Lords Sitting of 14 June 1932

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
KENT CORN RENT BILL.
Read 3a, with the Amendments: a further Amendment made: Bill passed, and returned to the Commons.

LONDON MIDLAND AND SCOTTISH RAILWAY ORDER CONFIRMA- TION BILL. [H.L.]
Order of the Day for the Second Reading read.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Strathcona and Mount Royal.)
On Question, Bill read 2a, and (pursuant to the Private Legislation Procedure (Scotland) Act, 1899) deemed to have been reported from the Committee.

LONDON AND NORTH EASTERN RAILWAY ORDER CONFIRMA- TION BILL. [H.L.]
Order of the Day for the Second Reading read.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.— (Lord Strathcona and Mount Royal.)
On Question, Bill read 2a, and (pursuant to the Private Legislation Procedure (Scotland) Act, 1899) deemed to have been reported from the Committee.

SOUTH LANCASHIRE TRANSPORT COMPANY (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
Read 2a (according to Order), and committed.
MINISTRY OF HEALTH PROVI- SIONAL ORDERS CONFIRMATION (ELHAM VALLEY WATER AND HERTS AND ESSEX WATER) BILL. [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: Amendments proposed by the Committee made.
MINISTRY OF HEALTH PROVI- SIONAL ORDER CONFIRMATION (HAILSHAM WATER) BILL. [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: Amendments proposed by the Committee made.
MINISTRY OF HEALTH PROVI- SIONAL ORDER CONFIRMATION (HENLEY-ON-THAMES WATER) BILL. [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: Amendments proposed by the Committee made.
MINISTRY OF HEALTH PROVI- SIONAL ORDER CONFIRMATION (HERTFORD) BILL. [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.
SEA FISHERIES PROVISIONAL ORDERS (No. 2) BILL.
Read 2a (according to Order), and committed.

COAL MINES BILL.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Viscount Hailsham.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF ONSLOW in the Chair.]
Clause 1:
Continuance of Part 1of 20 & 21 Geo. 5. c. 34 and of s. 1 of 21 & 22 Geo. 5. c. 27.
1.—(1) Part I of the Coal Mines Act, 1930 (which is limited to expire on the thirty-first
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day of December, nineteen hundred and thirty-two), shall continue in force until the thirty-first day of December, nineteen hundred and thirty-seven, and no longer unless Parliament otherwise determines; and, accordingly, in Section ten of that Act, for the words "nineteen hundred and thirty-two" there shall be substituted the words "nineteen hundred and thirty-seven."
EARL PEEL EARL PEEL moved, in subsection (1), to substitute "nineteen hundred and thirty-five" for "nineteen hundred and thirty-seven." The noble Earl said: I think the purpose of my Amendment is very clear on the face of it, and that is, to reduce the period for which the operation of Part I of the Act is prolonged from five years to three years. I am encouraged in moving this Amendment by some observations which fell from the noble and learned Viscount, Lord Hailsham, who is in charge of the Bill. When speaking on the Second Reading he told us that His Majesty's Government
"will be prepared to consider—I do not say accept Amendments, but prepared to consider any argument brought forward to convince them that the period, which so far they think is the best one, can for any good reason be extended or shortened."
It is quite clear that when he made that statement the mind of the Government was still open on that question of the period, and I wish to put before him one or two points which I hope will persuade him that the shorter period is the better. No doubt he has considered that question in the interval, especially during the little holiday he took lately on the Irish Sea.
I admit, of course, that the temptation to the Government, or any Government, to prolong the period to five years is a considerable one. The effect of five years is that this, from the point of view of the Government, or any Government, very troublesome question, is postponed till the next Government. The Government are able to shake themselves free of the question, so far as they can, and I dare say they feel that it is a very great thing to push one of these ugly questions overboard when they have so many other questions to consider. I am not sure, however, that they will succeed in what they are aiming at, because I do not quite agree with what he said, that possibly in any other country it would have been very difficult to have got any undertaking for keeping up wages for another twelve

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months. We know that there is a discrepancy between the period of price fixing and wage fixing, and therefore I do not think we can expect that this matter will not be brought up again another twelve months from now. I submit that there is a great advantage, when we have a coalition Government, in trying to make a permanent settlement of this question, instead of allowing it to lap over to some future Government five years hence, of which we do not know the composition.
Moreover, one would like to ask the Government this. They are trying to make this Act as permanent as they can. After all, all a Government can do is to say: "We decline to deal with a matter in a Statute again during our period of office." Do the Government and your Lordships really think that the working of this Act has been so successful, and the methods which have been introduced into the management of coal mines are so useful that they may become a permanent part of this industry, and that a precedent may also be set for other industries? We have not heard very much here of the objections to that system, but we all know they have been amply stated in another place and in other quarters. I will only refer to them in passing, because so many of them are familiar to your Lordships. But is it really considered to be a useful and permanent part of the State that we should have the great coal mining industry literally quartered, as it is, upon all the industries of the country? Is it really a right thing that these district committees should be able to fix the price of coal? Is all this immense machinery for dividing up quotas, for settling the standard amounts, and so on desirable? And is this traffic in the right to produce coal, which you do not want to produce, and is the sale of these certificates really a desirable thing in the management of the coal industry, or of any other business in this country?
After all, it produces great difficulties for the consumers, quite apart from the question of price. They find great difficulties owing to the operation of the quota system, especially if their demands for coal are rather small—difficulties in getting their supplies properly given to them, and all sorts of difficulties with waggons, which, taken together, make up a very hazardous and rather troublesome
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matter for those who are purchasing coal. We might say that these things were tolerable if we were convinced that this was only a temporary method. We have every sympathy with the coal industry, and we know quite well that its troubles are very largely due to the constant interference of Parliament with the whole system. I admit all that; but that ought not to blind us to the fact that we are really deciding to-night whether this system, with all its defects, should be made, as far as Parliament can possibly make it, a permanent part of the management of the coal industry, or whether we should say: "No, this is an experimental phase; we will not allow the business to go on for more than another three years without revision." Because, after all, if a revision has been renewed by one Parliament, and has survived two Elections, I am quite certain that a considerable body of opinion will rise up and say: "Oh, you cannot disturb this now. All these interests have got settled. Why, look at this system of selling certificates —it is part of the market business of the country, and it must not be disturbed by any Government." Therefore we have, I think, to look from a very different angle upon a system which is merely a temporary system, invented to get the coal industry out of great difficulties, as compared with a system which is to be regarded as a more permanent part of the industry of the country itself.
In listening to the speech of the noble and learned Viscount I was very much struck by the almost exclusive interest he took in the views of the coal industry itself. He talked about the views of the owners, about the views of the miners, about the views of the merchants and of the retailers, but we did not hear anything at all about the large consumers or the small industries—in fact, about the whole of the industries which are dependent upon coal. I have in my hand, having received it since I put down this Amendment, a rather remarkable letter from the Joint Conference of Public Utility Associations. This body represents the electricity, gas, water and tramways interests of the country, which consume about 28,000,000 tons of coal per annum. They strongly support the Amendment, and I may perhaps summarise one or two of the arguments which they advance. They point out that this

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Bill will increase the cost of living in every home by raising the price of coal, gas, and electricity. They point out how it will affect our export industries—and surely the value of the exports of our export industries is many times greater than the value of the export of coal. They point out that it will have the effect of keeping in business low grade mines which might be closed, and of checking the efficiency of the better mines. They point out that the Bill is really a subsidy to one form of fuel over another and, above all, in that tremendous contest that is going on between coal and oil, it is oil which will have preferential treatment and which will be able to gain over its dwindling rival.
It is rather interesting, in this connection, to observe that, while a few years ago unrestricted competition was supposed to be the salvation of the State, there hardly seems to be anybody now who comes forward in favour of free competition in the case of coal. The noble and learned Viscount said he was advised that about 2s. a ton would be the amount by which the price of coal would fall if there were free competition, and if this Act came to an end. Looking at the way in which our industries have been able to keep their heads above water—so far as they have done—during the last two or three years, one can see that it has been due to one cause, and one cause only, and that is that the price of all raw materials has been so abnormally low. They have in many cases fallen to 25 or 30 per cent. of what they were four or five years ago. If you take the metal industry and the great textile industries, like cotton, wool and jute, it is only through these knock-out prices for their raw materials that businesses have been able to maintain themselves.
Now this, I imagine, is only a temporary situation Everybody is asking that the prices of raw materials should rise and should go back at least to the level of 1928. Besides that, we have a large number of financial doctors, professors of economics, and so on, who are constantly speaking of what they do not like to call inflation—they christen it by some other alias like "reflation"—but at any rate all tending towards a rise of prices. It is clear, therefore, that though industries may be able to bear better to-day a rise in the cost of coal
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because of this particular situation, it is not at all certain that this is going to obtain during the next five years. I therefore submit that it is a very dangerous thing to allow the price of coal to be fixed for the next five years, when it may have a far greater influence on the prosperity of other industries because the prices of other raw materials may have risen. Noble Lords are very well aware that we trade nowadays on very small margins indeed and it may well be, if you tie your hands in this respect, that you may find that your industries are suffering because of that 2s. or 3s.—or it may be more—addition to the price of coal beyond the price that would have had to be paid if the coal industry was a little more free. May I suggest also that it may be that the extra price of coal, stereotyped through five years and perhaps raised in five years, may be the one thing which prevents the industries of this country from making those large demands for coal which would be the very thing that would absorb the people who are at present unemployed in the coal industry? I submit that it is rash and unwise so far to anticipate the future as to fix the price of one of the great raw materials which is mostly used for industry.
There is one other argument on which this increase of time to five years has been advocated, and that is founded upon the work of the Organisation or Amalgamation Commission which has been going about the country. We have just had the benefit of seeing the Report of that Commission, and the members seem to think that they have not been, as everyone knows they have not been, extremely successful in persuading people in the coal trade to amalgamate, but they say—and they use what is almost the language of menace—that now they may be prepared to make use of their compulsory powers. I am glad to say they also observe that they are not in favour of very large amalgamations. I am glad of that because, as your Lordships know, the history of large amalgamations in industry during the last few years has been singularly unfortunate. I think everyone would agree that those large amalgamations have been pressed too far. While I do not pretend in any sense to be an expert on the coal industry, I have some knowledge

