HL Deb 15 December 1932 vol 86 cc422-55

LORD MELCHETT moved to resolve, That, since under modern scientific conditions productive capacity is unlimited, and since the existence of indigence and unemployment throughout a large portion of the population demonstrates the tact that the present monetary system is obsolete and a hindrance to the efficient production and distribution of goods, in the opinion of this House the Government should bring forward immediate proposals for the economic reforms necessary to enable the subjects of this realm to enjoy the benefits to which their present productive capacity entitles them.

The noble Lord said: My Lords, I have ventured to put this Resolution on the Order Paper and to bring it to your Lordships' notice because I felt that the further we go on in our present economic conditions the greater muddle we seem to get into. I did so because I hoped that a debate in the calm atmosphere of your Lordships' House might help to clarify the position. I hoped further that I should be perhaps fortunate enough to persuade your Lordships of the correctness of the observations in the Resolution, and to persuade you also to press His Majesty's Ministers to use this Resolution as an instrument to introduce some of those economic reforms which I believe to be necessary, and which I believe some members of the Government are half inclined to believe will become essential before very long.

The key-note of the situation in which we find ourselves at the present moment is poverty. On all hands we see the greatest possible distress, an enormous amount of unemployment, people who are suffering not only from lack of work but literally from an insufficiency of the necessaries of life. This is common not only to this country but to nearly all the civilised countries of the world, and in a particularly high degree to the industrial countries. That is one side of the picture. On the other hand, we have in these days an unlimited power of producing all the necessaries that any civilised men can require, and producing them at once. We can produce without any further delay all the goods which we need for our civilised life. There is, for instance, in the case of steel an enormous power of production, an almost unlimited power of production. Take agricultural products—we can produce as much as we like of them. In regard to ships, houses, textiles, there is no shortage in the world either of materials or of men to work them. We have a great abundance on every hand and yet we find this extraordinary paradox of great actual poverty. There is only one commodity which we use at the present moment which is limited. All other commodities are for practical purposes unlimited. The only limited commodity is gold. In a world which has unlimited power of production you have this limited commodity, gold, which is very largely at the bottom, to my mind, of our present trouble. It is not the only thing, but it plays a certain part.

My noble friend Earl Stanhope, in replying for the Government in the debate on bimetallism last Wednesday week, said that there was plenty of gold. I do not want to misrepresent him and therefore I will read his words from the OFFICIAL REPORT: In 1900 there were £1,000,000,000 worth of gold in circulation. At the present time the supply of gold far monetary purposes has increased to £2,500,000,000 worth, or two and a half times. Therefore your Lordships will realise that it is not shortage of gold in the world which has caused the great drop in prices.

He went on to say that what had caused it was maldistribution, and he referred to the Report of the Committee of the Gold Delegation of the League of Nations in support of that view. I cannot, I am afraid, agree with him on that point. I find that the League of Nations are not altogether unanimous upon it. It is true that the Gold Delegation made that Report, but the Gold Delegation was largely composed of people who are known to be supporters of the gold standard and have been attempting to operate it for the past ten years without a very large measure of success.

If you turn to another document also published by the League of Nations "The Causes and Phases of the World Economic Depression," published in 1931 by the Secretariat of the League of Nations, a most valuable and comprehensive account of all that has occurred since 1929, you will find on page 230: It may be added, however, that in the opinion of some writers, had the available supplies of gold been larger than was actually the case, the influence of strains on the balances of payments and consequent gold movements in the last two years might have been attenuated.

That is rather a long-winded way of saying that if there had been more gold there would not have been so much trouble. To quote from the Interim Report of the Gold Delegation—I do not want to read out all these phrases because they take a long time: There is a growing risk of disturbance by fluctuations in the invisible items of the balance of international payments while the inelasticity of visible trade is increased, not only by barriers of one kind and another but also by the. inelasticity of wages.

They go on to point out that: Capital can only be transferred in the form of goods or gold or claims to existing wealth, and when capital transfers are made with such rapidity as to allow insufficient time for their ultimate effect on the volume of the imports or exports of goods to make itself felt, a disequilibrium of the total balance of payments is likely to be caused which will give rise to gold movements.

They further say that in recent years gold movements have taken place on account of political uneasiness or speculation on the Stock Exchange and not the normal reasons that have been the reasons in the past. Here you find the three principal factors of wages, commodities and capital admittedly, according to the Gold Delegation themselves, not properly served by the movements of gold. It is plain that if there had been a. great deal more gold it would have been easier to carry on the system, and, what is far more important, that it is quite impossible to go on maintaining a system which demands elasticity of wages and which allows capital movements of an enormous character to take place on paper that cannot take place in fact. We have become accustomed to see movements of goods restricted by tariffs and quotas, and we are bound to come to the time when we shall see capital movements restricted in the same way, because it is inconceivable that we should go on with a system which presumes to allow quantities of gold to be moved on paper that cannot in fact be moved at all. Had you infinitely more gold you could not carry out the capital payments which are in question to-day, so that for the Gold Delegation or the Government to say that there is sufficient gold and that it is not the cause of the disturbance, is begging the question.

The present system really does not in any way represent the true facts. It does not represent the facts of commerce or the facts of industry; but it is not my intention to spend much time in discussing the gold standard because that standard will die. It will die with those respectable and venerable individuals who now support it. There is not one of the younger generation of economists who, so far as I know, can be found to support the gold standard. They have almost with one voice written and spoken against it and it will disappear into the limbo of things that have had their use and are no longer of service to mankind.

But what is the policy of the Government at present? So far as they have 'taken us into their confidence they seem to be prepared with nothing of a serious character to deal with the fundamental question of the economic situation, except the World Economic Conference, which has been postponed already and is supposed to take place in London sometime next year. That seems to me a policy of despair. I cannot see why any World Economic Conference should agree upon any subject they can discuss. They have no reason to agree. They have definite and substantial reasons for disagreement. Let us take the countries which are important in this matter and see upon what their financial and economic policies, not in fiction but in fact, are based. The economic and financial policy of France is part of her military defence system. She does not consider it in terms of world trade or prosperity. To her the one vital question is her defence, and her financial questions are ultimately based on that principal question of defence and security.

Take the economic position of Germany. Her policy is based, so far, on two factors—the economics of revenge and the finance of despair. She has no reason to agree to any world scheme that is going to facilitate our position. On the contrary, she has her own position to look after, a special position entirely European and one not likely to fit inside any general world idea. You have the United States of America. Ninety per cent. of the trade of the United States of America takes place within her own territory, the remaining ten per cent. is not really of any particular importance and you will never persuade them to agree to anything which does not suit the ninety per cent. The fundamentals of her policy will be based on her own Party politics and will have nothing to do with the situation of the rest of the world. The policy of Central Europe, where not dictated from outside, will be dictated largely by fear, and in -Russia and Italy by reconstruction, development and aggrandisement which are not likely to fit in with anything we want.

