Lords Sitting of 28 May 1930

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.

BUSINESS OF THE HOUSE.
THE MARQUESS OF SALISBURY: My Lords, I am not aware whether the noble and learned Lord the Leader of the House has taken into consideration the circumstances of to-morrow. As your Lordships are aware, a ceremony of deep interest to many of us will take place in Westminster Abbey to-morrow at half-past five, and it may be a little difficult without some re-arrangement to finish your Lordships' business to-morrow afternoon in time to enable those of us who are disposed to attend that ceremony to avail ourselves of the opportunity.
THE LORD PRESIDENT OF THE COUNCIL (LORD PARMOOR): My Lords. I quite appreciate what the noble Marquess has said. No doubt there will be many members of your Lordships' House who will wish to be present at the ceremony in the Abbey to-morrow at half-past five. We could meet to-morrow at half-past three, if that will meet your Lordships' convenience. There is an Appeal Committee to-morrow, but the judicial business will be over before that hour, since the Appeal Committee meets at three o'clock. Perhaps, therefore, I may now give notice to the House that we shall meet to-morrow at half-past three. That will give us the best opportunity of getting through our work before the ceremony in the Abbey.
THE MARQUESS OF SALISBURY: I understand that the consideration of the Commons Amendments to the Mental Treatment Bill is not likely to take very long, and therefore there will practically be only a small Second Reading and two Motions. I imagine that, if we meet at half-past three, that will be early enough.
LORD PARMOOR: I have not sufficient knowledge on that point, but at any rate it is the best that we can do.

MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMATION (TORQUAY, WEYMOUTH AND MELCOMBE REGIS) BILL. [H.L.]
LORD MARLEY: My Lords, I beg to introduce a Bill to confirm certain Provisional Orders of the Minister of Health relating to Torquay and Weymouth and Melcombe Regis; and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(Lord Marley.)
On Question, Bill read 1a, to be printed, and referred to the Examiners.

EGMONT ESTATES.
THE LORD CHANCELLOR (LORD SANKEY): My Lords, I beg to move, That leave be given to the Lord Chancellor to produce, pursuant to the request of the Honourable Mr. Justice Bennett, declarations made respectively by the Right Honourable Margaret Walpole on the 21st January, 1842, by the Right Honourable Spencer Horatio Walpole on the 24th August, 1874, and Miss Helena Honora Perceval on the 28th March, 1911, which have been deposited with the Lord Chancellor for and on behalf of the House of Lords in connection with claims to sit and vote in this House made by successive Barons of Lovel and Holland, for the assistance of the said Honourable Mr. Justice Bennett sitting as a Judge of the High Court of Justice (Chancery Division) in a matter entitled "In the matter of the Earl of Egmont's Estate and in the matter of the Settled Land Act, 1925."
As this is a technical legal question of considerable importance, great accuracy of statement is not only desirable but is necessary. I have therefore prepared a short considered opinion which, with your Lordships' permission, I will read, so that there is no possibility of mistake. I thought it right also that on such a matter I should consult my predecessor as to the practice proposed, and I have had the advantage of discussing the matter with Lord Hailsham, who permits me to say he is in agreement with the Resolution.
When a Peer takes by descent, his proper course in order to obtain his Writ is for him to make application to the Lord Chancellor and produce evidence of
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his right. Upon the Lord Chancellor being satisfied, the Writ is issued accordingly. There are, therefore, in the custody of the Lord Chancellor a number of documents which have been lodged from time to time by Peers upon making their claim to sit and vote in this House. These documents are in the custody of the Chancellor as Speaker of the House of Lords, to whom the House delegates the duty of issuing a Writ where he is satisfied beyond any reasonable doubt of the justice of the claim. It would not be proper for the Lord Chancellor to part with their possession in any circumstances whatever except upon the authority of the House. I am confirmed in this view by an opinion expressed by my predecessor, Lord Halsbury, in 1884, and am indebted to the Permanent Secretary of the Lord Chancellor, Sir Claud Schuster, for his researches into this matter. Sometimes it happens that, when a Peer makes a claim, evidence which is material is amongst the documents already deposited on a previous claim, and to save labour and expense this evidence on suitable occasions is placed at the disposal of the claimant. The documents, however, not infrequently may contain statements as to the family history of the Peer making the claim or of his collaterals, which would not be furnished if it were not that the claimant and his advisers were satisfied that the statements were regarded as confidential by those in whose hands they were placed.
There is now pending in the Chancery Division an action before the Honourable Mr. Justice Bennett, relating to Teal property, in which the plaintiff styles himself Earl of Egmont. The title of Egmont is an Irish Earldom, and no claim has been put forward by the present Earl to succeed to the English Barony of Lovel and Holland which is held with it, and no question arises in the Chancery action as to the right of the present claimant or any other claimant to the Peerage. I am informed by the learned Judge that it would be of assistance to the Court if there were produced to the Court certain documents deposited with my predecessors on previous claims of successive Earls of Egmont to the Barony of Lovel and Holland. I have satisfied myself that the documents contain no statement which could in any way injure the reputation or be contrary to the interest

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of those by or on behalf of whom they were deposited. I am further informed by the learned Judge that the effect of producing them would be to shorten the litigation and to save expense, and that he is anxious, after consideration of all the facts, to see that the plaintiff does not incur any avoidable expense in establishing his claim.
In these circumstances, the question is whether any assistance should be given by the production of these documents. It is, in the first place, clear that I can only produce them if this House authorises me to do so. In the second place, it is clear that I ought not to ask for such an authority, and, in my judgment, your Lordships ought not to grant it, if any possibility of breach of that confidence of which I have spoken would ensue. It may be said that the mere production of a document deposited in such circumstances is a breach of that confidence. I can, however, say that in this particular case the documents appear to be of such a nature that those depositing them, or those on whose behalf they were deposited, if they were alive, would not have objected to their being rendered available for the purpose indicated. They consist of three formal common form affidavits, which I hold in my hand. There remains the further question whether the action which I now ask your Lordships to take can be drawn into a precedent, so as to prejudice the position of those who in future may wish to deposit similar documents. In my view, it should not have that effect. On the contrary, those who deposit such documents will have the assurance that such a step as is now proposed will only be taken after the Lord Chancellor has satisfied himself personally in the premises and has laid the matter formally before your Lordships. I beg to move that the Motion be agreed to.
Moved, That leave be given to the Lord Chancellor to produce, pursuant to the request of the Honourable Mr. Justice Bennett, declarations made respectively by the Right Honourable Margaret Walpole on the 21st January, 1842, by the Right Honourable Spencer Horatio Walpole on the 24th August, 1874, and Miss Helena Honiara Perceval on the 28th March, 1911, which have been deposited with the Lord Chancellor for and on behalf of the House of Lords in connection
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with claims to sit and vote in this House made by successive Barons of Lovel and Holland, for the assistance of the said Honourable Mr. Justice Bennett sitting as a Judge of the High Court of Justice (Chancery Division) in a matter entitled "In the matter of the Earl of Egmont's Estate and in the matter of the Settled Land Act, 1925."—(The Lord Chancellor.)
VISCOUNT HAILSHAM: My Lords, the noble and learned Lord on the Woolsack was good enough to mention this matter to me, and. I desire only to say that I am satisfied that the principles which he has laid down are the right principles which ought to guide your Lordships in a matter of this kind. I think it important that they should be stated and clearly understood, so that it shall not be suggested that documents of the character in question in this Motion shall be liable to production hereafter in any circumstances which might conceivably do any harm to anybody interested in the matters referred to in them. The noble and learned Lord on the Woolsack tells your Lordships that he is satisfied that in this particular case the principles are safeguarded, and I have only to say that it seems to me that the Motion is one to which your Lordships might well agree. I am glad to have an opportunity of stating my emphatic concurrence with the principles which the Lord Chancellor has laid down.
THE LORD CHANCELLOR: My Lords, I should like to say that I am very much obliged to my predecessor, Lord Hailsham, for the assistance which he has given to me in this case.
On Question, Motion agreed to, and leave given accordingly.

MINISTRY OF HEALTH PROVISIONAL ORDERS (FYLDE WATER BOARD, OLDHAM AND ROCHDALE) BILL.
Read 2a (according to Order), and committed for to-morrow.
SEA FISHERIES PROVISIONAL ORDER BILL.
Reed 3a (according to Order), and passed.

PUBLIC EXPENDITURE.
LORD MONKSWELL LORD MONKSWELL rose to ask His Majesty's Government whether any considered plan exists for the guidance of successive Governments, laying down the limit beyond which public Expenditure cannot be increased without making resort to inflation inevitable; and to move for Papers. The noble Lord said: My Lords, in times of extreme difficulty the one quality above all others that is required of Governments is foresight. I do not know what secrets may be locked in the bosom of successive Governments of this country. They may be looking ahead and so regulating our finances that the steps they are now taking may be suited for producing the best results in the long run. I hope that it is so, but, if so, it is the most successful practical joke that has ever been played in this or, I should imagine, any other country. It amounts to a complete reversal of all pre-conceived notions, and of all the lessons of history.
I am not one of those who think the label by which the Government of the day is known matters much. All Governments are delegates from the electorate. There is little real difference between the different sets of people whom an unchanged electorate returns to power. The Government at bottom simply reflects the aspirations of the electorate. If the electorate possesses foresight, so will the Government do so; if not, not. At a rough estimate I should say that in the whole of my acquaintance there are perhaps ten people who have a rudimentary glimmering of economics, and I imagine that the experience of most of your Lordships is similar. In these circumstances the probability that any Government returned to power by the present electorate works to such a plan as I have outlined appears remote. I hope with all my heart that it does. But appearances are terribly black. It is not too much to say that appearances suggest a wild scramble in which all political Parties take part to buy votes by the lavish expenditure of public money, and that this system makes all acts of foresight impossible.
The situation, so far as can be seen, is something like this. About sixty years ago the franchise was sufficiently widened to make the votes of people with little or no capital a matter of importance, and
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the widening process has gone on so fast that by the beginning of the present century there was an enormous permanent majority of people in this category. Directly this fact was thoroughly realised political Parties began to vie with one another to buy votes by withdrawing money from production by means of direct taxes levied upon the richer classes, whose voting power was insufficient to afford them protection, and spending it non-reproductively in all sorts of ways calculated to appeal to the majority of the electors. Then came the War, which, besides eating up capital on its own account, enormously accelerated the process of the diversion of capital into non-reproductive channels. I am not here expressing any opinion as to whether the way in which this money was spent was good or bad; I am simply calling attention to the facts. To begin with, the money was easily come by, but as demands grew and production, to put it very mildly, failed to keep pace, direct taxes had to be raised to such a point that at the present time we are obviously approaching the limit of what is possible to raise by this means, and little if any more can be squeezed out of them.
It is worth while looking a little closer into this. Direct taxes consist principally of Death Duties, Income Tax, and Super-Tax. We shall be making a generous estimate of the length of human life if we assume that on an average an estate changes hands only once in twenty years. It is now not quite twenty years since Duties on big estates were made so high as to involve the breaking up of a large proportion of the big estates passing by death, and there are still a few left. In a few years the tax gatherers will be going over them for the second time. To suppose that in the meantime a completely new set of big estates has come into existence ready to yield duty on the same scale as those already broken up appears to be out of the question. As to Income Tax and Super-Tax, the noble Lord, Lord Arnold, not long ago informed me that for the last year in which Income Tax was 6s. in the pound the Treasury had at the end of that financial year failed to collect assessments to those two taxes combined amounting to £94,000,000. I will not detain your Lordships by examining the various considerations put forward by the noble Lord to account for

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this fact. I should have thought that it bore its explanation on its face.
Now, far from there being any immediate prospect of expenses going down, every political Party, in slightly different language, announces its intention of continuing to increase Expenditure; in fact, under present conditions, they one and all appear to be convinced that not to do this is equivalent to political suicide. Where is the money to come from? Quite clearly, the direct taxes will soon be unable even to continue to produce what they are producing now. Indirect taxes are practically useless for vote catching, and there is no prospect whatever that large additional sums will be collected by means of new indirect taxes. Repudiation of the National Debt? This, in theory, may be done in various ways. The American Debt could no doubt be repudiated to-morrow, but what about the repercussions of such a step What chance would there be of our debtors continuing to pay us? Repudiation of the Internal Debt without previous inflation of our currency? I do not think it need be considered. All avenues are closed except one, and that is inflation. It is inflation that is the nightmare that has induced me to bring this subject before your Lordships, and I think I am doing the Treasury no injustice if I say that I have gathered that they are at least as much terrified of inflation as I am.
I am aware that there are people who think that inflation would be a convenient means of wiping out the National Debt. Germany has done it and survived; France has done it to a somewhat less extent, and has also survived. I believe that any comparison in this respect between this country and France or Germany is completely illusory. Both France and Germany, when they are in a tight place, have the priceless advantage of an agriculture carefully nursed for many generations with the especial object of producing enough food to feed the whole of the population. We have lately heard a good deal of the influx of French people into the towns, but even now half the population live in the country, and there is probably hardly a single Frenchman or Frenchwoman who has not some near relation with a farm, to which he or she could resort at short notice and secure food in return for his or her labour. In this country this resource
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simply does not exist. I do not know how near chaos and civil war France and Germany went at the height of their periods of inflation. Clearly they were not very far from it, in spite of the advantages they possessed in the matter of food production.
In two words, what I am afraid of for this country is that we are rushing headlong towards inflation; that, in the circumstances in which we are placed, inflation due to unrestrained public extravagance must become progressive. Inflation will progressively raise the price and restrict the supply of imported food. When scarcity reaches a certain point food riots will break out, law and order will disappear, and there is no obvious reason why Great Britain should not perish in a welter of starvation and civil war. It is with these possibilities in mind that I invite the Government to tell us that plans exist and are consistently followed which, so far as human foresight can perceive, are calculated to render this country secure from such a fate as I have outlined. I beg to move.
LORD BANBURY OF SOUTHAM: My Lords, as I was for many years Member for the City of London may I say a few words in support of the Motion brought forward by the noble Lord. I have preached economy for many years, not only to this Government, but to every Government, and I am sorry to say that I have preached in vain. Probably many of your Lordships have read the book upon England by Mr. Page, who was American Ambassador here some few years ago. There is in that book a very important passage regarding the commerce and prosperity of England and the United States. In that passage Mr. Page says—this was written some years ago—that one of the main causes of the prosperity of England was the fact that for many years she had accumulated savings. He said that America, being a young country, had not had time to accumulate savings, but that when America had had time to accumulate savings so as to be in a somewhat similar position to this country the result would be that America would out-vie this country in prosperity and success. That seems to me to be very true. But what has happened since Mr. Page wrote that? Instead of this country continuing to save it has merely continued to spend;

