HL Deb 09 November 1932 vol 85 cc1115-90

Order of the Day for the Second Reading read.


My Lords, it is just a fortnight since your Lordships' House had under consideration a Motion which was in effect a Vote of Censure upon His Majesty's Government in regard to the action they were taking in the Ottawa Agreements. That Motion, after full debate, was withdrawn, because the mover and such supporters of it as were present were conscious that there was an overwhelming superiority of opinion in the opposite direction. Tomorrow I shall have an opportunity at the close of this debate of replying to such criticisms as may emerge during our discussion, and I have thought that the most useful way in which I could try to help your Lordships this afternoon in moving this Second Reading would be not to indulge in a violently partisan speech, but to try as far as I can to state fairly to your Lordships what were the Agreements which were reached at Ottawa, and then to explain how the Bill which is the subject of discussion carries those Agreements into statutory effect.

The Ottawa Conference was the outcome of the Imperial Conference of 1930. At that time, as your Lordships will remember, the whole of the Dominions there represented were anxious to bring about a form of co-operation in trade matters by means of Imperial preferences within the Empire, but the Government of that day felt itself precluded by its political pledges and allegiance from giving effect to such a policy, and accordingly the Imperial Conference of 1930, failing to reach any conclusions upon this question of economic co-operation, passed a Resolution in which it declared that: Inasmuch as this Conference has not been able, within the time limit of its deliberations, to examine fully the various means by which inter-Imperial trade may best be maintained and extended, it is resolved that the Economic Section of the Conference be adjourned to meet at Ottawa on a date within the next twelve months to be mutually agreed upon, when that examination will be resumed with a view to adopting the means and methods most likely to achieve the common aim… There was a proviso that this adjournment must not be construed as modifying the views which had been expressed by the various members of the Conference.

The Ottawa Conference, therefore, held in July last, was held for the purpose of examining the various means by which inter-Imperial trade might best be maintained and extended. That was the commission which the Delegation from this country had in their hands when they went to Ottawa. But between the Conference of 1930 and the meeting at Ottawa in July, 1932, two fresh factors had emerged both of which were very material to the discussions there embarked upon. In the first place, at the beginning of this year the United Kingdom came into line with the whole of the rest of the Empire—for that matter with the whole of the rest of the civilised world—in adopting the principle of Protection for home manufactures. That obviously afforded opportunities for the extension and encouragement of inter-Imperial trade which were lacking in 1930. Secondly, although already in 1930 there was a grave state of depression in the economic world, that depression had extended and deepened to an extent which, I suppose, no one contemplated when the Conference adjourned in October, 1930. That increased stress of the world economic depression emphasised the urgency of finding some effective means to save the Empire as far as possible from the effects of that depression. It is impossible to have a prosperous British Empire whilst all the rest of the world is getting further and further into economic disaster. It emphasised also the importance of finding, if possible, a means of extending Imperial trade which would encourage the world to look for similar means for curing its own economic ills.

It was in those conditions that we met in July last. Very broadly, the purpose—or one main purpose—of our discussions was to devise means, if possible, of securing a market for Dominion produce in the United Kingdom and securing a market for United Kingdom and Colonial products in the Dominions. We set up a Committee for the promotion of trade of which I had the privilege of being Chairman. It very soon became apparent that it would not be possible to reach a fruitful conclusion within any reasonable space of time if we tried to get multilateral agreements which should cover the whole area of our deliberations. The particular interests of one or other Dominion which did not equally affect the others were so different that an attempt by eight different Delegations with some fifty or sixty members to discuss at the same time one agreement which should embrace all these matters, would have certainly led to failure. We did set up committees which were charged with the duty of investigating those matters in which more than one Dominion had a common interest—such matters as meat products, cereals, minerals, fruit and the like. But we decided that the best method of dealing with the problems which we had to solve was by a series of bilateral agreements, between the United Kingdom on the one hand and the several Dominions on the other, which should have regard in each case to the particular circumstances of the trade with that Dominion but which, at the same time, should all be consistent with certain common principles which your Lordships, I think, will find embodied in all the Agreements.

As a result of that method of approach, within five weeks from the time when we first met we were in fact successful in negotiating Agreements with every one of the Delegations with whom we were in discussion. For myself I think that the fact that we were able to reach agreement with each of those Delegations is something of a tribute, not merely to the United Kingdom Delegation, but to the spirit which animated all the Delegations in the discussions upon which we were engaged. The general principle which is found in all these Agreements is set out in the Resolutions recommended by the committee and adopted by the Conference which appear on page 10 of the Blue-book which summarises the Ottawa proceedings. Perhaps it is well worth while to quote one or two phrases: That by the lowering or removal of barriers among themselves provided for in these Agreements, the flow of trade between the various countries of the Empire will be facilitated, and that by the consequent increase of purchasing power of their peoples, the trade of the world will also be stimulated and increased; Further, that this Conference regards the conclusion of these Agreements as a step forward, which should in the future lead to further progress in the same direction, and which will utilise protective duties to ensure that the resources and industries of the Empire are developed on sound economic lines. The Agreements which carry out and embody these principles are seven in number. The main features which are included in each one of them may, I think, be stated quite conveniently without troubling your Lordships to go through each separate Agreement in detail. The first great principle which every Agreement includes is the principle of free entry for Dominion products into the United Kingdom wherever a protective duty has been imposed. Your Lordships will remember that in February of this year a General Tariff, in most cases 10 per cent. ad valorem, was imposed on manufactured and some other goods, on a wide range of goods imported into this country, and by that Act the Dominions were granted exemption from the duties until November 15. The first step of agreement which we reached was that that exemption from duties should be extended beyond November 15 throughout the currency of the several Agreements. When we hear, as we are sometimes told, that these Agreements tend to raise tariff barriers and interfere with the free flow of trade, I would like your Lordships to reflect that the first thing these Agreements do is that with regard to the trade between this country and the whole of the Dominions, trade covering in area something like a quarter of the globe, the Agreements provide that that trade shall be free of duty; and that can hardly be said to be very inconsistent with the principles even of the most rigid Free Trader.

The Agreements in the second place deal with a certain modified list of articles, not very extensive, with regard to which the Dominions were anxious to receive an increased margin of preference beyond that which they were at that moment enjoying. There were a few articles on the free list with regard to which the Dominions desired the 10 per cent. preference they had on the general range of imports, and there were a few more—fresh fruits, dairy products, a short list—with regard to which they asked that the margin of preference should be increased from 10 per cent. to 15 per cent. and stabilized in many cases in the form of a specific duty which roughly gave a 15 per cent. margin in their favour. Those preferences could not be given by a reduction of duties because the Dominions were already coming in free and therefore the only way in which they could be given was by increasing the duty on the foreign articles. Accordingly, we have in those cases a raising of the duty from 10 to 15 per cent. or whatever the figure is, and an assurance to the Dominions that they will enjoy that margin throughout the currency of the Agreements. There were a few articles with regard to which they requested an assurance that the existing 10 per cent. margin should be maintained during the period of the Agreements. Obviously it would have been unreasonable to suggest we could not modify the whole wide range of import duties without Dominion consent, and obviously it would have been unfair to the Dominions to ask them to give a definite margin of preference and to deny them a similar assurance in regard to those particular commodities in which they were specially interested. Accordingly a list was provided of articles with regard to which we agree to maintain the 10 per cent. margin of preference during the period of the Agreements.

Thirdly, there came the question of meat. As your Lordships know, this country is the one great market for the export of meat and unhappily, owing to over-production, the market has been so glutted that the price has fallen to a figure far below the economic cost of production in any part of the world. That was a matter which, in the opinion of the Dominions and of this country, required regulation and an Agreement was negotiated under Which we arranged that for the next eighteen months, from January next till June, 1934, there should be a progressive reduction in the percentage of frozen mutton and lamb imported from foreign countries, and there should be a stabilization of the quantity of chilled beef imported from foreign countries; and, further, that during that period steps would be taken to negotiate some more permanent arrangement which would secure the position of the meat market.

It has been alleged that this arrangement is against the interests of the United Kingdom consumer because it tends to raise the wholesale price of meat. Let me say frankly that it is intended to raise the wholesale price of meat. If your Lordships look at the Schedule which is contained on page 54 of the Blue-book and which appears also in the Agreements scheduled to the Bill on page 53, you will find that the Schedule takes the form of a Declaration by the Government of this country. I would like to quote two or three paragraphs because it indicates the view of the Government and the purpose we set out to attain: The present wholesale prices of frozen meat are at a level which has resulted in grave depression in the livestock industries of the United Kingdom and the Dominions. This depression is likely, if continued, to bring about a serious decline in production and consequent ultimate injury to the consumer. Such a position is so serious that it is essential to take whatever steps may appear feasible to raise the wholesale prices of frozen meat in the United Kingdom Market to such a level as will maintain efficient production. Then, in paragraph 4: The policy of His Majesty's Government in the United Kingdom in relation to meat production is, first, to secure development of home production, and, secondly, to give to the Dominions an expanding share of imports into the United Kingdom. That was and is the deliberate policy of His Majesty's Government, and we take our stand on that policy not merely in the interest of the producer, but just as much in the interest of the consumer.

So far as the producer is concerned we regard the present state of meat prices as one which is imperilling the whole agricultural situation in this country, and we do not regard it as possible for any Government to allow unchecked this steady fall in prices to a level at which no farmer in this country can hope to produce meat and which is bound, if allowed to continue, to land him in bankruptcy and ruin. But it is not only the producer who is injured by that state of affairs. If the fall is allowed to go on and no steps are taken to check the glut, the price falls—indeed has fallen—to such a level that the producer is unable to go on producing meat and is obliged to give up that particular enterprise. Even in the days when we were meeting at Ottawa, there were instances in which the prices realised by the Australian producer were not sufficient to pay the cost of getting the meat into the market, so that the producer was actually receiving less than nothing for the carcasses. We cannot go on like that. The necessary result has been that the producer, sooner or later, is driven out of business, and when you have got him driven out of business, by the painful process of complete financial exhaustion, then those who have survived find themselves with a shortage of supplies, with the result that prices go up to famine prices, which lands the consumer in an ultimate expenditure far higher than if prices had kept at a reasonable level throughout.

Therefore it is that we have entered into the arrangements set out in that Schedule, by which we hope that the undue increase and fall of prices shall be checked and a more stable and regular level of prices secured. It is perhaps some testimony to the foresight of those who had to negotiate these Agreements that the method which we were able to adopt at Ottawa has enabled His Majesty's Government, within the last few days, to take a step which the agricultural community welcome and recognise as likely to prove effective in checking the fall which has happened since the Ottawa Agreements—an arrangement which it would not have been possible to make with any possibility of success but for the Ottawa Agreements.

Those then are the main concessions, if you like so to call them, which we give to the Dominion producer. What, on the other hand, do the Dominions give to the United Kingdom producer? In the first place, an increased preference over a very wide range of goods. Comment has been made, I know, on the fact that it could not have been possible at Ottawa to discuss the merits of all the long list of articles with regard to which there has been an alteration in the tariff; but, my Lords, it would be a complete mistake to suppose that that consideration, and those negotiations, only happened at Ottawa. Months before the Ottawa Conference commenced we had been in negotiation with the various Dominions, and in touch with the various exporting interests in this country, and we have been able to ascertain where best we could obtain help in the Dominion markets, and we have been able to discuss with the Dominions how far they could meet our wishes in various regards.

When we were at Ottawa we had the assistance of most valuable industrial advisers, men of world-wide reputation and wide experience, chosen by industry and agriculture for themselves and not chosen by the Government, who were always willing to give us the benefit of their experience and advice, and who were in turn in touch with a number of unofficial representatives of various interests, from whom they were able to obtain any particular trade information of which they happened at any moment to be in need. Accordingly we have reached in these Schedules a number of increased preferences for the products of the United Kingdom in Dominion markets, which the trades themselves, at any rate, believe will very materially improve their prospects and increase their prospects of obtaining substantial sales. None of us at Ottawa thought that our measure of success or failure was to be ascertained by calculating the exact amount of preference that we were able to gain on this, that or the other article. None of us thought that our success or failure at Ottawa was to be measured by calculating on the one side how much the preferences which we gave to the Dominions were worth in money, and how much, on the other side, the preferences which we were given in the Dominion markets were worth in money to this country. I do not think that that calculation could be made with any measure of accuracy, and if it had been made it would only touch the fringe of the question, because the things done at Ottawa were to lay down the general principles regulating trade between the United Kingdom and the Dominions, and to lay down principles which would form an enduring basis for an increasing share in the Dominion markets.

In that regard we had in the Ottawa Agreements a series of principles laid down which, in the view of those engaged in those negotiations, and I hope presently in your Lordships' view, are matters of great public importance. We have, first of all, accepted by the two great high tariff Dominions, Australia and Canada, the principle that in giving any protection in the Dominion markets against the products of the United Kingdom only those industries shall be given such protection as are reasonably sure of sound opportunities for success. That means to say that in future, in determining whether protection shall be given against United Kingdom production, only those industries which have "reasonable assurance", to use the words of the Agreements, of establishing themselves on a commercial basis in the Dominions, shall be given protection at all. Secondly, where that condition is satisfied, where a protection is to be granted, the measure of protection is to be such as to put the United Kingdom producer on a fair competitive basis with the Dominion producer—the protective duty shall not exceed such a level as will give the United Kingdom producer full opportunity of reasonable competition, on the basis of relative cost of economic and efficient production; with the proviso that, in the case of Dominion industries, they shall be given reasonable protection until they have a reasonable chance of establishing themselves.

The matter does not rest there. Having laid down those two principles then, both in Canada and Australia, there is express provision made for the setting up of a tribunal before which United Kingdom producers are to have full right of access, which shall examine the facts and find out what protection is necessary to satisfy that condition, and the report of that tribunal is to be laid before Parliament and therefore becomes a public document, open to the inspection of the United Kingdom producer and also of the Dominion consumer. There is, further, an express provision that no protection is to be increased against United Kingdom production except after an investigation and report by that tribunal. It is, of course, possible to sneer at the tribunal and to say that you cannot trust a Dominion tribunal to be impartial and unbiased. It was not from that point of view that we approached these negotiations. We believed that we were just as much entitled to trust to the fairness of an Australian or Canadian tribunal as we should have been to trust to the impartiality of a United Kingdom tribunal. We believe that in setting up a tribunal before whom there should be full right of audience, whose report should be public property, and whose duty should be the investigation of the facts, we were providing a very real safeguard and a very great advantage to the producers of this country.

Then it so happened that, in addition to the protective duties which at present exist, many, or at least some, of the Dominions, owing largely to the economic disturbances of the last two or three years, have set up a series of extra charges on foreign goods. There are different names—exchange duties, dumping duties, primage duties, surtaxes, sometimes even prohibitions. And we felt that it was of the greatest importance to the free flow of trade between this country and the Dominions that those extra charges should, as far as possible, be removed, and that, wherever they existed, there should be an opportunity of some certain knowledge as to how much was going to be charged. We have achieved, first of all, a general acceptance by all the parties represented at the Conference of these principles with regard to Customs administration: that the aims which were to be kept in view should be:

  1. "(i)The avoidance of uncertainty as to the amount of duty which would be payable on the arrival of goods in the importing country;
  2. (ii) the reduction of friction and delay to a minimum;
  3. (iii) the provision of facilities for the expeditious and effective settlement of disputes relating to all matters affecting the application of the Customs tariff."
And I believe that there is hardly any concession to the manufacturing and commercial interests of this country that they would value more highly than certainty and impartiality in deciding upon the duties to which their goods are to be exposed. In fact, there is a series of clauses in the different Agreements giving effect to these aims; and I am glad to be able to tell your Lordships that, even since the date of the Agreements, the Dominions have begun to take steps to carry out those arrangements.

