§ THE MINISTER OF RECONSTRUCTION (LORD WOOLTON) rose to move to resolve, That this House takes note of Command Paper No. 6527 on Employment Policy and welcomes the declaration of His Majesty's Government accepting as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war. The noble Lord said: My Lords, I beg to move the Resolution which stands in my name. Ignorance and want are the two giant evils of which any sensitive society should be afraid, and the prevention of want is not only better but cheaper than its cure. On the last occasion when I occupied your time I outlined the Government's proposals for dealing with ignorance in young people by encouraging learning and the cultivation of knowledge over a wide field. To-day I commend to your Lordships the conclusions at which my colleagues and I have unanimously arrived for dealing with the prevention of want. The White Paper which I submit to you is called Employment Policy. With difficulty I resist the temptation to digress from that Paper and to discuss the abstruse question of why people work. To many of us work is a pleasurable occupation. We are very fortunate. The idea used to prevail that Governments should make work in order to deal with the unemployed. I think that that idea was both amateur and ill-conceived; there is no virtue in working unless it produces something of personal or communal value, and work should be a means of satisfying wants.650
The proposals in this Paper are designed to maintain such a general control over the volume of employment in the country as will secure that the labour of the country is engaged in meeting the needs of our society. The control which is envisaged aims at maintaining a high level of consumption, and by that means maintaining a high level of employment. The document opens with a statement of Government policy which I am glad to say has been highly commended:
The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war.
That is a confession of faith on the part of this Government. The document goes on to say:
A country will not suffer from mass unemployment so long as the total demand for its goods and services is maintained at a high level.
I think that the question before us is whether a Government can by any acceptable means of administration meet these responsibilities and secure these ends. I have to say that we think that it is possible, and we have outlined our proposals on this basis.
§ They involve three major considerations: firstly, our trading relations with other countries; secondly, the management of our affairs in the period when we are moving from full war employment or partial employment devoted to war purposes to the period of peace; and thirdly—and this is the more important aspect of the problem—the conditions in which in normal times the Government can act to maintain employment at any required level. I must necessarily leave out many things in dealing with this Paper, and I will not occupy your Lordships any longer than I can help. First on the domestic side. This period after the war—or between the two wars if by chance one of our enemies retires from the conflict before the other—is going to involve a great deal of tolerance on all sides and, I think, a great deal of administrative skill. It will present problems, but always the problems will be of a temporary nature. Of course we shall be passing out of the difficulties, apart from technical difficulties, of moving over from one form of production to another. There will, I surmise, during this period be a greater demand for labour than the supply. It will be a period in which we 651 shall have to guide our commercial and industrial policy, both at home and abroad, with great care, with great foresight, and I think with great clarity. Capital and labour must flow to those industries that can perform the greatest national service. We shall have to rebuild not only our homes but our industries, and during this period we shall have to buy a great deal of our food overseas.
§ We therefore suggest that, in this transition period, it will be necessary to ask the country to exercise a continuance of restraint—to maintain a control over the use of such raw materials that are in short supply: to continue rationing until supply is equated to demand: to discourage the production of non-essential goods for home consumption, however profitable they may be: and generally to seek—during this period when money will be very plentiful in consumers' hands, when human spirits will be buoyant with relief, when, without a doubt, there will be a great demand for freedom—to continue for a necessary while those Controls which will prevent violent rises in prices, and a disorderly rush to some end that will serve personal, rather than national, ends. Meanwhile, as indicated in paragraph 14 of the Paper, the Government will be seeking to give administrative effect to an orderly unwinding of the Controls it has imposed for the purposes of war. I do not anticipate from an employment point of view any great difficulty in this period, provided that throughout there is clear expression of the Government's intention, so that people know what it is that we are trying to do, and full co-operation with all the parties, both industrialists and trade unionists, concerned with these readjustments.
§ Now I turn to another part of the Paper. It is very natural when we are living under circumstances of war that we should look back with longing to the conditions of peace and say we wish we could return there. But I do not think it is true that we want universally to go back to pre-war conditions; that might be simple, but it might be disastrous. During these years we have advanced a generation in experience and in productive technique and we must benefit by that experience. But the 652 thing to which I would particularly like to draw your Lordships' attention is the outstanding adaptability that the workers of this country have shown during the war. They have learnt new trades very quickly, they have achieved great skill, and nowhere has this been more pronounced than in those areas which before the war suffered largely from unemployment.
§ Some of your Lordships, I hope, will support me with your practical experience in saying that in these old "distressed areas," where before the war there was perpetual unemployment for so many, you found during the war that there were good and willing workers available to whom you could take new industry with some confidence. I think these people had a very hard time before the war, but the war has proved that they are capable of rendering much greater service to the community than they were allowed to do before the war. They do not want to be on the "dole": they want to work; and they have proved, beyond any sort of doubt during this war, that they can work willingly and with great efficiency. I ask your Lordships' consideration of our proposals to secure, in these places, a balanced distribution of industry. I go, if I may, a stage further, and appeal to the industrialists of this country to recognize that, in the interests of human justice and social stability, this problem has to be solved, and I hope they will join with the Government whole-heartedly in seeking and in finding a solution of it.
And now I come to the long-term aspect of this problem. You will find it in Chapters IV and V of the White Paper. Total goods and services must be prevented from falling to a level where general unemployment appears, and in paragraph 41 is this significant statement:
The Government are prepared to accept in future the responsibility for taking action at the earliest stage to arrest a threatened slump.
One of my friends, with much political experience, asked me if this was a White Paper or an election address. I have read election addresses that have been worse, and I have read election addresses on the subject of finding employment which have been less definite. Our proposals involve first of all the Government taking upon themselves the obligation of knowledge. They will maintain an economic staff to advise them on the way
that trade and employment is going. We shall have a Man-power Budget as well as a Money Budget. We shall have to ask employers of labour, even in the good days of peace, to fill in another form to give us information so that the Government of the day can form some estimate of what the man-power situation is. I have heard some doubts expressed by manufacturers as to whether this is not going into their secrets. No, my Lords. They will be able to trust the Government not to hand on this information to their competitors. Their competitors might indeed be much more anxious to know what their income was than what their idea was as to future employment of labour. We have been filling in Income Tax forms for years, and they are regarded quite rightly as entirely confidential documents. I can assure industrialists that they need have no fear that in giving this sort of information they are likely to disclose anything to their competitors.
§ With this information the Government will be able to encourage or discourage public and private investment in capital expenditure. In the past, it is true, that public and private investment in capital expenditure has tended to run on parallel lines. The time when industrialists thought it was unwise to go in for further enterprise was the same, very often, as the time when the local councils, in a spirit of impending disaster ahead, thought also that it would be unwise to incur expenditure. If trade was bad, public economy demanded a reduction in expenditure, and so, with private capitalists reducing their expenditure and public authorities reducing their expenditure, the position became aggravated and trade went worse. Trade depends largely on the consumption of goods, and in the future the Government will ask public authorities to increase their public works when trade begins to show a sign of falling off. I must be very brief here about a subject which very properly could take a long time. Public works in the past have met with much criticism as a method of dealing with unemployment. But why? Because public authorities began to think about what public works they were to undertake when unemployment was already grave. Our suggestion is that they should be ready to come in at the very beginning in order to check the slump at the start. That is the purpose of the five years' programme of 654 public works indicated in this White Paper.
§ The question, of course, arises whether private investment will follow, these lines. Whilst we are under our present system of the organization of society, which I understand commends itself on the whole to quite a number of your Lordships, it is no use talking about how we are going to make private people invest their money. No one can make them do it, but I am satisfied that if we accept these proposals as part of national policy we shall find active co-operation from the business community. It pays to develop capital structure in periods when trade is slack, in order to be ready for development when trade is brisk: moreover the installation of new equipment when trade is falling often secures that increased efficiency which prevents further fall. In my remarks to your Lordships at the close of the first Reconstruction debate I ventured to make a personal observation on this subject. One of my friends in another place wrote me a letter the other day in which he said "Can you tell me who is the idiot who produced this White Paper, because it contains nothing of any value and nothing that is new." He gave me a list of very distinguished people in the past who had expressed views along these lines—a long catalogue of them, a catalogue, as he thought, of failure. I wrote back to him and said "Would you mind adding just one thing to your catalogue? If you add my name to this list of distinguished people I should be very much obliged, but add this too, that I practised these views in the period of depression, and it was of considerable benefit to those people who were associated with me in business and a little to my own benefit, too, I am glad to say." These are not wild theories that no business man would look at. They are very practical ones.
§ Finally, may I direct your attention to the proposals for increasing the demand for consumers' goods at home, during a period of trade recession, by increasing the spending power of the public through a reduction in the level of insurance payments? I have referred to this before in this House, in a debate introduced by Lord Strabolgi. I called it an economic thermostat. I observed that Mr. Punch said on that occasion that your Lordships did not seem very clear what I meant—and that maybe I shared 655 your views. I hope that paragraphs 67 to 7o will have rolled away any clouds from the mind of Mr. Punch. I have taken much time to deal with this Paper in some detail. I could not do otherwise. We are dealing with a problem that is vital to our social stability and to our economic life. It is true it has defied solution in this country in the past: it has defied it during periods of great expansion in our trade and commerce. It is a problem that has beset the conscience of philanthropists and has eluded the skill of statesmen. And yet, patently, it is the greatest problem that confronts the industrial age in which we live.