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and saving at the present moment is almost impossible for any class of people.
Your Lordships have probably seen that in answer to a Question in another place the Government stated that where a man had at the present moment an income of £50,000 a year and paid a premium in order to meet the Death Duties on his death, the result was that the amount he had to pay in Income Tax, Super-Tax and premium came to £50,900; so that though he had nominally an income of £50,000 a year he was actually £900 out of pocket. That sort of thing cannot possibly go on. When we remember that if a man has an estate of £1,000,000 the State takes half of it at one blow, it would seem that the result must be that in a very few years there will be nothing to take from the Death Duties and very little from Income Tax and Super-Tax. It must also be remembered that in a debate on the Finance Bill in another place the Chancellor of the Exchequer said—I can hardly believe that his figures are right but as he said so I presume they are—that there are only 50,000 people in this country who pay a full Income Tax. If that is so, what are the prospects for the continuation of the money which is taken from these people? I have not the actual figures before me, but I believe I am right in saying that Income Tax, Super-Tax and Death Duties amount at the present time to something like £350,000,000 a year. I do not vouch that those are accurate figures, but I think they are something like that. That is an enormous sum and it cannot possibly go on.
We all remember the character in one of Dickens's novels—I think it was Mr. Micawber—who said: "Income, 20 s. a week; expenditure, 19 s. 6d. a week; result, happiness. Income, 20 s. a week; expenditure, 20 s. 6d. a week; result, misery." I am not making any attack upon the present Government because I am sorry to say that all Governments during the past ten years have been tarred with the same brush; but that is exactly what the Government are doing now. They are not living on their income; they are living on their capital, and what, apparently, they will not see is that there is no hole in the ground out of which you can dig money and distribute it amongst people. No doubt they are
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deserving people. As Mr. Lansbury said, manual labour is a troublesome thing which ought to be avoided, and no doubt they feel that. I do not doubt that I should feel it myself, but we have to face the facts.
There being no hole in the ground out of which we can dig money, where on earth will you get these large sums of money to be distributed in what are called Social Services? I do not wish to enter into any discussion as to whether these so-called Social Services and the enormous Government Departments—too big before the War but enlarged tremendously after the War, whose only object seems to be to harass the unfortunate individual—are good or bad. I simply confine myself to the fact that even if they are good we cannot afford them. There are many things which we should all like to do if we had the money, but if we are prudent people we do not do them. If we do them, the result, as the noble Lord has said, is not inflation but bankruptcy—which may possibly be more or less the same thing because the end of inflation is undoubtedly bankruptcy, or rather the repudiation of your just obligations. In those circumstances, though with very faint hopes of success, because I am certain that the present Government have no plan for economy—that is the last thing they are thinking of at the present moment—but in the hope that my few remarks may influence not only the present Government but noble Lords who usually sit on these Benches, too, some of whom are conspicuous by their absence at the moment, I beg to support the Question of the noble Lord.
LORD MARLEY: My Lords, I have to thank the noble Lord who moved the Motion for his courtesy in writing a letter to me beforehand explaining the line upon which he proposed to address your Lordships on the subject of his Motion. I tried to analyse the exact meaning of his Motion from his letter and I came to the conclusion that, perhaps, the three things he most wanted to know were, first of all, whether there was a plan for the guidance of successive Governments in Expenditure; secondly, whether it was thought that we have reached the limit of national Expenditure; and thirdly, whether any sort of inflation ideas might he expected to occur after that limit of Expenditure

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had been reached, if further expenditure were required.
LORD MONKSWELL: You cannot help yourself.
LORD MARLEY: I think I might reassure the House at once by saying that the Government has decided not to repudiate the National Debt. That, no doubt, will be of some interest to noble Lords.
LORD MONKSWELL: How are you going to avoid it? That is what I want to hear.
LORD MARLEY: Perhaps in the course of the very few words I propose to address to your Lordships' House I may be able to reassure the noble Lord. The noble Lord, Lord Banbury, begged for prudence in Government Expenditure. I think he was perhaps right—
LORD BANBURY OF SOUTHAM: I am sure of it.
LORD MARLEY:—especially when one looks at the record of the previous Administration in this connection. Noble Lords who were conspicuous by their absence are now conspicuous by their presence and no doubt they will read in the OFFICIAL REPORT to-morrow what the noble Lord, Lord Banbury, said about them. The Budget now before another place seems to me to be an extraordinarily straightforward one compared with the financial antics of the previous Chancellor of the Exchequer. After all, the Government have made the attempt to pay for the commitments of this country out of direct or indirect taxation, and though it is uncomfortable for all of us to have to pay additional Income Tax or Super-Tax, yet on the whole it is, perhaps, more honest and more honourable to do it that way than to attempt to pay for the cost of running the country by the means used by Mr. Churchill.
I noticed that my right hon. friend the Chancellor of the Exchequer, speaking on Mr. Churchill in another place, said:—
"Mr. Churchill's policy has always been that of the prodigal taking no thought for the morrow. I am convinced that he never expected to face the House of Commons with another Budget. He had got to the end of his resources, and if he had been Chancellor next year (1930), he would have been compelled to impose additional taxation and thus expose his defalcations."
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Those defalcations were very uncomfortable matters, like the £19,000,000 raid on the Road Fund, like the annual raid on National Health Insurance funds amounting to a diminution of national contributions in the neighbourhood of £2,800,000 a year, and the extremely unfortunate cutting down of money available for the Unemployment Insurance Fund in 1925, which, had it been continued to be paid at the rate then in force, would have ensured that the Unemployment Insurance Fund, instead of being in debt to the amount of something like £35,000,000, as it is at the present moment, would have been actually a solvent Fund to-day. The Government amount cut down was something in the neighbourhood, when taking into account Government contributions and employers and employed contributions, of £8,500,000 a year, of which the Government contributions were £5,000,000 a year. This added up during the last five years would have provided enough money to make the Fund solvent at the present time.
Then there is the extremely doubtful method of legislating to-day, and making arrangements to pay, perhaps, to-morrow. The administration of the late Government was somewhat on those lines and about £15,000,000 has to be found this year for a measure which was passed eighteen months or two years ago. The result is that my right hon. friend, the Chancellor of the Exchequer, found himself with a, deficit of £14,500,000 in the present Budget, due to that type of what I might call rather too clever financial jugglery. As a result—and it will interest noble Lords to have this fact recalled to their memory—Mr. Snowden has proposed that in future there shall be no tinkering with the Sinking Fund. To quote his words:—
"…there is one certain method by which all efforts to reduce Debt can be rendered futile, and that is by leaving Budget deficits uncovered…There is still this deficit of £14,500,000 which I have to meet somehow. I cannot disregard it…it is my intention to propose to Parliament an alteration in the law bearing on Budget deficits in general. As things stand, the Chancellor of the Exchequer of the day is under no legal obligation to propose to Parliament that a realised deficit shall be made good. I propose to alter that."
That means that in future we shall have a position arising under which deficits in

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the Sinking Fund must be made good under the law of the country. I think that fact alone is to some extent a measure of prudence and foresight in legislation, and I hope it will meet with the approval of the noble Lord.
There was the question of the meaning of the Expenditure of the country and the noble Lord divided Expenditure into reproductive and non-reproductive Expenditure. I might, perhaps, suggest that a better division would be reproductive Expenditure, what I would venture to call transferred Expenditure, and non-reproductive Expenditure. In reproductive Expenditure I would put services which add to the physical and mental development of our country and its people.
LORD MONKSWELL: I thought you would say that.
LORD MARLEY: I am sure the noble Lord would have been sorry if I had not said that. So, in reproductive Expenditure, I put services such as education, health, housing, agriculture and matters of that type. Then, in transferred Expenditure, I venture to put such things as the Debt services of the country—the Internal Debt services of the country, not Foreign Debt services—old age pensions, and widows pensions, which are merely a transfer of money from the pockets of some into the pockets of others, and it is a system which, personally, I should like to see carried very much further. The Debt services, in point of fact, I believe, do not make such a great difference as is generally thought, because I believe that the payers of taxes which go to pay the interest on the National Debt very largely receive back that money as dividends on their holdings of Government loans. It is an interesting fact—and this will bear out perhaps what the noble Lord, Lord Monkswell, said—that owing to the deflationary policy, not deliberately perhaps but certainly pursued during the last seven or eight years, the proportion of the National Expenditure, of which the National Debt services form a ratio, has been constantly increasing. That is to say, whereas something like eight years ago the National Debt services were only about 25 per cent. of our total Expenditure, the average during the last four years has been in the neighbourhood of 44 or 45 per cent. That
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is a sort of fixed sum which cannot be altered, but as the price level falls it bears a larger ratio to our total Expenditure.
Then the third category that I wanted to put forward was what I call the exhaustive category—that is services like the Foreign Debt, the United States Debt, and Defence Services, which now amount to £110,000,000 a year. I suppose the less said about our Foreign Debt settlement the better. It was an extremely unfortunate episode, not at all in the interests of the taxpayers of this country. It was settled on a basis far worse than the similar Debt of France and Italy was settled, and what made the matter far worse was that our settlements of the French and Italian Debts were worse from the taxpayers' point of view than the United States settlement. That is a fact which cannot be lost sight of, and will not be lost sight of, by the taxpayers of this country.
The next point I want to deal with very briefly is the question of whether the limits of the national taxation have been reached. I would remind your Lordships of an extremely interesting Report of a Committee presided over by the noble Lord, Lord Colwyn, on taxation, in which it was pointed out that the proportion of income paid in taxes by the poorest people in this country was considerably higher than the proportion of their income paid in taxes by those possessing a considerably larger income. Let me give the figures. That Committee pointed out that a family with an income of £100 a year paid approximately 12 per cent. of that income in taxation. A family with an income of £500 a year paid only 6 per cent. of that income in taxes. A family with an income of £1,000 a year paid 11 per cent., that is less than the percentage paid by the poorest family, by the £2 a week man. Then, when you get to an income of £2,000, the percentage is 15 per cent. and it goes up to as high as 50 per cent. or more in the case of the largest incomes. It might be as well to remember that while the taxes are very high yet the sum left is still a sufficient one to eke out a precarious existence.
I should very much like to go into the figures quoted by the noble Lord, Lord Banbury, when he instanced the case of the unfortunate man who has £50,000 a

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year but whose taxes and insurances amount to £50,900 leaving him minus £900 to live on. I feel extremely sorry for that unfortunate man, but I have noticed that most people are very pleased to pay as high taxes as possible because, after all, the higher the tax one pays the higher is the income from which the tax is paid. There is no doubt that the policy pursued by the Conservative Government during its four years of office has increased the burden on the poorest people by increasing the amount of indirect taxation. It is quite clear that it is the policy of the present Government to alter, as far as is in their power, that ratio of indirect taxation. Then there is a possibility that we may get a little money by preventing tax evasion.
LORD BANBURY OF SOUTHAM: I am sorry to interrupt the noble Lord, but may I ask, if a man does not smoke or drink and his income is under £200 a year what tax does he pay? He is much better off if he does neither.
LORD MARLEY: If he does not drink or smoke he does not pay any taxes.
Several NOBLE LORDS: Hear, hear.
LORD MARLEY: But his fellow-taxpayers pay more. What I have given is the average.
LORD BANBURY OF SOUTHAM: It is a voluntary payment.
Loan MARLEY: Voluntary or involuntary, it is a tax on the people with incomes of £100 a year. I am not giving my figures. I am giving the figures of the Committee presided over by Lord Colwyn.
LORD BANBURY OF SOUTHAM: If it is voluntary surely it is not taxation.
LORD MARLEY: The point is that if two persons are liable to taxes and one does not drink or smoke and the other does, and the average of the tax is so much, then the one is paying twice as much as the other. I think that must be clear.
VISCOUNT BRENTFORD: He would if he drinks twice as much.
LORD MARLEY: It is the average. To go back to the question of tax avoidance, the Board of Inland Revenue has had to take cognisance of the fact that there is a certain amount of tax avoidance by
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people living abroad. I understand the position is that anybody who lives abroad for under three months of the year avoids paying Income Tax and Surtax in this country.
VISCOUNT BRENTFORD: Not under three months.
LORD MARLEY: I beg pardon. I should have said more than six months. I am told on reliable authority that there are people who watch their diaries very carefully and on the last day of the period when they would become liable they hurry abroad again. I do not know that there is much to be gained from that source. There is also the question of the conversion of estates into private companies. While that is perfectly within the law, yet it is liable to misunderstanding and objection and the Chancellor of the Exchequer proposes legislation to prevent avoidance of Estate Duties on landed estates and investments through the medium of private companies.
Then there is another source from which we may be able to get a considerably greater return from existing taxation. I refer to the possibility of inducing investments in industry in this country, and particularly in the export industries, instead of the money which is available being used for investments abroad. Mr. McKenna told us, in a recent monthly statement from the Midland Bank, that approximately £150,000,000 is now being invested abroad each year. It is the aim of His Majesty's Government that some of that money should be invested in this country in industries largely export in character, so that instead of exporting capital we should export goods made by British workers in this country. An example of that is the Government's Coal Mines Bill, by which we hoped that the industry would be put upon such a prosperous basis that money would be available from the British investor for the coal mining industry to enable the coal mining industry to reorganise itself and so increase its exports abroad instead of exports of capital.
LORD BANBURY OF SOUTHAM: If I had any money to invest I would not put it in a coal mine if the Bill passes.
LORD MARLEY: Well, that is an interesting proposition with which everyone may not be agreed. But the mutilated