In Canada there was a system of arbitrary valuation which caused the greatest irritation and resentment and created a very great feeling of ill will. There has already been introduced into the Canadian Parliament a Bill to repeal Section 43 of the Canadian Customs Act, which gives that arbitrary power, and to give a certainty to, and an impartial investigation to, our traders on those matters of valuation. In New Zealand there was in existence a surtax of nineteen-fortieths, I think, in most cases on all goods subject to Customs and a primage duty of 3 per cent. on all other goods. Already New Zealand has abolished the whole of that surtax in respect to British goods, and there remains only the primage duty on the balance, which we hope will be removed as soon as the finances of the country permit. In Australia there were prohibitions, surtaxes of something like 50 per cent. and, in addition, primage duties of 10 per cent. extending over almost the whole range of dutiable goods. On August 31 the whole of the prohibitions and surtaxes were swept away so far as British goods were concerned, and two days afterwards the 10 per cent. primage duty was also removed with regard to no less than 35 classes of goods in the Australian tariff, including a number of the greatest importance to this country.

Then there is a provision in the Canadian Agreement which has excited a certain amount of controversy. We were determined to set up preferences which in our judgment would enable Dominion products to have a fair chance in our markets and would enable our products to have a fair chance in Dominion markets. If, owing to the lack of enterprise of the British or Dominion manufacturer or producer, he was unable, inspite of those preferences, to secure his share in the market, that was a matter of his own commercial ineptitude, which the Government could not help. But we were conscious that there was another form of defeating those preferences with which no business enterprise could possibly cope. It was suggested to us that, apart altogether from the legitimate play of competition, there might be State action taken by some country which was determined to destroy the effective flow of inter-Imperial trade which these preferences were designed to create, that it could by State action, especially in a case in which the State happened to be the actual seller of goods, deliberately depress prices to such a level that no producer, however efficient, could hope to compete with them; and in that way the preferences which these Agreements set up could be defeated and the intentions of the Agreements set at nought. We were determined that that should not be allowed to happen, and accordingly there is provision made expressly, which is carried into effect in the Bill, that if State action by some foreign Government should take place which is designed to frustrate the effect and the intention of these Agreements, then the country whose markets are affected will take such measures as may be necessary, by prohibiting those goods from that State from coming in, to see that the Agreements are not defeated by any such unfair means.

There was also the question of time. We have been criticised because the Agreements last for five years in every case except in the case of India. In the case of India, as your Lordships know, great constitutional changes are at any rate under discussion, and it would be obviously improper that a Legislature elected under existing conditions should bind for any long time in advance a completely different form of sovereign power. But with regard to all the other Agreements it was obviously desirable that they should be operative for a sufficiently long time to ensure that the producer should have a fair chance to establish himself in the market which was designed for him, and to take such steps as were necessary to produce the supplies for which there was a reasonable opportunity of finding a market. We thought, for instance, that the United Kingdom manufacturer required a reasonable opportunity for getting the merits of his goods known, for establishing a good will, for building up trade connections, and for capturing markets which were invaluable for him if he possessed them, but which were not worth much if he were liable to be dispossessed at the end of a few months after the Agreements had been made. And similarly we were desirous that the Dominion producer, on his side, before he made such arrangements as might be necessary to produce sufficient quantities to satisfy our markets, should have a reasonable assurance that when his preparations were complete, and when the production took place, he would not find that the market had been taken away from him, and that the preferences on which he relied had been destroyed. Accordingly the Agreements operate for a period of five years in every case, except in the case of India.

I do not know whether anybody will have the temerity to repeat in this House the so-called constitutional arguments which were advanced at the beginning of the debates in another place. They were so completely pulverised when they were last produced that I doubt whether they will see the light, at any rate in the same form, up here. But if they should be brought forward I shall be very happy to deal with them when my opportunity arises to-morrow evening. For the time being I will only say that it seems to me that a reasonable time limit is an essential feature of this or of any other commercial agreement between two countries.

Those are the main provisions of the Ottawa Agreements. I have expanded them, I am afraid, at greater length than I had originally intended. I should like, if I may, just for a few minutes—and I will not detain your Lordships more than I am obliged to do—to run through the actual Bill and to explain, as far as is necessary, how that Bill gives effect to the Agreements to which I have called your Lordships' attention. Clause 1 of the Bill begins by setting up the Customs duties which, as I have told your Lordships, we agreed to impose at the instance of the Dominions. Subsection (2) of that clause not only gives power but imposes a duty on the Treasury to get rid of those duties whenever it is not necessary to maintain them in order to satisfy the Agreements. That might happen either because an Agreement was cancelled or because, in the case of some particular articles, a condition of the duties had ceased to be performed. For instance, in the case of wheat, zinc, lead and copper there is a condition that the duties shall be operative only so long as the commodities are supplied from Empire sources at world prices; and there has to be provision made for power to deal with that situation by taking off the duties if the condition is not fulfilled. Then there is a provision in subsection (4) that the duties are to be in substitution for and not in addition to the Import Duties Act duties.

Clause 2 gives the preference to the British Empire in respect of all these duties and the Import Duties Act duties. Subsection (3) deals with the position of the Irish Free State and provides that, so long as there are special duties imposed under the power which already exists on Irish Free State goods, these Ottawa duties shall not be imposed in addition. As your Lordships know, certain special duties have been imposed under the legislation of last July, and on the 15th November the Import Duties Act 10 per cent. duties will become operative in regard to the Irish Free State; but to impose these extra Ottawa duties in addition would seem to us to be unnecessary and really to defeat the object of the special duties, which are calculated with reference to the capacity of the Irish Free State produce to bear the charges imposed.

In subsection (5) there is a provision with regard to copper which I should like to mention. The copper duty is the only one in the whole range of the Ottawa duties which is intended to be prohibitive. Your Lordships probably know that the United States is the great source of copper outside the Empire. The United States has a duty on all foreign copper going into that country, with the result that British Empire copper is in effect excluded from the United States America. We arranged that we should put the same duty or a corresponding duty of 2d. per lb. on copper coming from foreign countries into this country, but we coupled with that the condition that the British Empire producers should be able to supply the whole of the requirements of the copper consumers of this country at world prices, so that no increase of price was involved to the consumers in this country.

It happens that there are two ways of refining copper; what is called the fire-refined copper and what is known as the electrolytic copper. In the case of fire-refined copper there is no difficulty, but in the case of electrolytic copper there are not at present refineries in the British Empire sufficient to supply the requirements for electrolytic copper, and accordingly Rhodesian copper has to go very largely to the United States to be refined there, if it is going to undergo the electrolytic process. Subsection (5) provides that, for the next three years, copper produced in the British Empire and refined outside it shall still be treated as British copper; that is to say, shall still be free of duty for the next three years, which will afford an opportunity for the creation of a refining industry adequate for the requirements of the Empire within the bounds of the British Empire. There is already one electrolytic factory of substantial dimensions in Canada, and it is hoped that under the stimulus of this clause it will be possible to satisfy completely the requirements for electrolytic copper by copper refined, after three years, in this country. There is power given to the Treasury and the Board of Trade to extend that time on certain conditions; and it is satisfactory to be able to tell your Lordships that the copper consumers and the copper producers have, within the last few days, reached an agreement with regard to the supply and production of copper which enables both sides to be satisfied, the one that the copper will be available, the other that it will be supplied at world prices and that the conditions of the Agreements will be fulfilled without any cost to the users of copper in this country.

Subsection (6) deals with the Port of Beira. The reason that has to be specially dealt with is that a great portion of the produce of Nyasaland and of Rhodesia is exported through Beira and it would not be fair to allow that fact to deprive the producers in those parts of the Empire of the preference which the Agreement is intended to give them.

Clause 3 deals with the duty on light wines and gives an increased preference to Empire wines. Clause 4 deals with tobacco and coffee, stabilises the preferences and increases them in the case of coffee. Clause 5 is the clause which deals with that unfair State competition to which I have already drawn attention. Clause 6 includes in the free list which is set up under the Import Duties Act certain articles which at present are not in the list but which, under the Indian Agreement, are entitled to be placed there. Clause 7 gives power to regulate meat in the way which I have already described. Clause 8 deals with the importation of Canadian cattle, a matter which I am afraid sorely offended the pride of the Canadian agriculturist, who resented the imputation on the quality of his cattle; it is one which our Department of Agriculture is satisfied can safely be accepted. It has, of course, as your Lordships see, provisions against unsuitable breeding cattle being introduced.

Clause 9 deals with the duration of the Agreements and says that the Treasury is to determine when the Agreements cease to be in force. Clause 10 provides for Orders made with regard to Customs duties to be laid before the House of Commons and Orders made with regard to other matters to be laid before both Houses and to require the approval of affirmative Resolutions of each House of Parliament. Clause 11 gives power to refer to the existing Advisory Committee certain matters. Clause 14 deals with the duration of the Act and provides that the Act is to go on as long as any of the Agreements continue in force. The reason for that provision is that, as your Lordships appreciate, the Agreements are for five years, but they can then go on after five years unless they are denounced by one party or the other. There is also, as I should have reminded your Lordships, a provision in the Agreements that if before the five years there are found to be matters which turn out to press unduly upon one party or the other, there is to be opportunity of consultation between the Governments affected. The purpose of that is that always, in detailed agreements of this kind dealing with a very wide range of subjects, something may arise which had not been foreseen and which may create a hardship. The purpose of the provision as to consultation is to make it plain on the face of the Agreement that it is not intended, if that should happen, that either Government affected should be accused of any attempt to escape or evade its obligations if it brings to the notice of the other party the difficulties which have arisen. There cannot be an alteration of the Agreement without the consent of both parties, but it is desired to make it quite clear that it is the right of either party to bring to the notice of the other any matters of that kind which may arise.

I think that concludes my analysis of the provisions of the Agreement. It was my privilege to be one of the Delegation which went from this country to negotiate those Agreements. We represented every party in the State; we worked throughout with the greatest harmony, the greatest loyalty and the greatest trust in one another. The conclusions which we reached were in every case unanimous conclusions. We do not believe that any arrangement made at Ottawa is necessarily a perfect agreement, a flawless plan, which cannot be improved upon. The actual Resolution to which I called attention indicated that the Conference itself regarded these Agreements as a step forward which should in the future lead to further progress in the same direction, but we believe that the Agreements which we negotiated, and of which we ask your Lordships to approve, do mark a real advance in Empire co-operation and Empire unity, and do, in the words of the Resolution of 1930, afford the best means for maintaining and extending inter-Imperial trade. It is in that belief that I commend these Agreements and this Bill to the favourable consideration of your Lordships' House. I beg to move that this Bill be read a second time.

Moved, That the Bill be now read 2a.—(Viscount Hailsham.)

LORD STRACHIE, who had given Notice that he would move, That the Bill be read 2a this day three months, said: My Lords, I notice that the noble Viscount who has just moved the Second Reading of this Bill said a Vote of Censure on the Government had been moved on a previous occasion, and that the reason it was withdrawn was that the preponderating opinion of the House was in favour of the Government and not in favour of the Resolution. I was present during the debate, and what struck me was that the supporters of the Government on that side of the House were the people who were censuring the Government. I think the reason why that Motion was withdrawn was that about seven o'clock, as usually happens, the House was almost entirely empty, except of the thick-and-thin supporters of the Government who vote for them on every occasion. I have put down this Amendment to the Second Reading in consequence of the speech made by the noble Earl, the Parliamentary Secretary of the Ministry of Agriculture. It was a speech which seemed to me once more to plead for delay instead of taking immediate action to deal with the very considerable and desperate plight in which agriculture is at the present moment.

My mind was taken back to what happened a year ago when the Abnormal Importations (Customs Duties) Bill was introduced into this House, and the late Lord Brentford and Lord Cranworth said, in no measured terms, that that Bill was not of the slightest use to agriculture. The noble Viscount, who replied, agreed with them to a certain extent, and said that as soon as possible the Government would take steps to remedy the complaint that agriculture had been neglected. A whole year passed, and then we had the Vote of Censure referred to by the Leader of the House the other day, and the speech of the Parliamentary Secretary, who then talked about a long-range policy, following up what had been said by Sir John Gilmour and also by the noble Viscount, who talked about the foundations of a future policy for dealing with the plight of agriculture. I am glad that the Government at present seem inclined to think that a long-range policy is not desirable, and that agriculture is in such a bad state that they must do something for it now. I will deal with that later. I do not agree that their new policy is going to do very much at present for agriculture.

I shall only deal with the agricultural point of view in speaking upon the Ottawa Agreements. I am quite willing to admit that from the industrial and manufacturers' point of view a great deal may have been done by the Government. It always seems to me that most Governments are ready to consider the industrial interests of this country much more than the agricultural interests. The quota is now being put forward as a remedy for the present condition of agriculture. I think the quota is a very complicated matter indeed. It seems to me that it is full of prohibitions, limitations and interferences. It reminds me very much of the sort of conditions which prevail under the Soviet Government in Russia, where they have every kind of interference and every kind of prohibition of the agricultural industry.

The quota, I cannot help thinking, is to a large extent really only another name for import boards. The late Labour Government, as far as I understood, was in favour of import boards as a means of dealing with the complaints of agriculturists. We have had a Report from the Bacon Commission which has suggested that there should be a quota for the imports of bacon into this country. I notice in the Report that the Commission suggests that six boards should be appointed in order to carry out the quota, plan for bacon. That means a very large increase of officials and of expenditure. I think that at present this country suffers from too many officials and the large expenditure which the payment of their salaries entails. We are all aware of the enormous expenditure in Whitehall since the War upon civil servants generally. I am not complaining of the civil servants being well paid, because think that our civil servants are most admirable people; but there is a question whether in these parlous times we can afford to have more officials added to those we have already in Whitehall.

I notice that a note has been made upon the Report of the Bacon Commission and the suggested quota by the National Farmers' Union, which says that by the Report it is proposed that there should be a limit of 22,360 tons. The National Farmers' Union say it is necessary that there should be a limit of 100,000 tons if any good is to be done in order to increase the price of bacon in this country. I cannot help thinking that this quota is really only Protection under another name. I suppose it is being resorted to in order to allay the consciences of those Free Trade supporters of the Government who think that Protection is a very dangerous implement indeed, and that we ought never to have Protection in any circumstances whatsoever, not even for revenue purposes. With the condition this country is in at the present moment it is necessary for us to raise revenue in every possible way. We certainly have come to the limit of direct taxation if not of indirect taxation, and I wonder whether it would not have been possible to accept the suggestion made by a small majority of the Agricultural Committee of the House of Commons that there should be a duty of 4d. on every pound of foreign meat coming into this country and a preference of 2d. for the Dominions. On the other hand it might be worth while to have only a duty of 2d. and a penny preference for the Dominion meat coming into this country. That certainly would have this advantage over the quota, that it would raise a great deal of revenue for this country. I think it was suggested that 4d. and 2d. would bring in something like £26,000,000 a year, but even if it were put at 2d. and 1d. it would have the advantage of increasing the money coming into the revenue.