§ Some totalitarian States have gone a long way towards solving it—at the price of freedom. We neither could, nor would, desire to do that in this country. After much thought the Government submit to Parliament these proposals, which, if generally accepted and acted upon, they believe would go far to meet the problem. We submit them to you and we desire the opinion of Parliament concerning them. Many members of your Lordships' House have devoted years of study to this problem of unemployment. Many of you, as bankers, industrialists, agriculturists, are competent to give to the country, and to the Government, expert advice on the various means whereby a high rate of employment can be secured, and it is for the purpose of obtaining that advice we have submitted to both Houses of Parliament these proposals. But the problem is not a narrow one of Government responsibility, and it transcends personal or Party issues. It is a matter of waging war against the greatest evil that threatens the welfare of the State and the domestic peace of our country.
§ No Government can go to war without the overwhelming consent of the public, and indeed in this country no Government can go to war without seeking alliances. Here is a proposal to declare war on want that makes for poverty, war on malnutrition and on all the misery that arises from both. It is the considered view of this Government of all Parties, men of wide Parliamentary experience, trade union leaders and industrialists, that the proposals in this White Paper are worthy of consideration as a means to this end. Both at home and abroad we must seek alliances in this work. We know that the Govern- 656 ment alone cannot provide full employment. This is the question that comes to our minds: Will the employers of the country help us, along these lines, to solve the problem of unemployment? Will the trade union leaders and the trade union organizations help? Are local authorities prepared to exercise qualities sometimes of restraint and sometimes of adventure in the allocation of their expenditure on public works in order to help to even out the booms and slumps in the demands for labour? Do these proposals, with the restrictions on capital issues and their hopes for a low interest rate, appeal to the judgment of the bankers and the financiers? Are the merchants of this country prepared once again to become "merchant venturers," to resume their Elizabethan quality with the products of modern industry and go out venturing in the world overseas for trade for the benefit of Britain? These are the questions that arise from this White Paper; they are the questions that we put to this House and the country.
§ And what is the prize? It is not the prize of personal profit—that is not enough. The prize is the future stability of our industrial life. I ask your Lordships to think what unemployment has meant in this country—in misery, in suffering, in physical deterioration, and in the degradation that follows in the mind of a man as he goes about vainly seeking work and when, as he fails, he sees his family suffering, his household goods being sold, his skill unwanted. What a cost it has been to the nation, and even when the country has been prepared to mitigate physical needs by the "dole," still, I say, what a cost it has been, what instability it has caused, and what distrust has arisen from it. In the seventeen years between 1922 and 1939 we paid in unemployment benefits £1,260,000,000. We had an average of 1,700,000 people drawing unemployment insurance benefit: we lost 250,000,000 days of work through industrial strikes and lock-outs. It is an expense, both of man-power and money, and misery, that we must not again incur.
§ This is not a problem for Britain alone. The same problem has occurred in all industrialized countries of the world. Unemployment, like any other disease, knows no boundaries of nationality, and I am glad to know that this White Paper has 657 already travelled the world and met with comment—almost always favourable—in the Press of other countries. We are not seeking prosperity for ourselves alone. Looking back at the period between the wars, we realize that nations are mutually dependent: bad trade, reduction of spending power, lack of confidence in one country, all affect other countries. The slump in the United States in 1929 was very soon followed by industrial trouble in this country: narrow nationalism in trade does not pay, and our trade problems are not exclusively our own problems—they are world problems, and those of us who are looking for a fuller life for the people of this country are also looking for a fuller life for the people of other countries.
§ We want to buy their goods because without them we cannot have the standard of living that this country has determined for itself; but we cannot buy their goods unless they buy ours. For half a century and more we spent our savings overseas: we have adventured: we have built railways and docks, bridges and rivers: irrigated the and lands, electrified towns and railways, financed the development of raw material and the production of crops. And we have attacked famine and disease wherever we have found them. The small population of this island has done more than its share in developing the natural resources of the world—often to our financial gain, but sometimes indeed resulting in the loss of our invested capital
§ That has been our past history. What is our immediate position? We have sold almost all that we had in saleable overseas investments in order that, when we stood quite alone, we could continue to fight this war for the maintenance of our freedom. We have incurred overseas debts that are double the amount of all our previous overseas investments: we have given of the wealth of our past: and we have pledged our future, and a new Britain has been born that has a place in history, as a people who keep their pledged word. We are infinitely stronger in productive capacity, in the application of scientific technology, than we were before this war. We now offer that capacity to the world with this assurance—our goods will be better, and they will be goods that can be trusted. If we can trade with the 658 world we shall secure full employment here and with it enjoy a rising standard of living; and we shall be able to pay the debts we have accumulated. If we again embark, with our great industrial capacity, on this world trade, we shall add to the wealth of the world, and we shall buy from other countries their natural products at prices that we hope will bring them prosperity too.
§ I foresee a universal movement for raising the standard of living of the world by clearing the channels of trade, by orderly management of international currencies and international investment, by evening out the extreme fluctuations—these booms and slumps which in the past have affected, generally to the ultimate detriment of the growers, the prices of primary products (both food and the raw materials of industry): I hope that we shall have continuing consultation regarding the domestic employment policies of different countries. Surely it is not without significance that 44 nations, gathered at Hot Springs, have subscribed to these ideas. The Government of this country believe in them, and conferences now meeting in the United States on monetary policy have these ends in view. What we are working for (as my honourable friend the Chancellor of the Exchequer said in another place a few days ago) is general agreement on an international code of rules which will limit the use of devices calculated to impede trade but will still leave the nations free to take the necessary action to preserve their own internal economic activity and balance of payments.
§ We seek our proper place in the trade of the world. We have earned it by enterprise in the past: we shall maintain it by the quality of the services we offer. We seek it for the expansion of the benefits that trade brings through the interchange of commerce: we seek it in no narrow desire for the exclusion of others. But trade we must if this country is to retain its place among the leaders of the world. By our past we earned that place and our recent record gives us unparalleled right to retain it.
§ Moved to resolve, That this House takes note of Command Paper No. 6527 on Employment Policy and welcomes the declaration of His Majesty's Government accepting as one of their primary aims 659 and responsibilities the maintenance of a high and stable level of employment after the war.—(Lord Woolton.)
§ LORD ADDISON
My Lords, it is a characteristic, I think, both of our race and our institutions that a speech like that to which we have just listened should have been made by a representative of His Majesty's Government. If one casts one's mind back one could almost describe it as an unbelievable speech; but we welcome it therefore all the more sincerely, particularly in view of two declarations made in the White Paper. The first sentence of the Foreword to the White Paper says:The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war.Then the White Paper says in paragraph 19 that the first aim of employment policy is the maintenance of an adequate level of expenditure on goods and services and that this will call for the application of a policy deliberately directed to that end. That is a most encouraging statement by a composite British Government, and I only hope that in the vicissitudes that will arise after the war the British Government of whatever complexion will not lose sight of that splendid intention.
It means that we turn our backs upon a system that regarded as a sort of indispensable reserve a great mass of human beings who were compelled to spend their time in idleness in a condition of constant anxiety and increasing misery. It means, I hope, that we have turned our backs upon that conception of an ordinary ingredient of an industrial and Christian community. I have very little to say on Chapters II and III of the White Paper, which deal with the transitional period, except to offer a very cordial welcome to the suggestions contained in them. I sincerely hope that whoever is in office at the close of the war, will be fortified by the Resolutions of Parliament to withstand the enormous demand that will certainly arise for the release of all manner of Controls which, in the social and national interest, should be more or less maintained. That will need a Government with a very stiff back, I prophesy, and I certainly hope that Chapter II of this White Paper will have so sunk into the minds of our people that the Government of that time will be fortified in the maintenance 660 of the necessary measures of control so as to prevent the stupid inflation which will certainly otherwise occur. I am speaking now of the interval between the termination of hostilities and the more regular establishment of employment.
I am glad the noble Lord spoke about the distribution of industry because that is essential if we are not, in the time to come, to see whole districts put out of work for long periods and almost left to rot, as was the case not long ago. Between the two wars five-sixths of the new factories in this country were more or less in the metropolitan area. That meant an entirely lop-sided development of our industry and meant that many areas, like South Wales and towns in the North-East, dependent upon single industries, were completely impecunious for long periods with immense distress to the whole population. I hope the development of subsidiary industries which is contemplated and the necessary labour training that will be required will make use of these areas which are described as "to be developed." Coming to the later period I hope that the inflation which we fear will have been avoided and that we shall pass into a period of more regular and stable conditions. There will be plenty of work in the world and plenty of work at home to be done. Apart from the rebuilding of a large part of our country and all that that means in ancillary industries, I hope there will be deliberate Government encouragement for the re-equipment and refurnishing of many of our industries, and that provision to assist them will be on much more generous lines than have been hitherto contemplated.
Your Lordships will perhaps not wonder if I draw attention to one very significant omission from this White Paper about work which will be available in the future. If we can lift the standard of living of the people here and still more in other countries, there will be an immense demand all over the world for the products of industry. This White Paper shows, however, a remarkable oversight in losing account of the land of Great Britain. About a million people at the present time are employed on the land. In nearly every village most of the cottages were formerly occupied by agricultural workers, but now, from one end of the country to the other, there is a vast labour deficiency. Moreover, you find that 661 during these later years large numbers of ancillary and processing industries have grown up, or are possible, which can be developed to an enormous extent. I believe it is a moderate statement to say that under a rational system the land of this country could employ twice as many people as it is employing now—that is to say we could have a million extra people employed in the healthiest of all industries. I believe, too, that this would result in providing a magnificent market for our own industries, for the manufactured goods and all the rest of the things that are produced here. I draw attention to that because I think it is a very significant omission. I suggest that this is a matter that requires to be remedied.