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of other industries, and I cannot myself believe that compulsory amalgamation can be of very much value. You may look at prices, you may look at contiguous coal mines, you may look at all sorts of things, but so much depends on the history of a particular industry, and very much on the personalities of the people who are engaged in running that industry, and I do not believe compulsory amalgamation made against the will of an industry can be of much value. Therefore I discount as one of the reasons for having this measure for five years the fact that it will give five more years for these gentlemen to practise their beneficent operations.
On those grounds I urge the adoption of the Amendment. The main ground which I would press upon your Lordships is that with the terrible uncertainty which faces us in regard to matters of trade, with everything in the melting pot, with loans repudiated, with disturbances in other countries, with difficulties abroad and so on, it really is very unwise to fix one element in the management of our industries at this time of day and to say that for the next five years we are to be precluded from dealing with it. I submit that it would be much wiser to fix three years, which is a fairly long period. At the end of that time this Government, which has probably a life of three or four years, may have the opportunity of dealing with it, and of dealing with it as an experienced Government, instead of leaving it to be dealt with by some new Government which may have to tackle it in the first years of its existence. I beg to move.
Amendment moved—
Page 1, line 10, leave out ("thirty-seven") and insert ("thirty-five").—(Earl Peel.)
THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM): As the noble Earl has truly said, I expressed my willingness on the Second Reading to listen attentively to any arguments which might be adduced to induce the Government to change the opinion which it had formed that five years was the right period for the extension of this Part of the Act. I have listened to the arguments of my noble friend, and nobody who has worked with him, as I have, will doubt that he has put the strongest case that it is possible to put in favour of the
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change; but, having listened very attentively and very carefully to what he has said, I hope he will forgive me when I say he has not succeeded in convincing me, and I hope he has not succeeded in convincing the majority of your Lordships' House.
To deal at once with one or two very minor matters, I would remind your Lordships that what we are discussing this afternoon is not whether or not Part I of the Coal Mines Act, 1930, should be continued. We are accepting that there should be a continuation, and the only question raised on this Amendment is whether the continuation shall be for three years, to the end of 1935, or for five years, to the end of 1937. My noble friend said that the object of the Government was to push off the decision as to what is to happen when that Act comes to an end to another Government, because, said he, at the end of four years this Government must come to an end. Will he forgive me for saying I make no such assumption? I do not see any reason why this Government should come to an end in four years. This Parliament may come to an end in four years, but, if we conduct the affairs of the country with the same prudence as I trust we are showing in asking for the continuation of this Act for this period, I hope that when the four years are finished a grateful country will renew our mandate and give us more opportunities of giving settled rule to the country. At any rate I am not arguing this on the basis that whenever Parliament comes to an end this Government is, of necessity, doomed.
I would like to tell your Lordships why it is that we think the period which is proposed is the right period. They are really reasons which arise out of the grounds upon which we have asked for any continuation—grounds which, I gather, have met with general acceptance. The first ground is this, that in the judgment of the Government there has been too much Parliamentary interference with the mining industry in the past, and we are not anxious to encourage Parliamentary interference with that industry in the future. There was made on the Second Reading a very powerful speech by my noble friend Lord Crawford—I am not sure whether he is present this afternoon—in which he laid a great many of the losses from which the industry is suffering at the door of Par-

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liament, because, he said, successive Governments and successive Houses of Parliament had insisted on legislating and interfering with the management of the industry, and in that way had so unsettled it and had so disturbed its due administration that it had become almost impossible to carry it on. We are desirous not to interfere more than is absolutely necessary with this industry, and whereas we are expecting that Part I of the existing Coal Mines Act will come to an end, if our proposals be accepted, five years hence, we are not suggesting that when that five years elapses and when that period is reached it will be necessary to pass a new Act again interfering in some different way with the industry.
On the contrary, we believe that if a reasonable opportunity be given to the coal owners and to the workers in the industry to get together, to reorganise, to rearrange their methods and to enter into voluntary arrangements of their own, it may very well be that when the five years have gone there will have been sufficient time for the coal owners to have devised a voluntary system which will be fair to the industry as a whole and will not necessitate any further Parliamentary interference. I observe that in the debate in Committee in another place a member who has deservedly a very high place in the counsels of that Chamber and great experience of this industry, Sir Geoffrey Ellis, as he now is, said:
"This is the first time that the coal owners as such have been given any stability to get on with their own suggestions for the improvement of the trade. It may be the last time that they will get that opporunity, but it is not right for the Committee to-day to put any obstacle in the way of giving them that opportunity. If they do not take the opportunity, then the judgment will be on their own heads."
I believe that is a very true statement of the position. We are anxious to give such a measure of stability as will enable the coal owners to make such reorganisation and such alteration as will, I hope, in the future render it unnecessary for Parliament to intervene. If we are going to do that, then surely five years is none too long an interval to allow.
There are other minor reasons, but I think they ought to be mentioned. At present, unfortunately, there is no doubt that a considerable amount of evasion is taking place with regard to the provisions
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of the existing Act. The President of the Board of Trade said that he had himself come across a number of instances where, not of course the majority of the coal owners, who have quite loyally acted fairly to one another, but where some individuals had succeeded in evading the provisions of the Act by such methods as the manipulation of freights, or the combination of sales of coke with sales of coal, or by similar means had got round the terms of the Act and the prices which are fixed in the Act. At present some at any rate of the coal owners, according to the President of the Board of Trade, whose business it is to know these things, think that the attempt to bring pressure to bear on these isolated individuals would create a degree of ill-feeling and friction and would expose them to an amount of dislike and criticism which would render it not worth while if the Act was soon coming to an end. Coal owners, after all, are the people who have to frame these schemes in the first instance and administer them, and they have a number of amendments which they are discussing, some of which they are likely to wish to incorporate in their schemes. They desire a sufficient time to enable these amendments to be carefully worked out and they desire them to be enacted at a time when it is still worth while to do it and when it would give full time for them to have effect before any change takes place.
My noble friend has said—this, I think he said, was his main argument—that it is very unwise in existing circumstances, when industry is in such a difficult situation, to fix the price of so essential a commodity as coal for such a long period as five years in advance. Of course, my noble friend did not quite mean that. He knows very well that this Act does not fix prices for five years.
EARL PEEL: I said gives the power, I think.
VISCOUNT HAILSHAM: What is done, subject to the appeals which he and I were so careful to get incorporated in the Act when we were discussing it two years ago—the appeals of the consumers and others—is to give power to the districts to frame schemes fixing output and minimum prices. My noble friend says that he hopes and, I gather, anticipates—I hope anticipates—that prices of raw

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material will be going up in the course of the next few years. I hope that will be so. I think it is generally conceded that prices now are too low and that that is one cause at least of our present economic difficulties. If that happens, can anyone think that the price of coal will remain stationary? It will be much easier at any rate to maintain the price than at present. I would like your Lordships to realise what would happen if prices are no longer fixed and this regulation no longer prevails. I am speaking from memory, but I think the figures are substantially correct, when I say that there is demand now for 220,000,000 tons of coal. There is a potential output of something like 300,000,000 tons. Suppose people have 300,000,000 tons of coal to sell and there is a demand for 220,000,000 tons, what sort of drop in prices would you get? The drop would not be proportionate to the difference between those two figures, because when supply outruns demand everybody who has goods to supply wants to have his particular goods used. The result is that prices are cut and cut, and the drop in price is disproportionate altogether to the amount of the excess supply.
In the old days it was preached and believed in this country that the one thing that mattered was cheapness, that the one thing we ought to aim at was unrestricted competition. I had hoped that my noble friend was with me in, regarding that as an exploded heresy and that there are other things to think of besides cheapness. Suppose you succeeded by bringing about unrestricted competition in effecting—as you undoubtedly would effect—a substantial reduction in the price of coal. It would be a reduction which would not help our industry as opposed to foreign industry, because a great proportion of our coal output is an export trade, and it is the export trade which would probably get at least as much of the advantage as the domestic trade. In all probability it would get more of the advantage since there is more competition in foreign markets than there is even at home. Let it be taken to be the same. There would be a tremendous fall in prices which would cheapen for us and for our competitors the cost of fuel. What would happen to the industry? At present the miners are getting a wage which I think
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nobody suggests is high and which certainly nobody suggests is too high. At present coal owners are carrying on their industry practically without profit in any case, and in many cases carrying on at an actual loss and finding out of their own pockets money to make up the minimum wage for the miners, so that they shall not throw people out of employment and intensify distress which unhappily is already too prevalent.
You cannot cut prices without disastrous consequences to coal owners and miners alike, and disastrous consequences the limit of which it would be very difficult to measure. It is to avoid that sort of catastrophe that we have thought it right to continue this measure for a limited period, in order that in this time of stress there may be—not any exploitation of the consumer, which nobody suggests is taking place; but in order that there may be maintenance of such a price as will give at any rate the possibility of keeping the collieries open without inflicting an impossible loss upon their owners, and of keeping wage levels steady at a time when they have unfortunately already dropped to too low a figure. In the judgment of the Government it would be a disaster for the mining industry if this control were suddenly removed at too early a date. We believe it is not unreasonable to give them that stability, for which Sir Geoffrey Ellis pleaded, for a period of five years. We decline altogether to assume that at the end of that five years fresh Parliamentary interference will be necessary, but, if Parliamentary interference were necessary, then the longer it is put off the better. On all those grounds, which I hope are reasonable grounds, the Government feel that the period which they have fixed is the right period and I would ask your Lordships, if my noble friend remains unconvinced, to support the Government in the view they have formed.
LORD JOICEY: I listened to the speech of the noble Viscount with great interest and have been much impressed by the statements he has made. I have always been against Government interference in the industries of the country. I have always thought it better to leave them in the hands of those people who have been trained in them and who understand them, for a Government, no doubt, must

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be largely influenced by political considerations. Take our own case in Durham and Northumberland. We used to deal with our own men direct, and any difficulty that arose with regard to wages or any question about the working of the mine was dealt with in the locality by proper committees representing both the masters and the men. But, as soon as the Miners' Federation was formed, they began to see that it would be much better for them to deal with the politicians than with the employers. The result has been that they have taken away most of our communications with the men in our own localities, and matters have now to be settled up in London. Our chief managers have now to spend most of their time every week in dealing with questions in connection with the Miners' Federation.
I am bound to say that I was surprised when my noble friend accused the Government of looking forward to making this a permanent Bill. I look upon it as a Bill which will only last for a certain time. I do not believe in legislation by instalments. It has a very bad effect and I am quite sure that, as time goes on, the public, the Government, and the workmen themselves—if they have any say in the matter—will be only too glad to hand matters back to be dealt with by the miners and owners themselves. Only those who are connected with the industry know the difficulties that there are in working coal. I was very glad indeed to find that the late Minister of Mines and the present Minister of Mines, Mr. Foot, took the opportunity of going through the various coal fields to get some information with regard to this great industry with which they were dealing. I feel sure that they changed many of their views with regard to this question. They found that the difficulties were very hard to surmount and it made them very much more moderate in dealing with the owners.
This industry is at present in an abnormal condition. I should be sorry to think that this Bill was going to become a permanent measure because, to a large extent, it would prevent us from working our industries in the way we should in order to compete with the foreign producer. I have always believed in competition. Competition is a good Wholesome thing both for the competitors
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and for those who benefit from it. But there are times, such as the present time, when competition will do more harm than good. Notwithstanding this legislation, I find that many contracts which we have been accustomed to make have gone to our competitors, even at lower prices than the prices fixed. How it is done I am not prepared to say, although I have my own opinion on this matter. If we shorten the life of this measure, it will have a very bad effect on the industry of this country. Most contracts in connection with coal are made for twelve months and are very often made three or six months before they come into operation. What is the result? If there is any uncertainty, they will not deal with the British producer but with the foreign producer. I have lost contracts for many thousands of tons because of the uncertainty which exists with regard to the future of this industry.
I am very glad to find that the Government intend to insist on the five years. It is beneficial to the industry and I feel sure that, as time goes on, we shall find flaws in connection with this measure, flaws which ought to be remedied. One of the chief objects of the original measure was to prevent one district competing with another. That is not being completely carried out. There are some districts which are cutting in and taking orders from other districts. Can one be surprised when there are orders for 70,000,000 or 80,000,000 tons less than we can produce? Naturally, the great object is to get more coal and more sales, because it pays to reduce the cost of production. If one district takes orders from another, the one district is penalised while the other becomes more profitable. The producer who sells for home consumption only has an advantage because he is getting a higher price than is obtained for export coal. If he uses that higher price in order to get export trade, he does his neighbour a very serious wrong. I quite agree with what was said by the noble Viscount who has just spoken, that it would be very much better if we could prevent this and if we could have some means of insisting upon the Act being carried out fairly and with consideration for everybody.
I am sorry I was not present at the Second Reading of this Bill for I should have liked to have spoken upon it, but,