As I understand it, speaking as a Free Trader myself, the Liberal Free Traders who left the Government did not leave it on account of Protection. They could hardly have done so, because they were parties to the Imports Duties Bill and so admitted that Protection was necessary as regards certain matters. We have to remember also that there is the question of revenue in this matter, and it is very necessary that we should consider that because both Mr. Baldwin and the Chancellor of the Exchequer have spoken strongly on that subject, and have said that it is unlikely in the immediate future that a reduction of taxation will take place because at present the finances of the country are not in a sufficiently prosperous condition. Therefore, it seems to me that it would help agriculture and at the same time help the taxpayers generally if the amount coming to the revenue were increased by a small duty on meat from overseas.

I noticed a letter in The Times this morning from Mr. Christopher Turnor, who advocated very strongly the necessity of helping agriculture by way of quota instead of by Protection. In the same column of The Times as that letter from Mr. Christopher Turnor appeared there was a letter from the noble Viscount, Lord Astor, who pointed out that ….the whole of the£10,000,000 to £20,000,000 anticipated increase in the price of foreign meat sold to British consumers will go to oversea meat producers. He added that if ….the alternative plan of imposing an emergency tariff on imported meat were adopted, a substantial portion…would be paid into our Treasury. That is to say, if you have a quota what would happen would be that the advantage would go to the overseas producer and there would be no advantage to the Treasury at all.

Then the noble Earl the Parliamentary Secretary to the Ministry of Agriculture, speaking on the World Meat Conference of 1933, said when we hope to place imports into this country on a more permanent basis. I notice that the noble Earl only said "we hope" to do it. I venture to say that it is hardly a right thing for this country to be dependent on what the World Conference will decide. I am not aware, taking Europe as a whole, or the world as a whole, that other countries are suffering as we are suffering from over-production of meat. The over-production is taking place not in this country but in the Dominions and in other countries who dump their produce here. I think that farmers have a very strong claim for duties. For what reason do I say that? I say that because wages boards were set up to regulate the wages of agricultural labourers and the hours worked in agriculture by a Labour Government with the consent of all Parties in both Houses of Parliament. I, for one, certainly always agreed that it was very desirable that agricultural labourers should be paid a proper wage and a greater wage than they had been paid in the past. They are skilled workmen who ought to be encouraged and who ought to be kept on the land. If you admit that it is right that their wages should be protected, I would ask why should not the produce which has to pay those wages be protected in exactly the same manner?

I would ask you also, how can British agricultural produce compete with the produce coming from countries with long hours of work and low wages, countries in which also there are subsidies or veiled subsidies for agriculture? It seems to me that the only alternative to enable us to compete with those countries would be to reduce the wages of the agricultural labourers, and I myself would always oppose that in every possible way. I regret to see that this year—owing no doubt to the plight of the farmers—wages have been reduced in sixteen counties by sums varying from 1s. to 2s. per week. So far, I am glad to say, I have not noticed that agricultural labourers' hours are being increased. Perhaps your Lordships will allow me to mention some of the counties in which reductions have taken place. In Somerset wages have been reduced by 1s. 6d.; in Yorkshire by 1s. 6d.; in Oxfordshire by 2s.; and in Lincolnshire (Kesteven and Lindsey) by 2s.; and in Berkshire by 1s. 6d. In eleven other counties they have been reduced by 1s. or 1s. 6d. I think that shows that there is a very strong case indeed for helping agriculturists to get better prices for their produce, because undoubtedly the farmers cannot pay high wages for comparatively short hours of labour when those hours of labour mean payment of a great deal extra for overtime, especially in those counties where dairy farming is general and work has to be done on Sundays and paid for as overtime.

The noble and learned Viscount spoke of the Advisory Committee at Ottawa. The Advisory Committee included gentlemen representing agricultural bodies who were sent to Ottawa to advise the official representatives. The official representatives so far as agriculture is concerned were Sir John Gilmour and Sir Douglas Newton. One of these agricultural advisers, Sir Arthur Hazlerigg, writing in The Times, complained that all the advice given by them to the official representatives—that is, to Sir John Gilmour and Sir Douglas Newton—was entirely rejected by those gentlemen. I think Sir Arthur Hazlerigg will be well known to many noble Lords, because not only is he chairman of the Council of Agriculture for England but he is a very prominent member and a past President of the Royal Agricultural Society with which many noble Lords are connected. They will, no doubt, consider that he speaks with some authority. Sir Arthur Hazlerigg said that all their representations to the official representatives at Ottawa were rejected in the interests of industry, of shipping and of so-called vested interests. It seems to me that that is a very strong indictment, and it would be very interesting if, at some time, Sir Arthur Hazlerigg would tell us what were the recommendations which were made and which were rejected by the official representatives of the Government in this matter.

I think that generally speaking we may say that agriculture in this country disapproves of the Ottawa proposals. The Minister of Agriculture announced in another place the other day that something was going to be done at once to relieve agriculture in this matter. He said that they were negotiating with the Dominions and with the Argentine. It seemed to me, as I understood him, that instead of waiting eighteen months for the Ottawa Agreements to take effect, he was going to get a reduction at once of 10 per cent. in overseas meat imports instead of waiting for a greater reduction eighteen months hence. It amounted in effect to a proposal to scrap the Ottawa Agreements entirely because those Agreements at Ottawa, as far as agricultural interests are concerned, would not be of any use for any immediate remedy of agricultural depress- sion. I am sure that all who are interested in land are perfectly well aware that the position is very serious indeed and brooks no delay, and that the Government ought to take immediate action. According to The Times the decision to take this action was only arrived at at 10.30 p.m. just before the Minister of Agriculture spoke. Instead of standing by the Agreements at Ottawa, the Government are now going to enter into voluntary agreements with the Dominions and with the Argentine in order that meat producers may get better terms than under the Ottawa Agreements.

That may be a very good and very desirable thing, but I do not think that the proposals with regard to meat imports are going to do much good because, although the Minister of Agriculture said that there was going to be at once a reduction of 10 per cent., I noticed that in the year which is generally taken, 1925, the imports were 5,500,000 cwts., and in 1931 7,750,000 cwts. of meat were imported into this country. That does not look as if the 10 per cent. is going to be of great advantage to the farmers. But it is an advantage to have the admission by the Government that the Ottawa Agreements are not satisfactory and that it is necessary for them to ask the Dominions and Argentina if they would be so kind as to agree to voluntary arrangements.

Speaking from the point of view of one representing a great dairying county, I notice that we get practically no advantage under the Ottawa Agreements, because I understand that free imports as regards dairy produce from the Dominions are to be continued for three years. It was pointed out strongly the other day that those counties were left out in regard to cheese, the Dominions being able to send in cheese to any amount and under-sell us. That may be very serious in the next three years. I say it may be very serious because in the milk-producing counties, as is well known, one of the great difficulties in making contracts with the distributor is that, though you may be paid a fairly good price for milk, there is something like a 25 per cent. surplus which has to go at something like 4½d. or 5d. a gallon. It only gets this low price instead of the higher price owing to the large importation of cheese, since it is hardly worth while for the farmer here to make cheese when he knows that he is being under-sold by the Dominions. I suggest that when the Government are approaching the Dominions for voluntary arrangements they should ask whether they would not meet us in this matter in order that we may get a better price for that surplus milk. I can assure noble Lords that the milk question is at present a very serious one and instead of getting better I fear it will become worse. The settlement made last year by the National Farmers' Union is not accepted as satisfactory by the counties which are largely interested in the sale of milk. I have been talking to agricultural friends and I find the general feeling is that the Ottawa Agreements Bill is not one which is going to do very much good to agriculture, and that the general feeling of agriculturists is that they have been sacrificed at the instance of the manufacturer. It is for that reason that I move that this Bill be read a second time on this day three months.

Amendment moved— Leave out ("now") and at the end of the Motion insert ("this day three months"). —(Lord Strachie.)


My Lords, I listened with great attention to the speech which has just been made, and if I understood it correctly it would appear that the noble Lord moved the rejection of this Bill not on the ground of strict Free Trade principle, but rather because the accommodations given to the farmer were not sufficiently satisfying. I have always admired the ability with which the Liberal Party manages to live in a state of uncertainty concerning fundamental principles and I cannot help wondering whether they will be able to substantiate the declaration that has been made. The noble and learned Viscount who moved the Second Reading has everyone of us at a serious disadvantage, for he alone among the members of the House had the advantage of being present at Ottawa and, we may be sure, taking a very vital part in the decisions arrived at. The noble and learned Viscount began his speech by telling us that he was not going to make a partisan speech and I felt he was thereby placing upon himself a self-denial which we were all prepared to appreciate; but I was not surprised that at the end he failed to live up to his intention and stated that at Ottawa every Party in the State was represented on the Delegation. If His Majesty's Opposition constitutes a Party then every Party in the State was not represented, and I cannot help thinking that in that the noble and learned Viscount—I am sure he was not intending to be offensive —was undoubtedly provocative. It requires an act of faith and generosity on our part to allow that to go by without further discussion.

I envy the noble and learned Viscount his capacity to disentangle involved threads of argument and to reduce to simplicity abstruse problems. If I felt quite as sure of his willingness sympathetically to understand the hesitations and difficulties of those of us who cannot accept his conclusions, I should feel happier about this debate. As a preface to the few remarks I desire to make I would like to explain in a few phrases the spirit in which I approach the subject. It so happens that the greater part of my Parliamentary life has been devoted to furthering reciprocal relations between the Mother Country and different parts of the British Commonwealth of Nations, and I have tried to do something within my own Party to develop an enlightened Empire outlook and purpose. I have always understood that conferences were one of the methods by which that might be attained. When a conference meets I have no objection to frank discussion. Such discussion frequently clears the air and makes subsequent understandings more easy. But conferences with that desire in their minds must wish to achieve a common end. There must be no concessions forced from any of its members which tend to leave a sense of injustice behind them. There must be no hard bargaining. There must be mutual give-and-take in order to develop a common good.

I confess, my Lords, that there are those of us who sit in this House, and in other places, who ask ourselves very seriously whether Ottawa meets that test. I had not the advantage of being present, but I have talked to people who were and whose business it was to estimate the flow of thought and the results obtained, and we cannot help feeling that those results, as presented in the Bill before your Lordships' House, are highly disturbing. So far from uniting the British Empire and fostering that common aim which we all of us desire, it seems as though Ottawa was the occasion for stubborn bargaining, each section of the Empire being for itself and almost none being for the Motherland. One result of these Ottawa engagements would seem to be that the overtaxed and overburdened people of this Island will undoubtedly have an additional burden to bear. Lord Beaverbrook, speaking in this House the other day, seemed to make light of the fact that our food might cost us more. The noble Lord was not able to realise the difference that a shilling makes one way or another in a poor man's home, and I was surprised that the noble Lord did not seem too pleased with the results of Ottawa. I have never known a case where a parent looked with such disfavour upon his offspring, as the noble Lord, Lord Beaverbrook, did the other day.

With regard to the general question, I begin to have something like a superstition that there is something inimical to British bargaining on the American Continent. Remembering our past experience at Washington, and thinking of Ottawa, I cannot help feeling that there is something in the air of the American Continent which deprives British statesmen of their usual powers of defence in the interests of their country. The rôle of the benevolent uncle is one that we all like to play, but the concessions which have been made at Ottawa seem to some of us to do more credit to the hearts than to the heads of those who were our representatives, and I cannot help remembering that no such abounding generosity is shown at home when the suppliants are the half-starved victims of our own economic disorder. Then the generous uncle becomes the stern economist, and reminds us of the inexorable laws of supply and demand.

The noble Viscount, in introducing this Bill to-day, said it was a great tribute to the Conference that they were able to make arrangements with each separate Delegation. My Lords, it is not so difficult to come to an agreement if you concede everything that the other side asks for. We were told, secondly, that they had achieved the giving of free imports to the Dominions, but that is not an achievement. It always existed. The real achievement was the raising of taxes on foreign goods by 10 to 15 per cent. That was the only result; but we have yet to prove that that is going to be the benefit that it is alleged to be. I understood the noble Viscount to say that the arrangements that have been made would not increase wholesale prices, but the whole point to me is, will they raise the retail prices to poor people who have to buy food?

We are to-day in the very difficult position of having to take or leave what these Seven Wise Men have brought to us from the Golden West. We may not modify, and we dare not reject. This sovereign Parliament has got the limited duty of signing on the dotted line. We are helpless in the matter before our people who may, as we fear, be grievously injured in the result. My admiration for the National Government has always been under strict control. I understood that it was to have a doctor's mandate to deal with a sick patient, and its carrying out of that mandate seems to be the transfusion of blood—the taking of blood from the weaker patient and the giving of it to the stronger, whose chances of recovery are at any rate greater. It seems that there is only one course left to us who take the view which I am trying to put before the House. It is to say quite frankly that whenever the time comes we shall reserve to ourselves the right to deal with this matter on its own merits and in the light of such experience as we may gain. We do not intend to be bound for ever by what has taken place at Ottawa, and by what we are at present unable to resist. It is just as well that there should be no sort of misunderstanding on that point.

I am afraid there is a great deal of anxiety and general disappointment outside the ranks of the Party to which I belong, and that the coerced congestion of the approving Lobby in another place is no indication of what people are actually thinking. One reason for the disappointment is that His Majesty's Government boomed the Ottawa Conference rather too incautiously. We were told it was going to be the gateway to prosperity, it was to be the blessed Opportunity for our country, it was to be the thing that would re-start prosperity in mill and mine and field; and now that it is over there is to be a postponed felicity until the World Economic Conference takes place, and after that there will be further postponements still.

The test for me is whether what has been done at Ottawa will unite the people of the British Commonwealth of Nations more closely together. Will it give to us an increasing strength and a common purpose, or will these arrangements reduce Imperial relations to mere economic convenience, and turn the Empire into an Imperial Rotary Club? The well-being of this country depended upon the Imperial barriers to the free exchange of goods being lowered, and the existing barriers to foreign trade not being raised. That, as I understood it, was the purpose in the minds of the seven representatives or delegates who went West, before they came under the hypnotic influence of Ottawa. What caused them to retreat from so sane a position? If it was not the whispering modesty of Mr. Bennett, it must have been the fear in their minds that the Conference would be a failure. A failure of the Conference would have been regrettable, but it would have been a failure that could have been amended.

But has it not indeed failed? If the desired end was to bring the Empire closer together and to intensify the spiritual relationships which exist between its separate parts, then that, I fear, is precisely what has not happened. I listened not long ago to a distinguished statesman who said that not only were there stiff rows (I am using his words) between the delegates and the representatives of this country, but there were stiff rows between the Dominions themselves. I am concerned for what the reaction is likely to be upon the workers of my own country. I ask your Lordships to understand that we in the Labour party were the heirs of the anti-Colonial bias of past generations. Labour audiences disliked both the name of Empire and what it implied. During the last twenty years we have gradually changed that into a friendly interest in the development of proper relations between ourselves and the Dominions, on the understanding that it was going to be for the general good, in which the workers of this country would participate. That plant is not deeply rooted. Any adverse wind or bitter frost might destroy it altogether, and it will be difficult to make the workers of our country who are earning £3 per week, if they are fortunate, understand why they should have an additional burden put upon them on behalf of people who are earning £5 or £6 per week.

