Lords Sitting of 26 October 1932

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
The Lord Sudeley—Sat first in Parliament after the death of his uncle.

Leonard Jauncey, Lord Bishop of Ely—Was (in the usual manner) introduced.

THE IMPERIAL ECONOMIC CONFERENCE.
LORD ARNOLD LORD ARNOLD rose to call attention to the Ottawa Conference Agreements and to the situation created thereby; and to move for Papers. The noble Lord said: My Lords, whatever differences of opinion there may be about the Ottawa Conference, I think it will be generally agreed that a debate upon the proposals there made is fully due in your Lordships' House; indeed it was largely for the purpose of considering the Ottawa Agreements that Parliament has been called together early; and we on the Labour Benches do not take the view that the Bills dealing with these matters, when they come from another place, furnish an adequate opportunity for full discussion. Those with large experience of your Lordships' House, or, indeed, with a little experience of it, know very well the way in which Bills dealing with finance, whether certified or not, are almost invariably bustled through this Chamber. We make no complaint of that whatever, but it supports our view that that procedure does not provide a sufficiently wide opportunity for discussing these very important matters. I have, therefore, in conjunction with my noble friends, put down this Motion in order that there may be a broad discussion, not only of the Ottawa Agreements but also of the position of the National Government in relation thereto, a discussion which would scarcely be in order to the extent to which some of us on this side wish to carry it if it were limited to the Second Reading of a
820
Finance Bill. I also venture to hope that this Motion may not be without its modest usefulness in elucidating certain points in the Ottawa Agreements about which more information and more explanation are urgently needed. I say "urgently" advisedly.
After these preliminary remarks I come straight to the Motion, and I will begin by observing—and we shall all agree about this, I think—that ever since the War there has been a large number of Conferences dealing with all sorts of questions, which, for the most part, have settled little or nothing, and many of which have done more harm than good. Yet there has never been a Conference which has ended in results so injurious to Great Britain as the Ottawa Conference. When we are told, as we are told, that the Ottawa Conference was a success, it is pertinent to ask what would have been deemed a failure? Is it suggested that in any circumstances Great Britain should have given away more than she did and got less than she did? Mr. Baldwin, with that engaging candour which is one of his most charming characteristics, has informed us that he did not go to Ottawa in a bargaining spirit. That is an extraordinary statement to make and if it is true it may do something to explain the one-sided Agreements into which this country entered at Ottawa.
Naturally, my Lords, the Government as a whole and the members of the delegation who went to Ottawa will not admit that the Conference was a failure. Mr. Thomas said it was a success. Mr. Baldwin went further and I think the delegation, in the statement which they issued to the Press on their return to this country also went further, and said that what had happened at Ottawa had exceeded their expectations—I think I am correct in saying far exceeded their expectations. The noble and learned Viscount opposite who leads your Lordships' House with so much ability and courtesy and who was at Ottawa, was, I rejoice to think, out of the country at the time, and therefore did not have to do violence to his conscience by talking in this way, but I think nearly all other Ministers made statements somewhat analogous to those I have quoted. It is very difficult to believe that Ministers

821
who talk like this really believe what they say having regard to the actual results of the Conference and the admitted friction at the Conference. If it were necessary I could read to your Lordships, in order to prove and elaborate what I call the admitted friction, quotations from the Press of all Parties and from practically every country in the Empire dealing with these matters, speaking of bad feeling, recrimination, hostility, and even in one case of breach of faith. I think these things clearly prove that the Conference did more to injure Imperial unity than to help it.
Not only so, but the Conference as a matter of fact failed in every one of the major objects which it set out to achieve—every one. It set out to bring about lower tariffs. It has not on balance brought about lower tariffs. On balance it has unquestionably raised the tariffs of the world. It set out to remove restrictions or to help to remove restrictions on overseas trade. So far from having done that it has increased restrictions on overseas trade. It was—we were told by Mr. Baldwin—to reduce or end erratic quotas. It has not done that. On the contrary, it has brought into being new and pernicious quotas. The Conference was to make it, easier for other countries to work for lower tariffs. In the result it will lead to retaliation by foreign countries—I do not say all at once, but as time goes on—and to higher tariffs. The supreme failure of the Conference was, of course, evidenced in the failure of the Mother Country to get Canada to agree to a pious resolution in the closing hours of the Conference supporting the liberation of trade within the British Commonwealth of Nations. They could not get Canada to agree to that. Was that part of the success of the Ottawa Conference? The truth is that so far from being a success the Conference was a failure, a complete failure, and it was only saved from actual breakdown by Great Britain making concessions out of all reason, so unfair, so lop-sided, so one-sided, that it is almost incredible that they could have been assented to.
The Conference has proved abundantly everything which has been said about the impossibility of devising any reasonably, equitable and symmetrical scheme of Imperial Preference, and about the im-
822
possibility of binding the Empire more closely together by a system of differential rates and preferential tariffs. The difficulty of the National Government and of those who support this policy of Imperial Preference, or economic unity, or whatever high-sounding phrase you use to connote it, is that the facts are against them. Whatever else they have got on their side the facts are against them. We have got the facts on our side, as I will endeavour to show your Lordships. After all, what is the scheme or policy of Imperial Preference? Briefly stated it is this: That we in the Mother Country are to give to the Dominions a preference on products which they send to us, a preference on duties which are already in force here or a preference on duties which are going to be put in force for that particular purpose—notably, as a result of Ottawa, duties on wheat and so on. In return the Dominions are to give us better access to their markets, partly by increasing preferences already given and partly—and this is the vital point of the whole matter—by reducing the protective tariffs which they, the Dominions, have against the export to them of the manufactures sent from this country. Now that broadly is the scheme. I think I have stated it fairly; I have tried to do so.
But what happened at Ottawa? When we come to what is the very crux, the heart of this policy of Preference, the essential point is that the Dominions should reduce their protective tariffs against us. There we find practically complete failure. In almost every instance no progress whatever was made in this crux of the problem, despite the repeated and persistent efforts of seven Cabinet Ministers over several weeks, backed by an army of officials; practically no progress whatever was made in this vital part of the scheme. Yet our Ministers have given away just as if they had achieved a success of this matter, because in no circumstances, we may presume, could they possibly have given away more. I should like to make it clear that if the Dominions would reduce their protective duties against us even then Ottawa would not be a success; but to make these Agreements without that is very unfair and very injurious to Great Britain.
What is the result of the whole matter for Great Britain? I can only deal with

823
the points broadly. Let me construct what I may call a profit and loss account for Great Britain: the Ottawa Profit and Loss Account. First of all, what has Great Britain given away? What is on the debit side? First of all there are food taxes, taxes on wheat and a quota on meat and bacon; and the quotas will, of course, raise prices just as much as tariffs, probably in the end more so. Those are new food taxes which are on the debit side. Secondly, higher duties on food taxes which were enforced before Ottawa; higher duties on butter, cheese, condensed milk and fruit, although the duties which have been imposed since this Government came in have, I am sorry to see from statements in the Press, made it impossible for some of the poorer people to buy fruit as they did formerly. That is the second item on the debit side. Next, high duties on some very important products coming to us, notably timber, copper, maize, linseed and so on, and a great many others. May I, my Lords, stress here a point which is surely of great importance in the whole problem, and it is this, that whereas nearly all the duties which we have put on, nearly all the things which we have agreed to in Ottawa, will increase the cost of living in this country and will raise prices in this country, so far as the Dominions are concerned that hardly applies at all. What they have done will hardly increase the cost of living in their countries at all. That, I say, is a very one-sided arrangement.
Continuing on the debit side, we have bound ourselves over a series of years not to reduce certain duties (that is taxes) without the consent of the Dominions, even—I believe I am right in this; if not I shall be corrected; I mention it to show how far the thing has been carried—not to reduce certain duties without the consent of a Dominion so small as Southern Rhodesia. I do not want to speak disrespectfully of Southern Rhodesia; I have from time to time had to answer for its affairs in this House; but it is a very small Dominion; its white population is about one-third that of Hendon. Then we have agreed not to reduce certain duties without the consent of Newfoundland. The population of Newfoundland is distinctly smaller than that of Hull. That is the kind of arrangement which we have entered into. I believe I am correct in saying that these
824
are precedents; nothing of this sort has been done before.
Next, Mr. Bennett literally forced our Ministers to denounce the Russian Agreement. The effect of that will simply be a further blow, as time goes on, at our dwindling export trade and a further present, at the expense of our manufacturers, to the German and United States manufacturers. This is the policy of the National Government. By the Ottawa Agreements we have incurred the antagonism of a large number of foreign countries. This will lead to retaliatory duties as time goes on and to the creation of those international jealousies and rivalries which, as history shows, are often the forerunners of war. These are some, but not all, of the items on the debit side. As a result we are now one of the most highly protected countries in the world.
What have we on the credit side? What have the Dominions given to us in return for what the Mother Country has given to them? What have we got? First of all we have statistically, at any rate on paper—in practice it will not in a great many cases amount to more than that—an increased preference on certain exports which we send to the Dominions. These increased preferences are nearly all, in one way or another, at the expense of foreign nations. In carrying out this part of the Agreements a certain number of articles are placed on the free list. Take Canada. A certain number of articles are placed on the Canadian free list. Some of them are simply ludicrous—azaleas, comic journals for children, bagpipes. Is this the way in which the National Government are going to increase the trade of the country?
I want to ask a question here. I am really seeking information. This is not in any way an obstructive question. This is a fair question and I should like a reply. As a rule in our fiscal debates here nothing is replied to, but I really want to know: Is it not the case that the Dominions have not bound themselves, Canada has not bound itself, to keep those articles on the free list? We are bound in black and white; Mr. Bennett was taking no risks. Is it the case that they are not bound to keep these articles on the free list? I should like a reply to that. Is it not the case that this talk about the free list is largely

825
rhetoric? Is it not also the case that despite the fact that these articles are on the free list it is not a free list at all? Canada will levy three duties against us: the dumping duty, the sales duty and the fixed value duty. That is a very important matter. My information is that those duties are still going on and that really, therefore, there is no actual free list at all. If that is so, this country in this matter has been, I think, a good deal misinformed, or at any rate it has got a wrong impression. That is the first thing which we have got and it does not amount to much.
The second thing is an undertaking to remove certain surcharges. Many of these would have come off anyhow before long without going to Ottawa at all. But here they are qualified, at any rate in some instances, by words like "as soon as practicable." I venture to think that in some cases "soon" will not be found to be very soon. At any rate it is a queer kind of phrase to have in what is supposed to be a business bargain. Then there are what I suppose, at any rate technically, must be placed on the credit side: the ambiguous and impracticable provisions to the effect that the Dominions are to use tariffs as a means of equalising costs of production. That is something which is quite impossible to do and even if it were done it would be thoroughly unsound economically. I have no hesitation in saying that so far as that part of the bargain goes there is no business man who would risk as much as a packet of pins on vague verbiage of that kind. That is really all we have got at Ottawa. There are a few minor provisions which it is not necessary to detail to your Lordships, but that practically completes the credit side of the profit and loss account.
Is it possible to say, having regard to the facts, if you put the debits against the credits, that this is a satisfactory profit and loss account from the point of view of Great Britain? I dare say it is satisfactory enough from the point of view of the Dominions, but what about this country? I say that it has not been proved possible, and it is not possible to devise any equitable scheme of Preference between the Mother Country and the Dominions.
But there is more than that. The whole policy, I submit, is fundamentally wrong, because here facts
826
again are against the Government's policy, because Great Britain's trade with foreign countries is larger and more important than her trade with the Empire. The facts are quite against those who support Imperial Preference. After all, trade is to some extent a matter of population. If you want to sell you must go where the buyers are and specially where the white people are, and in the whole of the Dominions there are only about 22,000,000 white people as against, I suppose, nearly 500,000,000 white people in foreign countries; and in the whole of the Empire there are only about 400,000,000 coloured people, of whom more than 300,000,000 are in India, as against 1,000,000,000 or 1,200,000,000 coloured people outside the Empire. In view of those figures it is not surprising that we do the trade that we do outside the Empire. Naturally inside the Empire we have very great advantages, and have had them within the Empire. In the past India has much helped our figures, but India has not been so satisfactory lately, and there is not much prospect of improvement under the Ottawa Agreements.
As regards white people, this policy of Preference is trying to force trade with people who do not exist. It is like the man in a dark room looking for a black hat which is not there. For instance, take Canada, as compared with London. The population of Greater London is nearly as large as the whole population of Canada. Take Australia. The population of Greater London is not very far short of twice the population of the whole of Australia. Moreover the populations of Canada and Australia are growing very slowly. The population of Canada in the last ten years has increased only from 8,788,000 to about 10,400,000—only about 1,500,000 in ten years. The population of Australia has grown even more slowly than that—namely, 5,500,000 to 6,500,000, or an increase of about 1,000,000 in ten years. Therefore I say that the white people are not there, and there is no prospect of them being there in sufficient numbers within a measurable distance of time, and yet it is mainly for them that this country has been called upon to make these stupendous sacrifices, though for the most part the great mass of the people in the Dominions are better off than the people in this country.
In view of those figures it is not surprising to find that our trade with foreign countries is larger and more important than our trade with the Empire. Again, take the four years ending 1931. Our exports to foreign countries declined less than our exports, speaking proportionately, to the Dominions. I do not want to make much of these figures, but, speaking broadly, and there can be no dispute about this, the trend of our overseas trade has remained much the same and varied very little during the last ten or fifteen years. In The Times recently I saw it asked what is our reply as Free Traders to this question: How is it possible for us to sell when foreign nations close their doors against us? My reply is that foreign countries do not close their doors to us. They have tariffs, which we dislike, but in many cases the tariffs of the Dominions are higher than those of foreign countries. Our reply as Free Traders, therefore, is that we do sell in large quantities to foreign countries.
Take 1929, which is the last normal year that we can take. In that year Germany bought from us more than Canada, and even little Holland bought more from us than New Zealand; and so I might go on. Therefore when we are told that foreign countries close their doors against us, I would ask you to look at the duties. Go back to 1929, which as I have said was the last normal year. Take cotton piece goods, a very important export from this country. In that year the Canadian duty was 21 per cent., the Argentine duty 15 per cent., and the Netherlands duty 8 per cent. Take woollen goods. In that year the Australian duty was 66 per cent., the Canadian 37 per cent., the German 24 per cent., and the French duty 12 per cent. These are the closed doors of the foreigner, as compared with what noble Lords opposite lead people to believe are the open doors of the Dominions. These are the duties. Now look at our dependence on the food and raw materials of foreign countries. In the case of food only a little more than one-third comes from the Empire, and the rest from foreign countries. Of raw materials not much more than one-fourth comes from the Empire and the rest from foreign countries.
Not only do these figures show how vitally important foreign trade is to this country, but the same thing applies to
828
other parts of the Empire. Take Canada and the United States. Is it surprising, having regard to the fact that those two countries are contiguous for over two thousand miles, that the trade of the United States with Canada has been growing much more than our trade, although we have got preference and the United States have not? The point which I am submitting to your Lordships' consideration is this, that this Ottawa policy is working against natural conditions. In the six years ending 1929 the exports of the United States to Canada increased from £123,000,000 to £178,000,000, an increase of £55,000,000, although the United States had no preference. The exports of Great Britain to Canada, with preference, increased only £8,000,000—namely, from £31,000,000 to £39,000,000. Then take Australia, set in the Southern Sea and not contiguous to any country. In the case of Australia our exports in those six years, with preference, went down from £68,000,000 to £62,000,000, while the exports of foreign countries to Australia went up from £47,000,000 to £65,000,000, an increase of £18,000,000, without preference.
These figures show the immense importance of foreign trade to the Empire, and I will sum up this part of my argument by this statement, about which there can be no dispute, because it is official. The trade of the British Empire with the world as a whole is nearly three times as great as is its trade with itself within its own borders. That, I think, is a very significant figure. Even if the position were different, and the facts were not against, as I hold they are, this policy of Imperial Preference, whichever way you look at it I submit that these Ottawa Agreements are a bad bargain for Great Britain.
I will begin with food taxes. The National Government had, as I have already indicated, imposed certain food taxes before Ottawa. Now they have gone further and instituted a tax on foreign wheat, and set up a meat quota, and they will set up a bacon quota. The wheat duty will undoubtedly lead to an increase in the price of bread. That is inevitable. The Ottawa delegation do not agree to that. There is to be a duty of 2s. per quarter on foreign wheat coming into the country, and the delegation made a statement, I believe composed on