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being an invalid, I was unable to do so. I hope that the Government will stick to the period of five years because it is beneficial not only to the industry but to the consumers who benefit from it. I hope that, as time goes on, we shall find this Bill being properly worked and very beneficial, and that after the five years the industry will be handed back to those accustomed to manage it.
EARL PEEL: Perhaps your Lordships will allow me to say a brief word in reply to the speech of the noble and learned Viscount. I am sorry that I have not had as much support as I had hoped, because there is no question that the feeling in the country is very different to the feeling on this subject in this House. I do not in the least repent that I am here representing in your Lordships' House what is a very widespread feeling in the country. The noble Viscount says that he thinks this Government is going to be immortal—going to last, I think he said, over the next Parliament. I am a little more sceptical myself about the vitality of the Government. No doubt we hope it may be so. He also said that he thought Parliament should not interfere with industry. I applaud again the sentiment, but this Bill is as great an interference with the action or freedom of industry as any Bill could be. He also referred to free competition, but my argument went much further. I was criticising all those defects in this Bill and asking whether they are going to be fixed and part of the industry of this country, and whether they are going to set a precedent for other industries. There is no more skilled debater than my noble and learned friend and if he had had an answer to that I am sure he would have given it, but he passed the question by and left my criticisms unanswered. I do not know now what is the mind of the Government regarding the merits and defects of this particular Bill.
I also asked whether in the mind of the Government this was regarded as a temporary or permanent measure. The answer of the noble Viscount is clear and the result of it is that it leads inevitably to the conclusion that this should be regarded as a permanent measure, because he asked what would happen now if you took off this system. He said that you have now 220,000,000 tons required and a
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producing capacity of something like 300,000,000 and there is therefore an immense gap. If that is the argument it is an argument that is likely to stay. Do any of us suppose that with the enormous competition of all the different forms of power, the demand for coal is really going to increase so much that it is likely to bridge the gap between the productive capacity and what is required of the product? I do not wish to put your Lordships to the trouble of a Division, but I regret that the Government have made up their minds on the subject. The truth is that the Government generally make up their minds before measures come into this House and it is extremely difficult when matters have been settled in another place for your Lordships to have any effect on legislation. I therefore do not wish to press my Amendment further. I only regret that the noble and learned Viscount has not been more persuadable.
Amendment, by leave, withdrawn.
On Question, Whether Clause 1 shall stand part of the Bill?
LORD GAINFORD: On this Question I want to deal with two points. One has some relevance to the argument we have just heard from the noble Earl who moved the Amendment. He has criticised the operation of Part I of the Act and pointed out that in the opinion of a great number of people outside this House the work carried on under that provision is not satisfactory. The coal owners admit that Part I has not been a complete success and they are considering what amendments should be sought from Parliament in connection with the provision. I expect that in due course suggestions will come from them and will be submitted to Parliament for confirmation by Resolution under the terms of the Act of 1930, so that the public may realise that so far as Part I has not been a success up to the present there is a prospect of improving it by Resolutions passed by both Houses on the initiation of the Central Council or the district boards under the Mines Act.
The other point has reference to some little misunderstanding which I think occurred on the Second Reading debate as to the draft Convention referred to in the Bill. I criticised that draft Convention and even the noble and learned Viscount in charge of the Bill also stated

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that it would require some modification. I objected to the inclusion of the reference to the Convention in the Bill, not because I am opposed to the principle of the Convention but I am opposed to that particular Convention in its present form as prejudicial to national interests. If we can regulate hours of labour in the coal mines on a uniform system throughout Europe and in the States of America we shall accomplish a great deal to secure fair competition between nation and nation. Conditions as well as wages ought to be revised with a view to securing fair treatment. If we have uniformity of hours, pay and conditions we are all confident that British labour and industry will look very well after itself after such an international agreement has been reached.
In a debate which occurred rather more than two years ago in the House of Commons dealing with improving the standard of labour on international lines, the late Mr. William Graham gave a somewhat prophetic warning of the dangers connected with these Conventions. He said:
"Even when you have got agreement there is a danger, as we all know, on the part of certain countries of failure to observe rules or else such exceptions are driven into the rules that a nominal agreement becomes a very unreal one. That is a state of affairs with which every student of this problem is familiar."
Therefore, when I criticised the Convention which is named in the second subsection of Clause 1 of this Bill, I did it having in mind the possibility of those evasions, and what I want to impress upon the Government is that in the event of ratification of this Convention they must not only see that evasions are not possible in the terms, but that means are taken to enforce obedience by every signatory. It is that point which I regard as a very important one and which I want to emphasise before we reach the Third Reading of this Bill.
Clause 1 agreed to.
Remaining clause agreed to.
Bill reported without amendment.

SOLICITORS BILL. [H.L.]
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF ONSLOW in the Chair.]
THE LORD CHANCELLOR (VISCOUNT SANKEY): My Lords, it will be within your recollection that this Bill was referred to a Joint Select Committee of the two Houses for considering Consolidation Bills. I beg to move that the Amendments made by the Joint Select Committee be agreed to.
Moved, That the Amendments proposed by the Joint Select Committee on Consolidation Bills be made.—(The Lord Chancellor.)
On Question, Motion agreed to.

CARRIAGE BY AIR BILL. [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.

FINANCE BILL.
Order of the Day for the Second Reading read.
THE SECRETARY OF STATE FOR AIR (THE MARQUESS OF LONDONDERRY): My Lords, it devolves upon me this afternoon to move the Second Reading of the Finance Bill in this House. It is not for me to remind your Lordships of the limitations of the powers of this House in relation to Bills of this character. Your Lordships are well aware that we in this House can only reject such measures. We have no power of amendment. However, I need not assure your Lordships that I am not relying upon the fact that your Lordships' powers are limited, to secure the consent of your Lordships to the Second Reading of this Finance Bill. Whatever criticism of detail we may be desirous of making, I am sure that the House will take no serious objection to the Bill and its principles as a whole.
May I remind your Lordships briefly of the circumstances under which the present Government took office? I shall not trouble your Lordships by any reference to the financial policy or financial measures anterior to the date when my noble friend the Lord Privy Seal, as Chancellor of the Exchequer, framed a

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Budget which demanded immense sacrifices from every member of the community, but at the same time sacrifices no less serious than the circumstances warranted and demanded. All I will venture to say on the present occasion is that those sacrifices, the sacrificial Budget, if I may use the expression, to which I have alluded, were the result of financial circumstances for which the Socialist Government as a whole must assume a certain responsibility. We can congratulate ourselves and the country upon the courage with which the Lord Privy Seal, the Prime Minister and the Secretary of State for Dominion Affairs faced the situation; and in spite of their former colleagues, who were urging them to desert what they believed to be a sinking ship, joined with the other two Parties in the country and formed a Government of a national and non-party character. The vindication of that decision, if vindication is required, is found in the high esteem in which this country is now held throughout the world, a position which it appeared momentarily to have lost, and in the outspoken admiration of other countries for the manner in which Great Britain is mastering her difficulties and giving an example to the rest of the world.
Your Lordships are familiar with, in fact I think most of you have painful recollections of, my noble friend's second Budget last year; and I need not remind the House of the appeal made to the country by the Prime Minister, which followed those financial proposals—an appeal for support of the National Government in its immense task of reconstruction. I think we can say that the result certainly justified the appeal. The strength of this country is truly immeasurable. No one can place any limit on the courage and determination of its people. The more desperate the challenge, the higher and the more valiant the response. When the history of this dramatic period through which we are passing comes to be written, I believe there will be every reason to be proud both of the achievements of the people of Great Britain and Northern Ireland, and of the policies of the National Government which guided them through the crisis.
May I draw your Lordships' attention for a moment to the magnitude of the task and to the grandeur of the national
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achievement? The present Finance Bill gives me a suitable opportunity for making a very brief review. I can assure you that while I venture to trouble your Lordships with a few figures, they will be as few as possible. I may remind your Lordships that when my noble friend made his second Budget statement in September last, he had to provide for meeting a then prospective deficit on the year's accounts of no less than £74,000,000. At the close of the financial year 1931–32, there was, as the result of the stupendous efforts of the country in carrying out the financial policy advocated by my noble friend in September last, a small apparent surplus of £364,000. The magnitude of the achievement as thus shown is amazing enough, though as a matter of fact, as I shall endeavour to prove to your Lordships, it is even greater than appears at first sight. I spoke of an apparent surplus of £364,000, but the real surplus is greater than that, because this result, this balancing of the national account with a small revealed surplus, has been achieved after taking into the revenue of the year from the assets of the Exchange Account £12,000,000, which is £10,250,000 less than the amount which had been provided for by my right hon. friend in the Estimates which he put forward, and in spite of the losses of revenue, resulting from the world-wide industrial depression, which amounted to some £21,500,000, from the receipts of Estate Duties, Stamps, and the Post Office.
I have mentioned deficits in revenue under certain heads. Let me call your Lordships' particular attention to the manner in which these deficiencies of revenue were made up. They were counterbalanced to the extent of no less than £19,000,000 by Income Tax and Surtax receipts in excess of the Estimates and to the extent of £13,000,000 by un-anticipated savings in estimated expenditure. Your Lordships there have a proof of two outstanding facts. First, the British taxpayer has answered the appeal of the Chancellor of the Exchequer to his patriotism to the full. This country, even in the stress and strain of the Great War, has in my opinion never shown itself to the world in a more favourable light. We are all of us taxpayers and, therefore, it is hardly fitting that I should indulge in too many raptures upon the