Another point upon which I desire to make an observation is that at the beginning of paragraph 2 in Chapter I of the Paper this country is described as being "dependent on exports." The noble Lord said something about that which we all welcome, and if the policy of Hot Springs can be developed, and we can raise the standard of living by international action, of, say, for example, the hundreds of millions of India, by even a very little there will be such a demand for goods that we shall not have any difficulty in finding markets for our exports. Raising the standard of living of people all over the world is a vital matter. The number of people employed in the whole of our export industries is about 1,750,000, and I am reliably informed that our export trade has provided hitherto rather less than one twelfth of the national income. So that, whilst we recognize that it is important to know that we must have exports if we are to develop our industries and to live, do not let us get it out of proportion. I also hope that we shall be able to make international arrangements in the future on such lines that we shall not find British industry being told to keep off the grass in some parts of the world. I think that is very important. I hope that we shall not commit ourselves or allow ourselves to be committed to any form of international agreement which has that result.
Now I come to another subject which, I am glad to say, is dealt with in different parts of this Paper, and which, in my view, is the core of the whole matter. It is remarkable but true that the only limes within the lifetime of any- 662 body listening to me when we have had full employment has been when we have had a war; that is to say, it has occurred twice in our lifetime. In this Paper you will find in a footnote to page 6 some very extraordinary figures, to which the noble Lord the Minister referred, with regard to the extent of unemployment between the two wars. Now I have never been one of those who have blamed industrialists for unemployment. I do not think it is reasonable to expect that if individuals or a group of people have a factory or factories making goods—let us say boots for example, though anything will do—and the buying of those goods falls off, those people will go on making the goods at their own personal expense. And you cannot blame them because they are not able to employ as many people as before in making the boots or whatever it is they manufacture. Therefore I say it is not fair—and I have never myself taken any part in it—to blame industrialists for unemployment.
I notice that in dealing with this matter there is a piece of delightful courtesy on page 16 to which I would draw your Lordships' attention. Paragraph 41 states:It was at one time believed that every trade depression would automatically bring its own corrective, since prices and wages would fall, the fall in prices would bring about an increase in demand and employment would thus be restored.It is a comfort to know that that fetish has been thrown overboard. There was a General Election not so very long since, and in the course of it people were actually persuaded to believe—I hope that I shall not be paining your Lordships by reminding you of this—that they would be better off if they had less money to spend. I am glad to say that this Paper finally extinguishes that extraordinary notion.
In paragraph 59 on page 20 we come upon a very important observation on the question of the control of prices and finance. Perhaps now the drift of my observations is emerging. I do not blame industrialists; it is finance and the control of our finance that has been mainly responsible, in my judgment, for our troubles. It says in this paragraph:The experience gained since 1931 of cooperation in this field between the Treasury and the Bank of England and the joint stock banks will make it possible to operate a concerted and effective monetary policy designed to promote stable employment.663 Well I was greatly comforted to see that because not long ago—we can all remember it—it was the thesis of the apostles of finance, who had their temple in the Bank of England, that when bad times threatened what one had to do was to call a halt to development. You had to stop building, stop loans to industry, reduce even the allowance of the poor unemployed by 9d. per week, reduce wages, and then, somehow or other, by the conglomeration of these things, our national affairs would be improved! That was the theory. Well, that beggarly policy is thrown over here. I hope it will be secured that in the future we shall recognize in our national policy that trade and industry cannot possibly be benefited if people have less money to spend. That, I am glad to say, is what this Paper recognizes with complete frankness.
I hope that we shall never again be in the position in which we found ourselves in 1931. You remember that the Bank of England borrowed more than £20,000,000 from one country and £25,000,000 from another in order to maintain Great Britain. There ought to have been a mechanical device set up outside the main entrance to the Bank. It ought to have had a horizontal arm with three balls at the end of it and with two supporters, one wreathed in the Tricolour and the other in the Stars and Stripes. It would then have been plain to all the citizens of London to what an extent of degradation we had been brought by the financial policy promoted by that institution. I am glad to see that that has all been thrown over, but I do hope that never again will the Government of this country allow the operations of the central bank to be divorced from the Government. I want to see this alliance or co-operation between the Treasury and the central bank maintained. It is essential that it should be maintained if we are to have a sound control over financial policy which will enable the standard of living to be maintained.
There is one other topic on which I will venture to say something, and it arises out of Chapter IV, on the control of wages and prices. I most heartily welcome this chapter, but I suggest that there is one serious omission; there is no approach to what may be described as a wages policy. Employment, as the whole Paper shows, 664 and as we know, depends upon the ability of people here and elsewhere to buy, and the means whereby the mass of the people are enabled to buy is, of course, their wages. We have in this House—and I am honoured to know that I speak in the presence of some of them—important, experienced and influential industrialists who have recommended a wages policy roughly on this basis. Mr. Seebohm Rowntree has written on this subject, and several others, particularly my noble friend Lord Perry, have spoken about it. Whatever work men and women are doing, they require certain things if they are to live in health—food, clothes, shelter and various other necessaries of ordinary healthy life. I suggest that nobody should be allowed to pay anyone less than will provide that minimum. If that principle were applied to every employed person no matter what his employment—even if it was only washing steps—we should immediately lift up the standard of living in this country enormously, and none of us would be any worse off; in fact, I suggest that anybody who has anything to sell would be better off. At all events the absence of a wages policy is, I think, a serious omission and I hope that such a policy will be developed in future.
There is also one comment which I wish to make with regard to the relation of wages and prices. In the last war the figures were available to me; they are not available now, but I expect that they are much the same. The share of wages in prices is very much less as a rule than many people think, because it is necessary to include in costs such things as overheads, establishment charges, rent, rates, taxes, insurance and many other things better known to many of your Lordships than to myself, so that the end-cost is often very much greater than would be expected by taking account of wages only. Wages are a smaller ingredient in costs than is often imagined, but we all know that as soon as any trouble arises large numbers of unthinking people who are not familiar with these facts cry out first and foremost for a reduction of wages. Industry might often be more efficient if it looked into the other ingredients of costs and saw what reductions could be made there. I know of a large number of industries where that has been done with immense profit and immense improvement in the efficiency 665 of the industry concerned. The cost accountants will soon point out where the costs are, and by that means we can ascertain defects in industrial processes and sources of waste which can be remedied, instead of beginning by an attack on wages.
There is one other ingredient of prices to which this document does not refer, except very incidentally, but of which I think that sight must not be lost. I refer to distribution costs. The end-price to the consumer is, as we know, very different from the wholesale price charged by the manufacturer. It has to be more, because everybody must be properly paid; but we do not need unnecessary interventions or unnecessary dealing; with the same article several times over, perhaps only in an office. At all events, I suggest that the costs of distribution in this country are higher than they ought to be, and a sound system will turn its attention to them in future.
I am making these comments, as I am sure that the noble Lord, Lord Woolton, will realize, in no unfriendly spirit. I am drawing attention to certain very important matters which arise out of this document, some of which deserve further elaboration. But I do hope that large numbers of timid people will read this White Paper. It is a great fortifier of the soul, and I am glad to quote in my concluding words the opening phrase in the last paragraph, because I agree with it so heartily:The Government believe that, once the war has been won, we can make a fresh approach with better chances of success than ever before, to the task of maintaining a high and stable level of employment without sacrificing the essential liberties of a free society.
§ VISCOUNT SAMUEL
My Lords, I rise on behalf of the noble Lords who sit on these Benches to give to the policy embodied in this White Paper a very warm welcome. That policy has been expounded to-day with complete lucidity and admirable conciseness by the noble Lord, the Minister of Reconstruction. Nowhere in this House might it be expected that this policy would be received with greater cordiality than here, since the proposals embodied in this Paper bear a very close and indeed a strange similarity to those put forward by Liberals some fifteen years ago, after a prolonged inquiry n which 666 they were assisted by Mr. Keynes, as he then was, Sir Walter Layton, Mr. Seebohm Rowntree, Sir Hubert Henderson, and other distinguished economists, the results of which were embodied in a book called Britain's Industrial Future. A General Election was fought by us on that policy. It was rejected by the Government of the day; and the opposition to that policy, including a Government memorandum prepared by the Treasury on the instructions of the Chancellor of the Exchequer, ruined the policy which now happily finds itself embodied in the White Paper which has been presented to Parliament. Thereby the Government of that day and the Treasury, under their instructions, gave wrong guidance to the nation and helped—of course, very much against their intention or desire—to intensify the grave depression which broke out all over the world, and which in this country doubled the numbers, already very large, of those unhappily suffering from unemployment.
Let me in the first instance say a word also in welcoming the procedure which has been adopted by the Government in this and in other great matters. Until rcently it was the practice for any Government contemplating some large measure of policy to appoint a Royal Commission or other inquiry which would investigate the subject and issue a report crystallizing ideas and formulating proposals and serving as a basis for public discussion; or else they would introduce a Bill, which usually could only cover a portion of the measures that were contemplated, to be the basis for discussions in Parliament, which have to be limited according to the rules of order to the specific proposals of that particular Bill. Now we have the practice coming into use—and I think I may say that it is universally regarded as a very convenient one—of embodying the proposals at the first stage in a White Paper. The Government adopted that in the case of education, national health, monetary policy, and now with respect to employment. The consequence is that the subject can be brought as a whole before Parliament and before the country, and the Government are not committed to specific proposals before public opinion and Parliementary opinion have been able to express themselves. We find now a new technique of Government which is likely to be a most useful precedent for the 667 future. This particular White Paper, I believe, opens a new chapter in the social history of this country, and is likely to be the basis of all future discussion on these topics for many a day.