The idea is that you are going to persuade all these people to do something undefined which is going to solve the extraordinary mystery of abundant material wealth on the one hand and dire poverty on the other. It is a miserable hope, and I do not mind venturing the prophecy that it has not the remotest chance of success. If that is all you have to offer the unemployed I am sorry both for them and the Government. We have to face quite a different situation. What are we going to do? Our job is a Simple one. We have it in our power, without asking the consent of any foreign Power, to reconstruct, plan and develop one quarter of the surface of the earth, the British Empire. It is our job to get on with that and I believe the greatest contribution the British people can make to world peace and prosperity is to develop their own territory in conjunction with the Dominions who have already gone a long way towards agreeing to such a policy. Ottawa has not achieved all we hoped for, but it is a first step, and that line, if pursued with vigour, will prove, I believe, extremely fruitful.

However, we are faced with this problem of riches and poverty and a poverty which, I think, many are inclined to overlook. I have had some opportunity of checking these figures and both in the north and in the south of England, if you take the budget of the ordinary man out of work, take off his rent, insurances, and what may be called his general standing charges, you will find he has between 3s. 6d. and 4s. 6d. a week for food and clothing for himself and his family. That is an appalling condition. It is not one on which we can compliment ourselves. It seems to me futile to say that things are worse elsewhere. What is that to do with us? We have a great and rich country, an infinite power of building what we need to build, producing what we need to produce and exchanging it for what we need to eat. Why do we not find some system of distribution and exchange that will enable us to do this?

It has been said by many people, faced with this problem, and by the Opposition of course, that this is what Socialists have been saying for a long time—that the answer to the problem is Socialism. One has been tempted at times to consider that as a serious proposition, until one looks at the definition of Socialism, and one finds that it is described as "production for use and not for profit." To my mind that is almost the most absurd statement that has ever been made, and that it should ever have been seriously put forward by a body of men, who hope to carry it into effect, seems to me to be quite incredible. Did anyone ever produce anything not for use? Did anyone ever produce something that was not to be used? The opposite to profit is loss. Nobody whom I have ever heard of could go on producing anything at a loss for very long. The very idea that lies behind "production for use and not for profit" is so hopeless that it is in no way going to provide a solution of this great problem.

We are emerging from a chaotic state of affairs. There has never been a capitalist system. There has been a chaotic condition of industry which has got to be regularised by means of control through gold or currency. That is not Socialism. That is merely a properly developed and properly organised economic system. How much control will he necessary is a thing which we shall only find out by experiment and by trying, and it is of no use sitting still or being frightened to do this or that. The principle of the control of industry has been conceded by Acts of Parliament which are on the Statute Rook, and all we need to do is to apply those principles, which are obviously necessary, in a great many more cases, and to apply them with some experience of the past, and try to devise a decently controlled scientific state of affairs. We must never forget that whether there is enough gold now, or whether there is not, whether the developments of the scientist or of machinery have taken the economists and financiers by surprise now or not, is nothing at all compared with the devastating things which will happen in the future.

The other day an evening newspaper, the Star, published an account of the condition of affairs in Chile at the present moment, and this is what they report: In Tocopilla, the principal nitrate port, babies are threatened with death because there is no milk. In Castro, the teachers are feeding those children who come to school as the children frequently faint with hunger in the class rooms. Numerous deaths from starvation have occurred at Chillan, and hundreds of children are living on a broth made from weeds. The bodies of those who have collapsed from hunger are frequently found on the roads … In the Indian reservation near Temuco a score of boys and children recently died from hunger. There are whole towns, such as Petorca and Papuda, where not a lump of sugar or a loaf of bread is obtainable. In other towns bread sells at 2s. 6d. a 2 lb. loaf and sugar at 1s. 6d. a lb.

That is the report from Chile. If anyone takes the trouble to look at the record a Chile in the past he will find that among the South American States it has been the most prosperous, the most regular in its payments, and the most contented and politically stable. What has come along to bring this condition of affairs about? The discovery of a scientist. Professor Fritz Haber made the discovery of the fixation of atmospheric nitrogen, and it was no longer necessary to rely upon nitrate from Chile. Thus every country could have its own nitrate.

That was a perfectly simple state of affairs. Everyone interested in science, or following scientific development, has been aware of this state of affairs for at least ten years, lot t not so the authorities in the City of London and elsewhere. The City of London in particular allowed Chile to get large sums of money for the development of her companies, and now London is landed with £7,000,000 of Chilean stock. The authorities in the City of London simply did not know what was happening. In the future you will have to be aware of these things, and it is at least essential that within ten years after the event you should have a thorough and complete knowledge of what is taking place. Whatever the developments of machinery and science have been in the past they are nothing to what they are going to be in the future, and so if our scientific development has been inadequate for the advance which has already been achieved, how much more inadequate is it likely to be in the years to come!

The atomic energy and other things which we hear of from scientists and chemists, which will give free and infinite power to mankind, would completely wreck the economic system as you try to work it to-day. You have got to realise that every development of this character, every development of machinery and science, is going to throw more men out of work than all your schemes for reconstruction or for alleviating unemployment can possibly put back. You cannot possibly afford to leave industry in the chaotic condition it is in to work out its own salvation. You cannot leave these things to work out themselves in the belief that all will be well in this best of all possible worlds. The Government will have the duty of carefully planning and rationalising the industry of the country, and if they do not set about it now they will have to do so in the future under far worse conditions.

It is lamentable that at the present time so far from planning ahead and obtaining scientific knowledge, and having scientific advisers for every Ministry, to advise the Minister, we find to-day merely contradictory policies. There was a great drive for economy in the Free Trade days of the present Government. In the Free Trade days it might justifiably have been argued, but since the change of policy the whole question of economy becomes a different affair. That is so obvious if you sit down to work it out that it is hardly worth developing it now. But it is quite plain that if you have a protective system, and you engage upon productive capital works in your country—factories and works which are going to he put into a position of earning profits under a protective system—you are making an advance, because you are no longer subject to the outside competition to which you were subject before you adopted a tariff system. But instead of any change being made in the policy of the Government when you have made one radical change in your economic system, the other part of it is allowed to go on in exactly the same way.