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fine spirit and other virtues exhibited by the taxpayer, but I cannot help drawing your Lordships' attention to the fact that the second Budget of last year not only increased the burdens of the Income Tax to the existing Income Tax payers, but also brought into the ranks of the payers of this heavy tax a large number of men and women who had never been called upon to contribute before. I think I can best sum up the situation if I say that no part, no class, of our population has failed to do its duty and to make its full contribution to the common stock.
Secondly, the National Government has achieved very considerable economies, but as I shall return to the subject of economy before I sit down, I will say no more on that head at present, though many who are now crying out for economies speak as if we had not already made considerable steps in that direction. Let me turn now to the finances of the current year, 1932–33, in connection with which the present Finance Bill is drawn up. On the basis of existing taxation and including the estimated yield of the various new Import Duties, and after making allowance for heavy reductions in the yield of the Income Tax and Surtax, there is a prospective deficit of £1,700,000 which is increased to £2,800,000 by the proposed changes in the Sugar Duties. This prospective deficit, is to be met and a surplus of some £800,000 provided for by the reimposition of a Customs Duty on tea, giving a 50 per cent. preference to Empire tea. It will be observed that provision is made in the present Bill for the reduction of the permanent annual charge for the National Debt by £13,500,000, which is the amount of the half-yearly instalment of interest on the American debt. All receipts and outgoings on account of Reparations or War Debts are being treated as being in suspense at present in order to avoid prejudicing the results of the Lausanne Conference.
Upon this Conference I do not propose to say anything to-day, and I am sure your Lordships will not expect it. The world is in a sad state of financial chaos to-day. The present dislocation of international finance is undoubtedly the aftermath of the War, complicated and enormously increased by regrettable shocks such as those concerned with failures of great magnitude. This state of
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financial chaos gives every pessimist his cherished opportunity of painting a dark picture and indulging his fancy for gloomy forebodings. At the same time, he should realise that he may do enormous damage by the spread of the dangerous psychology of defeatism. Nothing ever was so bad as it is painted by the pessimist and nothing ever will be. On the other hand, it would be foolish to indulge in an unreasoning optimism and to proceed as though there was nothing to worry about. There is of course plainly much that requires remedy. We know that numberless remedies are being propounded daily by numberless prophets in the newspapers and reviews and in monographs upon the subject. In my view, my very humble view, there are two prerequisites for the cure; first, that the nations should pull together and adopt the same financial policy; and, second, that the nations should look up again and take confidence. The secret of financial success lies in the restoration of confidence and in the general recognition of the increasing interdependence of the nations in financial matters. We in this country at any rate have no reason to lack confidence or to hang our heads. When I was at Geneva recently nothing impressed me more than the manner in which the nations look to us to give them a lead. A confident, enterprising Britain is still, thank goodness, a necessity to the world at large.
Your Lordships will quite justifiably expect me to say something on the subject of the Exchange Equalisation Account, for which powers are taken under Part IV of this Finance Bill. I think that my right hon. friend, the Chancellor of the Exchequer, speaking in another place on the Report stage of this Bill, on Thursday last, made the position perfectly clear. The object of the fund and the purpose for which it will be operated is to secure the stability of the pound in the exchange markets of the world. It is not for me to attempt to teach your Lordships an elementary lesson in international commerce and finance. In your Lordships' House there are many who are far better qualified than I am to speak upon these matters and at whose feet I am always glad to sit. But it as a self-evident proposition that the merchant cannot trade with any facility, and often cannot trade at all, unless he is able within narrow limits to

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estimate the position of the national currency in the exchange markets of the world with some certainty and for some time ahead. He wants to be able to quote and to accept "firm" offers at "firm" rates, and we hope that the Exchange Equalisation Account may assist in establishing this very desirable state of things. We are not unaware of the risks involved and the position will be most carefully watched.
I will only make one further remark of a general character and briefly refer to economy in which the whole country is vitally interested. Let me begin by saying that the Government is determined upon a policy of economy and retrenchment. So far as we are concerned we shall not spend a penny extravagantly. We stand for wise spending, not for waste. We know that this country cannot stand taxation on the present scale indefinitely, taxation which bears the more hardly with the falling prices in the wholesale markets, and places us at a disadvantage in the competitive markets of the world. But, as my right hon. friend the Chancellor of the Exchequer said in another place on Friday last, we do not want to be rushed into taking rash decisions without adequate investigations. I agree with him. Hard thinking is necessary, and there is a great deal more to be done than simply take up the pen and strike out or reduce certain items of expenditure. We must see where it will all lead us to. We are all apostles of economy, particularly, perhaps, when it effects other Departments than our own. As a House of Commons man, I have often reflected with a certain melancholy upon how many were the questions from private members which were directed towards objects that would result in increased public expenditure, and how very few tended in the other direction. That is, I am sorry to say, many years ago now, and for all I know there may have been a subtle change of spirit since the time when I sat in another place; but I doubt very much whether things have altered much, or, if they have, I regret to say evidence of the change has not yet reached me.
However, be this as it may, let me assure your Lordships that the Government have exercised, are exercising, and will continue to exercise the closest supervision over public expenditure. But we
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must remember that true economy means wise spending rather than a reduction in expenditure where the spending is productive. We have a certain standard of living for our people which we are determined to maintain. We must aim at raising the lower standards of other countries rather than allow them to pull ours down. Thrift, I am glad to say, exists in abundance. Notwithstanding unnecessary expenditure here and there —and it is true we do see some examples of extravagance perhaps—the records of our savings banks, building societies, and other co-operative organisations to-day give us real cause for confidence and satisfaction. They give one reason to believe that the truly vast sums which are expended in what are known as social services are not altogether lost, for it is obvious that a substantial part of them finds its way back to the nation's resources in the shape of more or less permanent investment.
It cannot be urged with any justice against this Government that they have no care for economy when in the face of an increase in expenditure upon armaments, which is nearly general amongst other nations, we have pared our Defence Services to the bone. Some of your Lordships, I know, think we have gone too far in this direction. The fact remains that we have made these economies in the Defence Services, and the determination of the Government thus to give a lead to the world in the reduction of the burden of armaments is a great example which I sincerely hope we shall find the world willing to follow and adopt before the close of the present Disarmament Conference. I do not know whether there are other matters in the Finance Bill to which your Lordships would like me to make reference, but I can assure your Lordships that in the course of the debate I shall be prepared to answer any questions noble Lords may like to put to me. I beg to move.
Moved, That the Bill be now read 2a.—(The Marquess of Londonderry.)
LORD PONSONBY OF SHULBREDE: My Lords, this Bill is not capable of any amendment in your Lordships' House, and very rightly so. The noble Marquess who has moved the Second Reading of the Bill can be trusted to make a very effective and telling speech out of very

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poor material. If I may say so, I think, in his own words, he perhaps a little over-indulged in his raptures over the present so-called National Government. The news we heard this afternoon from the noble and learned Viscount (Viscount Hailsham) that this Government is to all intents and purposes eternal, will fill the country with dismay, but I may be excused if I cannot quite see the glowing picture that the noble Marquess has painted for your Lordships. I see a different picture, one that I think is perhaps rather more accurate and one that appeals perhaps to a larger number than the picture painted by the noble Marquess.
The trouble that is in store for the Government arises from the very fact that they have rather overblown their own trumpet, that they have raised people's expectations too high, that they have held out such magnificent hopes, and that as in the course of time it is perfectly clear those hopes cannot be realised, the disappointment is going to be very deep. The noble Marquess made a few passing remarks with regard to the advent of this Government to power, and stated once more that a great deal of blame was to be placed on the late Labour Government for having brought the country to the pass that it was in. We have heard that so often. The reply is that the Labour Government having brought the country into such a pass, the National Government chose the leaders who were responsible for the policy of the Labour Government to be their leaders, and that has always seemed to me something that required further explanation.
What strikes one about this Finance Bill is its absence of any constructive plan with real conviction behind it. It is clear that it is the outcome of plans conceived by men who are shackled by compromise with one another. I have said that very often in your Lordships' House, because I feel it so very important that a. Government should be in power with men united by common conviction, which this Government is not. However, the Conservative majority in the Government have gained the upper hand, and they have been able to bring forward their policy of Protection, which they have advocated for many years past. Perhaps the most outstanding feature in
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this Finance Bill is the introduction of the Import Duty Advisory Committee, a body outside Parliamentary control, which is going to have a free hand in the imposition of indirect taxes. That is an innovation to which insufficient attention has been drawn in the country. A great deal has been said about the impartiality of the three individuals who compose the Committee, but if they were archangels it would be perfectly impossible for them not to get entangled in the pressure, and very often worse than pressure, that a system of Protection, once it starts down the slippery slope, is bound to involve. The Liberals in the National Government have protested, and one is always waiting to see when the breaking point is coming for them to come out. The ex-Labour Ministers are prepared to swallow everything, and remain merely as a decorative appendage to the Government.
As the noble Marquess said, the situation to-day is a very serious one. He described the world as being in a sad state of financial chaos. Perhaps I may be forgiven if I quote an utterance with regard to the present situation in the world from a man who is in a key position in the financial world, and who is also a member of your Lordships' House. It has been quoted in another place, it has been quoted at meetings and I make no apology for quoting it again in your Lordships' House. Lord Revelstoke, speaking just two months ago, on April 13, said:
"What do we see when we look abroad to-day? We see a world writhing, as it were, in a purgatory of its own making. We see the stream of international commerce which is said to require, for its normal flow, some £400,000,000 of fresh credit every year, reduced to a trickle and losing its way 'in bogs and sands,' the price of goods having fallen below the cost of production. We see these goods losing value daily, because they have ceased, or nearly ceased, to change hands. We see the burden of debts and of taxation intensified to breaking point, solvent debtors in default, banking facilities at a standstill. We see the delicate mechanism of exchange crippled by arbitrary control, barter between Governments supplanting the efforts of individual traders, foodstuffs being destroyed in despair, warehouses glutted with a surplus that is only redundant because the consuming power of millions of people has been either frustrated or paralysed. Worse than all, we see standards of honour debased, and good will, the leaven which ought to permeate humanity, slowly perishing while distrust,

