IMPORT DUTIES BILL.

HL Deb 29 February 1932 vol 83 cc667-767

Order of the Day for the Second Reading read.

THE SECRETARY OF STATE FOR AIR (THE MARQUESS OF LONDONDERRY)

My Lords, I have the great honour this after- noon of moving in your Lordships' House the Second Reading of the Import Duties Bill, and I feel very diffident in that on what I may call so historic an occasion the task should have fallen upon one who is so fully conscious of his shortcomings in putting before your Lordships the case which is embodied in this Bill. But I shall occupy your Lordships' attention for as short a space as I possibly can, and I impose this obligation upon myself for three reasons. One is that I know that the great majority of your Lordships have anxiously awaited this day and that, from the discussions which have occurred in another place, you are now fully familiar with the provisions of this Bill. My second reason is that there are many speakers who are anxious to take part in this debate, and the third reason is that, as your Lordships are aware, we are bound by the rules of the House to pronounce our opinions on the main provisions of this Bill but are precluded from either altering or amending it. And so I feel that your Lordships will excuse me from going into the many details of this measure.

I may say that I, personally, feel a great pleasure and a great satisfaction in being allowed to perform this duty. Like most of your Lordships, I have been engaged in this controversy for the best part of thirty years, and, whilst I have found myself in very little sympathy with what we know as free trade doctrines, I have not been altogether confident that if the out-and-out Protectionists were given a free hand, we might not find ourselves in a most difficult position. And that is why I welcome this measure. It is an experimental measure, it is true, and it is a moderate one. It is an elastic measure, and I am quite sure, from the fact that it has met with the ominous forebodings of colleagues of my own like Sir Herbert Samuel, and at the same time has received the buffetings of Lord Beaverbrook, that this is a measure which is probably in accordance with the wishes and desires of the great majority of the people of this country.

I believe that I shall be followed in this debate by my noble friend who sits beside me on this Bench. I mean Viscount Snowden, and I much regret that we do not see eye to eye with each other on this policy. It is true it is not the first time on which the noble Viscount and myself have found ourselves in disagreement, but it is also very obvious that, but for this very important measure and this very important policy, there is nothing at this moment which divides us far the purpose of carrying out the great objects for which we have come together. The noble Viscount will, I have no doubt, develop the case for Free Trade, which, unfortunately, at the present moment is a policy of free imports; and whilst I for one am fully in sympathy with the great ideal which he holds in front of us, still I feel somehow that in this practical world it is incumbent on us at this juncture by the measure which I am placing before your Lordships to put ourselves in a far more powerful and influential position than that which we occupy at the present moment.

Noble Lords opposite will approach this measure from a different angle. I have no doubt that they will fully carry out the main object of an Opposition, which is to oppose; but I think your Lordships will realise that when they represent, as they do, the Trades Union Congress they are certainly Protectionists in spirit, and I shall be interested to hear the arguments which they will put forward in opposition to this Bill. I have very little doubt that we shall be told that we have received no mandate, and they will add that a measure of this description requires a much fuller investigation than, they will affirm, this has received. This measure and this policy have been investigated for years past, and if anybody will only turn to the Returns which we have the opportunity of seeing we shall find that something must be done in this direction, or else we shall find this country languishing and, if we wait for the ideal of universal free trade, abdicating from the place which it now occupies among the nations of the world.

Noble Lords opposite appear to me, as far as I am able to judge, to be entirely oblivious of the situation in which we found ourselves last July. We were faced with a crisis which equalled in magnitude any crisis with which this country has been faced before. Notwithstanding the warnings of the noble Viscount who sits behind me, we continued a career of extravagant expenditure; until we found ourselves in a situation in which we were confronted with grave financial disaster. We met that crisis in a characteristically British manner. A National Government was formed and the Budget was balanced—a great sacrifice for the people of this country. Now we are in process of correcting the adverse balance of trade. Noble Lords opposite no doubt will endeavour to belittle that crisis. They will have this advantage, that, by reason of the fact that it was well handled, the catastrophe did not eventuate. But I am sure that the great majority of the people of this country are fully aware that had not the Government taken the steps which it did take we should have found ourselves in a very different position from that in which we find ourselves to-day. When I say that we shall be assailed with the accusation that we have no mandate, I venture to suggest that every observation, we can make of the electorate and the House of Commons shows us very clearly that the great majority of the nation are anxiously waiting for a measure of this description, and that they are not prepared to accept any excuse for delay. I am sure that we should be wanting in our duty if we did not go forward with the measure which I venture to put before your Lordships this afternoon.

The passage of Bills Bill into law this evening furnishes us with one further instance of a great historical truth; that is, that we of all nations have made greater changes owing to the genius of our people for administration than any other nation in the world. We have brought into being new policies which would have created revolutions in other countries. We have done so because the country has arrived, slowly it may be, at a decision, and when it has arrived at a decision it has carried into effect those great policies which in the past and the present day have maintained us in the van of progress.

The Bill itself contains provisions with which, as I have said, your Lordships are familiar. The first is a Revenue Tariff of 10 per cent, ad valorem Customs Duty with certain exemptions. The second sets up an Advisory Committee to give advice and assistance in connection with the discharge by the Treasury of their functions under the Act. Thirdly, the Committee may recommend additional Customs Duties as exclusion duties on articles of luxury or as duties to protect the home market. Fourthly, the Bill includes Preference to the Dominions and the Colonies. Those are the main provisions which I put before your Lordships this afternoon and, with your Lordships' permission, I will deal briefly with the history which has brought us to the point at which we now find ourselves.

In the early part of the last century, we were a protected country and achieved a position which was the foremost amongst the nations of the world. We were in the fortunate position then of never having suffered from the ravages of an invasion. Therefore, we began the race in the competition for the world's markets with a great preponderating influence in our favour. We were the pioneers in scientific development and were in the fortunate position of owning a large and powerful mercantile marine. It was then obvious that in return for food and raw materials coming into this country free we should supply the world with all those manufactured articles which at that time, owing to the difficulties in which foreign countries had been placed for a considerable time, they naturally desired. Free Trade effected great changes in this country. It turned us, for one thing, into a creditor nation. Your Lordships will agree, I think, that a creditor nation is in a better position to use the system of Free Trade or to make its influence felt in lowering tariffs than any other nation. In my judgment it is a misfortune at this moment that America, in the position in which she finds herself, has not used her influence in the direction of lowering tariffs throughout the world, which, after all, is one of the main objects we have in view.

To return to the brief survey of history which I am endeavouring to make to your Lordships, we found ourselves, owing to these factors, in a position of supreme importance, but as the last century grew to its close the situation changed. We found that other countries under a system of Protection were beginning to develop their own markets. Whilst our figures of imports and exports naturally expanded, we found that other countries were gradually catching us up in the race and that their figures of exports were expanding in greater proportion than ours. We gradually began to realise that our own home market was being affected by the possibility of foreign countries selling their wares in our market at prices which were lower than it was possible for our manufacturers to supply the needs of this country. That was due to more than one reason. One reason, and perhaps the main reason, was that the standard of living for foreign countries was lower than our own, and wages which foreign operatives received were lower than the wages which we were determined to pay in this country. Foreign countries had an additional advantage. By reason of our market being free to them they had the possibility of dealing with a large production, which in modern days is developing into what is called "mass production," and we know quite well that a large production means cheap production. As a result we have found that our own operatives in this country are suffering from grievous unemployment, to a very large extent by reason of the fact that the industries which they could operate to their own advantage and also for the welfare of this country have been taken from them, and are being taken from them, by industries which are being developed all over the world.

I am certainly not laying down the proposition that if we change our policy as we are changing it under this Bill we shall find ourselves at once in a prosperous condition, but I am quite sure, and I think your Lordships will agree with me, that the fact that we have something like 3,000,000 unemployed in this country is something which it is necessary for us to diminish as quickly as we possibly can. We know quite well the demoralising influence of unemployment. We know that when boys leave school they join the ranks of the unemployed, and we know that this has an effect throughout the country which we cannot look upon with equanimity. Therefore, it seems that instead of paying these vast sums which we are paying at present on social schemes, with which we all agree, it is far better that the operatives in this country should be occupied in healthy labour, and in furnishing for the home market those requirements which are necessary for their well-being. That is one feature of the great policy that I am venturing to put before you this afternoon.

I think your Lordships will agree, too, that in another respect the Bill places us in a totally different position from the position which we have occupied throughout the last century. Foreign nations have been able to disregard us in any negotiations which we were capable of putting forward. They have been able to look on our home market as a preserve for their own wares, and we have never been able, to discuss with them the possibility of their lowering their tariffs in return for something which we might give them. Now we find ourselves in a totally different position. Instead of approaching the nations of the world as a suppliant we come before them now its a powerful negotiator, and I am quite sure that by adopting that position we shall find that the policy which we all have in our minds at this moment of doing our utmost to lower tariffs will be furthered to a very large extent. I go so far as to say that the power which exists in this country for the, control of international affairs is so great, that if we adopt a policy which places us in a strong negotiating commercial position we shall find that all other countries will reconsider the policy which they have adopted up to the present time; and I do feel that in the desire which we have of seeing tariffs lowered all over the world Great Britain will be a great factor in bringing that policy to a successful issue.

The other provision to which I would venture to make reference is the question of Preference which is embodied in this Bill. I know that this policy is thoroughly in accordance with the sentiment of this country. We have been in a position of being unable to respond to the appeals and also to the Preferences which our Dominions have vouchsafed to us in years past. Now we can enter the Conference at Ottawa with confidence and with hope, and I am quite sure that by the negotiations which will take place there we shall find that the bonds of Empire, which are strong now in relation to sentiment, will be strengthened further by the great business connections that we shall be able to evolve by the policy we are adopting. Let us not underrate the material advantages which we can also derive. We know quite well that in the British Empire there exists wealth of all descriptions in enormous, almost limitless abundance. We know that our Colonies and our Dominions are expanding markets, and we feel that if we can come to some definite arrangement with the British Empire we shall organise trade on lines for the mutual benefit of the Mother Country and the Dominions. We may, it is quite true, have to adopt a new orientation of policy, which is certainly put forward in some quarters—that is, if the world decides on dividing itself into self-contained units we shall occupy a more powerful and a more influential position if we can speak to the world with the voice of the British Empire.

My mind at this moment is not running altogether along those lines. I am thinking the policy which we want to adopt is the further policy to free trade within the British Empire, an ideal which we all have in our minds, but which we feel is not at those moment one for practical politics. One does venture to hope, however, that by reason of those scientific inventions which have annihilated space and have brought the countries of the world into a proximity of communication which none of us quite a short time ago ever contemplated, we shall be able to develop real co-operation amongst all the nations of the world. We know that this desire exists in all parts of the world. We see it in the activities of the League of Nations. We see it in the Disarmament. Conference which is now taking place at Geneva, and I am quite sure that if we can develop this understanding between our Dominions and our Colonies on the lines of co-operation, we shall be able to extend that policy throughout the world. I feel that your Lordships will agree with me when I say that if we can extend that policy we shall find that we have made a long step in the direction of bringing about the lowering of tariffs, which I think is one of the great objects we have in view at the present moment.

I had not intended to trespass even for so long on your Lordships' indulgence, but a measure of this kind, so important, and containing powers which we fee! can have so far-reaching an effect from the national and also from the international point of view, cannot properly be commended to your Lordships in a few perfunctory phrases. As one who has always been in conflict with what I may call the bleak, antiquated and impotent theories of one-sided Free Trade and, at the same time, has feared the isolating tendencies of what I may call out-and-out Protection, I welcome this measure which organises our commercial activities on scientific lines and constitutes, in my judgment, a powerful lever towards, as I have said, the lowering of tariffs throughout the world. I beg to move.

Moved, That the Bill be now read 2^a.—(The Marquess of Londonderry.)

LORD MARLEY

My Lords, the noble Marquess who moved the Second Heading of this measure and commended it to your Lordships did so with his customary moderation and sincerity. He gave us an historical survey of conditions under Protection in the early part of the last century. He omitted to include in his historical survey the conditions of the people under Protection in those days—the women and children working in coal mines for 12, 14, 16 and 18 hours a day, the children working in factories, the intolerable conditions under which workers suffered in those days. It was to break those conditions that they insisted on the removal of the tariffs of those days and the adoption of a system of Free Trade. His speech consisted of a series of assertions of factors in our national prosperity that we would all like to see, but he gave no argument proving that the Bill which is now before your Lordships' House will, in fact, help to attain any of those desirable ends.

The noble Marquess said that this was a day which had been looked forward to by many members of your Lordships' House for thirty years. It is in fact the culminating point of protectionist policy—a policy which has dominated the Tory Party for thirty years, a policy which has paralysed their thoughts and sterilised their ideas for something like thirty years. I believe that the future of the Tory Party is at stake with the success or failure of the measure now before your Lordships' House. One of the newspapers which does the thinking for the Tory Party, in a leading article to-day said: At 12 midnight Great Britain ceases to be the traditional easy dump for foreign produce and merchandise. Midnight is zero hour when the advance to prosperity under Protection begins. That is a big claim. I notice that the noble Marquess made no such claim him- self. Nevertheless, that is the sincere belief of thousands of supporters of the Conservative Party—that prosperity will begin directly tariffs are imposed. This newspaper went on to say: All controversy should then cease, and we can sit back and wait for prosperity. If in fact the tariff system fails, the only choice before this country will be the adoption of measures such as are being tried out in Russia at the present moment.

It is because we believe that by the national planning of our industries alone can we secure prosperity that we are opposing the obsolete remedy which is now before your Lordships' House. The opposition of the Labour Party is not doctrinaire. Tariffs are a matter of expediency. We do not worship the god of Free Trade, but we have seen no evidence in any part of the world of the success of the protectionist policy which is now being adopted by this country. The Lord Privy Seal, the noble Viscount, Lord Snowden, said recently that he would rather entrust Free Trade to Sir Henry Page Croft than to the Labour Party. That may be his opinion. I take it as a compliment to the progressive thought of the Labour Party that we are able to cast ourselves free from the shackles of Free Trade which have bound him for many years. I take it also as a reminder of the paralysing effect which he himself has had on the Labour Party for many years by his laissez faire policy.

Tariffs have nowhere in the world been successful in overcoming the economic evils to which the noble Marquess has referred. He told us that it was desirable to diminish unemployment in this country and that this measure would help to carry us to that end. In France, a protectionist country, unemployment stands at a figure of something over 3,000,000. In Germany, a highly protectionist country, unemployment stands to-day at 6,127,000. In the United States of America, a protectionist country, unemployment stands, we are told, at between 12,000,000 and 13,500,000 persons, representing in men, women and children 50,000,000 of the inhabitants of the United States. This is the magnificent policy which is going to cure unemployment in Great Britain, this policy which has caused an increase in unemployment in the countries which have adopted it and used it in past years. Prosperity is to be brought about by a programme of Protection!

My Lords, the Government do not seem to know their own publications. Have members of the Government considered the Report of the Basle Committee on the economic position of Germany? That Report tells us that: The sharp reduction in the purchasing power of large masses of consumers has involved in the last two years the reduction or complete disappearance of industrial profits, serious unemployment and an uninterrupted slump in Stock Exchange securities. And this Basle Committee's Report goes on to say: Finally, to this monetary crisis is now being added a tariff crisis, each country seeking to defend its diminished production against foreign imports by a further increase in import duties and other forms of trade restrictions, which in turn result in the still further shrinking of international trade. This, then, is the policy of the Government which is to bring prosperity to the world!

The noble Marquess mentioned the standard of living in various countries. Is it a thing to be ashamed of that we have a higher standard of living than other countries? The standard of living, according to the Macmillan Committee, is in Great Britain 100, in Holland 87, in protectionist Germany 77, in protectionist France 58, in protectionist Italy 43. Is this what the Government desires—to bring the people of this country to a lowered standard of living. Yet we see that in country after country which has Protection the standard of life is lower than in Great Britain which has avoided Protection. The noble Marquess, Lord Londonderry, mentioned that this would help us in our Budget deficit. Need I remind the House that protectionist France had this year a Budget deficit calculated at some £80,000,000, and that in the United States of America we are told by the new United States Ambassador to Great Britain that the Budget deficit was £186,000,000?

THE MARQUEES OF LONDONDERRY

I am sorry to interrupt the noble Lord, but he has made two mis-statements. One is in relation to the standard of living. I never said anything of the sort. Neither did I say anything about the Budget deficit. I do not want to interrupt, but if the noble Lord goes on misrepresenting me I shall have to do so.

LORD MARLEY

The noble Marquess is wrong in saying I misrepresented him. He did mention the Budget and the standard of living of our people.

The MARQUEES OF LONDONDERRY

I am sorry to waste the time of the House. I did mention that we were undersold by other countries that had not the same standard of living as our own, but that is quite a different proposition.

LORD MARLEY

That is exactly what I was saying. The noble Marquess pointed out that we had a higher standard than the standard of other countries. Coming back to the Budget deficit, which the noble Marquess mentioned, possibly in the course of his historical survey, I merely pointed out that in protectionist countries Budget deficits are not unknown and I reminded the House that according to the new United States Ambassador to Great Britain the Budget deficit in that country for last year amounted to £186,000,000. For this year that deficit has risen to £247,000,000—pounds not dollars—and next year it is estimated that the Budget deficit will be £292,000,000. Surely, we can learn some lesson from a country of the wealth of the United States of America, instead of blindly following a policy which has been the programme of the Conservative Party for so many years and bringing it into effect at a time when its obsolescence must surely be obvious to all those who consider the matter impartially.

The noble Marquess suggested as the main reason for this proposal the readjustment of our balance of trade. I was reading a few days ago the report of a speech by one of the best known economists in Great Britain who was speaking at Oxford. He said: The long-ago exploded superstition that the balance of trade must be watched over and kept right by Parliament is only to be ranked with the once equally widespread belief that witchcraft must be smelt out and witches burned at the stake. It is an exploded belief, because economists generally agree that the balance of trade must be automatic—automatically balancing itself by changes in the price level in the different countries. The balance of trade, as noble Lords know, consists of the visible balance between imports and exports, a balance which has always been adverse to this country and for many years has stood in the neighbourhood of some £300,000,000 to £450,000,000. That adversity is paid for by the invisible exports of this country, our shipping, our oversea investments, short interest, commissions, and other items.

The Chancellor of the Exchequer, speaking in another place, pointed out that almost the whole of what Viscount Snowden calls the alleged adverse balance of trade was in the invisible exports, and he went on to say that unfortunately these were the least possible for the Government to influence because shipping and foreign investments must depend on world trade. How, then, was this measure to assist in dealing with an alleged adverse balance of trade? Import duties, of course, would injure both of these items. They were bound, in so far as they prevented trade, to injure our shipping and, in so far as they affected the prosperity of other nations, to injure our investments abroad. Our total imports from abroad are three from foreign sources to one from Empire sources. More than 70 per cent. of our imports come from foreign countries. In any case these calculations of the balance of trade or balance of payments are based on inaccurate and unreliable figures. They have been subject in past years to immense changes in the calculations made by the Board of Trade and other sources. Even visible items have been subject to errors of £20,000,000 and £30,000,000 and £40,000,000 in various years. The invisible items in the last five years have been calculated and recalculated by the Board of Trade and have been proved to provide errors in the final balance amounting to as much as 50 per cent. and 60 per cent. of the total balance.

I submit that to found a great change in the policy of this country on figures as unreliable and inaccurate as are the figures of the balance of trade is unwise in the present changing state of the world. The Macmillan Report, dealing with this aspect of the case, pointed out that the Board of Trade figures were inaccurate and should be placed on a more exact basis. It says the figures have been subject in recent years to frequent and large revisions after publication, and that it is evident there is so much guess work in them as to render them liable to an unduly wide margin of inevitable error. Yet on these misleading figures the Government are basing their whole policy for dealing with the balance of trade by means of Protection. We are told that this remarkable measure is to prevent the depreciation of the pound. Some of your Lordships were here a few weeks ago when we had a debate on the bank rate and we were told that the reason for the bank rate was to attract foreign capital and to check the withdrawal of foreign short-term balances. Those same words were used by the Chancellor of the Exchequer in another place when introducing this measure; yet within ten days of the introduction of the measure we find the bank rate being lowered in spite of what we were told was the necessity for a high bank rate a few weeks ago in this House. The Macmillan Committee pointed out that a lowering bank rate affects adversely the balance of trade, yet here we have the Government on the one hand trying to cure an alleged adverse balance of trade by a protectionist policy, and on the other hand approving of the lowering of the bank rate which adversely affects the balance of trade. I hope that the Government's sponsors of this measure will explain that apparent discrepancy in their policy.

