts. These figures cannot be reconciled with the reality by any economic body, whether in America or anywhere else. I have the whole facts in my mind. I only object to being told that an economic association has dealt with this.

LORD THOMSON

I notice that the noble Earl does not give me the facts, but if he has them he will no doubt give them to us in his reply. I would remind him that this statement that I have read out covers the whole period to which we have referred. The statement says that in the case of the United States, Italy will have paid at the end of the 62-year period of payments all of the money borrowed during the War, and, in addition, 759,000,000 dollars in interest. If he is going to submit facts and figures which controvert that statement of an important body of economists in the United States, I shall be very grateful and I will revise my opinion. I will also ask him if he will correct another statement with reference to the settlement with France. I am going to say that covering the whole period of the annuities the percentage of cancellation given to France by the United States is 60, whereas that given by us to France is 62; in other words, we are cancelling to a greater extent than do the Americans, and they are a far richer people, and I repeat they are a most generous people. If he can controvert these figures I shall be grateful, and I will revise my opinion about the unfairness of these settlements.

There is another aspect of this Balfour Note, the principle of which we are discussing at this moment. My right hon. friend Mr. Snowden was taken to task for saying what he did say, to this effect—that should circumstances arise we hold ourselves open to repudiate the conditions of the Balfour Note. There is not a word there about repudiating any international contractual agreement; the words are "repudiate the conditions" of the Balfour Note. The conditions obviously refer to this measurement which we apply to the amount we shall receive and the amount we shall pay. I think it will be generally agreed that in measuring what we should get from Germany the measure has been Germany's capacity to pay. I submit that if, as Mr. Bonar Law said in 1922, the conditions of the Balfour Note as applied to the amount we were to receive and pay were generous, having regard to the conditions of prosperity in France and Italy they are at this present moment fantastic. France is a very much more prosperous country than we are to-day. France has no unemployment, and is paying off annually large sums of commercial debt, and I am told is even lending money to the United States.

VISCOUNT PEEL

So are we.

LORD THOMSON

I believe we are, but we have a great deal of unemployment which distinguishes us from France. I understand—if the noble Marquess will forgive me—that the loans are being repaid in dollars.

THE MARQUESS OF READING

The revalorised franc also has to pay in dollars.

LORD THOMSON

Is this Balfour Note to be hung around our necks eternally? It is not a contractual international agreement. It is, with respect to its distinguished author, a sort of rule of thumb. It enables us to measure how much we are to get and how much we are to pay. Under the settlement reached in 1926 we are not getting all that we might get under the Balfour Note, but if this limiting condition, this self-denying ordinance, is to apply eternally, quite a serious situation may arise for this country. Revision is always coming along in regard to German Reparations. At this moment there are negotiations going on. Suppose, for example, that £100,000,000 per year were exacted from Germany. Of that France would get £52,500,000. We would get £22,500,000, of which £2,500,000 would go to the Dominions. We should then be entitled only to £17,000,000 or £18,000,000 from all our Continental debtors put together, and the more the Reparations demanded from Germany, the less our Continental debtors would have to pay to us, and the greater the temptation to them to make the demands on Germany as large as possible. We should get more from Germany, they would get more from Germany, but they would have loss to pay to us. I am speaking in the presence of some very great captains of industry, and I speak with diffidence, but I submit that it is not a good thing for this country to turn Germany to an exaggerated extent into the drudge of Europe. If Germany is asked to pay these gigantic sums, I agree that they can only be paid in the end in the form of export surplus. Germany is one of our greatest rivals, and if she is going to have an export surplus to reduce or extinguish what our Continental debtors owe to us, I imagine that the effect upon British trade can hardly fail to be very grave.

In the latter part of this Amendment we say that the settlements have been unfair, and I wish to justify that expression "unfair." What I think may clinch the matter is a statement issued by the Federation of British Industries in February, 1925. There it is said:— In terms of international competition for trade, it means that (assuming we are entitled to five per cent. interest and sinking fund on these Debts) we are subsidising France to the extent of £31,000,000 per annum; Italy to the extent of £27,000,000 per annum; and the remaining debtor countries to the extent of £41,000,000 per annum; these sums representing not only an additional tax burden on British industry, but a corresponding lightening of the burden on the industries of the debtor countries, which are in many cases in keen competition with our own for the markets of the world. That is an opinion which I should imagine would inspire respect in the mind of Lord Melchett, because it is a memorandum by the Federation of British Industries. He can hardly controvert that.