It may be said: What plans can be produced in order to put this position right? Of course, one could go on speaking of the plans that could be made for a very long time. I only propose to deal with them very briefly. But I will say this. Let us, first of all, realise that the essential point, the key point of the present industrial system is profit. It is also true of the State. Your taxation is derived from profits. If you have no profits and only losses, you cannot raise your taxes, your Budget falls, your currency is endangered, all the other disasters occur. Profit is your principal point at which real danger can arise. And therefore you must devise a system whereby profits, while not extravagant, also do not unduly and without any reason collapse, where a properly run and efficient concern can live and earn a reasonable profit in a reasonable way. I do not think that if a system was devised which stabilised the opportunity of profit for competent concerns, industry as a whole would object to a limitation of profits such as you see under statutory companies to-day. An arrangement whereby profits over a certain amount should be distributed between the work- ing man and the consumer would have certain great advantages. It would provide for a continually rising standard of living of the workmen, measured in ordinary money wages; and it would also provide for a continually falling level of prices; which are the two things that we desire to see.

After the experience of recent years, I do not think that serious industrialists would necessarily object at all to a theoretical and a practical limitation of their profits, provided they were assured that the limitation was going to take place under a stable economic system which was not going to collapse every decade or every fifteen or twenty years, as it has done in the past. If you are going to do that, you must also be in a position to control prices within certain margins—not necessarily to control them strictly, but to control them within certain limits, because it has happened of recent months that prices have fallen to such ridiculous levels that they bear no relation whatever to the costs of producing the goods sold. And that can continue to exist for long periods of time, causing grave distress, which we have already seen. While Government Departments go about trying to get prices up again, nations meet and say: "There is only one thing to do, and that is to raise the level of prices," and the Macmillan Committee report: "We must raise the level of prices." But none of them know how to raise the level of prices. Why let them fall in the first place? Why not have a system which prevents this disaster?

It is not impossible to devise such a system. Is it beyond the wit of man? I should not have thought so. Limit your prices within 20 or 25 per cent. margin of rise and fall. That would not be a very difficult thing to undertake. In fact, the principle of fixed prices has already been admitted in the coal trade in an Act of Parliament. To carry that a little further is not really so very difficult as it may appear to be. Upon those prices, and upon the maintenance of a price system which is some point above your costs of production, your whole profit—the only possibility of profit—of course, rests. Well, the control of such prices and the control of your commodity markets are things which can be worked out and worked out in detail, with care, by people whose job it is to sit down and study them from every aspect. That the subject presents difficulty I have not a shadow of doubt. Everything presents difficulty. Every step that the human being has taken in his social organisation has presented difficulty. But I am not going to admit that the human race which has invented a machine by which you can telephone from here to Australia is so stupid that it cannot invent a machine that is going to carry its economic life along in some stable and regular way. That is an impossible supposition. I am certain that unless we are prepared to attack it from a scientific point of view and to work these things out scientifically we shall never make any progress. We must conceive a radical reform of our industrial situation.

One might imagine the industries of the country grouped into twenty-six- or twenty-eight great chartered companies, with large powers of self-determination and control, powers of compulsory amalgamation, and other powers of that kind. Compulsory amalgamation, again, has been admitted in an Act of Parliament. The power of regulating wages—that, again, in our two principal industries, coal and agriculture, is already fixed. There wages are fixed by Act of Parliament. You must conceive that they will have the power to prevent the putting up of redundant works, and works that are not going to be of any service. In other words, if they were properly to plan out their affairs, they would maintain their own efficiency, a good standard of living for the people who work for them and a high standard of production, both in the question of costs and in the question of the quality of the goods which it is their duty to produce. All those things not only have been done in other countries but are being done to-day. In Italy a system not unlike that which I have just been suggesting to you already exists. It also exists in that incompetent country Russia, and if it were not for the control they have over their own industrial affairs they would not be able to carry on for a moment. But they have got a control. All the repercussions of these controls have been worked out and have been seen in the last ten or fifteen years. It is not entirely new ground that we should have to break to find a machine to suit ourselves. I am not suggesting that we should adopt either the Russian or the Italian proposals or the methods of those countries; I am not proposing flat we should do anything but find a method suitable to ourselves, suitable to our own industrial conditions, and one that will really give us the opportunity of working out our own economic destiny and of making use of the enormous wealth which lies at our door all the time.

I do not for a moment believe that Parliament, as it at present exists, is either capable of using these powers or ought to be given these powers. To my mind such a proposal is absurd. The debate that took place last night in another place seems to me adequate proof of the uselessness of such a conception. There we had three ex-Chancellors of the Exchequer all talking on this grave question of the American Debt—one of the great vital questions that is afflicting the world to-day. What was the topic of their discussion The mistakes that the three of them had made in the last ten years. They produced nothing at all for the future; they gave us no idea as to the best way out of our difficulties; they spent their time arguing with, each other as to who was most wrong when the original deal was made. Really, it is not likely to help us very much if we put this grave question of the creation of a planned State in the hands of a Chamber which can only rise to such heights. No, we have got to have, call it what you will, a Supreme Economic Council: that can offend nobody, because it exists already in Russia and Italy, so that, whether you are a Fascist or a Bolshevik, you cart accept it. I have used another term: an Economic Chamber of Parliament, chosen from those people who know this subject, whose job it will be to solve these problems; and I maintain that they are solvable. Something of the kind would fit in far better with our Parliamentary traditions, fit in far better with the type of Government to which we have been used. But I have no hard-and-fast ideas on the subject myself. I merely state the simple proposition that this can be done, that we have enough intelligence and trains to do it, and that all we need is to make up our minds to set about it in order to create a perfectly decent country for our people to live in.

We have to realise that it is no good going on in an economic world with a financial system which is so hopeless, as the Chancellor of the Exchequer admitted himself last night, that when America stops paying herself the whole system collapses. If you boil his speech down it comes to this, that the moment America stopped lending money to her debtors to repay her the whole system was in danger of, and did in fact, collapse. Why should we continue with these follies? We have an infinite power of production in our hands. We have scientists with brains, and if we concentrated on almost any material problem in the world today it could probably he solved within ten or fifteen years. We have bountiful gifts at our disposal if we have only the courage to take them. We have to create a system which is capable of giving them to us.

We have to realise that the days of an economic machine with a red flag walking in front of it, are gone. We have a 60 horse-power economic machine behind us to-day in the work of men in the laboratories of industry who have made it possible for us to have tan infinite production of any of the commodities or goods that we want. When you have a 60 horse power machine and you do not drive it properly it is not like the old machine with a man with a red flag in front of it. It gets very quickly into the ditch or into a telegraph pole. You have to look much further ahead down the road in order to keep it upon the track. That is really the situation we are in now. We have to look ahead. We have to have people who are capable of speed, who understand modern conditions, and who understand what is coming in the future. We have the opportunity with a National Government that may never occur again, of laying the foundation of a complete and radical economic reform for this great industrial country that perhaps no one single Party could ever successfully institute.

