Lords Sitting of 23 January 1940

Preamble
The House met at half past three of the clock, The LORD CHANCELLOR on the Woolsack.

BUSINESS OF THE HOUSE.
The LORD PRESIDENT of THE COUNCIL (EARL STANHOPE): My Lords, I beg to move that Standing Order No. XXXIX be considered in order to its being suspended for this day's sitting.
Moved, That Standing Order No. XXXIX be considered in order to its being suspended for this day's sitting.—(Earl Stanhope.)
On Question, Motion agreed to, and ordered accordingly.

NATIONAL LOANS BILL.
Order of the Day for the Second Reading read.
Lord TEMPLEMORE: My Lords, you will have in mind that on Wednesday last my right honourable friend the Chancellor of the Exchequer announced that it was proposed to repay on July 1 next the 4½ per cent. Conversion Loan 1940–44. The amount of the loan outstanding is about £350,000,000. The rate of interest is considered high, and the Treasury are taking the first opportunity of repaying it. Incidentally the amount of saving which we reckon will result if the loan is repaid is between £8,000,000 and £9,000,000 a year. At the same time in order to reduce to the minimum the amount of cash to be provided holders have been offered as an alternative to repayment the conversion of their holdings into a new loan at a substantially lower rate of interest. The new loan will carry interest at the rate of 2 per cent. per annum. It will be repaid at par on July 1, 1945, but the Treasury reserve the right to redeem it at par in whole or in part on or after July 1, 1943.
Holders of the 4½ per cent. loan who require repayment in cash will be required to make application to that effect by February 8 next and, following the course adopted on the occasion of
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earlier conversions, it is proposed to regard any holder who has not applied either for repayment or for conversion by February 8, 1940, as having accepted the offer to convert his holding. In addition to the new loan, the object of such a provision is that the Treasury may know definitely by a certain date the amount of cash that they will have to provide for repayments on July 1. Naturally the Government would only propose such a course if they were satisfied that all possible steps had been taken to ensure that the terms of the loan operation were brought to the attention of the holders of the loan. In this case notices have been sent direct to all registered and inscribed holders, and the Government's offer has received the fullest publicity in the Press. I think the House may be assured that the interests of the holders have thus been safeguarded.
A provision that all holders who do not apply for repayment by February 8, 1940, shall be deemed to have accepted the offer of conversion has, therefore, been embodied in rules which the Treasury have made in connection with this operation under the National Loans Act, 1939. But some doubts have been expressed in certain quarters whether it is effectively covered by those powers and the present Bill has been introduced in order to remove such doubts. The Bill has only one operative clause, divided into two subsections. Under Section 2 (2) of the National Loans Act, 1939, the Treasury have power to make rules with respect to the exchange of securities, and such rules deal for the most part with the manner in which, and the persons by whom, applications for exchange are to be made in various classes of cases.
The first subsection of Clause 1 of the present Bill provides that in connection with any arrangement for the exchange of securities the power of the Treasury to make such rules shall include, and shall be deemed always to have included, power to make provision, first, for requiring holders of old securities who desire repayment to make an application in accordance with the rules, and, secondly, for securing that if no such application is made within such period as may be prescribed by the rules the holder shall be deemed to have accepted the offer of exchange. At the same time the opportunity has been taken to remove doubt about the power of the Treasury to

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prescribe in the rules the persons by whom applications are to be made in cases where the holder of the old securities has died, and in certain other special cases. This is provided for in subsection (2) of Clause 1. Clause 2 is merely formal. My Lords, the Bill is of a technical character and restricted in scope, but it deals with an important step in the present loan operations. It is, I think, gratifying to note that the proposals of My right honourable friend have received a very sympathetic welcome in another place and in the country, and I hope that your Lordships will approve of the Bill and give it a Second Reading so that it may become law in a very short time from now. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Templemore)
On Question, Bill read 2a: Committee negatived.
Then Standing Order No. XXXIX having been suspended, Bill read 3a, and passed.

PRICES, WAGES AND EXPORTS.
3.36 p.m.
VISCOUNT ELIBANK VISCOUNT ELIBANK had given Notice that he would draw attention to the rise in the cost of raw materials and commodities and in wages which has taken place since the beginning of the war and ask His Majesty's Government whether they have any steps in contemplation for dealing with a situation which may seriously affect our export trade; and move for Papers.
The noble Viscount: My Lords, it is a little over two months since I raised in your Lordships' House the question of the vital importance of the export trade to this country, and since that time the Government, strongly supported by the Press and by public opinion, have taken steps to make things easier and to promote that trade. But there are still certain matters dealt with through the Departments in regard to which red tape and bureaucracy still exist. I am glad to say, however, that there is an amelioration in the conditions over which the Government have direct control. When I say "direct control" I exclude from that to some extent such control, for instance, as that of the Wool Control Board.
Since November another factor has arisen which was not so evident at that
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time, but which bids fair to play havoc with our export trade and also, one might say, with our whole economic existence. I refer especially in this respect, as I do in my Motion, to the rise in the cost of materials, the rise in the cost of commodities, and in the level of wages since the war began. What happened in this respect during and after the last war is within the knowledge of practically all members of your Lordships' House. The cost of all the three items which I have mentioned—materials, commodities and wages—rose out of all bounds until, owing to the resulting excessive cost of production and sale, owing also to the sudden deflationary reversal of the gold standard, our exports dwindled so dangerously that great unemployment arose, and when attempts were made to bring wages back to an economic level there was a grave national crisis which led ultimately to the so-called General Strike of 1926. That was a state of things which we do not wish to see repeated, and which we can far less afford to see repeated in these days, when even more terrible burdens of debt, expenditure and taxation are daily being piled up against the community, as they are in this present war, whilst at the same time we still have the large debts of the last war hardly liquidated.
The fact is that to-day everyone, whether reputedly rich or reputedly poor, is gradually being levelled up or levelled down to everyone else's conditions to such an extent that even the most ardent Socialist will very soon be able to claim that a genuine state of Socialism has arisen in his lifetime. But it is not my intention to-day to enter into a dissertation on Socialism or even to criticise the rise in the cost of materials, commodities and wages which, after all, are the obvious outcome of any state of war such as has arisen. My object, on the other hand, is to draw attention to the situation as it exists and to ask His Majesty's Government whether anything can be done to prevent the continuation of the vicious circle—or the vicious spiral, as some people prefer to call it—which has started and can only end in disaster unless it is curtailed, controlled and directed. To understand what has actually been happening, I have obtained certain statistics from the Board of Trade, and I wish here to acknowledge the promptness and