The Chancellor of the Exchequer referred to the optimistic statements of all the great banks. In this House there are fifty Peers who are directors of great banks. Every one of those banks within the last few weeks has written or spoken against tariffs. I have in front of me statements by Lloyds, Westminster, Barclays, National Provincial, Midland and the Canadian Bank of Commerce, all of which have made statements along those lines. The Westminster Bank said: "Tariffs cause adverse balances and bring world trade to a standstill." The National Provincial said: "It is hard to increase exports with high tariffs." And so they go on, bank after bank.

VISCOUNT ELIBANK

Will the noble Lord say who it is is making those statements?

LORD MARLEY

Some of the statements are made by the chairmen of the banks, and some appear in the monthly publications which those banks isssue, usually under the title of "Review."

VISCOUNT ELIBANK

Does the noble Lord not know that the banks issuing those statements usually say that they are not responsible for all that is published in those publications?

LORD MARLEY

Some do, and some do not, and I am quoting from the ones which are not so headed. Then the noble Marquess made a great deal of tariffs as a bargaining weapon, but when impartial examination has been applied to the possibility of using tariffs as a bargaining weapon it has been inevitably found that the result of the bargain is to cause higher and not lower tariffs. The International Economic Conference, which met at Geneva in 1927, in its final resolution expressly included the fact that they found that tariffs as a weapon had often caused tariffs to be raised even higher in the opposing countries, and we must not forget that these tariffs promote a retaliatory instinct, We have had an example of that in the last few days in the case of the British Actors' Equity Association, which has approached the Government and asked them to remove the ban upon foreign artists coming here, because they fear that foreign countries will impose a ban upon them, to the mutual loss of both this country and other countries. That is one example of the retaliation which will inevitably occur in the relationships between this country and other countries who are met with our tariff barriers.

We were told by the Chancellor of the Exchequer that these tariffs were to help the cause of efficiency in industry. Surely the opposite is the case. Surely an industry is able, after a tariff, to settle down in comfort to use the protection of the tariff to allow it to get increased profits without reorganisation and additional work. I have here a letter, dated February 16, from a famous firm of stationers and notebook makers, and they say, writing to one of their correspondents: In view of the imminent introduction of a general tariff on all imported goods, we fear that the cost of certain of the materials used in the manufacture of our diaries will inevitably increase, not so much— this is the important point— because any of the materials we use in our diaries are of foreign origin, but because English suppliers will be able to increase their prices and still be competitive with foreign suppliers. There is the efficiency that we get from a measure of tariffs!

Tariffs in the same way tend to bring about dishonesty in the presentation of evidence. A famous case occurred some years ago in bringing before the Safeguarding Inquiry Committee the case of certain American razor blades. The Committee of the Board of Trade was enquiring into those imports and Mr. Charlton, the works manager of Darwin's, Ltd., stated that the total annual imports of one type of American blades if spread out would cover England eight times over. That was submitted to pitiless examination by Sir William Pope, one of the senior mathematicians of Cambridge, and he pointed out that that calculation turned into actual blades meant that 800,000,000 tons reached our shore annually, and that each man, woman and child in this country used twenty million blades, weighing between nineteen and twenty tons a year, and that each inhabitant spent over £150,000 a year on safety razor blades. He said that he did not want to interfere with the innocent amusements of British people who used these blades, but, notwithstanding, it required explanation. The explanation, of course, was that the figures given before the Committee were utterly inaccurate and dishonest; and that is the temptation which tariffs must provide. Even in the House of Commons, in dealing with the Free List, we had wrangling and quarrelling as to what was to be included in the Free List, and I have here a Report of which the whole of one page was taken up in the consideration of whether, in addition to goat's hair, other animals' hair, horses' hair and human hair, should be included. It is logrolling and dishonesty following in the wake of this protectionist policy, as has occurred in other countries.

The real reason for this measure has been kept in the background by the Government. The real reason is the revenue to be derived therefrom. It is calculated at some £30,000,000, in so far as the measure fails to exclude imports. It is; a measure which will transfer to the backs of all the people, the cost of the duties paid, in order that they may be used to reduce the Income Tax of the better-off section of the people. Every man, woman and child will have to pay a sum of 13s. a year in order that £13 a year may be remitted in taxation on the better-off portion of the community. Any impartial examination of tariffs surely must bring us to an understanding that they are not a perfect weapon with which to deal with the problems facing the country. They have been examined by the International Chamber of Commerce, and not approved. They have been examined by conference after conference, and not approved. Tariffs are the nationalist policy, which results in misunderstandings and disagreements between nation and nation. The Prime Minister himself in his speech at the Guildhall spoke of the complete breakdown of the doctrine of national economic self-sufficiency, and yet this is a step towards the adoption of that doctrine. The most rev. Primate, speaking at St. Paul's Cathedral, warned us of the disease of a selfish and self-seeking nationalism. Mr. Runciman himself has talked about "nationalism run mad," and has pointed out that those countries which were determined not to import would find it increasingly difficult to do any exporting. The League of Nations has repeatedly declared against a tariff policy as a measure of international peace. Surely these arguments are worth consideration when such a step is being taken?

What was needed was a mutual discussion with other foreign countries as to our trade relations with them, a discussion which should have taken place through the League of Nations—not tariffs before discussion, but arrangements with other nations whereby each might benefit from an increase in the volume of international trade. The planning of industry is the only way in which our difficulties can be dealt with. The planning of industry is not a part of tariff policy: it is the negation of tariff policy; it is a measure for preventing industry between nation and nation. Hence, because we see that tariffs have failed in other countries, because we believe that the reasons for the change are inadequate and unreliable, because we have seen harmful effects at home and harmful effects abroad, we condemn the measure of tariffs, and we shall oppose its passage in this House.

The LORD PRIVY SEAL (VISCOUNT SNOWDEN)

My Lords, the noble Lord who has just sat down has given a somewhat comprehensive and effective criticism of the Bill which is now before your Lordships, and it has been none the less effective because it comes from one who professes an indifference either to Protection or Free Trade. I shall have, in the course of my observations, to touch on many of the points which have been dealt with by the noble Lord. In the time at my disposal it will not be possible to do more than touch upon a few of the patent fallacies, the unfounded claims, and the contradictory assumptions upon which this measure is based. This is the most important measure dealing with trade and commerce which has been before Parliament for nearly a century. The measure is revolutionary in its character. It proposes to reverse the fiscal policy under which the trade and commerce of this country have been conducted for the last 85 years. I have described the measure as revolutionary and I am sure that your Lordships will agree that a step so fateful ought not to be taken unless we are convinced that our free trade policy no longer serves the best interest of trade and industry, and unless we have every assurance that the new policy is better calculated to obtain those ends.

We have always had our Jeremiahs predicting the impending doom of British trade. About thirty years ago the late Mr. Joseph Chamberlain based his tariff campaign upon the allegation that our industries were dead or dying. But our industries refused to die in order to fulfil Mr. Chamberlain's prophecy; and twenty-seven years later our export trade in manufactured articles had risen by more than 100 per cent. Now, fortunately, we are able to test the alleged failure of Free Trade and the claims made in this Bill by hard facts and practical experience. Under Free Trade our exports have risen tenfold. The wealth of the country has increased seven times. The social condition of the people has improved immeasurably. As has been pointed out, wages are double the average of the wages in the protected countries on the Continent. We have social services—incomparable social services—costing the country something like £300,000,000 a year. And this marvellous advance in trade and commerce and in social progress under Free Trade has been achieved under great natural dis- advantages. We have to import for manufacturing purposes the greater part of our raw materials. We bring them from the uttermost ends of the earth, work them up into the finished article, and find a market in foreign countries, surmounting their high tariff walls. We have in England the densest population in the world to support. Now, these are facts in regard to the service which has been rendered during the last eighty-five years to the trade of this country by our Free Trade policy.

It is true that during the last two years our trade, in common with that of all the other countries of the world but in a much lesser degree, has suffered severely from world economic condition. Mr. Runciman, speaking a few days ago, said that we have been able to keep up at a surprising level our trade while other countries have been growing poorer and poorer. Under Free Trade we have been able to maintain our trade at a surprisingly high level while protectionist countries have been growing poorer and poorer. If at this time protectionist countries were weathering the blast more successfully, if while we were depressed they were flourishing, then I admit there would be a case for a review of our fiscal system. But that is not the case. Facts and figures have been given by the noble Lord opposite to prove the very contrary. Mr. Runciman, to whom I believe the inspiration of this measure may be largely attributed—Mr. Runciman, I repeat, says they are growing poorer and poorer. I submit that the first thing that the supporters of this change haves to prove is this. Is Protection serving the interests of protected countries better than Free Trade, is serving the commercial interests of this country? And there can be only one answer given to that question by hard and irrefutable facts.

It is claimed that this Bill will give greater employment to our people, that it will secure the home market and that it will do one or two other things. I want to test these claims. Will it increase employment? The noble Lord who preceded me gave the figures in regard to unemployment in the principal protected countries of the world. In Germany there are more than 6,000,000, and in the United States certainly not less than 12,000,000. Up to quite recently Protectionists pointed to France as a bright and shining light in the protectionist firmament; but we hear little of France to-day. France for some time succeeded fairly well in hiding the facts of her internal economic condition, but they are known to-day, and unemployment in France to-day is certainly not less than it is in this country. Therefore, by that test the first claim made by the Protectionists falls. If Protection is going to increase employment in this country we have a right to ask why it has not done that in protected countries.

The second claim is that it will expand our export trade. Last year our export trade fell by £181,000,000. The figures published last week by the Department of Commerce of the United States revealed the fact that in that year the export trade of the United States fell by £380,000,000, more than double the figure of the fall in this country. About ten days ago this information was circulated through the Press: The latest figures of world trade show that the total volume has fallen very sharply since October. In the last three months of 1931, while British exports were more or less stationary those of the United States, France, Germany and Switzerland fell abruptly. During this period British exports decreased by less than 1 per cent. But exports from the United States fell by 5 per cent., from Switzerland by 9½ per cent, and from France by 10 per cent. As to Germany the trade figures for December show a fall of 8 per cent, on the monthly average of the past nine months. Our exports last year per head of our population were double those of the United States of America. I ask your Lordships again, and I want an answer to the question: How is it that even in this time of unparalleled depression we are able to hold our position in the markets of the world more successfully than the great protectionist countries?

Then we are told that it will secure the home market. Last year nineteen of the principal countries of the world, excluding Great Britain, imported nearly £3,000,000,000 worth of goods from other countries, and these are all protectionist countries. Again I ask, how is it that tariffs are going to protect the home market here while tariffs have failed to protect the home market in any protectionist country in the world? As a matter of fact in normal times the United states of America imports more manufactured articles than we do. Protectionists and those who are supporting this measure must answer these facts. Will Protection do for Great Britain what it has failed to do in every protected country in the world? Why do we stand better than these protected countries? Why are we able to keep our trade now while they are growing poorer and poorer? It is criminal to gamble with the vital interests of the country by adopting a policy while staring us in the face are the facts of the disastrous failure of that policy elsewhere.

While we are waiting for a reply to these questions I will turn to the examination of one or two other features of the Bill. The noble Marquess who submitted this Bill to your Lordships' consideration referred to the question of the mandate. I do not want unduly to stress the mandate. An undertaking was given by the leaders of the National Government at the Election that they would consider the whole question of the alleged adverse balance of trade, and would submit proposals, not excluding tariffs, which they thought were necessary to deal with that matter. Mr. Chamberlain said that they would bring an unprejudiced mind free from all fetters to the restoration of our financial stability, and to frame plans for securing a favourable balance of trade. I must confess that I have seen very little of the free and unfettered mind in the examination of this problem. From the first day the House of Commons met there began a raging campaign for full Protection. The limitation of the operation of the Government's proposals for dealing with the alleged adverse balance of trade has been frankly abandoned, and this measure is now put. forward, in the words of Mr. Chamberlain, to "kill Free Trade as dead as mutton." Mr. Runciman said there is nothing permanent. Well, there is nothing permanent in this changing world, least of all, I hope, the fallacies of the Protectionists, but it is permanent in the intention of its promoters. Sir Robert Home said he would not be content to accept a 10 per cent, tariff if they had not been able to build upon it higher tariffs and more complete protection.

No case has been established for tariffs on the ground of an adverse balance of trade. May I be permitted to amplify a little the treatment of this question which was given by the noble Lord who preceded me? The usual test applied to our foreign trade to see if it is favourable—that is, if we are selling more than we buy—is to take the value of imported merchandise and exported merchandise, and to add to the exports what are called the invisible exports, as described by the noble Lord—that is, receipts from shipping, the income from foreign investments, commissions, insurance and the like. Now, if the visible and invisible exports fall short of the visible imports we are supposed to have an adverse balance, and it is assumed that we are running into debt, or that we are paying out of capital. By this method of calculation this country has always had a favourable balance of trade except last year, and the figures are not yet available.

I agree with the noble Lord that the figures of invisible exports are largely conjectural. There is no evidence whatever that we have a permanent adverse balance of trade, or even a permanent tendency in that direction. The fallacy of all this argument about an adverse balance of trade seems to arise from the assumption that trade is carried on between countries as countries. That, of course, is not the case. Trade is carried on by invididuals, and the total of a country's trade represents millions of individual transactions. Now it is quite true that if you strike an arbitrary line at a particular time you can very often get an adverse balance. That is always happening in a business concern. At seasons of the year traders, merchants and shopkeepers replenish their stocks. They buy much more heavily than they are selling, and they have an adverse balance of trade, but they do not worry about that; as a matter of fact it is a sign of the prosperity of their trade. They soon clear their stocks and the balance is reversed. A temporary adverse balance of trade rights itself by the operation of the automatic equilibrium. Where there is an adverse balance on individual accounts the individual restricts his purchases for the time being, and the balance is thus righted.

But there is one infallible barometer which shows whether there is an adverse balance of trade, and that is the exchange value of sterling. To pay for im- ports the British trader buys foreign exchange. The foreign importer must sell foreign currencies and buy sterling, and, of course, if there is more sterling on sale than foreign currencies the exchange value of sterling falls. Rut the exchange value of sterling is not falling. It has been steady for the last few months. It is showing a tendency to rise, and it is showing a tendency to rise when one might have expected, owing to temporary transactions, that it would turn the other way. The Bunk of England has been buying foreign currencies very heavily of late in order to pay the £50,000,000 Bank of England loan, and yet in spite of that sterling is improving. That one fact alone is the answer, and the conclusive answer, to those who allege an adverse balance of payments on commercial transactions. One reason is, as the newspapers have been pointing out of late, that foreign deposits are coming to London because of increased confidence abroad in the position of this country. Mr. Runciman said the other day that it is all right now, but we do not know what may happen. Well, in this changing world we never know what will happen, but we have to base our actions, not upon remote possibilities of what may happen, but upon reasonable probabilities, and not upon baseless assumptions. There is nothing wrong now. Quite the contrary. If sterling should fall then it would indicate that for the moment there was something wrong, but the automatic equilibrium would very speedily set that right.

Now let me deal with one other important point in regard to the balance of trade. If there be an adverse balance—I mean an increasing adverse balance—it is not in the visible imports and the visible exports because—and this is a most important fact—the ratio between imports and exports remains the same whatever the figures may be. It is quite true, there is no dispute upon this point, that the invisible exports—that is, the receipts from shipping, commission, insurance, overseas investments—have fallen heavily, but the only result of that is that we have so much the less to invest abroad. New having satisfied themselves that there is going to be an adverse balance of perhaps £100,000,000 this year, they propose that we should deliberately restrict imports and expand exports. The fallacy that you can reduce imports and increase exports at the same time arises from not recognising one inescapable fact, and that is that in the long run imports and exports must balance each other.

May I put a question to those who say that we can reduce imports and at the same time expand exports I That is the policy of every protectionist country in the world, and I want to put this question: If every country is aiming at reducing imports and increasing exports where is the market to be found for increased exports? I should like to have an answer to that question. The trade figures for last year show the futility of this idea that you can increase exports and reduce imports. In the last two years our imports have fallen by nearly £300,000,000. Upon the theory with which I am now dealing, the policy with which I am now dealing, that ought to have given us an enormous favourable balance. But what happened? Imports fell by that figure and exports fell by precisely the same figure. There is always this correspondence. If your Lordships will examine the figures of the last fifty years you will find that that correspondence between imports and exports has always existed. The Times put this very well in its commercial column a week or two ago, when it said that the smaller the amount of our imports the smaller must be the amount that the foreigners will have available to spend on British goods, and that any unnecessary restriction of imports was to be deprecated because it would limit exports and you would thereby reduce the total amount of international trade. I admit, my Lords, that there is one way in which you can reduce imports and expand exports. That is by sending your goods to the foreigner and declining to take any payment in return. But that is a policy which, I think, would hardly commend itself even to the most extreme Protectionist.

There is just one other point in connection with this matter with which I should like to deal in a sentence only. There is a vast amount of capital employed in this country and a great amount of labour employed in dealing with imports. If you restrict imports you render that capital useless, or you reduce its utility, you reduce employment at the docks and on our own railways, and you also reduce—which is most important—that very large invisible export which comes from shipping. If this Bill is intended to restrict the importation of goods—and that is declared in its Preamble to be its object—I want to know why Empire goods are to be admitted free. If there be a case on the ground of an adverse balance of trade for reducing imports, it ought to apply to the Empire more than to foreign countries, because during the last three years the so-called adverse balance of trade with foreign countries has been getting less but with the Empire it has been increasing. Last year it was three times more than it was three years before.

I have felt it necessary to dwell at some length upon this matter of the adverse balance of trade, though, as I have said, it has been frankly abandoned as the main reason for this measure, and I now turn to other aspects of this Bill. The Chancellor of the Exchequer described it as a measure for raising a substantial revenue and restricting imports. That is a very hoary protectionist argument. You are to stop imports from coming into the country and you are at the same time to raise a substantial revenue by taxing them. The Times calls it a Revenue Tariff, because we are told it sounds nicer and it is less likely to excite opposition. Mr. Runciman has calculated that the revenue from Import Duties will amount to about £30,000,000 a year. I am not going to anticipate the Budget, but I think I am justified in giving to your Lordships what is Mr. Runciman's idea as to the destination of this revenue. He said the drain on the direct taxpayers has gone far enough and the time has come when they ought to be relieved. That is a plain and a frank statement of the opinion of Mr. Runciman as to the destination of this £30,000,000; £30,000,000 of relief to the direct taxpayer, and an addition to the burdens of the indirect taxpayer—and the indirect taxpayer is mainly the working man.

But these duties, if they realise for the Exchequer £30,000,000, will take more than that out of the pockets of the consumers, for it is a well-known and true canon of taxation that indirect taxes take out of the pockets of the consumer more than they bring into the Exchequer of the State. Now if this revenue is going to be used as Mr. Runciman appears to assume, I say regretfully but emphatically that it will be a breach of the conditions upon which the Economy Act was passed last year. We induced a large section of the working classes to submit to heavy reductions of their wages and to make other sacrifices on the ground that there was to be equality of sacrifice, and when I imposed the extra sixpence on the Income Tax it was to carry out that pledge—as far as equality of sacrifice can be secured—and to call upon the direct taxpayers of the country, who could not be reached in any other way, by a Government measure of economy to make that equivalent sacrifice. I should be appalled to think of what the consequences may be if the direct taxpayer is first of all to be relieved of the sacrifice that he was called upon to make at that time.

Now a good deal of discussion took place in the other House as to what the effect of this tariff would be on the cost of living. Mr. Runciman, in his airy way, said that it will not raise the cost of living at all—nothing of the kind. But Mr. Chamberlain was much more cautious. He admitted that it will and that is how he justified the exemptions from the tax. He said that we must be very careful not to raise the cost of living to the danger point. My Lords, of course it will raise the cost of living. The very fact that we had all that clamour last week for additions to the list of exemptions—clamour coming mainly from the Protectionists—shows that they know quite well that these tariffs will increase the cost of the article on which the tariff is imposed.

This Bill, said Mr. Runciman, is a slimming process. That is rather an unfortunate expression, but it is very appropriate. I understand that slimming is a process of reducing weight in order to add gracefulness to the figure, but to obtain gracefulness and beauty in the figure involves a great risk that the patient may be killed by the treatment. Well, that certainly is likely to happen here. The trade of the world has been undergoing a slimming process for the last three years and what is wanted now is not a further reduction of weight, but a considerable increase in weight. Mr. Runciman tells us he is still a Free Trader and he caustically told the House of Commons a little while ago that if Protectionists wanted to carry Protection they ought to entrust it to a Free Trader with an open mind. Mr. Runciman has certainly an open mind on this controversy, but there are times when one wonders whether his support of these tariffs is not intended to show the absurdity and the hollowness of Protection. Whatever may be the reason there can be no doubt about Mr. Runciman's present enthusiasm, for he is beating his new drum with all the enthusiasm and fervour of a new convert.