I would appeal to the House to accept the terms of my Resolution and to vote for it, because I believe it is of no use just hoping for a recovery from the present conditions. It is no good to have another boom now with a great crash in a few years' time. We have to have something new, and if we do not have economic reform planned on demo- cratic, Government-instituted foundations, laid down by the National Government, we shall most certainly and assuredly be faced sooner or later with economic disaster. This House now has the opportunity of expressing its view, and of pressing that view upon the Government, without doing any harm or damage or in any way endangering the essential stability of the National Government upon which the stability of the country depends. Your Lordships have a chance of expressing a view this afternoon which may have far-reaching effects in the future; therefore I hope when the time comes you will give some support to the Resolution I have placed upon the Paper. I beg to move.

Moved to resolve, That, since under modern scientific conditions productive capacity is unlimited, and since the existence of indigence and unemployment throughout a large portion of the population demonstrates the fact that the present monetary system is obsolete and a hindrance to the efficient production and distribution of goods, in the opinion of this House the Government should bring forward immediate proposals for the economic reforms necessary to enable the subjects of this realm to enjoy the benefits to which their present productive rapacity entitles them.—(Lord Melchett.)


My Lords, I should like to say at once that I agree with a great deal that the noble Lord has said in his most interesting speech, although I am afraid I cannot agree with all of it. I should be glad to stand by his side at the grave of gold and the gold standard, and I agree with the noble Lord in the importance which he attaches to monetary reform. I feel sure that it is not beyond the wit of man to devise a scheme by which you could establish a practically stable general level of prices. I mentioned this subject in the debate last week, and I will not pursue it further now, but I am sure that could be done. Monetary reform will not of itself solve our industrial and economic problems, as I am sure the noble Lord would agree, but it will go some way. After all, the question of money and monetary reform only deals with the exchange of wealth, not with its distribution, which is quite a different thing. What I mean by the distribution of wealth is its distribution between the various classes who take part in production, roughly the landlords, the capitalists and the working people. As the noble Lord has said, we have apparently practically solved the problem of production. Our power of producing is almost, as he says, limitless, but our methods of distributing the goods we produce have not kept pace with the improvement in our methods of production. We still distribute our wealth on the old lines. Hardly any change has been made.

What is the situation with regard to distribution? You have an enormous mass of commodities produced, you have landlords snatching and grabbing as much as they can in the form of their share of rent, you have capitalists scrambling for profits, you have the. working people struggling for weekly wages, and many of them only succeeding, when they do succeed, in procuring a pittance. You have millions of unemployed people who are willing to work and anxious to consume, but who are obliged to live on what is practically the often very meagre bounty of the community. The result of that is, as is quite natural, a very unequal distribution of wealth. A year or two ago it was estimated that. 6 per cent. of the population of this country owned half the national income and three-quarters of the national wealth. I think the figures would probably be worse now, but I am not attaching any importance to any special estimate, because it is well known to your Lordships that the largest portion of the national wealth is held in this country by a comparatively small number of people, while the great mass of the people, something between 80 and 90 per cent. of the population, are obliged to work for weekly wages, if they can get them.

That is the same practically all over the world. You have the great mass of the people living on the margin of subsistence all the time. You have a small number of people managing to obtain the ordinary necessaries of life, and the moderate and ordinary comforts of life, but the luxuries and the best things of life are reserved for a very few people indeed. The result of that is that you have a failure of demand. All this great mass of working people demand things, they all want goods and services. They would like the luxuries which are enjoyed by the more fortunate classes. The demand is there in the sense of the desire, but the effective demand—that is, desire backed by purchasing power—is not there, and is quite inadequate. We have got to increase the effective demand for this mass of goods and services which we can produce now so easily. But the present Government during the last year have worked on different lines. They have sought a remedy by trying to reduce the supply of goods and not by increasing the demand for them. If you reduce the supply of meat the result is that you throw out of work a lot of people who are engaged in producing meat and who are engaged in subsidiary industries, and you increase unemployment. At the same time you raise the price of meat to the consumer who cannot afford to buy so much, and the result is that the consumer, and the producer are both worse off and you add to unemployment. I am certain that you have got to work at the other end and try to increase the effective demand for goods.

That can only be done in my view by working towards a much greater equality of income in this country. If you had the income of the country more widespread than it is now, you would have a much more widespread demand, a more widespread effective demand, more of these goods would be made, and you would get on very much better than by checking supply. Let me give an example. Take the case of meat again. The demand for meat of a family with £10,000 a year is very much smaller than the demand for meat of twenty families with £500 a year each, very much smaller. So if you get greater equality of income you will get a much more widespread effective demand and a steadier demand. The effect of that wider and increased demand would be to raise prices and so cover the cost of production. In that way you would reach your desired end. Therefore, I say you have to work for greater equality of income, and also you must have a new system of industry. Here I entirely agree with the noble Lord, Lord Melchett. You must have a planned system of industry. That is what I and my friends on this Bench are out for all the time.

What we complain of is that the present system is chaotic. We cannot afford to leave industry in the hands of groups of private people and allow them to produce what they like, when they like, for the sake of profit. There should be production for use and not for profit. That is a phrase upon which the noble Lord poured much scorn, but I do not think it is quite so absurd as he would have us believe. It is perfectly true that people who produce for profit generally manage to produce something which is more or less useful, but that is more or less by accident. On the other hand, they not only produce a great many things which are of very little use, but things which are often harmful, just because they are profitable to produce. You have only to look through the catalogues of Christmas presents of some of the more expensive shops to see the absurd superfluities which capitalism produces for the sake of profit.


And providing employment.


Certainly, but look at the other end. The desire for profit as a motive in industry does not enable industry to produce many of the things which we want. What about houses? Why are we in need of a million extra houses? Because there is not enough profit in them. They are surely useful enough. The point of the expression "production for use and not for profit "is that under our present system profit is the primary motive and use is quite a secondary concern. We want it the other way round. We want industry carried on as a public service, carried on with the object of providing people with the goods they need as cheaply and as easily as possible. We want a new motive in industry—public service rather than private profit. I think the noble Lord would go a long way with me in that. At any rate he agrees with me in desiring a planned industry, and I feel care we must work towards that goal. We must, in any view, have an industry publicly controlled and run for the good of the community and not mainly or primarily for the benefit of a few people.