LORD MELCHETT

The noble Lord must not assume that.

LOED THOMSON

Am I to assume that he does not always agree with what the Federation of British Industries say? That is very interesting information. I submit that in all these circumstances the Amendment should commend itself to your Lordships. We are bearing unfair burdens, and we are bearing them partly on account of a principle in the Balfour Note which, in spite of our great admiration for the form and spirit which inspired that Note—the second principle— has failed in its effect. And I should imagine that an Amendment like this, which commands a very large measure of agreement outside this House, must be approved by a large number of noble Lords opposite. If the right rev. Prelate opposite will forgive me, I should imagine that this Amendment would appeal to many of your Lordships as swear words are said to have appealed on one occasion to a Bishop, who said: "I am sorry I cannot use these words, but I am glad that they have been employed."

THE MARQUESS OK SALISBURY

My Lords, I am quite sure that the vast majority of your Lordships—I do not mean merely noble Lords who sit on this side of the House, but noble Lords who sit above the Gangway opposite—will be very glad that my noble and learned friend Lord Birkenhead has brought this very important subject before us this afternoon. No man is better entitled than my noble and learned friend to bring it forward. He was a member of the Government which was responsible for the issue of the Balfour Note, and he speaks, therefore, not only with his usual eloquence, but with a very special authority on the present occasion. And he has been very successful, may I say, not merely in his own speech but in the speeches which he has provoked in other quarters of your Lordships' House. I join with other noble Lords in expressing my profound sympathy with the noble Lord, the Leader of the Opposition. He has been placed in a very difficult position, but his honesty has prevailed, and he has dissociated himself both from the word "repudiation" which figured in Mr. Snowden's celebrated observation, and from the word "infamous." I congratulate the noble Lord, and I sympathise with him.

But really it is a little fatiguing, the amount which the Labour Party have to explain away. Because it is not merely that they have to explain away Mr. Snowden's dreadful speech, but they even have to explain away their own Amendment this evening. It appears that when they say that they approve of the principle of the Balfour declaration it does not mean quite that.

LORD THOMSON

Which?

THE MARQUESS OF SALISBURY

But there are not two principles expressed here. To the plain man, to ordinary Conservatives and Liberals reading the Amendment of the noble Lord, it was assumed that what was approved of was the general principle of the Balfour Note.

THE MARQUESS OF READING

As we are included, I must say I cannot myself agree with that view. I never said that. I thought the Amendment was perfectly plain. I am sorry I differ from the noble Marquess the Leader of the House. I understand the Amendment to mean that it approves the principle which affects the cancellation of the Debts and of Reparations, but it does not approve the principle which said, in effect, that we will only take from our debtors that which we have to pay to our creditors. I understand that it is that part which is challenged. I regret that this was not made clearer before. It does not alter my view as regards the Amendment. I shall vote with the Government, and shall vote against the Amendment.

THE MARQUESS OF SALISBURY

I am lost in these subtleties.

LORD PARMOOR

The English is quite plain.

THE MARQUESS OF SALISBURY

But then there is the word "unfair."

LORD PARMOOR

That is another matter.

THE MARQUESS OF SALISBURY

It is another matter, but it is in the noble Lord's Amendment, and he does not approve of it. That is the remarkable thing. So that the noble Lord not only does not approve of Mr. Snowden, which I fully understand—

LORD PARMOOR

I am sorry to interrupt. The noble Marquess is saying what is quite incorrect. I imagine that I made a very admirable—I will not say defence of Mr. Snowden, but a very admirable statement of my agreement with him.

THE MARQUESS OF SALISBURY

I can assure the noble Lord that he did not make a very admirable defence of Mr. Snowden. Whatever may be said, the defence was a very weak one. He did his best, and we will leave it at that. I turn for a moment to the speech to which we have just listened. The noble and gallant Lord declared that this country has obtained much worse terms than the American Government have. Well, I am advised that the Debts of the European Allies to America have been funded on terms which in actuarial value are not very different from those accepted by us, the chief difference being that the settlements with America provide for smaller payments in proportion during the earlier years, and heavier payments during the later years. That is the answer to the noble Lord. But I should like to add this, and it is of considerable importance: His Majesty's Government have always made it clear that the arrangements they had made were conditional on their debtors not paying more in proportion to the United States. So that is an express condition of the policy of His Majesty's Government. I hope that may somewhat reassure the noble and gallant Lord opposite.