The Bill proposes a general tariff of 10 per cent, on all imports, with a few exceptions. It is a beautiful little tariff, said Mr. Runciman, and it can do no harm. But this tariff is the widest in the world. Sir Robert Home told the House of Commons some days ago that in the United States of America two-thirds of the articles are admitted free. There are exemptions under this Bill, but they are only of a temporary character: certain food stuffs—wheat and maize in grain, and meat—are. exempted for the present. Well, I never could appreciate the logic and common sense of those who will permit their consciences to support a tariff, say, on bacon, oatmeal and scores of other articles of food included in this Bill, but refuse to swallow a tax on wheat grain. There is neither logic nor common-sense in that. If I were a Protectionist I should be a whole-hogger; it is the only logical position for a Protectionist to take. But these exemptions are only temporary. They are to be the subject of consideration at Ottawa. But the wheat quota, the Bill to deal with which is now before another place, is an alternative to a direct tax upon wheat and we have been told that the effect of that Bill will be to raise the price of the 4 lb. loaf by about a ½d. Bacon, we have been told, is to be dealt with in a quantitative regulation. Well, most raw materials—at any rate a large number—are to be taxed. Semi-manufactured articles, which are the raw materials for our manufacturing trades for export are to be taxed, and the effect of this must be exactly the same as a tax upon the pure raw material; it must increase the price of. the finished article, hamper our export trade, and give an advantage in the home market to the foreigner.

I feel quite unable to do justice to the spectacle presented last week of Protectionists filling the Lobbies of the House or Commons begging that articles in which they happen to be interested should be exempted from the blessings of Protection, and extreme Protectionists asking that particular articles should be exempted because there were manufacturers and traders in their constituencies who were afraid that they were going to be hardly hit by it. It is a pity that the late W. S. Gilbert is not still alive. He might have written a libretto of such a comic opera as this. The 10 per cent., of course, is only a basis upon which additional duties are to be built. A Tariff Commission is to be appointed, and I do not envy those Commissioners. From to-morrow every trade in the country will be clamouring for additional duties, and at the same time it will be opposing duties for every trade in which it is not primarily interested. As the noble Lord opposite has pointed out, there is no guarantee of improved efficiency. There is no limit to these additional duties.

I have already, in one or two sentences, dealt with the point made by the noble Marquess as to securing the home market. He made a statement which I think was rather more extreme than he intended, to the effect that our workmen were being deprived of their means of livelihood because the home market was being taken away by the foreigner. As a plain matter of fact it is not the case. We have already 80 per cent, of the home market and, as I pointed out a little while back, we have retained more of our own market than many of the protectionist countries. Both the noble Marquess who moved the Second Reading of this Bill and the noble Lord who followed dealt at some length with what is called the bargaining weapon of the tariff. I noticed that my right hon. friend Mr. J. H. Thomas, speaking on Saturday, is reported as saying that he regarded tariffs as a curse, but he supported them only because he believed they would be useful as a bargaining weapon. No belief was ever more utterly opposed to all experience than this. AH experience proves that tariffs are useless as a means of getting a reduction of tariffs. Every country except ourselves has had this tariff weapon in its hands. Has it had the effect of reducing tariffs? Quite the contrary. The whole tendency has been otherwise. Of course you can point to a few isolated instances where tariffs have been reduced, but the reason was that it was necessary to import those articles into the country, and it was not to that country's advantage that heavy import duties should be imposed.

May I be allowed to read a short sentence from the Report of the Balfour Committee dealing with this matter, because it puts the whole question in a nutshell? This argument— that is the bargaining weapon of a tariff— appears to derive little support from the Report of the Economic Conference, which, by clearly exposing the successive steps of the tariff bargaining process by which the tariffs of the principal countries of Continental Europe are normally settled, shows conclusively that it cannot in the long run lead, and that as a matter of historical fact has not led to a reduction of the general level of tariffs. The tendency is in the opposite direction and that for a very good reason. Mr. Chamberlain, speaking at Birmingham a week ago, said he could discern a disposition by foreigners to enter into a tariff bargain, but Mr. Runciman disposed of that. He said he had had his ear to the ground for some months and could discover no such rumblings—no such disposition on the part of the foreigner—and he quoted a long extract from the Board of Trade Journal showing that countries had put up tariffs and were not reducing them, and that more than twenty countries have this year increased their tariffs or imposed import restrictions. Only on Saturday the Portuguese Government announced a Decree raising their import duties by an all-round 20 per cent, and a 50 per cent, surtax on coal.

Now, Mr. Runciman said, in effect: "When I get this 10 per cent, tariff and additional tariffs I shall be able to go to foreign countries and say 'If you lower your tariffs to me I will lower mine '" Will he? Is there a Protectionist here who will allow Mr. Runciman to lower this 10 per cent, tariff? You know quite well there is not. Mr. Runciman would never be permitted to lower that tariff. He would never be permitted to lower an additional tariff by the force of the vested interests which had been created under the protection of that tariff. I have some experience of this both from the revenue aspect and from the tariff aspect. When I was in office eight years ago, I repealed the McKenna Duties, and incidentally the following year the industries concerned had the best year in their history. But that by the way. During the last three years I had not been able to repeal the McKenna Duties because I could not afford the sacrifice of revenue; and do you expect that either Mr. Runciman or any other President of the Board of Trade is going to sacrifice that revenue when it has already been hypothecated? As I said just now, the protected trades will take good care as far as they can that there shall be no reduction of these tariffs.

I do not wish to detain your Lordships any longer, because there are other members who wish to speak. I have dealt with but a few of the main objects of this measure, and I submit that no case has been made out for a departure from our present fiscal system. I submit that the present position of protectionist countries is a grave warning against our adopting such a policy, and that all the claims which are made for this measure are unjustified by experience. I will sum up in three or four sentences the case against the Bill. Its definite purpose is to restrict the volume of international trade and impose further hindrances in the way of the free flow of international commerce. It is designed to exclude foreign goods from this country and, at the same time, to obtain a larger market for our goods abroad. Our traders are to seek orders abroad by going to the foreigner and saying: "We are carrying on a great campaign in our country against the purchase of foreign goods. We are advising our people to buy only British goods. We have placed a tariff upon the goods sent from your country, but we want you to buy our goods." That, I think, is expecting a magnanimity from the foreigners that they are not likely to appreciate. By deliberately restricting imports this Bill will lessen exports. It is not required to deal with the balance of trade. It is admitted that it will increase the cost of living, and by so doing will lead to wage wars. It imposes heavy new burdens of taxation. It is useless as a bargaining weapon. And, finally, it has been passed without any mandate from the country. The House of Commons majority does not reflect the opinion of the country upon this question. Every time this issue has been submitted to the country it has been decisively and overwhelmingly rejected.

This Bill will pass. As Mr. Chamberlain said, arguments will then pass into facts, and that, my Lords, is our satisfaction in this our temporary defeat. Facts and experience will finally settle this question. Free Trade is not dead. There are far more Free Traders in the country to-day than there were three months ago. The post-bags of Members of Parliament give ample proof of that. Well, from one point of view I am not story. The generation which knew from experience the horror and starvation of Protection is gone. The new generation must learn what Protection is from its own experience and sufferings. Let the Protectionists glory in their temporary triumph and in the revival of a universally discredited policy. I do not underrate the difficulty of reversing a policy which has established, powerful vested interests. That is the reason why Protection continues in protected countries. While at the same time they realise its national disadvantages, they are powerless against protected interests. But I am confident that in this country a democratic electorate, when given the opportunity, will put national welfare before personal interests, and they will, an they have always done, when the opportunity comes give their condemnation to the proposals embodied in this measure.

VISCOUNT ELIBANK

My Lords, unlike the noble Viscount who has just sat down and the noble Lord who preceded him, I rise to bless this Bill, and not to curse it. Indeed, I welcome this Bill as a very important measure in the history of this country, and I congratulate the Government on having the courage to introduce it, and to introduce it in this form. I should like to take this opportunity to congratulate Mr. Neville Chamberlain on the part which he has played in the House of Commons in the passage of this great measure, and, if I may be permitted to do so, I should like also to say a word in the same sense in regard to the part which Mr. Walter Runciman has played.

We have just listened to a most forcible speech by the noble Viscount—a speech delivered, as is natural to him, in vigorous, expressive, and eloquent language. But it was a speech that might have been delivered many years ago be- fore the War, and is just as little applicable to the conditions to-day as it would have been applicable to the conditions before the War. The noble Viscount informed us that from the formation of this National Government there had been a raging campaign for Protection in the House of Commons and outside it. But he also stated that this measure had not received the free and unfettered consideration which was expected at the time of the General Election. I think that the reply to that is that this measure has been introduced in another place by a Cabinet majority which we now know was 17 to 4. Four members of that Cabinet—the noble Viscount, Sir Herbert Samuel, Sir Archibald Sinclair, and Sir Donald Maclean—decided in their wisdom, and, I believe, in their sincere belief, to stand outside and not to support this measure. But, after all, the mandate at the General Election that was given to this Government was to consider all these various measures of dealing with the question of unemployment and the restoration of the balance of trade, and they have decided that this is the best way of dealing with those conditions; and I believe that the country is and will be behind them in the course which they are taking.

The noble Viscount spent a very considerable time in proving that the adverse balance of trade was of no account to-day. I should like to ask the noble Viscount to cast back his memory to August of last year. At that time the noble Viscount was a member of the Socialist Government. A very serious condition arose in our finances, and we were told by the Government of the day that the chief reason for those serious conditions was the adverse balance of trade that existed at the time. We were told, moreover, that the adverse balance of trade was within the figures of from £100,000,000 to £200,000,000. As the noble Viscount, Lord Snowden, was then Chancellor of the Exchequer, I presume that he himself had provided his colleagues with those figures and that those figures were given to the country under his authority. Yet the noble Viscount comes to your Lordships' House to-day and says that this adverse balance of trade does not matter. But what happened… at that time I Any number of solutions were considered in order to put right that adverse balance of trade. The Socialist Government went so far as to consider the application of a 10 per cent. Revenue Tariff so as to put right that balance of trade. To-day in this Bill that 10 per cent. Revenue Tariff is provided. Yet the noble Viscount says there is no reason to have any fear at all with regard to the adverse balance of trade, notwithstanding the fact that this adverse balance still exists and, so far as we can judge, may exist for some time to come.

Then the noble Viscount went on to say that if this Revenue Tariff was used in any form whatsoever towards relieving the direct taxation in this country he would regard that as a breach of the Economy Act which was passed with his agreement a few months ago. I would beg to remind the noble Viscount that some nine months ago, in May of last year, before this blast fell upon the country in August, the noble Viscount in a speech in another place as Chancellor of the Exchequer—I am not sure but I believe it was when he was introducing the Budget there—informed the House that direct taxation, or rather, I think, industry, could not bear another straw of taxation; in fact if another straw were placed upon it it would break the very camel's back. What is the effect of that? Whether direct taxation be on the individual or on industry it comes to the same thing exactly. Notwithstanding that, in August or September, at the same time as the Economy Act was passed, the direct taxpayers of this country were requested, and they have patriotically responded to the request, to bear another sixpence on the Income Tax in addition to the three-quarters payment which they were asked to make in January of this year. Now the noble Viscount comes down to your Lordships' House and says, in spite of his utterances in May of last year, that if there is any reduction of direct taxation owing to this Bill it will be a breach of the Economy Act. I venture to say that the direct taxpayers of this country are so overburdened with, and so up to their necks in, taxes that unless there is some reduction and some amelioriation of their condition this country will perish and will go under altogether. It is only through a measure of the kind which is being discussed to-day that we are likely to find some amelioriation of those conditions.

The noble Viscount told us a great deal about imports and exports and gave us comparisons with his usual ability. But what we have to do is to look at the conditions in the country. We know that during the last ten years this country has been growing poorer and poorer. For ten years we have had at least 1,000,000 and now up to 2,500,000 or 3,000,000 unemployed. It commenced in the year 1921 and it is going on in 1932. What happened in foreign countries where they have that protective system which has been so decried by the noble Viscount, Lord Snowden, and the noble Lord, Lord Marley, this afternoon I In those countries this great depression did not really begin until two years ago, in 1929. We have witnessed during those ten years the filching of more and more of our home markets from us by the foreigners. Why I Because of this free trade system, which I agree has done a great deal of good for us in the past, but of which foreign countries are taking an unfair and undue advantage to-day. After all, should we blame them? They find here a market which is absolutely unprotected, a market with 40.000,000 people in a great industrial county, with considerable riches, with a large number of Colonies and an Empire overseas, waiting for them to throw their surplus goods into it and to take the work from the people of this country. This Bill will do a great deal, I believe, to help this situation.

I am one of those who have advocated Protection for a number of years, but I have not done it because I am a Protectionist. I have done it purely from a business point of view. I believe that Free Trade and Protection are terms which ought to be abolished and that we ought to look at these things from the point of view of what is good or bad for the country. Therefore I do not agree with some of my friends who say that this Bill does not go quickly enough. I believe it goes quite quickly enough. I believe it is better for the trade of this country that we should go slowly, carefully and cautiously, and feel our way in this new departure. I believe it is only in that way that we can make a success of it, and it is only in that way that we are going to carry moderate opinion with us in the country.

The noble Viscount said in the course of his remarks that this Bill would prove of no avail whatsoever as a bargaining weapon. I think we have already had one example of that. Within the past few weeks France placed a 15 per cent, surtax on coal coming from this country. I have no definite knowledge of the fact, but I believe that as a result of this Bill which is passing through your Lordships' House, France has thought better of that proposal because she has goods which she wishes to send to this country, and that 15 per cent, surtax has been taken off. I want also to give another example of what is happening us a result of this Bill. Your Lordships may know that in Central Europe, Austria, Hungary and Yugo-Slavia have been going through very difficult times indeed. I agree that all those countries have put on excessive tariffs, but they have always hoped to find a market in this country for their Surplus goods, and to-day, as a result of the tariff which is being imposed through this Bill, one Prime Minister and one ex-Prime Minister of those countries have made public statements in which they say that it is now necessary for those three countries to come together in an economic union in order to assist their own trade internally. There is the first example of the result of this Bill in lowering tariffs in other countries, because those throe countries will have to lower their tariffs in order to conic into an economic union. I suggest that will be a very great help to this country, because, when it does come to negotiating with those countries, as it will when our tariffs are put into force, we shall be able to negotiate on a very much larger scale with three countries in an economic union than we could do with three independent States of much smaller size.

Further, this Bill, framed as it is, enables the tariff to be built up upon a scientific and protective basis. There are, I know, a great many people in this country who would like to see a tariff based on all goods and all food stuffs. I have had some experience of tariffs in other countries, and I believe that is an utterly wrong way of approaching this subject; therefore I welcome with open arms the appointment of the Advisory Committee which, I am glad to say, is to come into existence to-morrow morning, in order that it may go into this question from a scientific point of view and produce a tariff which meets all the needs and conditions of the various trades and industries with which the Committee will be concerned.

There are one or two points in this Bill to which I would like to make reference. First of all I wish to refer to Clause 5, which provides for the free entry of all produce and goods from Crown Colonies and Protectorates. I welcome that clause, because at last it is going to provide the means of a really useful reciprocal Preference between this country and our Colonies, but I am a little sorry that that clause has been drawn upon such narrow terms. I would have liked to see it a little more elastic. I should have liked to see a proviso to enable certain variations to be made in those tariffs in the case of Colonies that are not able to reciprocate with this country. I know there are some people who believe that it is possible to instruct the Governments of the Crown Colonies and Dependencies and Protectorates to do this or that, to put on tariffs or to take off tariffs, just as the Colonial Office or the Secretary of State for the Colonies may desire, but that is not the ease. Those Colonies have their own conditions, their own problems of trade, their own difficulties and troubles, and there must be a certain amount of give-and-take between this country and those Colonies in all matters, including the question of tariffs. In some of those Colonies, like Ceylon, where a Government was established last year or the year before, the local people have very considerable control over questions of tariff. There are Colonies like Barbados and the Bahamas which have responsible Governments, and I feel that it would have been better if we had had some elasticity in this clause so that if, for instance, Ceylon in her wisdom did not feel she could give us the measure of reciprocal Preference which we were able to give her here, we might have some bargaining power to negotiate with that Colony.

There is the question of tea, which is on the Free List, and of sugar. Sugar affects the Crown Colonies considerably, and I should like to say one word with regard to it. I do not like, and never have liked, the subsidy to beet sugar in this country. I believe now, with this Bill, it will be possible to prepare such a scheme as will eliminate the beet subsidy and put the sugar question on a basis of tariffs altogether. Over and over again in this House some of us have advocated greater Preferences for the sugar Colonies, and I hope in the Budget that the Chancellor of the Exchequer will now be able to carry out some of those suggestions. I should like to see the tariff on foreign sugar increased, the Preference column of that tariff left as it is, and beet sugar grown free of duty in this country, or with some very small excise which would enable it to compete. In that way in a market which amounts to some 1,800,000 tons per annum, there is room for both British beet and Colonial sugar, leaving something over for foreign sugar.

There is one other clause to which I wish to refer, and that is the clause which provides grants of Preferences to the Dominions, India and Southern Rhodesia. Under that clause no duties which are levied under the Bill or regulations will be payable until the 15th November—that is, after the Ottawa Conference. I understood that under the mandate granted at the General Election the Government were to proceed to Ottawa absolutely free and unfettered by any question of home conditions, that our representatives were to be allowed to negotiate about any product, and that they were to ascertain through those negotiations whether it was possible to receive sufficient consideration, to make it worth while to put duties on certain articles in this country. I am greatly disappointed because it transpired in the course of the debates in another place that meat is to be excluded from consideration at Ottawa. I cannot think that Mr. Walter Runciman, who I understand is the chief supporter of this in the Cabinet, had in mind the Ottawa Conference when he was pledging himself in his constituency during the General Election about meat, because the two questions are on an entirely different basis. I hope that in July when the Ottawa Conference meets conditions will be such that the Government here will be able to reconsider that issue, because I venture to believe that there is no more admirable example than that afforded by meat and pig products of the possibility of negotiation on the subject of imports of food, negotiation not only with our Dominions, but with foreign countries. I agree that lamb may not be of such value in such negotiations as beef or pig products, but I do urge that the Government between now and July should, if possible, reconsider the attitude which they are at present adopting on this matter.

In the course of the debates in another place the Chancellor of the Exchequer, Mr. Neville Chamberlain, did not entirely close the door, because he said that the time might come when the conditions might be such as would enable them to deal with this question from a preferential point of view. I would like to remind your Lordships that in meat we have an article which may prove to be a very valuable bargaining counter in negotiations with the Argentine and Denmark. With the Argentine we have to-day an adverse trade balance of £41,000,000. Where does that £41,000,000 go? Most of that £41,000,000 is spent in the United States of America. With Denmark we have an adverse balance of trade of £43,000,000. Where does that go I That is spent in foreign countries. This £84,000,000 comes out of the pockets of the people of this country and goes into the pockets of the Argentine and Danish people, and they spend it in other countries. Then, on the question of meat—and I am including pig products the whole time—what about the position of our own farmers I Our farmers in this country require protection for their meat and pigs products just as they require certain help in regard to their wheat cultivation. I suggest that we should help our farmers with regard to meat and pig products in the same way as we are helping them with regard to wheat. It has been suggested that there is a scheme under consideration by which there should be a quantitative import system for pig products and also, possibly, for meat. But if you adopt such a system it will cut out the easy method of helping your farmers and of helping the Empire and of redressing your adverse balance of trade with other countries by imposing import duties.

Finally, I would like to refer to a statement made by Mr. Bennett last year. Mr. Bennett, it is true, rather bluntly said that you must look after your own people first, then after the Empire, and then after foreigners. The Secretary of State for the Dominions, Mr. Thomas, repeated that view in somewhat similar language in the House of Commons last week. I believe that it is the only reasonable and sensible way of approach to this question. We must look after our own people in this country. Then we must see what we can do for the Empire, having in view all the time possible sacrifices here and there so far as both the Empire and ourselves are concerned. Then, when we have looked after both those, we should consider our position with, regard to foreign countries. This Bill provides the basis for that policy. It is because of that that I welcome this Bill, and not only because of that, but because I believe that whilst this Bill is not the final solution or our ultimate salvation it will erect many milestones along the path to a new era of prosperity in this country and in the Empire.

EARL BUXTON

My Lords, I am professedly speaking on behalf of that section of the House with whom I always sit, but I aim afraid that I cannot claim that I necessarily represent their views because, being Liberals, we have different views on every single question and on this question we are certainly very much divided. I would like also to say that in criticising, as I propose to do very briefly, some features of this Bill I stand on this [the Opposition] side of the House for convenience, but I am as strong a supporter of the National Government as any noble Lord in this House. I was, if I may say so, delighted to hear of the agreement that had been come to by the various sections of the Cabinet. I think it would have been a fatal thing if this National Government, elected by the nation as a whole to can out certain national work, should have broken up and ceased to be national, and therefore I think that we should be very grateful to the Cabinet for the way this matter has been treated. It shows how unanimous they are and how friendly they are in regard to all other questions except this one of tariff reform.