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courtesy with which the Department supplied those statistics. I have obtained those statistics in order to illustrate how, early in the war, this particular thing developed. For instance, between August and November cereals of all kinds had already risen by 47 per cent., meat, fish and eggs by 19 per cent. and other foodstuffs by 21 per cent.
Lord STRABOLGI: Would the noble Viscount allow me to ask whether those are wholesale or retail prices?
VISCOUNT ELIBANK: Those are the prices given to me by the Board of Trade as the general rise and I cannot say whether they are wholesale or retail. As to raw materials, cotton and wool had increased by November by as much as 31 per cent. and 24 per cent. respectively. Take wool which, as I have just stated, had risen by November by 24 per cent. I am credibly informed that by March 1 wool with be 70 per cent. dearer than it was before the war. The effect of this on the textile manufacturing trade will be practically to kill it as there will be very little market for woollen cloths or clothing at the higher prices resulting from the higher cost of the raw material. The South Scotland textile manufacturing trade, which is a high-class trade and has always been largely an export trade, will be very nearly put out of action altogether by these very high prices. I hope the Government will seriously reconsider the wool prices now fixed for March I and that it will be possible to lower them and make them more economic.
There are certain other points connected with the Wool Control which I should have liked to bring in detail to the attention of your Lordships, but they are not cognate to the general issues of my Motion. Therefore I will merely content myself by making a strong appeal to the Government that early and special investigation be made into the personnel of the Wool Control and into the number of the staff employed, which has been officially declared, in reply to a question by one of your Lordships published in the OFFICIAL REPORT, to be 909—not the mystical number 999 which the Ministry of Information possessed, but 909, which is at any rate, apart from the 583 of the Timber Control, some twelve to fifteen times larger than any other Control in the
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country. I suggest that there is reason for investigation into that. I suggest also that there is reason for investigation into the operation of this Wool Control. It is being freely and openly alleged in Scotland and in parts of England—I believe even in Yorkshire—that this Control is very much in the interest of Bradford where it has its headquarters, and that Scotland and other interests in England are getting what is called in colloquial parlance a raw deal.
Now I return to the main theme of my Motion. I have already referred to the increase in the prices of foodstuffs, of cotton and of wool, but in order to present a full picture of the export trade I shall have to add iron, steel, chemicals, oils and coal, all of which had risen by November by over 9 per cent. Nonferrous metals like copper, zinc, tin and lead had also risen, not quite so much, but by over 5 per cent. Jute had risen by something like 200 to 300 per cent. Then we come to wages. This is a most important item, as your Lordships will no doubt agree, because wages form about 60 to 80 per cent. usually of the value of any manufactured article. Wages I find have risen on an average by 12½ per cent. and are still rising, like the prices of some of the raw materials and commodities. Two countries, Japan and Italy, are our principal competitors in the export trade to-day. Those two countries have three distinct advantages over us. First of all, they have the advantage of lower currencies; secondly, they have the advantage of lower wages; thirdly, they have the advantage of a lower standard of living. In fact it might be said that, except for the United States of America and the Scandinavian countries, those three advantages are possessed by practically all our competitors in the export trade. Those advantages are advantages with which it is very difficult to compete if our prices are rising out of proportion to economic considerations.
This shows how important it is to maintain in this country, in war time at any rate, as rigorous a control as possible over prices and wages. Unless we do that the vicious circle will go on turning. Higher wages will succeed higher prices, and these will be followed by lower exports, until at last, as in 1914ߝ19 and thereafter, we reach that national crisis which led to a national disaster at that time. The nation

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as a whole must take its share in the solution of this problem. As the Prime Minister said in his admirable speech recently at the Mansion House:
"All must take their share in the sacrifices ahead of us if we are to achieve the victory which is essential to our lives and liberties."
I venture to-day to make certain suggestions. I think it was the noble Viscount, Lord Swinton, who in his most lucid and admirable speech in your Lordships' House last week, said that he never made a speech in wartime unless he had some constructive suggestion to make. To-day I desire to make some suggestions. It will be for your Lordships or the Government to consider whether they are constructive or not. In any case I agree with the noble Viscount, Lord Swinton, that in these days speeches ought not to be made with the mere object of criticism, but should have something constructive about them.
My belief is that the last war proved that it is not satisfactory to control most of the elements of our economic structure and leave others, equally important, uncontrolled. You must control all of them if you are to obtain the best results. For instance, there is a direct control in this country over the income of the individual through graduated Income Tax and Super-tax; there is a direct control over the profits of undertakings through the Excess Profits Tax; there is a direct control over the prices of raw materials and commodities through the Control Boards; there is a direct control over manufactured articles through the Price Regulation Boards; there is a direct control over food prices through the Ministry of Food; and there is a direct control over agricultural prices through the Ministry of Agriculture. Yet wages, the most important element in output, are not controlled, except here and there in an indirect way. I venture to suggest that if we are to have satisfactory results, wages must be controlled as well as all these other matters I have mentioned, and all these, including wages, should be treated in due relation to the part they play in the whole economic structure. Unfortunately, at present the Trade Union Council do not seem to realise the immense importance of the thesis which I have attempted to outline here this afternoon. In a recent report the General Council have insisted that wage negotiations are and must remain the function of the individual trade
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unions. I have just had a note put into my hand in reply to the noble Lord, Lord Strabolgi, saying that the prices sent to me by the Board of Trade were wholesale.
Lord STRABOLGI: Thank you very much.
VISCOUNT ELIBANK: The Trade Union Council advocate, as a remedy against the vicious spiral, a stricter control of prices and profits. I do not take exception to that suggestion, but I do consider that the Trade Union Council have not yet realised or appreciated the true inwardness of their own position in the whole scheme of production as applied to war conditions and to war measures, and that a stricter control of prices and profits by itself, without a strict control of wages, will not effect what is wanted. In this country very few people are against the war that we are waging, and the Trade Union Council and its members have been and are amongst the most earnest and patriotic supporters of it. Therefore it does not seem much to ask them to bear their fair share of economic sacrifice, of the common burden of the war, even though it be by way of control of wages with the accompanying lowering of wage-scale in relation to the cost of living.
I have asked myself how this wage control could best and most fairly be effected. I venture to suggest that a reasonable way would be to set up district wages regulation boards on the same principle as the district prices regulation boards. These hoards should, of course, be established in consultation with the Trade Union Council and the principal employers and federations, and they should have control over all wages except certain wages of the heavy basic trades to which I will refer directly. Over these district wages regulation boards, with which for the purposes of this argument I should couple the district prices regulation boards, I should superimpose a central prices and wages regulation board whose special function would be to review and correlate prices and wages in special relationship to our export trade and to our economic existence as a whole. This central control board should have upon it outstanding members of Government, business, labour and economic circles. I admit that some of the basic heavy trades of the country which already have, national negotiating machinery on wages

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would have to deal direct with the central board, but in the last resort I think it is inevitable that those wages, like the others, should be subject to the final control of the central board and should be correlated in their turn with the whole economic structure. It is true that there are certain trade boards which have been in active operation in this country for a good many years and have done very excellent work. Those trade boards are more like negotiating boards, and I see no reason why they should not be incorporated into the machinery which I have outlined here this afternoon and be very useful adjuncts to it.
These are my proposals, and I submit that they are worthy of very serious consideration by the Government. They add force, moreover, to the suggestion which was made last week in your Lordships' House and which was very fully debated and supported by a number of members of your Lordships' House: that there should be added to the War Cabinet a Minister for Economic Co-ordination and that this central board and these matters to which I have referred should come to that Minister to be dealt with in the final resort. After all, these questions are of very great importance, and it really requires someone with super-authority, who is also concerned with the other measures connected with our trade, to deal with them and supervise them. The measures I propose are admittedly drastic, but only by drastic measures can we put forth our greatest effort and hope to secure victory. If by those measures we lay the basis not only for winning the war but for winning the peace, then indeed we can claim that any sacrifices we may make will be doubly blessed and rewarded. I beg to move.
4.1 p.m.
Lord STRABOLGI: My Lords, I am speaking on behalf of the Opposition on the very important Motion put forward by the noble Viscount. Before I came to your Lordships' House I fortified myself by consulting my noble friend behind me (Lord Snell), as I always do, and also by consulting some of the leading trade union representatives in another place, because obviously this Motion does affect the trade unions and the Trades Union Congress.
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I should like to say at once that I think that your Lordships are indebted to the noble Viscount for ventilating this vitally important question. With much of his speech we of course agree, and especially with the last part, where he advocated the presence of a Minister for Economics in the War Cabinet. I have been saying this now for some months and my noble friends and my friends in another place have been echoing it also. We are very glad to count the noble Viscount as a recruit to that idea. I understand that the noble Lord, Lord Stamp, is also going to intervene in the debate. We are very privileged to hear him. I hope he will realise that what I have just said is no kind of personal reflection on his important post in the Government or on the advice which he gives. We think there should be a Minister for Economics in the War Cabinet with full powers. I am sorry to keep on saying this, but we intend to hammer at it until the Government either resign on the subject or give way to us.
I should like further to inform the noble Viscount that his proposal for a district wages board to prevent wages rising would never be accepted by the Trade Union Congress or by the individual trade unions. If you really want trouble with labour, go forward with that proposal! I propose in a very few words to give the Labour attitude, and I do not think that the noble Viscount will really complain about it. We have trade boards already, but they, of course, prevent wages dropping below a certain amount. Until the Government can control prices and ensure that there shall be no great increase in the cost of living, however, the trade unions must, in the interests of the lower-paid workers, insist on wages rising also. I am afraid that that is axiomatic and cannot be departed from. The Labour Party and the trade unions also agree entirely that we do not wish to see this so-called vicious spiral, with prices being chased by wages and with the unorganised workers, pensioners, and others living on fixed incomes, suffering. We do not want that at all, and we will do anything reasonable to avoid that catastrophic occurrence. As my noble friend Lord Snell points out, however, we do not find much anxiety on the other side of the House to prevent the vicious spiral