I may be reminded of Russia which has made an experiment and set on foot a new system of industry and a, new way of life generally, and I may be told that that has completely failed. It may he asked, why should we depart from our present arrangement in view of that failure? I am not going to argue now whether the experiment has failed or not, but assuming for a moment that the experiment has completely failed—which I do not admit—all I can say is that because one country has not in the course of fifteen years succeeded in establishing a perfect or completely successful new system of industry, it does not follow that no other country can succeed in doing it. The time has come when we have got to plan our industry, to set to work on new lines. I am sure that we have to be prepared for very drastic changes and that the sooner we make up our minds to that the better. Do not let us wait until it is too late or we may run the risk of the present system crashing and burying us in its ruins before we have anything to put in its place. Take the. question of machinery. The marvellous machines we have now have become almost a curse to the working people, but that ought not to be so. Properly controlled, publicly controlled and planned, and made the servant of society, machinery ought to be the greatest blessing; it ought to be the means of giving working people some of the leisure and luxuries enjoyed by other classes. I think we ought to set to work to plan our industry on altogether new lines, and the first thing we ought to do, I am sure, is to create and increase the effective demand of the people as a whole for the vast quantity of goods and services that we are now able to produce.


My Lords, I rise to support the Motion because, like the noble Lord, Lord Melchett, I believe that too much discussion and too much light cannot be thrown upon the subject which he has raised. The noble Lord has presented his case with the great vigour and clarity of language which usually characterise his utterances, and he has presented to us a picture which I am sure has carried many of us along roads which we had not thought of or perhaps had no previous conception of. With regard to the general character of his proposal, I should like to say that whilst T believe with him that we cannot stand still or go as slowly as in the past, yet, notwithstanding that 60 horse-power engines may be driving along a great many people in this country, there are at the same time a great mass of people who cannot drive in a motor car, but must walk on the footpath. Those people will perhaps not be able to see as quickly or as clearly or with such vision as the noble Lord who has presented this Motion. So far as I can judge the Motion is divided into two parts—one, that our monetary system is obsolete and requires reform; and the other, that His Majesty's Government should immediately promulgate proposals to help to relieve the economic depression which to-day weighs down this country and, indeed, the whole world. This embraces very wide issues—issues like those that have been discussed by the noble Lord who has joust at down. But I do not wish this afternoon to enter into a question of Socialism versus individualism or any issue of that nature. I rather desire to confine myself to the general trend of the Motion and the main points which in my judgment are raised in it.

What is the position in this country and in the world as we find it to-day Whilst industrial production in the United Kingdom, the United States, France and Germany increased by 6 per cent. in the years 1924–29, we find that since 1929 this industrial production has decreased at the rate of 13 per cent. per annum or a total during that period of some 37 per cent. We also find that industrial trade in those countries has sunk even more and consequently there has been widespread default among debtor countries in respect of loans on foreign account. We look further and we find that industrial unemployment in the principal industrial countries of the world has reached the alarming figure of some 25,000,000 or more and, as has been n pointed out so clearly by the noble Lord, Lord Melchett, the value of primary commodities has decreased much below the cost of production and below the value of 1913 when wages were lower and costs of production were generally lower than to-day. The result of this, as my noble friend pointed out, is that there are widespread troubles, privations and bankruptcies, and these are all reacting upon industrial manufactures and trade. This is the tragic picture, and these are the problems with which we are confronted.

In what way or ways can Great Britain contribute her share to solving these problems? That is what we are seeking to-day. The noble Lord has presented his method of doing it. He says that we must have plans prepared on the lines of other countries like Germany, Italy and even Russia. I am doubtful, to-day, whether it would be possible in this country to induce any Government in power, except perhaps a Socialist Government, to produce plans of that nature. Therefore I think we will have to proceed by somewhat slower methods if we are to induce this country, and the whole world, to come into any scheme which we may be able to propose. There are three ways, so far as I can see, of doing this thing.

In the first place, by reducing the quantities of commodities and primary produce which are being grown. Secondly, or alternatively, by increasing the level of prices. So far as the first is concerned, reducing the production of commodities and primary produce, that is a very artificial method which can be effective up to a point but cannot be of lasting or permanent, or even satisfactory good. I for one rule that out as a permanent solution of our difficulties. With regard to increasing the level of prices, as my noble friend has pointed out, no one has been able to produce a plan by which we can do that. I have listened to many speeches and I have read a great deal of literature upon that subject, and I have yet to find anyone who has proposed a satisfactory plan for increasing the level of prices. Therefore, as a general solution, I rule that out because I do not believe there is any plan, heaven-sent or otherwise, which will increase the level of prices by itself. Thirdly, there is another proposal, and that is, in my judgment, by restoring confidence in the world and by reorganising the monetary systems of the world, so as to produce once more an international currency, an international stability of exchanges and price levels, and a reasonable exchange of goods and commodities between all nations.

How is this going to he done? I think we have to seek the origin of the evils which have been described in order to find the solution. In the first place, and I give this as a present to noble Lords on the Opposition Bench, there are too many tariffs in the world arid there are too many trade barriers at the present time. These have got to be reduced, so far as possible, and in many directions, and I venture to assert to your Lordships that unless tariffs had been imposed in this country during this year, and had provided an instrument for negotiations with foreign countries who had put on these very large tariffs, there would have been no likelihood of these high tariffs being reduced to any extent. I say this because, as you know, this country is the largest importer of raw materials and foodstuffs in the world, and all the other countries seek our markets eagerly in order to sell their foodstuffs and raw materials.

The other origins of evil are the War Debts and Reparations, as has been stated by my noble friend in his speech. These must be got out of the way. Upon whether the negotiations, which we all hope will start very shortly, between this country and the United States will enable these Debts either to be cancelled or to be reduced to such an extent as to make them negligible in the general exchange of the world's mart, or not, depends in my opinion very largely the opportunity for restoring the confidence of the world and restoring the trade conditions. I venture to believe that unless the United States of America sees true on this subject, whilst we in this country will suffer and the world will suffer, she will be the worst sufferer of all. Why do I say this? It is because, as a result of these War Debts and these Reparations, these huge gold hoards have been built up in the United States and in France, and unless these War Debts are cancelled or reduced it will be quite impossible to free that gold once more in order to get it into circulation. My noble friend Lord Melchett made a statement with which I am afraid I cannot agree. He made a statement to the effect that the gold standard will die and be committed to limbo and never rise again. I think when he made that statement he overlooked the psychology of individuals and of nations. Ever since the world began the individual, going back even to the aboriginal native, has wanted some token of his currency which he could pass from hand to hand, and from the cowrie shell it has risen up until you have your gold and silver and copper and other metals.

