§ LORD MONKSWELL had the following Notice on the Paper—To call attention to the crusade against national prosperity that has been carried on by all recent Governments, its origin and probable consequences; to ask His Majesty's Government how it is proposed that the people of this country shall be fed when the crusade has reached its logical conclusion; and to move for Papers. The noble Lord said: My Lords, on two recent occasions I have brought before you Motions dealing with different aspects of the finances of this country. On both occasions the answers I received from His Majesty's Government appeared to me to be so alarming that I make no apology for again inviting your Lordships' attention to a matter connected with those finances. On the first occasion the noble Lord, Lord Arnold, in giving particulars of uncollected taxes, stated that in 1922 the amounts of Income Tax and Super-Tax combined which were actually collected were £94,000,000 below the assessments. As the rates of these combined are again at the same level as they were in 1922 and the Death Duties are even higher, the prospects of collecting the assessments would appear to be remote. On the other occasion I suggested that our present orgy of national extravagance must shortly lead to inflation. Lord Marley, who made a speech from the Government Benches, in the course of many interesting remarks of a general character, was exceedingly careful not to say one single 277 word upon the subject of inflation. It is, therefore, not unfair to assume that he admitted a proposition which he dared not mention, much less deny.
§ On the one hand, then, we have passed the upper limit of effective taxation, and on the other we are on the brink of a fall in our currency which, once started, must continue so long as our national extravagance continues, till, if our national extravagance continues long enough, a million pounds will not buy a loaf of bread. In those circumstances I am naturally curious to know how the people of this country are to be fed, and I invite the Government to give us full and detailed information on the subject. A situation of this kind, fantastic as it may seem, is the logical result of the course followed by all recent Governments. One and all, they have carried on an attack against production, therefore against prosperity. Cheap and abundant production of all forms of material wealth is the principal and almost the only necessity for national security and well-being. To bring about this desirable state of affairs, the first essential is an abundance of cheap capital, but one Government after another, in deference to the blind Imbecility of the electors on whose votes they depend for their existence, have put every obstacle they can think of in the way of accumulation of capital.
§ The possession of any considerable amount of capital—that is to say, the ability to provide tools, to set any considerable number of men or women to do useful work—has been made an offence to be punished by heavy and recurrent fines. Restrictions of every kind have been imposed upon the right to work. Free competition in production is forbidden. Capital is being poured out like water in any way that ensures that it shall reproduce little or nothing. Large and rapidly growing sections of the population are actually being bribed with public money not to work. Meanwhile the childishly simple facts of the situation are a closed book to the electors of this country. The whole basis of prosperity is material wealth, which will almost automatically increase and multiply if its holders are given security, but which dwindles and dies unless it is allowed to be freely used for the production of yet more wealth. There is 278 only a negligible minority of voters who have progressed beyond the conception that the right way to become prosperous oneself is to drain away the sources of other people's prosperity. The huge majority of the voters in this country are, in fact, economically imbecile.
§ Take, for instance, the nonsense that is talked about over-production. From the point of view of the public, it is impossible to have commodities too cheap. Cheapness is simply the result of efficient and abundant production. When people talk of over-production, what they generally mean is that the introduction of efficient methods has had the effect of reducing the number of workpeople required in some particular industry. This, of course, is always likely to be the case when more efficient methods are introduced. It means that modern methods of production usually involve displacement of labour. This, I need not point out, is inherent. Again, the economically imbecile electorate entirely fail to grasp that the cost of production of the wealth of any country is the whole national expenditure of that country. It is no use saying that we will separate our expenditure into watertight compartments and charge against the cost of production the direct costs only—wages, raw material and so forth—but we will give all sorts of subsidies to the workman: we will educate his children; we will pension his father and mother; we will keep him when he is out of work; and we will not charge that against the cost of production at all. It is the veriest make-believe. These things are costs of production just as much and as little as the direct costs.