Before I close I want to ask whether anybody really knows what has been agreed upon. We have been told that Parliament does not in fact lose its control over these issues that are before it. Mr. Lyons, the Prime Minister of Australia, within the last few days spoke in Parliament at Canberra as follows (I am quoting from The Times report): With regard to the statement that Great Britain gave nothing, Mr. Lyons said, Schedule D showed that a tariff was imposed in Great Britain on a long series of goods which could not be altered without reference to Australia. Great Britain was giving something more definite and more binding than Australia was giving.… There had been no tariff reductions as a result of Ottawa. If there had been no Ottawa Conference reductions would have taken place just the same. Really the nation has a right to know where it stands in this matter. It surely is possible to give an authoritative statement as to whether we are in fact bound irrevocably for a given number of years or whether, if the occasion merits it, we can make a change. I do not want to belittle in any way the importance and value of Dominion trade. It is already very considerable, and I believe that it will grow. But there is very little likelihood of our receiving from the Dominions under these arrangements what we shall lose in foreign trade. We have a population of 468 to the square mile, and it seems to me the most dangerous of all games to gamble with the food of the people of this country.

I desire to close by saying that under these arrangements the welfare of the Empire would seem to be reduced to the hazards of commercial convenience. What if those hazards fail? Great Britain cannot for ever be giving more than she receives. The old idea of Empire, it seems to me, was on surer grounds. It was not trade balances that led the fine flower of Dominion manhood to participate in the agony of Flanders and Gallipoli, it was the sense of a deep, abiding spiritual conception of a common good; and it is because we believe that the arrangements made at Ottawa may endanger that for ever that we feel unable to support this Bill.


My Lords, every speaker who takes part in this debate must feel, I think, as I feel, the difficulty of saying anything new on a topic that has been so exhaustively discussed during the last few weeks. I had hoped that the noble and learned Viscount who moved the Second Reading of this Bill would have been more controversial and provocative, so that he might have provided me with some fighting material which would have raised the temperature of this debate. But I suppose the noble and learned Viscount is reserving a speech of that character till he closes the debate to-morrow, when there will be no opportunity for reply. I have another feeling which was expressed by my noble friend who has just sat down, that is, the futility of a debate upon a Bill when we have been told before-hand that we shall not be permitted to alter it by one comma or by one dot. I think that one of the most serious features of this question is that the House of Commons, under the compulsion of the Dominions, has surrendered its authority over fiscal policy.

I said to your Lordships just now that I felt a difficulty in trying to contribute anything new to the discussion of this question. I shall confine my observations, in the main at least, to putting another side to the interpretation of the Ottawa Agreements which has been put before your Lordships in the speech of the noble Viscount. Before I proceed to do that I want to make a brief comment upon the observations which were made by the noble Viscount at the opening of his speech—namely, in regard to the origin and the purpose of that Conference. The noble Viscount, speaking to your Lordships a fortnight ago, appeared to be anxious to disclaim, on behalf of the present Government, all responsibility for that Conference, and to place the responsibility for it upon the shoulders of the Labour Government. The Labour Government had, no doubt, a great many sins to answer for, but the responsibility for that Conference certainly cannot be laid to their charge. The account that was given of the genesis of that Conference by the noble Viscount was in the main correct; but I want to associate what he said in regard to the purpose of that Conference with some strange remarks that were made upon the same subject by the Prime Minister in the House of Commons some days ago in an attempt—a very futile attempt—to rebut the charge of broken Election pledges. The Prime Minister then said that if a Labour Government had gone to Ottawa they would have gone there knowing full well that, if the Conference were to be successful, it would involve the acceptance by the British Government of a tariff upon food-stuffs. With all respect to the Prime Minister, I beg to say that there is no justification whatever for that statement.

The noble Viscount read a part of a Resolution which was passed near the end of the Imperial Conference of 1930, in which it was said that the Conference would reassemble to continue the discussions which could not be finished, for want of time, at that Conference of two years ago. If your Lordships are so far interested in this point, will you take the trouble to look up the Report of the Imperial Conference of 1930? You will find on page 43 and following pages the Resolutions of the Conference, which set forth quite clearly the subjects which had been discussed by that Conference and the discussion of which was to be continued at the adjourned Conference at Ottawa. What were they? They were not tariffs, because the Government of that day made it perfectly clear at the opening of the Conference. Following Mr. Bennett's remarkable opening speech, the Government made it perfectly clear that they would be no party to any arrangement which involved the institution of a system of tariffs or Protection in this country. That was accepted, quite unwillingly I admit, by the Dominion Deputations, and they asked us: "What other suggestions have you to make for improving and extending Imperial trade?" We put forward a number of suggestions to which we were not definitely committed, but we put them forward as providing material for very useful and possibly profitable discussion and decision. Tariffs were excluded by common agreement.

What were the questions which were reserved for consideration at the Conference to be held at Ottawa? They were these: The United Kingdom Government suggested for examination certain methods of increasing Imperial trade —namely, quotas, import boards, direct exchange of commodities, promotion of agreements between industries, important machinery for Commonwealth consultation on economic matters. That was the reference which, had the Labour Government remained in office, they would have sent forward to the Conference at Ottawa. The Prime Minister the other day said that we knew quite well that we should have to begin at Ottawa where we left off, and he conveyed the inference that that meant that we should begin by discussing the question of tariffs. That, as I have told your Lordships, had been ruled out, and these were the questions at which the beginning would be made in the adjourned Conference at Ottawa. The Prime Minister had no justification whatever for saying that the Labour Government had given the slightest countenance or encouragement to the Dominion Delegations that we would at the Ottawa Conference make any change in the position we had definitely stated of hostility to the tariffs on foodstuffs. The Prime Minister said that that was in our minds. If that were so, if he knew that at the adjourned Conference the British Government would have to agree to tariffs if success were to be achieved, why did he not say so at the Election, instead of telling the country, and especially the electors of Seaham to whom he was speaking, that he would be no party to any proposals or schemes which involved an addition to the cost of the food of the people? I apologise to your Lordships for having dealt at such length with this question, but I think it was necessary to do so, in view of the matter having been raised by the noble Viscount. I felt also that some reply was necessary to the statement of the Prime Minister.

I turn now to the Agreements which are embodied in this Bill and for which the support of your Lordships' House is now asked. The purpose of the Conference, as declared by the British Delegation, was to promote inter-Imperial trade. Whatever may be our opinion about these Agreements there is no difference of opinion as to the importance and the need for stimulating, encouraging and increasing inter-Imperial trade. The second purpose of the Conference was to lower tariffs and to set free the choked channels of world trade. As a matter of fact we had a very definite assurance from the British Delegation that nothing would be done at Ottawa which would interfere, at the forthcoming World Economic Conference, with the freedom of the British Government to fight for, and to endeavour to secure, a general reduction of world tariffs. The noble Viscount said that since the Conference of 1930 there had been a change of government in this country—a Government which was committed to the policy of Protection, the protection, he said, of home industries. It does seem to me a strange inconsistency on the part of those who believe in Protection as a principle and as a policy that they should at the same time be advocating a lowering and, the noble Viscount said, the removal altogether of tariffs. If they succeed in doing that, what is to become of the home industries which, according to their philosophy, can only exist if they are protected by tariffs?

One would have believed from the closing sentences of the noble Viscount's speech that the Conference at Ottawa was a gathering of brothers met together in the closest friendship, and that nothing occurred there to impair the harmony and the pleasantness of the gathering. I wish that the members of the Delegation Would say in public what some members of the Delegation are very freely saying in private. Every Dominion was obsessed by the idea of economic nationalism. Every Dominion then was looking only to what it could get and how much in particular it could get from the Mother Country. The harmonious proceedings at the Conference were on the point of breaking up at two o'clock in the morning of the day when the British Delegation was due to leave Ottawa, and the break-down would have come if further concessions had not been made by the British Delegation. In 1930 Mr. Bennett —we know something of Mr. Bennett—threatened us that if we would not agree to his demands he would make an arrangement with foreign countries. The noble Viscount said the same thing in his speech a fortnight ago, that if the Conference had broken down then the Dominions would have turned to foreign countries. Mr. Bruce said the same thing only a week or two ago—"We should have to go outside to foreign countries and we should take away the preferences from you."

It is no wonder that Mr. Chamberlain said that he found the bonds of Empire had worn very thin, and those bonds could only be strengthened by the British Government, the people of this country, making fresh concessions to the Dominions. The Conference came to an end, and the British Delegation, weary and tired, went to the boat, and I can very well understand what took place there. They said: "Well, we are out of it, and we shall have to make the best of it. We cannot admit failure. We shall have to describe it" (in the words of the noble Viscount) "as having done big things. We shall have to describe it" (in the words of Mr. Chamberlain) "as the greatest achievement in a year of wonderful endeavour. We shall have to say" (in the wording of the manifesto the Delegation issued on their arrival in England) "that what we have achieved is far greater than our expectations."

I turn to the consideration of the Agreements and I want to apply four tests to them. Do they lower tariffs? Will they increase inter-Imperial trade? What is the effect of them on Great Britain? How will they affect world trade? First, the question of tariffs. Have they lowered tariffs? They certainly have not lowered tariffs in this country. The noble Viscount admitted that the Delegation had been obliged to agree to an increase in certain of our new tariffs to meet the demands of the Dominions. They have certainly not lowered British tariffs. They have raised duties on the old ones and they have imposed new duties. Let me give your Lordships one or two instances of what has been secured in the way of reducing Dominion tariffs. The noble Viscount the other day, like his colleagues in the House of Commons, made great play about the Schedule E. They have reminded us that that contains a list of 217 articles upon which duties have been reduced, or an increased preference granted to this country. Two hundred and seventeen articles!

Do your Lordships know how many articles there are in the Canadian Tariff Schedule? A statement appeared in the Press at the time of the Conference—I do not vouch for its accuracy—that Mr. Bennett had presented to the British Delegation a list of eight thousand items upon which he was prepared to make some concession, declaring that that would mean an increase of trade between this country and Canada of about £12,000,000 a year. I doubt if there are so many items on the Canadian Tariff Schedule. I understand that that list was exhaustively swollen by the same thing three and four times over. There was, for instance, an item "Micky mouse game." This appeared under "Micky" and it appeared under "Mouse" and it appeared under "Game." There was billiards cue chalk. It appeared under "Billiards" it appeared under "Cue" and it appeared under "Chalk." There are, I believe, 1,500 items on the Canadian Tariff Schedule, and 217 of these are included in this revised schedule, in Schedule E. What about the other 1,300? The other 1,300 apparently have not been touched. The duties upon those remain the same.

We have heard a great deal about the free list. The noble and learned Viscount referred to certain charges above the tariff imposed. Most of those charges are not at all affected or changed by the alterations to which the noble and learned Viscount referred. For instance, the exchange duty—the dumping duty as it is sometimes called—is not taken off. I know of no proposal to take it off. What does this mean? It means that; the few articles—only 70 of them—on the so-called free list have to pay this exchange duty. Then in addition they have a special duty of 3 per cent. Whether that is to be taken off I do not know. That makes 17 per cent. impost on those articles which are said to be on the free list. That exchange duty is not charged upon imports from the United States of America, because the American exchange has not fallen, so we have this curious result: that where the preference on British goods as against America does not exceed 10 per cent. the American goods enter Canada at a lower rate than the goods on the British free list. The noble and learned Viscount did not tell your Lordships that when he was speaking about the advantages of this free list a fortnight ago.

I admit that in that Schedule E you will find a reduction of duties, but if you examine them very closely you find that where Canada does not produce the goods they are on the so-called free list. Where the goods are not to a great ex- tent competitive with Canadian manufactures the duty is not so high; but in every case where the goods are in competition with Canadian manufactures the duty is of a prohibitive character. May I ask the question put by Mr. Joseph Chamberlain 30 years ago when speaking to the Dominion leaders? He said: "What is the use of your preference? What is the use of your high duties against the foreigners and a lower duty to us? It is no satisfaction to us to know when you prohibit the import of our goods by a tariff that you have a still higher tariff against the foreigner."

I will trouble your Lordships with only one instance. I take it from a large list, and I quote it because it is a case of particular interest to the constituency which I represented in the House of Commons—the Colne Valley division of Yorkshire, a wool and worsted manufacturing district. When Mr. Bennett raised the duties on the Dunning tariff two years ago the duty on worsted goods was made prohibitive and hundreds of factory workers were thrown out of employment in the Colne Valley division of Yorkshire. What are the duties now? I take a class of woollen tissue which was the staple export from that district to Canada at the time when the duty was only 16 per cent. It is a half-crown cloth, 32 ounces weight to the square yard. Before this revised Schedule, this great reduction of tariffs took place, the duty apart from additions was 97¾ per cent. In this Schedule it is reduced to what? 20? 30? 50? It is reduced to 90. Cases like that can be multiplied almost ad infinitum by a close examination of this Schedule E. That 90 per cent. is to be imposed under this Agreement. It does not include the so-called dumping duty, which would raise the duty to 100 per cent.

Now, my Lords, Mr. Bennett could very well afford to reduce this duty. Are your Lordships aware of what Mr. Bennett did in anticipation of the Imperial Conference of 1930? Just before he came here he raised the existing duties three and four times over. Duties of 16 per cent. were raised to 80 and 90 per cent. Then Mr. Bennett came here and said: "If you will agree to tax foreign imports, then I will give you a reduction of 10 per cent. in your preferential rates." I repeat to your Lordships that that is simply mockery. And that is what has been perpetuated under the Agreements which your Lordships are now asked to approve.

Take Australia, to which the noble and learned Viscount referred. In September textiles were rated for import duties as high as 185 per cent. They have been reduced to 105 per cent. My noble friend who spoke before me gave a very striking extract from a recent speech by Mr. Lyons, in which Mr. Lyons, the Prime Minister of Australia, said that their duties had not been removed. Speaking on October 17, Mr. Lyons said: "We have increased the duties against the foreigners on 400 items and reduced the duty on twenty classes." Twenty! Twenty out of a thousand ! Twenty classes of British goods! Mr. Bruce said in this country only a few days ago that there will probably be a number of increases in the Australian Tariff to enable an improved margin of preference to be given. Under this Schedule you will see that the maximum reduction of preferential rate is fixed at 5 per cent.

May I give your Lordships one or, perhaps, two cases to illustrate the way in which Australia treats British manufacturers under this so-called preferential system? On August 16 last the British manufacturers of hosiery sent a letter to the Australian Government and pointed out that the duties on hosiery goods in foreign countries were moderate compared with those in Australia. If this was strictly appropriate, and if time permitted, I could show that the levies in foreign countries on British goods are far lower in a great many cases than the preferential British rates under these Agreements. The hosiery manufacturers pointed out that in many cases the duty amounted to 400 per cent. and in some cases to 600 per cent., and the result, they said, had been that whereas in 1925 they sent £1,500,000 worth of socks and stockings to Australia, in the first six months of last year the total value was £2,500. In the course of the debate in another place, two Ministers said that the Dominions had abandoned their Protectionist policy. Well, my Lords, the only thing I can say to that is that I hope the Avenging Spirit will be merciful to them when they appear before the judgment seat.

The noble and learned Viscount referred to Article 11 of the Agreement with Canada, which says that the duty shall not exceed such a level as will give United Kingdom producers a fair chance of competition, and then there is a proviso—which is usually for the purpose of rendering what goes before wholly ineffective and inoperative; a proviso as to special consideration to industries not fully established. Do the duties I have mentioned give the British manufacturer a fair competitive chance? They do not. And what is the meaning of "industries not fully established"? What manufacturing industries in the Dominions are fully established? Every industry there is struggling to establish itself; it is doing that under the protection of a tariff, and the instructions to the Tariff Board in Australia have always been to give a tariff which would be protective in order to enable these industries fully to establish themselves. The noble and learned Viscount said that it was easy to sneer at the Tariff Board, to say that its decisions would be biased and might not be free from political influence. Well, Mr. Bennett in 1930 evidently thought that the Canadian Tariff Board was somewhat biased, but not in the direction that he would have wished, for he sacked that Board because it was not sufficiently protective. The noble and learned Viscount a fortnight ago said that under the Agreement it would not be possible for Canada to increase the duty on British goods, though I admit he added "so far as I can understand the Agreement."