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body of that Coal Mines Bill which your Lordships have nearly smothered—
LORD BANBURY OF SOUTHAM: How?
LORD MARLEY: It has been pointed out again and again that there are provisions which the Government consider are of essential importance which were deleted by your Lordships. I am not attacking anybody.
EARL PEEL: Then why are you saying it was mutilated?
LORD MARLEY: It was mutilated.
EARL PEEL: The Amendments were inserted by the opinion of a majority in the House.
LORD MARLEY: It is the opinion of the minority in this House and of the majority in another place that the Bill has been mutilated.
EARL PEEL: That is not what you said.
LORD MARLEY: That is what I say now. It is perfectly clear that the Bill has been mutilated. Finally, I want to remind your Lordships that owing to tax reduction during recent years and owing to the fall in the price level those who have comfortable incomes are considerably better off. I believe it to be a fact that a man with a gross income of £10,000 a year is twice as well off to-day as he was eight years ago.
Several NOBLE LORDS: No.
LORD MARLEY: That is an absolute economic fact susceptible of clear proof. By that I mean that the money available for spending after taxation will buy twice as much to-day as it would have done at the time of the highest inflation period in this country. It will buy twice as much. I believe that to be absolutely susceptible of clear proof. In this connection we have the fact that the yield from taxes has kept up very well. The number of Surtax payers remains constant. The yield from Estate Duties, from Surtax and from the principal sources of taxation remains constant, so that I would suggest that we have not yet arrived at the period when no further taxation is possible, although, fortunately for the peace of mind of noble Lords opposite, we have the
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assurance of the Chancellor of the Exchequer that he believes that no new taxation will be necessary next year.
THE MARQUESS OF SALISBURY: He said that he would not impose any new taxation. That is rather a different proposition.
LORD MARLEY: It is a different proposition; I stand corrected. I gather that the noble Marquess suggests that he said that he hoped that it would not be necessary.
VISCOUNT BERTIE OF THAME: Unless there were unforeseen circumstances.
LORD MARLEY: Unless there were unforeseen circumstances. I am not prepared to say whether there will be unforeseen circumstances or not. That is in the laps of the gods and, for all I know, may be decided to-day in another place. Finally, may I deal for one moment with the question of inflation? I do not quite know whether the noble Lord suggested that inflation was a disease or a medicine.
LORD MONKSWELL: A disease.
LORD MARLEY: As a medicine, of course, it is a possible form of taxation but, on the whole, an undesirable one. I do suggest, however, that the alternative to inflation—namely, the deflationary policy of recent years—has been at least a serious contributory cause of unemployment. I am not going to suggest that this is the deliberate policy of any Government. I believe that it was partly due to a world-shortage of gold. I am told that the world needs an average increase in the gold supply of about 3 per cent. per annum, and I am told that there has been an actual decrease in the amount of gold available. That has resulted in a falling price level and a gradual deflation throughout the world which has at least been partially responsible for the world-wide unemployment problem that is now facing this and other countries. I suggest that this danger of food riots and starvation is not a real one. A well known Socialist writer on this subject, in putting forward that proposition, said:—
"Our capitalist community, unable to support itself with its own hands, will fall back on horse, dogs, cats, rats, blackberries, mushrooms and cannibalism."

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I hope on the whole that we shall be able to avoid these dangers, and that noble Lords will be able to reassure themselves on that matter.
LORD JOICEY: My Lords, the matter that the noble Lord has brought forward in this Question is a very important one so far as this country is concerned. I do not think that either he or my noble friend Lord Banbury will get very much comfort from the reply that has been given by the noble Lord. I think we ought to realise the feeling that exists amongst all commercial people. Depend upon it, the opinion of large commercial concerns and their leaders in this country is a very important one so far as finance is concerned. If you read the speeches delivered at their various meetings, whether of banks or of any other commercial concern, I think you will be satisfied that there is a real and general anxiety with regard to our Expenditure and our financial position. We are undoubtedly drifting into a very serious disaster, and the misfortune is that those who control the taxation and Expenditure of the country do not seem to realise it.
I notice that the noble Lord who has just spoken stated that there was very little doubt that the yield from taxes was increasing. But how long is that going to go on? Death Duties, as we all know, are drawn chiefly from capital and we are spending our capital as if it were revenue. Everybody knows that, when that is done, you affect the income from that capital. There are many other ways in which capital is being expended and treated as revenue. The Chancellor of the Exchequer made a statement the other day that taxation did not affect the industries of the country. Any Chancellor of the Exchequer who snakes a statement of that kind shows clearly that he does not altogether understand the question. If you look at the various large industries that have been accustomed to pay very large sums in Income Tax, such as the coal industry, iron and steel, shipbuilding and ship-owning, most of them, even last year, contributed considerable sums in Income Tax owing to the system of averaging. These large sums are disappearing, and I feel quite sure that we may in the future find that the Revenue upon which Mr. Snowden is depending will not be realised.
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If you take away capital which pro duces revenue, depend upon it you must, affect that revenue, and I think that the Government—and I do not speak only of this Government but of all the Governments that have controlled our Expenditure and taxation—do not yet seem to realise the serious position that we are in. When you consider that there are only 60,000 people who pay these enormous sums in Income Tax and Super Tax, you will find that a large proportion of it has been paid by those industries which at the present moment are practically making nothing, or even losing. I hope that the Government, and in particular the Chancellor of the Exchequer, will give serious thought to the Question that has been so ably brought forward by Lord Monkswell and supported by Lord Banbury. Depend upon it, there is great anxiety among the great financiers of the country that we are drifting into a very serious position.
LORD CUSHENDUN: My Lords, when I came into your Lordship s' House this afternoon nothing was further from my intention than to take ally part in this debate. I read the Question standing in the name of my noble friend Lord Monkswell, and it did not suggest itself to me as a subject in which I should feel called upon to take any part. I should not have done so, but for one or two observations that fell from the noble Lord who spoke for the Government. I followed his speech as closely as I could. My difficulty was to make out where it was relevant to Lord Monkswell's Question. He went into a number of interesting financial matters and laid down certain propositions, but they did not seem to me to have any relation what ever to Lord Monkswell's Question, which asks
"whether any considered plan exists for the guidance of successive Governments, laying down the limit beyond which public expenditure cannot be increased without making resort to inflation inevitable."
The noble Lord has not given any reply, or any attempt at reply, to that Question. It would be a matter of very great interest to hear what the Government had to say in answer to it.
Instead of that, the noble Lord spread himself pretty continuously over the whole financial position, and thought it necessary to make a rather pronounced attack upon the finance of his predecessors. As

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I had the honour of being at the Treasury with my right hon. friend, Mr. Churchill, I feel inclined to say something in repudiation of what has fallen from, the noble Lord. Of course, a matter of this sort is one with which one cannot possibly deal at all fully without preparation of some sort. As I have already explained, I have made no preparation whatever. It is some time since I studied any of the materials which one would have to study to prepare a speech of this sort, and I can only speak from recollection, but I utterly repudiate the language used by the noble Lord with reference to my right hon. friend.
One of his expressions was "Mr. Churchill's financial antics," and then he went on to give one or two illustrations of What he considered to have been "antics." Of course, we had a re-hash of the old accusation about the Road Fund. The raid on the Road Fund was a catch-word on the Benches opposite before and at the last Election. I do not believe that any sober and instructed opinion in this country has at any time regarded what was called the raid on the Road Fund as any improper dealing with the financial situation. After all, let me remind your Lordships what the Road Fund is. To whom did the Road Fund belong? We had accusations of theft. I think the expression was used occasionally, that my right hon friend, Mr. Churchill, had robbed the Road Fund, and that he had committed theft. The Road Fund belonged to the taxpayers of this country. The Road Fund was a Fund with a very large amount standing to the credit of the taxpayers. It had been raised by taxation, and it would have been absurd, in the financial position which obtained two years ago, to have allowed that enormous sum to run on, which could not be used within any immediate future for the benefit of the roads of this country. It would have been absurd not to have used it for the benefit of the taxpayers, as Mr. Churchill did use it.
Then the noble Lord instanced the dealings with the Insurance Fund. Again he brought forward that example to show that Mr. Churchill had dealt with the finances of the country in a hand-to-mouth way and without looking forward to see what was going to happen in the future. As a matter of fact, exactly the contrary is the case with regard to the
1132
Insurance Fund. Mr. Churchill, at the time when he was preparing his last Budget, was fortunate enough to be able to forecast a very considerable decrease in unemployment in this country, and he had only to deal actuarially with the Insurance Fund to determine at what figure of unemployment the Insurance Fund would be paying its way. Unemployment was then falling very rapidly, and there was every hope, which probably would have been realised but for the result of the Election, that unemployment would decrease rapidly in the course of the following year, with the result that the Insurance Fund would be paying its way. As a matter of fact, it was no responsibility of Mr. Churchill's that that did not take place. It was the policy of the noble Lord and his friends, and not that of Mr. Churchill and his friends, that has added 600,000 or 700,000 to the number of the unemployed. That was entirely due to the policy of noble Lords opposite. Therefore, when the noble Lord, in his irrelevant answer to Lord Monkswell, chooses to make this attack upon the finance of Mr. Churchill, I think I am justified as an old colleague of Mr. Churchill in asking leave to repudiate the noble Lord's language and meaning.
The noble Lord expressed in very truthful language what is the policy of the present Government, not in relation to the Question put upon the Paper, but generally. He expressed the policy of the present Government as transferring money from the pockets of some to the pockets of others. That is a very euphemistic way of expressing a policy which might be very much more succinctly described. The noble Lord then reminded us of some findings of the Colwyn Committee. These, again, had no bearing upon the Question addressed to him, but nevertheless were of some interest. The findings which he quoted from the Colwyn Committee's Report I and others have sometimes thought were very good examples of the findings of theoretical financiers in giving an academic opinion.
The noble Lord quoted the statement that the man with £100 or £200 a year paid so much percentage in taxes, and that the man with a larger income paid so much less percentage, and so on. Viewing the matter practically, that is sheer nonsense. How can you tell what

1133
any man or any individual on the average would pay in taxes on a certain income, when his taxable capacity depends entirely, or almost entirely, upon indirect taxation? A man with £100 a year may not need to pay any taxes at all, and a great many of them do not, and therefore to talk about an average is, with great respect to the noble Lord, really absurd, and it is absurd to draw inferences from it, as the Colwyn Committee did. It is quite true that a man with a small income may, if he so chooses, by using dutiable commodities, pay a large part of his income in taxation. It may well be that a man with a much larger income, although he uses dutiable commodities, pays a lower percentage in taxation, but that is not really practical politics, and it has no bearing whatever upon the subject which your Lordships are now discussing.
There was one other statement made by the noble Lord which I do not venture without examination to contradict directly, but which I must say surprised me very much, and about which I am very sceptical. He said that the result of the finance of the last Government was to increase the amount of indirect taxation. I think if the noble Lord will examine the figures again he will find that it is not so. If you take in the Betting Tax as being indirect taxation, it may be that with that tax included his statement would be correct, but considering the amount of reduction which the late Government effected in indirect taxation, through the increase of Imperial Preference and in other ways, too, although it is quite true that the proportion as between direct and indirect taxation may have been altered, and I think was altered, by the late Government, I do not think it is correct to say that the amount of indirect taxation was positively increased by their operations.
The noble Lord finished by quoting an assurance of the Chancellor of the Exchequer—I am not sure whether it was an assurance or merely an expression of opinion—that next year he would not be obliged to put on new taxation. I do not know, as I say, whether that was an assurance or not. If it was an assurance it is not an assurance to which I, at any rate, would attach very much importance. We have had so many assurances, not only from the Chancellor of the Exchequer,
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but from the Government of which he is a distinguished member—assurances which have never been borne out by the facts—that I do not think we need take much comfort to ourselves from any assurance given by the Chancellor of the Exchequer with regard to future taxation; and in any case, even if we could rely upon that, it would not supply us with any intelligible answer to the Motion of the noble Lord.
LORD MELCHETT: My Lords, I think that a few words should be said on one aspect of the case which the noble Lord opposite raised, because in his speech he betrayed that curious muddle-mindedness on financial matters which seems to afflict the present Government in a most extraordinary degree, and which, if continued, is bound to ruin this country. In one part of his speech he announced that the policy of the Government was to transfer money from those who are better off to those who have less; I will not say from the more industrious to the less industrious, or from the more deserving to the less deserving, but he announced that as a policy. Carried far enough, that is the doctrine of Mr. Lenin, which has been carried out so successfully in Russia. And it is, after all, only a question of degree, for when taxation reaches a certain point the difference left is so small a margin that it really does not matter very much whether you take the capital and transfer it to the State, or take so much of the income that there is nothing left. That is a mere matter of machinery. But then the noble Lord went on to say, curiously enough, that the Government were exercised about the export of capital, which, I was surprised to hear him say as a Free Trader, was sent abroad in the form of money. I always understood it was sent in goods.
LORD MARLEY: I said it was invested abroad.
LORD MELCHETT: Investments abroad, I have always been taught, are paid in goods. It is the only economic method by which they can be paid for. Then, carry that a step further. The noble Lord does not seem to realise that the penal taxation of the present Government is forcing all of us to invest abroad, and is making it impossible to find people who will invest money in industries in this country. That