People often ask "But what, after all, is the cure for unemployment?"—the cure, as though it were conceivable to provide one cure! And yet each of the three Parties in Great Britain during the last hundred years has, in turn, presented a panacea which it thought would provide the cure for unemployment and similar economic evils. In the earlier part of the nineteenth century the Liberal Party was very much attracted by the economics of Bentham and Ricardo and for the most part supported a policy of laissez faire. It was thought that what were strangely called "natural laws," if left to themselves, would bring about the greatest happiness of the greatest number, and that all questions of wages and prices, currency and trade, could be dealt with automatically through the free pursuit of the self-interest of the individual. There is this measure of truth in that, that emphasis was laid upon individual initiative and private enterprise, which certainly are, to my mind, and the minds probably of most of your Lordships, the very mainspring of industrial progress. But it was found that the policy of laissez faire did not achieve in fact the object that was being pursued; and first trade unions arose in order to rescue the people from the misery and degradation into which they had been plunged, and afterwards the State had to intervene with the broad policy of social reform of which we are now witnessing so large a development. The Liberal Party abandoned that policy of laissez faire more than fifty years ago, and during the last forty years has been actively engaged in promoting these measures.
That being so, the Labour Party arose and, declaring that laissez faire having been proved to be wrong, the opposite must be right and adopted the formula of the nationalization of the means of production, distribution and exchange. Since it was foolish to have attempted to reduce State action to the minimum, the right thing to do would be to lift it to the maximum. And even now they seem in-clined to say that because we have a system which is mainly one of private 668 enterprise resulting in much unemployment, we ought to have a system mainly of public enterprise because that must therefore lead to no unemployment—surely a strange non sequitur. As a matter of fact the great depression of fifteen years ago and up to ten years ago resulted mainly from the unemployment in our export trade, and particularly in coal, cotton and shipbuilding, and if all those industries had been nationalized it would have made no difference to unemployment, for they would have been equally deprived of their markets, and the number of people unemployed would have been the same. And it is a mistake to suppose that, because Russia has no unemployment, similar circumstances could be produced here by adopting a similar economic system, because Russia, with her vast area and her varieties of climate, is able, in case of need, to be almost entirely self-contained, and so far as she is obliged to import she has a great production of gold, with which she could amply supply herself with those commodities which are deficient within her own area. Now the policy of my noble friends on my left to replace a system of private enterprise—
§ LORD ADDISON rose—
§ VISCOUNT SAMUEL
May I finish my sentence? To replace a system of private enterprise run for profit, to which they so much object, by a system of public enterprise run for loss would be neither a preventive nor a cure for unemployment.
§ LORD ADDISON
May I interrupt the noble Viscount? I only want to say that we cannot possibly accept his description of the Labour's Party's policy as having any approach whatever to accuracy.
§ VISCOUNT SAMUEL
Do they then say that Socialism is not a cure for unemployment? I wait for a reply.
§ LORD ADDISON
I accept that challenge, but I do not go in for phrases. I adhere to what I say, that the noble Viscount's description of the Labour Party's policy has no approach whatever to accuracy.
§ VISCOUNT SAMUEL
I await some specification of my error which we have not yet received. Now I turn to the third of the great Parties—namely, the Conservatives, who thought that they had found a panacea in a policy of Protection. I have been in that controversy 669 for thirty years of my life. We fought several General Elections on the issue, and always it was declared that if only we had a system of Protection in this country the unemployment difficulties would be solved. We all remember how Mr. Baldwin, in 1923, declared that unemployment was so severe that he could not find it in his conscience to continue as Prime Minister without going to the country to secure permission to establish a general system of tariffs. He was defeated at that time, but was successful later on. Tariffs were established, the Party got their way, and the position was just the same as before.
§ VISCOUNT SAMUEL
My noble friend will remember that we had that strange "agreement to differ," under which voted against those very proposals, with the consent of the rest of the Cabinet, and I resigned from the Government not long after when they introduced the second stage or their policy.
§ LORD LATHAM
The noble Viscount was a member of the Government when the first stage was introduced, although he agreed to differ.
§ VISCOUNT SAMUEL
That is a very unfair suggestion considering how we strained the Constitution and created the precedent—for the first time for one hundred years or more—when the Chancellor of the Exchequer, Mr. Neville Chamberlain, rose from the Treasury Bench to propose the Tariff Bill and the Home Secretary, myself, rose afterwards from the Treasury Bench to oppose it, and voted against it. I really think my noble friend, when he suggests I had responsibility for that measure, is rather incorrect in his history. With these recollections in mind I view this White Paper with a certain sardonic satisfaction because here we have a great declaration of policy on unemployment and the word "tariffs" or the word "protection," or any policy of the kind, is not even mentioned or hinted at. It may be said that this is a Coalition Government and that noble Lords on those Benches who may still feel strongly about it conceal their love in order to secure unanimity; but my studies have led me to look at two recent publications, the first issued by the Tory Reform Party and the second issued by 670 the Conservative Party as a whole. I find again a strong similarity, for the Tory Reform Party, in a very interesting and outspoken document surveying the whole field of industry and politics, does not even mention Protection or tariffs, while the Conservative Party organization, having appointed a central committee on post-war problems with a sub-committee on industry, has published this year a pamphlet of nearly fifty pages in which that which used to be the very core and centre of the whole of their policy is dismissed with the words: "Britain could not agree to any proposal that would involve unilateral economic disarmament." I have been reading the debate on this subject which took place a fortnight ago in another place occupying three days. I have read all the important speeches and have looked through all the others. Possibly I may have missed some obscure reference, but in these three numbers of Hansard again I do not find one single suggestion from any quarter that Protection or tariffs are considered a cure in these days for unemployment.
Obviously it is a truism that the right cure for unemployment is employment. A truism, as someone has said, is on that account none the less true. Just as preventive medicine is better than curative medicine, so prevention of unemployment by employment is better than attempting afterwards to supply remedies, in the same way that the test of a nation's public health system is not how many hospital beds it provides, but how few hospital beds it needs. In earlier periods it was a general view that it was the province of private enterprise to care for employment, and that the State should only come in when it failed in, order to rescue the victims of that failure. That province undoubtedly belongs to the State. It is the province of social insurance—schemes like those embodied in the Beveridge Report—but Sir William Beveridge is the first to emphasize that while these measures of relief and assistance are necessary, and indeed indispensable, far more important are preventive measures such as those embodied in the White Paper now before us. Employment and preventive measures are the right course, but not, of course, employment for its own sake merely. To pay men wages for digging holes and filling them up again is a form of employment, but obviously wrong as national policy. 671 The German variant of that policy—to employ millions of people to make armaments and then to blow them off in a war, and when that is done to set them to work again to make more armaments and have another war to destroy them—is a lunatic form of economics.
It is surely a strange paradox that it is only, as the noble Lord, Lord Addison, has said, when the world is busy destroying itself that everybody is employed and everyone seems to be industrially prosperous. That is not in the long run the way to conduce to the welfare of mankind. Production is for the sake of consumption and, as this White Paper emphasizes, the important thing is to establish an effective demand for goods. That can largely be done by the State improving the equipment of the nation, and that should be undertaken especially in times of bad trade. That was the policy which we were advocating in the years I have mentioned and which we so cordially welcome to-day.
If I were to try and put my finger on the most important sentence in this White Paper, it is the one in paragraph 78 which reads:technical efficiency … is the dominating factor in the growth of real national income.We are now living in the second industrial revolution. The first—the invention of the steam engine and the introduction of the factory system—has spent its effects long ago, and now we are in an industrial revolution brought about by electricity, oil, and industrial chemistry. A variety of new products are continually coming into existence hitherto unthought of. When we read of gliders towed by aeroplanes by means of a nylon tow-rope, that is using a substance which ten years ago did not exist. Unquestionably, in view of this great new industrial era which has been opened up by plastics and other similar materials, and indeed by industrial chemistry and engineering in general, it is scientific research and invention which are indispensable to success in peace as in war. Therefore in another branch of their policy the Government are this year acting with very great wisdom in lending special encouragement, as provided for in this year's Budget and Finance Bill, to scientific research. Technical efficiency is also a question of management and a question of the efficiency of labour, and that depends upon the 672 general standard of education. Therefore, all these different policies ire grouped together and tend simultaneously towards the same end. So also is toe harmony of industry, which can only be brought about by partnership between employers and employed, between management and labour. That, too, has its place in this great system.
Moreover, there is a reference here to combines and monopolies. It is an important sentence in paragraph 54, which reads:The Government will therefore seek power to inform themselves of the extent and effect of restrictive agreements, and of the activities of combines; and to take appropriate action to check practices which may bring advantages to sectional producing interests but work to the detriment of the country as a whole.This is not the occasion on which to go in greater detail into that matter, but I hope at some later but not distant stage the Government will tell us in some detail what are their proposals for preventing the possibility of abuses by monopolies and quasi-monopolies.