829
the boat coming home—that may perhaps account for its not being more economically sound than it is—but at any rate, it was issued when they got back. In that statement they said:
"It is a condition of the agreement that the duty"—
that is, the duty of 2s. per quarter on wheat—
"may be removed if at any time Empire producers are unable or unwilling to offer their wheat to us at prices not exceeding world prices and in quantities sufficient to supply the needs of the United Kingdom consumers. It will thus be seen that this provision guarantees us against any possible effect on the price of bread in consequence of the duty."
Why "thus"? What does this statement mean?
If it means anything, it means that in future we are to buy all our wheat from the Dominions and none from foreign countries. If it is analysed it cannot, as a matter of economic theory, mean anything else. Last year or 1930—I do not know which, but it does not matter—we bought £24,500,000's worth of wheat from foreign countries and only £18,500,000's worth from the Empire. Now, does this mean that in future we are to buy the whole of that £43,000,000's worth of wheat from the Empire, and none at all from foreign countries? If so, what about the Argentine, in which there is invested about £600,000,000 of British capital? If that is not going to happen—of course, it will not happen—this duty is bound to increase the price of bread, because it has been proved again and again that in a country where there is a duty on wheat the price of wheat is higher by about the amount of the duty than it is in a country where there is no duty on wheat. And this duty will increase the price of the foreign wheat coming into the country. And it will not only increase the price of the foreign, but also of the Empire wheat, because you cannot have two prices for the same thing in the same market at the same time. It cannot be done. They will both go up together. I will not say anything about the effect on home-grown wheat, because the question of the quota comes in there.
But I should like the noble and learned Viscount as a matter of economics to justify this statement, and in particular I should like him to deal with this point.
830
His young colleague in another place, in an outburst of candour and enthusiasm for which I have no doubt he received some notice, informed the House of Commons, in effect, that as a matter of fact this duty will not increase the price of the 4-lb. loaf as much as a farthing, perhaps distinctly less. But, if it is not going to increase the price of bread at all, why does Mr. Hore-Belisha say that? Surely, on a point like this Ministers might all say the same thing. It is all very well for Mr. Hore-Belisha to talk airily of not increasing the price of the 4-lb. loaf as much as a farthing, but as a matter of fact a farthing on the 4-lb. loaf to many poor families in this country is equivalent to an Income Tax of over 6d. in the pound. I should be very glad to have some explanation, and also some reconciliation of these varying Ministerial statements.
The truth is that the Ottawa delegation in making this statement went altogether too far. Now I put this point. If they are right, if the price of wheat is not going to be increased, what is the object of the arrangement? What does it do for Canada? What is achieved by it? It is perfectly clear that, as a matter of fact, there will be an increase in the price of wheat. The Ottawa Ministers also seemed to think there is a good deal of safeguard in this phrase about wheat at world prices. What are world prices? World's prices are not fixed and static. The Government have evidently found that out already in the case of copper. Mr. Neville Chamberlain admitted that it is a matter of great difficulty. He has a Committee working on it. He said they would arrive at a satisfactory solution, but they have not done so yet. World prices are formed by a large number of economic causes and forces. They are formed by all the factors in the problem, and this arrangement made at Ottawa will be one of the factors and prices will be different from what they would otherwise have been. Up to the present time the British people have enjoyed the best and the cheapest bread in the world. It has been a supreme blessing for this country. I am afraid this policy of the National Government's is likely as time goes on to take that away from them.
Before I leave this matter of world prices I should like to point out that

831
Mr. Lennox Lee, the Chairman of the Calico Printers' Association, in a speech at the annual meeting at Manchester, referred to an assurance which had been given about world prices in regard to imports of dye stuffs and he said that assurance had not been carried out. That, I believe, is the first test of this new way of doing things by world prices, and I submit it is not very encouraging.
Now I come to the meat quota. It is in some ways the most astonishing feature of the whole agreement. The effect of this quota will be to make meat dearer in this country. That is not in dispute. The delegation say so in their statement. That is what is intended. Surely, that is a very remarkable state of things. How many voters at the last Election were told "Your meat will cost you more" I How many voters at the last Election voted for a policy of deliberately raising the price of meat? This meat quota is, partly at any rate, to help New Zealand. The population of New Zealand is not very much larger than the population of Glasgow and it would be very much cheaper to make a present out of the British Treasury year by year to every man, woman, and child in New Zealand than to carry out this preposterous policy of the meat quota. I am not recommending that that should be done, but it would be very much cheaper. It is also to help Australia, which sends about £2,500,000 of frozen meat a year, about £2,500,000 of mutton and lamb combined; in order to help this small trade we run the risk of injuring—it is more than a risk because we shall undoubtedly injure—the Argentine in which we have invested £600,000,000 of British capital. This policy of the meat quota combined with other provisions in the Ottawa Agreements will injure the Argentine just at the time when, above all, in order to help her through one of the gravest economic crises conceivable, she needs increased exports to help the Exchange. This will tend to injure her in this respect. I should like to ask the noble and learned Viscount this: What is the estimated cost to the country in 1933 and the first six months of 1934 of this meat quota?
The next thing is the series of provisions in the Ottawa Agreements dealing with the problem of trying to equalise cost of production by tariffs. These provisions, if I may say so, are really
832
dreadful—dreadful as a matter of business and economics and interpretation. I will read the actual provision. It is to the effect that
"protective duties shall not exceed such a level as will give United Kingdom producers full opportunity of reasonable competition on the basis of the relative cost of economical and efficient production, provided that in the application of such principle special consideration shall be given to the case of industries not fully established."
Now nobody knows what those words mean. They might mean a dozen things or twenty things. And in any case, what chance will our manufacturers have in submitting, on these ambiguous and grotesque words, their case to the packed Tariff Board, say, of Canada. I know the Government have made a great point that in the future these Boards are not to be political, but Mr. Bennett, as usual, has been too quick for them. Apparently he is not going to be bound by a provision of that sort.
I have in my hand a report of Mr. Bennett's speech in the Canadian Parliament introducing these proposals before that Parliament. What did Mr. Bennett say? He said the Government were retaining complete powers to accept or reject the findings of the Canadian Tariff Commission which will be charged with the task of finding the difference in production costs between the two countries. Is that the position? As a matter of fact there really is nothing in it. The Canadian Government are not bound at all, and having regard to the complete lack of success which the Ottawa Ministers experienced in the matter of textiles there is not the faintest chance, I am afraid, of getting anything done. And if it were done, is it true that the Canadian Government then have complete power to do what they like; either to do it or not to do it? I think that is a question which ought to be cleared up. If that is so it neutralises anything which there may be in this provision. As a matter of fact there really is practically nothing.
The last thing I will say about that is that even if you could act on this and arrive at some result the finding of the Balfour Committee was that it was economically wrong. Their words were, I think, that it is. "indefensible and harmful," and that is also the opinion of Sir Arthur Salter. In any case there is no prospect of any material reduction in the protective duties of the Dominions.
When we are told—I expect the Government will claim—that tariffs have been lowered, the question is, which tariffs? We do not say that no tariffs have been lowered but it is not the tariffs that matter that have been lowered Take the question of Australian surcharges. They are, of course, important, but when we are told they will be taken off I think it is quite in point to recall that as a matter of fact they were put on for a temporary purpose and would have to come off soon anyhow. Take Lancashire and India. It is true Lancashire may get some small advantage when the Indian Tariff Board meets, at the expense of Japan. Any one familiar with the position knows that as a matter of fact that would in all probability have come about anyhow, I think I may say quite certainly that it would have come about without going to Ottawa. The more these proposals are examined the more it becomes clear that nothing of any substance whatever has been brought home to this country as a present from Ottawa.
I want to say one word about the provisions dealing with the Colonies. In some ways they are the most important and, far-reaching of all the clauses in the Ottawa Agreements. The arrangements are in. the direction of making trading agreements between the Mother Country and the Colonies. That is the policy of France—the policy of the closed door carried to the extreme. What is the result? Take the two islands of Réunion and Mauritius. Here are two islands, close together, much the same in size, in fertility and population. As a matter of fact owing to the policy of France the oversea trade of Réunion is only about one-third of that of Mauritius. The policy is one that is unfair to the Colonies and it is also wrong to foreign countries.
I have given reasons why it is a complete misrepresentation to represent this Ottawa policy to the people as a success. Not only so, but I affirm that since the advent of the National Government we have entered upon a period of make-believe, of telling the people things which do not accord with the facts. The very name National Government—a name which they appropriated to themselves —is make-believe. It is not a National Government. The noble Viscount oppo-
834
site (Viscount Hailsham) said that every Party was represented at Ottawa. That really is not so. The Labour Party was not represented at Ottawa and the Labour Party is the second Party in the State. Mr. Thomas does not represent the Labour Party. Mr. Thomas was turned out of the Labour Party a long time ago, and there is no divisional association or divisional Labour Party in the whole country which has supported the National Government or supported the Ottawa policy. How can the noble Viscount say that all Parties were represented at Ottawa?
Then look at the make-believe—I do not think you can use any other word—in regard to the resignation of dissentient Ministers as the result of Ottawa. I mean Sir Herbert Samuel, Lord Snowden and the others. For a long time the Press was urging them not to go. It was full of lamentations saying that if they went unspeakable calamities would ensue to the country and the Empire. The same kind of arguments were used to induce Lord Snowden to stop in the Government. What value he was to the Government after he helped them to get into power it was difficult to see. He had no department, he had no duties worth speaking of in your Lordships' House, and the idea that the Chancelleries of Europe will pay less respect and attention to Great Britain because Lord Snowden has left the Government is sheer nonsense. Lord Snowden has become a pitiable figure. He worked hard for the return of this Government and thus helped to destroy Free Trade, and now, having assisted the horse to escape, he is trying to undo the mischief by locking the door after it has gone. He has a heavy responsibility and yet, as usual, he is still blaming everybody but himself. However, these Ministers went at last, and the Press turned round and said it was quite all right, that it did not make any difference, and that their places could easily be filled. There was no consequence affecting the stability of the National Government and indeed on the whole the impression was given that it was perhaps rather a good thing that they had gone, that the Government was just as National as ever and as strong as ever because the Simonites were still in it. I