1135
is taking place on an enormous scale, and is growing, and will grow. The reason is obvious. After all, money invested abroad is not likely to be subject to the predatory operations of a Party which wishes to transfer it—finally, I take it, the whole of it—to the pockets of somebody else. I have been informed by people in the City whose opinion is of great weight that people are now beginning to transfer their property abroad, simply because they no longer think it is safe in this country, quite regardless of whether they get any income from it or not, so that there may be something they may be sure of having. That is not a vague fear but quite a serious statement. People are leaving this country; in fact, you are producing a flight from the pound, just as at one time there was a flight from the mark.
You may say: "If people do not appreciate this heavy taxation, if people who are well off do not care to cut down their standard of living to a much lower standard, and prefer to live in other countries where their money is invested and they are able to enjoy a standard of living to which they are more or less used, they are bad citizens—let them go." But do not at the same time imagine that you are going to encourage people to invest money in industry here, or that you are going to increase the exports of this country, or help the unemployment problem, which is weighing so heavily upon your minds. You cannot confine capital unless you confiscate it. You cannot prevent anybody selling English securities and buying Swiss, French or American securities, and leaving his money in some obscure place by some obscure methods which it is very difficult for even the Inland Revenue authorities to find out, whereby he is enabled to have a decent dinner from time to time.
So you are producing among citizens who have contributed to the revenues of this country the spirit of a tax strike, and that is a spirit that is daily growing. It is no use for noble Lords opposite to think that they can entirely ignore the expressed views of the chairmen of banks and big industrial enterprises in this country, to say that these people do not know what they are talking about, and that either Committees or Treasury officials are infinitely better guides in these matters than those who have to
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bear the burden of industry. I am not saying that as something new. I have protested against our financial policy ever since the War. We have pursued a crazy policy of deflation, a foolish policy of reduction of Debt at a time when we could not afford it. We depressed our industries, ruined our export trade, and had chronic unemployment. That is a financial picture of this country which people hold up as an example to other nations, who, whatever their financial methods have been, all seem to have been more successful than we have been. You cannot get away from the facts, and I am glad to hear that the policy of deflation, at any rate, is no longer going to be pressed as it has been.
But the policy of over-taxation is worse. There is nothing new in all this. If the noble Lord will examine the history of Empires, particularly the fall of the Roman Empire, he will see that over-taxation has been a more potent cause of the ruin of countries than any other single cause you can name. And the reason is obvious. If you make a citizen feel that it is not worth while to continue to make efforts because it is probable that the result of his efforts is taken by the tax-gatherer, he ceases to make the effort. And, after all, it is on the efforts of the citizens that you depend —and in "citizen" I include those who direct finance and industry, without whose energy, brains, and enterprise no industry would be carried on or established. And if those people begin to feel that the amount of taxation they have to pay is in excess of what can reasonably be demanded you are bound to see a decline. That is the verge on which you are standing.
After all, who are the people who have put the money into new industries? The same people whose money is to be taken away apparently, and given to people who will not put money into industry. The dissipation of wealth is very much like the dissipation of a head of water in a waterfall. If you have a hydroelectric scheme and a good head of water, you get, relatively cheaply, a good lot of power; but if that water is spread out into a shallow expanse on the level you get no power at all. It is a degradation of energy. And that is the danger of the theory of the dissipation of wealth. There may be evils in the concentration of

1137
wealth in a few hands, but in industrial communities there is an enormous advantage for all in that because enterprise is supported by small groups of people who have the money to put down themselves, who do not go to anybody else for it, and who are prepared, if necessary, to lose it if the risk is worth while.
And let the noble Lord ask himself this question: What rate of remuneration would he require on some new capital enterprise the result of which was in doubt if 12 s. 6d. in the pound, should he make a profit, has to be returned to the Treasury, and he only retains 7s. 6d. in the pound of the profits, whereas he may lose the whole of his capital? If he will make that calculation he will see that the return which is required is something so big that you cannot find industries that will yield it. And the result is a growing disinclination to go into new ventures. That is natural. Financiers point out that it is absurd to run these risks because the financial reward cannot possibly be in any way commensurate with the risks which you run. It is a question of heads you lose, tails you lose. And that is one of the dangers which seems not to be apprehended by those who seem to think that it does not matter how much you take away from people who have an income or a capital of a certain size. It does matter. It is not that they cannot still have a grill somewhere and still buy some clothes and still manage to live. That is not the point. It is that the dynamic force which these people represent in every industrial State is broken, and unless you substitute another for it nothing will happen. Speaking seriously, surely it would be much better to proceed to bring about pure nationalisation or the Socialistic State because there would be some big people who would have the financial ability to go on and do something. What you are doing is to bring about financial paralysis, and that is a very serious thing. That, with uncertainty, despair and despondency, is a picture of industry in the City of London at the present day.
The noble Lord talks gaily about the Coal Mines Bill. I should like to hand over to him the task I have had of trying to raise on first-rate debentures some money for collieries at the present time. I assure him that the Coal Mines Bill is the one thing which has killed the
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chance of my ever doing so. If the noble Lord opposite thinks that the Bill is a bull point I should like to take him with me to some underwriters in the City and get their views as to whether they think it is a bull point. It is not a bull point; it is a bear point. For noble Lords to come and tell your, Lordships that a Bill which proposes to increase the cost and practically destroy the profits of the coal industry is a splendid advertisement with which to go to underwriters and the public in order to get an investment in collieries—
LORD MARLEY: It has been difficult to raise money for the coal industry during the last four years; indeed, long before the Coal Mines Bill was thought of.
LORD MELOHETT: It has been very difficult.
LORD MARLEY: The point is that the Coal Mines Bill was brought in in order to put the coal industry on a better basis financially so that money could be raised for the industry.
LORD MELCHETT: The noble Lord seems to me to forget that by the shortening of hours, which has nothing to do with the reorganisation of the coal industry, you will so deprive the industry of profits that, however you reorganise it, it will be worse —
LORD MARLEY: The shortening of hours has nothing to do with the necessity for the reorganisation of the coal industry. That was made clear by an article in The Times.
LORD MELCHETT: The noble Lord was talking about the Coal Mines Bill. If he will take the hours clause out of the Bill he might be right. Is he prepared to do it? Is he prepared to give us even the small Amendment we have asked for?
LORD MARLEY: The Party is not prepared to take the hours clause out, but we are prepared to say that the Bill as originally introduced would have put the industry on a sound financial basis, including the hours.
LORD MELCHETT: The noble Lord knows very little about the coal industry and still less about its financial side. I am giving him not theory but practice. I am inviting him to put those arguments forward in the City to see what answer he will get. It seems to me to be terrible

1139
that the industry of this country is subject to government by people who seem to live entirely in vacuo, who are entirely out of touch with reality either in industry or finance. It is appalling and it is really the most serious thing which we have in front of us. I do not meet one leader of industry, I do not care what industry it is—and I meet dozens of them every day—who does not share the views I am expressing. If noble Lords opposite and their Party really wish to do something serious for this country surely it would be much better for them to consult from time to time some of us who have the interests of the country as much at heart as they have, and who have the advantage of long and trained industrial and financial experience.
Surely, that would lead away from some of these entirely theoretical points and arguments which you always hear advanced; for instance, that heavy direct taxation does not affect industry. I have heard that for years and it is entirely incorrect, as I have pointed out on previous occasions. If, in a limited company, you have very heavy Income Tax, obviously two things can happen; either the amount which you put to reserve is diminished or the amount of the dividend has to be diminished. If you diminish the amount you put to reserve the company suffers in future in regard to renewals of plant and so on. If, on the other hand, you diminish your dividend too much your shares go down and your chances of raising future capital are seriously impeded, if not made impossible. That is a very serious position for a progressive enterprise. All these are theoretical doctrines which I had to read when I was a member of a Government. Probably the same gentlemen hand them out to the present Government to-day—I disagreed with them just as intensely then as I do today—but they never see the point. They say that it does not matter in the least; it is all passed on to the shareholders. That is not true. It is not all passed on to the shareholders. That is why this particular form of taxation, of very heavy Income Tax with no reference paid at all to the actual position, is seriously jeopardising the stability of industry to-day. It is true that these are old points, but they are none the less true for being old, and they really cannot be passed by or
1140
glossed over with the facile assurances of good intentions which the noble Lord has given us.
I do not admire the present Budget. It is one of the most injurious and worst Budgets the world has ever seen. It imposes heavy taxation in this and that direction without any idea of the economic consequences, and seems to be based on the idea, "I am paying my way, blank the consequences." That is not finance. It is not statesmanship. I agree as little with the idea that it is a good thing to say by law what is to happen to deficits in Budgets. After all, surpluses in Budgets automatically go to Sinking Fund. If you occasionally have a deficit why should it not be allowed to be taken in balance against your surplus of other years? These pedantic methods of dealing with these things are to my mind hampering and choking enterprise and creating difficulties. Besides Mr. Snowden, virtuous as he is, is not paying the deficit off in one year. He is spreading it over three years. So that he is not meeting his obligations in quite the open-handed manner which was referred to by the noble Lord, Lord Marley.
He is also incurring further obligations. The Government are engaged to bring in a new Bill to raise the school age. It is the disadvantage of most of those schemes that their full financial effect will not be felt for four or five years. I do not believe that we can afford some of these very excellent things at the present time. The noble Lord, Lord Monkswell, is right in raising this Question. I am not afraid of inflation. What I am afraid of is that we shall reach a point, among the countries of the world, where, if you do not get tax-reduction, you will never get out of the difficulties you are in to-day; you will never help to solve the unemployment problem that we are all so anxious to solve; and you will merely descend from a higher to a lower pinnacle by a continuous orgy of Expenditure without any regard to the capacity of the country to pay for it.
Loan MONKSWELL: My Lords, may I begin by congratulating the noble Lord who replied for the Government on the courageous, not to say reckless way in which he made the best of a bad case. I am deeply flattered that so many most interesting speeches should have been

1141
made on my Motion. Tongues abler than mine have torn to pieces the courageous efforts of the Government spokesman of which I spoke. I think it is clear from what he said that no plan whatever exists for regulating our finances so that we shall pay our way, and that his answer amounts to saying that we are continuing our merry rush towards bankruptcy. I know that there is much business coming on, and I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.

INDIA.
EARL PEEL EARL PEEL had given Notice that he would ask His Majesty's Government whether they can make a statement on the recent disturbances and illegal activities in India; and move for Papers. The noble Lord said: My Lords, I desire in the words of my Notice, to ask the Government whether they can make a statement on the recent disturbances and illegal activities in India. I had hoped that it would not be necessary for me to bring this matter before your Lordships. I put down this Motion a month ago, and I postponed it for a fortnight. I had hoped that the position in India would be such by now that it would hardly be necessary for me to ask the noble Earl opposite (Earl Russell) to make a statement. Unfortunately, the clouds have not yet lifted. We have had the advantage of discussion in another place. The discussion in another place necessarily ranged over a far wider field than perhaps I shall do this evening. I wish rather, if I may, to concentrate the attention of your Lordships on the disturbances and illegal activities, and only to discuss such points as I think are directly connected with them.
But before I embark upon this investigation, may I make an allusion to two matters? I do not suppose we may have another opportunity for some weeks of discussion on Indian subjects, and I should like, in a word or two, to express my regret that the present head of the India Office, Sir Arthur Hirtzel, after thirty-six years, is leaving his work. I owe a great deal to that gentleman. I have been very closely indeed associated with him, and I know that not only is he a civil servant of the finest type, but he is a man, too, of very sane, very
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strong and very firm judgment, and, if I may say so, a character of very fine quality indeed. I know how many able men there are in that office, but I know, too, that his services and advice will be greatly missed. May I also make a reference, if I may be allowed to do so, to the death of a distinguished ruler in India, the Maharajah of Udaipur? I had the opportunity, only a few months ago, of visiting him, receiving his hospitality, and being struck by the charm of his manners and his old-world grace. Reference has been made to the fact that he was a sportsman, and I recollect I was sitting in a machan with him when, at the age of eighty-four, he was shooting tiger and panther, and I can remember the keenness and zest with which the old gentleman addressed himself to the sport even at that advanced age.
Perhaps I ought now to say not only what I want to do this evening, but what I do not want to do. I do not wish at this stage to raise any of those great constitutional questions with reference to India which we may soon have to discuss. We stand firmly by the Act of 1919, and by the limitations and conditions imposed by that Act. But I wish to pass aside, if I may, constitutional questions. We shall soon have Sir John Simon's Report before us, and we shall have, I am afraid, endless opportunities of discussing it. A great deal of time must be spent in considering these grave questions in a very few months from now. May I say in passing that I think it would be very much better if, in regard to Indian matters, we were not perpetually engaged in discussing constitutional politics, and if we could address ourselves rather more to those questions of economics and hygiene which are so necessary in the present condition of India?
We have to admit that these disturbances and troubles, outrages and riots and murders, have caused very much perturbation and trouble in the minds of many people in this country, and I regret to say that even from day to day fresh occasions of violence seem to arise. In the Press only this morning we see accounts of troubles at Rangoon, Bombay and other places, showing that this era of disturbance has not yet, as many of us had hoped, come to an end. The noble Earl knows that we get a very good picture of different incidents in the