My noble and learned friend who moved this Motion has not only obtained these luminous confessions from the Labour Party, but he has also received, what I did not doubt he would receive, an assurance from the noble and learned Marquess opposite of complete solidarity with the Government in dissociating himself absolutely from Mr. Snowden's attitude in the House of Commons. That is of great value—even more value than the confessions of the noble Lord opposite. The speech of the noble and learned Marquess shows, as was also shown in another place, that so far as the Liberal Party is concerned it will have nothing whatever to do with repudiating the obligations of this country. When we have cut ourselves loose from all the explanations and counter-explanations to which we have listened the broad fact remains that Mr. Snowden's statement—not withdrawn—shook, or would have shaken, the credit of this country throughout the world, had it not been that the other Parties in the State at once repudiated it. For that reason, if for no other, I earnestly hope that my noble and learned friend will receive in the Division Lobby the full support, not only of this Party, but of the Liberal Party too, and that in so doing we may vindicate the pledged word of the British Government, whatever Government may be in power.

THE EARL OF BIRKENHEAD

My Lords, I will not abuse the patience with which your Lordships have been good enough to receive the observations I have already made by a repetition of anything I have already said. Two or three points have emerged which I can deal with in three minutes, and, with permission, I will attempt so to deal with them. In the first place, in reply to my noble and learned friend Lord Reading, I would say that there is not, or ought not to be, any misunderstanding as to what the principle of the Balfour Memorandum was. There are principles and principles. Sometimes principles are complex and sometimes they are simple. This is a very simple principle openly proclaimed, on the first date on which the terms were made known, to Parliament, the country and the world. It was that there should be a cancellation of War Debts. There is no other principle. That is the principle.

LORD THOMSON

I beg the noble Earl's pardon—

THE EARL OF BIRKENHEAD

I wish to elucidate this. What is it that the noble Lord desires to say? I would desire very much to elucidate any point which any noble Lord desires to take, because I am very clear about this, that that was the underlying principle and there is no other. You are not invading that principle when you begin to say that you ought to have charged Italy more or you ought to have charged France more.

THE MARQUESS OF READING

The noble Earl will pardon me, but as I understand it, looking at the terms of the Motion, there is a principle underlying it which is the cancellation of Separations altogether. But there is another point which is what I may call an alternative point raised by Lord Balfour, and the noble Earl knows it well, the principle which is really the one under discussion; that is, as he says, that we shall not in any circumstances take more from those who owe us money than we have to pay those to whom we owe money. That, as I understand it, is the principle under discussion.

THE EARL OF BIRKENHEAD

I do not dispute the noble Marquess's accurate statement on that. But let us ask whether that is disputed.

LORD PARMOOR

Yes.

THE EARL OF BIRKENHEAD

Then we understand that the Labour Party has authoritatively declared in this case, and it is very important that it should be made plain, that this country should receive more in War Reparations than we have to pay. Is that the attitude of the Labour Party?

LORD THOMSON

Yes.

THE EARL OF BIRKENHEAD

It is?

LORD THOMSON

No. It seems to me that the noble Earl, if he will forgive me, has misunderstood. We are dealing with the principle that has been stated by the noble Marquess, and I am in perfect agreement with what he said. But because we say that we hold ourselves open to repudiate the conditions of the Balfour Note should circumstances arise in the future, if a revision takes place, we do not by that mean that at this moment we want to get more than we pay. We simply say that the principle which we do not accept is that we should be utterly bound to restrict what we receive to what we have to pay.

THE EARL OF BIRKENHEAD

The noble Lord would have been very wise to have undergone some legal training in his youth before he dealt with the problem in that spirit of levity and inconsiderate flippancy. It is a very plain question. We have to make contracts and binding contracts now. What is the use of the noble Lord saying that we do not want to be bound in perpetuity and in twenty years we might revise the conditions. You are not allowed the opportunity of revising things in twenty years. You must liquidate the business which has been disputed now. The whole point is, is it or is it not the policy of the Labour Party that it is their intention if they are returned to power to obtain more from our debtors than we pay to our creditors?