Further, this White Paper mentions another very essential thing—namely, cheap money, in paragraphs 16 and 59. If that could be maintained it would be of great value to industry. But here those references relate only to the period immediately after the war: "some time after the end of the war" are the actual words. I hope that the policy of cheap money will not be abandoned but that the Government by their financial arrangements, especially in the management of the finances of the State, will realize how great a benefit it is to the country as a whole if the standard rate of interest is in the neighbourhood of 2½ per cent. (or whatever it may be) instead of 4 per cent. or 5 per cent. as it used to be some years ago. But here—and it is an important but—the most efficient production by industry, the most equitable and harmonious industrial system and the most cheap and abundant capital will not enable us to remedy unemployment if there are not sufficient markets for the goods that we produce.
We are a people of 45,000,000 in a small island, in a world of 2,200,000,000 population and I for my part welcome the emphasis that is laid in this White Paper upon exports. My noble friend who has just spoken said our export 673 goods are only equivalent to about one-twelfth of the national income. But that is after the great decline that has taken place in our exports. Many of our exports have been halved, and it is now said that our present exports ought to be at least doubled if we are to maintain a suitable national income. I notice that the noble Lord said we had disposed of our foreign investments. If my memory does not belie me the Chancellor of the Exchequer a few days ago said in answer to a question that about half of our investments had so far been disposed of, not because we did not wish to dispose of them but because we cannot. The noble and learned Viscount on the Woolsack indicates there are still about one-half which have been retained.
§ VISCOUNT SAMUEL
Yes, but we may be able to pay off the mortgage. However that may be, a change has resulted in the balance of our economy through the disposal of a great quantity of our investments (whether it is half or whether it is the whole of our foreign investments) which brought us in a very large amount of imports so to speak for nothing in payment for the use of that capital. The disposal of this large part of our foreign investments does necessarily put a very considerable strain upon our whole economic system in the future. Therefore the development of the export trade is of the very essence of the whole matter. I notice that the Minister of Production in the House of Commons a few days ago said that the new field in which an increase of exports must take place is the field of the Colonial Empire, of India, of China and of Soviet Russia. That is a doctrine that some of us have been expressing in your Lordships' House for a considerable time past. Those countries include more than half of the human race, and if they are raised to a higher standard of civilization and of comfort they offer a market, if we can supply it, for high-grade goods at low prices which would be amply sufficient to make good the effects of the loss of our foreign investments and would be a safeguard to us against unemployment.
Will your Lordships have patience if I continue for a very short time on two or three other topics, those links with monetary policy and 674 credits for export of trade with the populations living in those backward countries industrially, which are closely connected with the credit system and international money and other proposals? Here even more than elsewhere we ought to be very cautious in interfering with private enterprise. I confess to some little anxiety at one or two sentences in this White Paper with regard to the control of capital issues abroad and possibly with foreign trade in general. Here, even more than in the home trade, nationalization or protection would be useless. Here you want the spirit of the old merchant venturers who are willing to take great risks and who have special intimate knowledge of the conditions of these distant and sometimes rapidly-changing markets. The reference to the control of investment in paragraph 16 (d) relates only to the period of transition, but I am a little nervous lest it be continued afterwards. It is often said trade follows the flag, and it does, but still more it follows investment, and the export of capital is represented in an outflow of goods whch is of great value to the country that provides the foreign investment.
It is right that in this matter and in other matters control should be maintained during the transition period immediately after the war. There are many who express great impatience at these Controls. It is extremely natural and indeed healthy that there should be impatience and resentment of Controls, and immediately the war is over some of the Controls, those necessary for the country's security now, like the censorship or Regulation 18B, would no doubt be immediately swept away to the relief of the whole community. But if all the economic and industrial Controls were abolished there would be undoubtedly a state of chaos. Supplies of food and of raw materials would be thrown into confusion, prices would at once get out of hand, a great measure of unemployment would be certain and public opinion which now is inclined to quarrel with all forms of control would rapidly swerve over to the opposite direction. The Government which would be held to be responsible for this chaos would be hurled from office and very possibly the nation would turn to extremist policies.
The White Paper emphasizes also the necessity for balanced Budgets, though 675 not necessarily for the balancing of an annual Budget. The balance may be effected over a short period of years. That seems to me to be very sound, but there is a great danger, as the whole of history shows, in unbalanced Budgets becoming a practice. My noble friend who has just spoken seemed to treat that as though it were not of fundamental importance. An elected popular Assembly, like all the rest of us, naturally finds spending agreeable and paying not so agreeable; and there is always a temptation when there is a surplus for the Chancellor of the Exchequer to lower taxation, and when there is a deficit to borrow in order to cover it. That has been perhaps the main cause of the downfall of France in recent years—the unbalancing of the Budget, the continual insecurity of the French currency and popular discontent following the depreciation of the franc, which in the memory of most of us was once worth nearly a shilling and is now worth little more than a penny.
It may be worth while to consider whether the Government should not put by in good times sums of money to cover possible future deficits, just as the Unemployment Fund, which is treated as a separate financial entity, is allowed to accumulate in good times in order that there should be a reserve to draw upon in bad times. Just as some companies which experience considerable fluctuations in their business establish a dividend equalization reserve, either under that name or a reserve without that name but with that object, so that they are ready to pay dividends in years when the dividend was not fully earned in order to secure stability, so the State might well put aside money for this purpose. It is unsound finance as a general rule to allocate particular funds to particular purposes. It is much better that they should be thrown into the Budget as a whole and that all payments should be made out of that Budget; but political psychology has to be taken into account.
It may be that after the war such sources of income as, for example, that from the sale of surplus war materials, might be put to a separate account. That fund, which is money really belonging to the taxpayers, might then be used, not to pay off debt immediately, but used, even if it means some slight departure 676 from financial soundness, as a fund to be used if bad times come so that it should not be necessary to increase taxation and thereby intensify the bad time. A proposal mentioned in the White Paper—or hinted at, not definitely proposed—is the establishment of a Capital Budget as well as a Revenue and Expenditure Budget. That also is a most desirable thing, for much expenditure and much debt is not expenditure that brings in no return or debt, which is dead-weight, but is, in the long run, remunerative. I am tempted to give illustrations, but I have already occupied so much of your Lordships' time that I forgo them.
As a whole the White Paper seems to me and to my noble friends to be excellent. It is criticized sometimes as being too general and vague and not going sufficiently into detail, but if it had gone into detail it would have been at once criticized on the opposite ground that it is impossible to foresee all the conditions that will arise and that the Government had assumed to themselves qualities of prophecy which statesmen cannot rightly claim. Experience must be the test and experience over a long period. It is, of course, wrong to say that the proof of the pudding is in the eating. The proof of the pudding is in the digesting. So it will be when measures of this kind, that are now being planned, are placed upon the national table. During the war our finance and industry have been managed with astonishing success, greatly to the credit of those who have been concerned, and the same hands have now prepared the outline for the economics of the peace. We have good reason to hope they may be attended with equal success.
My Lords, I should give some explanation for rising immediately after a speaker on these Benches, but, as I have told my noble friend who moved the Resolution this afternoon, it is necessary for me to catch an early train. In the first place I should like to congratulate very heartily my noble friend Lord Woolton and the Government on this excellent White Paper. I am speaking as an unrepentant upholder of private enterprise. After the debate between the noble Viscount, Lord Samuel, and the noble Lord, Lord Addison, about the Labour Party, I do not want to put that Party's position in an unfair way, but 677 as I understand it they wish to nationalize, at any rate the main industries, and run them or the lines of the London Passenger Transport Board, or on analogous lines. In my opinion neither private enterprise nor the Socialist Party can secure full employment. I do not believe it can be done under any other system than a totalitarian system, which is what we have got in this country during the war.
Industry was the subject of a good deal of criticism before the war. We were told that we did not conduct the export trade in the right way, that we did not try to find out what customers wanted but to sell them what we made. That is the position during the war. We are not giving the public what they want but giving them What the Government will let them have. That will not go on. But unless you have a totalitarian régime you cannot, in my opinion, get employment. What I think we can get, if we all work together, all Parties and all sections of life, the small man of business and the big industrialist, is a very high measure of employment and steady employment. If you turn to paragraph 6 of the White Paper you will find the necessity for efficiency mentioned. Efficiency is men-a good many times in the White Paper. At the end of paragraph 5 you will see the words "our export industries must be resilient and flexible." But that does not apply only to the export trade. It applies very definitely to internal trade. I am one of those who maintain that the industry of this country has been efficient, and I think that the war has proved that we have had a very considerable measure of efficiency in our various industries.
It is rather important to the Labour Party to remember that, if they are going to nationalize industry, they will have just the same interest in running things efficiently. But ruthless efficiency is a very dangerous thing. The Americans are very efficient people and I remember, long before the slump, an American friend, a business man, saying to me in 1920, "I am terribly worried." When I asked him what he was worried about, he replied: "All the brains in America are as busy as they can be trying to devise machines to do away with man-and woman-power." They certainly turn out the stuff, and we are grateful to them for turning out the great quantity which enables us to be in the position we are in to-day, but if you have ruthless efficiency that is not going 678 to create employment. You must balance your sense of public obligation, your sense of public duty with the state of efficiency you want. If I may be allowed to use as an illustration my own firm, because I know it better than any other, I think it is perfectly true to say that if we had wanted to do it we could probably have put the whole of the chemists trading in the country out of business. That would not have been right and it certainly would not have helped employment. It is a thing that you just do not do.