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newspapers, but we should like to have, with all the official weight behind it, the Government's view of the whole picture, and the range and extent of the seriousness which they attach to these events. Everybody knows that we have already granted a very large degree of self-government to India. Everybody knows also how many subjects have been transferred in the Provinces and are managed by Ministers, and what a very large proportion of the Services are manned by Indians, and we have had a very recent example—a painful one so far as Lancashire is concerned—of the extent to which the Indian Government is master in its own house in matters of finance and taxation.
Therefore the attacks of these seditionists—and I wish to make this point very clear—are not merely directed against the British Government. They are directed against their own countrymen who, in so large a measure, co-operate with us—Indians and Englishmen together—in the management and government of India. I would like to regard it from that point of view just as much as from the point of view of whether it is mainly an anti-British movement. All these disturbances, this picketing of the liquor shops, the attempt to boycott foreign cloth and so on, are not only bad things in themselves, but they are tending to raise that ever-present danger in India—communal disturbances and communal riots. I know that many have consoled themselves in the present difficulty by saying that the great community of the Moslems have generally held aloof from these riots and disturbances, or that they have in many cases, for instance, in the case of the Moslems of Sind, condemned, and severely condemned, the fomenters of these disturbances. These people have congratulated us that we have not to meet the processions of nine or ten years ago, when the Khalifate disturbances were at their height., and when, through our relations with Turkey, there were outrages and disturbances during the short-lived union between Moslems and Hindus.
I should suggest, also, there is a grave danger, if you get the communities in this sense ranged against each other, of the rising again of those terrible communal disturbances. There is a danger
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because many of the Moslems, I understand, regard these meetings of the revolutionaries and the seditionists as being an attempt to set up in India a Hindu Raj from which they themselves might be largely excluded. On the other side, there is the danger that, if the communities tend to range themselves on opposite sides, all those moderate sections of Hindu opinion, which would naturally be supporting the Government, are more afraid of expressing their true opinions on this subject because they might be charged with, or anyhow come under the charge of, criticising the community to which they themselves belong. This is caused by the continuance of these disturbances, and what I would suggest is that the fullest support should be given to the Government in India not only to crush these disorders but to bring them to an end as rapidly as possible.
We have all seen and know what a tremendous strain is being thrown on the police and on officials by their long vigils and their exhausting labours, and we know; too, how the Army always dislikes being brought into civil disturbances. Yet it has been necessary to bring in the Army because of the numbers that are being employed in these civil disturbances. We have been able to congratulate ourselves also on the fact that these disturbances were largely confined to the towns. That does not seem very encouraging to those who live in this country, where 80 per cent. of the population live in the towns and 20 per cent. in the country districts, but where you have 80 per cent. living in country districts and 20 per cent. in the towns the picture takes on a very different tone. I would suggest that there is a danger, too, in this active, vigilant and constant propaganda that is going on not only in the towns but, as the noble Earl opposite knows, in the country districts as well. Full reliance has been placed, and there has been justification in placing full reliance, on the loyalty of the Army, but we must not forget that these men come from villages where propaganda is going on and it is difficult to suppose that they cannot be to some extent influenced by what goes on among their friends and relations in those villages.
I would like to ask this question: Are these disturbances isolated, sporadic disturbances or are they connected together

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by a general system, by some superior control? I think until a few weeks ago it was believed that they were to some extent sporadic and unconnected and that they sprang up in different towns where there were centres of disturbance. But I think that the later information that we have had from India shows that that may not be so. Indeed I do not think that in the opinion of the Government that is altogether so. May I refer to a Question answered in another place a few days ago, when it was said that every effort is being made by the Congress by means of propaganda of all kinds and by demonstrations to stimulate anti Government and racial feelings? Now that would seem to suggest that all these disturbances are organised perhaps from a common centre. We see, as it were, a sort of change of venue of disturbance moving from one class of illegality to another, now fomenting strikes, now organising salt raids, now arranging for picketing and the boycotting of foreign goods, or stirring up troubles for instance on the Frontier by such methods as the grossest misrepresentations of the Sarda Act.
Up to now arrests which have been made have been arrests of the leaders in these different disturbances. We have seen Mrs. Naidu, Mr. Tyabji and Jawaharlal Nehru arrested. One after another these leaders are arrested and put into prison. It would seem to indicate a panel of leaders. As soon as one leader is arrested someone else is placed in a position of leadership. That might seem to be almost an endless process. If it be true that these disturbances are really organised from a common centre and if indeed, as is suggested in this information, these working Committees of Congress are Actually sitting together and organising from a common centre these disturbances, I would suggest to the Government whether the time has not come not merely to arrest the leaders in different districts, but to strike at the centre of the disturbances in these Congress Committees.
Several NOBLE LORDS: Hear, hear.
EARL PEEL: That is one suggestion I was going to make. I would remind your Lordships, if it is necessary to remind you, of the new example we have had of the old truism, as I might almost call it,
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in the Government of India of the necessity for strong control and constant vigilance and watchfulness on the part of the rulers of India. How quickly these disorders spring up, how easily disturbances arise as soon as for a moment that strong hand of the ruler is raised! May I give two instances out of those which have recently occurred? I happened to be in Calcutta not long ago and the question was being discussed of allowing to lapse the Bengal Criminal Law Amendment Act. That had been enacted for five years. Those who were discussing it suggested that as no action had been taken under it for some time there seemed no reason why it should be re-enacted. But I heard a different story in other Provinces to the west. There I was told that owing to the existence of this Act in Bengal many of the more ruffianly persons and conspirators had been driven into the Western Provinces and had been very unwelcome inhabitants of those Provinces. It was decided, however, that even though this Ordinance might not be re-enacted, nevertheless it should be indicated that it would be re-enacted if necessary. As the Secretary of State himself has told us, it was only nine days after that Ordinance had lapsed that it became essential, owing to the disturbances, to re-enact it.
The other case to which I wish to refer is the trouble we recently had on the North-West Frontier. When you move up and down that Frontier, when you see the numbers of troops and the aeroplanes, the armed frontier constabulary and the different forms of police and scouts you may be inclined to think that this tremendous machinery of control and repression is unnecessary in an area so apparently peaceful. Yet what do we see? The moment there is any relaxation of authority, the moment this propaganda spreads, you have one of these tribesmen, with his following of 500 or 600 men, advancing and a general idea spreads along the whole Frontier that troubles are in the air and that opportunity for loot is to be given. I think these are two rather signal instances showing the extent to which firm control, and not only firm control but organisation of that control, must be kept and maintained in strong hands.
Another point on which I would like to ask a question of the noble Earl is

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as to the question of propaganda in India. Of course we all know that the Government have passed a very strong Press Act, and I can certainly say from my experience that a Press Act is most essential. Nobody can imagine who has not studied some of these papers in the vernacular Press the vileness and constancy and continuity of misrepresentation and falsehoods in that Press. I know the difficulties of Government propaganda and I have often discussed that subject with those concerned. We are always told that if you have Government propaganda it soon loses force because it is known to be Government propaganda. Nevertheless, I still maintain the view that if more efforts were made continually to set out the Government's view of the action they have taken, whether it was actually believed or not in certain districts, law-abiding persons would be able to know what they had really done. Perhaps this is to some extent opposed, if not to the principle, at least to the habits of our rulers in India and of civil servants in general. Civil servants are accustomed to administer their own offices and not, perhaps, to consider the exact effect of their actions upon the outside world. We have seen that in this country.
I think every honest citizen admits that the last Government was a very fine Government. Why did that Government fall? We were told that it fell simply because it had not been active enough in advertising its own virtues and achievements. I do not bring a similar charge against the present Government. I think perhaps the ratio is inverse in their case. At the same time it is difficult to expect that civil servants will be as active as politicians in understanding the value of propaganda or of bringing home to the people whom they rule the excellence of their own achievements in legislation or administration. I really would suggest to the noble Earl opposite that he might again take up that subject of making it clear to the people, whether by wireless propaganda or through the newspapers or what not, what the Government's view is and the Government's side of what has been done, so as to give answers to these misrepresentations that are pouring out in every newspaper that is still allowed to circulate in India.
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The next point upon which I should like a few words from the noble Earl is this. We have had a picture—fortunately a cheerful one—from the Secretary of State in another place of the state of trade and business in India in the last few years. I think he congratulated India on the fact that their surplus exports had been something like £58,000,000 in the last year, and he described what had gone on in the matter of finance, the balancing of the Budget and so on in the last three or four years. That is very satisfactory, but I should like to know something, if the noble Earl can tell us, about the condition of business now. After all, these facts and figures and pictures deal with the years that are passed, when, if I may say so, others were in control. Personally I do not get very satisfactory pictures of what is going on in India in the matter of trade and business, and I should be very glad if the noble Earl could give us a true picture of the state of business in that country and, if possible, tell us how far he considers that the check to business was due to these illegal activities, boycotts and so on, and how far to the general slump in trade.
I should be very glad if he could answer a further question. I am quite sure that a great deal of this sedition and revolution is indigenous to India itself, but at the same time it bears on its features a great many resemblances to the activities of the Communist International. I have studied and read the speeches of many of these leaders in India and I have been struck by the extraordinary resemblance in phrase, tone and expression to the articles that appear in the Moscow Press. Perhaps this may be rather a delicate subject for me to broach with the noble Earl, but no doubt he has information, and I would ask him, not to disclose any information that he thinks it improper to disclose, but to tell us the extent to which the activities of the seditionists and revolutionaries in India are assisted by money, co-operation or the actual participation of trained revolutionaries in the campaign of disturbance and sedition that is going on in India. I shall be very much obliged if the noble Earl can give us some information on that point.
I have two other observations to make which I think are relevant to this matter. The first regards the bearing of these

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disturbances upon the coming Conference. It has been suggested that these riots and organised sedition are intended to discredit the Conference which, as we all know, is to be called by His Majesty's Government. Incidentally—although I cannot say that I expect to get an answer on this point—the noble Earl may be able to tell us something about the composition of that Conference and whether the Government of India have arrived at any decision as to its numbers or terms of reference. I shall be very glad if the noble Earl can give us that information. I submit to your Lordships that that is an entirely inadequate description of the aims of these persons. They are not only seditionists but also revolutionaries, and their aim is not merely to discredit the coming Conference but definitely to work for the separation of this country from India and the destruction of the British connection.
That element has always been present since the reforms started. I am speaking of the reforms of 1919. Noble Lords will remember that those early Councils were boycotted by the Swarajists. They refused to take part. By not taking part in the Councils that were set up, they wanted to prove, I suppose, to the world at large their capacity for administration and self-government. Then the tune changed and they entered the Councils, but with the definite idea, as they stated, of breaking down those Councils from within. In fact I think one might say that, if only these gentlemen had expended one half the energy that they put into trying to destroy constitutional government in India towards advancing it, India would be much further advanced than she is now on the path of constitutional government. Everybody knows the result upon their minds of the famous Declaration of the Viceroy. Quite a short time after the Declaration was made they came to him and advanced still further impossible demands which they were well aware that the Viceroy could not possibly grant. After that we had those terrible scenes in the Lahore Congress, when fortunately the Congress split and the extremists went off in the direction of complete independence for India.
What I am going to suggest to the noble Earl is that it is really too late and quite useless to attempt any conciliatory action with these gentlemen.
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They have stated quite clearly that they deny our right to legislate for them. They repudiate the Act of 1919, they repudiate the Conference and they deny altogether our claim to deal with India. In those circumstances, of what value could these gentlemen be at the Conference, and under what circumstances could they come to it? They have declared that they repudiate any right on our part or on the part of Parliament to decide what the future Constitution of India is to be. It is obvious that they can hardly, with any sort of self-respect and without throwing over their opinions, come to that Conference. Besides, too, at that Conference they would be absolutely useless, for all they would try to do would be to endeavour to wreck any chance the Conference had of coming to unanimous or successful resolutions. Although I am free to admit that is a difficulty, because of the desirability of getting all the different elements representing Indian points of view at the Conference, I cannot say that I envy the task of the Viceroy who has to make the selection. Nevertheless, although I feel that the absence of these gentlemen will leave the Conference incomplete, it is useless to try to persuade these gentlemen, who are out to promote a system of sedition and revolution, which the Government must use every effort to crush.
I would only say that I want the noble Earl opposite to make the freest possible statement that he can make with regard to the present situation. After all, on the eve of the publication of the Report of the Sir John Simon Commission, and on the eve of the consideration of this great question by the people of this country, I think I am free to say that the people of this country ought to be informed most fully and frankly by His Majesty's Government of the situation which His Majesty's Government have to meet in India at the present time. We have a splendid record in India. I am not ashamed for anyone to study it. It is open to the whole world to consider and study, and I think we are entitled to know the exact and precise facts of the situation now.
This is the last word with which I wish to trouble your Lordships before other speakers address you. I should like to express our sympathy with all our officials in India, from the Viceroy downwards, who are engaged in this anxious