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that fear of our neighbours which it is the mission of Christianity to dispel, spreads like a pestilence from day to day."
No more eloquent description of the world to-day could have been given.
When one comes to the effort of the National Government which is embodied in this Finance Bill in such a situation as that, it must strike everybody that it is entirely inadequate and in no way meets any of the evils from which we are suffering. In spite of the rapturous language of the noble Marquess I would remind him that trade is not reviving. I would remind him that in the last two months 173,000 have been added to the list of unemployed. I cannot see that we have any reason for congratulating ourselves to-day. But we are ready to look forward to a series of Conferences that are going to meet. We are hoping that a new direction will be given to the Conference at Geneva which has arrived at a deadlock. I was rather condemned and laughed at a few weeks ago when I criticised the proceedings at Geneva, but everything I said then has proved to be absolutely correct. Let us hope that a change will come there. Although disarmament may not seem relevant it is fundamentally so because until the burden of armaments is lifted from off the backs of the taxpayers in all nations, and until greater confidence is restored between nations, the economic situation is very unlikely to improve.
We have the Lausanne Conference coming, and nobody can quite foresee what will be the outcome of that, but the delay has already made the European situation more difficult to cope with than if the Lausanne Conference had taken place in January. After that we have the Ottawa Conference. I for one cannot see what benefit is going to come to this country from the deliberations at Ottawa. I do not know how the raising of barriers around the Empire in order to promote trade within the Empire is going to help the world problem with which we are confronted to-day. Beyond that there is to be a World Conference in which America is to take part to consider methods of stabilising world commodity prices. Let us hope something will come from that. We are waiting and I do believe that by international action there may be some hope. I remember that when the Labour Government were in
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power, and when the Labour Government at that time said that this was not just a national crisis but that it was a world crisis, we were often jeered at and were told that we were shirking our responsibility. Now everybody has clearly come to the conclusion that that was true, and that by these international Conferences, and by these Conferences alone, are we likely to get any improvement.
But, my Lords, this contribution to the difficulty is really pitiable. The burden of taxation is placed still more heavily on the poorer classes of the community—as if they had not enough to bear already, what with unemployment and the various cuts in pay. There is no doubt that the burden of taxation is being felt by, and is almost intolerable to, the middle classes of moderate means and also the large masses of the workers. At the same time we do not see that it is intolerable to the really well-to-do. I do not suppose that those of your Lordships who go this week to Ascot—where I see accommodation for 20,000 motor cars will be provided within a mile of the grand stand—will see any noticeable signs of poverty on the part of the rich. I think we can all notice that the life of luxury is extending rather than retrenching. At the same time, hidden from the public eye, there is an intensity of suffering going on which is being still further aggravated by the present Government's method of putting further burdens on to the backs of the workers.
I do not want to detain your Lordships as others are going to take part in this debate, but I must say that I regard procrastination and delay as fatal. What is wanted is to grasp this great problem with far more initiative than the Government are prepared to show. The noble Marquess said in the course of his remarks that when he was at Geneva—I was very much struck by what he said on this point—he found people were looking to Great Britain for a lead. I believe that is absolutely true. I believe that other nations are waiting. When is that lead coming? We have been hoping for it. Is there going to be a lead at Geneva? Is there going to be a lead at Lausanne? Is there going to be a lead at any of these Conferences? Or is there to be just a tentative advance, the cautious finding of fresh expedients to make further delay before any drastic

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step can be taken? No, my Lords, this Finance Bill is insufficient. Mrs. Partington's mop was a far greater barrier against the waves of the Atlantic than this Bill is a defence against the very severe economic forces which are shaking the nations to-day.
LORD RHAYADER: My Lords, rising to speak for the first time in your Lordships' House I venture to crave indulgence for the few remarks I propose to make on the general financial policy of the present Government. The Budget which is embodied in this Bill is the second Budget of the National Government. The first Budget was introduced in September last by my noble friend the Lord Privy Seal, and he will not be surprised if I tell him that I much prefer the first Budget of the National Government to the second. The Budget of the Lord Privy Seal in September was designed to bridge a vast gap between the public expenditure and the national income. He succeeded in that Budget in accomplishing an almost unparalleled feat by arriving at a surplus in the beginning of this financial year. The second Budget, which we are discussing to-day, also, I am prepared to believe, will leave us with a surplus at the end of the financial year, although the prospects are not very encouraging. Both these Budgets aimed at being balanced at the end of the year, and I hope the second one may achieve it, but in one respect they come before the country with very different credentials.
The first Budget had behind it the backing of a united Cabinet and the support of every member of the Conservative and Liberal Parties in the House of Commons; and, although it asked for great sacrifices from all classes in the community, the country acquiesced and approved of what the Government did. The present Budget comes to us from a divided Cabinet. Many of the most important clauses, upon which the noble Marquess who introduced the Bill preserved a complete silence, are opposed by some members of the Cabinet. That is a unique position in which the country finds itself in considering the financial proposals of the present Government. I doubt if it has happened
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before in the history of Parliament—at any rate in recent years—that a Budget, the financial scheme for the year, has been presented to the country with the admission that the strongest difference of opinion exists in the Cabinet in regard to certain parts of it. The Bill, therefore, lacks the authority with which Finance Bills have hitherto arrived in your Lordships' House. I submit that this makes it all the more necessary that your Lordships should devote a certain amount of time to the examination of the Bill.
I have a few observations to make ranging over rather a wide area. I shall not attempt to deal with them in great detail, but there are so many matters in the Budget to which I wish to refer that I would appeal to your Lordships for patience. The first thing I wish to say is this. I think—and this opinion will be shared by many people here and in the country—that the Government are spending too much money. The gross expenditure covered by the Estimates this year is no less a sum than £894,000,000. That is a figure which very seldom occurs in any of the publications which go out to the world, but the total figure is £894,000,000, nearly £90,000,000 more than the corresponding figure eight years ago. From that the appropriations in aid of some £47,000,000 are deducted —and may I suggest to the Government that an examination of those appropriations in aid is a possible means of economy?—leaving a net total of about £848,000,000. Further to ease the minds of the public, the Government always present the total without the self-balancing services and so reduce it to somewhere about £767,000,000. But the gross amount to be spent by the Government this year is £894,000,000.
That is far too much for the nation to spend on government. It is one-third of the national income. There is one point on which there is no difference between the Government Benches and the Opposition in this House and in another place—that that is too large a proportion and presses too heavily upon all classes in this country. It may be urged that this expenditure is sanctioned by the House of Commons and that therefore the Government are exonerated. I want to put, it to representatives of the

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Government here, in the hope that they may pass it on to another place, that it is for them to lead and for the House of Commons to follow. I have had a great deal of experience in this matter and my conviction is that the House of Commons can never really effectively exercise economy unless the Government keep a very strict hold. The demands made upon members from their constituencies, the schemes put forward, the suggestions made always involve expenditure. What ought to be done is that, like any prudent individual, the Government should estimate beforehand what expenditure we can afford to make in the next twelve months. Then let them apportion that money among the Departments; in short, ration the Departments.
That is of course a reversal of the present procedure. What is done at the present time is that every Department furnishes its estimates to the Government, beginning some time before the end of the financial year. The estimates received from the Departments are added together and the total is the amount which the Chancellor of the Exchequer sets himself to raise for the national expenditure. I want that process to be reversed, and I suggest that if that were done it would be possible for the Government to make a great economy. In order that I may put a figure upon it, I urge them next year to look for a reduction of ten per cent. on the average in the present total expenditure. I do not see why, if they exercise real economy, they should not get the Estimates down to a gross £800,000,000 instead of the £894,000,000 at which they stand to-day. At the same time I hope there is going to be no delay in putting through the conversion scheme for War Loan. There is between £15,000,000 and £20,000,000 to be saved annually by a conversion scheme. The Lord Privy Seal smiles, but I do not know whether it is a smile of welcome or of a sarcastic nature. I am sure he wishes to see that scheme carried through at the earliest possible moment.
The second point to which I wish to draw attention is the Exchange Equalisation Account, which is Part IV of the Finance Bill. In spite of the words of the noble Marquess, I view those clauses with misgiving. £150,000,000 are to be
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set aside for the purpose of stabilising the exchange. The Treasury, if I may quote Clause 24, are to cause the funds in the Account
"to be invested in securities or in the purchase of gold in such manner as they think best adapted for checking undue fluctuations in the exchange value of sterling."
Those words have a very fair appearance, but, in effect, they mean that the Treasury are going to speculate in sterling, that they are going to buy or sell sterling according as they think the market is going. Usually they will be operating against the tendency of the market. Is not that a very certain way of incurring loss? Already in the Finance Bill there is £8,000,000 of loss. There is a good deal to be said for a very careful watching of the position of sterling, but I think this is a new and dangerous power the Government have taken and I hope they intend to keep the most careful watch over it. They are going to stabilise the pound, if they can. Have they made up their minds at what figure, at what final figure, they would wish it to be stabilised? They will be surrounded by people desiring to profit by the opportunities their operations will give, and therefore it is most essential in the interest of economy, and if we are not to lose millions of money, that this should be most carefully watched all the time, not only by the Treasury, but by all the financial representatives of the Government.
I hope the Government will be prudent, and if I am doubtful about the prudence of the Government. I think they have themselves to blame. They have shaken my confidence by the precipitate way in which they have plunged this country from Free Trade into Protection. I speak as a lifelong and unrepentant Free Trader. I supported the National Government last August at its formation by every means at my command, as the Lord Privy Seal well knows. I stood as a supporter of the Government at the General Election and met the fate of most Free Traders supporting the Government who were not actually members of the Government because, though I had zealously supported the policy of the National Government, I did not support the fiscal policy of the Conservative Party. It is to that defeat in some

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degree that your Lordships owe the infliction that is falling upon you to-day. But I gave the Government full support and I speak to-day with some sense of grievance. We were promised a full inquiry before the fiscal system of this country was changed. We have not had that inquiry. We have had ill-considered temporary measures, and finally the House of Commons and the Government have handed over the whole problem of tariffs to a body described as the Import Duties Advisory Committee, a new and strange body outside Parliament.
The financial position of the House of Commons in this country is based upon the Parliament Act in which the House of Commons was made supreme in matters of finance. The country has delegated to the House of Commons the power of dealing with finance. I am no lawyer, but a lawyer's tag comes to my mind: a delegated power should not be delegated. I really would like to draw the attention of the Government to the constitutional position in which the House of Commons places itself when it relinquishes the taxing power entrusted to it by the Parliament Act and puts that power into the hands of Commissioners or Committees outside Parliament. I have not seen much reference to that matter in the debates that have taken place, but it is an aspect of the question that has always interested me and I did not believe, until I read the debates in the House of Commons and saw the Finance Bill and the Import Duties Act that the House of Commons would give up this trust placed in their hands and put it into the hands of a Committee outside Parliament.
With regard to the proposals of the Finance Bill—and I apologise for having detained your Lordships so long—why is there this change-over to Protection? There are many objections to it. Commerce has asked for stability. There is nothing more unstable than tariffs. At this moment what do the industries of the country know as to the duties that are to be put on in the near future—to-morrow, in a fortnight, in a month? There is no possibility of foreseeing the future. I think a great part of our success in the nineteenth century, the Victorian age, which has already become a kind of Golden Age, was due to the fact of an established fiscal system, and I do not think we could have done a worse
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thing at this moment than to make this change. We are given many reasons for the change. The reasons given by different members of the Government are frequently inconsistent with one another. The Chancellor of the Exchequer triumphantly asks how we could have raised the £27,000,000 or whatever the amount is—he warned us not to rely too much upon the estimates, but where else could we have got this sum of £27,000,000? I have already told your Lordships that I think it might be met by economy, by the Conversion Loan, and in other ways; but it was certainly unnecessary to change the fiscal system of this country for the sake of £27,000,000.
Then I am told that the tariff is going to be a great cementing influence in the British Empire. The cementing of the British Empire by means of a tariff is a mysterious process which I confess I do not understand. My observation through life has been that there is nothing that members of families fall out about so much as questions of property and the equal division of benefits. If the tariff is to be used for bargaining purposes inside the Empire I think you are going to do a very dangerous thing. I do hope that however you may deal with foreign countries, you are not going to bargain with the Dominions with regard to what their fiscal system is to be. I think it would be a fatal thing to say to one Dominion: "You will have ten per cent. here or twenty there," and you give to another different figures on condition that they make concessions to you. I implore the Government if they have any such idea not to pursue it. Let them tell the Dominions that here in this country there is a free market for their products, that they may send here whatever good things they have to send, and that we shall be glad to receive them all on an equality. I would go further. I would say to every foreign country at the same time that if they are prepared to treat us on equal terms we shall be ready to make agreements to that effect. Therefore I do beseech the Government not to try cementing all the Empire by making bargains about tariffs, and to keep the door open for favourable arrangement with other nations.
Then there is a peculiar thing called the balance of trade, about which I think more nonsense has been talked in the last twelve months than about any other