835
say that is make-believe. Things cannot both be and not be at the same time.
One of the great assets of our country has been its political sense and its interest in politics, but this kind of thing is destroying both. There has never in our time been such a period of political apathy as at present, and this is due partly to this National Government and the methods by which it obtained power, and partly to this make-believe. What did Mr. Bennett say in his speech introducing these proposals in the Ottawa Parliament? He said the policy adopted at Ottawa was substantially the same as the policy put forward at the abortive London Conference in 1930. That was the policy which Mr. Thomas then described as "humbug." Now he has left that Government and gone into another he says it is a success. I say things cannot both be and not be at the same time. This sort of thing brings politics in this country into disrepute.
It is as certain as anything can be that these Ottawa Agreements will have precisely the opposite effect from that which is intended. They will not help the trade of this country to any extent, but on the whole I say they will injure it. It is doubtful if they will increase our Imperial trade. They will not help Imperial unity; there is no question about that. I have always felt that Mr. Joseph Chamberlain rendered an ill-service to the Empire when he threw into the delicate network of our Imperial relationships this very contentious and, indeed, devastating policy. It will divide the Empire as time goes on hopelessly. It is wrong not merely economically, not only Imperially but as a matter of world politics. These Ottawa Agreements will not help the cause of good international relations. So long as we in the British Empire have not abused our Imperial trust, so long as we have not attempted an exclusive trading policy in our ownership of these vast areas which make up the British Empire, foreigners have had no just cause for hostility against this country or against the Empire. But Ottawa means that unhappily the position is going to be different in future. I am afraid that history will show that the Ottawa Agreements so far from being the success which is so loudly claimed, are fraught with evil consequences both for this country and the Empire. I beg to move.
VISCOUNT ELIBANK: My Lords, I do not think that this afternoon we need deal with recriminations between the noble Lord, Lord Arnold, and Lord Snowden, neither of whom is in the Government to-day; so I will proceed to the Motion which the noble Lord has put on the Paper. I was rather surprised when that Motion was presented on the Paper, because it seemed to me that it would have been better if the debate which has taken place this afternoon had awaited the ordinary routine and taken place when the Ottawa Agreements automatically came before this House in the form of legislation for the purpose of ratification. At the same time, it is not altogether astonishing that the noble Lord should have raised this issue, because whenever the subject to which this Motion applies arises he is unable to contain himself and his whole being—and soul, I might say—is filled with bitterness and with prejudice regarding any act or measure that might affect the Free Trade sanctuary of which he has been so watchful and constant a guardian for so many years. During his speech he poured forth all the vials of his scorn and derision upon those who dared to differ from him. But to-day we can afford to smile indulgently at his jibes and his diatribes, because the citadel which he has defended so long and so valiantly has fallen. A new fortress has been erected in its place, and the noble Lord, with all his eloquence and all his industry, will find it difficult to destroy it.
The noble Lord in his Notice calls attention to the situation created by the Ottawa Conference Agreements. In the course of his speech—and I should like to congratulate him on the great industry with which he must have studied the Ottawa Agreements—he raised many points which I venture to submit might much better have been dealt with on the Committee stage of the Bill relating to the Ottawa Agreements themselves. It would be quite impossible for me to follow him in every one of them, but I should like to sum up what seemed to be his view of those Agreements. His view apparently is that Great Britain has received a shattering blow and that the whole Empire will crumble away and break up into mutually antagonistic fragments. He gave many reasons for this view. He referred to foreign trade as

837
larger and more important than Empire trade, and he gave statistics to that effect. He referred to Canadian trade and to trade vis-a-vis the United States of America, and he made many points with which I cannot find myself in agreement. From my point of view the situation created by the Ottawa Agreements is one of greatly increased confidence in the future of the Empire.
That confidence extends to very many classes of the community. It extends to the commercial classes upon whose active support the prosperity of the Empire depends in a large degree. In the course of his remarks, referring to the profit and loss account, he saw nothing in the way of advantage to Great Britain so far as trade is concerned. I venture to submit on the contrary that there will be great advantage to the trade of this country. There is in sight, as a result of the Ottawa Agreements, at least £50,000,000 worth of trade with the Dominions which at present goes to foreign countries. That trade is to be taken by our manufacturers if they go after it. Then again, we have to look to the effect upon our own agriculture as a result of the Ottawa Agreements. The noble Lord at some considerable length dealt with the question of the price of food and the cost of food-stuffs. He was anxious to show that as a result of these Agreements there must be increases in the prices of food-stuffs in this country and elsewhere. I do not wish to fall into the error to which the noble Lord just now referred, but I am going to state quite plainly that in my opinion unless the prices of food-stuffs and of all commodities in the world go up the world can never recover from the depression in which it is so set to-day. In the long run it is the producer who creates the great purchasing power in the country. To-day the producer in nearly every trade, in agriculture and in other products, is producing at a loss and he cannot go on doing that.
The noble Lord referred also to the question of tariffs and the effect of these Agreements upon them. He condemned the Agreements because he said that tariffs would not be lowered and that articles on the free list were not really on the free list. Why was it that Mr. Scullin, the Leader of the Opposition in the Australian Parliament, opposed
838
these Agreements? He opposed the Ottawa Agreements because he said that tariffs were being lowered against the manufacturers of Australia and that consequently they were disadvantageous to Australia and would do harm to Australia. Then we have the opinion of Mr. Mackenzie King. Mr. Mackenzie King is a member of the Party in Canada which corresponds to the Party to which the noble Lord used to belong. We were told that the Liberal Party in Canada was against the agreement. What do we find in the reported speeches of Mr. Mackenzie King in the Canadian House of Commons? He has stated quite succinctly that if he had been in charge of the Canadian delegation he would have been prepared to have given 50 per cent. preference on British goods, a great deal higher preference than was granted by the present Canadian Government. I suggest to the noble Lord that if he looks round the Empire in a few weeks time and reckons up the majorities by which these Agreements have been ratified he will then really know what the situation is. He will find that these Agreements have been ratified in every Parliament of the Empire by huge majorities. Even in South Africa, where only a short time ago there was legislation enabling Germany to participate in any preferences that might be given to this country, they have already repealed that legislation and have brought their Dominion into line with the rest of the Dominions on this subject.
I was privileged to be present at Ottawa in a commercial capacity during the whole of the Ottawa Conference; the most epoch-making Conference which has taken place within the Empire or outside of it at any time. At this Conference there were gathered together official and business delegates from over one quarter of the globe, that quarter of the globe which is marked red on the map, the quarter of the globe representing all the British peoples and other British subjects. The noble Lord has gone out of his way to minimise the importance of the number of white people who live in the Dominions. He has stated that there are only 22,000,000 of white people and he has brushed aside as being nothing at all the other 400,000,000. I am merely following the noble Lord's own state-

839
ment. To me it looked—and if I am wrong I will withdraw—as if he brushed aside the 400,000,000 of his Majesty's subjects, coloured and otherwise, who reside in that great Empire.
LORD ARNOLD: I am extremely sorry to interrupt the noble Viscount but he almost invited me to do so. He is always very courteous. On the contrary, I pointed out that a very important part of our trade is done with India and other parts of the Empire. The coloured people are very important. But I pointed out that the white people are the people for whom the preference is mostly devised, and they are the people who obviously, man for man, can buy more than the coloured people.
VISCOUNT ELIBANK: I accept the noble Lord's explanation, because I am very glad to hear it coming from him, although it does not alter his subsequent statement, which was, that foreign trade was of very much greater importance to us than the trade of our Dominions. We all agree to-day that our Empire trade is not on the same scale as our foreign trade. At the same time, that Empire trade is of an expanding nature; it is of an expanding nature from the point of view of population, from the point of view of resources and from the point of view of kinship. It is no good in these days saying that the Dominions shall be treated as the rest of the world. Do you think that Germany, or France, or Italy, or any other of those countries, if they had had the same opportunities as we had with regard to the Dominions, would not have made agreements like the Ottawa Agreements long ago? Of course, they would.
I want for a moment to get back to the actual Conference at Ottawa. It would hardly have been human if such a Conference had proceeded without differences of opinion and difficulties in dealing with the complex political and commercial questions with which it had to deal. Differing, as many component parts of the Empire do, in many respects in their customs, in their trade methods, in their ideas upon Free Trade and Protection, and in the type of article which each produces and manufactures, not always in consonance with each other, it is not extraordinary that the fashioning of these into a common mould presented a task
840
which taxed the capacity, the skill and the patience of some of the ablest of our statesmen in the Empire. I saw the difficulties and the snags and the courageous way in which they were faced and overcome by all the delegates and by our delegation, and not least by our Leader in this House the noble Viscount, Lord Hailsham. One and all were actuated by the highest motives and the desire to secure the best results for their respective countries and for the Empire. But these difficulties were bound in the end to be overcome, because, underlying them all, was a common ideal and a uniform desire for closer economic unity amongst the countries represented at Ottawa. It was this spirit which permeated the whole proceedings of the Conference and which, translated into actual practice, has meant that, whilst looking after their respective interests so far as reasonable, all the countries which took part in the Ottawa Conference have contributed their share of sacrifice to the common lot for the betterment of the whole of the Empire.
The noble Lord referred to the question of bargainings. Of course, there were some bargainings; there were bound to be some bargainings on an occasion of that nature. The bargainings or negotiations have resulted in the Empire giving a lead to the world which will be of the greatest assistance at the World Economic Conference in London, which is to take place next spring. Not only that, but it has resulted already, as we have been told by the right hon. gentleman the Secretary of State for Foreign Affairs, in many countries coming to Downing Street and asking to take part in similar bargainings with this country as soon as possible. The noble Lord, I think, suggested that this will not happen. I would rather take the word of the right hon. gentleman the Secretary of State for Foreign Affairs in this matter, because he has full inside knowledge, whereas the noble Lord's ideas are fashioned by his own mind.
Do not, my Lords, be led astray by the diatribes and faulty arguments of the noble Lord. He is steeped, as he has shown us once more this afternoon, in his ancient shibboleths. He has not awakened to the new era that is upon us. Even the News-Chronicle, a newspaper which, no doubt, the noble Lord

841
reads every morning with his breakfast, on the 1st October had this paragraph:
"The real issue to-day is for this country to work for the sort of tariffs which do not, like the present scales, destroy world trade. By offering reciprocal treatment to all countries willing to lower their tariffs to a maximum of, say, 10 per cent., we could give a compelling lead in this direction. This practical proposal is the real alternative to our present disastrous drift into the high Protectionism which leads to a world of 'closed,' impoverished States."
That is to me, and it must be to the noble Lord, Lord Arnold, the most, significant paragraph that has been written in the Free Trade Press for many a day. It is the death-blow to Free Trade as we have known it, and I hope that the noble Lord will take warning by it and that he will adjust his ideas to it, if he can, because otherwise, like Robinson Crusoe, he may find himself upon a desert island. Free Trade as we have known it is dead in this country, and I say, "Thank God." It will never revive in the same form again. The issue in the future will be: High tariffs or low tariffs; high preferences or low preferences. Never again shall we be at the mercy of the whole world. At last the vision of Joseph Chamberlain has materialised. His dream is alive, and clothed in practical raiment. At last the Empire is marching along on the only road that will lead it to real unity and real prosperity, the road blazed by the Ottawa Agreements.
LORD MARLEY: My Lords, I cannot hope to rise to the eloquent heights of the noble Viscount who has just sat down. I want to deal for a moment with the Ottawa Agreements, perhaps from a slightly different angle, and I think the Government may rightly claim a success in Ottawa as a continuation of the policy which they have pursued during the past twelve months. My objection is not to Ottawa qua Ottawa but to the whole policy of which Ottawa is the crowning and the most recent example. The whole policy of this so-called National Government has been aimed at maintaining the dominant economic position of the possessing class and every activity of the Government has been aimed at the standard of living of the workers.
Let me remind your Lordships that at the very beginning we were told that the country was suffering from an economic crisis which demanded sacrifices and we were then given the hypocritical cry of
842
the need for equality of sacrifice. Wage cuts have been the order of the day for the last twelve months. The Ministry of Labour Gazette month after month gives the cuts in wages which have fallen upon the workers. The economy campaign is still in the height of its performance. We have economy by the National Government, we have economy in housing, at a time when there are 370,000 unemployed building trade operatives. We have economy in education, which my noble friend Lord Sanderson will, I trust, hammer out to-morrow. We have economy in municipal expenditure which is resulting in widespread unemployment. We have economy in private expenditure all because we are told that the economic crisis is still upon us, and we are suffering from a national policy which has rendered necessary, according to the present Government, the type of Agreement of which Ottawa is an example.
I do not agree with this cry of economy. I do not believe that the Government have produced any reason for Agreements such as the Ottawa Agreements, which impose further sacrifices and further hardships upon the workers of this country, on the cry that we are suffering from national poverty. We have economists writing to The Times and pointing out that more expenditure and not less is necessary. We have paragraphs in the newspapers pointing out that the rich are better off than they have ever been. I have seen a paragraph in a London newspaper of a few days ago in which it is stated that the restaurants in London are doing better than they have ever done before. London, they say, is the gayest city in the world, and it is a fact that our big restaurants and smart supper places are doing better than they have ever done in the last few years. Does this look like poverty? Is poverty then the necessary cry in order that we should put further disabilities on our people by such Agreements as the Ottawa Agreements? The workers have been hit by such activities as the means test and by the general tariff policy of the Government, and the crowning policy which is going still further to lower the standard of life is the policy of which Ottawa is the example. The Prime Minister boasted in the House of Commons yesterday that

843
his Government had only increased unemployment by 230,000 in the year. He boasted of that whereas we were told—the noble and learned Viscount who leads the House apparently does not agree—
THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM): I only shook my head because the Prime Minister did not say that. He said that unemployment had increased by 230,000, but he did not say that his Government had caused that increase.
LORD MARLEY: Let me read what the Prime Minister said. It is as follows:
"Our increase, not counting in those who have been knocked off, is 66,491 and if we add the Anomalies Bill and the others we only have to add to that something between 170,000 and 175,000. The very people who were responsible for an annual average increase of 810,000 in unemployment censure a Government which has been responsible for an annual increase of a little over 230,000."
If he says his Government is responsible for an increase of 230,000 it seems to me to be an admission of the statement I have made.
Lord Arnold dealt with many details of the Ottawa policy. I want for a moment to deal with one point and that is Article 21 of the Canada Agreement. That is an article under which the Government has seen fit to denounce the temporary trading agreement with Russia. I wonder whether the noble and learned Viscount would be good enough to tell the House whether the agreement to denounce that Treaty was actually made at Ottawa or whether it was made after the return of the delegation to London? To us it seems that this denunciation was a sort of prize for which Canada was striving, and in that connection—and we know it is a Canadian demand—it is peculiar that during the very course of the Conference proceedings at Ottawa we find that Canada was herself actually doing a large trade with Russia, and that actually during the sittings of that Conference large cargoes of Russian oil arrived in Ottawa in exchange for many tons of Canadian aluminium. The Manchester Guardian said:
"It now emerges that the Bennett Government agreed to the present interchange of products with Russia during the Conference, at the very time when the Canadian drive for a British embargo against Russian timber and wheat was at its zenith."844
I think Mr. Bennett was very wise to carry through this agreement. It put in employment in Canada 1,000 men who were out of work at the beginning of the Conference—a wise decision, but it is peculiar that Canada should demand that we should break off relations with Russia at the same time that she was entering into new relations with Russia and giving employment thereby to her workers.
If an alteration in this Treaty were wanted why denounce it first? The Treaty contains in the beginning of it a statement that it is merely a temporary agreement to serve as a modus vivendi pending the conclusion of a full Treaty. The German Trade Agreement with Russia was made without denouncing the old Treaty, and I suggest that the denunciation of this Treaty makes friendly relations far more difficult, and makes the carrying through of a new treaty not so easy as it would have been had it resulted from friendly discussions within the boundaries of the present temporary agreement. The result of this denunciation cannot but be to make trade with Russia more difficult, and therefore to cause more unemployment in Great Britain. Mr. Baldwin, speaking in the House of Commons, said that we wanted trade with Russia. It is not the way to continue and improve our trade relations with Russia to denounce the Trade Agreement under which those trade relations are carried on.
What was wrong with the existing Trade Agreement that Canada was so anxious that we should denounce it? Surely we can judge as to our own trading relations—whether we get benefit or otherwise from trading with any other foreign country. We know that at the very moment of this denunciation our trade balance with Russia was improving month by month and year by year. The figures show that the exports to Russia from the United Kingdom in the first six months of this year were no less than £1,300,000 more than in the first six months of last year, and that during the same period Russian exports to Great Britain were less by nearly £5,000,000. I do not admit that it is possible to have a genuine trade balance between any one country and another, because trade is not directly between one country and another; it is always triangular