The noble Viscount is not quite right. I said it was not possible to raise the duty without a reference to the Tariff Board.


If the noble and learned Viscount will permit me one moment I will refer to what he said.


I can give the noble Viscount the actual Article.


Oh, I could recite it from memory, but perhaps the noble and learned Viscount would find the reference more quickly.


I can give the reference to the Articles in the Agreement, but I have not the whole of the speeches.


It is Article 14, and the noble and learned Viscount's statement a fortnight ago appeared to be based wholly upon Article 9. I will not detain your Lordships longer about it, but it is the fact, as the noble and learned Viscount now states it, that there can be an increase of a tariff on British goods if it is recommended by the Tariff Board. I wonder who attaches the slightest importance to the provision that the United Kingdom producers shall be entitled to state their case before the Tariff Board. Of course they can state their case, and so will the Canadian manufacturers who to such a large extent dominate at least one political Party in Canada. In regard to Australia, the gentleman who is, I believe, the Attorney-General and the Assistant Prime Minister said the Ministry was not bound to accept the Tariff Board's report irrespective of its own opinions and those of Parliament.

I will now give the second case that I said I would quote, and then I think I have finished quoting cases. This is to illustrate the work of a Tariff Board. There is in this country a very popular wringing machine. By the expenditure of many thousands of pounds in advertising they had established a market in Australia and were doing a considerable trade. Seeing this an Australian manufacturer went to the Tariff Board and said: "If you will give me a duty of 45 per cent. I will copy this model and manufacture it." Well, the Tariff Board did not give him 45 per cent., but they gave him 40 per cent., with the result that the tariff is now prohibitive and 500 men in the British factory are deprived of work for a fortnight a year which they formerly did to supply the Australian market with this article. That is only one instance, but it is typical of the working of a Tariff Board.

I will not say much about meat because the details of that arrangement have apparently already broken down and the Government have announced that there is to be a restriction of meat, including bacon, beyond figures given in the Report. I wonder if your Lordships have noticed two considerable contradictions in these Agreements. Meat is to be the subject of a restriction of imports, in order to raise the price, but wheat—and I suppose that corn-growing in this country is in about as parlous a condition as the stock-raising industry; I saw a statement in a paper the other day that wheat was now at a lower price than it had been since the days of Queen Elizabeth—why is the Government so anxious to raise the price of meat and yet insert a provision in the Agreement that if there be an increase in the price of wheat beyond world prices then the Agreement shall be cancelled? The noble and learned Viscount tried to draw a distinction between raising wholesale prices and retail prices. I dare say your Lordships have seen in the newspapers, to-day, that following the announcement made in the House of Commons two days ago, retail prices of meat have already risen. You cannot raise wholesale prices without retail prices also rising, and very often to a far larger extent than the rise in wholesale prices. The Government are now embarked upon a policy of restricting output to raise prices, which would have led to the hanging of an individual in mediæval days.

May I turn to the last of my points, and that is the effect of these Agreements upon world trade and our own foreign trade? It seems to me, my Lords, that the British Delegation never for a single moment considered the effect of these Agreements upon world trade, and our world trade is, of course, far more important to us than Dominion trade. As a matter of fact, world trade is more important to the Dominions themselves than is inter-Imperial trade. The Dominions have to find markets in foreign countries for a very large part of the things that they can export. I believe that in 1929 half the exports from Australia went to foreign countries, and, as Mr. Thomas said the other day, if Great Britain were to derive the whole of her supplies of meat and wheat from the British Empire, the Empire countries would still have to dispose of a large part of their production in foreign markets. Why! the value of domestic produce in 1930 exported by countries of the Empire to foreign countries amounted to the colossal figure of £672,000,000. Did the British Delegation ever consider what was going to be the effect upon this huge foreign trade of ours, and all other countries of the Empire with perhaps the single exception of New Zealand, which finds a market here for a large part of her exports? Did they ever consider what was going to be the effect of these arrangements upon foreign trade?

The object is, we are told, to increase the imports from the Dominions, and correspondingly to increase our exports to the Dominions, but the extent to which this can be done—that is, the increase of British exports to the Dominions—is very small, so far as the white population is concerned. The natural increase of the white population of Australia is only 2 per cent. a year. I believe that as a British possession it has a history of something like one hundred years, and yet that vast Continent at the end of a century has only a population of 6,000,000. I do admit that there are vast possibilities for an increase of trade amongst the coloured population of the British Empire, and I think that if attention were given to raising the standard of life amongst those hundreds of millions, rather than concentrating all our attention in trying to get what will be at the best a paltry increase of trade amongst the white population of the Empire, there are vast and untold possibilities of hundreds of millions of additional trade with the coloured population of the Empire. So far as Great Britain takes more of her food and raw materials from the Dominions, to the same extent she must diminish her purchases from foreign countries, and what is the result of decreasing purchases from foreign countries? The result is that they decrease their purchases from us, because, in spite of the economic heresies which have been so popular in recent years, I think it is still true that if we would sell we must buy.

Take the case of Canada. There is no Dominion so dependent upon foreign trade as Canada. Canada exported to the United States in 1930 nearly double her exports to Great Britain, and £30,000,000 more than the value of her exports to all the countries of the Empire. Does anybody mean to tell me that Canada is going willingly to sacrifice one dollar's worth of that trade? No! do not tell me that.


If the noble Lord will go to Canada he will find many people to tell him that that is the case.


Then I do not think much of the business capacity of those men. I can well understand that they need protection to prevent their businesses from going into the bankruptcy court. Another result of this policy will be that we shall provoke foreign countries into reprisals, and that has taken place already. I had sent to me a Canadian newspaper a few days ago, in which there was reported a statement, a terrible statement, by Mr. Bennett. He said they were going to make the foreigner pay tribute to the British Empire. Is that likely to promote world trade? Is that likely to foster friendly international relations? I can imagine no statement more provocative and more disastrous than that statement, reported to have been made by Mr. Bennett. Then what of competitive markets? These tariffs will increase the cost of raw material and food to our people, and that is going to have the result of increasing cost of production and lessening our competitive power in the world markets. Further, if by these Agreements we can succeed in keeping foreign goods to a greater extent out of Dominion markets what is going to happen? Are the foreign countries going to stop producing those things? Not at all. What they are going to do is to cut into markets where the British exports now hold the field. If you take all these facts into consideration the results of these Agreements are likely to strike a most serious blow at the huge foreign trade of Great Britain and of course of the Dominions.

Just a word about the dumping clause to which the noble and learned Viscount referred. Although that clause is in general terms we all know quite well that it was aimed at Russia, although it can be applied against any country where it is alleged or proved that by State action, direct or indirect, any of the preferences are likely to be frustrated. But how are you going to prove State action indirectly? Why, there is not a State in the world, including our own, which does not by its policy either directly or indirectly influence the cost of production. And therefore if—I think that this is a point of some importance—if a foreign country through great efficiency, fine organisation, is able to come into the British markets at a price which will cut away the preference on Dominion products, then this clause is going to be invoked to stop the people of this country from getting the benefit of those cheaper goods. Why, what is the purpose of foreign trade? The whole purpose of foreign trade is to be able to buy things cheaper than you can make them yourselves. And this dumping clause, in so far as it is not actuated by spite against a particular Government, shows a lamentable ignorance of the whole theory and practice of foreign trade.

In conclusion, may I say this? We had, I said, an explicit undertaking that nothing would be agreed to in Canada which would limit the freedom of the British Government to ask for a reduction of world tariffs at the forthcoming World. Economic Conference. I submit that we have tied our hands, and that we have not that freedom. A great deal of play is being made about foreign countries coming here anxious to enter into negotiations with us for revised trade agreements. But what is there new about that? Whenever did foreign countries not come to this country, or we go to foreign countries, in order to negotiate reciprocal trade arrangements? But we have tied our hands. Are you, for instance, when you have a 35 per cent. duty on iron and steel, going to Belgium—a country which treats our imports far better than our Dominions do—are you going to Belgium and say: "Now, if you will reduce some of your tariffs against us still further, we will reduce our iron and steel duties" You cannot say that. You have tied yourselves for two years in order to give the steel industry an opportunity to put itself into an efficient condition.

I have not dealt with the point which was treated so very effectively by my noble friend who preceded me, and that is the effect of these sordid bargains upon Imperial sentiment and Imperial unity. The bonds, we were told, wear thin; they do not appear to have been made much. thicker, judging by the statement made by Mr. Bruce a fortnight ago to which I have already called the attention of your Lordships. I suppose the nominal unity of the Empire will be maintained so long as the Dominions are permitted to exploit this country for their own benefit. But I would warn your Lordships that we lost our greatest Colony by taxing the colonists for the benefit of this country, and you are in real danger of losing your Empire by taxing the people of this country for the benefit of the Dominions.

Well now, what does it all amount to? It is no use the members of the Government pretending that Ottawa was a success. They must have a very poor opinion of the intelligence of the British people if they think they are going to be deceived by this patent bluster. Why, a cat would not be deceived by it. You cannot fool the people. The facts are too patent. But at least we have had one honest declaration from a member of the Delegation. Mr. Baldwin said in the House of Commons a few days ago: What have we got out of all this? What does it mean in trade? I answer quite frankly, I do not know. "It is something great" the noble and learned Viscount said; "the most wonderful achievement of a wonderful year," says Mr. Chamberlain. "I do not know," says Mr. Baldwin.


My Lords, the noble Viscount, Lord Hailsham, when he was addressing your Lordships' House just now, said that in the speech with which he would wind up the debate to-morrow he intended to reply to the criticisms made against the Bill which is before your Lordships' House. That being so I shall not attempt in any way to reply to the charges and the criticisms made upon the measure by the noble Viscount who has just spoken; nor shall I attempt to deal with the charges that the sentiment or the atmosphere at Ottawa was bad. I was not there, so I am not able to speak, as the noble and learned Viscount could, from personal experience. But I should like to say this, that we surely frequently find feeling running high in your Lordships' House or in another place in arguments, controversies, discussions, and debates, and, when it is all over, we are able to go and settle down for the national benefit. And the fact that there may have been controversies and arguments between the representatives of different parts of the Empire does not mean that when they separate they are not able to work with greater strength than before for Imperial unity.

During the whole of my public life over a period of 23 years I have always worked for closer Imperial economic unity. Taking the Bill as a whole I believe that it does give effect to that. I believe that it will do a great deal to stimulate inter-Imperial trade and inter-Imperial co- operation. But, when I have advocated this policy in the past, I have always advocated it through an instrument called tariff duties and Imperial Preference. In the few observations which I propose to make I want to examine a new instrument which, for the first time, this country is being asked to adopt—namely, the quota. This is the first time that the quota is going to be used, because the so-called Wheat Quota Act of 1932 was a Quota Act only in name. In fact, that Act imposes a duty or tax on all flour whether home made or imported. It was not a Quota Act. So this is the first time that your Lordships' House or Parliament has been asked to deal with this new instrument. As I shall try to show, I believe that it is a very dangerous instrument. I believe that it has all the disadvantages that may be associated with tariff duties, as well as many disadvantages of its own.

Since the Ottawa Conference ended there has been, as was agreed here the other day, a big slump in prices. As the result of that, the other day, the Chancellor of the Exchequer, speaking in another place, indicated that the Government were contemplating reducing the quotas; that is to say, increasing the restrictions by reduced quotas on the foodstuffs which we import here in this country. The Minister of Agriculture, I think, speaking in another place, has also announced that the Government have been engaged in negotiations with representatives of other Governments with a view to a voluntary restriction of foodstuffs brought into this country. The object of both those things, whether voluntary agreements or quotas, is to diminish the quantity of food-stuffs being brought in here. I am apprehensive of informal private negotiations. I would far rather that these reductions were done through Parliament. I believe that there is a risk in that, but I understand that these are only temporary proposals.

I wish with your Lordships' permission to establish a few facts in connection with these quotas. First of all, we agreed the other day that there had been an unprecedented drop in all meat prices—the prices of beef, bacon and mutton—and that it was desirable, in order to help British agriculture, to try to increase prices. Everybody was agreed on that. I am not going to discuss whether we should aim at getting back to the figures of 1929 or of any particular year. There is general agreement on that point. There is also another point which was mentioned by the Minister of Agriculture—namely, that we have to maintain a parity between prices; that there is a parity between the prices of beef, bacon and mutton; and, further, that there is a parity between the prices of home and imported meats. That is to say, you cannot raise the price of British-produced meat in this country unless you also raise the price of imported meat; so that if we are to aim at increasing the price of home-grown meat by many millions of pounds, as it will be, then the total cost of imported meat must also be raised by many millions. I would be prepared, were it necessary, to put forward a figure of £10,000,000 or more; but I would prefer to deal merely with the principle, which is this: that if we set out on a policy of raising the price of home-grown meat we must simultaneously and of necessity also raise the total price of imported meats by x million pounds.

We can achieve this increase in the price of meat by the use of two methods or two instruments: either by tariff duties or else by restricting imports, whether through quotas or through voluntary agreements. Viscount Hailsham, who was speaking just now, indicated that by the Ottawa Agreements it was the deliberate intention of the Government to increase wholesale prices in the United Kingdom. But, my Lords, if we reduce the amount of meat which we buy from the Argentine or from Denmark or from Poland we are going to leave in their country to depress their prices the surplus they do not export. That is to say, not only will the quota increase the price to British consumers but it is going to reduce the price to the consumers in these foreign countries. The result of that is going to be that you are going to have, as the result of using this instrument, a reduction in the cost of living in foreign countries at the same time as we bring about an increase in the cost of living in this country.

The results on retail prices of quotas or of voluntary agreements or of import or tariff duties are substantially the same. They can be so regulated as to bring about the same increase in price; the consumer, the townsman, the housewife, is going to have to pay just as much for imported bacon or beef or mutton, whether the Government use quotas or voluntary agreements or import or ordinary tariff duties. It is important to realise that the quota is just as much a food tax, and that these voluntary agreements which are being made for the reduction in the amount of imported foodstuffs in order to create an artificial shortage and scarcity of food here are intended to raise the price of food here. You cannot escape from the charge of raising the price of food if you do it by means of a quota or by means of these voluntary agreements for restricting imports, any more than if you do it by ordinary straightforward tariff revenue duties.

The next point which I want to put before your Lordships and which we want to consider is this: when the United Kingdom consumers are going to be compelled to pay x million pounds more for their imported bacon, beef and mutton, who is going to get the benefit of this increase? Who is to get this x million pounds which the British consumers are going to pay to foreign producers? If we persist and use the quota, or if we continue with these voluntary agreements, then the whole of these millions of pounds resulting from the increase in price which we are going to pay for imported meat, will go abroad to South America, Latvia, Denmark, or to the shippers and the exporters, whereas if we were to bring about this increase in the price of imported meats by tariff duties, then not necessarily the whole but a substantial portion of that x million pounds sterling which the British consumers are going to pay for imported meats would come to our Treasury. I have no idea whether next spring we are going to have a balanced Budget or not, but I think the Government should be very cautious before deliberately rejecting revenue to the extent of £5,000,000, £10,000,000 or even more which might be brought into our Treasury and which is to go overseas if we persist in these quotas. If we had that revenue we should be able to reduce the taxpayers' burdens, the burdens of the consumers who are going to have to pay more for their imported meat, or else we could use it to help and stimulate agriculture.