I am speaking as a Liberal, and I am not sure whether noble Lords who before coming to this House had votes quite realise the position of Liberals in constituencies in which there were no Liberal candidates. I can assure you that the strain on them was very great indeed. At the time of the Election my daughter wrote to me saying that as a good Liberal she had gone to the poll wearing a crepe veil, her tottering feet supported by two other disconsolate Liberals, in order to vote for a Tory and a Protectionist. That was the position we took up because we were anxious to vote for the National Government. One of the conditions, on which we gave our votes was that the Government should have a completely free hand in regard to this question of tariffs and other questions which would certainly arise, but I must say that it came rather as a shock to some of us that the proposals in this Bill were introduced at such a very early stage after the time of the birth of the National Government. It gives us rather a shock that a cut-and-dried Bill of this sort should be so rapidly produced, but my three political friends in the Cabinet would not have stayed there if they had thought that there had been any breach of faith on the part of the Government as a whole, and I do not allege any such breach of faith.

Defending this Bill, Mr. Runciman said it was a measure of gentle Protection. In his first fall from virtue, I am afraid my right hon. friend has used the time-honoured argument that it was only a little one. My fear is that these duties are bound to increase. We have seen that in every country. If it is said that the 10 per cent. duty is not successful it will be argued that if it were 20 per cent. it would be all right. What makes me nervous and anxious in this matter is that the Amerys and Page Crofts and others accepted the Bill as a solution of the question and gave it enthusiastic support. I cannot believe that they would be content solely with a miserable 10 per cent., or that the whole-hoggers would be content with a side of bacon. I fear therefore that sooner or later we shall have proposals to increase these duties until they become a great burden on the country.

The Lord Privy Seal has dealt with various points and I will content myself by referring to one or two. I am speaking here not as an extreme Cobdenite. Some of my friends are perhaps almost more royalist than the King. I speak as one who believes in Free Trade, though I do not consider it altogether sacrosanct. I do not at any rate propose to use the old arguments of Free Trade against Protection. They have been used for some 80 or 90 years and I think it is about time they retired on an old-age pension. I will not touch either on the question of the Ottawa Conference and what we are going to do for the Dominions. That remains for the future. But I think it will be the case that the more we are able to come to agreement with the Dominions the greater will be the adverse balance of trade, and we shall not be really carrying out the object we have in view. In every other way I am in favour of Preference with the Colonies.

There are two good points connected with this Bill on which I should like to speak. The first is the Free List in the Schedule, which was much increased as time went on in the Committee stage of the Bill. That process was rather amusing to us Liberals. Liberals have always said that if you put a duty on an article of food or manufacture it will raise the price here, whereas the Protectionist has always said that the foreigner would pay. We have also said that one of the great evils of any Protection system is the logrolling and pressure to which it gives rise. It was amusing in the last few days to see what pressure was brought to bear in order that articles might be included in the Free List which were not there before —jewellery for Birmingham, newsprint and other matters. I am glad that this Advisory Committee is to be appointed. It will be a difficult job for those serving on it, but I am sure the Government will have, in the Chairman we have heard of and some of the other members, a good and impartial body. This Committee has a great advantage to my mind, though in a sense it takes the matter rather out of the control of Parliament. I think one advantage is that under this Advisory Committee we shall get rid of one of the evils that arises in other countries from the pressure and the log-rolling which have been brought to bear on representatives by their constituents.

The main point on which this Bill is supported is that the adverse balance of trade must be remedied. Protection has had a good many aliases—Protection, Retaliation, Fair Trade, Tariff Reform and now the Balance of Trade. In the ordinary way any person with many aliases is treated with some suspicion. The remedy proposed is the introduction of import duties. It is clear that import duties can reduce the adverse balance by preventing goods from coming in, but on the other hand, even more important to this country than the question of imports is our great export trade, and I do not see how this tariff duty can be said to improve in any way the position of exports. The President of the Board of Trade says there is no tariff which would stimulate exports. That I think is true. Not only will it not stimulate them, but it will be adverse to their increase, one of the things the Government has in mind. The main reason at present why our balance of trade is bad and our exports have fallen off is that the cost of production in this country is high. We have high wages, some of our machinery is obsolete, and competition abroad is greater than in the past. In addition there has been this tremendous fall in the price of all the articles, both of commerce and food, which are the basis of satisfactory trade. Further there has been of late in almost every protectionist country a tendency to put up all import duties. There is hardly a country that has not of late diminished its purchasing power abroad by the limitation of imports. That has hit our trade. Is it not certain that this 10 per cent. duty, the abnormal duties, and the higher duties that can be imposed, will have a specific adverse effect on our exports and aggravate the position instead of improving it?

These duties certainly will not diminish the cost of production. Indeed it is admitted that these increased duties on many manufactured articles, and on food, will undoubtedly increase the cost of production. These tariffs, by reducing the amounts which other countries will take, will reduce our exports to them and the effect of reducing our exports will affect the question of our imports as well. I would like to read to your Lordships an authority on this. It is in these terms: The problem: How are we at one and the same time to diminish our imports and to increase our exports? It is a complicated problem, and one that has to be attacked from many angles, because it is hardly possible to find a proposal which will advance one of these two objects without its having some reaction, and without its affecting the other. The effect of the sudden closing of the market of this country to one class of goods from another country may easily produce such a reduction in the purchasing power of one of our customers in another class of goods as to have serious results upon our export trade. My authority is the Chancellor of the Exchequer, and I think he has expressed in much clearer language the views which I have been endeavouring to express. It seems to me quite certain that as regards our merchandise, our visible exports, the tariff imposed on goods here must necessarily increase the cost of production; also that the imposition of the import duties will prevent many goods from coming in, and that those, of our customers who before have been able to purchase our goods may find themselves unable to do so because of our 10 per cent. tariff.

There is one other point which I think is a very vital point, and it is this. As I think Lord Snowden pointed out, there are not only these visible exports to which I have referred, of many millions a year, but also the invisible exports, which help to effect the balance of trade. There is the interest on investments, there is the shipping trade and the commission trade. All these invisible exports affect very largely the question of the balance of trade. As regards these investments, it is quite clear that the foreigner who owes us this money has to send his payment to us in gold or goods. He cannot send it in gold, because there is not enough available to go round, and he has to send it in goods. If we prevent him to a large extent by reason of the effect of the Import Duties, will he be able to pay us the interest on investments? I fear we may find that there will be default in this direction.

What, however, I am more interested in, because it is a point at which the introduction of tariffs hits the trade worse, is the question of the shipping trade. We are proud of our great mercantile navy and are doing our best to increase it, to improve our harbours and dockyards and to increase the facilities for carrying out its work effectively. This country, as world-carriers, has been far ahead of any other country in regard to its mercantile marine. Our mercantile marine has suffered much of late, due to the fall in the general volume of trade in the world. It is admitted that this measure will prevent the import of a very considerable quantity of goods from abroad. That is the object of the tariffs. That will mean, as far as shipping is concerned, that there will be no increase, but probably a diminution, in the shipping trade. Our ships will have to go out, it may be, with cargo, but will have to come back in ballast, and it will mean a considerable loss and may be the final blow at their position. What I have endeavoured to say is that the introduction of this import tariff cannot possibly assist our general exports. It may improve trade in this country in some ways, but it cannot increase our ordinary commercial exports and will undoubtedly hit severely our hidden exports, our investments, and will deal a fatal blow to our shipping trade as well. Those are points which have to be considered in determining whether we will agree to this Bill or not.

Then the Chancellor of the Exchequer said that this is a permanent scientific tariff designed to keep out foreign trade and encourage our home trade. The President of the Board of Trade supported that by saying that we shall have £30,000,000 of revenue, which can go in the reduction of taxation in some way. You cannot have it both ways. If the Bill is a success it will keep out goods and there will be no revenue. If you have a large revenue it will show that the Bill cannot have been effective, and it seems to me that that is the position which the Government have not fairly faced. If there is this revenue derived from these imports of foreign goods some consumers will no doubt get benefit from a reduction of taxation, but the whole of the country will suffer from the increased cost of manufactures and the increased cost of living.

Lord Snowden referred to the question of the cost of living, and I do not suppose that even the noble Viscount, who is going to wind up, will deny what the Chancellor of the Exchequer has already admitted, that if you impose this enormous number of duties upon various articles and food the cost of living is bound to rise. In fact the Chancellor of the Exchequer, speaking of his meat duties, said: In present circumstances, and having in particular the question of the cost or living very much in our minds, we do not consider that this is a time when it would be prudent or wise to put a tax upon the import of meat into this country. That means, in other words, that he admits that if we did put a duty on meat it would increase the cost of living in regard to that article. That has to be considered with reference to this whole matter.

One point more I would like to note, and that is this. The Chancellor of the Exchequer said that this would be a permanent scientific tariff. The President of the Board of Trade said it would be not in any sense permanent, for Parliament could at any time repeal an Act of this sort. I am afraid that the President of the Board of Trade is wrong and the Chancellor of the Exchequer is right. If this tariff is once imposed, in the conditions in which it is imposed, it will be impossible to take it off. If it were a simple 10 per cent, tariff it could no doubt be taken off at any time. But the whole object, or one of the main objects, of this 10 per cent. is to arrive at agreements, with the Dominions on the one hand and with foreign countries on the other, to give them reductions of various sorts in view of a quid pro quo. It is quite certain that, that being so, the hands of any Government will be so completely tied that they could not possibly repeal this Act in view of those bargains without a breach of honour. I think, therefore, that we must assume that this is a permanent Act, and the difficulties of repealing it would be very great indeed.

The Chancellor of the Exchequer said a day or two ago that the inter-actions and reactions of all these things—home trade, export trade, revenue, direct taxation, tariffs, and so on—are simply endless. The conclusion that he came to was that there was a balance in each case of advantages and disadvantages. In other words, it is a leap in the dark, and we do not know whether we shall land in a bog or on firm ground. As far as I am concerned, I could not vote for this Bill. On the other hand, I do not think it is worth while to vote against it, especially as it is a Money Bill, with which the House is not really concerned; and the House of Commons has so effectively expressed its views that I shall not vote against it. I hope myself that the Bill will succeed in the objects which the Government have before them—namely, the balancing of trade, the increase of revenue, the increase of industry, and the reduction of unemployment. I hope it will succeed, because undoubtedly things are in a parlous condition now, and if this Bill is to be effective at all it may be of some use to the country at large. What I feel is that, if it does not succeed, this experiment will have done a great deal of harm, and the last state of the country will be worse than the first. Therefore, though still a Free Trader I should like to see this Bill succeed rather than have the poor satisfaction later of saying "I told you so" when it has not succeeded.

We have lived in the last few months very fast and gone very far, and especially in the last few days. We have in office a Government representative of three Parties in the State, with something like 550 supporters out of a House of 615. They have produced a Budget with a deficit of £170,000,000. They have gone off the gold standard; they have also gone off the personal responsibility standard. But I do not know whether your Lordships quite realise what is happening to-day. To-night when we go to bed, my Lords, we shall go to bed as members of a free trade country; when we wake up in the morning we shall be members of a protectionist country.

LORD JOICEY

My Lords, I have listened to this debate with very great interest, and I must compliment the noble Viscount, Lord Snowden, on the very powerful speech, from his point of view, which he delivered. But I cannot help thinking that he lives very much in the past, and does not seem to realise the condition of things at the present time. I am an old Free Trader. I have been a Free Trader for 60 years, and you may rest assured that it would be a very powerful reason which would induce me to support a Bill of this kind. But I am glad to say that I can give it my cordial support. What is the present position compared with what it was? For 85 years, said the noble Viscount, we have had Free Trade, and it has been of immense service to this country. I am not going to say for a moment that we have not received very great benefits from the Free Trade system. But things have changed. We were the chief producers of all kinds of machinery in the world. Any new country that was opened up was supplied by us with machinery for its various industries, and in the old countries also many of the industries were supplied by us with machinery. The result is that they are now able to compete with us, equipped in the very best way; and, unfortunately, in many cases they can produce the very articles we used to supply them with more cheaply than we can, and export them to this country. As new countries developed we had always been the leaders, but by degrees, when other countries became equipped—many of them by our efforts and by our machinery—they were able to compete with us, and a good deal of the trade which we had has been lost to them.

I feel sure that the competition which is going to take place between those countries and ourselves will be much more severe than we have so far seen. We talk of unemployment. We have a vast amount of unemployment. Who is to say whether these unemployed are going to get employment hereafter, even when trade has improved? Every manufacturer and producer gets the best machinery he can in order to increase his production, and the result, is that men lose their jobs, and we have one man at a machine now doing the work that used to be done by two or three. What is to become of the unemployed? I think this problem is going to become a very much more serious one than many people in this country realise. It would be the greatest folly to allow the foreign producer to come and take possession of our markets, as he is doing now, and as I feel sure he will do unless we have some means of protecting ourselves. Barriers are put up against us by all countries. We have almost the only open market in the world, and, owing to other countries being able to produce in large quantities, they can produce more cheaply than we do. The result is that they take possession of our markets.

They not only put up barriers in the shape of tariffs, but now they are going in for licences. You cannot ship abroad unless you have licences to do so. Not only that, but they go so far as to say; "We are not going to allow you to send more than a certain number of things into our country." With such protection in opposition to us and considering the handicaps we are under, surely it is time for us to realise the position and take some action to protect our home market. That is the reason more than any other why I am prepared to support this Bill. I hope as time goes on it will result in giving that protection to our home market which in my judgment is absolutely necessary if we are to continue to give employment to our working men.

The expenditure we have to contend with is enormous, and I do not see how we are going to carry on our industries unless some real effort is made to cut that expenditure down. I see that the expenditure on our Debt was only £24,500,000 in 1913–14. In 1931–32 our expenditure on the War Debt is £405,988,000. The rest of the Budget in 1913–14 amounted to £145,000,000, The rest of the last Budget amounted to no less than £397,402,000. With such a handicap as that the Government ought not to continue to give grants for all kinds of things that appear to me to be unnecessary in the counties. Driving to my office in Northumberland I passed some workmen altering a bridge. They were moving it a distance of perhaps 130 or 140 yards. That was absolutely unnecessary. What is such a distance to motor traffic there? A mere nothing, I had the Chairman of the County Council lunching with me that day and I expressed that opinion and asked what the work was going to cost. He said that according to the estimates it would cost £70,000. That sort of thing is going on all over the country and some check ought to be placed upon it.

Another question is that of our food supply. It was stated by the noble Marquess that our food supply is practically provided for by about three things—the exports, the invisible exports and the services rendered by our ships. I noticed that Mr. Runciman stated the other day that the Budget last year contained no less than £100,000,000 of capital. I do not know whether that included Death Duties or not. If it did not include them he might have added another £70,000,000. Surely we cannot shut our eyes to facts that concern us so much. As a business man I am brought into contact with men of commerce and business every day, and I am bound to make a protest on their behalf and to give the Government some support in dealing with those important matters. With all this capital expenditure we have no money for the development of our industries, and I speak with some degree of confidence. In the greatest industries we have—agriculture, ship-building, the coal trade and ship owning—nobody can get capital to carry on to-day. If you apply for capital nobody will give it to you. Depend upon it, all this expenditure that is going on is forcing away from industry the very capital that is necessary if it is to be carried on. I hope this Bill will not only deal with the question of imports but will stimulate the Government to insist upon a further reduction of expenditure.

Surely, too, we ought to do something for agriculture. We can only produce about one-third of our food supply and have to buy the other two-thirds elsewhere. Owing to the expenditure to which I have referred, if our exports go down, if our invested capital abroad goes down, if the services rendered by our ships and other things go down, how shall we pay for that two-thirds of our food supply? People laugh and think it is impossible, but unless we wake up and deal with these questions we may get into much greater difficulties than any of us imagine. Therefore I think we ought to do what we can to deal with these special matters.

Surely no industry at the present time could employ more men than agriculture if some sort of protection were given to it. I think it is a duty we owe to our country to give agriculture protection in some shape or form. People are afraid of taxing food. I do not want to see the food of the people taxed, but I would much rather see food taxed than have no food at all. Something ought to be done in regard to that because the development of agriculture would enable us to employ a very large number of additional people on the land. And whatever may be the opinion of some experts I feel sure that if this country is to recover its position we shall be compelled to take measures to get men back on to the land. The towns have the power at the moment. The agricultural workers have not sufficient power to deal with the opposition they get from the towns, and I hope that the Government will have the courage to deal with that matter and make some effort to put land tenure in such a position as will enable a much greater number to be employed on the land than is possible at the present time. The Government have a free hand. Nobody can say that they have not, seeing that they came in with such an enormous majority. The Government also have the power. All they want is the courage, and I hope as time goes on we shall find that they will take courage and make such a mark in this country that their reputation will last for very many years.

LORD DARYNGTON

My Lords, the last two speeches we have listened to this evening show, I think, the very great change there has been in recent years regarding this fiscal question. The noble Lord, Lord Joicey, has always been a very keen Free Trader and one of the great leaders of industrial opinion in the North of England, and I do not think it would be possible to make a more forcible speech in favour of the solution of the problems which is proposed than the one he has made, so far as his own interests and the interests of those he has represented in the past are concerned. I should like also to refer to the speech of the noble Earl, for whom the House has great respect. He said that though he would not be prepared to vote for this measure to-night he wished it well. I sincerely hope that feeling will extend to the rest of the House, and though we are having this great controversy and debate on this Question to-night, I hope that all those who do not feel inclined at the moment to support the measure in the Lobby will realise how necessary it is to make it a success.

In the very interesting speech we had this afternoon from the noble Viscount, Lord Snowden, he spoke very strongly, as always, against Protection. I would like to mention one fact which has always been very difficult for me to understand—that is, the attitude of a man who has been the great representative of the trade union interests in this country for many years. If there ever was a principle that is protectionist it is the principle of trade unionism. It is perfectly plain that if it had not been for that protection trade unions would never have been in the great position they are to-day. He spoke also with regard to bargaining power. I do not know what noble Lords, as a whole, think with regard to that, but it seems to me that the case was made out for bargaining power by the Chancellor of the Exchequer in the other House, and recent events have shown the great necessity for obtaining that bargaining power. It has been suggested this afternoon that we might negotiate with foreign nations without it. The late Mr. William Graham, whose loss every one in this House deplores, tried to negotiate with regard to this question, without any very marked success.

Reference was made this afternoon to the opinions of bankers. I was astonished to hear the statement that was made with regard to the opinion of bankers, because in my view the vast majority of the bankers of this country are strongly protectionist; certainly they are in opposition to the present system of free imports. But I did not rise to speak about points raised in the debate. I want to make two points, and then I will sit down. One is in regard to the balance of trade. Mention was; made this afternoon of the inaccurate figures which had been given in certain directions. It was rather a surprise to me to hear that statement. I did not know we could not rely upon the figures which had been given. I do think everyone must realise that the balance of trade has made this action of the Government an absolute necessity. Noble Lords who have just spoken mentioned their views with regard to the tariff question, and said they would not vote against this measure. The noble Lord who spoke last has only changed his views recently, but I was one of those, if I may say so humbly, who had Colonial Preference in my Election Address in 1898, so I may be excused for speaking on this subject.

These are the figures I have in regard to the balance of trade. The excess of imports over exports of goods (including silver, coined and uncoined) in 1929 was £381,000,000; and in 1931 it had risen to £411,000,000. The excess of Government receipts from overseas over Government payments overseas was £24,000,000 in 1929, and in 1931, £16,000,000. The excess of British receipts from shipping ever British payments for shipping was £130,000,000 in 1929, and £80,000,000 in 1931. The excess of income from British investments overseas over interest paid in respect of overseas investments in the United Kingdom was £250,000,000 in 1929, and £165,000,000 in 1931. The excess of income from British banking services to overseas companies and persons over British payments for banking and services overseas rendered to United Kingdom companies and persons was £65,000,000 in 1929, and £30,000,000 in 1931. Lastly—I will not trouble the House with any further figures after this—the excess of receipts over payments in respect of other services was £15,000,000 in 1929 and £10,000,000 in 1931. Those figures show plainly the position of our balance of trade, and it seems to me that it is quite impossible for us to go on as we are at present.