§ Every political Party is forever saying that the standard of living of the British working classes is the highest in the world, and that, whatever happens, this state of affairs is to continue. That this is contingent upon the production of the commodities and services which constitute the standard of living is not mentioned at all, and the economic ignorance of the majority of the electors is so great that they accept the comfortable things that are told them. Men of all political Parties are constantly talking about a redistribution of wealth. They do not mention that, of all the redistributed wealth, 90 per cent. is sterilised in the process of redistribution.
279§ The fact, of course, is that the standard of living of a country depends upon its production. If the British working classes produce less than the savages of Polynesia the standard of living of the Polynesians will rise above that of the British. Clearly our present troubles are primarily, and almost entirely, due to the excessive all-in costs of production, which make it impossible for us to produce as efficiently as other countries. While I do not suggest that tariffs may not in certain circumstances be desirable, they certainly will not do much good unless they have the effect of reducing our all-in costs of production to the level of those of other nations. As our all-in costs of production are burdened by a much heavier extraneous load of taxation than those of most other nations, I do not myself see how it is to be done. If we are to survive, we must be able to produce efficiently enough to earn interest at or about the market rate free of all taxes. Anything short of this is living on capital in some form or other, and sooner or later bankruptcy will result.
§
I do not think that there can be any doubt that we have for long been impoverishing ourselves in this way and that the breaking point is approaching. What chance is there of our saving ourselves while there is time? The situation, bad as it is, is in no way mysterious, but is obviously the direct result of our present political system. To parody a couplet much used by politicians of a former generation we may now say that the motto of all political Parties is:
Let wealth and commerce, laws and learning die,
But God preserve our new democracy.
I have never myself been able to understand the prejudices for and against the innumerable systems of government that the world has seen and is seeing. The only thing that appears to matter is whether a system produces security and prosperity or the reverse. There is, so far as I am aware, no objection to democracy as a form of government if its results are good. In the particular circumstances of our own case the results are obviously so bad that the system may break down at any time, owing to sheer inability of any democratically-elected Government to provide the country with food.
§ Democracy with us has been carried to the extreme point where the comparatively small section of the people who practise thrift and understand the importance of production, is entirely without the smallest vestige of political influence. As a political force they have been wiped out for the time being. So far as I know, these people do not even possess any organisation of the slightest value that would enable them to step in and take control when the inevitable breakdown of democracy takes place.
§ If the electorate were capable of learning anything it is inconceivable that they should not have learned from the example of Russia. The crooks and fanatics who are behind the so-called proletarian movement in that country, having destroyed most of the means of production in Russia, are now saying to the Russian people: "We congratulate you. You have got rid of your capitalist masters. All is going splendidly, and you have given absolute power into our hands. We hope you will not mind, so as to get things quite straight, if we propose to introduce slavery for an unlimited period. If you do mind, it does not matter, because if you resist we shall shoot you down." The crooks and fanatics who are behind the democratic movement in this country are proceeding on precisely the same lines. They have already cajoled the imbecile electorate into dissipating wealth and into planting their puppets where they control the naval, military and police forces of the State, and they are doing everything they can to organise and legalise attacks upon the community. What is intended is not difficult to foresee.
§ I think it must be recognised on all hands that we are living in a time of political chaos, which in the nature of things will pass and give place to some more stable system. The human race appears to be divided into two main parts—a comparatively small section of people who possess foresight and do not take any important step without counting the cost, and a comparatively large section who have no foresight and never consider consequences. Democracy is a term that may be used to cover a wide range of systems, but in most democratic countries—certainly in this country—the latter section are supreme. They are 281 easily organised by cajolery and intimidation and can be driven by demagogues like flocks of sheep. The section that possess foresight are, for the very reason that they think for themselves, much more difficult to organise and to control, but irresistible when of one mind. It is, therefore, in no way surprising to find that from the break-up which came with the advent of the industrial era about a hundred years ago, the first thing to emerge was predatory democracy, which itself believes it will last for ever while it is in fact living from hand to mouth and has already destroyed any chance of permanence that it may ever have possessed.