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going downwards and to prevent a drop in wages in bad times.
What we do advocate is a much more stringent control of the prices of goods. The noble Viscount gave us some figures from the Board of Trade with regard to the rise in wholesale prices. My information with regard to the rise in the cost of living—and Lord Stamp or Lord Templemore will correct this, if necessary—is that it has gone up by about 18 per cent.
VISCOUNT ELIBANK: My figures are up to November.
Lord STRABOLGI: I am speaking of the cost of living as a whole, including the cost of rent, travel and everything else.
VISCOUNT ELIBANK: To-day?
Lord STRABOLGI: Yes. The noble Viscount says that wages on the average have increased only 12 per cent., so that so far wages lag behind the increase in prices. If prices are not controlled the lower-paid workers, the unorganised workers, are bound to suffer. The more powerfully organised trade unions are fully aware of this. The miners, for example, who are always in a very powerful bargaining position, are to-day saying that if the Government cannot prevent the rise in the cost of living there should be a sliding scale for all wages. I do not think that it is possible to get away from that. They are thinking in this matter not only of the colliers but of the un-organised wage earners, the old age pensioners, disabled ex-Service men and others; and I am sure that the noble Viscount would be the last to desire to see those people suffer by a rise in the cost of living.
When we speak of sacrifices, I hope that we are all prepared to make sacrifices in this great struggle in which we are engaged, but there are certain people who really cannot make sacrifices; their standard of living is so low, they are so close to the poverty line, or even below it, that they have no margin to sacrifice. On the other hand, there are workers who in wartime, because there is a scarcity of their particular type of labour—skilled workers and so on—can no doubt command a higher wage. The Labour Party support the Government's invitation to those people to invest in voluntary loans to the
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Government for the conduct of the war, but we would ask for this further safeguard. If workers who, not always through bargaining but often simply through the scarcity of their labour, find that their economic position has improved during the war, subscribe to the Government loans, then they say: "Do not let the fact that we own these Government Bonds and so on be used as a lever after the war to depress our wages; and if we fall out of employment"—this is very important—"do not let the means test or public assistance officials penalise us because we have been patriotic in the war and done our best to invest anything that we could save from our increased wages in Government scrip." I think that that is reasonable, and that is the demand of the Labour Party.
With regard to the wider question of the rise in prices and the effect on the export trade, we think that the Government are very much to be criticised for not pegging sterling higher. We think that the drop in the dollar value of the pound from 4.68 to 4.03 was too sharp, and that by an earlier introduction of exchange restrictions this could have been avoided. We might have had to subsidise exports if we pegged the pound at a higher level; on the other hand we are having to pay more for our imports as things are, and that accounts for some of the rises in wholesale prices cited by the noble Viscount. We also say that the Government are not doing nearly enough to control this rise in prices. The increase in jute prices quoted by the noble Viscount is really indefensible. Furthermore, with regard to another element in the rise in prices—namely, shipping freights—we consider that all merchant shipping should have been requisitioned much earlier than it was actually requisitioned, so as to control freights. With regard to internal prices, we think that a great deal more could be done—it is being done to-day in France by our French Allies—to peg prices and to prevent an undoubted and too rapid a rise in the cost of living. If the French can do it, I do not see why we should not. If you do these things I do not think you will find organised labour unreasonable in the matter of asking for increased wages.
There are two other comments that I would venture to make. The first is this: with the increase of retail and wholesale prices profits do not always decrease. In

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fact, well organised monopoly industries are able to increase, and do increase, their prices in such a way that their profits are maintained. That being the case, it is not easy for the noble Viscount to go to organised labour and ask them to make sacrifices, when their own employers manage to keep their profits at a high level. As the noble Lord, Lord Stamp, is to speak, and as he is a very eminent banker, and I see other eminent bankers present in this House this afternoon, I should like to say that I notice that the banks are keeping up their profits in spite of the country's difficulties. That being the case, you really cannot go to the lower-paid wage-earners—agricultural labourers, for example—and ask them to make sacrifices.
VISCOUNT ELIBANK: May I interrupt to say one word? If they keep up their profits they are controlled and have to pay Excess Profits Tax, and they also pay Income Tax, which is graduated; so that if their profits are the same they are in fact less, if I may put it in that way.
Lord MANCROFT: I am not a banker, but why does the noble Lord, Lord Strabolgi, say that the profits of the banks have gone up or kept up?
Lord STRABOLGI: I did not say they had gone up; I said they had been maintained.
Lord MANCROFT: They are not being maintained; they have gone down. What is more, bank dividends have not been appreciably increased for the last fifteen or twenty years. If any increased profits have been made they have been used for covering the losses which banks have made in trying to provide credit to help industry in the post-war difficult times. But it is not correct to imply that the banks, for the bank shareholders, have made money out of the country's difficulties.
Lord STRABOLGI: I notice that their shares always stand at a very high level, and they all seem very prosperous.
Lord MANCROFT: That does not justify the noble Lord in implying that the banks have made increased divisible profits.
Lord STRABOLGI: I said they were maintained. At any rate, the banks are
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asking for a higher Treasury bill rate today in order to maintain their profits. However, what the noble Viscount opposite said is perfectly true—there is the graduated Income-tax and so on; but the working man has to pay higher taxes in the same way. He is very heavily taxed on his little luxuries such as beer, tobacco and entertainments and on his tea and sugar. And, after all, there is always this argument, that a working man with a family of young children has a very hard time in making ends meet, and he has not a big margin for sacrifices and savings. When you talk of equality of sacrifice, do remember the lot of the lower-paid wage earners.
The other comment I venture to make is this. I entirely endorse, as all your Lordships will, what the noble Viscount said about the necessity of helping export trade in every way we can. I also endorse his remark that we should try to make constructive suggestions. I am going to throw out a suggestion that I know is very controversial indeed, but I think it is worth while examining. As we must help the export trade, would it be altogether impracticable to give some exemption in taxation to the profits made from what I may call abnormal exports? If you do that you will get the most energetic section of the entrepreneurs seeking round for a market for exports. They will know that their profits will be taxed at a lower rate and they will then seek to export to foreign markets, instead of contenting themselves, as most of them do to-day, with perfectly safe Government contracts on war work and so on. That is the suggestion I throw out. I do not know whether it will appeal to the noble Lord opposite, Lord Mancroft, and other orthodox economists, but it is a form of subsidy for export and I think it is worth examining. We shall await the Government's reply on the very important matters raised by the noble Viscount with great interest.
4.15 p.m.
EARL STANHOPE: My Lords, it might be convenient if the debate were adjourned at this point in order to take the Royal Commission. I understand it will be a suitable moment for another place.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The Royal Assent was given to the following Bill:
National Loans.
House adjourned during pleasure.
House resumed.