LORD PARMOOR

I have tried once or twice to make it clear to the noble Earl—

THE EARL OF BIRKENHEAD

I am very stupid, I know.

LORD PARMOOR

I will try once more. I entirely agree with what was said by the noble Marquess.

THE EARL OF BIRKENHEAD

Unfortunately, he does not agree with you.

LORD PARMOOR

All that Mr. Snowden said was that in the event of some future revision by mutual consent—

THE EARL OF BIRKENHEAD

No.

LORD PARMOOR

That is what I think Mr. Snowden said—that we should consider the whole matter open, but that we were bound by the principle that we were not to get more than we received.

THE EARL OF BIRKENHEAD

That, again, leaves the explanation extremely and obviously incomplete. The noble and learned Lord has said that all that Mr. Snowden said was that if by future revision this position could be readjusted with a more fortunate result to ourselves, the Labour Party would welcome it. So would everybody else; but, unfortunately, Mr. Snowden did not say that. He said he repudiated the principle. The noble and learned Lord shakes his head. Does he deny it?

LORD THOMSON

"If the circumstances arose."

THE EARL OF BIRKENHEAD

What circumstances?

LORD THOMSON

"The" circumstances: I am reading from Mr. Snowden's speech.

THE EARL OF BIRKENHEAD

I had in mind the first speech made by Mr. Snowden; I do not know from what other speech the noble Lord is reading. What Mr. Snowden said in his first speech was that the Labour Party repudiated the principle of the Balfour Memorandum.

LORD ARNOLD

No.

THE EARL OF BIRKENHEAD

If the noble Lord will read the passage I will deal with it. I do not happen to have it before me, but I have it in mind.

LORD THOMSON

It is at column 121. Mr. Snowden said this:— We have never subscribed, let it be remembered, to the principle of the Balfour Note"— this particular principle that the noble Marquess has explained. Then Mr. Snowden said, using the phrase which has been so much criticised— I think that was an infamous Note.

MR. CHURCHILL

The Labour Party?

MR. SNOWDEN

The Labour Party. Certainly we did not. And we should hold ourselves open, if the circumstances arose, to repudiate the conditions of the Note."

"If the circumstances arose."

THE EARL OF BIRKENHEAD

What circumstances?

LORD THOMSON

It depends upon what the circumstances are. I submit that is flippant and that it is really a very bad debating point, and I do not think that any one will differ from me. Mr. Snowden says: "If the circumstances arose," and we cannot define what the circumstances will be.

THE EARL OF BIRKENHEAD

But you are quite unable to explain what circumstances.

LORD THOMSON

No one knows what the circumstances will be. The revision is coming along periodically and automatically every three or four years. We are going through a period of revision now, and we did not know three years ago what the circumstances would be to-day. "If the circumstances arose," said Mr. Snowden, "we should hold ourselves open," and the noble Earl tries to pervert that plain and simple sentence into a statement that if we took office tomorrow we should change the conditions of our settlement with France or someone else and demand more from our debtors than we are paying to our creditors. I do not think that is a fair debating point, if the noble Earl will allow me to say so. He accuses me of being flippant and I return the accusation.

THE EARL OF BIRKENHEAD

I am not at all annoyed, if it is any reassurance to him, with the noble Lord; but I desire to call attention a little more closely to what actually happened, because it is incongruous with the position now assumed by the Labour Party in your Lordships' House. We find Mr. Snowden saying, you will remember: "Certainly we did not agree to the Balfour Note. I think it is an infamous Note and we should hold ourselves open, if the circumstances arose, to repudiate the conditions of that Note." Is it or is it not an infamous Note? The noble and learned Lord. Lord Parmoor, says it is not an infamous Note. I do not know what the noble Lord, Lord Thomson, says about it, whether he thinks it infamous or not. He is very ready to give us his opinion on so many points that he might favour us by saying whether he thinks it is infamous or not, I do not imagine he would find it very easy to reply to that. Then we are told in the official Amendment of the Labour Party that— while approving the principle of the Balfour Note which is in favour of the general cancellation of Allied Debts and of Reparations "— we now know that the Labour Party approves the principle—this deals with a slight controversy which arose between the noble Marquess and myself—while approving of the principle of the Balfour Note, which is in favour of the general cancellation of Allied Debts—they approve of that—they approve of this infamous document—

EARL RUSSELL

Hear, hear.