The other point I want to mention before I sit down is in regard to the ques- tion of timber from Russia. I dare say many of your Lordships will remember the very interesting speech made by the noble Lord, Lord Ernie, upon the question of the conditions under which timber is worked in Russia under the five-year plan. They are slave conditions to a considerable extent. I want to know, if I may ask, what His Majesty's Government are going to do in regard to that matter, because it is a very serious one. Mr. Baldwin, at the Conference of Women's Organisations in the Royal Albert Hall, on May 15, 1931, said; The time has gone by when we can leave our country open and free for the dumping of goods, produced under inferior conditions, from foreign countries or as a surplus of mass production. … The sending of goods by Russia to be sold at knockout prices was not trade; it was economic war, and a war much more dangerous to our people than a war of arms. The Russian system was the antithesis of everything sacred to a free race. … and we shall protect our own people from every attempt to sap the foundations of our civilisation by economic warfare. In 1929 the trade agreement with Russia, with its most-favoured-nation clause, came into being. I want to ask His Majesty's Government under what conditions steps will be taken to deal with the solution of this problem. In conclusion I should like to say that I am delighted to think we are having the last day of discussion upon a controversy of this kind in this House for some time to come, and I have the greatest pleasure in supporting the Motion for the Second Reading of the Bill.

THE PAYMASTER-GENERAL (LORD ROCHESTER)

My Lords, in intervening in this debate to-night I have no desire to trespass unduly upon your Lordships' time, but I might be thought lacking in respect to your Lordships' House if I contented myself with giving a silent vote this evening against a first' class measure of His Majesty's Government of which I am a member. I have been long enough a member of your Lordships' House to know that candour and sincerity are always respected by your Lordships, and I am confident, therefore, that in the peculiar and delicate position in which I find myself I shall not appeal in vain for your Lordships' consideration and indulgence in the unenviable experience of speaking from the Front Bench in opposition to a piece of legislation of major importance promoted by the Government.

I confess quite frankly that I have sought long and diligently for an escape from my dilemma. I have listened to many of the debates in another place, and I have read others, and I have read much else besides, and if anyone has tried to review the whole problem in the light of present circumstances I have. I tremble to think how near I may have been to becoming a victim of my own cowardice. However, I stand at this Box to-night a rabid and impenitent Free Trader, and I believe with the fullest conviction that the tariff proposals of the Government are not only fraught with serious danger, but may even be disastrous to the economic and industrial life and prosperity of the nation. I think I can subscribe to almost everything my noble friend the Lord Privy Seal said from this Box today, and also, with perhaps two exceptions, to all he said on this subject a little less than three weeks ago when the Vote of Censure in respect of Cabinet responsibility was under discussion.

The two exceptions to which I refer are these. On that occasion the noble Viscount, Lord Snowden, said he would just as soon trust the safeguarding of Free Trade to Sir Henry Page Croft as he would to the Labour Party. He further said that he was not attracted by the company on the other side of the House. That is not my position. I believe that the Party opposite will maintain intact the purity of its Free Trade principles, notwithstanding individual lapses, but after reading the speech delivered last week in another place by the honourable and gallant Baronet the Member for Bournemouth, I should be very sorry to trust him with safeguarding the workers' standard of living, for he even urged the deletion of meat from the Free List. In other words he demanded that the meat of the poor should be taxed, apparently forgetful of the very large number of consumers who not long ago suffered severe cuts in their incomes and therefore are still less able to bear an increase in price of a most material commodity which they consume. I scarcely think that my noble friend could have been quite serious in expressing his preference for guardianship by Sir Henry Page Croft. I should much prefer to trust the security of Free Trade to those with whom both the noble Viscount and I were not only asso- ciated but very happily associated until the distressing events of last July, and no one regrets more than I do the breaking of those ties. Personally I think it is little short of a tragedy that the opportunity was not taken by the official Labour Party of co-operating in the formation of an emergency Administration to ensure a fully representative National Government, thus making it all-embracing, to overcome the unfortunate but nevertheless de facto position. My contention at the time was that a real collapse of British credit would unquestionably entail the workers' standard of living being reduced in secret, and I was and still am convinced that the preferable course in the circumstances was an equitable scheme of open and frank reductions all round, even if only as a temporary expedient, until the deeper issues involved could be fearlessly tackled.

As I say, with those two exceptions I range myself beside the noble Viscount, and, perhaps greatly daring, I would add this. His speeches and writings are usually sufficiently seasoned with salt so that he might perhaps with advantage reserve at least some of that very useful commodity in case of need for some of his new friends rather than dissipate it all on his old ones. At the last Election I found my name, for the first time in my life, on the same handbill as that of a Conservative candidate. I withstood the shock and carried on, he being a supporter of the National Government. He spoke at his meetings and I spoke at mine. I contend that those of us who took the platform in support of the Government at the last Election and now find ourselves in opposition to one of their principal pieces of legislation, at least can say in extenuation of the anomalous position in which we find ourselves that we trusted those in whom we had the completest confidence. We were quite ready to support the most stringent economy and to co-operate in examination of everything, including tariffs, which might contribute to avert the financial danger with which the country was faced.

Personally, I accepted without reservation the Prime Minister's appeal to the nation. Not only the Prime Minister but other members of the Government were equally definite in their assurances to those of us who feel strongly on the subject. Mr. Baldwin said: Perhaps I should say a word about those who have tried to confuse the issue with attempts to revive the old Free Trade-Protection controversy of 25 years ago. Now that is not the real issue. Those are Mr. Baldwin's words. In face of such a statement as that I confess for my part that I rind it difficult to subscribe to the claim of the noble Marquess who moved the Second Reading of this Bill to-night, that there was a mandate given al the last Election for such a radical departure from our long-established fiscal system as is embodied in this Bill, which is simply unadulterated Protection, and on a permanent basis too.

I would go further, and with your Lordships' permission I would like to address myself to this question of mandate. I suggest to your Lordships that the position in whi.ch we find ourselves to-night has only been made possible by an Election being held in such haste and so unnecessarily last autumn—for which, by the; way, the Party opposite cannot avoid its meed of responsibility, for, gratuitously and with an entire, lack of any useful purpose, the Labour Opposition on the formation of the first National Government divided the House of Commons on almost any and every occasion, and did their best to impede the smooth running of the machinery of government. Thus they precipitated an appeal to the country, and so for good or ill the Election took place, with what result we all know. And we know, too, what use is being made of that result I see that Sir Arthur Steel-Maitland, speaking at Birmingham on Saturday, is reported in The Times this morning as saying: If the Government show courage and more courage and always courage in being ready to do the thing that is necessary, without caring too much for ordinary electoral considerations, the result will be all right. That is a Conservative ex-Minister speaking after the Election! What does the voice of the electorate matter after an Election so long as the tactics employed succeed?

Rush tactics have been tried before, as I well know, for the full blast of the last attack struck my constituency in all its intensity. I want to refer to that because I think it is significant. It is sig- nificant that when time was taken to give an opportunity of facing the issue we had a very different verdict from that which will be recorded to-night. This noble Marquess, the late Leader of this House, was member for Rochester for ten years. The late Marquess died on the 22nd August, 1903, when the present Marquess succeeded. I am speaking from memory, but I think I am correct in saying that Mr. Joseph Chamberlain launched his Tariff Reform campaign on 15th May, 1903, so that during that summer of 1903 we had the raging, tearing campaign throughout the country. It so happened that Mr. Joseph Chamberlain resigned from the Government on September 18, 1903, which was less than a week from the; date the Election was taking place in Rochester, consequent upon the noble Marquess's accession to the Peerage. There was less than a week between Mr. Joseph Chamberlain's resignation and that by-election in Rochester, and thus it was that the Conservative candidate succeeded in securing a majority of 521 against Sir Harry Johnston, who was the Free Trade candidate. But with time to educate the constituency—and this is why I refer to the matter—and to carry on a campaign not only there, but throughout the country, there was a change. In less than two years, when a General Election came, Free Trade swept not only Rochester but the country.

I ask noble Lords behind me how they would feel if the position was reversed, if this had been a protectionist country for the last eighty or ninety years, had battled through a great World War and other shocks, emerging more successfully than any other country, and they, still Protectionists by conviction and experience, were faced with such a fiscal revolution as the sweeping away of tariffs by one fell swoop without that paramount issue having been clearly and unequivocally submitted to the country for its verdict. Then I ask them to try to enter into the feelings of some of us who are Free Traders by conviction and who have been in protectionist countries and seen something of the damage wrought by tariffs.

But to return. Mr. Baldwin also said at the Election that the National Government must be free to consider any and every expedient which may help to establish the balance of trade. But if imports upset the balance of trade Empire imports do so as much as any other. How then can this Bill be said to help in correcting the balance of trade, seeking, as it does, to encourage Empire imports? We were promised an impartial inquiry. Instead, the fetters of Protection are being riveted upon us without there even having been an opportunity given to the country of saying yea or nay. A clear, straight fight in the country on this issue has been avoided and the assault on Free Trade has been carried by a flank movement, not to say a treacherous ambush. Is it surprising then that there are those who contend that a fraud has been committed on the electorate I A tariff as a temporary expedient to deal with an abnormal situation is one thing, but this Bill is not in that category. One of the Conservative Members for the City of London said last week, "There was nothing temporary about it. They had got tariffs on and they were never coming off again." Well, we shall see. Personally I never like to prophesy unless I know. The folly of economic nationalism and the fallacy that the State can increase its sales while declining to increase or even to maintain its purchases—as though the whole object of selling were not to obtain the means of buying—are futilities writ large in the Bill now before your Lordships' House.

It is contended that this Bill will increase employment. How can that be? That has not been the effect of Protection in other countries. By taxing the raw materials of our exporting industries their competitive power in oversea markets will be destroyed and those at present engaged in such industries thrown out of employment. If a tax is not going to entail an increase in the prices of raw materials for the replenishment of our industries why have a Free List at all I It was almost nauseating to watch the way full-blooded Protectionists were tumbling over one another last week in another place, seeking to secure inclusion in the Free List of the raw materials of industries in which they or their friends or others were interested. Was there ever such a public exhibition of inconsistency I There they were using free trade arguments that were long since said to have been buried—that a duty would raise the price and thus hamper the manufac- turer in his quest for cheap raw materials—some of them still fondly cherishing the selfish hope of buying in a free trade market and selling in a protected one.

In my judgment not the least dangerous part of this reversal of our fiscal policy is the fact that Parliament will no longer be the sole arbiter in these matters. Duties will be imposed by the Tariff Committee and the Treasury, and Parliament will be merely called upon after the event to register its assent. The instrument which is really to determine and impose them is a nominated irresponsible body acting with the Treasury. In view of the late hour I will not deal with one or two aspects of the subject that I would have liked to touch upon. As one who has been engaged in the carrying trade, and associated with one of the big insurance companies as a director until retirement upon joining the Government, I should like to have dealt with invisible exports in the form of shipping and insurance services, interest from foreign investments and commission, but time forbids. I pass on because I feel very strongly that the troubles of our manufacturing and shipping interests—which are well supplied with the teeth and claws so j necessary for success in the coming struggle—are not of so much moment as | the interests of the teeming millions of those less capable of looking after themselves, and of the working and middle classes of our land.

The application of taxes on so many essential foodstuffs is in effect in the some category as an Income Tax levied inversely to the capacity to pay, so much larger a proportion of their incomes being spent in such necessaries. To inflict these burdens upon the poor with the intention—and I think that is not denied—of thus obtaining sufficient fresh revenue to enable a reduction to be made in Income Tax, is a form of "broadening the basis of taxation" to which I object. Surely it is an injustice to tax the food and necessaries of life of the less fortunate in order to add to the ease of the more fortunate. The new economic imperialism embodied in this Bill is in my opinion no solution of our present problems. Are not the nations of the world just beginning to realise their essential unity, and is not this the psychological opportunity of suggesting the enlargement of the scope of the forthcoming International Conference to be held in June on War Debts and Reparations, so as to include the subjects of the restoration of facilities for international trade by the removal of tariff walls and trade restrictions, and thus change the whole aspect of the discussions that are to follow at the Empire Conference at Ottawa?

In days gone by the nations of the world have looked on with benevolent neutrality while this country has annexed vast areas of the earth's surface, and they have been content in the belief that those new territories would be open to their enterprise and their capita!, for them also to do business therein; but if all that is to be changed now, and an economic unit created opposing and retarding the trade of other nations, a very different and highly dangerous situation may arise. If only die time and thought and energy, in this and other countries, that are given to schemes for keeping out the foreigner were devoted to seeking to remove restrictions and causes of irritation, and to securing the free and unlettered exchange of commodities between the respective countries, and using the brain power of each nation for the common good, we should all be in a stronger position to withstand the worldwide economic hurricane that has now assailed us, if indeed the hurricane had come at all. Economic independence is an unrealisable dream. Nationalism, reducing the world into watertight compartments in the last resort, is both practicable and impossible of attainment. The nations, whether they like it or not, are all interdependent. The old Book is true. We are all "members one of another," and one of the essential conditions of the restoration of prosperity is the recognition of those moral laws which are woven into the very fabric of the universe. I believe that the moral injury that will be wrought by this Bill will be even greater than the economic harm.

In conclusion, I would add this, that after a dozen years' membership of the House of Commons, with its more restrictive Standing Orders, I am glad to avail myself of the more liberal procedure of jour Lordships' House, to say why it is I am content to avail myself of the arrangement offered by those who differ from us and sanctioned by your Lordships' House less than three weeks ago, that those who dissent from this policy should remain in the Government. Notwithstanding my unabated hostility to the measure now before your Lordships' House, I believe that the National Government offers such unrivalled and unexampled opportunities for work of the greatest importance that it would be against the public interests to waste the chances that it offers, when, apart from the immediate fiscal issue before us, there are so many and varied fields of useful service, where such a representative Government, even, with Conservative leanings, can achieve so much valuable and welcome progress—in such matters as Disarmament, India, Reparations, public economy, and others—that those who have the privilege of sharing in the Government at such a time as this must take a broad and comprehensive outlook and not consider one individual item alone of domestic politics, however important, to the exclusion of all else. Therefore I hope the Government will remain National and add to its virtue knowledge—especially knowledge of the evils of Protection before too much irreparable harm has been done. Thus it is that I am prepared to take my part, in howsoever small a way, in the delicate task of assisting to maintain in office the present Government, which I believe may be effective for so many useful purposes, while showing myself a relentless critic of its fiscal nostrums.

Having made my position abundantly clear of having no part or lot in this matter, in response to the appeal in the leading article in The Times this morning it is my intention to await the results of this policy without capricious obstruction or undue impatience, and certainly without distortion, and no one will be more glad than I shall be if, in the event, we who view this Bill with such grave misgivings should prove, in the words of The Times, to be false prophets but loyal friends. Admittedly the Bill is an experiment, and I am only sorry that it cannot be tried without vested interests being built up thereunder, which all experience shows will be very difficult to get rid of. However, the verdict that is going to be pronounced upon this Bill in the Lobby of your Lordships' House to-night, is not the final one. That can only come after experience of its working, and by that final verdict we shall all no doubt be content to abide. It only remains for me to add that I shall not easily forget the kindness and consideration shown me by your Lordships to-night in permitting me to discharge with so little embarrassment a task that nothing but a deep sense of public duty would have made me undertake in thus addressing your Lordships.

THE LOUD ARCHBISHOP OF CANTERBURY

My Lords, I really owe you a very sincere apology for venturing to intervene for a few minutes in this discussion, for I am very well aware that I am about to have the audacity of diverting your attention from the main issues of this Bill, which constitute the interest of this debate, to the consideration of a single point. I can only hope that my brief dullness may be some relief to your Lordships after listening to the speech on which I congratulate the noble Lord who has just sat down, in which, with so much vigour and vehemence, he has attacked not only this Bill but the motives of his colleagues on this very comprehensive Bench behind me. I know that in normal circumstances it would be most unfitting to speak about a single detail on a Second Reading debate. That is a process which ought to be reserved for the Committee stage. But these are not normal circumstances. We have no Committee stage, except one which is necessarily formal, and we are unable to move Amendments. The point to which I wish very briefly to call attention is one which concerns the public interest, the best interests, the intellectual interests, of the whole community, and I know no other way in which I can have it put on record that this matter was brought before your Lordships' House, and I hope that, if that is done, it may influence the Treasury and the Tariff Commission which it is proposed to create.

The point is the imposition of a 10 per cent, duty on objects of art which come from abroad, and which have been produced or created within the last hundred years. The incidence of such a duty is plain from Clause 20 of the Bill, and I have been asked to call your Lordships' attention to this matter by the Standing Committee of the Trustees of the British Museum, which, of course, includes the Natural History Museum, a body of which I have the honour to be the chairman. I submit that the imposition of this duty will be a very serious restric- tion upon the power of the national and provincial museums to acquire objects of historical, artistic, and scientific importance for their collections. Ten per cent, may seem a very small sum, but it has to be remembered that, in answer to the appeal of the Government for economy, the British Museum certainly has reduced its estimates to the very bone, and it has no margin to spare. Let me give only two illustrations of the way in which this duty would affect the collections of these great national institutions. I take them from purchases to which the Trustees are already committed. One is the purchase of a reproduction of one of the most famous statues in Japan. The ship bearing it is, I believe, already here, or is expected every day, and unless this statue can be cleared by to-night the British Museum will have to pay more than £70 more than it had intended. Again, the Trustees have agreed to purchase a very important collection of lepidoptera from abroad at a cost of £1,000, and if this Bill passes they will have to pay £1,100, which they certainly cannot afford to do.

On the more general question, I am informed that 50 per cent, of the acquisitions of the Natural History Museum come from abroad, and many of them are objects which have certainly not been produced or created within the last hundred years. I take even the case of fossils. We had a very large consignment of them only the other day. A fossil, I presume, is a thing which might have been produced yesterday, even though in its ultimate origin it may be thousands of years old and it would seem absurd to impose a tax of 10 per cent, on scientific objects of that kind entering this country. Again, with regard to pictures, what authority is going to determine delicate points of date, as to whether a picture was or was not painted within a hundred years? Or suppose an English picture by one of our masters within the last hundred years has gone abroad, and is being sent back to this country: is it to pay a duty on its return? Or, again, what is to happen to valuable manuscripts which may be offered from abroad, characteristic of the life and history of some of our greatest authors or statesmen?

I venture to urge, in the first place, that there is no question here of increasing or protecting home industries. The trustees of these museums are bound by duty to acquire whatever they think to be necessary for the adequacy of their great collections. They are not going to be induced by this duty to purchase airy more objects of British origin than they would do if the tax had not been imposed. They certainly would not dream of importing any object that could be produced here in this country. In the third place, the duty would, I suppose, be levied upon gifts of objects of this kind which may be sent from abroad, which we should all feel to ho most undesirable. And, in the third place, the gain to the revenue would be almost negligible. It would be certainly in the case of the national museums; the duty would be paid by the Government which levies it. It is only a question of accounting. The Exchequer would be receiving in one form what it would have to pay out in another form through the grants that it gives to these museums.

I therefore venture to ask with much apology for intervening in a single detail in this important Bill: Is it worth while to impose a duty which would really be a tax upon knowledge, upon the power of our great national institutions to acquire those objects—artistic, historical, literary, scientific—which are necessary for research and for the extension of the knowledge of our people? I do not say anything about the trade in these objects, which was mentioned the other day in another place. I confine myself to the simple position that I very strongly urge that at any rate objects acquired by purchase or by gift by our provincial or national museums should be exempted from the incidence of this duty. I again apologise for intervening. I do not know how otherwise I could have put this important matter on record, and I hope it will not be necessary for us to detain your Lordships further from the consideration of the great issues before you.

LORD PASSFIELD

My Lords, I wish, to begin with, to support the most rev. Primate. It is not merely the question of the importation of objects of art less than a hundred years old. It must also be looked at a little more widely than that. I am entirely supporting the plea of the most rev. Primate in this matter, but I would like to point that, as far as I can read the Bill, the test of whether an article is to pay duty or not is that it must be imported—and merely that it must be imported—from a foreign country. If the British Museum sends out a collector or an explorer to a foreign country, what he brings home will also be subject to duty as I read the Bill. And I cannot think that the Government have carefully thought that out, because it is absurd to say that if you send out a. collector or an excavator to a foreign country, and we have been to the expense of sending him and he brings home these things, that because they are imports they are liable to the duty. You can push it a little bit further. If a British artist makes any sketches or does any painting in a foreign country, on the Riviera or even in mid-Channel, when he brings those sketches or that picture home: they are imports. It is true that if he catches fish on the way home the fish will be fish of British taking and therefore free. But if he paints a picture on his passage across on the way home he will have to pay the 10 per cent, duty upon it.

I come back to the speech of the noble Lord, Lord Koch ester. In reference to that speech I want to say that I feel grateful to the noble Lord because he has spoken with engaging candour. About this debate as I have listened to it there has been from the beginning, if I may say so, rather a lack of candour. I do not say lack of sincerity but lack of candour; and the noble Lord put the point that he wanted to make in a way which I am sure your Lordships must have felt, whatever you may have thought of the particular expressions used. The noble Lord reproached those sitting with me for not having had the wisdom or the virtue to stand with himself and the others in this National Government. "Ought we not to have taken advantage of the opportunity," he said, "to join the National Government?" After the explanation of the noble Lord to-day as to the ambush into which he has fallen, I cannot think ho would seriously condole with us for not having fallen into the ambush. We surely are in a position to say that we felt all along we were being led in the wrong direction.