Some of your Lordships know what are the worries of business directors, but a great many people in the country have not the same knowledge. To read some newspapers and to listen to some speeches one would think that one of the great worries of a board of directors is how to get the maximum amount of money to distribute to the shareholders. My experience is that directors want to get the money but do not want the shareholders to have it. They want to put profits back into the business and build up a sound concern. It is their aim to provide decent conditions for their employees. I think it is fair to say that they want to provide steady employment for their own work-people and to do that they must give reasonable service to the country.
The White Paper covers an enormous area and I only propose to take one or two paragraphs. Paragraph I7 about Controls has already been referred to by my noble friend Lord Addison. I hate Controls like everybody else, but I realize that some of them will have to be kept. I do not know if the people of London realize what a really tremendous hatred of control there is in the North and Midlands. It is perfectly true, as the noble Lord said, that it will need a very strong Government to keep Controls on after the war. So what I ask the Government to do now is to make a list of a minimum number of Controls, the ones which we can all be more or less satisfied in our minds that we have got to have, and that we shall be able to persuade people to accept. If you present a great wide range of Controls you will get the whole lot turned down. If we can have a list of minimum Controls which members of Parliament in both Houses can be persuaded that it is their duty to recommend to the public, I think that there is a reasonable chance of getting them accepted.
679 A small matter arises on paragraph 30. Some of us have had dealings with some of the departments mentioned. I myself have had something to do with the Board of Trade and, perhaps, we do not always find it the most helpful of Ministries. Now here there is a suggestion about their powers being developed, and that means regional organization. I have had five years' experience of regional organization and, believe me, it is most important that those Ministries should send good and efficient men to represent them in the regions. When such men are sent I have never found that there has been any bother with the local authorities or with employers. We have been very fortunate in our region, if I may say so, in the representative of Lord Woolton's late Department. But it does happen that where Ministries send a man down to a region who is not as good as the local officials trouble is started at once. I have known of cases of this kind. If a man goes down to a region to represent a Ministry and to take charge of trade and industry within the region, and it happens that that man has been sacked for inefficiency from one of the businesses in that region—well, that just does not help. If you want to run efficient regional organizations the Ministries must see to it that they send good representatives down to the regions.
I am not going into the economics of this Paper, but it strikes me that one of the most important matters is that referred to in paragraph 41 which states that:The Government are prepared to accept in future the responsibility for taking action at the earliest possible stage to arrest a threatened slump.A good deal is said in this part of the Paper about capital costs and capital expenditure, but I think it is fair to say that in a large number of trade slumps the first indication you get of what is coming comes from the consumer end. People stop buying because they think that the price is too high; when a traveller goes round to retail establishments he cannot book as many orders as he did formerly, or perhaps he cannot book any at all. The manufacturer thinks: "I will just hold up that extension I was going to do in the factories and the putting in of that new plant." After all, there is nobody in this room who would spend a pound to-day if he thought that the same article 680 would be available for purchase for ten shillings or fifteen shillings to-morrow. If he thought, however, that the position was that he might get it for nineteen shillings to-morrow but that it was doubtful he would probably risk spending one pound to-day. That is the idea, as I understand it, that is behind the whole Government action that is outlined in this Paper. They are in fact going to act boldly and with speed with a view to stopping any slump getting going.
I think that the great cause of a slump is lack of confidence spreading through the business world. In this connexion I would like to say that I entirely agree with what Lord Woolton said a few weeks ago—and he has referred to it again today—about industry spending money in times of slump to improve machinery and improve conditions generally and getting the benefit of those improvements when better times come. I think that as a matter of fact that is the practice of all progressive firms to-day, and I believe that the proof of that is supplied by the very large amounts which are being paid, and which have been paid for the last two or three years, in E.P.T. I think it is true to say that a great deal of the new plant, the new works, and the modernized old ones, set up in the slump period had not got to the productive stage before the war started, and that is why the Treasury is now getting the advantage of the large sums of money which were invested in new plant and were spent in trying to improve things generally and bring equipment up-to-date in the slacker times.
Now I want to touch for a minute or two on paragraph 54 to which some reference has been made already. One sentence reads:Employers, too, must seek in larger output rather than higher prices the reward of enterprise and good management.I think if you consider fairly the most successful firms of recent years you will find that that is already the practice. The people making money are the people with a big turnover who get only a small profit per article. The paragraph goes on to refer to a growing tendency which it is said there has been in recent years towards combines and towards agreements, both national and international, and so on. I strongly urge upon the Government that there should be an inquiry into the whole matter of combines and agree- 681 ments. These things vary tremendously from dividing markets and fixing conditions of sale. I may be prejudiced but in my opinion there is no more harm in fixing the conditions and price of sale of a box of pills than there is in fixing conditions and price of sale of a newspaper. After all, one does not expect to pay one penny for a paper in London and perhaps three-halfpence or a halfpenny somewhere else. You might even get to the stage where it was given away.
I know a lot about this, for I nave been in America where there is keen cutting of prices—a thing which some people advocate over here. I say that nothing leads to worse service, more substitution on the public, and worse conditions generally than cut prices. I think that all prices should be fixed, and I believe that in our central price bureau and the price system which the Government are working to-day we have the nucleus of something which could be very usefully developed for the future. It is only fair, I submit, that if you are having prices fixed somebody should be there to see that you are not fixing too big a margin. I do not think that these combines and agreements are nearly as bad as some people would make out, but do feel that there is a great deal of suspicion about them in the minds of the public, and therefore I urge the holding of a Government inquiry. You could not in my view have a public inquiry because a great many of the matters dealt with would concern foreign countries, and it is to nobody's interest here to throw away trade to foreign countries if we can keep these things quiet. But there should be an inquiry to satisfy the public as to whether some of these things are or are not right. The results of the inquiry of course should be published. It is in that way I feel that we can remove suspicion from the public mind. I beg that the inquiry should not be a Royal Commission to report after the next slump has finished but a Commission to report with considerable speed.
§ LORD WOOLTON
May I interrupt my noble friend for a moment? I would like it made quite clear what he is asking for. Is it an inquiry to be held in public or an inquiry by the Government?
I think in the first place an inquiry by the Government be- 682 cause I believe you might do untold harm to some sections of the national trade, particularly those with international agreements, if it were held in public. I think the results and the conclusions of the inquiring body should be made public, but I feel it would do the country's trade definite harm to hold the inquiry itself in public. I would not do anything to prevent anybody who thinks he can provide useful evidence from giving it at the inquiry.
To me the most interesting thing about business is the people in it. People are always more interesting than things, and so the retail trade is more interesting than manufacturing. Your Lordships can have no idea of the amusement which some shop-assistants get out of you when you go shopping. But we are a great nation, and this "little man" business makes me very angry. I am not thinking only of the boys and girls in the Services, but of the men whom one sees in the rehabilitation centres, with broken limbs and broken backs, and the fine spirit which they show. I am thinking also of the men and women in the factories, who have been working in the black-out for four years, and of the housewife in the queue, often with other people's children to look after, and the bombed-out people in the rest centres. These things make one very humble, and it is up to all of us, to whatever section or Party we belong, to do our utmost to remove this bugbear of unemployment.
§ LORD McGOWAN
My Lords, I welcome the White Paper, so ably covered by the noble Lord, Lord Woolton, as a very valuable contribution to our postwar problems. I think that it reflects great credit on the Government, and for it they have deserved and obtained much praise. It calls us to a comprehension of these problems, which is much, and to suggested remedies, which is more. It asks all in industry, whatever our position may be, to join forces in securing a high and stable level of employment through stability of prices and wages, the mobility of labour, and the maintenance both of the power of spending and of actual expenditure, whether it be on capital or consumption goods. The White Paper covers an immense field and pro- 683 vides many points for discussion and elaboration. Others will speak more fully of its wider implications. I shall confine my remarks to two aspects, one of which is of a highly controversial nature and much discussed at the present time. I refer to national and international agreements in industry, which have been mentioned by the noble Lord who has just spoken.
In this country, many manufacturers have ceased to believe in the inherent superiority of free or extreme competition, and have moved successfully a long way in the direction of co-operation in industry and central action by the Government. We have an eloquent example of this in agriculture. The remedies found by the Government in the past have taken various forms, among which I may mention the marketing boards, the hops scheme, the guaranteed price for wheat, many trade treaties, the provisions of the Coal Mines Acts, and the legislation regarding entry into the passenger road transport business. I submit, therefore, that we in this country are in what I hope is an unprejudiced position to consider the merits and demerits of international agreements or cartels based on facts as to how far they can be of advantage in the post-war world for the purposes of international co-operation, for the extension of foreign trade, for national full employment, and for a rising standard of living.
I have elsewhere spoken and written of some of the benefits which can flow from international collaboration as a result of industrial agreements. I repeat that those benefits are numerous and substantial. The purpose of those agreements is, in the main, to regulate but not to abolish competition. Such agreements can lead to a more ordered organization of production and can check wasteful and excessive competition. They can help to stabilize prices at a reasonable level, and thus assist in one of the declared aims of the White Paper. They can lead to a rapid improvement in technique and a reduction in costs, which in turn, with enlightened administration of industry, can provide the basis of lower prices to consumers. They can spread the benefits of inventions from one country to another by exchanging research results, by the cross-licensing of patents, and by the provision of the important "know-how" in the 684 working of those patents. They can provide a medium for the orderly expansion of world trade and can make a substantial contribution—and this is important—to the difficult problems of the post-war readjustment of production in countries greatly affected by the war. They can also assist in providing much greater stability of employment.