PRICES, WAGES AND EXPORTS.
Debate resumed on the Motion for Papers made by Viscount Elibank.
4.30 p.m.
Lord STAMP: My Lords, we arc, I am sure, all very grateful to the noble Viscount for bringing this particular question to our notice at this critical moment in the way he has done. If we are to examine the position of our exports with a view to basing policy upon that examination, it is very necessary that we should not take the figures too much in detail and also that we should not take them too much as totals. It is essential that we should examine the figures in order to eliminate those factors in our interpretation—particularly in the recent figures—which are, so to speak, beyond our control. We must disentangle the inevitable from the figures and see which portion of the movement of prices in general is due to outside causes and which is due to domestic causes. There has been a general world rise which affects all competitive exports as well as our own. The Bank of England index number for primary products for the four months shows a rise in this country of 28.4 per cent., but there is a rise of 19.5 per cent. in the United States—a difference of nine points against us. If we take the industrial materials, leaving out metals and food, our rise is 35.6 per cent. and the American rise is 31.1—a difference of only 4.5 per cent.
I suppose that at the time of the outbreak of war, apart from the threat of war, the whole world outlook was for a rise in prices and increased production. Indeed, those of us who make it our business to study American outlook and prognostications will remember that for quite a long time Americans have been regarding the 1929 level of production as a kind of golden age to which they would return. There has been a kind of implied assumption that if they could once
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achieve a production index equal to 1929, then all the things that went with that index in 1929 would also come back—all the other economic factors of employment and prosperity. To their astonishment and dismay, now that they have reached the 1929 index of production, they find they have all kinds of disabilities—huge unemployment and the like—that did not exist in 1929. So far from the restoration of that level having brought back all its then attendant circumstances, many of them are painfully lacking. One reason, of course, is that technological improvements in production have been either very great in the interval or their fruition from the previous period has been great, so that we find that there, as here, a unit of production is possible with much less labour. But I say that the whole outlook at that particular time was for a world rise. Superimposed on that there are special causes—deficient wheat crops in several countries, which, as your Lordships know, exert a basic dynamic influence, and also the cutting off of supplies of many materials from the belligerent countries.
But in Britain we have not only to bear the brunt of the world rise in prices in our imports, but we have special causes also at work. The first has been referred to. It is due to the altered value of sterling which, by itself, would tend to make our imports some 14 per cent. higher in sterling price. Then we have the real additional costs of shipping. I am not referring to the money costs, but to the actual physical costs that come about because of much longer voyages and much more difficult handling; and we have the real cost of insurance due to shipping losses. Whether the actual money costs have risen beyond the legitimate or justified real costs, is not my point at the moment. I am trying to show that there are certain real, inescapable costs of production entering into the imports that come into this country which affect this question of price rise. The really remarkable feature is not that we are nine points ahead of America in this rise, but that the relative difference, having regard to these special domestic factors I have mentioned, is not very much greater than that.
Now at home, when the goods are here, we have much heavier industrial costs, real costs, due to the difficult working, the longer time taken to achieve par

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ticular results, especially in transport, the black-out conditions, the expenses attendant upon air-raid precautions, and the like. All these are additional, real industrial costs. So far as we have gone prices must rise with the external conditions. Prices ought not to be reduced below the essential replacement costs, or business must stop. The whole system jams. A price rise of that description has a doubly salutary effect. It is the only way in which the supply will continue to flow in and it is the only way in which we can get, apart from a special rationing system, what reduced consumption we desire, unless indeed we are prepared to subsidise particular prices for particular purposes. We can achieve all social needs in that direct way, but I imagine that none of your Lordships would suppose that we can do anything more than apply that system over a very limited range and to a limited depth and with a limited scope. Any general policy of subsidising from the Treasury this rise in prices to which I have referred would, of course, be nothing better than trying to lift ourselves by our own boot strings.
So far as this rise is general and exists also in competitive markets, obviously we are not likely to be at much of a disadvantage in our export trade, and our export chances may not greatly suffer. So far as it is due to the domestic costs sterling depreciation works in both ways. It makes our imports very expensive, but it does enable us to counterbalance that disadvantage in selling our exports. The purely domestic causes of increased prices remain however as a definite drawback that our competitors do not suffer. So far as we have gone in analysing prices like these there is no appearance of the vicious spiral or general inflation, nor will there be merely because prices rise when supplies are short generally, and even profiteering, however glaring in particular instances, is small in its relation to these aggregate figures. I know that these general figures cover wide individual differences and each of these individual cases has to be examined upon its merits. Each individual case like jute or cotton has its own particular problem. Some are capable of being tackled direct and these are the natural results of short supplies. The rise in cotton of 67 per cent. since August, and of jute to the
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astronomical figures that have been referred to, are due to special causes.
Steel, however, presents a rather remarkable paradoxical situation at the moment, for although nearly all the raw materials of the industry—many of them of course imported—show a substantial rise, the British prices of steel products such as plates, bars and joists, are lower than, we will say, those of Belgium or France or the United States at home, and they are very much lower than the prices from those countries abroad. Thus plates in Belgium are £13 15s., in the United States £12 16s. and here £10 13s. The export prices in Belgium are over £18, in the United States £15, in Great Britain £11 2s., so that in that field, at any rate from the point of view of prices, our export is not in any immediate jeopardy. But, we have to ask, how long is this situation likely to last? It is impossible to say. Quite clearly the only obstacle to a very fine rise of export trade in this field is the difficulty of allocating a sufficient supply of raw materials and perhaps, in some cases, of factory capacity for the purpose. One of the reasons, I suppose, why prices have been kept as low as they have is that the spread of our overheads in that industry over the full capacity is one of the very important factors that assist us at the present moment.
The prospects to-day of our export trade in general are, of course, very different in their character from those at the beginning of the last war. At that time all the chief manufacturing countries, except the United States, were involved in the war. The United States were really the only alternative supply for export markets, and even there they were not so fully equipped as they are to-day and most' of their capacity was devoted to the home market. Our large-scale purchases in the United States in the last war absorbed their unused capacity and created boom conditions. With very high costs and soaring domestic prices, they were not well equipped to be competitors in the export market. Their competition then was nothing like so keen as it could be today. We had, I suppose, as large a range of exports as our supplies permitted and price competition did not bother us a great deal. Now, as a result' of world development since that time, we start off with a much smaller share of world export trade. We have now many competitors with a