845
or four-sided, or many sided; but the direct figures show that during the first six months of this year, as near as can be calculated, there was actually a balance of trade favourable to this country in our trading relations with Russia. And at that moment, when we had built up a larger export trade, giving more employment to our people, this peculiar Government took the opportunity to denounce the Trade Agreement and add to the unemployment in our midst.
It is an extraordinary thing, when the figures are examined, that Russia is the best market in the world for many of our specialised products. Let me give one or two figures. Russia takes practically a third of all the electrical instruments which this country exports. It takes 70 per cent. of all the threshing machines we export. It takes 40 per cent. of all the tractors and parts we export; it takes 40 per cent. of all the electrical generators, 50 per cent. of all our gas and chemical machinery, 90 per cent. of all our machine tools, 80 per cent. of all our steam turbine and rotary machinery. I could give point after point from the trade accounts of this country, published in the Annual Statement of the Trade of the United Kingdom, in which Russia is the main market for our exports. And all this is being jeopardised by the action of the present Government in denouncing this Treaty under Article 21 of the Ottawa Agreement come to with Canada.
Canada claims that Russia was dumping goods into this country. There never was a more ridiculous accusation. On the contrary, the dumping has been done by other countries—if it can be called dumping. Let me remind your Lordships that, as far as wheat is concerned, in which Canada is alleged to be in competition with Russia, the fall in the price of wheat has nothing to do with Russia, and these wheat prices were falling far more when Russia was not an exporting country at all. In 1929 Russia's exports were only 9,000,000 bushels. In the same year the exports of the United States were 140,000,000 bushels, and of Canada 180,000,000 bushels. The price of wheat cannot be affected by an export of 9,000,000 bushels as opposed to an export of 140,000,000 in the case of the United States and 180,000,000 in the case of
846
Canada. In 1932 the price of wheat is still falling, yet Russia has exported no wheat, and has even imported wheat from Canada during that period. Russia cannot be accused of dumping in this connection, and the Canadian cry that Russia is an unfair competitor is an unreasonable cry and one which, when the present Government pay attention to it and conclude an agreement in consequence, is equivalent to making our workers suffer a definite disability, a lowering of their standard of life which is unfair in its incidence and uncalled for by the facts.
In regard to timber, the case is even more ridiculous, because the only Canadian timber which is in any way in competition with Russia is timber which can only reach this country as a result of a journey of many thousands of miles and a passage through the Panama Canal. The freight charges alone make competition impossible. Moreover, the cost of timber exported from Russia to Great Britain is actually higher than the cost of similar timber from Scandinavia and Finland, and British timber importers had actually to send out a deputation to the Russian Government to ask them to lower the cost of their timber lest they should be placed in a position of losing money because they would have on their hands Russian timber at a higher cost than the Scandinavian and Finnish timber. That is not dumping; that is the opposite of dumping; and Canada has no right to claim that Russia is in competition with her in that connection. This cry of dumping cannot hold water on any statistical facts, and I challenge any noble Lord to prove by any figures that, in fact, there is unfair competition between Russia and Canada in this connection.
The result of the breaking off of trade relations with Russia because of Article 21 of the Agreement with Canada has been to make a new agreement with Russia more difficult, and to create an atmosphere in which further trade is again rendered difficult, if not impossible.
VISCOUNT ELIBANK: On an export credit basis.
LORD MARLEY: The noble Viscount reminds me about export credits. I do not propose to deal with that subject, because your Lordships will have

847
observed that there is a Motion down for one day next week, or shortly afterwards, to stop export credits to Russia, and I suggest that that is the time to deal with export credits. The result of this breaking off will mean more unemployment, an increase in the price of necessary goods and food-stuffs to our people, and the handing over to Germany of trade which we could do with Russia, financed, let me remind your Lordships, by British credits, given to Germany to enable Germany to take our trade with Russia. That is not a desirable state of affairs. I want to suggest that this policy, this series of political actions, all of which have been borne upon the backs of the workers of this country either in reduced wages or in increased unemployment, are the real causes of the expressions of discontent among the workers and the unemployed.
This discontent has a right to free expression. We have in this country an old standing belief in freedom of speech, in rights of assembly, and in the inalienable right of the people to express their discontent. We have had recently a number of expressions of that discontent, and I want to suggest that the Ottawa decisions have a definite economic connection with those expressions of discontent. The result has been clashes with the police, and movements of people based on an admittedly extremely difficult situation, but whose connection with the policy of the present Government cannot be hidden, and therefore I am opposing the Ottawa Agreements, and those with whom I am associated are opposing the Ottawa Agreements, because they represent another blow at the standard of life of the workers of this country.
LORD BEAVERBROOK: My Lords, I have listened to the speech of the noble Lord, Lord Marley, with extraordinary interest. His principal objection to the Ottawa Agreements seems to be that the Russian Agreement has been denounced, and he goes on to say that these Ottawa Agreements are also responsible for the riots in the streets. I am not so sure he is not right. Are we to understand that the Communists are being urged on to these disorders by the denunciation of the Russian Agreement? Is that what he means? My noble friend Lord Elibank pointed out to him that the Russian

848
agreements were financed on export credits. The noble Lord would not make any reply to that, but the fact is that all the goods sold to Russia from this country are at present paid for almost entirely out of those export credits. I do not think that the noble Lord can raise us to any very great opposition or hostility to the Ottawa Agreements on account of the denunciation of the Russian Trade Agreement.
The noble Lord seems to find some fault with Ottawa, because, he says, Ottawa is in part responsible for the cuts in wages. That is how I understood him, but I thought that the Socialist Government accepted the responsibility for the cuts in wages. That is what Lord Snowden has told us at any rate. Then he speaks of another objection to the Ottawa Agreements, that the restaurants in London are crowded out. At the same time we heard from the noble Lord, Lord Arnold, that an objection to the Ottawa Agreements is that there is a tax on food. Those are contradictory arguments. When the noble Lord, Lord Arnold, speaks upon the Ottawa Agreements, and, indeed, whenever he speaks, he interests me very greatly, because he always produces an immense number of figures. He produces these figures without any reference—a thing which surprises me greatly—and quotes them in support of the case that he is making for the time being. He quoted a series of figures to show that the trade of Australia with Great Britain has fallen in the last few years, and also to show that the trade of Canada with Great Britain has fallen in the last few years. We quite agree. I mean fallen in comparison. He showed that the trade of Australia with Great Britain had actually fallen while the trade of Australia with the United States had grown. He also showed that the trade of Canada with Great Britain had not grown nearly so rapidly as the trade of Canada with the United States. I think I have stated correctly the point made by the noble Lord. But it is for that very reason that we are supporting the Ottawa Agreements. It is because trade with those Dominions was not so satisfactory as we desired that we wanted the Ottawa negotiations. That is why we are so very glad that these negotiations were undertaken.

849
The noble Lord, Lord Arnold, makes another point against the Government in connection with the Ottawa Agreements. I think that point is that the Government calls itself the National Government and he finds something very extraordinary in a Government which does not include himself and some of his colleagues going by the name of a National Government, and yet it always surprises me when I come to this House and look at noble Lords or the other side who call themselves by the name of Labour Peers to observe that they do not look to me very much like the labouring portion of the community. But there you are! Anything will do with which to make arguments in denunciation of the Ottawa Agreements. Even the old and threadbare argument about Mauritius and Réunion has been called into action once more. I could at once answer the argument about Mauritius and Réunion with the story about Jamaica and Porto Rico, but I have used it so often that I would be ashamed to bring it into this House again. But I am always interested in arguments supported by figures.
The noble Lord, Lord Arnold, says that immense sacrifices have been made by the people of Britain on account of these Ottawa Agreements. He looks upon the bargains purely as sacrifices, he will not have any other view. The noble Lord used to be a stockbroker. He used to sell securities from a seller to the buyer. I suppose when the securities went to the buyer he called that situation a sacrifice on the part of the buyer, or possibly a sacrifice on the part of the seller. There is no sacrifice in the Ottawa Agreements. It is a bargain in which both sides are benefited and advantaged. It is a bargain in which we can rejoice because of the advantages which come to our own people at home, and because of the benefits that are conferred upon the people of the Dominions. I am greatly delighted with the Ottawa Agreements. I only regret they have not gone further. I am sure. I speak for the Dominions—for the Dominion of Canada at any rate—when I say that they look upon the advantages which British traders will enjoy in the Dominion market as a very considerable sacrifice on their part, if I may use the word, for which undoubtedly they get corresponding advantages.
850
I am sorry that the Ottawa Agreements have not gone much further. I look upon the noble Viscount, Lord Hailsham, as having performed an immense public service and for my part I express gratitude to him. That he did not bring us back something more I am perfectly certain was not his fault. Everybody knows that I would like to see the Agreements developed to the point where we get as nearly as possible to unrestricted free trade between the Dominions and Great Britain. I am quite convinced that now we have made a start we shall in time realise that ideal. I know that many noble Lords look upon that statement as something which cannot be justified by the facts. When three years ago we put forward proposals for a movement in the direction of free trade throughout the Empire we were looked upon with scorn and treated with ridicule. Having already got so far, is there any reason to despair of the prospect of going much further? I do not think so. On the contrary, I am quite satisfied that this is a mere beginning and that in the end we will attain a united economic Empire.
I agree with the noble Lord that the Colonies represent an important part of the Empire from the economic standpoint and I regret very much that more progress was not made in dealing with the Colonies at Ottawa. I think it is too bad because, of course, the Colonies offer us a most splendid opportunity, a most glorious chance for the expansion of our economic Empire. I am one of those who advocate that French system upon which Lord Arnold poured scorn a few moments ago. I know quite well the reason for the delay in bringing the Colonial Empire into Customs union with Great Britain. It is due to two Treaties—first, the Congo Basin Treaty, and secondly, the Anglo-French Treaty. The Congo Basin Treaty relates to East Africa and the Anglo-French Treaty to West Africa. I am told that the French will not consent to the denunciation of one Treaty unless the other Treaty is also denounced. That statement has been frequently made. These two Treaties really stand in the way of the development of our economic Empire. They stand in the way for this reason, that under the Congo Basin Treaty we are compelled to give exactly the same terms to Germany and to France, to Italy and to the United States,

851
and to a number of other countries, that we get for ourselves. That is the Congo Basin Treaty. That Treaty has run out, but it is being carried on without any final decision being taken. The Anglo-French Treaty is an arrangement between France and Great Britain by which the British Colonies are open to French traffic and French Colonies are open to British traffic. But unfortunately under the most-favoured-nation clause many other nations get in under the covering wing of this Anglo-French Convention.Plainly it is our duty to denounce these Treaties as quickly as possible. They are bad because they stand in the way of our economic Empire. They stand in the way of the incorporation of the Crown Colonies in a British Customs Union. If you will refer to page 10 of the Summary of Proceedings at the Ottawa Conference you will see that it is declared that protective duties are to be utilised
"to ensure that the resources and industries of the Empire are developed on sound economic lines."
I hope greatly that under that resolution of the Imperial Conference there will be no difficulty in going straightforward with the denunciation of those Treaties so that the resources of the Colonial Empire may be developed. The Treaties are bad any way, because, for instance, our Empire share in the sale of commodities in the Congo Basin territory amounts to only £2,000,000. The foreign share in our portion of the Congo Basin territory amounts to £3,000,000. Therefore, we actually have yearly a net loss of £1,000,000 if you make the calculation between the advantage to the foreigner and the advantage to ourselves. Exactly the same thing applies in West Africa. The Gold Coast and Nigeria actually buy £8,000,000 of goods from the foreigner but our sales in West Africa only amount to £600,000.
It is in these African Colonies, if we bring them into the Customs Union of the Empire, that we have the best opportunity of carrying out the great policy of development. They cover an immense area, bigger than India. The population numbers 50,000,000—a population which I do not despise—capable, if developed, of a purchasing power which will become a real factor for our manufacturing industries at home. The development of that African Empire gives us the same
852
opportunity that our ancestors had in the days when the development of India was undertaken. India has been an immense market for us and here in Africa we have the same chance, the same possibilities, and the same certainty of reward if we have the courage now to denounce these Treaties and go straightforward with a policy of bringing these Colonies into Customs union with Great Britain. Already, of course, we allow all imports from those Colonies into our markets in Great Britain free of any duty. Under the Imports Duty Act of last spring there is no tariff against those Colonies. Where the delay has occurred is in bringing those Colonies to the point where they will give the same advantage to British goods in their markets. It is that policy that I urge upon the Government and I strongly hope that they will go straight forward, making progress in the direction of their Ottawa programme and also bringing the Crown Colonies into a Customs union with Great Britain as quickly as possible.
It is true that those Crown Colonies depend to some extent upon their Customs revenues. They have to rely upon those Customs revenues for their services. But we could afford to subsidise those Colonies to the extent of any Customs revenue they might lose. It would be to our advantage and it would not be a burden on us. The whole burden might even be laid on the backs of the manufacturers in Great Britain who sell goods to the Crown Colonies. They might be asked to pay a levy which would relieve us of any public burden. It must be borne in mind that these Crown Colonies do not compete with our manufacturing population at all. There are no manufacturing enterprises there such as there are in the Dominions. There is no competition with our agriculture at all.
That brings me to my real cause of regret in connection with the Ottawa decision—that is, that no progress was made in the direction of assisting agriculture in our own country. No real progress was made in that direction. I remind you again of the resolution passed at the Conference that it was the purpose of the Ministers to develop the resources and industries of the Empire on sound economic lines. There is no resource of this Empire that will afford such splendid reward if we develop it as the agricultural