§ What should be our aim when our present troubles have been surmounted? Foresight, the one quality in which democracy is most conspicuously deficient, will, as civilisation becomes more and more complicated, point more and more the path to prosperity. Those nations will survive whose rulers recognise economic facts and act accordingly. The others presumably will perish. At the present time it is probable that Great Britain is kicking against the pricks of economic fact harder than any other nation, not excluding Russia. It can be put very simply. The standard of living must depend on the production of those material things by which people live. To attempt to raise the standard of living without concurrently increasing production is to attempt a process which in the nature of things cannot endure. To demonstrate the impossibility of the continuance of democracy in any form even faintly resembling that in which we have it today, we have only to ask ourselves what chance there is of the present electorate voting in accordance with the simple economic fact that the standard of living depends upon production. The answer obviously is that there is no chance whatever, and that to hope for anything of the kind is futile. Democracy in fact is incompatible with survival.
§ If we go a little further it very soon appears that democracy is a highly artificial system depending even in logic upon a number of childish fallacies, while history gives it next to no sanction. The position clearly is that it is only in very peculiar circumstances that a democracy like ours can come into existence, while 282 the possibility of its continuing for any great length of time—as time counts in the life of a nation—may at once be dismissed. If it is not overturned by some exterior shock it will soon commit suicide. I will nut detain your Lordships by speculating on which of these processes is the more probable. Neither is likely to be a pleasant one.
§ Let us pass on to the principles which must animate any Government which wishes to initiate an era of security and plenty. The first absolute essential is that a long view should be taken. We must make up our minds whether we are going to be a self-contained community, as far as possible satisfying our own wants, or whether we are going to encourage the exchange of our own commodities with those from overseas. The decision we reach must obviously depend on whether or no overseas countries are prepared to enter into long-term agreements with us, and the matter cannot be settled quickly. There must be no more yearly Budgets with money snatched from anywhere it can be found to meet improvident and hand-to-mouth expenditure. Revenue and expenditure must be planned for years ahead, and no increase in the taxes planned allowed except in the case of war. Finally, and above all, it must be recognised that the root of all further alleviation of man's lot lies in the extended use of power and machinery, and that the provision of power and machinery depends first, last and all the time upon the existence of huge masses of cheap capital which is merely another name for power and machinery. Only in some such way can the possibilities of the industrial era be turned to account, and this can happen only when the thrifty and far-seeing members of the community have organised themselves so as to have at their disposal sufficient physical force to ensure that their programme can be carried out. I beg to move.
§ THE SECRETARY OF STATE FOR THE COLONIES (LORD PASSFIELD)My Lords, the noble Lord who has just sat down was so impartial in distributing his criticism and blame over all the recent Governments that I am rising only out of courtesy to the noble Lord, because I feel that His Majesty's present Government have nothing more to protest against 283 than His Majesty's Government which preceded us. I think, in fact, the noble Lord indicated that the terrible process of undermining national prosperity had been going on since the beginning of the industrial era, about a century ago.
§ LORD PASSFIELDI would ask the noble Lord to take courage. If this terrible process has been going on as long as that, it may not be so serious as he thinks. The noble Lord referred to the previous discussion that he initiated on the subject, in which he suggested that my noble friend Lord Arnold, in answering him, did not mention one very serious matter, the danger of inflation, whereupon the noble Lord concluded that Lord Arnold—
§ LORD PASSFIELDI beg the noble Lord's pardon, Lord Marley. That being the case, I feel bound to mention that point, lest I should be held to have admitted anything as serious as that my noble friend had overlooked the danger of inflation. Fortunately the subject of inflation is not one of Party differences in this House. The danger of inflation, in the strict sense, is recognised, I think, by all Parties in the House, and I think I can comfort the noble Lord by saying that, so far as the present Government are concerned, they will not willingly take any step whatsoever in the direction of creating inflation. I do not claim any superiority on that account. I could say a great deal in criticism of successive Budgets of previous Governments, but it must be admitted that they were not guilty of inflation. I can assure the noble Lord that His Majesty's Government at the present time are not going to embark on any policy that could be called inflation.