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large amount of unused capacity. Our export trade in the course of time must inevitably become more vulnerable to price competition. That is a particular reason for watching the development of costs.
We ought to be most willing to allow increases for world costs and inescapable real costs, and also for the sterling costs, but we ought to be very unwilling to go beyond these. Any such costs going beyond these are those types of wage adjustments in relation to prices which are attempts to achieve the impossible. I should be the last to want to depress the standard of life of large numbers of our people, and whatever we may do to meet this difficult situation that particular factor stands in the forefront of policy. But after all, our average standard of life in this country and in any country, is settled not by these money factors at all, by adjustments of wages or adjustments of prices or one with the other; it is settled by the total quantity of actual goods that we can get into the country. Beyond that you cannot divide. However nearly complete our fleet may be and may remain, if the voyages of the fleet take two or three times as long, if our foreign exchange resources are limited, as indeed they are, and if priority has to be given over a wide field of materials to those used for war purposes that do not enter into this standard, then the quantity of goods in the country cannot possibly be as great as it was, and no amount of jugglery or manipulating prices and wages together, with the best will in the world, alters that quantity or can increase it, or therefore can improve the real standard. Any monetary attempt to provide more, or to suggest that there is more in the country, must lead to the spiral of inflation.
Lord STRABOLGI: May I ask the noble Lord if he would elucidate something? He appears to be basing, this argument on the amount of goods we can bring into the country, but he is not apparently dealing with the amount we can produce in the country and he has not explained the one and one-third million unemployed.
Lord STAMP: I have not developed my argument to that point. I was just trying to get your Lordships' attention directed to the real facts behind monetary expressions either in prices or wages; and the total amount of goods we can get
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into the country, the imported goods, are a very large factor in the total standard of life. The production of the country is very largely devoted, and will be more and more devoted, to war purposes, and that in itself does not tend to make a larger contribution to make up that imported production, to make a larger contribution towards the goods that enter into the standard of life. Kipling was no economist, but in the Gods of the Copybook Headings he puts the matter extremely well. He said:
"But though we had plenty of money, there was nothing our money could buy."
The standard of life of the country, by and large, depends upon the extent to which we can get imports freely corning in and even that must mean, having regard to the shipping position and the exchange position, a severe restriction of the total consumption of the country. As I say, the protection of the standard of the class of the people who have lowest monetary resources must be our first charge.
If the noble Lord appeals, as he did, to certain examples of French action along certain lines, I would ask him whether he is prepared to recommend action along the whole line that has been taken, which would mean a more realistic recognition of what I am saying. I would like to quote from one very striking speech made quite recently by the French Minister of Finance, M. Paul Reynaud. He said:
"The fatal and inescapable law is that since the State is destroying masses of riches, the country is condemned, not only to an increased effort, but also to a considerably lower consumption."
Speaking of inflation, he added:
"This method of financing the war, like all methods, would inflict upon the country a severe reduction in the standard of living. But how? By soaring prices, by the un-regulated rise in the cost of living. It is a method, but the most unjust method; it is the one which inflicts the most unequal sacrifices."
The problem which has been put to us is that of the export trade, and I am only dealing with the problem of the standard of living in so far as attempts are made to deal with it on lines that are inimical to the export trade.
The noble Lord made a very interesting suggestion of subsidising exports

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by means of tax discrimination. I can assure him that amongst the very numerous methods of encouraging exports that is one which I shall study with very great care. As an old Revenue man, I am naturally very suspicious of all tax discrimination, but war-time considerations make it necessary to look into second and third-rate expedients and I shall give most careful thought to that suggestion. The factor that is extremely important in studying the export trade is not so much the rise in imports, by themselves, or the rise in exports, by themselves, but the difference between them. Although we are congratulating ourselves upon some recovery in export trade, it is by no means adequate to the task before us. The difference between the two shows a worsening of 41 per cent. over the corresponding period. That is a very substantial figure, and not a figure that can be indefinitely met out of our resources of foreign exchange and out of our gold holdings or even our securities. The utmost pressure has to be exercised throughout upon this particular factor.
If we called in the economic doctor to pronounce on the national health, I judge that this is the first pulse, so to speak, that he would feel. This is not an academic matter and it is not a matter only for the Treasury. Everyone in Government circles must be export-balance conscious, because an export-balance consciousness is the most important factor. Exports which are too costly in exchange for imports are hardly worth having. It is no good looking merely at export figures without considering whether, taking the imports they involve into account, we are left with an adequate exchange balance for our trouble. I should say that everyone in Government and trade circles must be export-balance conscious, because it touches all our activities. Every time we are studying a cost, or anything that will affect costs, we must have that consciousness behind us, and no amount of orders from any centre or any individual can achieve anything like as much as personal consciousness in each particular field of action, each department and each trade. Perhaps I am in a position to say that our particular organisation, by being, so to speak, personally conscious in the Ministerial Committee, the Departmental
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Committee of all the Departments affected, meeting at frequent intervals, affords a very excellent means—the best possible means that I know—for keeping these aspects prominent in everyone's mind, so that they are not just regarded as one department's business and a particular question of theirs, but are constantly before them from all angles. I can say that they have, to my knowledge, been actively considered by the Ministers from the first month of the system.
So I would ask your Lordships, in considering the problem raised, to distinguish between the two types of costs and to focus particularly in our policy upon the second type. This habit of analysing the price rises and dividing them into the essentials, which are almost virtuous in their aspects, helping the machine to run smoothly and contracting demand as the only way of adjusting rises to the quantity of supply, and into the vicious aspects, those which ultimately jam the machine altogether, should be available as a piece of mental furniture for all of us, to judge what is actually happening.
If I may sum up, I think the export situation requires the most careful consideration on all hands, on the part of Ministers, Departments and commerce generally. We must not be deceived by the very welcome improvement which has recently taken place, but we must set our faces sternly against all fallacious and pleasant-looking remedies which ultimately enter into export costs and deprive us of one of the very means by which the nation can live and win the war. I have been invited into other fields, about which I should be very glad to speak on other occasions but which are not involved here, such as banking policy and the lag in employment; but sufficient for the day is the pleasure thereof!
4.54 P.m.
LORD BARNEY: My Lords, after the constructive speech of my noble friend who moved and the very illuminating speech of Lord Stamp to which we have just listened, you will realise that anyone else may be disinclined to stand long between the House and the noble Lord who will reply for the Government. I feel that to say anything more would be redundant. The fact, however, that Lord Stamp himself came down and made this contribution to the debate will add very much to the attention which will be

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focused on it. I am sure your Lordships will agree with me that we have all had ample reward for coming to this debate in hearing this statement from him. Your Lordships will be well aware that he holds the important position of Chairman of the Committee which co-ordinates all these economic matters in conjunction with the Committee presided over by the Chancellor of the Exchequer. The suggestion has been made on behalf of the Government that this body is adequate to meet the demand which has been expressed with such emphasis to-day by Lord Strabolgi, and which followed appeals from many others of your Lordships, especially the renewed appeal of my noble friend who moved to-day.
I will not attempt, therefore, to deal with any particular point after a speech such as we have heard from Lord Stamp, which will merit, as his speeches always do, very careful studying in the OFFICIAL REPORT. I will confine myself to two points, the former a particular and the latter a general one. The former arises out of the reference which my noble friend the mover of the Motion made to the wholesale price rises of various commodities. He quoted the Board of Trade figures, which are available to your Lordships in the issue of the Board of Trade Journal for January 11. He also referred to particular commodities, and mentioned two—which indeed Lord Stamp also mentioned—which are not controlled in this country. But Lord Elibank also mentioned one commodity which is controlled—namely, wool—and drew attention to the fact that under control the prices have been advanced 7o per cent.
VISCOUNT ELIBANK: May I interrupt my noble friend? I did not say that they had been advanced by 7o per cent.; I said that they were going to be advanced up to 70 per cent. from March 1.
Lord BARNBY: I take notice of the noble Viscount's correction, which no doubt explains why the figure quoted in the article in the Economist for January 20, which may doubtless have been brought to your Lordships' notice, is only 17 per cent. This discrepancy of course accounts for the difference which my noble friend points out between an announced price against which forward contracts have been made, and the price which is actually in existence at the present moment. But that does not alter
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the point that I want to make: that in this particular commodity, of course, the British Government are in a dominant position. The argument was put forward that a high price was demanded by Australia and New Zealand to the extent of imperilling the sale of manufactures from it, and, once bought, the price of wool had been advanced to a figure which is causing dismay to wool-growers and is likely to cause a diminution of total consumption through the stimulation of synthetics. But that brings me to the particular point I wish to make: that it is dangerous to consider the price of any particular commodity as an isolated factor. In forming a view of the economic state of any particular commodity the price of that commodity must be considered in ratio to the general price index. That may well change, in which case a variation in any particular price would be justified.
Lord Stamp reminded us that in this country prices in general had risen 28 per cent., whereas in the United States of America they had risen only 19 per cent. We are naturally anxious with regard to the question of exports, and to whatever extent prices for raw materials may rise it must make it more difficult for our exporters to find a market. It is to the influence of the United States of America as a whole that I want in general to refer. My noble friend Lord Strabolgi complained that sterling had been pegged too low. He will not forget that in 1925, when we returned to gold, the price was fixed so high that it virtually crucified all the export industries. Manufacturers will not readily agree with him that it is too low now, particularly for those industries which work with raw material produced within the Empire, or at ally rate within the sterling area. The general effect of the price level on exports must depend very largely on what takes place in the United States of America. In all the rises and falls of the past twenty years, or even the past thirty years, the greatest influence originated in the United States. Whatever be our position, as inevitable winners of this war, towards other countries in Europe, there is little doubt that we shall be, with other countries in Europe, poorer as against the United States of America; all the greater, therefore, will be the force of their dominance in their influence on world prices.