853
industry of Great Britain. That is the most splendid and excellent chance of which we can avail ourselves to-day. Ottawa has done nothing for it. It is true that the duty on eggs has been increased from 10 per cent. to 14 per cent. It is true that there is an increase in the duty on butter imported from foreign countries from 10 per cent. to 15 per cent., but there is practically nothing more. The noble Lord, Lord Arnold, spoke of a duty of 2s. a quarter on wheat. It is a trifling sum. It is so small a duty that it will really play no part in determining the future of wheat-growing. It has been suggested—I think it was stated by somebody in the House of Commons—that it would add a farthing to the cost of the 4-lb. loaf. That is not true. It would add something so small that it could not be calculated. As I say no progress has been made in the direction of helping the agricultural industry. Whatever benefits have been conferred on that industry as the result of the Ottawa Conference have been gained by the Dominions and not by us.
I am perfectly certain that the policy of the Government is to give agriculture in Britain an opportunity to develop. I only wish they had the courage and the energy to carry out their own policy. Mr. Chamberlain has stated that the policy of the Government is to look after the home farmers first and then the Dominion farmers. Why not do it? It is trifling with the problem to give us quotas. Quotas will not meet the situation at all. I do not want it to be supposed that I am going to oppose quotas. On the contrary, so far as I am concerned I am going to grasp at quotas like the drowning man in the old story grasping at a straw. But they will not meet the situation. For instance, we are offered quotas for mutton and lamb. The total import of mutton and lamb into Britain is £18,000,000, and £13,000,000 come from the Dominions. Therefore, under the Ottawa resolutions we must wipe out £13,000,000. That leaves £5,000,000 from the foreigner. The Government plans will reduce that £5,000,000 from the foreigner to £3,000,000, and that leaves us £2,000,000 worth of mutton and lamb which we can offer as an opportunity to the farmers of Britain to increase their output. It is £2,000,000 at the very most, and if the Dominion imports are increased in the slightest degree down goes the
854
amount. The production of mutton and lamb in Britain at the present moment is £14,000,000, so that we offer £2,000,000 on £14,000,000 of production. But the production is very low. If you look back at 1925, so short a time ago, you will see that the production in Britain then actually amounted to £16,000,000, just £2,000,000 more than the present figure, and that £2,000,000, remember, is the offer that we are made in the way of development, extension and expansion. That is all we have got out of Ottawa so far as mutton and lamb are concerned. It is not enough. It does not offer any chance for increase of production in Britain.
Next we come to pig meat. I do not know what the proposals are in relation to pig meat. I do not think anybody can understand them. I have tried my best. I have come to the conclusion that the home quota is to be fixed sometime next July by firms of chartered accountants. Next first of July chartered accountants are to pencil up calculations, and out of these calculations we will get at what represents the home quota for pig meat. I have come to the conclusion that that quota will amount to 1,500,000 cwts. That is the position we are to start from. That amount is worth at the present moment about £5,250,000 in money in round figures; that is a rough calculation. The quota provides for doubling our output in two and a-half years, so that over the next two and a-half years all the benefit that the farmers of Britain can possibly get out of the pig quota is an increase in production of another £5,250,000. Again you will see that it is a trifling figure compared with the total value of agricultural produce in Great Britain. These figures are so trifling that you are not even beginning to consider or to try to deal with the real problem of agriculture. To get this £5,250,000 worth of extra production we are to have altogether eight new commissions and boards. It seems an immense new Civil Service in order to deal with such a very small sum in increased production.
I am bound to say that there is something to be said for Lord Arnold's case if you look into the way Canada was treated over pig meats. The Canadians have managed to get a quota of 2,500,000 cwts. Our total production is 1,500,000

855
cwts. and the most we are given to expect is another 1,500,000 cwts. in two and a-half years; but Canada is given 2,500,000 cwts. at once. The imports from Canada in the year 1931 amounted to only 50,000 cwts., so that the Canadian pig quota is to be increased fifty times over while our pig quota is only to be doubled. It is not just. It is not fair. It is not a proper adjustment. I am not complaining of the quota to Canada. I am perfectly sure that Canada can fulfil it. I am very glad the Dominion got it, but I do say that the promise of Mr. Chamberlain that we are to take into account the interests of our home farmers first and then our Dominion farmers ought to be operative now and here, with a very greatly increased pig quota for the British farmers. I am afraid that the Government are saving up this pig quota for the Danes. That is what I dislike.
I hate to see these quotas going to foreign countries, and most of all the chilled beef quota, amounting as it does to 100 per cent. of the present imports from the Argentine. The Argentine supplies us with practically all the chilled beef that we import. It is a most serious situation for the British farmer from my point of view. There can be no increase in the production of beef in Britain as long as the 100 per cent, quota is continued in favour of the Argentine. The problem of the farmer is very serious, for the Argentine costs of production amount to perhaps one-third of the costs of production in Britain. We cannot compete with them. Their costs destroy our market and the quota destroys our prospects of development. I wonder what reason the Government has for its solicitude for the Argentine. I wonder what is the reason. They say that the quota will help the producers. I hope so. I am very hopeful of it. I do not despair at all. But why do they want to help the producers of the Argentine? I cannot see the advantage of it. Besides, the Argentine meat imports to Britain are in the hands of a monopoly. I do not disapprove of monopolies but this happens to be a foreign monopoly. It is entirely in the hands of a foreign monopoly. There are five firms concerned in the foreign monopoly, Vestey, Armour, Swift, Morris and Wilson. Vestey is an Argen-
856
tine firm. That question was raised in your Lordships' House in 1922 and thoroughly gone into. It is an Argentine firm. Armour is American. Swift is American. Morris is American, Wilson is American. These five foreign firms have an agreement which was made in 1927 providing for sharing out our markets. They share them out now. I estimate that the profits of Vesteys in the last two years have amounted to as much as £4,500,000 a year, and that monopoly has made an agreement to share out the market here which partly belongs, in right at any rate, to the British farmer.
I am told that the Government is to give the Vestey firm 50 per cent. of the present quota from the Argentine. I say that is a very serious decision. If the quota is reduced at all and there is any shortage in Britain of chilled beef the position will become serious indeed. For this Vestey firm, this Argentine firm owns 4,000 or 3,000 butchers' shops in Britain. The moment that the quota of cheap foreign chilled beef is reduced the supplies will go to these 4,000 or 5,000 Vestey shops and our own butchers will go short. Nearly all of our butchers sell foreign beef; one in every three sells nothing but foreign beef. One in every three butchers' shops is given up entirely to foreign beef. If you limit the imports of foreign beef, leaving the situation as at present in the hands of this foreign monopoly, this foreign trust, which made a sharing out agreement in 1927, with their 4,000 or 5,000 butchers' shops will bring ruin on our butchers just as ruin has overtaken our farmers. I hear everywhere that butchers are profiteering. It is not true. Butchers are having a very hard time, a very hard time indeed, and if you examine the lists of failures amongst butchers you will see that there are very nearly as many failures among butchers in proportion to their numbers as there are among farmers, and that is a pretty heavy list. If you look at the statement of the Ministry of Agriculture, and compare the wholesale and retail prices for store sheep and beef for ten years, which is a fair test, you will see that in those years, between 1921 and 1931, wholesale prices, speaking roughly, for mutton, beef and lamb have fallen 45 per cent. while retail prices have fallen 35 per cent., or 10 per cent. less

857
than the fall in wholesale prices. Butchers have to pay the same rents, the same rates, and more taxes, and their wages are double the pre-War figure, so that a cursory examination of the position will show us that the butchers are not guilty of profiteering.
Further, I must insist upon warning the Government that the dangers of the quota to the butchers are as real and pressing as the danger to the farmers. Those who think, like me, that the Government ought to adopt a policy of duties instead of quotas, cannot understand why they do not do it. If they will put a duty upon beans why not upon beef? If they will put a duty upon what the greengrocer sells why not upon what the butcher sells? If they put on a duty instead of a quota we shall get more revenue, and already we have been told by Mr. Baldwin that there is a danger of a deficit. Here is an opportunity of getting clear of that menace of which Mr. Baldwin speaks, a deficit in the next Budget and the possibility of more taxation.
What is the reason why the Government insist upon quotas and will not have duties? It cannot be the Dominions, because the Dominion Minister's all asked for duties. A few days ago I read a speech by Mr. Amery, in which he said most definitely that the Dominion Ministers wanted duties and not quotas. Is it then out of consideration for the foreign importers that the Government have quotas instead of duties? Is it for the purpose of enabling the National Government to give benefits and advantages to the Danes and Argentinos, perhaps in exchange for trade in those countries? I do not think so. I think the Government are fully aware of the spirit of the people, desiring as they do that the Empire shall be the chief and present concern of the Government. It cannot be consideration for the meat monopoly, or for those foreign firms, Vestey, Armour, Swift, and Morris.
Is it then the pledge that Mr. Runciman made at the last Election, that there should be no duties on wheat and meat? Is it because of Mr. MacDonald, the Prime Minister, who said very much the same thing, or is it because of Mr. Baldwin's boast that there would be no food taxation so long as he was Leader of the Conservative Party? Is the National Government dodging accusations of being food taxers at the next Election, or is it
858
a gesture to National Liberals, or an attempt to keep Lord Snowden in office? He has gone now, and why should not the quotas go with him? At any rate if the Government will go on with quotas they must pay a tribute of respect to Dr. Addison, Mr. Wise and Sir Oswald Mosley, the real architects of the quota policies. There is nothing left but the import boards, and for my part I think the quotas would be better with the import boards than if you rely upon the five foreign firms which made out a sharing agreement for the British market in 1927.
For my part I rejoice that the Government has begun part of the journey in the direction of the policy which we have been advocating. I hope that they will continue in that course and will realise that, the production of agriculture is bigger in wealth than the production of cotton, iron and steel and coal together. Add up the total production wealth of those three industries and you still have a bigger figure in the case of agriculture. I hope the Government will remember that, because agriculture is in ruins at the present time. There is no market for store cattle. Bring your store cattle to the auction mart and you will get no buyers. Norfolk is a County in which the buying of store cattle is bigger than in any other three counties, but the farmers in Norfolk will buy none to-day. The reason is that the farmers have got no money and cannot get credit.
Make no mistake about it: the Government must either undertake to protect agriculture or agriculture must be ruined, and agriculture is entitled to protection. This National Government has protected manufactures in Great Britain to the extent of 100 per cent. of production, but they have only protected agriculture to the extent of 25 per cent. of production. It is not just, and public opinion insists upon justice. But there is something greater even than that, and it is necessity. In no circumstances will your quotas, which come in next July, save agriculture from complete ruin. You cannot save agriculture even by tariffs, unless you apply them forthwith, and with the intention of saving the industry. You cannot apply them forthwith, and so you must look forward to some measure of immediate relief, for otherwise the farmer is ruined. You must save

859
the farmer before it is too late. If you save the farmer you, the Nationalist Government, save yourselves. If you let him go smash the National Government goes smash too.
LORD SELSDON: My Lords, I think anyone who rises to address you for the first time must be oppressed with diffidence, and I know that I am. I can only ask you to have kindly tolerance with me, and all the more so because I have to follow the eloquent speech made by Lord Beaverbrook, with almost every word of which find myself in hearty agreement. He will therefore forgive me if I commence with consideration of the arguments which have come from the Benches opposite, and of the arguments we have heard elsewhere with regard to the conduct of the Government in regard to these Ottawa Agreements. As I listened to the speeches made from the Benches opposite this afternoon I was impressed again with the feeling that they were extraordinarily illogical, that they were extraordinarily inconsistent, and, if your Lordships will allow me to say so, that in some cases they were extraordinarily irrelevant.
Let me try to justify that observation by summarising, if I can, as Lord Arnold did—and I hope, like him, as fairly—and as shortly as I can, what I conceive to be the chief arguments which have been brought forward, both this afternoon and in the House of Commons and elsewhere, against the actions of His Majesty's Government. There is, first of all, what you might call the Imperial argument. We had a little of it at the end of Lord Arnold's speech this afternoon. It is said, in fine and very resounding language, that the Imperial ideals have been put in jeopardy. It is said that the future fabric of the British Commonwealth of nations is being endangered because we have descended for the first time to a sordid basis of huckstering and bargaining with each other. It is said that this hard bargaining is disintegrating to the ties of Imperial sentiment, and is destructive of common solidarity. That is the first argument—what I call the Imperial argument.
Then there is the international argument. It is said that by our actions at Ottawa, by the agreements which we have made in the family, we have crippled in advance our usefulness as members of the International Economic Conference, and we have impaired the prospect of
860
securing lower tariff barriers throughout the world. Then there is what I may call the domestic argument, which Lord Arnold stressed very strongly this afternoon. And I call your Lordships' attention to the fact that this is wholly inconsistent with the first argument, with the argument about hard bargaining, because the domestic argument is this: Our men at Ottawa were very bad bargainers, they did not bargain nearly hard enough; we got left with the wrong end of the stick; Great Britain has had a raw deal. As Mr. Greenwood put it in a crisp phrase in the House of Commons the other day—one of those phrases which do so much to unite the ties of Imperial sentiment and common solidarity!—His Majesty's Government of the United Kingdom have been blackmailed by the Dominions. Then there is the constitutional argument, of which we heard a great deal—we are not hearing quite so much of it now—the constitutional argument that we have involved ourselves in unconstitutional obligations, which fetter the freedom of Parliament. And, lastly, there is the old argument, which has really ceased to be an argument and become almost an invective, the economic argument that we have turned our backs on the holy land of Free Trade, and that we are leading this country and the world again into the wilderness of protectionist policy.
Let me invite your Lordships for a few moments to consider briefly one or two considerations affecting each of these arguments. Take the first argument—the argument that bargaining is wrong and detrimental to Imperial solidarity. I suppose that means something to those who use that argument, but I confess to me it is all completely wild and whirling, because you start with the agreed objective of trying to arrive at some agreement which would increase the amount of inter-Imperial trade. There is no quarrel about that. That is an agreed objective. And in order to reach that objective you call the Conference at Ottawa. Again there is no quarrel about the Conference at Ottawa. I did not understand that any objection is taken to the fact that we went to Ottawa by any of the purists opposite—any of the votaries of Mr. Cobden and the worshippers at the shrine of economic and constitutional proprieties—whom I might call in the