LORD ROCHESTER

Will the noble Lord allow me to explain? I said "not to say a treacherous ambush".

LORD PASSFIELD

I am sorry I do not follow the exact literary distinction of that way of putting it. I am glad the noble Lord has put it in that way, but I am unrepentant. At any rate, we did not join in this so-called National Government. To come to the particular point of this Bill, I do not think it has been very definitely said this afternoon, except by the noble Lord, Lord Rochester, that this National Government was formed avowedly and expressly to deal with the national crisis. It was to have an open mind. It was not even to exclude a tariff if that were necessary to deal with the national crisis. That national crisis arose from two things, in my view. There was the drain of gold, which was solved by going off the gold standard. There was the necessity of balancing the Budget, which was solved by the Budget being balanced. Then the National Government, I thought, had really dealt with the crisis. But another object was invented between the formation of the National Government and the Election. That was that it was necessary to put right the adverse balance of trade. That really was the only remnant of the crisis, if it was a crisis at all, which was left, and the National Government got a majority to deal with that.

The National Government has brought forward this Bill. Again there seems to me, to put it quite politely, to have been a lack of candour, not of sincerity, about the way in which the measure has been brought forward. It is justified clearly by the mandate if it is a measure to avert the crisis and put right the adverse balance of trade, if that is a fair way of putting it, though I agree with the Lord Privy Seal about that. If that is the object of the Bill, why is there so much else in it and why is it so contrived that it will not and cannot put right the so-called adverse balance of trade? I think the Lord Privy Real has shown pretty definitely that it is an intolerable intellectual error to suppose that you can put right the adverse balance of trade simply by restricting imports. The inevitable effect of restricting imports is that thereby to some extent at any rate you diminish exports. I defy the Government to put forward any intellectual argument really to indicate how you can change the adverse balance between imports and exports merely by diminishing the quantity and the value of imports in some way.

Then it is said: "At any rate we shall get some revenue out of it." The Bill has been very strongly put forward and is, I suspect, supported very largely by a number of noble Lords, on the ground that this revenue will come in very useful. It has been mentioned this afternoon in fact that it is hoped it will be used in order to let us off the extra sixpence on the Income Tax. It has been suggested that it is not a very noble thing to do and that it might possibly be considered an actual breach of faith after what has gone before, that we should take this £30,000,000 in order to reduce the Income Tax by sixpence. The extraordinary thing is that if you do that, if you do get that revenue of £30,000,000 you have not diminished imports. The whole notion that it might diminish imports, the plea that you will alter the balance of trade by diminishing imports—it is stupid anyhow, but assuming that is the plea—the very feeling that you will get £30,000,000 of revenue means that you will not have diminished imports. You cannot alter the balance of trade in that way.

As a matter of fact, as the Lord Privy Seal pointed out, there has been no adverse change in the last few years in the visible imports and exports. The relation between them, which is the question here, has remaind fairly constant. I have before me the exact figures which show in what way and why we are concerned about this adverse balance of trade and in what way the position has been altered. I ask very honestly and sincerely, in what way this Bill will affect these items? First of all there are our exports. I think it has been shown pretty conclusively that the whole effect of this Bill will be to increase the cost of production. Some people think it will increase the cost of production a great deal, others that it will increase it only a little. Some people think it will increase the cost of production of all goods; while others think it will increase the cost of production only of some goods. But is there a single noble Lord here who doubts that either in the whole or in part of our production the cost of production will be increased to some extent at any rate by these Import Duties? I do not think any one can doubt that. If the only effect of the Bill upon the exports is to increase the cost of production, surely no one can argue that the effect of the Bill will not be to diminish them. We may differ as to how much it will diminish them, whether by a great deal or a little, but nobody can say that it will not diminish them.

The next big item is our surplus from the national shipping. Obviously and admittedly if the Bill is to have any success at all in any direction it will diminish the amount of freight earned by our ships. That is perfectly clear. If it diminishes imports it will diminish the freight inwards. If it does not increase the exports it will not increase the freight outwards. Very likely ships will go outwards in ballast and we shall lose in that way. This Bill will really increase the adverse balance of trade by affecting exports. It will further increase the adverse balance of trade by diminishing what our shipping produces.

The next point is the income from over-seas investments. Where are our overseas investments? We are now in effect putting a differential duty on Colonial produce in favour of our own Colonies against the tropical possessions of foreign countries. That is the effect of the Bill as it now stands. That differential duty en the produce of our own Colonies as against the produce of foreign colonies is going to diminish our overseas interest and dividends. Remember again that tic duties are not levied on things that are done by foreigners. They are levied on things that are done in foreign countries by Englishmen. For instance, Brazil owes us a lot of money. It has gone into default. Brazil still exports coffee and a number of other things to this country. We are going to put a differential duty against Brazil on those articles which will inevitably reduce the exports of Brazil to this country. Is that going to make it easier for our nationals who are in Brazil, whose capital is in Brazil, who are, therefore, concerned in Brazilian trading? Are they going to be able to pay? They are not able to pay much now.

Take, for instance, Argentina. We are going to put on a differential duty in one way or another against part of the products of Argentina—we do not quite know what it is at present—and as compared with Canada. Will that benefit our investments in Argentina from which we get, I have heard it stated, £40,000,000 to £50,000,000 interest and dividend? Will that increase or diminish that amount? Of course it will diminish it. The noble Lord, Lord Joicey, who is not here now, instanced Argentina as a country where there is what he called "an adverse balance of trade"—that is to say, we are importing from Argentina £40,000,000 or £50,000,000 of goods and only sending there £10,000,000 or £15,000,000 worth. He calls that an adverse balance of trade. But the point is that Argentina owes us £30,000,000 or £40,000,000 a year, and the only way Argentina can pay us is by sending goods.

Have we not learned that? Every noble Lord here must have realised that the only way a country can pay is by sending goods. Have not we since 1910 had it beaten into us by hard experience that the only way that Reparations can be paid is by the export of goods? Everybody ought to have learnt that by now, even the least economist amongst us. The only way Argentina can pay interest to this country is by sending goods. Then we call it an adverse balance of trade. Would we rather that they did not pay us interest? We are going in the way to tend to make it impossible for them to pay the interest. This item of income from overseas investments is going to be reduced. You may quarrel as to whether it is to be reduced from all countries or only from some, from some enterprises and not from others, but this Bill must inevitably, because of its differential effect against those foreign tropical countries, make it more difficult for our people there, our own nationals, our own capital there, our own enterprises there, to send home these dividends and interest.

Those are the principal items. I think I may claim to have argued—I will not presume to say that I have shown, because that depends on the figures at the and of the year—but at any rate I may claim to have put up a case for saying that the adverse balance of trade is not such a dreadful thing as has been suggested. This Government exists as a National Government with the express mandate to remedy the adverse balance of trade, because if it does not do that I do not know what mandate it has. That is the only thing left which it has to do. But if it has to do that there is nothing in this measure which will even tend to correct the adverse balance of trade. There is a great deal in this measure which will aggravate the adverse balance of trade, as I have shown, under those various heads. However, it may be said again that this Bill is not for correcting the adverse balance of trade. What happens, I find, when you argue it, is that a man shifts his ground. He falls back on the revenue. He then says it is not that we shall get money out of it; he has another case: that it will be a, weapon by which we can negotiate and get lower tariffs. That is the way people shift about from one leg to another.

Let us look at that, let us assume that is so. I think the Lord Privy Seal gave the actual fact of the experiences of other countries when he said that they have failed to get lower tariffs by their weapon of the tariff. They have failed in all tariff countries to do that, and the result is that tariffs are higher than ever in those countries. I do not believe there is any case in which negotiations have in the long run produced lower tariffs. But the Government itself does not seem to be aware whether that is so or not, because the Government is going now, assuming this is the true object, to negotiate with two sets of people.

It is going to negotiate with foreign countries, and it is going to do that by shaking this tariff in their faces, saying: "We have put 10 per cent, on your goods, and we have the power to increase the tariff in a particular case. We may increase the tariff in yours. What will you do about it? Will you give us a lower tariff? "At the same time the Government is to negotiate with another set of people for whom. I venture to believe it is even more concerned, being very anxious to get this other set of people to reduce their tariffs—I mean our Dominions and Colonies. In that case do they go to them as they go to the foreigners and say: "This is a splendid weapon this tariff we have put on against you; we do it deliberately, because we believe that this will enable us to negotiate more successfully with you"? Do they do that? No; they take exactly the opposite line. They put all the goods coming from the Dominions and the Colonies in the Free List. That is to say, in the one case they are going to negotiate with the weapon of a tariff, in the other case they have thought it better not to do so. I do think, in justice to them, they want the Dominions to lower their tariffs, and they have approached the Dominions with a gift of no tariff.

They cannot have it both ways. If a tariff in being is a useful weapon to negotiate with in order to get lower tariffs, the Free List in being can hardly be considered an equally good weapon for negotiating with the Dominions. You may say that the Free List is a good weapon. Why then not turn it the other way about and have a Free List for everybody, or have a tariff for everybody? If the Dominions, if Mr. Bennett in Canada will be properly compliant in reducing duties, and if Mr. Lyons in Australia will take off the duties on British goods, then you can take off your duty. If you had put it on they might not have done that. The Government goes to the two sets of countries in two different ways. It goes to the foreign countries with the threat of a tariff, and it goes to the Dominions with a Free List. Which is going to be the better weapon for getting any reduction of tariffs? Personally, I do not think that either of them is going to be much of a success. That being so, is it not likely that this measure cannot redress the adverse balance of trade? I feel most assuredly that this measure cannot redress the adverse balance of trade, but will make it worse.

It is quite unlikely that this measure will induce either foreign countries or the Dominions to reduce their tariffs. What is left? What is left is that it will raise some revenue, and when the noble Lord, Lord Daryngton, made an appeal to everybody in the House to do his best in order to make it a success, I wondered in what particular aspect we were to make it a success. Are we to make it a success in approaching foreign countries to reduce their tariffs, or a success in regard to the balance of trade, or are we to make it a success by not doing either of those things and letting the foreign imports come in and thereby raising revenue from them? Are there not some noble Lords here who think that will be the best result of all, that we should get the £30,000,000 a year revenue and let the blessed things come in? Are we quite sure there are none here who think it would be a very good thing to get sixpence off the Income Tax?

It is not for me to say, but at any rate your Lordships are doing quite a remarkable thing in passing this Bill. What this Bill is doing is that it is reducing the House of Commons in respect of taxation, to the same position as your Lordships' House. Your Lordships' House has the privilege of ratifying a decision which has been come to with regard to taxes, but no more. Now the House of Commons, with regard to the tariff, after this Bill has passed will have the pleasure find the honour of ratifying the decisions which have been come to by the Tariff Commission and His? Majesty's Treasury. It is an interesting? development of our Constitution that, having removed that power of interfering with taxation measures from this House, this Government should have taken a similar step with regard to the other House which will form an interesting chapter in our constitutional history. To-night will be remarkable not so much for the passing of a tariff measure, because there will be lots of tariff measures in future, but it may be written down as remarkable that on this night the privileges of the House of Commons in the matter of taxation, or this kind of taxation, were reduced to the same level as the privileges of the House of Lords. In spite of the desire of various noble Lords that we should all join together in joy at the passing of this measure, I intend, if it is not too late, to have the pleasure of voting: against it.

EARL PEEL

My Lords, listening to the noble Lord, Lord Passfield, I judged that he is a far better defender of Free Trade than the noble Lord who sits beside him, Lord Ponsonby. I certainly think that he ought to earn the plaudits of a certain section, anyhow, of noble Lords here. We have had two supporters of the Bill tin the Government Bench—of course (here are really a large number of supporters—and two attackers of the Bill. How very evenly the debate is balanced! I suppose we shall have a summing up from the noble and learned Viscount on the Woolsack who, with judicial authority, will be able to hold the scales evenly between the two opposing parties. I was rather glad that the noble Viscount the Lord Privy Seal did not lay too much stress on the question of mandate, because there is certainly a good deal to be said on the other side. My impression of the General Election was that the feeling of the country went even beyond the proposals made by the National Party Leaders. There were certain exceptions, of course, but I think the feeling of the country generally was strongly in favour of a change in the fiscal system and that it was against the system of free imports.

I was rather puzzled in the course of the debate to know what had really happened. We were thrilled a few months ago by being told that we were passing through a serious financial and monetary crisis, but as the debate went on we heard less of that financial and monetary crisis and the noble "Viscount the Lord Privy Seal seemed rather to minimise it. Short our memories possibly may be, but I believe that the financial crisis has passed and the balance of trade has been very largely improved simply because there was a change of Government which gave foreigners the idea that we were determined to put our financial house in order. It may have been due also in some measure to that Act which authorised import duties of 50 per cent. That has had a certain effect on imports and may have had some effect in reducing the adverse balance of trade. But I am bound to say that I thought, as I listened to the noble Viscount the Lord Privy Seal, that the tune he sang now about Free Trade and the situation generally was very different from that at the time of the General Election. Then he did not seem to think that Free Trade was the great security which would save us from all danger, but now this new system which is proposed is to involve us in fresh difficulties and troubles.

I always like to hear the good old argument brought out—it really did my heart good to hear it again from the noble Viscount the Lord Privy Seal—"Look around at other countries. See what has happened where they have tariffs. Look at the United States with twelve million unemployed. Look at Germany. Look at France." I remember very well that only a few years ago when people said: "Look at the United States, there is a country with a great tariff system and look how prosperous that country is" we were always told by Free Traders: "You are quite wrong. It is the greatest Free Trade country in the world, because between all those States there is absolutely free trade." The argument is apparently good for the Free Trader whatever happens. If the United Slates is prosperous it is due to Free Trade and if it is not pros- perous it is due to Protection. I am not myself very much in favour of taking one financial proposition and applying it to every country to see how it works out. Unfortunately the world's affairs are far more complicated than that. If you take the United States as an example you must consider the whole of the financial methods of that country, the speculation that goes on, and lots of other things besides the purely fiscal question. The same consideration applies to Germany. If Germany is paying out Reparations and borrowing from other countries even more than she is paying in Reparations, if you remember at the same time the inflationary period by which she was divested of her working capital, and if you add a few other little disturbances you will find that there are plenty of reasons to account for unemployment in Germany without attributing it entirely to Protection.

The noble Lord, Lord Marley, again rather puzzled me because he seemed to infer that the bank rate was responsible. Ho said there was some inconsistency in the action of the Government, because they were bringing in this Bill and only a few days ago the bank rate was lowered. But the Government do not lower the bank rate. I remember that we had a discussion on that point some time ago. He seemed to think that the Government were responsible for the bank rate, whereas of course the Bank of England regulates it. The position of the Bank of England is very simple. Everybody, of course, wants a lower bank rate, but you cannot always have it. There may be questions of foreign exchange and so on. It is very largely because of fresh confidence in the finances of this country, due to our having a stable and—shall I say?—a composite Government, that foreigners are buying sterling bills freely and that therefore there is no fear of withdrawals of balances.

Again, I was rather surprised at the argument that you can never use tariffs as a bargaining weapon. On that I would like to say incidentally, in reference to what the noble Viscount the Lord Privy Seal said about other countries being in such desperate straits because of their tariffs, that in all those countries there is no Party which desires to do away with tariffs—not one. There is no Free Trade Party to speak of in those countries. As I am rather inclined to think that foreigners know their own business as well as I know mine, or perhaps even better, I think it is very significant that whatever may be said by Free Traders here there is no Party in those countries which wants to change their fiscal system. Indeed, in another connection, the noble Viscount the Lord Privy Seal told us that there were no fewer than twenty countries which in the last few months had raised tariffs. That seems to me to show that they do not think that tariffs are the cause of their, present financial troubles. The noble Viscount said that other countries are unable to make bargains with each other, but our position is a little different, if I may say so. By leaving our country so long open to free imports from all the world other countries have come to build their trade upon that system of free imports into this country and we have now a tremendous lever against those countries. If we cannot use that lever and cannot secure better terms in foreign countries, then we must have most incompetent negotiators and we had better engage those who are able to take advantage of this tremendously favourable situation.

I will only deal for a moment with the old argument that in stopping imports we must also stop exports or exports may diminish. The whole tendency of this legislation, if successful, is to diminish manufactured imports and to increase raw materials. It is making the character of the trade, if possible, more favourable to this country, and if that is so you get better shipping—and anything almost would be better than the miserable and unhappy condition of our shipping as it is to-day. The Lord Privy Seal said you will let in goods from the Dominions free. Well, after all, we may be allowed to treat the Dominions as part of our own family, and if we are to protect ourselves from the adverse balance of trade and check imports surely we may check those from foreign countries first. I think the noble Lord, Lord Passfield, fell into the same fallacy, if I may so call it, when he said that when you are dealing with the foreigner you will put up tariffs to bargain with while in the case of the Dominions you have no tariff. The answer is again that we regard the Dominions as members of the same family and will not use the same business methods with them as with foreign countries.

In the few minutes I have left I should like to say two or three words on the Bill. I am very gratified that the basic tax has not been placed in the first instance too high and I will not enter into the dilemma, which has been answered ever and over again, that if the goods do not come in you get no revenue, whereas if you get revenue the goods will come in. You either get the revenue or the goods do not come in. But when you are changing over after all these years from a free import to a tariff basis, and as our trade has adapted itself to certain channels, it is most important that you should act in the process of the change with the greatest circumspection. I regard this Bill necessarily as rather tentative in its operation. There must be a great deal of examination before you can establish a useful scientific tariff thoroughly adapted to the enormous complexities of our trade and therefore I rather welcome the caution shown in the 10 per cent, duty. We are told it is not, enough to stop imports, but it so then there is the Advisory Committee. We have heard a great deal of discussion by economists of the necessity of consuming power to increase our producing power and of the unwisdom of too much economy. Now, prices of manufactures have gone down so tremendously that it is ridiculous to suppose that they can continue to be as low. You must have some rise in prices. At the same time that rise will be accompanied and, I hope, exceeded by the consuming power of the community because the more prosperous business is the more there is paid in wages and salaries and the greater are the reactions on other industries.

One of the reasons why I welcome the Bill is that I think, for the first time, we have the nation really considered as the producer and not as the consumer. The Government is establishing itself in the position of being the friend and no longer the enemy of the producer. A few years ago the Conservative Government produced an admirable measure for relieving industries of rates, but the next Government countered by the taxation of site values which has inflicted a corresponding and severe injury upon the industries of this country. Burden was added to burden and we have the whole of world competition concentrated on this unfortunate island. This new attitude seems to me a great advantage in itself. It is, if you like, a revolution in your fiscal system, but it is more: it is a revolution in the view the Government takes of the relations between the producer and the consumer and of the necessity of doing all it can to assist the producer himself.

I am very glad that the Government resisted in another place all the attempts to insist that before any help was given in the way of tariffs there should be some curious examination by the Committee into the question of whether these businesses were efficient or inefficient. Businesses will become efficient very rapidly if they get more command of their home market. It is because, exposed to tremendous competition, they cannot go either to the banks or the public for money to put their house in order and to restore their plant, that change is necessary in this respect. I think it will add to our position and prestige abroad, where foreign business men have long been astounded at our fiscal methods and have been thinking that a system which has allowed this country to be completely at the mercy of all their exports, was almost a sign of some weakening of the brain. At the same time we have another opportunity of really re-starting the Empire, of avoiding all the difficulties at previous Conferences, and of approaching them with an enthusiasm and a readiness to meet them that I am afraid is not shared by the late Secretary of State for the Colonies. Indeed I cherish the hope, possibly a vain one, that the Liberal members of the Cabinet will regret in the years to come the too faithful reproduction of their lugubrious speeches in the pages of the OFFICIAL REPORT, and that perhaps, through some of those tricks that memory sometimes plays us, they will go about boasting that they were members of that great Government which gave a new direction to the trade and fiscal system of this country.

[The sitting was suspended at twenty minutes before, eight o'clock and resumed at nine o'clock.]

LORD STANLEY OF ALDERLEY

My Lords, it is with a sense of diffidence almost amounting to apology that I ask leave to address your Lordships, only for a short time. It is not for me to give you an exposition of the technical and theoretical arguments, either on one side or the other, upon which the Bill now before you is based, but there are nevertheless certain aspects of this question which I think may be properly considered by your Lordships, and which it seems to me have not perhaps been sufficiently stressed. During the General Election last October there were many Liberals and Free Traders who were induced to vote for Conservative candidates, on the very definite and very clear understanding that no permanent change should be made in the fiscal policy of this country. I myself took part in Election addresses in some five or six constituencies, and induced Liberals, and possibly some of the members of the Labour Party also, to vote for a Conservative candidate who was supporting the National Government, but only on the understanding—I gave my word for what it was worth—that there would be no change in the fiscal policy of this country.