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That brings me to the point that I particularly wish to make—namely, that in all these considerations the closest watch should be kept on tendencies in the United States. We are indebted to Lord Stamp for having referred to that at considerable length. He referred to what has been the effect of the United States of America on the world price level during the course of the last war. Fortunately under present conditions in the United States, and as a result of the foresight of the War Resources Administration, evidently the Administration are determined that the influences of external purchases shall be less this time than they were before, and the War Resources Administrator is empowered, if and when his full authority comes into play, to make sure that there will be nothing like the runaway market that there was last time. I was very glad to read in The Times this morning that even in advance of that Mr. Morgenthau had announced that he was, at the invitation of the President, using his influence to co-ordinate existing Allied purchases and the purchases arranged through the Inter-Allied Committee, of which we welcome M. Monet as Chairman. Those purchases, therefore, are being co-ordinated now, in advance of the possible circumstances of war, by bringing into relation the American Government's purchases of preparedness requirements and the Allied requirements from this side. That is an indication of the collaboration of the United States Administration with us in our hope that this vicious spiral will not go too fast arid that we shall not require the application of methods which were necessary last time.
I would conclude by saying that with regard to the internal situation the Price-Regulation Board is empowered to impose a supervision of prices as they affect the consumer, but there is certainly perplexity in many minds from the fact that in various controls raw materials have been rigidly controlled in price while the manufactured products of those industries have been left free, so that the sky is the limit to the advances in those products, except in cases where limitations are imposed by the Price-Regulation Board. The fact that internal prices have such an important bearing on exports as a whole encourages our hope that in the examination of this question
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and in preparing any reply to be made by the noble Lord who is speaking for the Government, or in preparing such future statements as may be made by the Government, use will be made of the existing Committees which are announced as helping in the work of control, such as the body over which Lord Stamp presides.
5.7 P.m.
Lord TEMPLEMORE: My Lords, I am sure that the Government are very grateful to my noble friend Viscount Elibank for introducing this question to-day. We have had a very interesting debate, which has included an exceedingly interesting contribution from my noble friend Lord Stamp, who holds such an important position under the Administration at the present moment. My noble friend who introduced the subject brought back to our minds very vividly the state of affairs which existed after the last war, and which is very present to our minds in this House and in another place, and also to the minds of all people who are of our sort of age and standing in the country—how a rise in prices and a rise in wages and vast unemployment led eventually to the General Strike of 1926. He said, and very rightly, that we ought to do all in our power to prevent that sort of thing happening again. I can assure the noble Viscount and your Lordships that this is very present to the mind of His Majesty's Government.
The Government have this question of the rise in prices and wages continually in mind. It was referred to by my right honourable friend the Chancellor of the Exchequer the other day, and it was also referred to at some length on January 9 by the Prime Minister, in the notable speech which he then made, in which he spoke about it being a mistake to tie up wages to the cost of living and said that it could do no good to anyone, because it could only give an impetus to the vicious spiral of the alternate rising of prices and of wages. That was a thing, he said, which all of us would wish to avoid. I think at the present moment it may be said that fortunately from some points of view, but unfortunately from others, the depreciation of the pound sterling has done a good deal to absorb the increased cost of various materials, so far as regards our exports in the terms of the currency of our overseas purchasers

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not on a sterling basis. For some time before the war the pound sterling stood in the neighbourhood of 4.65 dollars in the United States of America. About a, week before the outbreak of war it began to depreciate, and to-day it stands at 4.02 dollars, representing a depreciation of 14 per cent. My noble friend opposite, Lord Strabolgi, found fault with His Majesty's Government for not pegging sterling higher, and I have to thank him for giving me notice that he intended to do so. I should have been hard put to it to answer him, because I am afraid that I do not understand very much about the question; but I am glad to find that he was most ably answered by my noble friend Lord Barnby in the speech which he made just now, and I think that I need say no more about it.
Another feature about our export trade at the present time which has proved very helpful is the very considerably increased demand from many markets overseas for United Kingdom products, partly, no doubt, because Germany's overseas trade, except in Scandinavia, is very much impeded, to say the least, by our blockade measures, both inward and outward, and partly because a number of European manufacturers are also faced by an increase of prices for imported raw materials and for the transport of their manufactures. In considering the incidence of increased costs upon our export trade we should therefore bear in mind that, so long as the market remains a seller's, rather than a buyer's market, it will be capable bearing some increase in price. In so far as our competitors are also subject to increased costs, the danger of our overseas customers turning to other sources of supply is lessened. Nevertheless His Majesty's Government recognise that, while it is important to earn as much foreign exchange by our exports as possible we must avoid losing export trade through excessive prices. The problem of keeping prices down is in fact receiving their careful and continuous attention.
May I refer to the efforts of the Ministry of Supply in that direction? These efforts, through the Ministry of Supply's control of raw materials since the beginning of the war, have been to ensure so far as possible that supplies are available at the lowest practicable price for all essential uses. It was a deliberate decision of the Government
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that in attempting these trading operations the Ministry of Supply should so fix its selling prices as to cover all those elements of overhead which a prudent trader would endeavour to cover. That is to say, no effort has been made to subsidise out of the proceeds of taxation consuming industries in order to countervail additional charges arising from increased freights, insurance and other charges. Similar considerations have been taken into account in determining maximum prices for goods subject to control but not actually bought and sold by the State. On the other hand the objective has also been to ensure that the prices charged are not unnecessarily inflated, and in addition great attention has been paid to measures designed to prevent prices from rising too speedily.
As regards measures designed in general to secure essential supplies at the lowest price possible, it was early foreseen in the preparation of plans for the control of raw materials in war-time that, unless drastic and exceptional steps were taken, the sudden increase in demand on certain war materials and other dislocating factors would be bound to produce rapid and uncontrollable rises in price. Various expedients have been adopted in accordance with the previously considered plans and one example that may be mentioned is long-term contracts for bulk purchases. These have been mainly in the metal group and with Empire producers or Governments. I am glad to say that the Governments concerned and the producers have shown the utmost willingness to co-operate in contracts of this kind. The advantage of such long-term contracts is that on the one hand they have allowed the producers to go ahead with production plans with an assured market, while this country, in return for offering that security, is able to obtain supplies at very reasonable prices, in some cases at only a little over pre-war levels. In many cases, thanks to the ready co-operation of Empire Governments, tentative arrangements had been reached many months before the war which enabled contracts to be implemented immediately war broke out. In some cases at least the prices secured as a result of these contracts are extremely favourable, as is shown by the fact that the Ministry of Supply are issuing the materials concerned at prices below world prices.