Now, my Lords, there is a big school of thought in this country to-day which wishes to see established a managed currency. I have no doubt that my noble friend had it in his mind, when he said that the gold standard would die, that a managed currency would take its place. I do not object altogether to a managed currency up to a point, because I believe in the central banking system. I believe that the central banking system will ultimately be established in this country, as it has already been established in the United States of America, with certain faults attached to it at present. It is already established in Canada, India, France and other countries, and I believe that this central banking system will ultimately extend throughout the world in a far more perfect condition than that in which it exists to-day. Therefore I go a certain length of the road with my noble friend; but that you will get acceptance of the absolute repeal of the gold standard from all those countries who adopt the central banking system will, I believe, never happen. Indeed, I think that when we enter this World Economic Conference regarding which my noble friend has so little hope, we shall have to make up our minds that if we are going to recommend a central banking system we must have attached to it the gold standard in some form or another, for otherwise you will never get the United States or France, or perhaps Holland, Switzerland, and Belgium to agree to our proposals. I do not believe that in this country the mass of people would agree to do away with the gold standard altogether. I am quite certain that in the City of London they would not. Therefore let us above all things he practical on this question, and see what we can achieve along lines which are likely to find the greatest measure of acceptance.

I was very interested in one remark made by my noble friend with regard to the British Empire, because, like him, I believe that the British Empire, covering as it does a quarter of the globe, containing as it does vast riches and great populations, can have a. great effect in solving this question. And I would like to suggest to your Lordships that the British Empire should continue on the sterling basis until such a time as it can come to an arrangement with the countries which are on the gold standard. At the present moment the British Empire and those countries which are on the sterling basis—that is to say excluding South Africa, which is suffering very much in my opinion because of being on the gold standard—are gradually emerging from their difficulties; while those other countries, like the United States and France, are sinking lower and lower into poverty and trouble. Consequently, I believe that if we go on on the sterling basis, and look neither to the right nor to the left, ultimately the United States and France will come to us and say: "Now what are you going to do about it?" Then will be the time, and not before then, to go back to a gold standard at such a level as may be convenient to the different countries forming the sterling area. Not until we do that can I see the opportunity for the world to re-stabilise itself, either in its trade conditions or in its exchanges or in any other matter of international commerce.

There is one other point to which I wish to refer, and that is with, regard to the remarks made by my noble friend towards the end of his speech about the establishment of an Industrial Chamber of Parliament. I know perfectly well what my noble friend is searching after, and I feel very much that he is after a solution which might greatly help this country. I do not believe, however, that the solution of an Industrial Chamber of Parliament would find favour in this country, at any rate to-day. We have already two Chambers of Parliament, and two are sufficient in any democratic State that I can think of. But it is perfectly true that there are many problems which are dealt with in the House of Commons to-day. problems of industry, of commerce, and of finance, which are not there capable of treatment or of debate in the intensive way in which they should be discussed. Whilst my noble friend has been searching for that solution of a third Parliamentary Chamber I have been looking into the question from the point of view of some council, established along the lines of the Food Advisory Council, and I am going shortly to ask the noble Earl who will reply one or two questions about a Council which already exists in the State. I refer to the Economic Advisory Council, which is, I understand, a Council which advises the Cabinet.

The Economic Advisory Council, as I understand it, is a Council consisting of certain gentlemen very distinguished in commerce, banking, and finance—I confess I do not know their names but I have been told so—who sit in Whitehall Gardens and consider questions of finance and industry. I should like to ask the noble Earl how often that Advisory Council sits; secondly, does that Advisory Council consider questions only which are remitted to it by the Cabinet; and, thirdly, does it take into account all questions affecting industry and finance as touching the problems with which we are dealing to-day? I believe that the Economic Advisory Council would do very much better work if it were established as a body which held open meetings instead of sitting in camera. I believe if that body were composed of a considerably larger number of gentlemen, of the same calibre as those who already no doubt compose it, but of gentlemen familiar with every phase of commerce, finance and industry, and if they were to discuss those questions in the open, with members of the public present, disclosing their thoughts and their ideas on all these problems, that would not only be of the greatest assistance to the State but it would also help to educate public opinion in this country concerning those problems. I venture to impress upon the Government the advantages of such an arrangement, and at least I hope the noble Earl may be able to give us some of the information for which I asked in the earlier part of my remarks referring to this matter.

Before I sit down I should like to add this. Unlike my noble friend, I think perhaps there is too much control over our ordinary everyday affairs in this country. These questions like the quota and meat and bread and flour control, marketing schemes, Orders-in-Council for this and that and the other, are placing in the hands of the Government and bureaucracy such tremendous weapons that I far one cannot see to where it is leading us, or to what extent the old economic body politic is being deprived of its power of control. In order to investigate this subject I should like to see a Commission set up somewhat on the lines of the Macmillan Committee to inform this country whither we are proceeding in these matters. I am not unprogressive in any of these problems, but, as my noble friend said, I do think, with this 60 horse-power engine driving us along, that at least we should see which way we are being driven. would also ask the noble Earl whether he will bring this proposal to the notice of His Majesty's Government with the object of considering whether "It is a practical one or not.


My Lords, I think your Lordships will agree that the debate has wandered over a very wide area of subjects indeed. The noble Lord who introduced this Motion in a very interesting speech dealt broadly with economics, exchange, production and trade. I do not think he will expect me to be able to follow hint into all the matters which he lightly touched upon in a very comprehensive speech. I had hoped that the noble Lord would give me some suggestion of what he had to place before the Government for dealing with the present circumstances of the country. I was puzzled before the debate began as to what he was likely to say. I understood that he was interested in bimetallism. I thought that he might go into that subject again, or that he might take up the policy that was proposed by the London Chamber of Commerce in June (just before the Ottawa Conference) whose conclusions, I believe, he supported although, I understand, he was not present at the discussions. I doubt very much whether that Chamber would repeat the suggestions they then made which were founded almost entirely on an immediate return to the gold standard. Certainly I think my noble friend Lord Elibank would be very far indeed from supporting any suggestion of that kind. I was glad to find that he was with me at any rate in supporting the gold standard. I do not mean a return to the gold standard of currency, but to the upholding of the gold standard, because that, I know, is opposed by the noble Lord who introduced this Motion. I am afraid Lord Elibank and I will have not much chance of giving satisfaction, because in the book which the noble Lord produced a few weeks ago I find that he had very little use indeed for the Treasury, and none at all for anybody who was over 50 years of age. He told the House that those who supported the gold standard were merely respectable and venerable persons. Lord Elibank and I can take this at any rate to our credit, that we may be considered respectable.

The difficulty I find in following the noble Lord, Lord Melchett, is' that he was so extremely indefinite. He put forward the suggestion that profit was the key of the whole situation. There I entirely agree with him, in opposition, of course, to the views that were put forward by the noble Lord, Lord Sanderson. Lord Sanderson stated that a new incentive should come into the whole question of production, and that we should take as our new standard the incentive of service and not of profit. I wonder if the noble Lord would like to go to the Railway Commission and say to the railway trade unions: "In future you shall give service, but you shall not have profits, and your wages shall, therefore, be materially reduced, if, indeed, they do not disappear." You cannot have profit for one part of the population without profit for the other. Therefore if you are going to abolish profit altogether, you must abolish wages and merely give subsistence. I think there the noble Lord would find himself bitterly opposed by all the trade union leaders.