It is true that the Conservative Party admitted that they would try to introduce tariffs as part of the policy of this country, but it was quite certainly not admitted that that would be a permanent thing, and we saw the result of the statements made by the Conservative Party in the last Election in the Abnormal Importations (Customs Duties) Bill. That Bill many Liberals, myself amongst them, were prepared to accept, in that it was a temporary measure. This measure now before the House is a very different affair. It is, so far as anything can be permanent, intended to be a permanent alteration in our fiscal policy. It seems to me that that is a very serious breach of faith with the electorate. This Government holds office as a result of the Election in October. If it does not actually owe its existence entirely to that Election, at any rate it owes a great deal of its strength to that Election, which strength is, largely at any rate, derived from the Liberal and free trade vote. I would suggest that there is a very definite dishonesty in trying to put this measure through this House and another place. I think we owe it to the political honesty for which this House is so justly famous not to give our assent to this measure. Even those of your Lordships on the other side of the House who can see no particular evil in this Bill should, I think, refrain from giving it the sanction of your approval until you are certain that you do so only by the consent of a large majority of the electorate. I do not wish to cast any reflection on my noble friends opposite, but I would suggest that they were elected to office, not perhaps so much on account of their own merits, which are great, but from a panic-stricken fear of profligate and bankrupt Labour finance. That being the reason for their holding office, I can see no case at all for putting forward a measure of this nature.

Further, this Bill has two avowed objects which have been clearly and fully stated in another place. The first is to redress the so-called adverse balance of trade, about which the noble Viscount opposite has spoken at some length, and I am not going now into the question of whether or not an adverse balance of trade, so-called, is or is not an evil thing. I myself think that there is no intrinsic evil in it. But be that as it may, I am still entirely unconvinced that this measure will have any beneficial effect whatever on this so-called adverse balance of trade. You are going to restrict imports and I agree with the noble Viscount opposite in saying, without meaning to be offensive to him, that I am old-fashioned enough still to believe that you cannot restrict imports without equivalently restricting exports. Therefore, the only result of this measure will be that you will diminish the total volume of trade, both on one side of the balance sheet and on the other.

My noble friends opposite will doubtless tell me that what we lose in export trade will be made up in increased supply by the home market. But I would, with all respect, point out that that has nothing to do with redressing this adverse balance of trade, which is one of the avowed objects of this Bill. The only effect—and for my authority I have no less a person than the Chancellor of the Exchequer—will be to increase the cost of living, which many millions of our people can ill afford. Secondly, against this restriction of imports you must set the losses that we must infallibly sustain from a reduction and restriction in the value of our shipping, our insurance, and our commission business, which forms so large a part of the wealth of the country. Not only that, but you must remember that this Bill avowedly sets out to hamper and restrict the commerce of foreign countries. I hardly need tell jour Lordships that, owing to British enterprise and British capital, we have some £285,000,000 of income a year coming in to us from foreign countries.

I would ask you whether we are further to hamper and restrict the trade of those countries from which we derive so considerable an income. Ts it not possible, nay, I would say, is it indeed not probable that the paltry—perhaps "paltry" is an exaggerated word—but at any rate the £30,000,000 odd which the Chancellor of the Exchequer budgets to receive from the new Duties will be off-set and more than off-set by a reduction in Income Tax and Super-tax which is derived from this vast income of £285,000,000 a year? I will put it to your Lordships that it may be so, and no one n the Government, with the exception of certain members of it who have, I think, right convictions, seems to have thought of that. Secondly, this Bill gives rise to certain very fundamental and very important Imperial questions. I am not one who is insensible of the good will existing between ourselves and our Dominions and Colonies, and I am not unaware that the present, if ever, is a time when everyone both in this country and in the Dominions overseas is doing his best to further good will between the British Commonwealth of Nations and its mutual prosperity.

I do not want you to think that I am anti-Empire—I use that for want of a better word. It is not so. But I can see, and I see with very great foreboding, difficulties which will arise, in consequence of this Bill. Taking the most optimistic view possible that in June or July this year, at the Imperial Conference at Ottawa, the most favourable course of events takes place, and that (he Colonies come to us and say: "We will do for you exactly what you have done for us. We will allow you to import your goods into our country free of all duty as you have allowed us to import into Great Britain free of all duty." What, then, is the use of this tariff as a weapon for bargaining with foreign countries? How are we to make reciprocal agreements with foreign Powers which may, and almost certainly will, upset the Colonial monopoly of the home market? I do not see how we can do it. Secondly, what is to happen if a Dominion comes to us and says: "We thank you for all you have done, for allowing our imports to come into your country free, but before we make an equivalent-agreement with you about your exports to us we must have a discriminating tariff against some other Dominion"? How are we to answer that? The question of wheat, I think, is a very obvious example, although I am aware that wheat is not particularly dealt with in this Bill.

Furthermore, a country in its earliest stages of development has the policy, and if I may say so rightfully has the policy, of developing its own secondary industries, since it is in those stages of development comparatively speaking able to food itself and is therefore more or less independent of the outside world for the absolute necessities of life. It is understandable enough that it should wish to develop its own industrial life, and I have no need to tell your Lordships that that is the settled policy of the Dominions. From my own experience I know it to be true both in Canada and Australia. This economic self-dependency is a natural, and I will go so far as to say, a healthy ambition with which we have neither the power nor the right to interfere. That being so, there is another difficulty which, owing to their mentality, if you like so to express it, we shall find it very difficult to surmount. I do not say for a moment that these difficulties are insurmountable, but I am unable to see any solution to them and I think that no one else will find a solution to them.

I do not wish to be pessimistic nor do I wish to make out that the fiscal policy of His Majesty's Government is utterly and entirely mischievous. I think it, if I may say so without disrespect, to be merely hopelessly and absolutely misguided. Having put several points before you inadequately it is not for me to take up the time of jour Lordships' House. I can only end by thanking you for the courtesy and indulgence and patience with which you have heard me. Let it not be said that that patience is one born of apathy Let it not be said that this House was a party to a measure which involved, however well meant a decep- tion, nevertheless a deception on the electorate. Let it not be said that this House was a consenting party to a measure which will lead, as I am convinced, to disruption rather than co-ordination in our Empire, to political disharmony—I might use a stronger phrase than that and say political dishonesty—and not only that but will go further to clog and to stifle the progress of commerce in the world, a stifling and a clogging which has done so much to bring the world to its present disordered state.

LORD ARNOLD

My Lords, I should like at the outset of my remarks very cordially and very sincerely to congratulate the noble Lord who has just sat down upon his first speech in your Lordship's House. He bears an honoured name in the battle for the free trade cause, and I am sure that whether there be agreement with him or not there will be agreement about this, that he has shown himself very well able to maintain the traditions of that honoured name. For my part I hope very much that in the battles which will ensue upon the passing of this Bill he will not infrequently intervene in coming debates on the free trade side.

This has been in many ways a very extraordinary debate. In fact, the longer I remain in your Lordships' House the more surprising do its proceedings become. I have now been a member of your Lordships' House almost exactly eight years, and I think in some ways this is the most singular day which I have spent within this Chamber. What is the position? This Bill, whether we agree with it or whether we do not agree with it, effects a complete fiscal revolution in this country. It entirely transforms, or will do, the industrial and trading system of the country. It is a Bill which not many years ago would have been strongly opposed by some very distinguished members of the Conservative Party. The Duke of Devonshire, the late Viscount St. Aldwyn, Lord Ritchie, the first Lord Cromer, Lord James of Hereford and others would have nothing to do with this policy of Protection. They were willing rather to separate themselves from their colleagues and from their Party. Yet today this measure is going to be passed without a syllable of protest from one member of the Conservative Party, and not only so, but I think I may say without disrespect that the contributions which have been made in support of the Bill have not been particularly weighty. Certainly the ground which ought to be covered has up to this moment by no means been covered or traversed.

I do not wish to speak at all unkindly of the speeches. I have great regard for the noble Marquess who opened the debate and he made, as he always does, a very courteous speech. But his speech was brief and it seemed to me to burke nearly all the difficulties he had to face. He claimed, as Protectionists invariably do, that practically all their schemes are all advantages and no disadvantages—all credits and no debits. Our case is that the debits so enormously outweigh the credits that Protection, particularly for this country, will prove a specially bad piece of business. The noble Lord, Lord Daryngton, said this would be the last day of these debates. On the contrary I see a long vista of debates which are, in fact, only just beginning. I come to the noble Lord, Lord Rochester. He made a prolonged speech and apparently there has been burning in his breast a desire to carry the fiery torch of Free Trade to the uttermost parts of the country, but the noble Lord has been singularly successful in stifling that desire because he actually joined this Government after the introduction of the Abnormal Importations Bill. The noble Lord was not in for the start; he came along afterwards. There is the wheat quota—no word of protest! What need was there for the noble Lord to join the National Government in the name of national unity? The same applies to the noble Viscount. He was not a member of the Labour Party when he joined the Government and he represents nobody but himself. The suggestion that we must have these men in the Government for national unity was a fiction. As a matter of fact the noble Viscount has been turned out of the Labour Party and has not the slightest chance of being taken back even if he wanted to return.

I come to some of the phases of the Bill which have been discussed a good deal, though not at undue length. I will not say much about the balance of trade, not because much could not be said but because it seems hopeless in your Lordships' House to get a reasoned reply to points put about this matter. On the introduction of the Abnormal Importations Bill I quoted Professor Edwin Cannan, who has been most caustic in his language about this idea that it is the duty of Parliament to come along and deal with what is called the adverse balance of trade. I ventured on the last occasion of a, fiscal debate in this House very briefly to put before your Lordships the accepted economic teaching on this subject, and if the Leader of the House will allow me to say so I do not think he met the point. He said that a more ridiculous argument had never before been submitted to the House. I scarcely think that that is the way to deal with the accepted teaching of economists, not that I claim to be one, but I know what their teaching is. If I may do so, I would ask the noble Viscount to deal with the matter in a little more reasoned manner, and I would remind him of words I adapt of Disraeli—namely, that contumely is not logic and derision is not argument.

As a matter of fact, this Bill will only make the balance of trade worse and will make it more difficult to export British goods because of the increased cost of production. What we want is to sell British goods and that ought to be the slogan of the Government. They should devote their attention to that. As a matter of fact, this balance of trade is all dependent upon the most shifting and fluctuating foundation. The Chancellor of the Exchequer is not quite correct, but, even if the figures which have been put to the House represent the fact, this Bill is a wrong way of dealing with the matter.

Then I come to the £30,000,000 of revenue which we are told will be got by these tariffs. It is called broadening the basis of taxation, which really means that the rich pay less and the poor pay more. Even if you get £30,000,000 it will be the most expensive transaction that this country ever entered into. It will affect the cost of living and will raise prices. You cannot have two prices for the same thing in the same market at the same time. The effect of this Bill will be not only to raise the price of articles and commodities coming in from abroad, but to raise the price to the same extent of the same articles produced here at home, and the consumer will pay more than the Exchequer will get. This will increase the cost of living. The Chancellor of the Exchequer says it will to some extent. Mr. Runciman says it will not. Lord Snowden said he could not understand the mentality of those who would support a tax on meat but would not put a tax on wheat.

The noble Viscount to-day made a very remarkable speech and one which I do not hesitate to characterise as an outrage on the Constitution delivered from that Box—a grave Parliamentary perversion. Viscount Snowden is given the credit by some people—I do not give him as much credit as some—for a large share in the return of this Government, but would it be believed that the noble Viscount virtually gave a pledge that a Bill like this would not be introduced, and yet he remains in the Government? During the election he said: I do not believe that the Conservative leaders would regard a majority obtained in the circumstances of this Election as giving them a mandate to carry a general system of Protection in the new Parliament. That is exactly what they are doing. Such a radical departure from our established fiscal system could not be made without an emphatic and unequivocal decision of the electorate. Yet this Bill goes beyond the possibility of those words and the noble Viscount sees lit to remain in the Government. Is he really labouring under the delusion that he can do any good either to himself or the Free Trade cause by speeches of that kind while he remains in the Government?

What about the wheat quota? The noble Viscount is in favour of the wheat quota and the wheat quota will raise the price of bread. Sir Herbert Samuel said so. So the noble Viscount, the great Free Trader, by his association with his present colleagues has become a bread taxer. And he is the man now who is condemning everyone else. That is an astonishing position for a man who likes to represent himself as almost the one righteous and virtuous person in a wicked and perverse generation. There is not the slightest need for him to remain in this Government on the ground of national unity. Noble Lords opposite were very pleased a few months ago to have the new recruit, the noble Viscount. I do not think they are quite so pleased now.

Noble Lords

Yes.

Lord ARNOLD

Well, they are very easily pleased, and I venture to predict that before long they will be wishing he were back on this side. But we do not want him. He is no use to us, not even on Free Trade. His position is absolutely untenable and impossible and nobody would be more virulent, venomous and vitriolic than the noble Viscount if anybody else were in the same position.

I will leave the noble Viscount and pass on. I say this Bill will increase the cost of living. There was an astounding spectacle in the House of Commons on Thursday night. You had two strong supporters of Protection, Lord Winterton and Sir Arthur Steel-Maitland, rushing in and begging that zinc should be put on the Free List because if not, they said, it was going to give an advantage to the Colonies by getting a, price nearly as high as the foreigners and they did not really need that—giving the whole case away, smashing to smithereens the Protectionists' case that duties do not raise prices. I have heard Lord Hailsham claim that Safeguarding Duties do not raise prices at all. Of course they raise prices. I gave instance after instance and they were never refuted. And the Chancellor of the Exchequer did not reply to his noble friends: "Oh, there is nothing in all this. You are quite mistaken." On the contrary, he said it was a serious matter and would be looked into, and if the facts were as represented then the Government would do something about it. Well, the Government is going to have a busy time if it is going to look into all cases like that.

I was very much amused by the speech of the most rev. Primate. He reminded me of what occurred a few days ago when a friend of mine, a Protectionist for years, came along complaining, now that we are on the eve of Protection, that something was happening that he had not foreseen, that something was going to raise the price of an article which he uses in his business and he does not like it. He said to me, with rather a wry face: "I did not know Protection was like that." I said: "Protection is always like that. That is Protection." And there are a good many people who will find that out just as the most rev. Primate will. I went into a shop the other day to buy an article and said: "I think I will take another." The reply was: "We are not sure whether we have one at the same price or whether the next article paid the duty. I will just enquire." What is the good of suggesting that tariffs do not raise prices I They raise prices by a higher amount than the duty.

I would like to say something about the Imperial and Colonial aspect of this Bill because it is a very important one. The Bill is put forward as a step in the direction of that Imperial economic unity of which we have heard a great deal in the last year or two. And who is the man who is going to have charge of the negotiations at Ottawa under Clause 4 of this Bill? That man is Mr. J. H. Thomas, the man who only a short time ago described the Canadian offer in the direction of this greater Imperial unity and reciprocity as "humbug." And then, when a Liberal member in the House of Commons very properly got up and moved an Amendment in favour of some sort of reciprocity, on the plea that we ought not to give all this to the Dominions unless we were quite sure they were going to give something to us, Mr. Thomas described it as an insult. I do not know how your Lordships feel, but personally it makes me shudder to think that the destinies of the Empire are in any considerable degree in the hands of a man like that.

I heard Mr. Thomas myself not long ago in the House of Commons pour scorn on these whole proposals. He pointed out that, as a matter of fact, many foreign countries treat us better than the Dominions do as regards tariffs. We have to bear that in mind. A very large trade is done by this country with foreign countries. I suppose that in 1929, the last normal year, two-thirds of our exports in manufactures went to foreign countries. Germany took more than Canada. Australia did not come too well out of it. South America took more than Australia. Holland took more than New Zealand. Look at the markets. The whole white population of the Dominions, is 22,000,000 and the white population of the whole of the rest of the world, leaving ourselves out of account, is about 500,000,000. The whole population of the British Empire is about 400,000,000, while the population of the rest of the world outside the British Empire is about 1,400,000,000. How, then, can you expect our trade to prosper if we are going more and more to restrict it in this way?

We all want to increase trade with the Dominions if it can be done on proper lines. We have had that matter out in your Lordships' House from time to time. No reply has ever been given to the fundamental objections to this policy. First, I may take the fact that the differing nature of the products which the Dominions send abroad make it quite impossible to devise any scheme which will be in any way reasonably equitable and symmetrical. No reply has ever been given to that. No reply has been given to the point that this policy will inevitably increase the price of living in this country, and that is not the way to make the Empire popular with the masses of the British people. No reply has been given to the very important point that it is fundamentally wrong to try to hedge round a quarter of the world's surface with tariffs, and shut it off as far as possible from trading with the rest of the world. That is the way to lead straight to economic war, and economic wars have often led to real wars, and that is the policy on which you are embarking.

No reply has been given, as I think the noble Lord, Lord Passfield, pointed out, to the certainty of retaliation, and the forming of counter combinations against the British Empire. The Protectionists go about claiming that everything is on the credit side, and that nothing is to be said on the debit side. We say that that is a fundamentally wrong view, and that this is a policy which in the end is bound to lead to the disintegration of the Empire. Take the matter as regards the Colonies. The Beaverbrook Press has been dancing about in childish glee because Colonial produce is to come in here free, and they seem to think that we are approaching—that is what they mean—the French Colonial system. They want us to make Mauritius like Réunion. Take those two Islands, which are similar in extent and population. Réunion is under the French Colonial policy, and to a large extent it can only trade with France. Its trade is only about one third of that of Mauritius. That is what you want to do under this Bill. It has well been dubbed a "kill trade" Bill. There you have practical experience going on year after year in those two Islands, and that is the kind of thing you want to do under Clause 5. We say it is a wrong; policy. It is an un- just policy to the Colonies, and it is very unfair to the other trading countries of the world.

I promised the noble Viscount opposite that I would not be very long. He has been very courteous in the arrangement of this debate, and he must have the opportunity of speaking. We all want to hear him and wish to conclude the debate before too late an hour, so I shall not detain your Lordships further. I would say in conclusion that it has been stated in this debate that matters are now passing from the House of Commons, from the debating Chamber, from the Legislature to the field of industry and commerce, that they are passing from argument to fact. We Free Traders say with complete confidence that we know, despite the jeers and scoffings—to use no stronger word—at our so-called outworn shibboleths, that they are founded on the unshakeable ground of economic truth and also on the proved experience of a hundred years. We know also that practically every prophecy made by Protectionists since Joseph Chamberlain began his campaign in 1903 has been proved wrong. We know also that before long noble Lords who support the so-called National Government will be running about hurrying and scurrying and trying, by mis-statements and percentage perversions and general muddleheadedness, to explain away the mischief this Bill will have done and the suffering which it will have caused. That is what it will lead to, because that is what will happen as a result of meddling and muddling with the complicated mechanism of British commerce and finance.

VISCOUNT HAILSHAM

My Lords, it is perhaps not without some ironical pleasure that we Conservatives notice that, I think for the first time since the Parliament Act, the Party to assert the constitutional right of this House to reject a Money Bill is the Socialist Party. Our amusement is not lessened by the fact that the occasion which they have selected to invite your Lordships to take that heroic attitude is one on which what they are so often pleased to call the popular House has affirmed the principle of the Bill by a majority of more than seven to one—a majority which, I suppose, has hardly been equalled in the case of a Finance Bill, certainly for many decades past. I will remind your Lordships and those of my noble friends who are tempted to accept the invitation of the Socialist Party, that what they are really asked to do under the Parliament Act is to delay the operation of this Bill for one month. If they were successful in the vote which they cast the Bill would become law, but it would become law in one month from now. The result, therefore, would be that for one month goods would come in free of duty and that the experiment which, however much they may dislike it, I am sure they would wish to be as successful as possible, would be made in circumstances which would almost foredoom it to failure. However, the Socialist Party has chosen to set a. precedent which may one day be a useful one to remember.

I agree, of course, that in a discussion upon a measure which profoundly changes the fiscal policy of this country those who resist the change have a right, as the noble Lord, Lord Arnold, has said, to call upon the proposers of the alteration to justify their position. However true it may be that the world has passed on beyond those Victorian shibboleths which the noble Lord still asserts with such unfailing conviction, it is also no doubt true that it is incumbent upon us who ask this House and who ask the country to accept this change to give reasons why the change is necessary. I am not going this evening to embark at any length upon the time-worn controversy of Free Trade against Protection—not, I beg the noble Lord opposite to believe, because I am afraid of embarking on that controversy, but because, first of all, we have never had free trade in this country; because, secondly, I believe that the country as a whole is heartily sick of the old time-worn arguments on one side and the other; and because, most of all, the conditions under which we live at present are conditions which were undreamt of when that controversy commenced and are conditions which could never have come to pass if Mr. Cobden had been right in his theories of political economy.