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Another method has been that of centralised purchase by the Ministry of Supply. The method of bulk contracts can, of course, only be adopted in cases such as the metals where large scale production is the rule, or where, as in the case of wool, a Dominion Government is in a position to make a long-term agreement. Here I should like to answer some remarks made by my noble friend about the personnel of the Wool Control. He referred to two Controls, the Wool Control and the Timber Control.
VISCOUNT ELIBANK: I referred only in passing to the Timber Control, but I referred very definitely to the Wool Control.
Lord TEMPLEMORE: Exactly. Well, I have not really been able to find out anything about the Timber Control, but as regards the Wool Control I am informed that the Control which was set up in Bradford is under the control of a leading man in the industry who has been president of its main body, the Wool Textile Delegation, for many years. Leading members of his staff were chosen in consultation with him and with heads of the principal associations in the woollen industry. The noble Viscount rather found fault, I think, with the fact that there were 909 people on this Control. I at once asked for particulars of that, and the noble Viscount is quite correct in the figure he gave. But the matter has been carefully investigated by my right honourable friend the Minister of Supply, and I am told that even this large number is considered to be only adequate to the very large volume of work which there is to do.
In other cases, mainly in the textile group and in timber, large-scale purchases on Government account have been made, but are necessarily in the nature of day-to-day purchases. In such instances the elimination of competitive buying between merchants and the concentration of purchasing power in one hand have enabled supplies to he secured at a reasonable price level and have prevented large fluctuations. The more important materials dealt with in this way are timber, hemp and flax. In yet other cases close co-operation between the traders concerned, acting in conjunction with the Ministry of Supply, has enabled them to undertake bulk purchase of their essential requirements without direct Government
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intervention. For instance, I would mention that, through the medium of the British Iron and Steel Corporation, steel makers in the United Kingdom are jointly purchasing abroad their requirements of iron ore, of scrap, of steel ingots and semi-finished steel. Again, in the case of hides and skins the trade themselves have set up an imported hides pool. In this case the extreme variety of hides, and the fact that they come from all countries of the world, make it essential to maintain established channels of trade. The pool works in the closest collaboration with the Leather Controller and ensures supplies, particularly for military purposes, at reasonable prices. In yet other cases, for example, cement and calcium carbide, it has been found sufficient to enter into voluntary arrangements with the trades concerned, as a result of which all the members of the trade bind themselves to keeping prices at reasonable levels.
I have dealt so far with what I might describe as the negative side of the Ministry of Supply's arrangements—steps taken to secure that where the prices are raised they are only raised to the minimum extent necessary. It would not be right to omit the more positive aspect of the matter—steps taken to secure that supplies of raw materials are, in fact, available. I have already emphasized that in general the export market at the moment is a seller's market. The difficulty of manufacturing countries is not so much to sell their goods as to ensure that they have goods to sell. The various steps that have been taken to ensure adequate supplies—namely, bulk purchases, centralised or co-operative purchase, coupled with the elaborate machinery that exists to ensure that supplies are devoted to essential purposes including the export trade—are probably a better contribution towards the success of the campaign to maintain the export trade than any devices such as subsidies, which would be bound to bring in their trend counter-subsidies and countervailing duties in other countries.
I would like to add one observation in regard to food prices, which form a very important part of the cost of living. The Ministry of Food are, of course, exercising careful control over food prices. Since the rise in the price of food which took place in the early months of the war there has been little further increase, and it is

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I think interesting to note that there was no increase in the retail food index between the 1st day of December and the first day of this month.
I come now to the very important question of the rise in wages, which the noble Viscount did not touch on at great length.
VISCOUNT ELIBANK: I said a great deal about that.
Lord TEMPLEMORE: I beg the noble Lord's pardon. Yes, he did. It is quite true that since the beginning of the war claims for increases in wages have been made in most industries and that in many of them some increase has been granted. In other cases, the claims are still under negotiation. I am told that a very general figure for the amount of the increases granted is 3s. or 4s. a week for adult men. A great deal is heard in these days of the dangers of a situation in which prices and wages are constantly chasing each other. We have referred to that already. The noble Viscount mentioned it, and I have referred to it in the first part of my speech—namely, what we call the "vicious spiral." The possibility of such a situation arising is bound to occur at a time like this, for there is always a mutual reaction between the level of prices and the level of wages. Your Lordships are aware of the statements made on this subject by the Prime Minister and the Chancellor of the Exchequer. The inflationary position that would be created if wages are continually chasing prices, and thus giving a further impetus to the rise in prices, would be of no help to anyone, least of all to the workers. This consideration has, I am sure, been very Much in the minds of the leaders both of the employers and of the workers in the negotiations which have led to some increase of wages.
My noble friend Lord Elibank put forward a very interesting suggestion about wages. He wants to set up what I may describe as Government control of wages. Wages are largely controlled by various boards set up for that purpose, but they are not Government controlled, and I understand the noble Viscount would like to see some measure of Government control. But that suggestion was immediately frowned on by the noble Lord opposite (Lord Strabolgi), who said that Labour would have nothing to do with it. I cannot go further than that to-day.
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No doubt that suggestion of the noble Viscount, like anything else put forward by him or any other member of your Lordships' House, will be considered, but I do not know what the Government may decide.
One thing from which we may derive a certain amount of satisfaction is that the wage claims and, in some cases, wage increases have all been dealt with without any serious industrial disturbance or ill feeling between the two sides of the industry. This is due, no doubt, mainly to the real desire of both sides, employers and workers, to do nothing which might hinder the successful prosecution of the war. That is in everybody's mind as essential. At the same time that could not have been brought about unless there had been in existence in practically all industries adequate machinery for the voluntary negotiation of wages and working conditions in an ordered manner—a machinery which has been able to take full account of all the varying circumstances and needs of the industries concerned under war conditions. This subject is one which is under discussion between the Government and the leaders of employers' and workers' organisations, and I can assure my noble friend that the dangers of soaring prices and wages are not being overlooked.
The Government have taken a very great step towards controlling these matters through the piece of legislation which I had the honour to take through this House before Christmas—namely, the Prices of Goods Bill. Anyone who thought that that legislation was not going to be operated when it became an Act must have been rather pleased to find that already there have been several prosecutions of people charged with profiteering and suitable penalties have been imposed. I have tried to deal with the points raised by my noble friend, and I can only assure him—it is a rather well-worn phrase, I am afraid, but some of these things are no less true because they are often repeated—that these very important matters are continually in the minds of the Ministers concerned and of the members of the War Cabinet.
5.25 p.m.
Lord GAINFORD: My Lords, there is one point, which I raised some time ago, and which I wish to emphasize again. It is the importance of the export trade being