Some of the benefits of this type of organization are suggested in the words of the Minister of Labour and National Service, when speaking in another place on June 21 last—In association with other countries, we must try to agree on measures which will prevent the appalling fluctuations in the international price level which characterized the years between the wars … Therefore, international discussions will proceed on a wide range of subjects.This objective, to my mind, is the right one, but it should apply equally to raw materials, whether industrial or agricultural, and to semi-manufactured and fully-manufactured goods. It is stated by some writers that cartels are designed to or have the effect of restricting production in order to keep up unduly high selling prices, or, alternatively, by keeping prices unduly high productive effort may be impeded. I think, without giving specific cases, that this general statement is inclined to distort public opinion. I do not believe that this contention is of general application, though isolated cases may exist.
On a dispassionate study of the facts, I submit that there are ample grounds for making use of the international cartel type of organization in order to secure the benefits which it can undoubtedly bring. At the same time, steps must be taken to prevent the misuse of the powers which may be thus secured. To achieve this, as one not unfamiliar with international agreements I welcome paragraph 54 of this White Paper, in which it is stated:The Government will therefore seek power to inform themselves of the extent and effect of restrictive agreeements, and of the activities of combines; and to take appropriate action to check practices which may bring advantages to sectional producing interests but work to the detriment of the country as a whole.Such investigations will throw light where at present, through lack of knowledge, there is, I fear, all too often only prejudice and hostility. Such powers as are proposed to be given to the Board of Trade mark a new Government interest 685 in industrial matters so far as they relate to agreements and combines. There is no hint in the White Paper of the methods to be adopted, and I therefore hope that at an early date the Minister will be able to enlarge this paragraph by giving some description of the procedure which he has in mind for he will be well aware that this particular subject is to-day not only of national but of international interest.
Such investigations will throw a new light on the operation of agreements, and in the hands of competent individuals will, I hope, ensure that the powers to be given to the Board of Trade will be exercised for the general good. Industry would have just cause for complaint if it could be demonstrated that the interpretation of agreements was so narrow as to be prejudicial to national interests. It would be a great mistake, and would serve little purpose, to antagonize industry at the outset by assuming that all industrial co-operation is designed to further sectional producing interests to the detriment of the country as a whole. For the proper treatment of international agreements I fully endorse what the Chancellor of the Exchequer said in another place, referred to by the noble Lord, the other clay. His words were:What we really need, in my belief, is an international code of rules which will limit the use of devices calculated to impede trade but will still leave the nations free to take the necessary action to preserve their own internal economic activity and balance of payments.We do indeed need a code of good international conduct, but can we have such a code of rules without an economic international tribunal to administer it? Shall we not need, indeed, some international mechanism to solve such international problem as trade agreements, payment agreements, monetary schemes, customs unions, tariffs, etc.
So far I have dealt with international cartels, but there is a problem nearer home. There exist to-day many trade associations, some of doubtful value as they are only concerned with price fixing, and in some cases prices are arranged to perpetuate the inefficient producer. But trade associations can also serve many useful purposes, and the suggestion was made in a document issued about eighteen months ago described as "A national policy for industry," that industry ought to pursue a more vigorous policy of 686 sectional organization, with a central council of industry representative of the whole of industry as a focal point. The interests of consumers was held very much to the fore, and it was also suggested that an industrial tribunal or commission should be set up by the Government as a central court of appeal on all industrial matters. This suggestion might be considered by the Board of Trade when they set up a supervisory body to implement paragraph 54. In the White Paper the vital necessity of increasing our exports is stressed, and on the facts as we know them it is obvious that if we are to be in a position to pay for our imported foodstuffs and indispensable raw materials, our exports must be increased. As the country has been told this almost daily for a considerable time past, I have no doubt a number of industrial concerns, my own company included, have been planning the erection of factories when labour and material are available, involving large expenditure, in order to provide the capacity necessary for larger and larger export demands.
But there is a reservation which I submit to be of the utmost importance. During the years of war many countries accustomed to purchasing a variety of products from us, America and even from Germany, have not been able to do so. Therefore, while on a short-term programme we can expect considerable demands from those countries until the vacuum is filled, industrialists would like to know what is the Government's attitude towards the future of competitive enemy industry. More experience will have made Germany expert of improvisation, and unless her industries are blasted beyond repair for years to come—which is, I imagine, unlikely—they will not be long out of the export markets. The same applies to Japan, I think, in a greater degree, as before the war that country was making violent attacks on this country's trade in a number of export markets, and in this effort to capture business they were naturally assisted by their very low standard of living. In the past industrialists have attempted to deal with this problem by means of international commercial relations founded and worked by concerns in the various countries. Such methods will not be possible again for many years to come. Unless German and Japanese goods are excluded from world commerce—and that is not a practicable proposal 687 for more than a few post-war years perhaps—the only alternative evident at the moment is a régime of bitter international competition, in which we shall be at considerable disadvantage if the beaten Germans and Japanese are prepared for any given level of efficiency to work for a standard of living well below that acceptable to the British worker.
I know full well the difficulties in making any pronouncement now on this important matter, but these thoughts reinforce the suggestion I have made that we need more guidance on the question of international commercial policy, and more information upon the basis on which future international commercial relations are to be built, and in particular what part the future economy of Germany and Japan is to play in that policy. It is with no desire to embarrass the Government at the present time that I say that I am sure industry in this country asks for some lead at the earliest possible moment to this problem as the answer given will determine to some extent the amount of capital expended that industry here will make to increase its capacity for export trade. There will be many difficulties in securing enlarged export trade. In the long run it is on our own efficiency and enterprise that we must depend. We shall seek, and I have no doubt we shall get, the understanding co-operation of our splendid trade unions, for I am certain that they will not be deaf to the appeal that their trade practices and customs should ensure the success of our efforts to become more and more efficient, and by so doing to increase more and more our export trade. To conclude, I have elsewhere declared my belief in the growing emergence in British industry of a new social outlook, which leads industrialists, in the administration of their companies, to place the national interest before mere profit-making. To all those who share that view the Government's proposals in this respect must, I feel sure, be welcome.
§ LORD BARNBY
My Lords, in paragraph 80 the Government, in putting forward these proposals, say we intend to be pioneers. I am sure that when this debate comes to be concluded the noble Lord, Lord Woolton, will find that the House gives universal endorsement, and in terms of admiration, to the lofty aims set out in the White Paper. The last must appeal 688 particularly to Lord Woolton because he is enunciating the policy which he himself has in the past put into practice. He said it was only possible in the time available to deal with a few of the aspects and subsidiary details of the broad policy. But the advantage of debate is that it gives later speakers an opportunity of taking up one or two of the points raised. The noble Lord, Lord Trent, particularly made some points which have the stamp of hardheaded practical experience.
I find myself singularly in agreement with Lord Addison in his anxiety lest the purge of outlook, among those in high places responsible at so relatively recent a time as six or seven years before this war for a fatal policy, will have been adequate. It is hard to believe that a policy which aimed to cure unemployment by diminishing the spending power of the population should have been advanced as the appropriate policy from high quarters at that recent time. Lord Addison, in emphasizing the need to guard against a recurrence of that insane contractionist policy, rather doubted whether freedom of the Bank of England from Governmental regulation left sufficient assurance that such a situation might not recur. Doubtless that will be the subject of much discussion in this House and elsewhere. I agree with Lord Addison that finance was mainly responsible for our troubles. The Government spokesman, in concluding, may find it appropriate to add some further emphasis, beyond what has been said to-day, that the policy of the Government, as defined in the White Paper, must be influenced by the overriding international monetary policy. For that reason we have hopes of achievement from the conference now taking place in the United States.
The noble Viscount, Lord Samuel, in dealing with export trade, emphasized that the loss of export trade materially affected employment in this country. I seize this chance of reminding your Lordships—it cannot be sufficiently the subject of reminder—that it was not our laissez faire policy, which is now rejected, or booms and slumps, as the alleged inevitable act of God, which caused the greater part of our trouble in the past. It was the folly of man and the changed values of currencies. I pass to another point made by Lord Samuel. He condemned, as I understood, Protection. It 689 would be folly to assume that the automobile industry of this country could have got anywhere without Protection. Had there not been some Protection under the Safeguarding of Industries Act, many other of our industries would have found themselves unable to compete with the lower standards of living in other countries. While one realizes the desirability of avoiding political controversy at this time, it would be incorrect to disregard the facts.
I welcome the intervention of Lord McGowan in this debate. He took the opportunity to amplify some of the impressive pronouncements which, speaking with the authority rightly accredited to him, he has made in the country. I suspect that other members of this House feel, like me, that it is desirable that more statements of this character should be made in the House rather than outside because they have frequently been of a controversial nature. I should have liked to address some questions to him, but unfortunately he is no longer in his place. He enlarged on the theme on which he has frequently spoken. It was a plea for the large vertical industrial unit and the organized cartel. That is a theme which is widely challenged in the country. This plea for the large unit rather than the small unit brings me to appeal to Lord Woolton for some indication of Government policy on the point. What are the Government's wishes with regard to the large unit and the small unit controversy, which is confusing many industrial minds?