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and troublesome situation. It is very difficult really to appreciate the extent of the continuous strain which is being laid upon them, and I should like specially, if I may, to say one word of sympathy with the police, who, as your Lordships know, are acting constantly under these isolated conditions. They have not been very well considered, and in fact their treatment by many of the Councils in the Provinces has been most discreditable. They have been denied opportunities for improvement in living, pay, etc., and it is a great tribute to them that they have shown such loyalty and courage during the tremendous and fiery ordeal through which they have passed during the last few months. I ask the noble Earl to do what he can to give us a very full and very frank statement on these grave disturbances and seditious happenings.
THE MARQUESS OF READING: My Lords, the last purpose I have in mind in addressing your Lordships, particularly after the speech made by the noble Earl, is in any way to embarrass His Majesty's Government or the Government of India or the Viceroy. Indeed, I feel sure that all your Lordships will agree that at this critical juncture, when the Viceroy and the Government in India are engaged in suppressing the disorder, riots, and illegal activities taking place in various parts of India, we should give our fullest support to those engaged in the administration of India in times of such difficulty. I desire to say for myself that whatever criticism there may have been in some quarters, whatever desire there may be in some quarters now to criticise the Viceroy, I give him my unqualified support. I think it is only right that he should have the fullest confidence not only of the Government but of all in this country who are anxious to see our great Empire in India maintained at the full height of its well being.
I shall occupy your Lordships' time for but a few minutes, because, having formed the view that it is at this moment more desirable to support than to offer criticism, I shall not refer to anything that is past, nor shall I attempt to discuss what may be the outcome of the present agitation, or the result of the publication of the Report of the Simon Commission. It really is impossible for
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us in this House or elsewhere in the country to discuss the question of possible constitutional progress or reform when we have a Commission, appointed by the late Government, which has been labouring incessantly for over two and a half years, has just signed its Report—we are all anxious to see it—and has had opportunity, certainly not vouchsafed to any of us, of hearing all the evidence brought before it and making investigations, even in quarters where there was opposition. The Commissioners have pursued their investigations with the utmost desire to inform Parliament and the country of the situation as they saw it, and are making recommendations which seems to them wise and opportune.
I leave all those questions without further observation. I am content, and indeed I think I am bound, as we all are, to await the publication of the Report of the Simon Commission before dealing with any of these very important problems. The situation at the moment is an anxious one. I hope His Majesty's Government, and the noble and learned Earl who is about to reply, will give us all the information they can. It is essential that in this country we should know the facts, and that nothing should be kept back save what may be absolutely necessary in the public interest. We are dealing with a very serious situation. Disorder, sedition, riots, bloodshed are not unknown, but we have at this moment what is to my mind the most serious aspect of these forms of activities—civil disobedience. When I was in India it was threatened and there was some attempt. I am not making any comparison, or attempting to suggest what should have been done at an earlier moment. I am pointing out this, that while at that moment a bridge had been thrown across the chasm which divided Hindu from Moslem, and to that extent the position was more serious because the Moslems joined with the Hindus in the demonstrations against the Government in 1921 and 1922, that bridge, frail as it was, has disappeared. It led to discussions about the protection to be given to minorities, into which I do not now enter. But that bridge does not exist. The situation is in that respect better. I would venture to say also that in the earlier years to which I have referred the opposition in Congress to Mr.

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Gandhi was very feeble, if it existed at all. There is perhaps more difference of view in India at the present moment among various political Parties than there was then.
What is new, and in my view serious, is that the definite organisation of civil disobedience has been set up. The continued demonstrations of that kind have the effect of sapping the influence of the Government and undermining their authority. One may of course be drawing inferences on somewhat slender evidence, but as I survey the whole situation in India and see the disturbances that have occurred in Bombay, Sholapur, Calcutta, Chittagong, Madras, and elsewhere, the position is a serious one. You have also the disturbances in Peshawar, always a very dangerous place. These were perhaps the most serious of all the disturbances, so far as I can judge. They arose in a Moslem centre, and resulted in no sense from tribal trouble, but because of agitation against the Government. It has been said that it was largely due to the agitation about the Sarda Act, which had been misrepresented among the Moslems—an Act introduced for the purpose of raising the age for marriage and doing away with child marriage, a measure which mostly affected Hindus, but in some form or other was thought to have been directed against, or to have had some evil influence on, the Moslems. So in Peshawar you had this trouble. Again, in the last few days we have had the riots and the killing of Burmans and Indians. That has nothing to do with the Government. It is purely a matter between themselves. The Government is in no sense responsible. To my mind all these phenomena, all these outbreaks of violence show that the authority of the Government, which ought to be supreme and unquestioned, has been undermined by agitation, sedition and propaganda.
I am not in the slightest degree suggesting blame upon anybody. It is a very difficult problem for the Viceroy. He lives in a sense in two different atmospheres. He must always have before him, of course, the vast problem of dealing with a population of 320 million people, of whom 250 millions are in British India. He has to deal with all the reports that come to him from those various places, and he has in the end
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the responsibility for those matters. At the same time he has to keep his attention constantly focussed upon the atmosphere here. He is responsible to Parliament and to the Secretary of State, and he has to steer his course according to the views of His Majesty's Government. In matters of supreme policy, though not in minor matters, he must be in agreement with them. He has attempted, with the highest motives, the greatest sincerity and profound earnestness, to conciliate India so as to avoid the very difficulties which have arisen. Whether he is right or wrong I do not pause to enquire at this moment. He has acted with a far greater knowledge of the situation than at any rate I possess, or I think most of your Lordships can have. Having done that, having announced the round-table Conference when he went back to India, which was thought to be a great step in advance, he nevertheless had nothing but trouble to meet on all hands.
I desire to say that civil disobedience can never be tolerated. It strikes at the very heart of the Government. If it succeeds it is a vital blow, if it manages to survive it has dug the grave of Government in India. I have myself the strongest opinion that in all matters that relate to civil disobedience the Government must put forth all the weapons at its command in order to destroy it and to break it. It must not allow itself, it cannot allow itself to pander to it in any way. It may be easy in India, where the law is different from here, to pass over a seditious speech without enforcing the law. I have done it myself again and again, and other Viceroys have had to do the same. That is very different from dealing with a propaganda which is directed to active interference with the work of Government, which must in the end, if it succeeds, paralyse the Government and destroy it.
I agree with the suggestion of the noble Earl who opened the debate, so far as I followed it, that it is desirable to get at those who are responsible. I am in entire accord. These poor deluded Indians very often understand very little about it; they only have one side put before them, and they are thus roused to fury, particularly in these months which

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are the months of the hot weather before the monsoon, when we all know that the blood is hot and trouble may very easily be caused. Those are the people who ought to be protected. I submit to the Government that the only way effectively to deal with this problem is to go straight at those who are responsible for preaching the doctrine of civil disobedience and doing everything they can to induce the poor ignorant people to act like a rabble. That is what I suggest to the Government, and I hope it will have their support.
Something has been said by my noble friend about trade and business, and he referred to figures which have been given showing prosperity in recent years. Those figures are of little avail at the present day, as must be agreed by anyone who knows the situation. One has only to ask any business man connected with India what the situation now is, and he will tell you that it is seriously affected. I noticed that in the speech made by the Secretary of State he said, perhaps in another connection, that things have improved from January in the view of persons interested in finance, and who understood credit, because they have been able to float a loan and because the Indian Loan stood at a higher figure. I think that is a poor comparison if you wish to ascertain the facts. For the loan that was introduced six per cent. had to be paid in order that it should be floated. If you compare the figures it may be true to say that they are a little better now than in January, but the better comparison is to go back a couple of years and compare the figures at which Indian loans stood then. They were very nearly equal to those of the British Government. Compare them now—I am not saying who is to blame—and there is an indication of what the situation is. If this state of things is to continue Indian prosperity must, of course, go on decreasing very rapidly.
My hope is that something may be done by which we can restore order. After all, it is the primary, the elemental duty of Government to restore and to maintain order. It matters not to what Party the Government belongs. In this country, I think, at least we have this situation—that all Parties are of the same opinion about that. I believe that
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His Majesty's present Government are just as desirous and just as determined to restore and to maintain order as a Conservative or a Liberal Government would be in their place. I desire to give them every support in doing that. I only hope that in anything I may have said to-day, feeling so very strongly about this campaign of civil disobedience, I have not let fall one word which could be a reflection in the slightest degree upon the aims and aspirations of honourable Indians who take part in constitutional agitation. They are entitled, from their point of view, to take such attitude as they think right in order to secure for their country progress which we may think too fast but which they are perfectly justified in pressing upon us by constitutional methods.
Those who have been in India—I see in his place the noble Marquess, Lord Linlithgow, who spent some time there on valuable agricultural investigations and made a very helpful Report—will agree with me, I am perfectly certain, that you cannot travel through the various Provinces of that country without coming into contact with numbers of men—I am speaking now of the educated classes with whom, perhaps, one comes into more direct contact because of the difficulty of language—whom you cannot meet without understanding their view and without sympathising to some extent with it. At the same time you may be perfectly satisfied in your own mind that they are seeking to go much too fast and that they must wait before their view can be made effective. Nevertheless, I desire to pay a tribute to those who are continuing by those means their efforts to make constitutional progress, who deprecate all illegal activities and are anxious that recourse should be had to proper methods. It is my impression that by far the great majority of the Indian people would be of this opinion and would like to have recourse to these means only.
May I say one word regarding the military and police? I have some knowledge of the difficulties encountered by those who are brought constantly into conflict with many thousands of people in narrow thoroughfares, where missiles are thrown by no-

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body knows who, where men may be injured at any moment and nobody knows who is the culprit, and where the strain upon the men is as severe as it can be. Whilst sympathising with them and endorsing what was said by my noble friend Lord Peel, I desire to add that the restraint which both military and police, officers and men, Indians and Europeans, have put upon themselves is most commendable and most exemplary. From all the reports that have been received they have had the greatest difficulties to meet and yet have managed to meet them in a way which has done credit to the Government that presides over them.
I conclude by begging the Government to tell us all that they can so that we may understand what is happening in India at the present moment and so that the people of this country, who have every reason to be proud of what has been done, who know something of the history of India, who looking back over 170 years may be able, it is true, to point to mistakes, nevertheless will be bound to admit, if they are honest and honourable, that Britain has given to India throughout that period not only peace but justice, fidelity to promises and prosperity so far as that could be achieved.
THE MARQUESS OF ZETLAND: My Lords, may I crave the indulgence of your Lordships on this the first occasion on which I have ventured to address you if I say a few words upon the subject about which the noble Earl, Lord Peel, is questioning the Government? May I associate myself most heartily with the tribute which the noble Marquess paid to the Viceroy in the very difficult position in which he finds himself? I doubt whether anyone who has not been through the ordeal of dealing with a situation of this kind in India can conceive of the difficulty of the position of those in authority in that country. Criticisms of the Viceroy on the ground that he has carried a policy of conciliation too far or that he has hesitated too long in striking at those who have exceeded the bounds of constitutional agitation in India, I think are most unfair. It is essential, of course, that order should be restored and respect for the law enforced, but that is not the only aspect of the question.
We have reached a very critical stage in the relations between this country and
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India. The Viceroy and the members of the Government of India are leading figures in a drama of historic importance and of world-wide interest. News of events in India is echoing daily round the whispering galleries of the world. The eyes of the people of two hemispheres are riveted upon the stage. It behoves us, therefore, to do nothing which could give any legitimate ground for the suggestion that in India we are acting arbitrarily or vindictively against the people of that, country. It behoves us to assure ourselves that when in due course we come to the bar of history for judgment we shall stand upon an unassailable foundation of justice and of moral right.
For that reason I think that the Viceroy was right when he agreed during last winter to receive Mr. Gandhi for the purpose of discussing the situation. If he had not done so it would have been immediately broadcasted to the world that out of consideration of his own prestige he had rejected the possibility of an honourable and amicable settlement of our difficulties. I have not the smallest doubt that it would have been sought to lay the responsibility upon him of bringing down upon the people of India all the horrors of civil strife. But if I think the Viceroy was right in that attitude, I did not expect for a moment that the magnanimity would evoke from Mr. Gandhi a similar response, for I am satisfied that Mr. Gandhi is himself so permeated with a false pride of race that he would rather wrest by force a crumb from the British than accept a loaf voluntarily offered.
I am sometimes asked whether Mr. Gandhi is sincere. He poses before the world as the apostle of peace, as the protagonist in a struggle in which the Hindu doctrine of non-violence is pitted against the doctrine that might is right, which is attributed by Mr. Gandhi and his supporters to the people of this country. It has been said of men that by their fruits ye should judge them. A good many years ago, when Mr. Gandhi was starting his campaign in favour of home rule for Indian people, he published a monograph based very largely on the teaching of Tolstoy, of whom he is an enthusiastic disciple, the object of which was to bring into hatred and contempt not merely British rule in India but the whole fabric of western civilisation. The medical