I have been considerably amused during the last day or two to read in the newspapers that the representatives of these shipping firms or foreign exporters or foreign countries have been gracious enough to assist the Government in arriving at these agreements, and that they have been willing to agree to a voluntary curtailment of their imports. Of course they have. They knew perfectly well that the alternative was a tariff duty and that if they can agree to a voluntary restriction they will get the whole of the benefit of the increases in the cost of imported meat, whereas if there were a tariff duty they would get only a small portion of that increase. Far from their waiting to be called upon, I wonder they have not been rushing in greater numbers to put forward proposals for the Government.

We are told that we have to have quotas, or that we cannot have ordinary tariff duties upon imported meat because of certain Election pledges. I have not read all the speeches of the representatives of the Government, but I will only quote two. Mr. Baldwin speaking on October 9, 1931, said: In my view the tariff is the quickest and most effective weapon to reduce excessive imports. That being the case, I should have thought that he would have used an emergency tariff to reduce those excessive imports at the present moment. I notice that on October 17, 1931, the Prime Minister said: I advocate a tariff as the best means of cutting down our excessive imports. There you have two leading members of the Government saying that in their considered judgment tariffs were a more effective and a better instrument for reducing excessive imports than anything else—that is to say, than quotas. I cannot find any Election speeches made by any member of the Government asking for a mandate to impose quotas. I cannot find any speeches made during the last Election for the voluntary curtailment of imported food-stuffs in order to raise the price. I have not been able to find any evidence of any mandate for the so-called quota, this new instrument to which we have been asked to agree.

There are other objections against the quota which I will not discuss to-night. I believe that it infringes the most-favoured-nation clause, and, therefore, will give us a great deal of international trouble. There is another point. If we continue with the quantitative restriction and regulation of imports we are committed also to controlling the production of food-stuffs in this country and regulating their distribution. I do not know whether your Lordships' memories go back to the years immediately after the War. My recollection is that price fixing and the control of distribution were very unpopular. I believe that the public and the agricultural community are only consenting to it now because they are depressed by the slump psychology, and I believe if conditions were to improve there would be a tremendous reaction against this "Dora" control which is necessarily and inevitably associated with quota restriction.

It is because I believe in the ideal contained in these Ottawa Agreements, it is because I have always stood for inter-Imperial trade, that I am genuinely apprehensive of this new instrument called the quota. I am genuinely apprehensive lest, as a result of it and of its operation, there may be a reaction against the Government. We may have a reaction against the help which it is proposed to give to agriculture. There may be even a popular reaction against the whole economic Imperial structure which we are now trying to build up. I would beg the Government even now, at this late hour, not to endanger our hope of assisting British agriculture, not to endanger the structure of inter-Imperial trade which we all so much desire, but to return to that simple policy which I believe most members of the Government have advocated in the past, which I am convinced most of your Lordships who have stood for increased Imperial trade have advocated in the past—namely, a policy which will help agriculture and Imperial trade by straightforward tariffs and Imperial Preference.


My Lords, there has been some criticism in recent weeks of the action which my colleagues and myself have taken in resigning from the National Government on the ground of the Ottawa Agreements. It has been said that we ought to have resigned either before the Ottawa Treaties or to have accepted the Treaties which were arrived at there because it must have been known to us no such Conference could afford to disagree. To say that, I think, shows a complete failure to understand the deep reasons which led us to resign from the Government on economic grounds. Our objections to the Ottawa Agreements are in substance threefold. In the first place, they rivet the whole Protection system on this country in an extremely objectionable form for at least five years, and take out of the hands of Parliament the power to alter that system without the consent of the Dominions, if it proves to be a failure. In the second place, they tie our hands very seriously at that World Economic Conference which member after member of the Government has said is the real hope of restoring prosperity in this country and in the world. Finally, the Ottawa Conference itself has wholly failed to realise the expectations which I think members of the Government themselves attached to it before they went there and which was so very well expressed by Mr. Baldwin in the opening speech he made at that Conference.

We can understand the objections by considering whether or not the Ottawa Agreements do contribute in any marked degree to getting us out of the very formidable difficulties by which we are now confronted. This country at this moment is faced with a menace quite as grave as that which confronted it in 1914. The whole basis of its prosperity, a prosperity which led it into the position which it obtained in the last century, is threatened, as it was never threatened by enemy power, by the change in the economic position of the world. The real question after Ottawa is this: Is it a, contribution to the solution of that difficulty? Does it point a way to a better world, or does it, on the contrary, make it more difficult and plunge us deeper into the catastrophe by which we are now confronted? What is the cause of this depression of which we are often reminded? What is it which lies at the root of our difficulty and of the difficulty of other countries? The answer is the one word, "glut." And what is the cause of the "glut"? Restriction. That is the root cause of the trouble by which we are confronted.

People talk about over-production. In a free economic system such a thing is impossible. The needs of the world are absolutely insatiable. There are millions of people all over the world in dire need of every kind of human necessity. There are great supplies of capital and labour ready to meet those needs if they are allowed to function freely. People say that mass production has introduced a new phenomenon into the world. Sir Oswald Mosley is basing a new crusade on this so-called over-production. Nothing was more dislocating to the old methods of production than was the steam engine and the railway, and no more people, comparatively speaking, are being thrown out of work by the novel processes which have been introduced in recent years than were thrown out of work during the last century by the introduction of the methods which were then new. There is no earthly reason, inherently, to-day why the prosperity which this country enjoyed during the whole of the last century should not again be enjoyed. We are told that the standard of living of the population of this country was raised fourfold at the time when the population also increased fourfold. There is no reason why that should not be continued. There is no reason why at the same time you should not go on with that great social reform legislation with which the Party to which I have the honour to belong had so much to do in the latter part of the last century and in the 1906 Parliament. There is no reason why the United States, which succeeded in transporting across the Atlantic 120,000,000 people from Europe and in employing them all and having a continual shortage of labour at the highest wages in the world, should not continue. There is no inherent reason. The reason is simply political obstructions to trade. That is the root cause of all our suffering.

The obstructions are of three kinds. There are, first of all, tariffs. What do they mean? They mean that every country in the world has its own iron and steel plant, its own coal mines, its own textile factories. That is due to political action. We get an immense over-production of certain kinds of things and an under-production of those things which will meet the new needs of human beings because labour and capital are diverted to the production of the old ones. The second thing is subsidies. There is overproduction of wheat and sugar. If the proposals of the Pig Commission are carried into effect there is going to be an enormous over-production of pig meat; and there is over-production of coffee. I am told that it is true that Europe has enormously increased its production of wheat at enormous cost since the War. Why? Because every nation has subsidised production of certain things. Finally, you have gigantic uneconomic payments representing either War Debts —domestic and foreign—or Reparations, which mean payments for destruction and not economic payments. Those are the causes of your troubles. You will never get the situation right until you deal with these causes.

Lord Hugh Cecil, writing to The Times not very long ago, put the situation, as I thought, with his accustomed lucidity. He said: The true economic remedy for over-production of any particular thing is the increased production of other things. If goods can be freely exchanged abundance will grow, everything exchanging for everything, until the abyss of human need is filled. I know it is rather antiquated to say these things, but I believe that these things are as true as mathematical laws. Your Lordships may remember the statement of a distinguished member of your Lordships' House who spent his life in the City, that the only hope for this country and the world was a gradual return to Free Trade.

Just look at the effect of the restrictions. Taking eighteen of the chief trading nations of the world imports between 1929 and 1932 decreased 52 per cent., and exports decreased 56 per cent. That means that half the foreign trade has died away. In the Dominions, which are high tariff countries, the figures are 58 and 58—rather more than the rest of the world. In the country which in the last two years has been almost the only Free Trade country, Great Britain, the figures are 39 and 47. There you have proof of the old Free Trade argument that while by Protection we can encourage particular industries we lose in an infinite number of small detailed trades all over the country by increasing the cost of their production. Look at shipping. In October, 1929, there were 122 vessels laid up representing 205,000 tons. In 1932 there were 871 vessels laid up representing over 2,000,000 tons, and most of the vessels in use are travelling half full. Sir Herbert Samuel quoted some figures from the Board of Trade last week in the House of Commons, and pointed out that whereas in 1929 our national revenue from overseas sources was £1,170,000,000 it was in 1932 only £668,000,000, a loss of £500,000,000. People applauded the great Loan Conversion scheme and a very fine performance it was, but it was one of the most terrible indications of national decline which you could imagine, because the whole of that money which ought to be seeking profitable and useful investment went into Government Bonds as the only channel in which it could find investment at all. It is no sign of health, it is a sign of disease.

The causes of all this are the three things I have spoken of—tariffs, subsidies, uneconomic debts. If you could sweep these away the machine would be moving again. It is said that monetary causes lay at the root of the trouble. I do not want to under-rate the monetary factor, but I would remind your Lordships that the Macmillan Report, one of the best Reports ever published, said quite clearly that the gold resources of the world were adequate to maintain the international trade of the world if they were properly used, but that what prevented them being properly used were Reparations and War Debts, which transferred too much gold to France and the United States, and tariffs, which prevented nations making payment for loans which they would otherwise do by goods. Until you face this single central fact you cannot get the world right. On the contrary it must get worse, because every step you take in that direction forces you to take another. Once you get into the vicious circle of restrictions you are bound to go from one to another until you get the self-supporting nation.

We look upon Mr. de Valera in Ireland and it seems to us that he is acting the part almost of a madman; but what are we doing? We are following exactly the same policy. There is no reason why we should not have a tariff around every county in England on the argument that is being used now. Yet nobody in his senses thinks that that would add to the prosperity of this country. Every restriction that you put on means that you are going to restrict something else. If you start Protection you strike a staggering blow, for instance, at shipping. Every act of this kind means more shipping laid up, and remember that one-third of our population lives in the ports of this country. Is that a policy which is going to restore prosperity? Every restriction you put on now is a staggering blow to our foreign buyers. If the Report of the Pig Committee is adopted you will lay Denmark on its back. Is that a policy which will lead to prosperity? Is that a policy which can lead to any kind of decent international relations?

Of all countries in the world we are least able to pursue a policy of national self-sufficiency. Only 8 per cent. of our population is on the land and more than half our food-stuffs are imported and will have to be imported. Yet every day we are getting nearer and nearer to that position. That is the really serious danger. I will put it in another way. Every step in this direction is leading in the direction of the policy for which noble Lords on that Bench stand. You cannot have restriction unless you go the whole hog of Protection. Let me read a sentence from the Pig Commission's Report. They recognise quite clearly that you will have to regulate not merely the trade but every single farmer. You will have to tell every farmer how many pigs he may or may not produce. This is what the Pig Commission say: It is inherent in an effective quota system that there must be preventive or penal"— I emphasise that word— machinery to secure that the quota is not exceeded. Are we going to gaol for the crime of producing cheap bacon?

Speaking in another place on October 18, Mr. Chamberlain said: During the period of experiment we shall be considering and consulting with others as to the possibility of making a permanent scheme, and if we find, as I hope and believe we shall find, that it has enabled us to get over the major difficulty in the case of mutton and lamb, the market for which is in this country, then it will have proved an object lesson which we may find extremely useful when we come to deal with the more complicated problem of the commodities which are sold in world markets. Is the system of the Pig Commission to be applied to every aspect of our international trade? I admit it may be disputed as to whether at the last Election the Government did or did not have a mandate for Protection, but I submit the Government had not a mandate to carry out a policy which the late Socialist Government never had the courage to put into effect. Holding these fundamental views, and realising that the acute financial crisis was over, was it not obviously our duty to resign in order to say where we thought this policy of Protection was really leading? It seems to me we were absolutely bound to recover our freedom to say what we thought, for after all an agreement to differ is simply an agreement not to differ effectively.

As to the Ottawa Agreements, I was relieved to find that the noble Viscount, Lord Snowden, delivered what seemed to me a, most devastating attack on the details of the Bill and I will only add one or two figures in support of his points. In 1930 83 per cent. of our imports were free of duty. After Ottawa it is 25 per cent. Will that help our manufacturing industries? Will it help us when it comes to competition in the world markets? Before 1930 only £150,000,000 out of £1,032,000,000 of our imports were taxed. There were £882,000,000 free. After Ottawa £602,000,000 are taxed and £430,000,000 are free. Let me read a quotation from a Canadian newspaper, the Halifax Chronicle, which on October 13 of the present year pointed out exactly what Viscount Snowden has pointed out—that the duties now put on most of the articles in Canada which affected Canadian manufacturers are still prohibitive. The duty on cotton"— says this newspaper— is reduced one-third, but when it is remembered that the duties on cottons were raised variously from 13¾ to as high as 53⅔ per cent. the net result is to leave the duty more than twice as high as it was when Mr. Bennett came into power. I do not want to impugn the experience of the British Delegation, but I can only say that it seems to me they have brought back what is called in overseas parlance a gold brick—something which looks gold on the outside, but is found to be a brick when you unwrap it. The formula they accepted with such avidity is the Protectionist formula. It was the basis of the Hawley-Smoot Tariff of 1930. It is the formula which the League of Nations Economic World Conference of 1927 rejected as the Protectionist formula, and they come back and brandish it as something meaning progressive free trade. It is nothing of the kind. I am not impugning the integrity of the Dominions, but you can protect anything under that formula.

The fundamental truth is that Ottawa has been a failure which has produced nothing of any substantial good and a great deal of harm. It has failed because the Ottawa Conference was a meeting of Protectionist Governments. A Protectionist Government is one which believes in protecting its own industries from what is called undue competition. It is going to reserve for its own industries the home market. It is impossible for Protectionist Governments to agree upon a policy which in fact will liberate trade. The only hope of that is a Free Trade Government. The only Party in the least likely to bring that about is the Liberal Party. In Canada Mr. Mackenzie King has offered 50 per cent. preference without any bargaining at all. The one hope for Empire Free Trade lies in having Liberal and Free Trade Governments everywhere. It is important that in this country the Party which does believe in increasing the channels of trade instead of blocking them up should be free to express its opinions.

I will not take up the noble Viscount's challenge about the constitutional point, but I believe that events are going to prove that he is wrong. And it seems to me a very serious thing that in days when you may have a repetition of what happened in 1931 and when the products you are dealing with are enormously subject to conditions of climate and so on, that for five years you make it impossible to alter the duties. I had a long conversation some time ago with one of the principal members of the American Tariff Commission which acted on the principles which this Government is beginning to proceed upon of making differential treatment. He told me that it got them into a hopeless difficulty and that they now thought the only policy was one level of tariffs. Many people will agree with Mr. Amery when he said: "Let us never have another bargaining conference, but whatever we do let us do it on our own initiative."