The noble Lord went on to say that we were on the brink of a fall in our currency. I hope that is not true and, as a matter of fact, a rise has taken place in our currency, if it is measured by the general level of prices during the last five years. That is to say, the value of currency, as indicated by the general level of prices, has risen. If the price of articles, measured in our currency, has gone down, the value of our currency 284 has gone up, and the noble Lord's fear that we are on the brink of a fall in our currency must mean that he is afraid that prices are going up. I confess that I can see no sign at present of a marked and general rise in prices, and I would suggest to the noble Lord that possibly a rise in prices would not be a sign of any great calamity. There are many people who say that the first sign of an improvement in trade will be a check to the fall in prices and a return to a steady rise in the prices of commodities. I can assure the noble Lord that, so far as I am advised, there is no sign of our being on the brink of a fall in our currency. The noble Lord said that a necessary condition of stabilisation was cheap and abundant production in all forms of material wealth. I may agree with him about that, but I would point out to him that cheapness in all forms of material wealth is generally described as a rise in the value of our currency. If our currency fell, it would mean that prices would be going up, and that is the very inflation of which he is afraid.
We are certainly enjoying at the present time an abundant production of a great many forms of material wealth. There is probably more wheat in the world than there has ever been before, more rubber, more tin, more wool, and, indeed, more of almost everything. There is abundant production in the world, and producers, at any rate, think that commodities are cheap enough. If the noble Lord were in Australia he would not be under any misapprehension as to the amount of production or as to the low prices that are being obtained. What the logical end of this is I do not know, but the noble Lord seemed to think that the logical end of the action of all recent Governments is an attack on productivity. We sometimes build better than we know, and I suppose I speak on behalf of the late Government as well as of the present Government when I say that they are quite innocent of any desire to attack productivity. That may be the logical end of their action in the noble Lord's view, but we do not always pursue things to the logical end.
To speak more seriously, I would ask the noble Lord to take courage on one point. He was very emphatic on the importance of saving and thrift. The noble Lord seemed to think that the 285 great majority of people in this country were incapable of thrift and were not saving. I humbly suggest to him that he might take comfort from the fact that one very marked feature of the present time, not merely of this year but of the past few years, has been the very great amount of saving by the great mass of the people. If the noble Lord will take all the statistics, he will see an enormous increase in building societies, in industrial insurance, in friendly societies and in savings bank accounts. If he will add this up, making any deductions that he likes for participation in that saving by the middle or upper classes—if we must talk of classes—he cannot fail to see that there has been relatively a very large amount of saving, measured in hundreds of millions of pounds. It is not only relatively a very great amount, but it represents a huge amount of thrift and foresight and is a very remarkable phenomenon in the present conditions of bad trade.
I would urge noble Lords to take courage from that. It is something over which we can all rejoice without any suggestion of Party views on the subject. It represents a great and widespread saving by the accumulation of relatively small sums, and I doubt whether at any time in the history of this country there has been so much saving by the better sections of the wage-earning class as there is at the present time. Certainly at no time has there been so large an aggregate sum in their possession as the result of saving. I would only remind your Lordships of the co-operative movement which, when I first had occasion to know it, numbered only 1,500,000 members, and had a capita] of something like £50,000,000. The membership is now about 6,000,000, and the capital is at least £150,000,000, practically all of which is accumulated as the savings of the wage-earning class, numbering something like one-third or, to be moderate, one-quarter of all the families in the Kingdom. Now, that is a very remarkable result, and when the noble Lord talks about the huge majority of electors being economically imbecile I would commend to him the fact that a very large section, numbering millions, of the electors, are participating in this extraordinary saving — extraordinary 286 because it is unparalleled in this country at any previous time, and, I suggest, unparalleled in any other country of like magnitude.