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practitioners of the West, the hospitals of the West, these things were singled out by him for special denunciation as evil things, and things, therefore, which no self-respecting Indian should demean himself by touching. Yet when Mr. Gandhi himself fell ill, when death stared him in the face, it was to this very science of the West that he turned, and it was to the skill of a British surgeon that he owed his life. When I am asked if Mr. Gandhi is sincere, I say, "Let the world judge."
But whether Mr. Gandhi be sincere or whether he be not sincere in his professions of his belief in non-violence, the results of his preaching are not open to doubt. He has gravely undermined the respect for law in India. He has remained wilfully blind to the fact that it is an essential basis of an organised society that the law should be voluntarily respected, and he is apparently oblivious of the fact that the necessity for enforcing respect for law, with which the Government of India are faced to-day, will inevitably present itself in future times to any Indian Government that may come into existence. Mr. Gandhi has sown the whirlwind. Who is it that is going to ride the storm? I think if Mr. Gandhi would ponder upon the threat which was recently made by the Mahomedans of Bengal against the Corporation of Calcutta, a body which is at the present time under the control of Mr. Gandhi's friends and supporters—a threat that they have made that they will enforce their demands against that body by the very methods which Mr. Gandhi is advocating against the British Government—that should give him pause.
The undermining of respect for law is not the only injury that Mr. Gandhi has done to India in his present campaign. At a time when all Parties in this country were ready to view in a spirit of sympathy and generosity any proposals put before them for a further advance of Indians along the road of self-government, he has succeeded in creating in the minds of a great many people in this country grave doubts as to the wisdom of any further concessions being made, and, indeed, in some quarters a demand for a drastic curtailment of the concessions which have been already granted. I do not agree with that demand. I think to put back the hands
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of the clock is wholly impracticable. If you were prepared to burn the Report of the Simon Commission before it is issued, to double or treble or quadruple your Army of occupation in India, and to govern India indefinitely under Martial Law, you might perhaps for a time put back the hands of the clock, but surely to do these things would be a grievous confession of failure, would display us to the world as a people bankrupt in statesmanship, and wholly unworthy of the high trust which has been placed by Providence upon us.
No, I conceive that the duty of the Government is to lend no ear to such counsels of despair, but to go forward steadily and firmly upon the path which has been marked out, not by this Government only, but by all Parties in this country, turning neither to the right hand nor to the left, not allowing themselves to be stampeded by the violence of the agitation in India into making concessions which, upon a consideration of all the factors in the case, are deemed to be too great in the interests of the people of India themselves, or, on the other hand, refusing to make such concessions as the justice of the case may demand. But if that policy is to be successfully pursued, it is clear that the Government in this country and the Government in India must have both the will and the means wherewith to restore order and to ensure respect for the law, and it is precisely upon this point that anyone who has held high administrative office in India finds grounds for some anxiety at the present time.
I do not doubt the will of the Government of India to restore order and to enforce peace. The measures which they have already taken are proof of that. Nor for a moment would I cast any aspersions upon the loyalty of the Indian police. Indeed, knowing as I do from bitter personal experience the pressure which can be and is brought upon Indian police by the boycotting of their families and other measures of that kind, I am amazed at the stoutness which they have shown in carrying out their hateful and their difficult duties up to the present time. But the police force in India is a very slender instrument. In the whole of British India, a country more than twelve times as large as England, Scotland, and Wales, there are less than 200,000 Indian

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constables, one only on the average to every 1,250 of the population. In the Provinces the police force is organised on a district basis. The executive officer in the control of the police of a district is the district superintendent of police, and he, in collaboration with the district magistrate, is charged with the duty of maintaining order within his district.
Within the whole of this area of British India there are only some 260 districts. That means that there are only some 260 superintendents of police, or one to every million of the population. There is in Bengal a district—the district of Mymensingh—an area of six thousand square miles with a population of 4,500,000 of people. You can picture for yourselves the sort of task that devolves upon the district superintendent of police and his slender force in a district of that character when the forces of anarchy are let loose. So I say that if my reading of the situation in India at the present moment is correct, the Government of India will be faced in a steadily increasing degree with the necessity of employing troops, both European and Indian, for the performance of duties which are primarily police duties. Do the Government in India and the Government in this country accept that position? Are they satisfied, if they do that, that there are at the disposal of the authorities in India resources adequate for the purpose? If the noble Earl who is going to reply could give any assurance upon that point I should view the situation in India to-day, not with complacency, but certainly with less anxiety than I do at the present moment.
LORD LLOYD: My Lords, I only desire to say a few words to associate myself with the remarks that have fallen from my noble friend who opened this discussion and from noble Lords who have followed him. Like the noble Marquess who has just preceded me I welcome an opportunity, as one who had to deal in difficult days in 1919 and 1920 with a situation of gravity commensurate with this, of paying my tribute to the marvellous behaviour of the British and Indian police. I think that good will come out of this debate if only it is realised that Governments have done too little for the police in India. There have been deeds of real heroism in Bendi Bazaar and in Jacob's Circle in Bombay which vie with
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many done on more renowned battlefields. I do hope that the words which fall from us in this House may be of some encouragement and cheer to the officers and men in India who are carrying on so gallantly at the present time.
It seems to me that the real gravity of the situation in India lies fundamentally rather less in the actual disturbances of to-day than in the sinister causes of those disturbances. I listened in vain in another place two or three days ago to hear from the lips of the Secretary of State something as to what action the Government are taking in regard to subversive Communist propaganda which we all know perfectly well, and the Government know, is being so openly spread abroad throughout the East, and not only in India, by agencies of the Third International. It is hopeless to blind ourselves to what we know is going on encouraged by the Soviet. The great difference between the situation to-day and that with which we had to deal in 1922, for instance, is that in that year Mr. Gandhi's influence was important over the whole of India. His philosophy and creed were the leading elements in a movement which certainly affected the Hindus. If the same were true to-day, which it is not, his plan of campaign would of course have led to unpremeditated acts of violence, as they did at that time, but there would not have been armed raids of the character that we saw at Chittagong, where armed forces carried out a well-conceived raid with definite objects; nor should we have had such occurrences as at Sholapur, where plans of the most delicate and intricate character were made even to preparing for a skeleton Government locally to carry on.
I do feel that His Majesty's Government ought to tell us to-day how far they really consider that these movements which are going on are organised by the Third International. If I speak plainly on that question it is because I think the time has come for plain speaking on the subject of Soviet propaganda. The Government seem to be under the extraordinary illusion that they can toy with Soviet relations with this country and not feel the effects of it in the East. I have been nearly 27 years in the East on and off and I can assure His Majesty's Government that every

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action they take for recognition of the Soviet Government here has an immediate repercussion all over the East that is a weakening and a danger to our Government.
There is another matter. Like the noble Marquess who spoke just now, I do not propose to touch upon the constitutional subject. I believe that until the Simon Commission's Report is published the less we say on these matters the better, but it is a truism, I think, to say that a plain and clear and well understood policy in times of disturbance and unrest is a powerful weapon always in the hands of the Government. It does seem to me that at this moment it is very difficult indeed for the peoples of India to understand exactly what His Majesty's Government are going to do. We were told by the Prime Minister last autumn that there was no change of policy. We were told by the Secretary of State a few days afterwards that there was a change of policy. The words which I think he used were that the first change that had been made was that of a change of spirit and that the second change was far more important, a change in policy, which in reality is the central object in India and of Indian opinion, and that is the Conference.
I wish to say only two or three words about the Conference. We can scarcely be surprised if there is a good deal of confusion on that question. Let us look back for a moment. First we see the Statutory Commission, which was quite properly set up to implement the policy laid down by the Montagu-Chelmsford Reform Act. That policy comprises both the machinery and the goal of constitutional reform. That is an important point. Then, in order to obtain views representative of Indian opinion, there was set up a Committee of Indian members of the Central and Provincial Councils. In addition to these two bodies the Government have now set up machinery for a round-table Conference. I should like to ask the noble Earl this question. If the purposes of that roundtable Conference are merely advisory, is it not a little difficult, both for us here and for the Indian peoples, to see why the Reports of those Committees of the representatives of the peoples of India mere not held sufficient. Why do you want fresh advice? Is there not
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some good reason for confusion of thought in that the Conference appears to be intended to carry out functions that are already performed?
I have had some evidence of the fact that many people in India are led to the conclusion that the Conference must be intended to have a new and wider function than those that have already been carried out by the machinery in operation. It does appear that you reach an inevitable dilemma: either the Conference is to be merely advisory, in which case it might seem to be superfluous; or it is to have an actual voice in the decision, in which case it is a departure from the present basis of policy which can only be described as being very important in all its implications for the future of the Indian Empire. I hope the noble Earl will make it clear to-day, so far as he can, exactly what the composition and functions of the round-table Conference are going to be.
As I have just said, I do not desire to enter into any discussion of the constitutional position, and if I refer to the Viceroy's Declaration it is only to remind your Lordships that one of the reasons given for that Declaration was the creation of a good atmosphere for the Report of the Statutory Commission. Perhaps I am not a good judge but I confess that I am always a little alarmed, from long experience, when Governments at Whitehall set themselves to create a good atmosphere in the East. I have seen so much of it. Serious concessions, perilous to our trade and prestige, have been made during the last two or three years in the Far East in order to create what is called a good atmosphere. I do not think that very much profit or good has come out of it. We have bartered away a great deal of our position nearer home in Egypt recently in order to create a good atmosphere. I do not know that we have reaped very much advantage out of it.
The noble Earl referred to propaganda. I would reply that I do not think you can set up any very effective machinery for propaganda in India. The best propaganda is the behaviour of the Government itself. That carries weight throughout India, from Comorin to Peshawar, in a few moments. Strong action or weak action is your only propaganda, and you

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need no other. Similarly it seems to me that the best atmosphere for the consideration of the Statutory Commission's Report will be created by the Government restoring law and order as rapidly as they can, and remembering that the masses of the people are more important to us than the consideration of any political views of a minority. I hope that His Majesty's Government will give us to-day some clear account of what they propose to do with regard to outside propaganda in India, because if that interference were disposed of and made clear to the world at large I believe that much trouble in the way of lawlessness and disorder in India would very rapidly disappear.
THE UNDER-SECRETARY OF STATE FOR INDIA (EARL RUSSELL): My Lords, to answer the Question on the Paper I propose first to give your Lordships a short account of the course of the recent disorders. On March 12, your Lordships will recollect, Gandhi set out on his march to the sea, and nothing very much happened in connection with that march until he gave the signal to open defiance of the law by announcing that he had achieved his purpose of breaking the Salt Laws. That was on April 6. On April 7 at Sylhet, in Assam, a disorderly procession had to be dispersed by force. On April 11 the police in Bombay City were stoned and had to make four baton charges, and on April 12 bombs exploded in two Bombay suburban railway stations, fortunately doing little damage. On April 15, following on the conviction there of Sen Gupta and of Jawaharlal Nehru elsewhere there was further serious rioting in Calcutta. Tram drivers were stoned and tramcars burnt. The following day at Karachi a disorderly crowd broke into the city magistrate's court during the trial of six of the chief local leaders of civil disobedience and the police had to fire on the mob. On the night of April 18, at Chittagong in Bengal, there was an armed raid by from 60 to 100 revolutionaries on the police and railway armouries, in which seven persons were murdered and others wounded. On April 27, in Madras, there were serious riots in which the police were compelled to use firearms, while four days earlier there was a serious outbreak in Peshawar City, and on April 24, at Neela in Bengal, not far from Calcutta,
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the police were compelled to fire on rioters who resisted their interference with salt-making.
On May 6 there was a serious outbreak at Delhi, starting with attempts to picket the courts. The Deputy Commissioner and police superintendent were savagely attacked, and troops had to be called out. Later an attack was made on three police lorries and other police coming to their assistance were stoned. On the same day at Howrah, near Calcutta, a party of police who were endeavouring to stop interference with a light railway were stoned and had to fire in self-defence, and a magistrate and police superintendent were attacked by a crowd in their car at a ferry. On the same date also a body of some 500 volunteers attacked a railway police-station at Nadia, in Bengal, owing to the arrest of certain persons who had attacked a newsvendor. On May 7 began the outbreak at Sholapur, in the Bombay Presidency, which necessitated the control of the City by the military and the imposition of Martial Law.
On May 14, at Mymensingh in Bengal, a large hostile crowd attempted to prevent the delivery of excise liquor to vendors and, when their efforts appeared likely to fail, attacked the magistrate, the police and the excise staff with brickbats. Persuasions and warnings and charges by the police failed to secure the dispersal of the mob, which continued to make violent attacks and destroyed excise liquor to a considerable value. Eventually the police, under the orders of the magistrate, had to fire. Some forty Government servants, including the additional district magistrate, the superintendent of police and his assistant, received injuries and one assistant sub-inspector was stabbed. Fifty-three rioters were treated at the hospital of whom one has died. On May 15 began the massed raids on the salt depots at Dharasana, in the Surat district, and Wadala, near Bombay, and on May 21 there was violent resistance to the search of the Bombay Congress offices in consequence of the disregard of the magisterial order prohibiting the publication of a Congress bulletin. On May 18, in the Jhelum district in the Punjab, the police were compelled to fire on rioters at Kala. There were serious riots between Hindus and Mahomedans at Dacca on May 25 and at Rangoon on May 26. The Rangoon

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rioting has resulted in twenty-five deaths reported up to date, though more of the wounded rioters in hospital are expected to succumb to their injuries. Approximately 250 rioters have been treated as in-patients in hospital. These riots were referred to by the noble Earl who asked the Question. Both these riots were communal and not connected with n on-co-operation.
EARL PEEL: In Dacca and Rangoon?
EARL RUSSELL: Yes, in both Dacca and Rangoon. I have so far received only the briefest official report of the disturbances in Bombay City on the night of the 26th, and the morning of the 27th, which resulted in the police again having to fire on the crowds, and I cannot supplement the Press reports on this matter. My latest information is that the situation there is now quiet, and that the casualties are estimated at four killed and thirty-six injured. The chief feature of the campaign against the Salt Laws during the last few days has been a change of tactics in the Bombay Presidency. Technical breaches of the law, which formed the plan of campaign at the start, have now been largely abandoned in favour of mass action. This has been tried at three places—Shiroda, in the south, Wadala, within a few miles of Bombay City, and Dharasana, in Gujarat. The tactics employed have been that large bodies of volunteers try to force their way by weight of numbers into salt works and to steal salt. During the early part of the week attempts on a comparatively small scale were made to obtain entry into the salt works at Wadala, but the number of volunteers in the Congress campaign continued to increase, and on the 21st a crowd estimated at well over 2,000 tried to force their way in. Thanks to the skill and endurance shown by the police, the attempts were unsuccessful, and the timely arrival of troops, by the moral effect of their presence, gave much-needed relief to the police. Apart from particular instances of violence during this phase of the campaign, of which there were several, it is obvious that attempts to force a passage by weight of numbers through a barbed wire fence cannot be described as non-violence.
I will now give your Lordships certain further details which my right hon.
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friend has received regarding the disturbance on the 25th at Gujar Garhi, near Mardan, in the Peshawar district, in the course of which a gallant police officer, Mr. Murphy, lost his life. Early that morning news had been received that six persons from the village of Takkar, two miles west of Takkibhai, whose arrest had been ordered, were walking into Mardan escorted by a crowd of volunteers and villagers. The Assistant Commissioner and assistant superintendent of police, with twenty-five police, who were later reinforced to bring their strength to seventy-five, armed with lathis, blocked the road near Gujar Garhi. Infantry were also there in support. The six persons whom it was intended to arrest surrendered themselves, but the crowd insisted in accompanying them to Mardan gaol. On being informed that this could not be allowed, the crowd settled down on the road and Mr. Murphy, the assistant superintendent of police, after riding through the crowd to investigate possibilities, returned to the Assistant Commissioner and suggested that he might be allowed to disperse the gathering by a charge.
The Assistant Commissioner warned the gathering to disperse, but they asked for time, as they had sent horsemen to Utmanzai for instructions. The crowd was again told to disperse, and after a further interval the police were ordered to charge. Mr. Murphy, who was unarmed, outstripped his men, and was lost in the crowd. The villagers by the roadside joined in with the crowd in throwing volleys of road metal and large stones. The police were driven back immediately through the troops, who advanced, and as the crowd scattered they found the body of Mr. Murphy, who had been murdered by the crowd. I may tell your Lordships that the nature of the injuries and bullet wounds showed that there was no question that it was a deliberate murder. The troops later advanced two miles up the road, but the crowd had scattered, damaging the telegraph lines as they went. The Assistant Commissioner then searched the village of Gujar Ghari and arrested twenty persons who were said to have been seen in the crowd.
Apart from this incident, the internal situation in the North-West Frontier Province had up to the end of last week