861
words of Mr. Kipling "united idolaters." I do not think they objected to our going to Ottawa; and indeed, they could not, because it was not the National Government which accepted the invitation to go to Ottawa, it was the Labour Government. If there was any objection to our going to Ottawa the time to raise it, in the case of Sir Herbert Samuel and Sir Archibald Sinclair, was before the delegation left these shores. But they have been very careful to explain, almost by words of one syllable, that the reason why they did not resign then was that they thought it possible Ottawa would came to nothing, and they would have resigned for no good cause, and the ungodly would have laughed at them. If that is so, given the object of arriving at an agreement to further inter-Imperial trade, and given the opportunity of the Conference at Ottawa, I ask any man of common sense how in the world was that objective to be secured, and that opportunity to be taken advantage of, except by means of the process of bargaining.
For observe. If you rule out bargaining one of two things must happen: either we must have accepted every proposition which was made to us, on every single point, by every single Dominion, or else we must have said to the Dominions: "These are our propositions, take them or leave them." I ask your Lordships how much that would have contributed to Imperial sentiment and solidarity. Observe the inconsistency, too, between this argument and the next one—the argument about crippling our chances at the International Conference. Bargaining with representatives of the Empire is all wrong and very reprehensible, but bargaining with representatives of foreign countries is very right and proper, and the only unfortunate thing is that by any agreement made in the family we should have restricted our opportunities for such bargaining.
Have we not ever since the Act of 1846 was passed—have we not tried to seek opportunity after opportunity of persuading foreign countries that Cobden was right and that they were all wrong. Ever since then we have been trying to put that point of view to foreign countries. Only a few years ago the late Mr. Graham exhausted every resource of
862
a most ingenious and fertile mind in order to try to persuade foreign countries of that fact, and with what result? In all the long tale of years we have never once had any effective prospect of a real lowering of tariff barriers against us. Never until now—now when, for the first time, you have got something to offer. And what is the result? The result is that we hear from the Foreign Secretary that the Argentine and the Scandinavian nations and Iceland, and I do not know how many other countries are queueing up in the corridors of the Foreign Office at the present moment, and trying to start negotiations with us for trade agreements. Does that look as though our powers were lessened, and our force impaired as members of the International Economic Conference? Of course, it is quite true that the field has been restricted, the cultivable area for commercial agreements has been narrowed, but for the first time you have got an efficient fertiliser, for the first time you look like getting a crop.
I come to the domestic argument. We are told we have made a bad bargain. We are told the Dominions have got too much, and we have got too little, and that we have thrown away the substance of foreign trade in order to grasp the shadow of Empire trade. Lord Elibank has already dealt with that, and all I will say is that in this matter time and time alone can really show who is right and who is wrong. But there are certain considerations which I think we might well bear in mind, because they give us a pointer at all events on the probable course of events. The first of these considerations is the fact that since the War, although the trade of the world has grown as a whole by something like 25 per cent., our share of the world trade has been falling. And our share of the world trade has been falling acutely in some of the most important of the foreign markets. In contrast with that the pre-Ottawa tariffs did confer a distinct and tangible advantage upon our trade. They availed to secure that of the total purchases made by the Empire 40 per cent. came to this country, whereas in the case of foreign countries only 14 per cent. of their purchases came from us. Is it not fair to say that with these great and additional preferences—because whatever may be said about them they are undoubtedly a great enlargement

863
upon the pre-Ottawa preferences—is it not a reasonable thing to imagine that our share of the Empire trade will be greatly enhanced? Moreover, by encouraging the marketing here of Dominion produce we are increasing the purchasing power of those who, person for person, are our best customers in the world, and it does not follow by any means that we are lessening the purchases which are to be made from us by foreign countries. On the contrary, from the evidence contained in those corridors of the Foreign Office and in the columns of the foreign Press, it is clear there never has been a moment in our fiscal history when foreign countries have been more anxious to secure themselves in the British market, or have realised more the importance of the British market, and been more ready to enter into reciprocal arrangements with us.
A word on the constitutional argument. I think the constitutional argument is wearing very thin, so thin as to be almost threadbare. I understand that the analogy of the commercial treaties has already been abandoned by its discoverer, Sir Herbert Samuel. We are left, it seems, with this argument, that a long-term agreement which prevents you from increasing the taxes in this country is a good, an excellent, and a constitutional thing—they were bound to say that the moment it was discovered that is exactly what Cobden had done in the 1860 Treaty—but a long-term one which prevents you reducing taxation is novel, unprecedented and wholly, iniquitous. That seems to be a distinction without a difference. The truth of the matter, as any practical business man knows, is that it is impossible to expect trade to expand by virtue of any of these Agreements unless you have a certain security as regards a time basis. No Dominion manufacturer, no British manufacturer is going to embark upon the outlay of fresh capital on the extension of his business in one particular direction unless he has some reasonable amount of time security. I sat in a another place for a number of years and remember, during a fiscal debate, hearing the late Lord Melchett say that he could make money under Free Trade, and he could make money under Protection, but the one thing no human being could do was to make money under a
864
system which oscillated from Free Trade at one moment to Protection at another.
There remains the last argument, the old appeal to prejudice. That argument, the old Free Trade argument, seems to me to be very largely irrelevant to the present state of things, partly because, as has already been said by Lord Elibank, the whole tendency at Ottawa was undoubtedly towards the modification—I will not put it higher than that—of the extremely high protectionist policy which has recently prevailed both in Canada and in Australia. But not only do I say it is irrelevant for that reason, but it is really out of date; it is too late. The United Idolators are out of time. They ought to have overthrown the altars at the moment of the import duties. That was the moment for them to raise their protest, instead of merely saying they did not like the smell of the burnt offerings.
I agree with Lord Beaverbrook. I see my noble friend Lord Daryngton here. He and I sat together on Mr. Chamberlain's platform in Glasgow in 1903, and so I am one of those who have been in the Preference movement from the beginning. I am far from saying that Ottawa contains absolutely all we could have wished. I am rather sorry that something more was not done from the Colonial point of view. I think it is a pity we were not able to do something to encourage sugar and tobacco. I am profoundly sorry that the very important, I think the all-important point about the stabilisation of an inter-Imperial monetary standard had to be shelved. It seems to me that what is happening now in the exchanges goes to show that it is true that unless and until you do arrive at some approach to stability in your monetary standard it is only a very little matter of drops or rises in the exchanges before the whole of your preferences may run off. Therefore I regard the monetary question as one that is vitally connected with the problem of preferential treatment. I am sorry nothing was done about that.
I am sorry, too, that the meat position had to be left where it is. I, like Lord Beaverbrook, am not at all happy about the position of the British farmer, and I confess I do not quite see why he should not have both a duty and a quota. You have it in the case of wheat, and I do

865
not see why you should not have it in the case of meat. However, we are committed for 18 months at all events to the quota, and all I would say about that is that I hope everybody concerned will try to do their best to make the quota work. The truth is that at Ottawa we have set out—and this is the reason why I for one strongly support the action of His Majesty's Government—upon an attempt to revivify and to recreate the whole sentiment of Imperial Preference, and to produce a larger volume of trade in the Empire. The difference really, it seems to me, between those of us who support the Government and those who are opposing it was summed up the other day by Mr. Foot. Mr. Foot, the late Minister of Mines, was present at a resignation meeting in the Queen's Hall, I think it was, on the 12th October. Addressing that assembly, he held up his hands to Heaven and said: "If Ottawa succeeds it will be a tragedy." Our view was that it would be a tragedy if Ottawa were to fail.
LORD HUTCHISON OF MONTROSE: My Lords, I crave your indulgence also as one who addresses your Lordships for the first time. In the very few minutes that I shall take I wish to try to convey one or two thoughts on the Ottawa Agreements. I do not want to repeat arguments and points that have already been made. I think we ought to thank Lord Arnold for putting this Motion down in that it has allowed the noble Lords, Lord Beaverbrook and Lord Selsdon, and others, to give us such interesting speeches. I am one of those who are not afraid to express sentiments in relation to the Empire. I cannot forget the great service that the Dominions rendered to us in the time of great need in 1914. They came forward voluntarily, and freely spent their money in helping us to defeat the common enemy. Therefore I feel that it is wrong to push back sentiment when we are dealing with our own kith and kin beyond the seas.
I cannot think that the Labour Party are really, if I may say so, distinctly honest when they say that they wish that these Agreements had not been made. After all, as Lord Selsdon pointed out, they originated the Conference, and having gone to the Conference who will say that we ought to have come away from that Conference without some
866
agreement? I think we ought to congratulate our delegates. I know personally of the great hardships they underwent, and of the hard work they put in during the negotiations over there. I doubt whether we could get a better team than we sent there to deal with national affairs at Ottawa. One of the great advantages of Ottawa was the personal touch which that team and the members of our trade delegations got with the various leading men of the Empire. I am sure that these Agreements will lay the foundation of future negotiations which will lead us into better trade relations, and more remunerative trade relations as far as this country is concerned.
I regret very much indeed that my friends in the Liberal Party chose to leave the Government over Ottawa. I disagree with them, but I shall say no more. After all, everyone must make up his mind on a situation like this. But I think that having continued in the Government when it was a matter of trade amounting to £350,000,000, which is the amount of trade concerned under the Import Duties Act, they should not have left the ship when a matter of only £38,000,000 was concerned. As far as my friends in the Liberal Party and myself are concerned we are as strongly in support of the Government as we ever were, and I hope we shall continue to see them get successfully over the great difficulties of the country. The constitutional point which Lord Selsdon has dealt with leaves me cold. As for the usefulness of the Agreements as a whole, only a fortnight ago was visiting Germany, and there I met leading people both on the political and the business side. The one point they made was "Now you have got the Ottawa Agreements we must make commercial treaties with you." They pointed out that in the trade between Denmark, Sweden, Germany and ourselves they were all looking forward to making fresh trade agreements. How different is that position from that at Geneva where Mr. Graham fought so hard to try to get some amelioration of the adverse position of our trade with foreign countries!
I am perfectly certain that when the World Economic Conference assembles we shall be in a much stronger position. We shall have the weapons that others have, and I am satisfied that in consequence that Conference will have more

867
lasting results that the last Economic Conference at Geneva. At least we are on the right road. We have got our army together, we have got our own people together, and if the world sees that the British people wherever they are situated are going to act together as a unit where trade is concerned, then I am sure that they will give us most advantageous terms for our trade. I only hope that the very serious position in which our country has been placed is less serious now. I cannot say that as regards trade I see much sign of that. But this I will say, that in a short time Ottawa will not be in the minds of the people. There are more serious things in front of the country today. We have a very troublesome European situation, we have problems in India to which we have to devote our minds, and there is a desperate unemployment situation before us. Surely the very serious nature of the problems which face our country ought to have deterred some of our friends from leaving hold of the great responsibilities which they had undertaken. I for one venture to think that perhaps now they regret that action. At least I know that some of their friends regret that action. I trust and pray that this Government will go steadily ahead with their plan on the lines they have laid down. We always used to say in military circles "Carry on and carry through with your plan" because a plan successfully carried through is better than a better plan not carried through.
LORD REVELSTOKE: My Lords, must ask the House to grant to an inexperienced speaker who addresses it for the first time its customary indulgence. I am doubly embarrassed by the fact that I happen to hold views on the general subject of Protection which most of your Lordships will find antiquated and extreme. I am one of those people who believe tariffs to be entirely responsible for the ills from which the world is now suffering. I see no possibility either of the spread of good will or of recovery in the world's trade as long as the economic warfare, which is at present being carried on by the principal nations of the world, persists. Conversely I see in the free interchange of goods the only avenue towards, and security for, peace. These happen to be the inferences which I have found myself driven to draw from the facts as I have
868
observed them during my life. I have heard nothing this afternoon which has shaken my belief in them. They are personal beliefs and I am aware that they are not widely held. I have thought it my duty to state them thus baldly in order that having heard them your Lordships will no doubt excuse me from dealing in detail with the Ottawa Conference.
I will therefore confine my very few remarks to reflections on the general principles involved. I was privileged to listen to the speech by which the Chancellor of the Exchequer introduced in another place the subject which is now under discussion. In the exordium to that speech the Chancellor touched a note which I had hitherto found lacking in the utterances of statesmen both in Europe and in America. After referring to the inter-dependence of the different commercial units which compose the world the Chancellor pointed to certain ideals which the diverse components of our Empire have in common—ideals of peace, justice and freedom. For a moment, as I understood him, he was basing himself on that conception which lies at the very root of our religion and of our moral code. I mean the conception—at once an ideal and a fact—that humanity is an organism. His appeal was to the consciousness of that conception by which we are able to recognise ourselves as men. No statesman could possibly have chosen a loftier ground, and although it has to be admitted that as his speech proceeded he found himself obliged to narrow that ground so that the term humanity had to be understood as applicable only to the inhabitants of the British Empire, still that one sentence was sufficient to throw a ray of light on that larger, finer and, I venture to say, sounder policy which it is comforting to think has a place at the back of the Chancellor's mind. For, my Lords, it is for such a world-policy that the nations, sick of restrictions, tired of sophistry and self-deception, are waiting. If this country, as seems probable, has disabled itself at the present moment from taking the place which properly belongs to it and giving the example and the clear call to freer trade which the world needs, then the world will have to wait in patience or the lead will have