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publicly discussed subject. I never hear of the balance of trade without thinking of the persistence of human error. If ever there was an economic fallacy thoroughly exposed it was this balance of trade theory which ruled the world down to about the middle of the eighteenth century. Two Scotsmen, Hume and Adam Smith, blew the doctrine sky high, and that it should be revived now seems to me most strange. Hume said of it:
"The apprehension of the wrong balance of trade discovers itself whenever one is out of humour with the Ministry, or in low spirits."
Adam Smith showed successfully that you cannot arrive at what this balance of trade is, that if you could it would be of very little value, and, lastly, that the worst way of dealing with it is by putting on duties to keep out imports.
The members of the Government have dwelt largely upon the balance of trade, and it has produced the worst effects throughout the world and among the British people at home. There is growing up an attitude of hostility towards foreigners and foreign goods which I deprecate in the highest degree. I have just come back from a Mediterranean journey to Constantinople. I came back by the Orient Express, in seventy-two hours from Constantinople to London. It was a wonderful journey. A well-laid track, crossing great rivers, over magnificent bridges and through long tunnels under mighty mountain ranges. All natural obstacles to the movement of goods and men have been abolished, and in that journey I passed the frontiers of Turkey, Bulgaria, YugoSlavia, Italy, Switzerland, France, and our own country. Everywhere, in place of the natural obstacles which had been overcome, instead of mountains and rivers dividing nations, I found Customs barriers set up. I protest that, to-day, it is more difficult for goods to travel from Constantinople to London, overland, than it was in the days of the founder of the Eastern Empire.
That is the work which modern tariff-makers have done for us. The Government have joined them, and there has been a campaign against the buying of foreign goods or the taking of journeys abroad. There has been agitation about the building of the new Cunarder. If we are not to have goods from abroad, and
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are not to travel abroad, why should we build ships? I went out by sea, and we touched at port after port. In every harbour we went into there were ten, fifteen, or twenty ships laid up, rusting in the docks, and likely never to go to sea again. That is the condition of Europe and the world to-day, and it is largely due to the restrictions placed upon ships and men by Governments. It is a matter of infinite regret to me that His Majesty's Government have followed that course instead of heeding the wise words of the Lord Privy Seal, and opening our doors to commerce.
We have in the Government Protectionists who regard tariffs as a gospel of salvation, and on the other hand Free Traders who believe in the real gospel of peace among men. Between them there are those who are not sure about it all and who think that at any rate there is a tariff and they may use it to bring foreign countries to reason. The Secretary of State for the Dominions and my old friend the President of the Board of Trade are very keen on using tariffs in order to make foreign Governments more reasonable. History is against them. The plagues hardened Pharaoh's heart, and the tariffs which we use against foreign countries almost invariably harden the hearts of foreign Governments. I want to ask the representatives of the Government whether they have yet got any benefit from their bargaining with foreign Governments. I have seen wrangles in the newspapers with Germany about our new taxes, and wrangles with France; and poor little Denmark, which has grown to depend upon our markets, is complaining. Have the Government had any success in their bargaining?
This is really not an economic but a political matter. As Adam Smith said, it belongs not to the economist but "to that crafty and insidious animal vulgarly called a politician." I suggest to the Government that the tariff wars on which they have now embarked are working out according to plan, and that in truth they have no prospect of inducing foreign Governments to be more reasonable because of our tariff. I do not say one word in defence of the action of foreign Governments in this matter. I think we Free Traders have every reason to complain that they have

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resisted our arguments for nearly 100 years. I raise no word therefore in defence of the action of foreign Governments in refusing to be influenced, but I suggest that the history of tariff wars is almost invariably this. Two nations fall out, they put up tariffs against one another, each in turn increases its tariffs, and while those two nations are fighting some third nation comes in and snaps up the trade about which the two are fighting. That has been the past history of tariffs.
I am afraid that I have wearied your Lordships, but I was unable to be present when this subject was debated at an earlier date. My heart is hot within me about those matters and it was necessary that I should speak. In this matter of Protection I think the Government have made a grave mistake. They have, by a majority only—not with the unanimity which would have carried great authority —decided to follow the path of restriction at a time when all the world is crying out for the freer movement of men and goods. I do not think they have helped this country, and they have made the world position worse. Economic nationalism is the curse of the world at the present time. Hence all these Conferences about to take place. My last word is an appeal to the Government. I want to ask the Government when they go to Ottawa, when they go to Lausanne, when they go to Geneva and to that further Conference that is to be held, to have one aim only before their eyes. Let this be their guiding principle: Considering all the circumstances, what would be best for the world as a whole? Let them look at the problems from the point of view of all the nations, as well as their own. If they do that they will not only help this bewildered, groping, and most unhappy world, but they will also hest serve the interests of our own country and of the Empire.
VISCOUNT ELIBANK: My Lords, I could only wish that the noble Lord, upon the next occasion when he takes a long journey, will not travel through Europe, from Turkey to Yugo-Slavia, or from Italy to France, or to Gibraltar, or to any of those other places that he has mentioned, but will make a tour through the British Empire and visit Australia and Africa.
LORD RHAYADER: I was at school in Australia.
VISCOUNT ELIBANK: Well, perhaps the noble Lord has not been there since he was at school and perhaps he will return there and see what the conditions are to-day. Let him see the conditions also in Canada and South Africa. He will then perhaps once more realise that there are there vast expanses of country waiting for settlement and development, and that by this measure which is before your Lordships to-day there is a possibility of developing those lands and of creating a fresh era for this country and for the British Empire.
I listened to what the noble Lord, Lord Ponsonby, said in regard to the Bill. As usual, he poured cold water upon the actions of the Government, and he was very lugubrious about the future. But I cannot see the conditions in the same light as he does. I believe that this Government have done extraordinarily well in the very short time that they have had at their disposal. I do not agree that they have produced no effect, as was stated by the noble Lord who has just sat down, upon the balance of trade. We have had figures disclosed this morning in the official publications showing that the balance of trade has considerably improved during the last two or three months. I do not think there is any doubt, whatever that that, is due to the Import Duties Bill, which was passed by this House only a few months ago. And now to-day in this Bill we have an extension of the preferential system, especially in the matter of tea and sugar, and we have the basis upon which we may be able to extend those Preferences at Ottawa.
I quite agree with the noble Lord that we must not go to Ottawa in a haggling spirit, but I do not see eye to eye with him in his view that the only way that we shall develop our Empire is by allowing the products of all the world, including our Empire, to come into this country upon equal terms. That is why we are going to the Conference at Ottawa and why I believe, with the good will which there is going to be on all sides to make that Conference a success, that we shall certainly attain a great measure of agreement from it. I am not one of those who think that the whole of the world is going

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to be changed by that Conference. But at least if we start and get a basis for greater co-operation in the future we shall have made a start which will lead on to better things. I also think that it is not accurate when the noble Lord the Leader of the Opposition states that we have given no lead to the world. We have given a lead to the world in that we were the first to cut down expenditure on a large scale. We were the first to form a Government on a national basis and if the noble Lord—as I know he does sometimes—were to visit Paris or the United States or any capital centre in Europe or any part of the world, I think he would find that this country is held in great admiration for the way in which it grappled with the difficult conditions in which it found itself and the difficult problems with which it was confronted.
I agree with the noble Lord who says that we must have economy. We have a Budget of some £894,000,000. That Budget is produced only by the exaction of the highest degree of direct taxation that the country is able to bear. If another straw were placed on the back of the unfortunate taxpayer the taxpayer would collapse. If that is so, I am inclined to believe that, with conditions as they are in the world, and the uncertainty that exists as to whether those conditions will be ameliorated within any reasonable time, it is quite possible when the autumn comes that the Government will find that, however carefully their estimate was prepared, they have not been able to obtain sufficient revenue to meet the Budget which they have drawn up.
The noble Marquess who moved the Second Reading said that this question was giving the Government very great concern. He said the Government were doing a great deal of hard thinking about it. I am very glad to hear that, but I should like to see the Government take a sharp and ruthless knife and cut through a great deal of the expenditure which we have to-day. I believe that it is only in that way that they are going to economise—only by saying: "To-day our expenditure is £894,000,000; tomorrow it is not going to be more than £700,000,000 or £750,000,000." Then, having done that, let them tell the heads of Departments that they have to make those reductions in some way. I believe
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that is the only way in which we shall get real economies. Ten years ago we had the Geddes "Axe" Committee, and economies were obtained through that Committee. I am not suggesting that the Government should set up another such Committee, but I do say that if the Government take a strong and definite line on this matter they will have the whole country, or at any rate the best part of it, behind them.
THE MARQUESS OF LONDONDERRY: My Lords, owing to the limitations to which I ventured to make allusion, the Finance Bill does not occupy in your Lordships' House so long a time as it does in another place, but I feel that there are one or two matters to which I should make a reply. The noble Lord, Lord Ponsonby, in his speech painted a very gloomy picture. I made an endeavour in advance to remove the gloom from his mind, because I felt that when he came to speak he would relapse into the depths of gloom. To create an atmosphere of gloom in the country is a most dangerous thing. It. may be described as creating a feeling of defeatism, which is very dangerous from every point of view.
The noble Lord drew particular attention to the creation of the Import Duties Advisory Committee, and led your Lordships to believe that that Committee was outside the control of Parliament. That is not quite correct, because any arrangement made by the Import Duties Committee can be annulled by Resolution of the House of Commons. What I think the noble Lord had in mind when he alluded to that subject was that the Import Duties Committee have the power of removing articles from the Free List, and in that respect it may be said that the control of Parliament has been impaired compared with what it was previously. But I would suggest to the noble Lord that there could be no better body for the control of these matters than this particular Committee. I think he must agree that from their intensive and expert knowledge they are a far better body to deal with such a matter than Parliament as a Whole. Beyond the respect to which I have made reference the authority of Parliament is not impaired.
The noble Lord who followed in the debate made a long and very interesting