Let me say one word with regard to the idea of including the Colonies within the Protectionist wall. I would like to read a letter written by Sir Graham Bower, the Colonial Secretary of Mauritius in 1907. This is what he said. The Islands of Mauritius and Réunion are sister islands of the Mascarenhas group. Both are of volcanic origin. The climate of both is the same, the soil of Réunion is believed to be the richer of the two, and Réunion is a little more than one-fourth larger than Mauritius. Both are peopled by French and Indians, and the Code Napoleon is in force in both islands. But Réunion is virtually a French Department. There is free trade with France and a Customs tariff against the world outside the French Empire. Lord Beaverbrook's scheme is, in fact, in force as between France and Réunion. In the British Colony of Mauritius there is no discrimination, and trade is free to flow in the most profitable channels. Here was an opportunity of comparing the various schemes of an Imperial Zollverein, Empire Free Trade, Preference, and similar proposals, and bringing them to the test of practical experience. With the assistance of my office staff and the British Consul at Réunion I worked out the following table, which is published in the Colonial Report on Mauritius for the year 1908:

  • Poplation. Mauritius, 373,000; Réunion, 173,000.
  • Area: Mauritius, 705 square miles; Réunion, 969 square miles.
  • Value of Imports; from the Mother Country, in rupees: Mauritius, 7,960,000; Réunion, 4,647,000.
  • Total Imports: Mauritius, 31,000,000; Réunion, 8,000,000.
  • Exports: Value of exports to Mother Country, also in rupees: Mauritius, 7,000,000; Réunion, 7,000,000.
  • Total value of exports: Mauritius, 46,000,000; Réunion, 8,000,000."
He concludes: These figures are conclusive. The Imperial Free Trade as practised between France and her Colonies successfully canalised all trade, but without any material benefit to inter-Imperial trade, whilst it was absolutely disastrous to foreign trade. This point would be brought out still more conspicuously if I were to give the shipping returns. By canalising the trade with France, Réunion had practically one regular line of steamers—the Messageries Maritimes—whilst Mauritius had the Messageries Maritimes, the Union Castle Line, the British India Line, and the Clan Line, besides numerous tramp steamers. The effect of canalising the trade with France and shutting out the rest of the world had the following consequences for the French Colony: (1), The richer and larger Island maintaining only about half the population; (2), the trade was enormously reduced; (3), the population were poorer. Is that going to be the effect of this policy of the Government as applied to the Colonies? I think your Lordships have got to think very seriously about this kind of practical experience. It convinced not only Sir Graham Bower but also Mr. Cecil Rhodes, who certainly was no Little Englander, that a policy like that adopted at Ottawa would be fatal to the Empire.


The noble Marquess has not stated, in regard to those two islands, what is their physical capacity.


I stated that the soil of the French island was supposed to be rather better than that of Mauritius. It seems to me that this letter does reinforce completely the general thesis that I have made, that the root of all trouble, to-day, is restriction, and that unless we get rid of restriction we shall not get on. The Ottawa Agreement is entirely restrictive, and so far from adding to the prosperity of this country or the Empire it is going to damage it.


My Lords, I have the honour to address your Lordships' House as the last survivor of the overseas representatives summoned to take part in the first Imperial Conference, a Conference summoned by Lord Knutsford in 1887 and then called a Colonial Conference, the conception of Sister "Dominions" not having then been evolved. That Conference established a new vista and a democratic definition of "Empire." The new aspiration became a burning desire for mutual co-operation of sister nations, under the flag of the King-Emperor, the holding together of hands to advance mutual happiness, progress and prosperity. Since then there has been summoned Conference after Conference, and as a result of those Conferences those who have devoted their lives and resources to advance the new and cherished idea of Imperial unity have felt that their objective threatened to vanish in the distance. This was a growing apprehension until the Ottawa Agreements were arrived at. I feel that by those Agreements new heart and great hope have been given to all those who believe in the progress and development of the British Imperial system as at present constituted and are determined to work for it. The noble Viscount who is the Leader of this House, in setting out the achievements of the Conference at Ottawa, laid great stress on that conspicuous clause which finds a place in each of those Agreements, and which is the keystone of the achievements of that Conference—namely, the clause which he read out word for word and carefully explained, whereby in that Agreement on the part of the Dominions a self-denying pledge is given not to encourage speculative and unpromising competition in setting up new industries in competition with those established in the Mother Country. I can assure your Lordships' House that the acceptance of that clause on behalf of the overseas nations marks great progress in the realisation of the Imperial idea.

In the Conference of 1887 the most weighty orator, the leading spirit on the part of the Colonies, was Mr. Deakin, the Attorney-General and at one time Prime Minister of Victoria. His ideal was Australia for the Australians, and he advocated protection of an extreme character with the watchword of "Australia for the Australians." That policy then demanded that industries should be created at every opportunity and subsidised with public money in order to make Australia independent of the Mother Country, commercially as well as politically. That idea has been widespread not only in Australia, but also in Canada. Energy and money have been poured out in the past to create beyond the seas industries and manufacturing enterprises which had no chance of success in fair competition against the experience, technical knowledge and specialised industries of the Mother Country. The industries that have been thus established and have survived are important and they are numerous, but they form no exhaustive list of the industries in which this country is still pre-eminent and which are in future protected from competition. To have achieved for the Mother Country the withdrawal of the now prohibited form of competition means that whatever foreign countries may do to destroy our trade—and they will go on doing their best—under these Ottawa Agreements our workers have in view a growing trade within the Empire and a certain and sympathetic market.

I fully share the grounds upon which the noble and learned Viscount the Leader of the House has assured your Lordships that there is no reason to doubt that His Majesty's Ministers overseas will give in all sincerity the desired and agreed interpretation to words of the clause which the noble and learned Viscount read to your Lordships' House as embodied in every Agreement. That clause is a masterpiece of draftsmanship, and it may be described as "watertight." I have served as Governor in three Australian States where week after week in Executive Council I was in personal contact with Australian Ministers, and I can assure your Lordships that that key clause is drafted in a manner which will command the sympathy of Australian statesmen and it is so constructed as to appeal to their mentality. It is likely to be administered in the future in the spirit in which it was drafted and signed.

What would be the prospect of English workers in the not distant future and of English trade in days to come if the Ottawa Agreements had not been arrived at? Your Lordships cannot fail to realise that competition for trade is the objective of all Governments to-day; such trade rivalry will become more and more acute if any real progress is made with conversations in reference to disarmament. Trade has reached in many lines already the stage of cut-throat and subsidised competition. Here in England the overhead charges that trade has to bear include indirectly the costs of the unprecedented volume of our social legislation. Trade in competition with foreigners must bear the cost not only of higher wages and shorter hours but the added charges for factory legislation, for the regulation of the labour of women and children, for the cost of housing, etc., etc. All these burdens on trade add to the cost of production and to the difficulty—nay, I will say the impossibility—of prolonged competition with Continental countries not governed by Ministries dependent on a democratic system of Government. Other foreign countries are governed despotically by men who do not hold their office by the votes of the workers. If we in England wish to maintain for our workers a higher standard of living and of comfort than is enjoyed by those who toil in other countries where there is little if any altruistic factory legislation such as here, where the workers are in some cases compelled to work the longest hours that human nature can endure, and to work merely for food or for wages equivalent to a bare subsistence level, countries where there is no Sunday rest, no Bank Holidays, no restrictions on child labour —I hold that if we hope to compete with products of labour so managed we must make up our minds to give up free trade with such countries and decide to restrict our trade with nations that are governed democratically, with nations that wish to maintain a high standard of living for the workers.

The world will have to group itself into two large divisions, in one of which workers are sweated systematically, whilst in the other the value of organised voting power is always respected: and should we not be thankful to Providence that by the Ottawa Agreements we have begun to take sides in this grouping in good time by foregathering together for trade purposes with nations under the British Flag and establishing the trade machinery called for by the aspirations set out in carefully considered compacts together with the democratic nations which form the British Empire as constituted to-day? Maybe we shall have to pay more for the necessaries and luxuries that we consume. Maybe we shall have to forego a few necessaries and many luxuries produced by foreign countries. Be it so, then we shall have to put up with minor privation in order to enjoy a higher standard of living in nations ruled democratically. To have achieved that promise of the withdrawal of destructive competition against the Motherland is a great achievement. It is enough to be satisfied with in recompence for the work and anxiety of Ottawa.

As far as this country is concerned, I beg leave to congratulate most heartily the Conservative leaders among His Majesty's Ministers who have fulfilled the pledge given to the electors of the United Kingdom at the last General Election. The leader of the Conservative Party declared in good time that it would be fought on tariffs, upon the question of giving a mandate to a future Government to abandon a system called "Free Trade" which was no longer free for both sides, which was condemned by the Conservative majority as a useless system, which every other country had been forced to abandon. The appeal to the country was for authority to deal with trade, as every other business is dealt with, scientifically, systematically for the pur- pose of achieving prosperity or checking the depression of the standard of living. The maintaining in England for some time longer of a standard of living superior to that of the nations around us is the main issue. Our workers insist on shorter hours, higher wages, more comforts than other producers of similar goods. The tendency of the world is to come down to one average level all round of wages and comfort, but nevertheless here it is the duty of those in power to put off the evil day of our coming down to that average. The duty is to retard the departure from our superior standard of comfort.

There was a time when the objective of Governments was said to be the greatest good of the greatest number. We read of that in the text books of political economy in our early days, but what is the result in practice to-day? It means that Governments have to face the problem of feeding and regulating the maximum of population on the minimum of area. That problem of over-population as the result of peace and good government is our difficulty. But what does modern democracy demand instead as the objective of its leaders? It demands the minimum of work for the highest possible wages—or rather, the highest standard of comfort, which is by no means the same thing when wages are translated into coin. Democracy demands that this be achieved by those in power for those who have votes to give, even at the expense of other nations.

I have not been impressed by the figures by which the noble Viscount who at one time was Chancellor of the Exchequer has endeavoured to pick holes in the details of certain items in the Schedules of the Ottawa Agreements. I have gone through those Schedules, and I also am impressed, as he is, with the fact that the Schedules are incomplete. They bear evidence of having been in some parts hurriedly put together, and they are throughout somewhat eclectic. Nevertheless, the Ottawa Agreements contain provisions and administrative machinery for adjusting those minor defects and details of the tariff schedules. There is no tariff which does not contain anomalies. There is no tariff which does not contain contradictions. It would have been miraculous if the Schedules added to the Ottawa Agreements were unique in avoiding imperfections.

As an example of the jugglery with figures which we have heard this evening from the Cross Benches I observed that, in disparaging the great value of the future prospects of the Australian trade which is heretofore to be reserved for the British worker, it was said that the population of Australia increases only at the rate of 2 per cent. per annum. It struck me on hearing that, that the noble Viscount who used those figures must have for the moment forgotten the compound interest tables which were probably on his table every day when he was at the Treasury administering our finances. If the rest of his destructive criticism to-day is on the same basis, we may brush aside much of his attack, but the main reason for giving it little weight is that the machinery is provided in the Ottawa Agreements for rectifying these details and minor difficulties.

The object of these Agreements has been twofold: firstly, to abate the despair of those who go on working and striving and giving their all to uphold the idealism of Empire. Patriotic Britishers are very numerous. Not only are these to be found in the official classes, but they are numerous throughout the Empire in every class. The love of the Empire is strong with a multitude that is not vocal. Such patriotism should be fostered and encouraged. In this is our hope to be able in future to resist the systematic aggression of nations that are organised aggressively to destroy our trade. How can we hope to maintain our present standard of living when we see countries like Russia converted into little better than a starving multitude organised to destroy our trade? We see a development of forced labour that has no parallel since the Roman Empire, under an oligarchy, was able to import 70,000 slaves from Palestine to build the Colosseum. There is no point at which Governments that are not democratic, Governments that are despótic, Governments that are managed by oligarchies with a nominal chief, will stop in future to destroy our trade. It is no use talking of the inadvisability of provoking them. There is no such thing as provocation being open to increase or diminution. Every resource is applied when there is a fanatical determination to destroy our trade by the competition in free markets of labour organised in order to lower our standard of living, and thus to bring about internal disturbances, and Wreck democratic and free institutions everywhere.

One word about what is called "the tax on meat." There is no such thing as a tax on meat. There is a tax on those who buy meat for themselves or for others. Perhaps it is a form of taxation which has a great deal to commend it from a hygienic point of view. Moreover, the collection of taxes shows that indirect taxation is collected inexpensively. It was said by the noble Viscount who leads the House that there was at present over-production of meat. That may be so, but there is another more weighty reason for the alarming fall in price: that reason is economy; the necessity to eat less. Meat is by no means a necessity of life, and in these hard times the consumption of meat must have diminished very considerably on account of that stress and pressure which has been caused by the delay on the part of the electors of England in getting rid of Free Trade and in getting rid of a Socialistic Government which was taxing too heavily and spending our resources extravagantly in setting up a standard of what is called social legislation on a level beyond the possibility of its being paid for.

When we hear repetitions of this cry against taxing food, let it be remembered that if we want to provide for the workers that standard of comfort which they are enjoying to-day as a result of social legislation—of education, of good housing, of facilities for recreation, provision of opportunities to frequent racecourses, to spend on cinemas and all the rest of it—we must admit that such standards of superior living cannot be maintained by taxing only the so-called capitalist—those who personally or otherwise through their predecessors represent the wages fund, which is the product of self-denial in the past, already in England the few have been taxed to the point where taxation ceases to be productive or justifiable. The land in England is taxed until it actually pays financially in many cases to give the land away. When there was a move to tax gold, aeroplanes were hired and the gold flew away. Therefore, if that standard is to be maintained, it will have in part to be paid for by the many. The few who can continue to pay for others may be more or less, but they are rapidly diminishing. Taxes on food are easily collected; and the art of scientific taxation is to pluck the maximum of quills out of the goose that pays the taxes with the minimum of scream. That is the dictum of Colbert, a French authority on finance.

By the imposition of taxes on meat both protection and revenue are achieved at the same time. The noble Lord who last spoke from the Cross Benches wanted to know what was to be done with this additional revenue in the Exchequer. My Lords, there is a deficit to be met. He also wanted to know if the current Budget was going to be balanced. I should be surprised if anybody who has studied finance has the remotest hope that the Budget will this year be balanced, except, of course, by trenching on the Sinking Fund, which may, as a consequence, almost disappear. I do appeal to your Lordships' House not only to pass this legislation as asked for by the Leader of the House but to pass it within the time indicated by the Leader of the Government.


My Lords, we have had a very prolonged sitting, and if I followed my own inclination I should spare your Lordships the infliction of the speech which I had prepared. But it is the only opportunity I shall have of expressing myself in your Lordships' House on the Ottawa Agreements and I would therefore crave your patience while I address to your Lordships some remarks. I will make them as short as I can. It is of course a foregone conclusion that the Second Reading which has been moved to-day by the noble and learned Viscount will be carried. It was carried in the other House by a majority of six to one, and the majority in your Lordships' House may be even larger. But I do not think that that exempts those of us who are utterly opposed to the principles underlying the Ottawa Agreements from expressing our views in this House.

We are in a minority. The opinions which we hold are not shared by many members of the House of Commons or of your Lordships' 'House, but our views are the convictions of a lifetime, and they are not to be easily put aside. I am not ashamed to confess myself a confirmed Free Trader, with my faith absolutely unshaken by recent controversies or events. I believe that the only hope for the restoration of the world lies in greater freedom of trade and in the free exchange of goods. We are accused of uttering musty old shibboleths. I would remind your Lordships that the Ephraimites were executed not for uttering shibboleths but for being unable to utter them, and if the truths of Free Trade are old, I venture to think the fallacies of Protection are even older. Under the Free Trade system the great trade of our country and of our Empire grew up. In the eighty years that have past passed since the adoption by this country of Free Trade never was anything seen in the whole history of the world like the development and extension of British trade all over the world. In all countries of the world Englishmen were engaged in raising cattle, rearing sheep, mining for tin and copper and gold, growing coffee, tea, rubber, in every part of the world where there was work to be done and a profit to be made. The enterprise of Englishmen took them there, and the trade of this country was the most marvellous growth that ever the world had seen. Our ships were in every port, bringing home to this country the products of foreign climes for the consumption of the people of this country.