869
to come from some other quarter. It remains only for me to thank your Lordships for the patience and attention with which you have heard my discursive remarks.
LORD PONSONBY OF SHULBREDE: My Lords, I think that we are indebted to my noble friend Lord Arnold for having put down this Motion and for having allowed a larger field for discussion than would have been possible on the Second Reading of the Bill which wilt come to your Lordships at a later stage. I think the whole Douse will feel that we have had an extremely interesting debate and we have heard three maiden speeches all of which have been very serious and interesting contributions to the discussion. I listened to Lord Beaverbrook with very great attention, because he is the champion of the policy which he has every hope now will reach its fulfilment in toto as time goes on. What struck me most was not the particular argument he used in the masterly survey he made of the details of the Ottawa Agreements but, if I may very respectfully say so, the fundamental fallacy on which the whole of this doctrine of Protection is based. It has been put by my noble friend Lord Revelstoke in very simple and striking language. It was noted by my noble friend Lord Arnold in the concluding remarks of his masterly speech and it is this: trade is treated as warfare, as combat, by noble Lords opposite and by the present Government, and that is a fallacy. Trade is mutual advantage and so long as the idea continues that you are going to get an advantage for the British Empire by putting a high wall round it and regarding it as a unit, in the expression so constantly used ever since the days of Mr. Joseph Chamberlain thirty years ago, "against all the world" so long, I feel perfectly confident, you will not gain the advantages that you expect.
Lord Beaverbrook used that expression "against the world." He looks forward to a Customs Union, to free trade within the Empire, to a high tariff wall round the Empire against foreign countries. He hopes to improve Imperial trade at the expense of foreign trade, and underlying all this is a feeling that any disadvantages to foreign nations will redound to our advantage here at home. That is the fundamental fallacy that was exposed
870
by Mr. Arthur Balfour in 1903 in a sentence which I will ask your Lordships to allow me to read. He said:
"The riches of one nation conduce, believe me, not to the poverty but to the wealth of another nation, and if it could double or treble by the stroke of some fairy wand the wealth of every other nation in the world but own own, depend upon it our nation would greatly profit by the process."
Of course he was perfectly right, and that is the principle, the underlying theory, which is forgotten in this scramble for bargaining and for drawing ourselves to ourselves and regarding the foreigner as somebody against whom we have to combat and whom we have to attack.
Another statesman in those days, a Canadian, saw the fallacy of this idea, too, and I will give one short quotation from a speech of his. Sir Wilfred Laurier said:
"There are Parties who hope to maintain the British Empire upon lines of restricted trade. If the British Empire is to be maintained it can only be on the most absolute freedom, political and commercial. In building up this great Empire, to deviate from the principle of freedom will I be to weaken the ties and the bonds which now bold it together."
I believe that those sentiments are as true now as they were thirty years ago, and I think it deplorable that we, in the second quarter of the twentieth century, surrounded by difficulties and the pressure of circumstances of world origin and also of national origin, should have recourse to a discredited policy that was cast aside eighty years ago. People point the finger of scorn at Free Trade and say that it is a discredited policy; but Protection is still older and still more discredited, and neither the one nor the other is really the kernel of the difficulties by which we are surrounded to-day. I cannot believe that this tinkering with tariffs, this complex tangle which is contained in this Report and this erection of barriers and the setting up of the Empire in opposition to, and in competition instead of in co-operation with, other nations, will consolidate the Commonwealth of British nations, will restore prosperity to the United Kingdom, will reduce unemployment and will pacify and compose the discontents from which our people in the towns and in the country are suffering.
The Government have magnificent publicity. It is able by its methods to de-

871
lude the country in what my noble friend Lord Arnold calls make-believe. The Government spend a good deal of their time receiving one another at Victoria Station. When the Prime Minister was received after the Lausanne Conference I was taken in and I heard that people were preparing to spring on their seats and wave their Order Papers in the House of Commons. I went to hear the Prime Minister's speech and when I heard the reservations and the qualifications and the modifications and the limitations I was not surprised that nobody sprang on his seat or waved an Order Paper. Then the Prime Minister hurried down to Victoria Station to receive Mr. Thomas and Mr. Baldwin. It was a mistake that nobody apparently went to receive the noble and learned Viscount who leads the House, who, I am sure, did most of the work.
VISCOUNT HAILSHAM: None of us arrived at Victoria Station.
LORD PONSONBY OF SHULBREDE: I must apologise for getting the station wrong. I will not try to guess at which of those stations the noble and learned Viscount arrived.
VISCOUNT HAILSHAM: Try Waterloo.
LORD PONSONBY OF SHULBREDE: I am sure the noble and learned Viscount missed a reception and I think he was the one person who ought to have had one. The publicity was such that we knew what he did and what his colleagues did every hour as they went out in the ship. I do not think such publicity has ever been given to any Conference. And so the effect is produced in the country that something great and big has been done. I do not know if many noble Lords have really studied this Report. I find that my knowledge of the English language is very faulty when I study this book. There are an enormous number of words in it which I had never heard before in my life. I do not think it conveyed very much to me. I looked about to see where the great remedies were, and I felt that if we could afford to distribute them broadcast in the constituencies it would bring about the downfall of the present Government very rapidly.
I do not believe that by these devices you are going to cure the ills from which we are suffering. I am sorry to say that
872
I believe that if we go on very much longer with this Government, with the chances and changes that may operate and the loss of a few more Ministers, Lord Beaverbrook's ideal may be reached, and I do not think that that would be for the good of the country. He is a most sincere and ardent advocate of his policy. Nobody who hears him can doubt his sincerity, but I think that would be pressing still further a pernicious line of advance towards the disintegration of the Empire and towards further dispute and controversy between the nations of the world. This is a moment when the nations want to get together, when we do not want to have these disputes, and when we do not want to have this procession to the Foreign Office of people coming to bargain. We do not want old friends like Denmark being attacked in the newspapers of this country, as she has been and is still being. We want to feel that these sordid bargainings can be put aside in a united endeavour, internationally, to remedy the fundamental ills from which the world is suffering. There is one more Conference coming, the World Economic Conference, and let us hope that the ground may be prepared in order that that may be a real Conference with a real result. I must say that my noble friend Lord Arnold was fully justified in putting down this Motion, and I cannot say that any speeches I have heard, so far, have weakened my conviction that this is a wrong policy which is being pursued by the Government.
VISCOUNT HAILSHAM: My Lords, there is this justification at least for the Motion which we have been debating this afternoon, that it has produced three maiden speeches, each one of which would have made the debate, I think, a notable one. I think everyone of us listened with great pleasure to the contributions which were made by each of those three noble Lords. Both Lord Selsdon and Lord Hutchison have won their spurs in another place, and Lord Revelstoke, although he will forgive me for saying I do not agree with his conclusions, yet brought to the matters under debate a sincerity of feeling and high moral standard which can do nothing but elevate the whole tone of the debate.
The Motion seeks to call attention to the Ottawa Conference Agreements, and to the situation created thereby, and the

873
first fact which I think any consideration of the Ottawa Agreements must bring into prominence is the thought of what would have happened if the Ottawa discussions had failed. The Conference at Ottawa was not the proposal of the present Government. It was suggested in 1930 by the Prime Minister of Canada, and his invitation was accepted by the then Socialist Government. Therefore the responsibility for the holding of a Conference rests not at all upon the National Government. But just consider what the effect would have been, not only on the Empire but on the whole world, if the Ottawa Conference had ended in failure—if there had been no agreement. No one who has studied the recent tendencies of the various economic policies of our Dominions could doubt that if, unhappily, we had been unable to reach agreements, they would have been constrained to find agreements elsewhere, and that would have been no difficult task. If it had transpired that all the Dominions of the great British Commonwealth of Nations met together in the endeavour to reach economic agreement and had wholly failed, what chance would there have been for a World Economic Conference, where there was no such tie of sentiment or bond of common interest as that which made the Ottawa Conference a far more promising field than any meeting between foreign peoples? If Ottawa had failed the results on the Empire at large would have been disastrous, and the results on the world would have been to make any hope of improvement impossible. That is the view which is held, not merely by those who took part in the Conference, but by great industrialists and commercial members of other foreign nations, who have publicly stated that that was their view.
But, my Lords, Ottawa did not fail. Ottawa achieved what I believe to have been, in the language of the noble Lord who has just spoken, something big and great. I think he said that that was what was said to have been achieved there. I accept that view, and I claim that something big and great was achieved there, and I hope presently to satisfy your Lordships that that claim is well founded. Lord Arnold began by telling us that it was impossible to devise any equitable preference between this country and the Dominions, and starting as he always does with a false premise, he had no diffi-
874
culty in reaching art incorrect conclusion. Of course if it is impossible to devise an equitable preference between this country and the Dominions it follows that the Ottawa Conference cannot have devised an equitable preference, but unless you assume your premise and your conclusion, if you examine the preference and see whether it is inequitable to the unbiased mind, which is not clouded by the outworn shibboleths of the nineteenth century, then I think the conclusion is a very different one. The noble Lord told us that Ottawa has not lowered tariffs.
LORD ARNOLD: On balance.
VISCOUNT HAILSHAM: It is a remarkable fact that the opposition of Australia to this Agreement is based entirely on the fact that it has lowered tariffs, and that is, it so happens, an opposition by a Labour Party almost as extreme as the one which sits on the Benches opposite. And if you look at any one of the Agreements—I only look at Canada because I do not want to take up too much time—you find that, in fact, an increased preference is given in 217 items, and that in 127 of those items, that is, 58 per cent., it is reached by a reduction of the existing Canadian duty; and out of those 127 no less than one-half will in future be admitted free. What is the good of saying that it is not the lowering of the tariffs on balance?
Then the noble Lord said it has not removed restrictions on trade. The noble Lord is entitled to his opinion, but, after all, there were at Ottawa a certain number of fairly astute business men and a certain number of fairly experienced politicians. I gather that the complaint of the noble Lord is that they were much too astute for the innocent and ignorant British politicians who were sent to deal with them. And the unanimous resolution of the Conference which all those who had taken part in it reached was in these terms:
"That by the lowering or removal of barriers among themselves provided for in these Agreements,—"
these are the Agreements that do not lower tariffs or remove restrictions—
"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."

875
Then it goes on to set forth the aims to be kept in view—the avoidance of uncertainty as to the amount of duty, the reduction of friction and delay to a minimum, the provision of facilities for the expeditious and effective settlement of disputes relating to all matters affecting the application of the Customs Tariff. And your Lordships will remember, if you have been studying the Agreements, that all those matters are dealt with both in the Canadian and the Australian Agreements. What is the good of making an assertion in this House that nothing has been done to remove restrictions when all you can say is: "It is true that the Agreements provide for the removal of restrictions, it is true that everybody at Ottawa was convinced that they had done it, but I" (Lord Arnold) "know that it is impossible to reach an equitable arrangement, and therefore I answer that, whatever is said in the Agreements, either it means nothing or else it cannot be carried out"?
The noble Lord went on to say that these Agreements will lead to retaliation by foreign countries. The exact contrary is what has happened, but I know that the noble Lord will say that if the facts do not fit in with his theories then there must be something wrong with the facts. It is quite true, as the noble Lord, Lord Ponsonby, said, quoting Lord Balfour, that if something happened to double the prosperity of the rest of the world this country would benefit. But it would not be true if that increase of prosperity in the rest of the world was achieved by reducing the prosperity of this country, and that is what is happening under the free imports system. And if it be true that the increase of prosperity in the rest of the world would help the rest of the Empire, may it not also be true that the increase of prosperity in the Empire which these Agreements will bring about may do something to help and benefit the rest of the world?
The noble Lord, Lord Arnold, said to me that in his view—he put it, I think, as a question—on the true construction of the Agreements even the preferences we had got could be wiped out by Canada at will. If the noble Lord looks at Article 9 he will find that that is a mistaken view. Canada can alter the tariffs—this is my own reading of the Agreements, of course I cannot give anything
876
eles—but Canada can only alter them subject to these two conditions: first, she can reduce the duties so long as the margin of preference given to British goods is preserved, and she can increase the duties against everybody except Great Britain. I do not think you want a more effective protection than that. The noble Lord sneers at some of the items in the free list. He picks one particular flower out of the description of florists' stock and says, "Who wants to import azaleas?" and he has a laugh, which the Scotsman always enjoys, at the popularity of the bagpipes. That is really playing with the subject. He ignores the real substantial trades which are benefited and directly affected by the schedules.
If he would look, not at what politicians say, but what trade people declare, he would find, for instance in last week's Trade and Engineering Supplement of The Times:
"Pottery: The scope for pottery manufacturers in Dominion markets is greatly increased through the concessions contained in the Ottawa Agreements, greater preference being granted for ceramic wares. The preferences sought by the British Pottery Manufacturers' Federation have largely been granted.
"Leather: As the result of the Ottawa Agreement, Northampton leather manufacturers are hoping to improve their trade with Canada in lining leathers.…
"Cutlery: The United Kingdom-Canada Agreement has been received with satisfaction in the cutlery trade…Manufacturers are very optimistic regarding future trade with the Dominion, as it is felt that the Agreement provides opportunity for wide extension of business."
I could go on. But what is the good of sneering at azaleas and bagpipes, and leaving out the big substantial things, which the Agreement really does? If you look at the Agreement as a whole I think the noble Lord will find that the opinion of manufacturers at home is very widely different from that which he professes to entertain.
Then the noble Lord said that the 2s. on wheat was bound to increase the price of bread, and he went so far as to say that a colleague of my own, Mr. Hore-Belisha, had admitted that in the House of Commons. I was surprised, and I sent for Mr. Hore-Belisha's speech, and I found that my hon. friend in that House did not say anything of the kind. What he did say was that he did not