What are the conditions which, in the judgment of the Government and of those who support the Government, imperatively call for the change which this Bill embodies? First of all there is the adverse balance of trade—£113,000,000 according to the Board of Trade figures. What is the answer which is put forward on the other side? They say that the Board of Trade figures are not necessarily accurate. Nobody is infallible in making estimates, but at least the Board of Trade figures are figures compiled with the greatest impartiality by people who have access to all relevant documents, who have made a lifelong study of the problem, and who at least are more likely to be right than anyone else we can invite to form an estimate. It is just as likely they have under-estimated as overestimated the adverse balance.

The noble Lord, Lord Marley, said that we cannot be sure that there is exactly this balance on the wrong side—that they may have allowed too little for our shipping profits. Well, the shipping authorities say they have allowed too much. But see what his argument leads to. It is rather like the suggestion that when a doctor has been called in to diagnose what is wrong with a patient and try to cure him, if he finds that the patient is apparently very ill from some internal complaint he should say: "I think this is the illness and this is the cure, but I will not try to cure it because until I carry out a post-mortem I cannot be sure I am right, so we will let the patient die first and then look inside him after and see if he really suffered from the disease I suspect." That is not the doctor I would wish for the noble Lord if he found himself in the condition in which our trade is in to-day.

My noble friend, Viscount Snowden, in his speech whose vigour, power, force and conviction we must all have recognised however profoundly we disagreed with him, said that after all there was an automatic check on any adverse balance of trade—what he called, I think, the automatic equilibrium of the exchange—and he said: "See how steady the exchange is to-day." Well, we have got about 30 per cent, off the gold standard already and to some of us that might seem a rather parlous state of affairs, but why is the exchange remaining steady to-day? Is it not obvious that it is because of the fact that this Bill has been introduced and because the peoples of the world know that this country is adopting a sane economic and fiscal policy? If, unhappily, this Bill had been defeated, does anybody suppose that the exchange would have remained steady then?

Follow a little further what this automatic equilibrium argument amounts to. Is amounts to this, that if there is an adverse balance of trade ultimately, when once we have left the gold standard the value of the pound measured in foreign currency will drop to so low a level as automatically to check the imports or to stimulate the exports and so to redress that adverse balance. See what that means. It is common ground with all of us on both sides of the House that many of the staple necessities of life and of industry in this country have to be obtained from abroad. Wheat and meat, the food of the people, and the raw materials for our great industries, like cotton and wool, all these things have to be bought from foreign countries, and if our currency becomes further depreciated they must cost more in terms of our currency. If the pound sterling is worth only 2½ dollars instead of nearly 5, twice as many pounds will be required to purchase the same amount of American goods and American goods will be twice as dear. That means that there will be imposed an ever-increasing handicap upon our industries, which have to pay more for their raw materials, and ever-increasing privation upon the poorest of our people, who have to acquire goods for their necessities, paid for by them in terms of British currency and acquired from countries with a gold standard.

In other words, the noble Lord and those who think with him are quite prepared to accept with equanimity a situation in which an enormous protection is imposed against foreign imports, upon the necessities of life for our people, an enormous burden caused by the increase in the cost of living and of handicap upon our manufacturing industries by the increased cost of materials. These things are all right so long as they are brutal and unreasoning in their incidence, but all wrong when dealt with scientifically by an elastic measure of tariffs. Can your Lordships imagine a more illogical attitude? We are told that Free Trade has not failed at all, that our exports have increased under Free Trade. So they have, but have you troubled to compare how they have increased proportionately to the exports of countries which are not under Free Trade? I have some figures here. I take 1880 because it is a round half century from 1930 and is about the time when foreign countries were beginning to think that Free Trade was not quite all that we would have them believe. Comparing 1880 with 1930 the exports of manufactures increased in the United Kingdom by 117 per cent. In Germany the increase was 438 per cent. and in the United States 1,852 per cent. It will be said that in 1880 they had only begun and that their industries were infant industries and it is not fair to take the comparison with that year. I have also taken another year, the last year before the War, 1913, and you find, comparing 1913 with 1930, that our exports increased by 3 per cent., Germany's by 35 per cent., and the United States by 100 per cent. Does it look as if the free trade position was quite as rosy as Free Traders would have us believe?

Then Free Traders say—I think my noble friend Lord Snowden says—the foreign countries cannot shut out imports by means of a tariff because, he says, their imports were in the aggregate last year some £3,000,000,000. But whoever supposed that the object of a protectionist policy was to shut out all imports? The object of a protectionist policy, looking at it now from the point of view of Protection, and merely from the point of Protection, is to encourage production—to shut out the goods from a country which that country can produce for itself. But any country requires immense quantities of raw materials, of food stuffs, and other articles, which under any scientific tariff are encouraged to come in and not discouraged. And to say that there are £3,000,000,000 of imported goods in the rest of the world proves, if my noble friend will forgive my saying so, just nothing at all. Under a protectionist tariff we should propose, not to prevent imports, but to change the character of imports, and to insist that so far as possible, instead of importing manufactured goods which put our people out of work, we should import raw materials which afford employment for our people.

Then we had again that time-honoured Free Trade axiom "Imports always balance exports." I do not want to follow the noble Lord, Lord Arnold, by asserting that everybody knows that is not true. That might seem almost discourteous, but I think an analysis will show that it cannot be accurate. In the first place, in order to make it even approximately true you have of course to bring in all sorts of things which are not exports at all—so-called invisible exports; and to bring in on the other side all sorts of things which are not imports at all—invisible imports, payments to foreigners for services and for money which they have invested in this country. But when you have brought those two things in it by no means follows that imports balance exports. Even in that extended sense it would only be true supposing there never was a capital gain or loss at the end of the year; and as there is always a capital gain or loss at the end of the year it may probably be said that the statement is never true. And if at the end of the year the adverse balance of trade is £113,000,000, for example, that means in effect that we have lost £113,000,000, which we make up probably by selling foreign investments or something of that kind. We live on our capital; and so long as we have got any capital left to live on no doubt the process can continue, but it is not a very promising process for our posterity or for our trade if we are gradually destroying our invisible exports by destroying the capital out of which those exports are made up, and that is really what is involved in going on regardless of an adverse balance of trade and consoling yourself with the pious reflection that somehow or other imports always balance exports. That is a point which certainly Mr. Cobden never thought of, certainly which did not exist in the bygone days of Free Trade controversy—the adverse balance of trade.

What is the second? The second is the unhappy fact that we have two and three-quarter millions of our people unemployed. My noble friend Lord Snowden said that he could point to foreign countries where protectionist policy existed where there was also an equally large proportion of unemployed persons. I think that is true, but there is this difference: that whereas they enjoyed periods of prosperity and have now sunk to a temporary depression, our unemployment is a permanent post-War feature in our economic life. And, after all, when we remember that we are importing into this country every year some hundreds of millions of pounds worth of manufactured goods, many of which could easily be made in this country, why should not we see to it that our own people should make these goods, and realise whatever wages are involved in them and whatever profit can be made out of them, instead of handing over the profit and the wages to foreigners and leaving our own skilled workmen on the "dole"? That is the alternative between the free trade and protectionist policies with regard to our unemployment. It is not for lack of efficiency that we cannot compete. My noble friend Lord Snowden says that already we have 80 per cent. of the home market. The reason we cannot compete is that we are so handicapped by the different standards of living at home and abroad and by the crushing burden of taxation which weighs upon British industry to a far greater extent than on any foreign country, that, in spite of the efficiency of our manufactures and in spite of the enterprise of our manufacturers and industrialists, they are unable to overcome the handicap unless they are given fair play.

The noble Lord, Lord Arnold, said that we were beginning at the wrong end when we were trying to check imports, because he said what we want to do is to sell British goods. I agree with him, but why should he confine his sales to foreigners? Does he not want to sell British goods to British buyers?

LORD ARNOLD

I said so.

VISCOUNT HAILSHAM

Then if the noble Lord said so, I hope he will go with me into the Lobby when we have found a way of doing it.

LORD ARNOLD

We want to sell to both.

VISCOUNT HAILSHAM

We will do one at a time. After all, so far as the home market is concerned it is surely plain—I should have thought almost beyond argument—that if you succeed in shutting out of the home market goods which the foreigner at present is selling here, but which can be manufactured in this country, you are to that extent creating employment in this country, and are selling British goods, which is the very object which the noble Lord desires with me to attain.

What is the third position which is a new feature since the War? In old days the Dominions, the Colonies and the Mother Country were indissolubly bound by legal ties. That position has passed away, and to-day there is no legal tie which binds the Dominions to the Mother Country except only, perhaps, their allegiance to a common Sovereign. We think that there ought to be ties created to take the place of the legal ties which have been dissolved, and we believe that those ties can be found in economic bonds if only we can go about it in the right way. Do not let us forget that everyone of the self-governing Dominions only eighteen months ago affirmed their conviction that by a system of Imperial Preference those economic bonds could be created, and affirmed their willingness to enter into an economic system by which those bonds could be created.

Do not forget it was only by the deliberate policy of the Government of this country at that time that their offer was unfortunately rejected. Luckily for us, the Dominions, with more wisdom and more patience than our own Government was inclined then to show, did not take the refusal as final, and only postponed the matter until the meeting at Ottawa next August; and we are going to the Ottawa Conference determined if by human skill it can be done to negotiate such arrangements with the Dominions not that we may crush their industries by our own, not that their statesmen may put aside the interests of their own countries, which of necessity must come first to each of them, but that they and we may go into conclave each determined that while we take care of the interests of our own part of the British Commonwealth of Nations first, we put the rest of the Commonwealth only second and in front of any foreign nation, that we desire and determine so far as we can arrange it that the tariff shall be used so that those goods which the Dominions have to sell and which we need to buy shall come from the Dominions and not from abroad, and that those manufactured goods which the Dominions desire to buy and which they import every year to the tune of hundreds of millions of pounds shall come from British factories rather than from foreign lands.

What next? The revenue position. The noble Lord, Lord Passfield, sneered at the suggestion that we are going to raise revenue by means of this Bill and sug- gested that you could not raise revenue if you achieved Protection. Of course the goods that pay duty to that extent are not replaced by British goods, but what on earth is there to prevent this tariff from operating in some instances to provide protection by preventing foreign goods from coming in, and in other cases to provide revenue by insisting that those foreign goods that do come in shall be taxed? I am not able to see any inconsistency in it, and I do not believe that the noble Lord does either.

LORD PASSFIELD

Except the £30,000,000.

VISCOUNT HAILSHAM

I do not care about figures, but £30,000,000 represents £300,000,000 of goods at 10 per cent. Our imports are about £800,000,000, are they not? The £30,000,000 of course represents 10 per cent. not only on manufactured goods, but raw materials and other things come in, and I think I am right in saying that last year we imported £800,000,000 worth of goods from abroad. Therefore it is quite obvious that there is plenty of room for a tariff to produce revenue and at the same time to have a very strong influence in protecting our industries and in providing markets for our home production. The noble Viscount, Lord Snowden, said that only the poor were hit by indirect taxation and that—

VISCOUNT SNOWDEN

No, not "only."

VISCOUNT HAILSHAM

I do not wish to misrepresent the noble Viscount. He said that the greater part of indirect taxation would fall upon the poor. That involves two assumptions. He will forgive my saying that I do not accept either of them. The first is that wherever goods come into this country the whole of the duty is paid by the consumer. It obviously is not, because if the whole duty were paid by the consumer then the price would have to be put up by the whole 10 per cent. and in almost every case that would mean encouraging the home producer to come in and undersell him. There are cases no doubt in which the duty falls on the. consumer because the goods which are imported are goods which can only be made in a particular country, and where that country has a monopoly and can pass on the whole of the duty. But there are many other cases where the foreign importer cannot pass on the whole of the duty because he would lose his market. He has to bear part of the duty in order to retain the market at all, and it is not true to say that in those cases the consumer bears the tax, which is borne, in fact, wholly or in part by the foreign importer or his agent or purchaser in this country.

The second assumption is that the poor consume the greater part of the goods which will be subject to the tax. I know of no statistics which will prove that statement. I do not know where my noble friend would draw the dividing line between those he calls poor and those whom he calls rich. Perhaps he puts it so high that there are very few rich people and therefore the poor would bear the tax. On the other hand, if he put it as low as he put his own Income Tax limits a few months ago, it may turn out that the so-called rich, at any rate the direct taxpayers, bear the bulk of the tax in so far as it falls on the consumer at all. But, even if it were true that the poorer part of the population paid the bulk of indirect taxation, it would equally be true that it is the poorer part of the population who gain the bulk of the advantage from the taxation, because it is they who gain the work that is going to be created by this tariff, and who will be rescued from the misery of unemployment and the "dole", and restored to self-respect and the facility for earning an honest livelihood.

As to the fifth point, which did not happen in the old days, we hope to use this tariff and right of discrimination which it affords to reduce foreign tariffs. We have heard, and it is no doubt true, that tariffs have reached unheard-of heights. We know there are all sorts of methods of restrictive regulation by which British goods are kept out of foreign countries and we intend to use the bargaining power which these duties offer to enable us to reduce those tariffs. The noble Lord said: "Oh, but people have not succeeded in doing it in the past." One reason may be that foreign countries always had the free market of Great Britain to dump goods into; but at any rate the alternative of what Lord Marley described as mutual discussion does not seem to be a very promising field. We have been having mutual discussion for about fifty years and tariffs have been going up against us all the time.

Then we propose to use this Bill to help to restore efficiency to industry. I am glad we did not have to-night the old cheap sneers at the efficiency of British industry, which I think were undeserved, but no doubt at the moment industry at home is heavily handicapped by reason of the uncertainty of having any market and the unfair competition of foreign goods produced under sweated conditions without having to pay the same taxes as British industry. By reason of these matters British industry is heavily handicapped—prevented from accumulating capital and such as is accumulated frightened away by the lack of certainty of a return. We intend to cure that by this tariff.

Finally we intend to avoid the consequence of doing nothing. Lord Marley said the only alternative to this Bill would be the methods of Russia. Well, we on this side of the House are not enamoured of the methods of Russia and we believe that a Bill calculated to prevent that alternative, which the noble Lord says is the only one, of having slave labour introduced here, is a Bill which, on that ground alone, ought to commend itself to the common sense of the people. Viscount Snowden relied, on the other hand, on the automatic equilibrium, and I think I have dealt with the arguments in answer to that.

At this late hour I do not want to take up more time. I do not promise— the Government has never promised—that this Bill is going of itself to bring about a millennium. I do not disguise from myself that from the purely political Party point of view this is a bad moment to introduce the Bill. It is a moment when we have been on the very verge of ruin; a moment in which the whole world is suffering from an economic depression unequalled perhaps in history; a moment in which we are told by all the economists that the prices of primary products are too low and must inevitably go higher. I am afraid there may be unscrupulous people who will not be slow to say when they do go higher that it is due to the Bill, even though they know it is due to world causes outside the Bill. I do not disguise from myself that this is a difficult moment at which to introduce the Bill, but I say it would be a tragic moment at which to leave things as they stand.

We are on the very brink of grave economic disaster. We are living in a condition when this country cannot afford to go on as she is without risk of widespread misery and literal starvation among large sections of our population. We believe that this Bill does offer fresh hope and fresh encouragement to industry; that it does offer a reasonable opportunity of gaining better access to foreign markets; we are confident that it does offer a real chance of developing the Empire markets, and of encouraging the settlement of our own people in our wide spaces and Dominions; that it does do something to forge fresh links, uniting the Empire together. We believe that this Bill does give to our people, who are almost despairing under the king-drawn-out agony of unemployment, a fresh hope and a fresh chance of finding work, and an opportunity of justifying themselves and restoring their own self-respect. For the rest we must leave it to the enterprise and to the energy of our people, of our workers, and of our industries.

My noble friend Lord Snowden has said that when the next Election comes the people will be swayed with the desire for national welfare rather than by any personal interest. I agree with him, though I cannot forbear reminding some in this House that it was not long ago that we used to hear the parrot cry, at

every Election: "Your food will cost you more." There is not much appeal to the national welfare in that slogan. I agree that the last Election has shown that if the matter is put straight before the people on national grounds they can be trusted to think imperially and respond to an appeal so made. I believe that, unhappily, Free Trade has been tried at the bar of public opinion and has been condemned. At any rate I am confident that it has proved itself unequal to the conditions in which we live to-day. I know that the tariff and Imperial Preference system, which we are to-day extending, has been tried on a small scale in the Abnormal Importations (Customs Duties) Act, and the Safeguarding Acts, and has proved a success, and I believe it will justify itself by experience. At any rate I hope I am speaking not merely for my own Party but even for those Free Traders who believe that we are making a mistake, when I say that I hope and pray that this great adventure will enure to the national good, for the Imperial advantage, and for the advancing of that civilisation in which the British Empire takes so leading a part.

On Question, Whether the Bill shall be now read 2^a?

Their Lordships divided: Contents, 129; Not-Contents, 12.

CONTENTS.
Sankey, V. (L. Chancellor.)	Malmesbury, E.	Aberdare, L.
	Midleton, E.	Abinger, L.
Argyll, D.	Mount Edgcumbe, E.	Addington, L.
Marlborough, D.	Peel, E.	Alvingham, L.
Somerset, D.	Pembroke and Montgomery, E.	Amulree, L.
Wellington, D.		Annaly, L.
	Poulett, E.	Askwith, L.
Anglesey, M.	Radnor, E.	Auckland, L.
Exeter, M.	Rothes, E.	Basing, L.
	Scarbrough, E.	Belper, L.
Cromer, E. (L. Chamberlain.)	Selborne, E.	Berwick, L.
Abingdon, E.	Spencer, E.	Biddulph, L.
Airlie, E.	Stanhope, E.	Brougham and Vaux, L.
Albemarle, E.	Strange, E. (D. Atholl.)	Brownlow, L.
Beatty, E.	Vane, E. (M. Londonderry.)	Camrose, L.
Bradford, E.		Charnwood, L.
De La Warr, E.	Bridgeman, V.	Clinton, L.
Denbigh, E.	Chaplin, V.	Congleton, L.
Devon, E.	Elibank, V.	Conway of Allington, L.
Effingham, E.	Goschen, V.	Conyers, L.
Howe, E.	Hailsham, V.	Cornwallis, L.
Iddesleigh, E.	Hambleden, V.	Cottesloe, L.
Iveagh, E.	Hampden, V.	Cozens-Hardy, L.
Leven and Melville, E.	Hood, V.	Cranworth, L.
Lindsay, E.	Knutsford, V.	Cullen of Ashbourne, L.
Lucan, E. [Teller.]	Scarsdale, V.	Daryngton, L.
Macclesfield, E.	Sidmouth, V.	Desborough, L.
Dynevor, L.	Joicey, L.	Southampton, L.
Ebbisham, L.	Kenmare, L. (E. Kenmare.)	Strathcona and Mount Royal, L.
Ellenborough, L.	Lawrence, L.
Elphinstone, L.	Lloyd, L.	Sudeley, L.
Erskine, L.	Lovat, L.	Selsdon, L.
Fairfax of Cameron, L.	Luke, L.	Swinfen, L.
Faringdon, L.	Manners, L.	Templemore, L.
Fisherwick, L. (M. Bonegall.)	Marks, L.	Teynham, L.
Forster, L.	Middleton, L.	Treowen, L.
Gage, L. (V. Gage.) [Teller.]	Mildmay of Flete, L.	Tweedmouth, L.
Glentanar, L.	Monckton, L. (V. Galway.)	Vivian, L.
Hampton, L.	Monson, L.	Waleran, L.
Hanworth, L.	Mount Temple, L.	Wargrave, L.
Hardinge of Penshurst, L.	O'Hagan, L.	Wavertree, L.
Hawke, L.	Oriel, L. (V. Massereene.)	Weir, L.
Howard of Glossop, L.	Redesdale, L.	Wharton, L.
Islington, L.	Roundway, L.	Wigan, L. (E. Crawford.)
Jessel, L.	Sempill, L.	Wynford, L.
NOT-CONTENTS.
Snowden, V.	Marley, L. [Teller.]	Rochester, L.
	Northington, L. (L. Henley.)	Sanderson, L.
Arnold, L.	Passfield, L.	Stanley of Alderley, L. (L. Sheffield.)
Hay, L. (E. Kinnoull.) [Teller.]	Ponsonby of Shulbrede, L.
	Revelstoke, L.	Swaythling, L.

Report from the Committee of Selection, That the Lord Addington be proposed to the House as a member of the Select Committee on the said Bills in the place of the Lord Ruthven of Gowrie: Read, and agreed to.

Resolved in the affirmative, and Bill read 2^a accordingly.

Committee negatived. Then (Standing Order No. XXXIX having been suspended) Bill read 3^a, and passed.