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speech, and drew attention to the actual Estimates. He suggested that there was some method of what I might almost call sleight of hand in the publication of Estimates by the Government. I think the noble Lord is as fully aware of the manner in which Estimates are controlled as I am myself, and I can assure him that there is as much supervision of the full Estimates as of the net Estimates. Speaking as one who has been in the perhaps unenviable position of a Minister I can assure him that we have a particular amount of expenditure in mind in relation to our own. Department, and that we have the greatest possible difficulty in getting our expenditure sanctioned by the Treasury.
LORD RHAYADER: May I interrupt the noble Marquess to state what my suggestion really was? I do not doubt the carefulness with which Estimates are at present prepared, but at this moment the question is put to the Department: "What are your Estimates for the year?" Those are collected and the total arrived at. What I want done is to send for the head of each Department and tell him what you have to spend in that Department in the year, and then set him to work to prepare his Estimates accordingly.
THE MARQUESS OF LONDONDERRY: The noble Lord advocates a policy of rationing, which, possibly, would be an excellent one to adopt, and I have no doubt, with his great influence, he can get that policy approved in the House of Commons, or at all events he can get the subject raise there and discussed by that House. I am not altogether out of sympathy with that policy myself, but at this moment I am not sure that we can make further headway with it. The noble Lord also entered, as I thought he would, into a disquisition upon the relative merits of Free Trade and Protection. I may say that I am willing to go with him a long way. I should like to see tariffs reduced all over the world. I agree that the heightening of tariffs renders the community of nations, and the coming together of nations, a very difficult problem. The noble Lord may not have been in his place some time ago when I moved the Second Reading of the Import Duties Bill in your Lordships' House. I then based my advocacy of that Bill on the necessity of Great
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Britain using her influence to get tariffs lowered and not increased. I have always felt that by standing out of the whole controversy we have allowed other nations to continue the raising of their tariffs, and I think that the best chance we now have of lowering tariffs is to place ourselves in a position in which we can bargain with other countries. The noble Lord asked me whether I could point to any improvement in the position —whether we had been successful in bargaining with other countries. At this moment I am not prepared to answer that question, but I am quite sure that if we are going to get tariffs down we shall have a better chance of doing so now that we are able to speak to foreign countries in their own language.
The noble Viscount who followed countered the noble Lord, as I expected he would do, with the arguments on the other side, and I do not think there is any need for me to enter into this controversy at the present moment. The noble Viscount had the usual cut at the Government in relation to extravagance in expenditure. I can assure him, as I ventured to say in my opening remarks—
VISCOUNT ELIBANK: I had no cut at the Government in regard to extravagance. I said I thought the Government had done extraordinarily well, but that we wanted more. I thought it might do something in a certain way. I do not think the noble Marquess would wish to misrepresent me.
THE MARQUESS OF LONDONDERRY: I entirely withdraw and apologise to my noble friend if any expression I used has wounded his feelings. We are much too old friends to have any differences of opinion. The point I wanted to make—perhaps I put it too strongly—was that he was urging upon the Government that they should reduce expenditure. I agree with him that expenditure should be reduced, and I can assure him that the Government are doing everything in their power to reduce it; but, as an old member of the House of Commons, I am quite sure that he cannot place his hand on his heart and say he has not urged the Government to increase their expenditure upon various things in which he was himself interested. That is the danger to all Members of Parliament. They will preach economy as an abstract

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subject, but when it comes to their own constituencies there is no expenditure which satisfies them. I do not know that there is any further question raised in the debate to which I need reply. We have had a most interesting debate, and I should like to take this opportunity of congratulating the noble Lord, Lord Rhayader, on his maiden speech in this House. I never thought at one time that it would be my privilege to congratulate my noble friend upon making a maiden speech in this House, and I am very happy to do so now. I hope we shall often hear him making contributions to our debates.
On Question, Bill read 2a: Committee negatived.

LAND VALUATION AND TAX.
LORD STRACHIE LORD STRACHIE rose to move to resolve, That this House regrets that the Finance Bill does not repeal the valuation and Land Tax imposed by the Finance Act, 1931. The noble Lord said: My Lords, at this time of the day I shall not go very much into the merits of the case, but deal rather with the Parliamentary situation as regards the Motion standing in my name upon the valuation and Land Tax. What has happened in regard to this matter? Up to December of last year the amount expended under the Finance Act of 1931 was £120,000, and 700 officials were engaged. A debate was raised upon the question upon a Motion which I placed on the Paper last December. I did not move my Motion, but we had a debate upon it, and the Government were then asked to state their attitude with regard to repealing this Land Tax valuation in the future. The noble Lord who replied for the Government said he could give no authoritative answer. Of course he could not do so, for he was not a member of the Cabinet. The Leader of the House, who I understood was sitting upon the Bench opposite, did not think it worth while to say what the intentions of the Government were.
One may take it that the Government last year absolutely refused to give any indication as to whether they were going to repeal that Part of the Act or not. What has happened this year? This year in the House of Commons the Finance Bill was again introduced with this most objectionable clause providing for valua-
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tion and a tax upon all land. It was debated at considerable length in the House of Commons and when a Division was taken the figures were very interesting. There voted against the repeal of the Land Tax Clause 298 and for the repeal 71. That is to say, there was a majority against of 227. What was most remarkable was that more than half the House of Commons refused to vote on the question. Members abstained to the number of 317, showing that evidently there was no great support for the Government in this matter, although no doubt a number of new members did not care to oppose the Government at that particular stage.
I should like to draw your Lordships' attention to another remarkable fact. No Conservative member, with one exception, spoke in favour of this tax. Colonel Acland-Troyte moved the rejection of the clause. A very distinguished agriculturist and a very old member of the House of Commons, Sir George Courthope, denounced the clause and said he regretted that his leader refused to repeal it. Another prominent agriculturist, Mr. Michael Beaumont, asked for its withdrawal. Then before the Lord President of the Council replied Mr. Gordon Macdonald quoted a long statement made by Viscount Snowden. I regret that the Lord Privy Seal is not in his place. What did Mr. Gordon Macdonald say? He quoted a long statement from Viscount Snowden, with which I will not trouble your Lordships at length, but at the end the noble Viscount said that this was
"one further stage towards the emancipation of the people from the tyranny and the injustice of private land monopoly."
Mr. Gordon Macdonald was followed by Mr. Baldwin, who made a remarkable statement. He described what Mr. Gordon Macdonald had said as "the beautiful words which the hon. member quoted from the Chancellor of the Exchequer in the Labour Government." I will not comment upon that statement. I will leave it to the landed interests outside this House as well as in it, the bulk of whom supported Mr. Baldwin at the General Election, to comment upon those words.
Mr. Baldwin made the further statement that the valuation and the land tax were in a state of coma for the present Parliament. Is it not possible that

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they may wake up from that state of coma? It is not unusual for a patient in a state of coma suddenly to revive and come to life again. I rather think that there may be some intention that the patient may come to life again because I was very much interested, and at the same time surprised, to see it reported that the Financial Secretary to the Treasury, Major Elliot, made this statement at the annual meeting of the Property Owners Association:
"Lord Lloyd might also have spoken of the taxation of land values which was postponed to a period when the country could afford to pay better."
The Financial Secretary to the Treasury did not say that when they had time or when there was no longer a National Government or in another Parliament they were going to repeal the land valuation and the Land Tax. He only said they were waiting to put it in force until there were better times and the country could afford to pay it.
There was a still more remarkable statement made yesterday in the House of Commons. I quote this passage from the OFFICIAL REPORT:
"Lieut.-Colonel ACLAND-TROYTE asked the Chancellor of the Exchequer what sum of money has been expended since 1st January in carrying out the provisions of Section 28 of the Finance Act, 1931?
Mr. CHAMBERLAIN: About £2,000.
Lieut.-Colonel ACLAND-TROYTE: May I ask what use it is to come down here and preach economy, and allow this waste of money to go on?
Mr. CHAMBERLAIN: I do not think it is a waste of money."
What does Mr. Chamberlain mean by saying it is not a waste of money? It must mean that on some future occasion he intends to put into force this valuation and this Land Tax. Otherwise it is a waste of money to spend £2,000 a year—or no doubt more—to keep alive this valuation. Then I notice that Mr. Baldwin said it was in gratitude to Viscount Snowden that they had maintained this provision for valuation and the Land Tax upon the Statute Book. I would not fat one moment depreciate the great value of the part played in the General Election by Viscount Snowden, but on the other hand I cannot understand why there should be a special form of gratitude to Viscount Snowden.
Why is not the same form of gratitude applied to Sir Herbert Samuel? I should
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think Sir Herbert Samuel gained as many votes for the Government as Viscount Snowden, but how is gratitude shown to Sir Herbert Samuel? Reference has already been made to a very remarkable state of things when you get one Cabinet Minister rising from the Government Bench and reading a statement in favour of import duties and another Cabinet Minister denouncing him for making it. I venture to suggest that Mr. Baldwin might have shown gratitude to Viscount Snowden by treating him exactly as he has treated Sir Herbert Samuel, by telling him: "You have a perfect right, of course, to get up in the House of Lords and denounce me because I have repealed the land valuation provisions and the Land Tax which my Party dislike very much indeed." It seems to me that that would have been a reasonable way to do it. What is good for the House of Commons might be applied here, although of course it might be applied here under more difficult circumstances.
There is another point to which I should like to refer, and that is the way in which this clause is actually at the present moment discouraging the development of land and discouraging employment. I hold in my hand a memorandum which was given to me by a member of your Lordships' House, who is well known to most, people. This memorandum says:
"A lay-out for the development of about eleven acres in the London area had been negotiated at the moment of the introduction of the 1931 Budget, a year ago last Easter. The scheme provided for the construction of a length of about 3,400 feet of roads, severed and drained, and the construction of eighty-four houses, of a type suitable for the neighbourhood. Arrangements in detail had been made, as necessary preliminaries to the scheme, the burden of which fell directly upon the owners and the promoters.
The terms for the carrying out of the constructional works were settled between the two parties and the formal agreement was about to be entered into, but owing to the uncertainty created by the Finance Bill, 1931, as to the valuation of the land and the placing of the Land Value Tax thereon, both parties were in accord that the development scheme could not be proceeded with, and since that time the promoters have not been able to make any progress in the matter; consequently, the opportunity of a considerable capital out-lay in the construction of the roads and the houses with the resultant loss of employment, has been rendered impossible."