The ships are still in the ports, but to-day they are rusting in idleness. What has become of the trade? The figures, with which I will not at this hour of the night trouble your Lordships, are appalling. I will give just two sets of figures. I have the figures for 1929 and the figures for the year ending December, 1932. The net imports in 1929 were £1,100,000,000 roughly. In 1932 on a gold basis—and it is important to remember that the figures actually quoted in the Government publications are no longer on a gold basis, and I have reduced them to a gold basis to make the comparison fair—the net imports, taking the last quarter of this year to be the same as the last quarter of last year—and I am afraid they are less—will be only £503,000,000, or less than half—45 per cent. in the course of four years. The exports were £729,000,000 in 1929. In 1932 they are £268,000,000, turned into gold—only 36 per cent. of our export trade left ! What part have the Government played in this reduction of our trade? They have not stopped the decline. It has been going on since they came into office. The exports in September were the worst on record since 1905, with the exception of the War years.

The charge I would venture to make against the Government is that they have persistently, in the last twelve months, increased the difficulties of trading. I do not look to Governments to give great help in matters of trade. I think they have not really any great power of creating trade or of doing more than keeping the channels of communication open, but when it comes to blocking trade the powers of Governments are enormous, and our Government have followed the other Governments of the world to do evil in inventing restrictions and quotas and licences and prohibitions, and so have made a great contribution to the restriction of our trade. The very theories to which they have committed themselves and led the country to believe in have all been in the direction of restriction of trade. There was the Buy British campaign. Carried to its logical conclusions "buy British" means do not buy foreign, extinguish your foreign trade; that is the logical outcome of "buy British." It has done no good to British trade; it has injured our foreign trade. The commonplace saying of today is: "Why should you buy more from a country than it buys from you?" Why not? "Direct trade is better," said a member of the House of Commons recently. Why? What does it matter to a British trader where his payment for the goods that he sends out comes to him from, provided it is paid at the appointed day? The whole theory of this balance of trade is, I believe, based on a mistaken conception of what trade really is.

Lastly, in this connection, there is this invention—no new thing—of the doctrine of the compensatory tariff which is embodied in the Ottawa Agreements, and which is represented even by the noble and learned Viscount as something of a triumph. They have established these tariffs which are to balance local conditions and bring about fair competition. But the only basis of trade is the difference in the cost of production in different places. There would never be any trade at all if everything was at your door on the same terms as it is elsewhere, and to abolish this difference by means of tariffs is not only to diminish trade, it is to extinguish trade. All these doctrines have been put about by the Government during the last twelve months, and the charge I have to make quite definitely—and I make it regretfully—is that they have so handled this matter of trade as to drive out of the Government their Free Trade colleagues. They have destroyed the national character of the Government by their persistent advocacy of limitations on trade and tariffs. They seem in all their legislation and action during these last twelve months to have cared for nothing but pushing this Protection business. I speak as one who supported the formation of the National Government. I have no wish to destroy the National Government, but I have every wish to prevent this policy being carried further. I think it has not been quite fair of the members of the Government who have driven out their Liberal colleagues and their Free Trade colleagues by their action in regard to this question.

It must be remembered that had the same doctrines been put abroad at the General Election in 1931, or had it been proclaimed when the National Government was formed that this was to be the policy which the Government were going to pursue, there would have been no National Government, or at any rate there would have been no Liberals and no Free Traders in the Government. We have heard to-day speeches from two of the Ministers who resigned. The noble Viscount, Lord Snowden, said nothing of his action, but the noble Marquess, Lord Lothian, has explained to the House why he felt obliged to resign. I notice that Sir Robert Horne, with a contemptuous comment, said he thought the ex-Ministers "take themselves too seriously." My Lords, I am glad that Ministers take their political beliefs seriously. I am glad that they will not condone a policy which they are not able to approve. I think that Ministers who resign because they cannot agree with the action which the Government are taking are rendering a public service. For my part I would like to thank the Free Trade Ministers, whose views I share in the matter of Free Trade, for refusing to be led along the path of tariffs and restrictions by the present Government.

Ottawa was to be the culmination of this policy. It was much boomed beforehand, and what have we got out of it? Mr. Baldwin's words have already been quoted, but I cannot forbear quoting them again: What have we got out of all this? What does it mean to trade? I do not know; no one knows. The aim was clear enough. It was the lowering of tariffs. But the Agreements represent the surrender of the British Government to the high Protectionists in the Dominions. The crowning failure of Ottawa was that the Governments at the last moment refused to pledge themselves to lower the high tariffs in the Dominions, That resolution, which was proposed, as I am informed, was not signed. I would like the noble and learned Viscount to produce the resolution which was discussed at Ottawa but was not signed with regard to lowering tariffs. I am spared from troubling your Lordships with the many details about the Ottawa Agreements by the speech of the noble Viscount, Lord Snowden, but I may be allowed to say that the Government, in spite of the brave words of the noble and learned Viscount to-day, are not very jubilant about the Ottawa results. The Prime Minister suggested a few days ago that all had gone well, and that nothing unexpected had happened. He said: Everybody who was concerned with the Imperial Conference of 1930 knew what the Dominion demands— a rather unfortunate word I venture to think— were going to be. They knew the difficulties that would be met with. No one had the least doubt that the negotiations were going to start at exactly the point where they left off. They left off with Mr. Thomas ejaculating "Humbug."

But though the demands were the same the Government's reply has been different. They have swallowed in 1932 what was refused with somewhat rude phrasing in 1930. Of course the demands put the Delegates in a difficult position. They were guests, Mr. Bennett in Canada their host. Moreover, they had promised to bring back so much from Ottawa, and, though their early hopes were soon dashed, they could not come away with nothing. They therefore—again I quote the Prime Minister— Put up the stiffest fight that was possible in order that these tariffs should be as advantageous as possible to this country. Resistance to the demands was prolonged to the last moment, and in the small hours of the morning of the last day the Agreements were signed and the Delegates came away wondering what they had done and hoping for the best. That, I think, is a not unfair picture of what happened at Ottawa.

Now the Government are faced with the hard fact that Ottawa has done nothing for the British farmer. They are brought up against the quarrel which is raging in every Protectionist country in the world between the agricultural interest and industry. In the United States, in Germany, in France, in Australia, in Canada, tariffs have been pushed up and agriculture is complaining. Tariffs go higher, trade is destroyed, food is made dearer and the purpose of the Government defeated. The Secretary of State for the Colonies, speaking in another place, said: It would be fantastic to have a policy that protected industry and left agriculture out. Of course it would, but that is Ottawa. The Government must know that it does not matter to the British farmer, who is suffering severely from competition whether he is suffering at the hands of the Canadian or the Argentine farmer. The results are precisely the same. The Government, of course, realise that and they are going to deal with it, and so we have this precious quota system, the 20 per cent. quota to raise the price of wheat.

Well, I am surprised at the constant receptivity—I would almost say gullibility—of the agricultural interest. Do they not understand that it is in the interests of the towns that food should be cheap while it is in the interests of the farmers that food should be dear, and that no possible system of Protection can reconcile those two contradictory positions? In the contest that takes place under a protective system between agriculture and industry agriculture must and always does get the worst of it, because the people who live in the towns are eight out of ten of the people of this country and the eight will not suffer their food to be made dearer artifically in the interests of the two who live in the country. We have had experience before of that in this country. It is not very long since another Coalition Government, animated with the same noble desire to help the country districts—and I sympathise with them—passed the Corn Production Act to enable the British farmer to grow corn. I think it was a rash enterprise. I do not see how it is ever possible for the British farmer to grow wheat profitably against the farmers in the great spaces of the world. But in that case the Government not only promised to do something for agriculture: an Act of Parliament was passed. And what was the end of it? Farmers bought their farms. Agricultural prices were high and land prices were high. They bought their farms and within six months the Corn Production Act was taken off the Statute Book because the burden of it upon the towns was too great.

So it must always be. All you can do for the agricultural interest in the way of tariffs is to make your tariffs as low as possible so that the farmer may be able to buy supplies for their farms, their feeding stuffs, their linseed—which you are now going to tax—their machinery and so on, as cheaply as a free trade market can give them. That is what you must do for the farmer. What you are doing is to raise the prices of these things, and you will fail in your efforts to balance that because you will make food dear and the towns will never tolerate that for long.

I think the Government have missed a great opportunity. They have made this change over from Free Trade to Protection at the worst possible moment in the history of the world. The nations are in a confused and miserable state of economic warfare, groping blindly for escape from the overwhelming complication of Reparations, War Debts, currency restriction, gold scarcity and trade limitations of every kind. The Governments of the world are engaged in raising tariff walls in order to make them independent self-sufficing units. In this process international trade is being strangled to death by the Governments of the world. All instructed opinion declares that salvation lies in freedom and in the removal of trade barriers, but Governments pay no heed and our Government has now followed other Governments along this wrong path. There was hope that our country would have led the world out of the morass, but that hope is dead. The Government have announced the change of our fiscal policy from Free Trade to Protection and we are now among the most highly protected countries in the world. I can only say that we Free Traders do not acquiesce in what has been done. We shall never accept it. Like Mr. Mackenzie King in Canada we warn the Government that we shall change the policy when we can. What one Government has done another can undo and we shall not rest till we have regained the freedom of which the Government have deprived us. We were brought up in freedom and we will never willingly live in bondage.


My Lords, I did not intend to say anything, but the words which have just been spoken induce me to say one word. The noble Lord has referred to what he considered the conflict of interest between the agricultural and the industrial population. I come from Scotland, where the state of farming is even worse if possible than in England, and only the other day a hardworking farmer said to me that what is needed to help the farmer more than anything else is that the working population of the towns should be more prosperous and able to buy more. Quite apart from any other effects Ottawa may have directly on the agricultural industry, if Ottawa leads, as I believe it will, to increased industrial prosperity that will do perhaps more than anything else to help the farmer by increasing consumption. As has been said, people have been economising, and the fact is that the great populations in the cities, and our miners and other workers, are not able to buy meat in anything like the same quantity as they used to do. If in an indirect way they are made more prosperous it will do a great deal to help agriculture which, where I come from, is in a very bad way indeed and may soon result in wholesale disaster. I only wish to say that because I feel that it is one side of the question which is very important.


My Lords, after four hours of debate I will promise to detain you only five minutes. It falls to my lot to be farming unprofitably in three of the countries affected by the Ottawa Agree- ments—in Australia, in the Argentine and in this country. Since January prices of cattle in the Argentine have gone down almost in the same ratio as in this country. In Australia there has been no corresponding increase in price and in this country, as your Lordships know, the bottom has practically gone out of the market in stock. It is recognised that our market is practically the only market in the world for the countries that export meat. Up to almost a year ago France, Germany and Italy used to take in a certain amount of frozen or chilled meat, but now this country is almost the exclusive importer. I will only refer to chilled meat in regard to which I think I have one point that can be usefully made. The special pressure to sell home-grown stock at present is due to the fact that the pasture is running out. Frost will make it less valuable and therefore stock is coming into the market. Now that we have a quota system it should be so graduated as to reduce the quota that comes in from, say, August to December and increase it from March to July, when the grass is coming on in this country and there is not the desire on the part of farmers to send stock to market. You may ask how this will affect the other side of the world. It will effect the pastoralists favourably because it is just at this time of year that the pasturage in the Southern hemisphere is becoming good, and there is not the necessity to send stock into the market until a later time. I have preached this for many years as a method of relieving our farmers in this country at this particular time of year. I notice that the quota system is based on quarterly allotments, but I hope it will be sufficiently elastic to allow a large quota at one time of the year and a small one at another.


My Lords, when the noble Marquess, Lord Lothian, was speaking I could not help feeling much sympathy with his point of view as well as regret that the National Government had lost his services. I am sure he was perfectly right in his two points: that it is no good halting between two opinions and that if you are going in for Protection you must go in for it all round. It is that latter point that I want to impress on the Government. Last week we had a debate on the live-stock industry and that debate was followed by very prompt and effective action on the part of the Government, for which, on behalf of agriculturists, I wish to express deep gratitude. Unfortunately, there was wanting in the debate the presence of the Leader of the House. If he had been here I had meant to appeal to him to take upon his broad shoulders what I know he took upon himself at Ottawa, the championship of the agricultural interests, even though that was not particularly in his charge at Ottawa. For myself, I feel the deepest gratitude to the noble and learned Viscount for what he did at Ottawa, and in particular for Article 21 which at any rate introduced the principle for which all agriculturists and many industrialists have been yearning for many years past, the principle that the standard of the working man in this country shall not be imperilled by the action of semi-civilised nations.

I now pass to the concrete necessities of the day. When our common ancestor, Noah, took a look at the weather forecast, and decided that there was going to be a Flood, he did not halt between two opinions. He got to work and built an Ark, and it was not until the Flood subsided, and those species which he thought worthy of salvation had been preserved, that the Ark fetched up again on dry land at Ararat. Substitute for that historical mountain the name of Free Trade, and there may yet be hope for noble Lords who address us from the Liberal Benches. The present problem is to produce an ark which will carry us. The Free Trade boat has been navigating the seas for a good many years, but it has ceased to be seaworthy for our purpose. We may come back to the Promised Land, as Lord Rhayader still hopes to live to see. Meanwhile we have got to see that our ark is watertight, because we are committed to the ark.

Amongst the expressions of policy which are most to be valued in the Ottawa Agreements is that expression which is to be found in one of the Schedules, that the home producer is to be given the first place. The history of this Government, as far as agriculture is concerned, is that they were returned to office pledged to restore agriculture, and I fully believe that it is their intention to see that pledge fulfilled. I fully believe that the principle expressed in that provision lies close to the heart of the Leader of this House and of the members of the Government. If so, is there any reason why that principle should not be made mandatory on His Majesty's Government, rather than optional? I hope to get an answer to that, possibly, later in the debate, but I and my friends have been looking at Clause 7, and we cannot see how to make that principle mandatory will in any way interfere with our commitments to the Dominions, or in any way go against the main principle on which the Ottawa Agreements are based.

I may be asked why, after such quick and effective action as the Government have just taken, is it necessary to make that principle mandatory on the Board of Trade. The answer is that individual action of individual members of a Government is not a sufficiently stable prop for an industry like agriculture. A long-term policy is required for agriculture, just as it is, shall we say, for Imperial trade. Agriculture cannot any longer be left at the mercy of agitations and fortnightly decisions. If we are going to save the country we want a long-term stable policy for agriculture, relying upon Parliament and not upon the voluntary good will of individual Ministers. Reference has been made several times in this debate to the supposedly divergent interests of agriculture and the towns. I venture to say that that is the greatest if not the oldest mistake into which the Liberal Party have plunged themselves. The truth is that the interests of the towns depend upon a prosperous agriculture, and so we may say that the interests of the whole nation—more especially with our export trade to the Continent of Europe visibly fading, as it has been doing for years, long before a Protectionist Government got into power—depend upon the interests of agriculture. For that reason I hope at a later stage to bring forward an Amendment, which I hope the Government will accept, stabilising the policy which they have initiated at Ottawa.


My Lords, I beg to move that this debate. be now adjourned.

Moved, That this debate be now adjourned.—(Lord Stanley of Alderley.)

On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.

House adjourned at twenty minutes before eight o'clock.

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