877
think that there was any reason for an increase, but he went on to say that he had had a calculation made, assuming that the whole 2s. tax were to fall on all our imports, instead of upon half of them, to see how much that would work out at on the 4-lb. loaf, and the tax would cost even then only so much. And I venture to think that the noble Lord's suppliers of this information must have been a little inaccurate when they gave him this citation as an authority for the statement that Mr. Hore-Belisha said that there would be a farthing increase in the price of the loaf. In fact, as the noble Lord knows, it is expressly provided in the Agreement that if there is any increase in price in this country the Government of this country have a right to take off the 2s. duty altogether, and that is expressly agreed to by the Canadian Government.
The noble Lord then says: "But what is the good of the Agreement to Canada?" The answer is that what the Canadians wanted especially was the certainty of a market. You have got vast supplies of wheat grown in Canada, you have vast supplies grown in the Argentine, you have vast supplies grown in Australia, you have vast supplies grown all over the world—sometimes nearly a year's supply carried over from one year to another. And it is—not in the noble Lord's opinion perhaps, but in the opinion of those who know the trade—a very material advantage to them to be assured that they have the first chance of selling their goods in what is the greatest open market in the world.
The noble Lord asks what is the good of fostering this Empire trade, when there are only 22,000,000 white people in the Dominions and there are 500,000,000 outside; and when only 30 per cent. of our trade goes to the Dominions and 70 per cent. goes to the rest of the world. The noble Lord's own figures are the most conclusive answer to his question. It is a very remarkable fact, assuming his figures, that whereas only 5 per cent. of the white people in the world live in the Dominion's, 30 per cent. of British manufactures go to that 5 per cent., and one reason why such a large proportion is taken by the Empire is this very preference which he is so anxious to decry. When he says there is no room for expansion, I doubt if there are any parts of the world where
878
there are such opportunities for growth and increase of population and increase of demand for manufactured goods as lie in some of our great Dominions. Even under existing conditions they import every year hundreds of millions of pounds' worth of manufactured goods. I do not want to give exact figures because I have not got them, but I think £300,000,000 or £400,000,000 worth of foreign manufactures—or at any rate a very large figure—went there in 1929. Why should we not get some of that? Why should we not so arrange our tariffs that they will take from us a greater proportion of these foreign manufactures which they require, and that we in return shall give them a better opportunity of selling their raw materials in our markets? At any rate we see no reason why that should not be attempted. We do not think that is an anti-foreign policy, although we are sure it is a pro-British policy, and we believe that by the Ottawa Agreements we have gone a long way to achieve that ideal.
Then the noble Lord sneered at what he called the "packed Tariff Boards." I venture to think that was an unfortunate and a very unworthy attack upon the impartiality and the fairness of our Dominion friends and colleagues. Of course, if you start with the assumption that your partners are going to try to cheat you, you cannot make an agreement with them. You had much better not be partners. But if you start with the assumption, as I do, that the Dominions have just as high a standard of honour as we have, that they are as anxious to carry out their pledged word as we are, then I say the establishment of independent Tariff Boards in Canada and Australia is a really satisfactory safeguard to our manufacturers, and that this unworthy sneer at the "packed Tariff Boards" of the Dominions is one which ought never to have been made, and which has absolutely no foundation in fact.
The noble Lord, Lord Marley, added his contribution—apart from a discussion on wage cuts and unemployment and other irrelevancies—by discussing the denunciation of the Treaty with Russia. He said: "Could not we in this country know, could not we judge, when we ought to denounce a Treaty with a foreign power?" We can, and it is because we can and because we have judged that it

879
is desirable to denounce the Treaty that we have given the notice which terminates it in six months time. The noble Lord, with that tenderness for Russia and everything coming from Russia which contrasts so remarkably with his dislike of anything Imperial, said that there was no dumping from Russia. If there be no dumping from Russia then Clause 21 of the Canadian Agreement will never come into operation, because Clause 21 is only designed to stop unfair foreign State competition which is frustrating or destroying the preferences which we have set up, and if in fact the noble Lord is right in his opinion of his friends' methods of trading why then Article 21 can never operate.
But there happen to be people who do not take the same view about Russian trade as the noble Lord does, and it is no answer to say: "Well, Russia only has £9,000,000 worth"—or whatever the figure was—"and America has £120,000,000 worth, and therefore Russia cannot dump." If the noble Lord will forgive my saying so that is a complete non sequitur. It is not the larger quantity which necessarily constitutes dumping. The allegation against Russian trading is that they deliberately use the quantities which they send this country to depress prices at the very moment when otherwise there might be a rise, that they are consciously using their exports to depress our markets and to smash our manufacturers and our importers by under-selling at whatever happens to be the critical moment. I am not saying the accusation is true—the noble Lord must not misunderstand me—but I say that is the case made against them, and you do not meet it by saying that what they sell in the aggregate does not amount to nearly as much as other people have sold.
Then I turn to a very interesting speech which came in support of the Government from my noble friend Lord Beaverbrook, a speech of sincerity and of great ingenuity. He, in very eloquent terms, appealed to the Government to denounce the Congo Basin Treaties in order to create an Imperial Zollverein within which the African territories of the Crown could be included. I do not want to discuss that matter more than to say that I think the noble Lord is making a rather strong assumption when
880
he is quite sure that it is possible to denounce those Congo Basin Treaties. The matter is, at any rate, a very complicated one. I would only like to assure him that while the possibilities of those territories are not being ignored, are indeed the subject of close study, the problem is not quite so simple as he would like to believe.
The noble Lord went on to say that we were doing nothing for agriculture, and that the 2s. on wheat would not do anything to help the price at home. The noble Lord had forgotten that we had already done something for wheat before the Ottawa Agreements came into existence, and what we had done for wheat was to give a guaranteed price which we are advised and believe does give a reasonable margin of profit for the farmer. Then the noble Lord said, "What is the good of these meat restrictions? Why not put on a duty? It is a simpler and more effective method." I will take mutton and lamb, because it is the instance which he mostly dealt with, and take his own figures. He told your Lordships that the effect of the restrictions, as he calculated, would be to make a reduction of some £3,000,000 worth of mutton and lamb from foreign countries, and therefore only give room for something less than that £2,000,000 worth of expansion in the British trade. My noble friend I know will forgive me when I say that I do not think that argument meets what is the real difficulty in regard to the meat situation. The difficulty is not that there is not enough room for expansion, but that owing to the existing over-production prices have been forced down to such a level that the home farmer and the Dominion farmer are unable to live.
What you desire to do and what this Government in the Agreement expresses its desire to do, is to take some steps which would raise the wholesale price of mutton and lamb to such a figure as would enable the efficient producer to have some reasonable assurance of a fair profit. It is not that he wants to be able to sell £2,000,000 worth more mutton and lamb, what he wants is to be able to get £2,000,000 more for the lamb he sells, and that can be far more effectively done, as we think, by regulating supplies than it can be by any system of duties. Further the margin in the cost of production in meat, the noble Lord says, was one-third

881
in the case of the Argentine compared with this country. To equalise that would involve a tremendous duty which might have a very serious effect on the price of meat. What we are trying to do is by regulating the supply to achieve such a balance between supply and demand that there may be a reasonable assurance of a fair profit for the home producer and the Dominion producer, and to avoid that alternation of glut which brings down prices to nothing, which sends the producers into bankruptcy, which sends them out of business, and the resulting scarcity which sends prices up to famine level and makes the consumer pay a sum which he ought never to be expected to find. We want to keep an even balance between supply and demand and so regulate matters that we can assure a reasonable price, and we believe that is more effectively done by the method of a restriction than it can be done by any system of duties. That is the justification for the quota plan, and not any tenderness for this, that or the other member of His Majesty's Government.
The noble Lord went on to say that he did not understand the working of the pig meat quota. He calculated that Canada got fifty times as much as she at present produces and Britain only twice as much as she at present produces. The answer to my noble friend as far as that is concerned is that there is no pig meat quota in the Agreement, and that would account for his not being able quite to understand its working. The truth is that there was set up in February last a Commission which reported only yesterday with regard to the regulation of the production of pig meat in this country. That Report will receive, and indeed is receiving, careful attention from His Majesty's Government, and all that we did at Ottawa was that we arranged with the Dominions that if, as a result of the Report which was then pending, it should be found necessary to establish some system of regulating the production of pig meat, Canada should have an assurance of an unrestricted entry for her own production up to the figure, I think, of 2,500,000 cwt. of bacon. My noble friend, therefore, is quite right in saying that there is not any intelligible arrangement about quotas for pig meat made in the Ottawa Agreements because
882
at that time the Commission's Report had not been received and at that time, as at this time, no decision had been come to as to what plan should be adopted.
I have taken up more time than I intended in dealing with the points which have been raised on one side or the other, but I should like if I may to add a very few words in conclusion. I want to say that in my judgment it is true to say that something big has been achieved at Ottawa. First of all I say that something has been achieved because all of us, I think, must have been conscious since the Statute of Westminster and since the recent developments of successive Imperial Conferences that the material links which bind the Empire together had practically ceased to exist. There was still no doubt—no one attaches more importance to it than I do—the sentimental link. There was the link of common allegiance to His Majesty the King. But we felt, and we still believe that we were right in feeling, that it was desirable in the interests of the Empire as a whole to reinforce that sentimental link with the material bond of a common economic interest, and we believe that we have found that link in the Agreements which we have made. We believe that something great was achieved at Ottawa because for the first time Canada and Australia have accepted in terms the principle that no industry is to be protected in those countries unless it is reasonably assured of success. We have laid down—and it has been accepted by both of them—the principle that in those industries which are protected no higher measure of protection shall be imposed as against United Kingdom products than is necessary to give a reasonable opportunity of fair competition between the United Kingdom manufactures and the domestic manufactures in the Dominions. That is in our view, and in the view of our manufacturers, a very real and substantial advantage and a very great advance on anything that has been achieved before.
We have achieved something because we have laid down for the first time that there can be no increase in duties against this country unless first there is an inquiry and it is found by an independent Tariff Board that the increase is necessary in order to give that equality of competition. We have an assurance that in

883
every inquiry we shall have full right of audience before the Tariff Board. We have an assurance that the report of that Tariff Board shall be laid before Parliament and shall therefore become public property. We have a promise from Canada and Australia, which I for one value at greater worth than it appears the noble Lord, Lord Arnold, attributes to it, that they will remove as soon as possible all those impediments to the freer flow of our trade into their country which have been such an exasperation and trial to many of our manufacturers. The noble Lord at one moment said that they never would do it and the next moment said they were going to do it anyhow and therefore it was not worth anything. He cannot have it both ways. The truth is that very likely Australia would be friendly disposed towards this country and very likely Canada would have been anxious to help us—as both those great Dominions have proved during the last thirty years, when they gave us preferences without any quid pro quo from us—but it is of real value to have it established as one of the cardinal principles of inter-Imperial trade that all these surcharges and primages and dumping duties and the like are to be swept away at the earliest possible moment, and that whenever they are imposed there shall be that certainty of independent assessment which goes so far in lubricating the wheels of trade and assisting our manufactures to find an outlet in Dominion markets.
I could go on with a number of other points, but I think I have said enough—at any rate I hope I have said enough—to satisfy your Lordships that in what we have done at Ottawa, although we have not completed an edifice we have laid foundations which will result in better trade within the Empire, which will bring prosperity to our Empire, which in helping Imperial trade will bring prosperity to the world, and which gives to the whole world a lead towards those sound principles which we have advocated and which Ottawa has done something to implement.
LORD ARNOLD: My Lords, you were good enough to pay very close attention to the long speech with which I opened this discussion, and in the remarks which I have to make now I will be extremely brief. I was followed by the noble Viscount, Lord Elibank, who is an
884

eminent authority on all questions of Preference and I only refer to his speech to say this. He quoted certain words of Mr. Scullin. My reply is to refer to words of Mr. Bruce in which he said broadly—I have not the actual words here—"Ottawa means no material change in the policy of Australia." With regard to the three maiden speeches I need only say that I listened to them with the same interest as everybody else and also to the speech of my noble friend Lord Beaver-brook. His perfervid zeal in this cause is always stimulating, although I profoundly disagree with him.
With regard to the speech of the noble and learned Viscount, Lord Hailsham, and to his remarks about tariffs having been lowered, my reply to the noble and learned Viscount is to quote from the Economist, which is our chief city journal. I said that on balance, looking at the matter as a whole, tariffs have not been lowered. The Economist says:
"But total trade will not be increased, for when such reductions as have been made in the British preference rate are set against the higher duties imposed both by us and by the Dominions, the mass of tariff barriers is without any doubt at all much greater than before."
I will leave it at that.
The noble Viscount says that foreign countries are now crowding here to make arrangements with us and that therefore it is quite out of point to talk about retaliation. I ask him to wait a little. It is very early times yet. I did not say that these things would happen either this week or next week. I asked the noble Viscount certain questions, with one or two of which he has dealt. To most of them I say with great respect, he has not replied, because there is no reply. Our case remains unshaken and unshakable. I was interested in what the noble Viscount said as to the Canadian free list and as to whether there was any guarantee that articles put on the free list would remain there. I will study the article to which he referred; I will look closely at it. But the noble Viscount did not say anything about the three duties about which I asked. I asked whether those duties will still go on. That question did not elicit any reply at all. My information is that those duties still apply and therefore there is really no free list.
Then we come to the question of whether wheat will be increased in price.

885
The noble Viscount seemed to think that having got the House of Commons OFFICIAL REPORT for Monday he had quite replied to me. I also went to the Printed Paper Office to get the House of Commons OFFICIAL REPORT for that day and strange to say I arrived at the precisely opposite conclusion. I thought it confirmed what I said. The statement of the delegation is that you are guaranteed against any rise in price. I have certain passages underlined in pencil in Mr. Hore-Belisha's statement and my contention is that in effect he concedes the point. He said
"if it turn out to be an increase in the cost of bread—and I do not think it follows that there will be an increase…"
He does not guarantee it. That is the point I was intending to make. The noble Viscount did not deal with the question of the duty on foreign wheat raising the price of that wheat.
As regards the cost of the meat quota I have not any reply at all, although I suppose the Government have made some
886
estimate of what it is going to cost. Neither did the Government give any reply about the veto on any conceivable arrangement which is made about equalising the cost of production by the Canadian Tariff Board. The noble Viscount says nothing about that. As a matter of fact the Ottawa Agreements carried the matter no further than it is now. The whole thing is hopelessly unsound and would not come to anything in any case. These questions have not been replied to. We had thought of dividing the House. I was going to ask for a return as to the meat quota. I suppose it is quite useless; the noble Viscount will not give us the information. In those circumstances I do not think it right to detain your Lordships and I ask leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.
The House adjourned at half past seven o'clock.