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showed some sign of improvement. In Peshawar City normal life is gradually being resumed, and the inhabitants of Kohat City have now generally resolved to abstain from further agitation, the position there being reported as normal. In Bannu City the situation is less satisfactory, but here also there was some improvement during the week. A favourable sign in the Province is that recruiting for additional police, which has been necessitated by the recent events, is proceeding briskly and recruits are coming forward freely. The chief weapon of the anti-Government agitators is now, as it has been all along in this area, the dissemination of false reports, but active steps are being taken to counter these. As your Lordships will be aware, the Government of India have appointed a Committee consisting of two High Court Judges, one of whom is a Mahomedan, to enquire into the disturbances at Peshawar on April 23, and the measures taken to deal with them. The Committee is now sitting and conducting its inquiry.
At the end of last week the Government of India were able to report that the tribal situation in the North-West Frontier was definitely easier. In the Malakand there has been some agitation in Panjkora, and movement of small parties of Utman Khel has been reported from the direction of Bajaur, but all other tribes are quiet. The Spinakawara Mullah, who has great influence with Utman Khel, has apparently decided to hold aloof. On the border of the Peshawar district Badshah Ciul, son of the Haji Turangzai, is still occupying his position, which was bombed at intervals during the week and casualties are believed to have been inflicted. As the presence of hostiles on the district border and the attempts to gather lashkars have disturbing effects on the district, an ultimatum has been delivered to the Halimzai Mohmands that if Haji himself does not withdraw within twenty-four hours action from the air will be taken against the villages where he had established himself. A reply has been received asking for extension of the time limit, as the matter is still under discussion between the Halimzai Mohmands and the Haji. Some Mohmands are reported to have joined the latter, but the tribe as a whole is staunch.
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It was mentioned in last week's report that there was an Afridi lashkar of about 500 at Gandao. This is inactive and will probably disperse. In Waziristan the action taken from the air against the Madda Khel villages in North Waziristan was immediately successful. Twenty Maliks, surendered themselves as hostages, and the terms to be imposed on the tribe for the unprovoked attack on Datta Khel Post will shortly be announced. In Sholapur, where Martial Law has been in force for some days, conditions are reported as fast becoming normal, and the Government hope that it may be shortly possible to discontinue Martial Law. So far as can be judged, it still remains true that the rural classes have been little affected, except in Gujarat, where the situation continues to give cause for anxiety, and broadly speaking, it also appears to be the case that there has been little or no participation by Moslems in actual disturbances, except, of course, in the North-West Frontier Province, where Mahomedans greatly predominate in the population, and where special efforts were made by the Congress organisations, by means largely of wilful misrepresentations of the effect and purpose of the Child Marriage Restraint Act recently passed by the Indian Legislature, to stir up hatred against the Government. For example, it has been said that all young Mahomedan girls will be medically examined by male doctors before marriage, and this palpably absurd statement has apparently been believed.
That, I think, sums up the general information to date as to the disturbances, and gives perhaps a general view of the picture for which the noble Earl asked. It is fair to say, as I have suggested, that the Moslems are not taking part in the civil disobedience movement in any real or extensive sense of the word, and that some of these disturbances were communal disturbances. The noble Earl also spoke of the loyalty of the Army, and I think other speakers mentioned it. I am glad to be able to assure your Lordships that so far as our information goes there is no question, and no doubt whatever, of the loyalty of the Indian Army. Their conduct has been quite exemplary, and I ought not to pass from the subject of these unfortunate incidents, and these riots, without echoing what has been said about the

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Indian police. The Indian police have had a time of difficulty which it is really hard to imagine. They have been exposed for hours together, they have been on duty until exhausted, and have frequently had to stand, pelted by brick-backs, insulted by the crowd, receiving wounds and not firing to protect themselves until absolutely the last moment has made it necessary.
In connection with any incident it cannot honestly be asserted that the Government of India have not shown the utmost limits of patience and forbearance in quelling any disturbance, or have ever resorted to force or the use of firearms until the conditions made it absolutely necessary. But, of course, as some of your Lordships have pointed out, exactly the opposite kind of story is circulated by Congress leaders, and your Lordships can hardly have a better example of that than the extraordinarily garbled, and indeed grossly untruthful, account of the events at Peshawar which was read by an hon. Member in the debate in another place on Monday.
Then the noble Earl asked whether these incidents appeared to be connected, or whether they were under central control. Well, the Government of India can hardly say that they have perfectly definite evidence, but they have enough to give them a shrewd suspicion that there is organisation and direction from behind, that these are not sporadic riots of crowds, but that they are directed riots of crowds, and that there is a definite organisation behind them. Then I think it was the noble Earl who further asked: Is the Government prepared to arrest and to deal with the Congress Committees who incite to these acts? The only answer I can give him on that is that when proof is given that any person is behind these acts no doubt that person will be dealt with; but I cannot at the moment say that we have definite legal evidence or satisfactory evidence as to these things. But the Government of India take the view, which has been already expressed that civil disobedience is a denial of Government, and that civil disobedience must be suppressed, and those who foment it must be dealt with. The noble Earl twice used an expression which I wish to refer to in order to deprecate. He talked about crushing these
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outbursts. I do not like the word "crushing."
EARL PEEL: I think I said "crushing sedition."
EARL RUSSELL: Well, it depends upon what value you give to that word; but your Lordships must remember, as I think another speaker has already pointed out, that probably a very large number of these unruly crowds, and even of these infuriated and brutal mobs who take part in these riots, are really unfortunate and deluded people, who believe, and probably honestly believe, that they are helping the cause of their country in some mysterious way by these disturbances. It is difficult to feel that they are by any means in the same position as people who are consciously seditious and who consciously desire to destroy the Government. They are misled, and really I think one's feeling for them should be more a feeling of pity than the feeling of a desire to crush, in the sense of dealing with them in a vicious or hostile manner.
EARL PEEL: I think that is not quite a fair representation of what I said, because I pointed out that the way to do it was to get hold of the leaders, the organisers. That is what I meant by crushing sedition. I have sympathy with many of these unfortunate people.
EARL RUSSELL: I am very glad to have elicited that explanation, because I am sure it may remove what possibly was a misapprehension. Naturally, the Government of India feel, as I think every member of your Lordships' House would feel, that the very last thing we would wish to do is to be compelled to shoot down our fellow subjects in India. That is a measure which a Government always takes with the utmost reluctance, and only when circumstances make it absolutely necessary, and I repeat that I think both the Viceroy and all the Commissioners of Police and the military have shown very great restraint and really infinite patience in dealing with this very difficult situation. We cannot honestly be accused, I think, of doing anything more than was necessary to preserve immediate law and order.
The very last object with which I refer to these outrages that have taken place is to incite any hostile feeling in your Lordships' minds or in this country

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against India as a whole, or against the Indians as a whole. What the exact psychological state of mind is which led to these demonstrations I find it personally very hard to understand. But, of course, the keeping of law and order, although it is a primary and essential function of Government—you might say it is elementary, and you must start with that: you cannot get on until you have peace and order in a community—is by no means ultimately the most important thing. The most important thing, the Government feel (and I hope your Lordships will agree with them) is to do what is possible to meet anything that is felt as a genuine grievance, and to make any advance that can properly be made. I think it is right to say in that connection that probably all the races in India, including the Moslems and the "untouchables," have a feeling that some advance in self-government would be appreciated, and is desired. They all have a feeling that they might want something, and what the Government desire to do, and the object of the round-table Conference that they propose to hold, is to enable the freest possible expression to be given to that feeling, from whatever quarter it comes, and whatever form it takes, and to ask all the various grades of opinion in India to meet together and to see what practicable proposals can emerge.
That seems to me to be the only proper and statesmanlike course you can offer them, and I should thing no fuller and franker offer has ever been made to any people who say that they want further advance or freedom. You offer them a full and unfettered opportunity of stating whatever it is their wish to do, and of proposing whatever it is they think can be proposed, and of discussing it. And I think that nobody could deny that, with the present Party in power, they would be discussing it with a sympathetic Government. That is the offer that is made, and it is to all of us a matter of very great grief indeed that that offer should be met by this civil disobedience campaign, which really does not deflect us from our purpose, but which does tend to make some of those who otherwise would be prepared to support some of their demands impatient, and which also, unfortunately, has the indirect result, when we take necessary repressive measures,
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of apparently alienating from us at the moment some of the more moderate opinion in India. As I say, I do not understand the psychology of it, and I cannot explain it.
Then, to answer a few more specific questions that were put, I was asked about Government propaganda. The Viceroy has made from time to time certain statements of policy and principles. Perhaps a day-to-day propaganda in the shape of a news sheet or wireless bulletin is what the noble Earl had in mind, and that might or might not be advantageous. But it is perfectly true that it would be known to be Government propaganda, and in the present hostile and suspicious attitude which the Congress people have succeeded in creating it is more than likely, I fear, that it might not be believed, because apparently what they are more ready to believe than the truth is that which is not the truth. But certainly the suggestion of the noble Earl will be remembered.
I was also asked a question as to whether Russia and Moscow were at the back of all this. Well, we always have the sinister figure of Russia in the background. We are quite used to hearing of Moscow, and we know perfectly well that the alleged, the avowed, determination of the Russian Government has, I think, always been to destroy other forms of Government in other countries. That, I think, has never been denied. But I can only say that when we are asked whether we have definite evidence that they are behind this movement in India the answer is that, so far as I know, we have not that evidence. Whether they are or are not behind it is a matter on which evidence later may be obtained, or on which people may have their own suspicions. But if I am asked whether we have definite evidence I can only answer that at present we have not.
The noble Earl also asked a question about the effects on trade—a perfectly legitimate question and one to which the answer is, of course, of importance. But I must point out to him what I think probably would occur to him.
EARL PEEL: The noble Marquess asked the question.
EARL RUSSELL: I have a note that the noble Earl asked what the effect on trade would be.
EARL PEEL: I did.
EARL RUSSELL: And the answer is, of course, that these outbreaks are so recent and this disturbed condition is so recent that it is impossible to give a real estimate of what the effect on trade will be at present. It is sufficiently obvious, of course, that disturbance of trade there must be when you have hartals going on, the compulsory closing of shops, riots in the streets, the boycott of foreign cloth and all that sort of thing. It is obvious that there must be disturbance of trade, but how great that disturbance is and what the figures are, clearly I think we would hardly be able to state for, perhaps, another year.
Then, the noble Marquess, Lord Reading, asked, and said that it was right at this moment, that nothing should be kept back. I can only say that so far as I know the Government have kept nothing back from the public of this country in this matter. I think we have given the country all the information we have, and I think we have taken them fully into our confidence as to the position. I really do not think there is anything kept back, and I hope that the noble Marquess himself does not think there is. I can only say that I know of nothing that has been kept back.
I have already spoken of the behaviour of the police and in conclusion I should like to ask your Lordships to agree with me that the Viceroy, who has been placed in a very difficult position, has behaved with immense patience—
NOBLE LORDS: Hear, hear.
EARL RUSSELL: has really kept his head in a sea of troubles, has done everything he possibly can to be conciliatory, and has done nothing that could at any time be regarded as provocative. I am glad to be able to make this public assurance that he has already been told that he has the complete, the full and the unstinted support of His Majesty's Government and, I am sure I am safe in saying, of your Lordships' House.
NOBLE LORDS: Hear, hear.
EARL PEEL: My Lords, I am much obliged to the noble Earl for his statement. I need not formally withdraw the Motion because I do not think I moved it.
THE LORD CHANCELLOR: The noble Earl did not actually move it.

RAILWAYS (VALUATION OF RATING) BILL.
Amendments reported (according to Order).

BARNSLEY AND DISTRICT TRACTION BILL. [H.L.]
FAVERSHAM OYSTER FISHERY COMPANY BILL. [H.L.]
FALMOUTH WATER BILL. [H.L.]
Commons Amendments considered, and agreed to.
House adjourned at twenty-five minutes past seven o'clock till to-morrow, half past three o'clock.