THE EARL OF BIRKENHEAD

The noble Earl, Lord Russell, has much more sense than all those on that Bench. I have long since formed that conclusion. I think if he had been in charge of this debate to-night we should have reached complete unanimity long ago. Now at least we know that the Labour Party, as its opinion is expressed in this House, is partly of opinion that this is an infamous document, and partly and mainly that it is not, that the spokesman of the Labour Party in this House is of opinion

that his own Amendment in describing this adjustment as "unfair" is an unfortunate selection of words, and that his colleague, Lord Thomson, on the contrary, thinks it most aptly describes the situation. Well, let this Party go to the country with these divided arguments and these irreconcilable views, but at least we shall know that, in whatever department of State they propose, as Mr. Ramsay MacDonald has told us, to introduce dicipline and organisation, they have not been able to do it among their forces in this House and the other House.

EARL RUSSELL

My Lords, I am not going to answer any of the questions of the noble Earl. I only rise to make one observation before we proceed to the Division and that is that the speech he has been making for the last five or ten minutes hardly carries out the promise he made to your Lordships when he opened this debate, that it was not his intention to endeavour to make any political capital out of it.

THE EARL OF BIRKENHEAD

I have been much provoked since.

On Question, Whether the words proposed to be left out shall stand part of the Motion,

Their lordships divided: Contents, 89; Not-Contents, 6.

CONTENTS.
Hailsham, L. (L. Chancellor.)	Bertie of Thame, V.	Dunmore, L. (E. Dunmore.)
	Churchill, V.	Dynevor, L.
Salisbury, M. (L. Privy Seal.)	Elibank, V.	Elgin, L. (E. Elgin and Kincardine.)
	FitzAlan of Derwent, V.
Wellington, D.	Hood, V.	Erskine, L.
	Inchcape, V.	Fairfax of Cameron, L.
Dufferin and Ava, M.	Peel, V.	Faringdon, L.
Reading, M.	Ullswater, V.	Cage, L. (V. Gage.) [Teller.]
		Gainford, L.
Ancaster, E.	Southwark, L. Bp.	Hampton, L.
Birkenhead, E.		Hanworth, L.
Buxton, E.	Askwith, L.	Hardinge of Penshurst, L.
Chesterfield, E.	Biddulph, L.	Harris, L.
Cranbrook, E.	Bledisloe, L.	Hay, L. (E. Kinnoull.)
Leven and Melville, E.	Cawley, L.	Hemphill, L.
Lindsey, E.	Clanwilliam, L. (E. Clanwilliam.)	Hindlip, L.
Lucan, E. [Teller.]		Howard of Glossop, L.
Lytton, E.	Clinton, L.	Jessel, L.
Midleton, E.	Clwyd, L.	Joicey, L.
Morton, E.	Cottesloe, L.	Kintore, L. (E. Kintore.)
Onslow, E.	Cranworth, L.	Kylsant, L.
Plymouth, E.	Cromwell, L.	Lawrence, L.
Stanhope, E.	Danesfort, L.	Melchett, L.
Stradbroke, E.	Darling, L.	Meldrum, L. (M. Huntly.)
Strafford, E.	Davidson of Lambeth, L.	Merrivale, L.
Vane, E. (M. Londonderry.)	Dawnay, L. (V. Downe.)	Mildmay of Flete, L.
Wharncliffe, E.	Desart, L. (E. Desart.)	Monson, L.
Wicklow, E.	Desborough, L.	Newton, L.
Plumer, L.	St. John of Bletso, L.	Templemore, L.
Ponsonby, L. (E. Bessborough.)	St. Levan, L.	Teynham, L.
	Sandhurst, L.	Wharton, L.
Rathcreedan, L.	Stanmore, L.	Wigan, L. (E. Crawford.)
Remnant, L.	Strachie, L.
NOT-CONTENTS.
De La Warr, E. [Teller.]	Arnold, L.	Parmoor, L.
Russell, E.	Muir Mackenzie, L.	Thomson, L. [Teller.]

On Question, Motion agreed to.

Resolved in the affirmative and Amendment disagreed to accordingly.