The noble Lord, Lord Melchett, is obviously right when he says that the key of the whole situation must be profit. That brings us to a further question. The noble Lord, Lord Sanderson, talked about the limitation of supply, or the controlling of supply, and he said he thought that was a wrong policy, and that the correct thing was to get an increased effective demand. How are you going to get an increased effective demand if the producer finds that those goods which he produces—take meat if the noble Lord likes—he is unable to sell at a profit, and, therefore, he has no alternative other than to cut down his expenditure to the uttermost, to reduce his labour costs and turn men out into unemployment? The key of the whole situation is, of course, profit. The moment you can produce and sell—and the words "and sell" are vital—goods at a profit you will be able to use more labour, and that labour will have a right, and I think a very good chance indeed, of increasing its wages. Then you get your real increased effective demand for goods. One cannot go into these questions of what exactly are goods for use and what are goods that are not for use. The noble Lord, Lord Sanderson, knows quite as well as I do that the moment you cease to make goods, whether they are merely for ordinary use or whether they are goods for luxury use, you also abolish employment for a great many people.

The fault I really find with the speech of the noble Lord, Lord Melchett, is that he appeared to me to regard the whole situation as if we were an island living in the midst of a vast ocean, with no other nations to consider. In some ways I wish we were, but that is not the situation. We have to face the competition of countries all over the world. The noble Lord I see shakes his head, but I think he will agree with me that at any rate a very large number of things cannot be produced in this country.


Not in the Empire.


I agree, not in the Empire, but the countries of the Empire may find themselves close to other countries. Canada, for instance, has a vast amount of trade north and south across the border, instead of east and west with Australia and the United Kingdom. People in the United States hold many shares and a good deal of control in Canadian companies. That has to be taken into account, and if the noble Lord and I had been at Ottawa—I was not and I think he was not—we should have found that that entered largely into the question. Great as is our trade within the Empire and greatly as I hope it is going to be increased, there is still a vast amount of trade between this country and foreign nations. At once you get into exchange difficulties, and I think the noble Lord will agree that if you are to get stability of prices and his keynote of profit, you must take into consideration the question of exchanges between this country and the other countries of the world.

In the book which the noble Lord recently wrote he proposed to deal with that by having two types of coinage—one for internal use within the country and the other for exchange purposes. As far as I understood it—and I have to admit that I have had very little time to study it—there was one link missing, and that was the exchange between the internal currency and the external currency. You cannot have an internal currency to deal with wages and profits and a different currency not linked to it with which to buy the raw products needed by industry, such as cotton, for instance. The noble Lord has not begun to develop that in his book. The noble Lord talked about the control of prices and he took as an instance coal. But suppose he had taken as an instance cotton or rubber? Then he would have found himself in considerable difficulty because, unless he is going to place an entire embargo on the import of these commodities into the country, he will come up against the law of supply and demand and will find that the supply is so great that the demand is unable to absoro it.

He and I agree on one thing, that we should endeavour so to organise industry that it is put on a sound basis, but when he suggests that the Government should bring forward schemes for the control of the whole industry in this country and that it should be divided into only twenty-eight or thirty groups, as I understood, great difficulties will arise. He well knows how great has been the difficulty of the Government in getting the coal industry, one single industry, to combine and to organise itself properly. I think he will agree that whether that scheme is good or bad, there is at any rate still a vast amount of criticism in regard to it and many people are very far indeed from being certain that it is the true solution. Personally, I have no doubt that it is but it may require modification. I think the noble Lord will agree that to combine the entire industries of the country into only twenty-eight or thirty groups would be the task not of weeks or of months but of years. Therefore it is not going to be an immediate solution to our problem.

The whole question of an attack on currency is of course a very old one. Since the debate took place last week my attention has been drawn to a debate which took place in your Lordships' House in 1718. I find that in that debate, on January 16, 1718, Lord North and Grey took notice of the great ferment that was in the nation, mentioning the great scarcity of silver, which he said occasioned a general stop of trade and very much distressed the poor. It sounds very much like the noble Lord's Motion to-day. A week later the matter was further discussed, and Lord Bingley represented the great prejudice that trade received from the scarcity of silver. He also said: It was a matter of wonder that a remedy had not seasonably been apply'd to so great an evil which had visibly been growing for so many months past. My ancestor. replied on behalf of the Government. He happened at that time to be Chancellor of the Exchequer and I understand that he ways the last Chancellor of the Exchequer who had the privilege of a seat in your Lordships' House.

I am sorry that my noble friends Lord Hunsdon and Lord Desborough are not here because I am going to make them a present. My ancestor said that it was in part due to luxury in regard to silver plate—I do not think that troubles us much in these days—to the vast exports of bullion and other plate to the East Indies and to the export of silver and import of gold to and from Holland, Germany and other parts. Again there is very great similarity with to-day. He wound up by saying that: no fault could be found on this score with the managers of His Majesty's Treasury; but that, on the contrary, it might to their praise he observed, that the publick credit never was so high since the Government could now borrow great sums at 3½ per cent. Again, I think, the present Government may claim something not very dissimilar. So the House resolved, on January 25, 1718, that no alteration be made in the monetary system, and the Resolution was reported and agreed to by the House on January 27. Now, my Lords, there is a lesson to follow. Three years later the South Sea Bubble burst. I am not going to suggest for one moment that conditions have not changed since 1718, and still less am I going to suggest that the noble Lord's Motion is the South Sea Bubble; but I do submit to your Lordships that history does teach us a lesson and that is that these schemes, which are very attractive in many ways, by which it is suggested you might wipe out the National Debt or set trade on its feet again or do something (as the phrase is) to get rich quick, very often inflict greater injury than that which they are designed to remedy.

The noble Viscount, Lord Elibank, asked me a series of questions about the Economic Advisory Council. He asked how often does it sit. I understand that committees and sub-committees meet frequently and that it has a small permanent staff. I am not in a position to say whether it submits the results of its conclusions to the Cabinet other than when questions are remitted to it, or whether it also considers questions of trade. I will endeavour to find out, and if I am at liberty to give the noble Viscount the information I shall be very glad to do so. At the moment I am sorry I cannot give him further information than that. He suggested also that the Committee should sit in public. Well, we all have our views about public meetings. My impression is that you get more information when experts sit in private than when they sit in public. They have to consider how far their own businesses will be affected, and how far their opinions will be trumpeted throughout the world and perhaps used for entirely different purposes than were intended. Therefore, when the Government have the opportunity of calling leaders of commerce and industry into consultation, I submit to your Lordships that they are likely to get far better information if that information is given confidentially than if those experts have to sit in public and have their speeches and opinions reported all over the world by the public Press. As regards setting up a Commission——


Before the noble Earl finishes that subject may I ask who are the members who compose this Economic Advisory Committee? What are their names and how many are there?