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That is a very strong statement indeed and shows what an unfortunate effect is being caused by the state of coma in which the Land Tax and land valuation are being maintained by the Government at the present moment.
There is no doubt that, if the Government cannot make up their mind to show their gratitude to the noble Viscount, Lord Snowden, in another way than by keeping the Land Tax and valuation in a state of coma, they will discourage more employment, more development, and more capital being put upon the land. This legislation has a paralysing effect on anyone who desires to put more capital into the land. If we put more capital into the land, we shall have our valuation raised and have to pay increased taxes on what we spend. The real object of this Land Tax, which was imposed by the Labour Government, was simply land nationalisation in the future. I cannot do better than quote the statement made by the Lord Privy Seal, when he was Chancellor of the Exchequer, last May:
"By the measure we assert the right of a community to the ownership of land. If private individuals continue to possess a nominal claim to the land, they must pay a rent to the community for the enjoyment of it … The taxation of land values may be described as a rent paid to the community for the use of the land."
That is how Lord Snowden justified his Land Tax, which he pointed out was merely a step towards land nationalisation. We ought to leave it to Mr. Baldwin's supporters to protest against this first step towards land nationalisation.
It is interesting to notice that at a later date Lord Erskine, one of the Somerset members, said:
"This is a method, not of imposing an equitable tax, but of confiscating the land, making it worth nothing and then nationalising it.
Mr. MACLAREN: Hear, hear!
Lord ERSKINE: Then why not say so?
Mr. MACLAREN: I do say so."
I see the Leader of the House is amused at that. I hope that he is going to say that he is not in favour of land nationalisation. I can assure him, having spent a great many years in the House of Commons and having fought many elections, that he will find at the next General Election that there are a large number of landowners like myself who did all they
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could to support the Government but will not support a Government which is helping half way towards the nationalisation of land.
Moved to resolve, That this House regrets that the Finance Bill does not repeal the valuation and Land Tax imposed by the Finance Act, 1931.—(Lord Strachie.)
VISCOUNT HAILSHAM: My Lords, the noble Lord who has moved this Motion said that I showed amusement at a quotation which he read to your Lordships. The amusement, which I confess I felt, was at suggesting that the quotation, which certainly represented the opinions of a Party as far removed from my own as it is possible to be, had any relevance to the subject which your Lordships are engaged in debating this evening. My difficulty is that at this late hour I have to choose between dealing with the Motion and dealing with the noble Lord's speech. It is difficult to do both and impossible to do both at the same time.
Let me say a word about his speech. He began by telling us that in the Division lobby on a Motion to delete this clause there voted some 340 members and that therefore there were some 300 abstentions, which showed, he said, how unwilling the Conservative Party was to support the Government in this matter. I have looked at the OFFICIAL REPORT for that evening and I find that there was a series of Divisions on various clauses of the Finance Bill, of which this was only one, and on none of them was there a bigger attendance than in the one on which the noble Lord commented, the others having nothing to do with land taxation or land valuation in any shape or form. As to the reason why the 300 members were not there that evening, I hope that they were doing what I have often encouraged them to do when there is a big majority, as there is to-day. I have encouraged them not all to come down to the House of Commons but to spend their time in their constituencies educating their friends as to the real merits of the National Government's policy.
My noble friend suggested that the right plan was to have an agreement to differ and a speech by my noble friend the Lord Privy Seal, protesting against the decision of the Government. I doubt

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whether he was serious in that suggestion. The arrangement made about the tariff was one made in exceptional circumstances to meet an exceptional emergency. I for one have always disclaimed any view that joint Cabinet responsibility should be shelved or that it should be made the rule for any Cabinet Minister, whenever he likes, to dissociate himself from the Government as a whole. That would be a very unfortunate precedent to establish. The noble Lord read a letter which described how some scheme for development in London was dropped last year when the 1931 Budget was introduced. I am not in the least surprised to hear it.
LORD STRACHIE: It is still held up for the same reason because this still remains in the Budget.
VISCOUNT HAILSHAM: That is not what the letter said. I entirely accept that the reason the scheme was dropped in 1931 was that they were alarmed at the prospect of land valuation.
LORD STRACHIE: The memorandum also refers to the present state of things. It was only given to me a few days ago and the noble Lord told me that the same state of things exists as when there was a Labour Government. They are equally afraid of this Government.
VISCOUNT HAILSHAM: That only shows how foolish some people's fears are. The noble Lord's speech and the Motion which he invites this House to pass would encourage idle fears and would persuade people that the position is different to what it really is. Let me turn to what the position really is. Your Lordships are not asked under this Motion to discuss whether land valuation is a good thing or a bad thing or whether a Land Tax is a good thing or a bad thing. The noble Lord said that it is still in the Budget. Let me explain what the law is and what the present Finance Bill does, and then your Lordships can judge whether the Government is deserving of censure. Under the Act of 1931 it was provided that there should be a Land Value Tax charged annually for the year ending 31st March, 1934, and each subsequent financial year, and it was provided by the succeeding clause that there should be a valuation as soon as might be after every valuation date.
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That is to say, until the valuation date has arrived there can be no valuation, and the valuation date—it is important to deal with this legal phraseology as it is otherwise difficult to make the point clear—was defined in that section as meaning, with regard to the first valuation, the 1st January, 1932, and, with regard to the second valuation, the 1st August, 1936, and thereafter every five years.
That was the position which was embodied in last year's Act and what the Government have done in this year's Finance Bill is to alter that and to say that, instead of a tax being payable for the financial year ending 31st March, 1934, and each subsequent financial year, it is not to be paid until such financial year as Parliament may hereafter determine, and that, instead of the valuation dates being, as was stipulated in the 1931 Act, the 1st of January, 1932, and the 1st August, 1936, and thereafter quinquennially, under the present Bill by Clause 27 those dates are to be wiped out and there are to be substituted such dates as Parliament may hereafter determine. The legal effect of that is that there can be no Valuation Tax, no valuation date, and no valuation, because valuation cannot happen until after a valuation date, until Parliament enacts some legislation which reintroduces the Valuation Tax and the valuation date. Unless and until that is done the Valuation Tax is dead and no valuation can take place. It would be just the same if the noble Lord's proposal were adopted and the section of the Act of 1931 repealed. Any future Parliament could re-enact those clauses. In either event Parliament has it in its power to enact land valuation. Under the noble Lord's suggestion it could be done by re-enacting the clauses of the Act of 1931, and under the Finance Bill which received Second Reading a few minutes ago, it could be done by bringing in an Act or embodying clauses in an Act which would provide for such and such a valuation date. But unless and until Parliament enacts legislation the Land Valuation Tax is dead. As soon as Parliament enacts legislation which imposes a Land Valuation Tax it, of course, becomes operative whether it is done by fixing a date or by means of the re-enactment of the two clauses, and

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therefore to suggest that there is some subtle design, some danger in its being done in this way instead of that is to ignore facts and to seek for imaginary bogies.
The noble Lord said that there were some economies—at least I so gathered from his speech—to be achieved by his proposal. I can assure the noble Lord that he is quite mistaken in that. Undoubtedly since January 1, 1932, there has been an expenditure of £2,000 resulting from the aftermath of the Land Valuation Clauses in 1931. That expenditure has been incurred not by reason of any postponement or repeal of the date, but by reason of the fact that the Finance Act of last year became operative in June or July, a number of officials were appointed, and a number of liabilities were incurred which do not entirely disappear when the policy is changed. But there can be no further valuation and no further expenditure incurred on land valuation until Parliament otherwise determines. That is the plan the Government have adopted, and so far as economy and expenditure are concerned the effect is exactly the same as if the Government did as the noble Lord would have us do. That being so, there being no difference in the result, and the matter being only one of verbiage, the question may fairly be put to the Government why it chose the one way instead of the other. I doubt whether it would be quite a sufficient reason to invite this House formally to censure His Majesty's Government, which is the effect of the Motion, merely because we adopted one way rather than another, but I would like to make it clear why we have adopted our particular plan.
The reason is that we are a National Government and that we embrace in the present Cabinet four members of the old Socialist Cabinet of a year ago. Let me explain what that means. I hope it is not necessary in this House to defend or to elaborate the importance of the establishment of the National Government last August or the value from the national point of view of having established such a Government. I propose to assume that you agree with me in thinking it was worth while. Assuming that, what was the purpose of the National Government? First of all, it was to effect economies
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and impose sacrifices, which could hardly be done except by the general consent, of the nation; and, secondly, I think it was to endeavour to unite all political opinion and all classes of the community in support of a Government which was trying to speak for the nation and to face the great emergency and crisis we had to undergo in a national and not in a sectional spirit. If that be true, would it be wise for the Government, which embraces in its numbers four representatives of the Socialist Party who were originally responsible for this Land Valuation Tax, not merely to get them to assent to our postponing the operation of the tax and postponing the whole matter till Parliament shall hereafter pass an Act which shall re-establish it, but to ask them to accept the humiliation, for it would be nothing less, of having this year solemnly to repeal what last year they had solemnly enacted? One of the members particularly identified with this legislation was then Chancellor of the Exchequer and is to-day Lord Privy Seal. No doubt we could have invited those members of the Government either to undergo that humiliation or to break up the Government by leaving it and retiring.
LORD STRACHIE: Was it no humiliation to agree to Protection?
VISCOUNT HAILSHAM: "No humiliation" is perhaps putting it too far. It is perhaps not humiliation, but a sacrifice of opinions which they held in virtue of their consciousness of the supreme importance of the national crisis and of keeping the National Government in existence. This is an easier way, a less disagreeable way, and an equally effective way, and the only object of doing it in any other way would be that of imposing on them a public humiliation that it would be unreasonable to ask of them. I am not in the least ashamed of saying that although it has been my duty to denounce in no sparing language the policy of the Socialist Government of which these four gentlemen were members, we and the country have every cause to be grateful to them for the attitude they adopted last August. I think their courage and their preferment of national to sectional interest deserving of real gratitude from the nation. We have valued their co-operation during the

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last six months, we look forward to the continuance of that co-operation in the future. We regard their presence as a real strength to the Government in its work at home and in its very difficult negotiations abroad, and we believe that any attempt to weaken their position or to undermine their position in the Cabinet, or make their continuance in the Government impossible, would be a real source of weakness to the country at the very time when the Government most need to present a united front to the world as a whole.
On those grounds, although I quite agree with the noble Lord that I am entirely opposed to the policy of land valuation, and do not in the least dissent from any of the criticisms levelled against
Resolved in the negative and Motion disagreed to accordingly.
House adjourned at twenty-seven minutes past seven o'clock.
it by my Party, I think the attitude we took up is the right one. I should be very sorry if this House were to censure the Government for taking means to effect that end, which does not involve this consequence of driving from the Cabinet those who were responsible for a course of legislation with which I profoundly disagree, but who have been good enough to subordinate their views to those of their colleagues in the Cabinet, in order to present that united front which the noble Lord's Motion would seem anxious to condemn.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 14; Not-Contents, 16.

CONTENTS.

Bedford, D.

Hereford, V. [Teller.]

Lawrence, L.

Newton, L.

Macclesfield, E.

Banbury of Southam, L.

Phillimore, L.

Malmesbury, E.

Biddulph, L.

Strachie, L. [Teller.]

Morton, E.

Lamington, L.

Wharton, L.

Selborne, E.

NOT-CONTENTS.

Sankey, V. (L. Chancellor.)

Chaworth, L. (E. Meath.)

Ponsonby of Shulbrede, L.

Clanwilliam, L. (E. Clanwilliam.)

Redesdale, L.

Bath, M.

Sanderson, L.

Danesfort, L.

Lucan, E. [Teller.]

Gage, L. (V. Gage.) [Teller.]

Stanmore, L.

Plymouth, E.

Hay, L. (E. Kinnoull.)

Strathcona and Mount Royal, L.

Marley, L.

Hailsham, V.

LORD STRACHIE: Lost by Labour votes.