The noble Lord indicated, though I do not think he quite used the phrase, that for a number of years this country has been living on its capital. I speak without having the exact statistics in my head, but I do speak with some economic knowledge of the subject, and I can assure the noble Lord that, far from this country having a lessened aggregate of capital this year compared with last year, and so for other years, it is putting it mildly to say that the aggregate wealth of this country has not diminished; the question is whether it has increased at the same rate as the population. I would not like to answer that without looking at the figures again. But there is no sign of our living on our capital yet. The noble Lord may say that the logical end of measures with which he does not agree may be that we shall be making drains on our capital in the future. I mistrust these prophecies and pursuing of things to their logical end, because I do not know; but certainly at the present time this country is not quite so down and out as the noble Lord fears.
In the opening of his speech he drew attention to the fact that some years ago the amount of Income Tax and Super-Tax uncollected ran into a great many millions, and he suggested, though I do not think he stated it, that at the present time the uncollected amount must be much greater. There, again, I think the noble Lord might take courage. It is quite true that, in the collection of Income Tax and especially Super-Tax, the Inland Revenue authorities are not peremptory, they do not sell up a man if he has not paid his Super-Tax by March 31. They allow him a little time before they proceed to drastic measures, and I do not think they are otherwise than wise in doing so. But I do not think that the amount uncollected at the end of the year is at the present time any greater than it has been, and I should be very much surprised, with the steady improvement of our methods, if it is not less than it has been. I have not got the figures, because the year is not completed and they are not published, but certainly last year, up to March 31, astonishing as it may seem, 287 the income of the country, so far as it is evidenced by Income Tax returns, had kept up. And I should be very much surprised if there is any very serious falling-off yet.
Perhaps the noble Lord will accept that as the best reply that I can give to his address on the spur of the moment, because we had very little indication of the line that he was going to take. I would only, in conclusion, urge him to take courage, and not to believe that all Parties in this House and in this country are necessarily led from the rear by the crooks and fanatics to whom he alluded—because in his impartiality he did not attribute that sinister leading by crooks and fanatics to any one Party in particular. He distributed his blame impartially over all the recent Governments. Well, I think those crooks and fanatics are about as imaginary as the army of Russians that passed through this country at the opening of the Great War; and if the noble Lord will look again at what is actually going on among the people of this country, the evidence of their orderliness, of their willingness to work, and of their very great amount of savings—I do not say thrift, because that means wise spending as well as saving—but the very great amount of the savings that they actually make from their wages, which are none too good, I think he will find that they compare very favourably in that respect with some other sections of the community, and their conduct and their character are such as to give me, at any rate, a great deal of confidence in the future. I think that confidence may reasonably be justified, and I hope it will be shared.
LORD MONKSWELLMy Lords, I am very much obliged to the noble Lord for his answer to my speech, which, I am afraid, contained a good number of points which he would want to study beforehand. But I must say that I am rather struck by the hardihood of the noble Lord in coming and making this very optimistic speech when his own Chancellor of the Exchequer is well known to be faced with an unbalanced Budget, and has not the slightest idea where he is going to get the taxes from to balance the next one, especially in view of the constantly growing expenditure—very much, I must repeat, on the lines that I 288 indicated in my speech. Of course, I am delighted to hear that he is satisfied with the thrift of this country, but I must say that it seems to me that the working class thrift in this country is simply a drop in the ocean. I saw some figures the other day, and all I could make out was that the whole of the savings of the working classes of this country amounted to somewhere about £2,000,000,000, that is, about one-third of the National Debt. Considering that they have all had their wages forced up by political methods for the whole of the last twenty years, it appears to me an extremely poor result, and I am not at all favourably impressed by it. But this is evidently a subject which, I fear, is not very well suited for discussion on the floor of your Lordships' House, so I will not say anything more concerning it. I beg leave to withdraw my Motion.
§ Motion, by leave, withdrawn.