I am sorry to say that I do not know. I did not know that the noble Viscount was going to ask that question and I think he would agree it has little to do with the Motion on the Paper. If he wishes I will endeavour to find out. No doubt I ought to know the names, but I am sorry to say that I do not. At any rate I understand there is no secrecy about the matter. In regard to the Commission I will represent the noble Lord's views in the proper quarter, but we have had so many Commissions and Committees that I suspect that there will not be great anxiety to set up more.

Regarding the future, it is not for me to lay down what the policy of the Government should be, but your Lordships know that His Majesty's Government did discuss the monetary question at Ottawa and came to some general conclusions. They agreed, as the noble Lord said, that prices should be raised, but they did not go into that particular question further at the moment. They agreed it was sound to have short-term money at low rates, and I think your Lordships will agree that the great conversion schemes which the Government succeeded so well in carrying through have enabled short-term money to he borrowed at a much lower rate than any of us dreamed was possible even a year ago. They wish to see that the national revival of trade and industry should be put on sure foundations. In that I think your Lordships will agree they have succeeded; first, by balancing the Budget; secondly, by their Conversion Loans and the ability to borrow money at low rates; and thirdly, by tariffs.

The further proposal they have is one that I am afraid does not appeal to Lord Melchett and that is the World Economic Conference. The opinion of the Government is that nations now have their trade and monetary systems so interlocked that it is impossible for one country to stand by itself—even a great area such as the British Empire—without at any rate taking into consideration the views and situations of others. That is why it is proposed that the main nations of the world should come together to consider these problems at as early a date as possible. It is no fault of the Government that that Conference is not already sitting, but, as your Lordships know, that has been found impossible because various nations, owing to political or other reasons, were not able at the moment to join together and support the Conference. We hope very much, however, that this Conference will meet at a very early date and we have more hope in its being able to arrive at satisfactory conclusions than the noble Lord, Lord Melchett, who seems to have no hope in that direction at all. If we were as pessimistic as he we should feel that none of the various proposals put forward—and they are almost as numerous as the experts themselves—would be likely to survive. But we believe that nations are beginning to realise that you cannot put up barriers against trade without stopping the flow in both directions. While we are certainly going to develop our trade throughout the Empire we also wish to increase our trade with other parts of the world. I am afraid that I have only dealt very inadequately with a vast subject, but I have endeavoured as far as I could to answer the points which have been raised by the noble Lord.

Quite obviously the Government cannot accept the noble Lord's Motion and I think he will agree, if he conies to look at it a little more carefully, that he himself would not be prepared to say that he could unreservedly support it himself. Be starts by saying that "under modern scientific conditions productive capacity is unlimited." Unlimited can only mean without limit and therefore I imagine he would say that meat, which has been mentioned in the debate, is included and that in future cows will breed like the musk rat and sheep like the nutria. At present that is not the case even under "scientific conditions." I should be prepared to agree that production is far in excess of demand, but I think it will be agreed that it is impossible to call it unlimited. The noble Lord's Motion goes on to say that "the present monetary system is obsolete and a hindrance to the efficient production and distribution of goods." Surely most of us would say that it is not so much the present monetary system which is at fault as the way in which it is being worked. Most people would say that if it were worked as it was before the War we should all find ourselves in a very different condition.

The noble Lord rather twitted me with saying that I considered the supply of gold was adequate. I am a child in these matters, but I understood that the amount of gold in the world prior to the War was adequate. He takes the line that the increase in production is about 3 per cent. per year and that that should be followed by an increase of money of about the same amount. Unless he is going to tell us that the gold before the War was the cause of trade at that time being good, I do not see how he is going to make his argument. He asks us to say that the existence of poverty and unemployment are clue to the monetary system. I do not agree. That may come into it, and the way which the system is used undoubtedly does come into it, but there are many other causes, and I hope your Lordships do not feel inclined to say that it is purely to our present monetary system that the misery and want which exist at present, and which everyone will agree it is essential to reduce at the earliest moment, are due.

I come to the last part of the Motion in which the noble Lord calls on the Government to bring forward immediate. proposals. The noble Lord himself has given us no immediate proposals. He has produced a book in which I venture to suggest his proposals are not sufficiently complete to be put into operation even if he had the power and the control of either a Stalin or a Mussolini, both of whom apparently he is inclined to admire and think possible in this country, whereas I think the British character is rather different from that of the Italian or the Russian. When you look at this Motion I think your Lordships will feel that at any rate there are parts of it to which you cannot agree, and many of you will feel that there is none of it to which you can agree. At any rate the Government are quite unable to accept the Motion as it stands and I hope your Lordships will support me in it s rejection.


My Lords, the noble Earl, if I may say so, has made a very great attempt to follow a debate which has covered an enormous amount of ground. It is inevitable that a debate on this subject should cover a lot of ground and I tried in the Motion to confine it as far as possible so that it could be readily comprehended and dealt with. The noble Earl has made one or two criticisms of the general proposition and several detailed criticisms. He referred just now to the South Sea Bubble and to the general failure of get-rich-quick schemes. Our South Sea Bubble burst in 1929. We, are trying to recover from that, and as a matter of fact that is the whole point of my observations. South Sea Bubbles keep on bursting. Why I do not live in this world of bursting South Sea Bubbles. I live in a world where simple men go forward and are able to make things in factories, and honest workmen are clamouring at our gates to come in and make things. We know that we can make them and make them well. What has gone wrong? The truth is it has never been right. The world has never yet invented a system which enabled it to have the advantages of the great powers which science has given it. When you say it is not the monetary system at fault, it is true that there are many other things, and I have pointed out, in book and speech, that there are far more things than the merely monetary question involved. What is the purpose of money? Money has only one object and that is the facilitating of exchange between one type and another. It fails to do that now, and if you will treat money in its broad sense as the only medium we have for exchange it is clearly that which is wrong.

All that I press the Government to do, and which I think the House has a right to press it. to do, is to set about trying to invent some better system. It is true that you may be able to pick holes in my suggestions. I have not the whole economic wisdom of the world, but here in this country are the men of science, the men of finance, and the men of industry, who are supposed to be the first in the world, and surely this is the country which ought to be able to provide a great solution. We are supposed to have the wisest statesmen, and all I press the Government to do is to try and lay the foundations and to bring forward immediate proposals. These economic reforms will take at least twenty-five years to carry out. Why then wait? Why not make a start? All the time that we wait means that all our efforts and all our strivings lead in no direction.

Resolved in the negative, and Motion disagreed to, accordingly.