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developed. I am quite sure that the late President of the Board of Trade, Mr. Oliver Stanley, and his successor, Sir Andrew Duncan, realise how important the export trade of this country is and how vital it is to the carrying on of the war. The Federation of British Industries have made representation to the Government that industry as a whole believes that whilst the three Services may be all right, being represented in the Cabinet, yet it is all important that there should be an individual who will be able to adjust the various claims of the three Services and also look after the interests of the export trade. It is vital to this country that the maintenance of the three Services should be guaranteed, and it can only be guaranteed, if we are going to continue this war for many months, by an increase in our export trade. That means that currency will be attended to, that instead of the three Services drawing on the Government for supplies, maintenance will be looked after in the first instance so that the three Services may be properly maintained during the course of the war. This is a point I hope the Government will continue to consider, and I trust they may see their way to do something in that direction.
5.27 p.m.
EARL STANHOPE: My Lords, I can assure the noble Lord opposite that the Government realise the importance of exports, as Lord Stamp told your Lordships. It is far more a question of every Department of the Government coming into this matter rather than one or two. I see letters and articles in the Press suggesting that some great individual is to be found to co-ordinate the whole matter and make everything come under one head. But they do not realise the enormous implications of the whole export policy. My noble friend could have extended his speech a great deal further by showing how control over our products come into the matter. There is, for example, the question of wool. The amount of wool allocated for export purposes, when it is made up into cloth and so forth, is a very much higher proportion than will be allocated to manufacturers who are dealing only with the home market. I believe the figure was going to be 100 per cent. for export, but that was not found sufficient, and I
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believe the figure has been put substantially higher and that will mean that the allocation for the home market will be further reduced. Then there is the whole question of shipping to bring in raw products. The Board of Trade comes into it in some directions, and the Ministry of Supply in other directions.
I do not care who the individual is, but I do not think any one person could take the whole of these matters into his hands and get quick and satisfactory solutions. Therefore, what the Government have done is that they have set up this Committee in which all the respective Departments are represented either by their Ministers or, in the case of Lord Stamp's Committee, by their permanent officials. They come and put their points, and the Committee decide there and then what shall be done. If you have one individual, such as the Minister for the Co-ordination of Defence, instead of having to deal with three Departments as in his case, this co-ordinating for export trade and for trade generally would extend, I suppose, to about seven Departments. The consequence of that would be very considerable delay. I can assure my noble friend that the Government feel that, in acting as they are, they are adopting a way which really deals quicker with the matter by means of a Committee than by having a coordinator who would have to go to each Department one after the other. I am not qualified to go into the matter at great length, because I have not been briefed by the various Departments concerned, but from what I have seen of the proceedings of that Committee I can say that much to your Lordships. When your Lordships realise what that Committee are doing you may perhaps feel that the Government have been wise in not being pressed in the direction so many desire of having a co-ordinator of export trade only.
5.32 p.m.
VISCOUNT ELIBANK: My Lords, should like in a few words to ask the noble Earl the Leader of the House who represents this Committee in the War Cabinet?
EARL STANHOPE: The Chancellor of the Exchequer.
VISCOUNT ELIBANK: The noble Earl has told us that all this is going on outside

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the War Cabinet, but who is the individual who does it in the War Cabinet?
EARL STANHOPE: The Chancellor of the Exchequer. I do not think my noble friend realises how the War Cabinet works. There are nine Ministers who are members of it. When any question arises which, we will say, affects the Board of Trade, the President of the Board of Trade is then summoned to join the War Cabinet, and he is present at all discussions on that particular subject. In regard to the proceedings of the Committee generally the Chairman is the Chancellor of the Exchequer, because the Treasury must come in in regard to questions of exchange: for instance, as to where we buy things, whether we buy in the difficult markets of North America or in some of the other markets where exchange is not quite so hard to come by. Therefore the Chancellor of the Exchequer has to come in all through. The Chancellor of the Exchequer represents the Committee normally in the Cabinet, but when any special question comes up the Chancellor of the Exchequer is reinforced by other members of his own Committee as and when required for that particular purpose in discussion at that date.
VISCOUNT ELIBANK: That is a fair explanation, but I cannot help feeling that the Chancellor of the Exchequer has so much to do otherwise in his own Department in connection with the provision of finance and of expenditure that he can hardly have time to take a really detailed interest in these matters of trade, which in any case are effected by four or five different Departments. I do not propose to go on with this question to-day, but I do not feel very satisfied that the Chancellor of the Exchequer, as an individual, is able to carry this burden, nor do I feel that from the country's point of view it is fair to the Chancellor of the Exchequer to ask him to carry this burden.
Having said that, and I say it without any prejudice of any kind, I wish to thank the noble Lord for the reply which he has made this afternoon to this debate, and for the courteous manner in which he dealt with it, as he always deals with debates of this kind. I also wish to thank the noble Lords who have taken part in this debate, and who have added very
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greatly to its interest and its importance. The noble Lord, Lord Strabolgi, as he usually does, made some very important observations and suggestions and one of these may, as the noble Lord, Lord Stamp, stated, have very useful results. That is the suggestion for meeting to some extent the point which I have raised this afternoon of the granting of preferences on exports leaving this country. I congratulate the noble Lord on making that suggestion, and I congratulate him also, as an old and staunch Free Trader, on using his ideas quite apart from any former principles which he may have held in order to further the war. I also want to thank the noble Lord for the way in which, on behalf of the Labour Party, he replied to the various suggestions I made, especially with regard to wages. I expected to hear from him this afternoon that there was no possibility of accepting the proposals which I ventured to put forward in order to meet this suggestion of correlating—I want that understood—prices to wages and wages to prices so far as our export trade and our ordinary economic existence are concerned. But, having raised this question, I feel that at least further consideration will be given to it by the Trades Union Council and, I hope, by the Government.
I was a little disappointed by the reply of my noble friend on the question of wages. I did not feel, from the way he expressed it, that the Government were taking that matter in connection with our export trade as seriously as they had taken the question of prices and costs of materials and commodities. I venture to suggest in the light of past experience that it is very important indeed. I suggest to the Trades Union Council, if we are to avert disaster in the future and win the peace, that that side of the question must be taken as seriously as the other side. In that connection I would like to say to the noble Lord opposite that I did not mention in my speech the question of equality of sacrifice. I realise as well as he does, as the noble Lord, Lord Stamp, said, that there are classes in the community, receiving very small pensions and so on, who may have to be dealt with on a different basis to the higher wage-earners in the country. I have no illusions on that score. I would be the last to suggest that we were going to lower the standard of living of some people who have already a very low

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standard. I take this opportunity to put that point right in case any observations of the noble Lord might lead to a misapprehension as to my point of view.
The noble Lord, Lord Templemore, gave me a circularised reply on the question of wool. As I stated, wool from the 1st of March was to be advanced by 70 per cent. I cast no reflection upon the head of the Wool Control, who is a man of great position in the wool industry, nor do I cast any reflection upon the other members of the Wool Control Board, but I do not accept my noble friend's suggestion that that Board as constituted represents upon it all the interests that it ought to represent. Scottish interests are not properly represented. I venture to say there are interests in England also that are not properly represented, and from that point of view the Board ought to receive full re-examination.
Dealing with wool distribution, the noble Lord said that wool was being quite fairly distributed. That is not a fact as far as Scotland is concerned. I can speak from the point of view of the south of Scotland where I live and where I have lived all my life. In that part of Scotland, which contains all the tweed mills, manufacturers have been accustomed to use the best types of wool produced in the hill districts of that part of the country. Those wools are being cut off from them and if they are cut off from them it will kill their very fine export trade, an export trade which has formed a very large proportion of their total trade. They Cannot enter the lower ranges of that trade for the simple reason that they do not possess the machinery to enable them to do so.
I venture once again, in spite of what my noble friend has said in reply, to urge very strongly that a full and proper investigation be made into the Wool Control from the point of view which I have just mentioned and also from the point of view of the staff which it employs—909. That staff spends its time in demanding that forms be filled up by manufacturers who have not the staff to do it. This Wool Control requires very careful investigation, and unless that investigation is made and something is done to allay the strong feelings which exist in Scotland and in England, there will be very un-
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happy results because this matter is not going to be left alone. I hope your Lordships will pardon me for having spent so much time on the subject of wool, but I felt that it was very necessary to go a little further into the subject. I once again thank my noble friend for his reply and I urge the Government to remember the matter of wages because that is very important having regard to the proportion they bear in the cost of the manufactured article to the price of raw material. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.