I return to Lord McGowan. He referred to a report issued recently called "A national policy for industry" which was, I understand, a report by some 120 self-appointed industrialists, speaking for no recognized trade organization, who took it upon themselves to set out what they thought should be a proper national policy. No one objects to any group of industrialists putting forward then views, but it is widely felt that opinions should represent the considered views of organized federations rather than be expressed as the hazard views of individuals, however eminent. This brings me to another point I wish to address to Lord Woolton, and that is, what are the Government's views with regard to trade federations? In paragraph 82 reference is made to this. There must be some decision as to whether trade federations are 690 to be clothed with authority which will enable them to discharge such functions.
In paragraph 83 reference is made to the collection of statistics. Lord Samuel referred to this indirectly, and Lord Wool-ton, in his opening remarks, mentioned the Man-power Budget announced by the Minister of Labour in a recent speech. Is it the intention that industry should be given appropriate powers to collect these statistics? The White Paper gives an indication that it is going to be a voluntary appeal. Let us remember that all these statistics are collected to-day under Defence of the Realm Regulations. Is it the intention to make these returns a statutory obligation? Is it to be done by Governmental agency or civilian agency? If so, what power is it intended to give to these civilian agencies, and are they to be the trade federations? Further, what appeal is there to make their membership complete?
I cannot refrain from referring to the remark in the Foreword of this White Paper that industrial efficiency is essential to a high level of employment. Industry must have the equipment with which to work. There is gratitude to the Chancellor of the Exchequer for the promise he has made of more considerate treatment in the way of obsolescence allowance both on machinery and buildings. I am confident that Lord Woolton himself will be a convert to the belief that it is right that there should be a firm pronouncement before the promised autumn Budget as to what the intentions of the Government are in this respect. If industry is to have efficient equipment, it requires a revision of the Factory Acts to permit the two-day shift operation of female labour. Expensive new equipment must, to carry overheads, run more than eight hours in the twenty-four.
Lord Woolton made an appeal that industry should resume the position of the merchant venturer, pushing out into the ends of the earth and showing what British enterprise can do. Will the noble Lord use his influence so that we may get some remission, of double taxation? It is true, as Lord Trent has said, that companies want to conserve their resources for the development of their industries and not to pass them on to the shareholders, but how is it possible to develop enterprises abroad that will bring back replacement orders down a distant vista of years and give employ- 691 ment in England if there is to be added to the taxation in the country of origin taxation at the standard rate in this country? Present taxation makes the enterprise of the merchant venturers of the past an impossibility. Lord Woolton also referred to the central economic staff that was going to be established to enable the State to get the information that would give control over the volume of employment. I should like to ask what powers are to be granted to that small central staff and through what agency are the figures to be collected?
§ LORD BARNBY
I ask the noble Lord not only to do that but to put the policy into practice so that information may flow in from various sources to the small economic staff referred to in the White Paper. My concluding reflection is that a debate like this in your Lordships' House, recording opinions uninfluenced by political considerations, is a valuable contribution, as will be the many other debates that doubtless will follow and contribute to the solution of our problem. My own feeling is that it does not lose by comparison with the report for Canada of the Committee set up by Mr. Mackenzie King under the Chairmanship of Dr. Cyril James, Principal of McGill University, an exceptionally able man who has wide familiarity with the United States and England as well as Canada. I, like preceding speakers, welcome the statement and have the greatest pleasure in supporting the Motion.
§ LORD TEVIOT
My Lords, I would like to begin by saying that I consider this White Paper is of the greatest possible importance. I welcome very much indeed the whole attitude to which it gives expression. I am afraid that what I have to say will be very much in the shape of a questionnaire to my noble friend. Let me draw attention to the background of commitments already entered into or about to be entered into by the Government. I will enumerate them. We have the Atlantic Charter, we have the Hot Springs Conference, we have U.N.R.R.A., we have the International Labour Office, we have a monetary policy conference to be held shortly, Lease-Lend and Mutual Aid, the Prime 692 Minister's Four-Year Plan and the extention of Social Services. In another place three Ministers spoke in the debate on this White Paper, the Minister of Production, the Minister of Labour and the Chancellor of the Exchequer. It seems to me quite clear that four other Ministers are involved in it, the President of the Board of Trade, the Minister of Reconstruction, the Minister of Agriculture and the Minister of Town and Country Planning. I mention them to show the enormous range in which all these matters have to be considered. I would like to ask my noble friend if he could some time in the near future, not necessarily at the end of this debate, let us know who is going to co-ordinate and who is to be responsible for all this. In view of the present commitments, industry is aware that control must continue for a considerable time, but after the war it must gradually disappear if the full use of the capabilities of our industries and our people are to help in the reconstruction of trade after the war.
Another question I want to ask is this: How much of the White Paper is going to be implemented by Order in Council or how much is it intended shall go on to the Statute Book in the shape of Bills? That is important and I think the industries of this country, certainly those of which I meet many representatives in the Association of British Chambers of Commerce, are very anxious to know about these matters. What effective means of collaboration with industry do the Government intend now while details of the White Paper are being worked out? Who is going to conduct such discussions and be responsible for them? Industry is suspicious and does definitely lack confidence in the many Controls that now exist. No one quite knows where they are. Perhaps that is only natural under present conditions, but I think there is a certain amount of scope for the Government to let us know a little more than we know to-day. I feel that it is the Government's responsibility to create a condition of confidence without which industry cannot possibly switch over to peace requirements either on the short-or long-term plan. It has already been mentioned this afternoon, by the noble Lord, Lord Trent, that industry has been weakened and denuded of resources under our present taxation, which may be unavoidable just now. Here is an 693 important question: Do the Government intend 10 carry out the deconcentration of industry? There is no indication as yet of any plans with regard to that. I think the question of the advisability of private enterprise has been sufficiently discussed, so I will not touch on that.
§ LORD BARNBY
Is it the intention that the Government should carry out the policy set out by Mr. Lyttelton when he was at the Board of Trade, which dealt with the concentration and deconcentration of industry?
§ LORD TEVIOT
I am not quite sure what my noble friend means, but I have no doubt the Minister does.
§ LORD TEVIOT
The necessity for freeing industry of many restrictions before legislating for permanent policy is, I consder, most important, because if this is not done the policy might not work after restrictions were eliminated. No one can say how the various industries will fare under the restrictions that are bound to exist in the transition period. Then I come to something else that I hope we shall be told a great deal more about. There seems to me a lot of very admirable pious aims and one of the most important is that we shall enormously increase our exports. I believe some people say they should be increased by 50 per cent. and others that they should be doubled. Can the Government give any indication whether there is any likelihood of this being achieved? Can we reasonably suppose that other nations are willing or are going to be willing to help us to this end? It definitely means terrific competition with them. From my experience and what I read of history other nations, however friendly, think of No. 1 when it comes to business. I thank the noble Lord for his speech and I hope that some of the questions I have put to him will be answered in due course.
§ THE EARL OF HUNTINGDON
My Lords, I feel rather like a lone voice in the wilderness, for I am afraid I cannot give unqualified welcome to the declaration in the Paper. It seems to me that the Government are barking, however impressively, up the wrong tree. What we want is not a high level of employment, but full employment; employment for every man and woman in the country 694 who can and wishes to work. What we want is not self-satisfaction because we have kept the number of unemployed under 2,000,000, but a positive policy which will provide work for every person willing to work and which will also raise the standard of living. Of this positive policy I cannot find any sign in the White Paper. The best that can be said of it is, that, like the curate's egg, it may be good in parts. However, these parts are worth close examination, and I should like to call attention to certain features in this White Paper which might herald a new approach to the problem of unemployment.
In the first place, the White Paper describes the chief symptoms of this disease. In Appendix I there is a chart which shows only too clearly the course of the recurring fevers of boom and slump, getting steadily worse as our means of production become more efficient. The White Paper explains quite correctly that slumps or depressions are caused by lack of purchasing power on the part of the consumer. There is a very good description of this in paragraph 40, which shows how the decline in the demand for steel leads to unemployment amongst the steelworkers who, in consequence, will spend less on other consumer goods. So the demand for the other consumer goods will also fall off, and the depression will gather momentum.
What the White Paper does not make clear is what has led to the original decline in the demand for steel, and in this, I submit, you have the crux of the problem. From the White Paper one might assume that this original decline in demand was pure chance, started perhaps by the machinations of some fraudulent financier or by an unexpected fall in some South American securities which had taken people unawares and suddenly produced depression. I submit that this is not the case. What has really happened is that, under the state of free and uncontrolled private enterprise, various industries all over the world have been manufacturing goods and selling them at a profit. Part of this profit has gone back into manufacturing more machinery to make more goods to sell. While profits have been mounting, and goods have been multiplying, wages have risen hardly at all, particularly in relation to profits. Finally, there comes a moment when there is a 695 mass of goods and very little money with which to buy them. The situation is like a house of cards which a push from any direction may cause to fall. When the depression starts the employers are driven to dismiss workmen and reduce wages, which further limits purchasing power and increases the depression until either consumer goods become used up or we find some way to increase purchasing power. That was the method employed by President Roosevelt in the New Deal. I have deliberately simplified the process but, simple as it is, it has very terrible results and entails incredible wastage.
The Minister of Production, in another place, recently gave a clear picture. To quote his own words:It is indubitably true that sometime during the 'twenties there was a very large number of unemployed in Europe, running into fourteen or fifteen millions altogether, at a time when the granaries of Canada were stuffed with grain and when those fourteen or fifteen million people were, as the Americans say, on the bread line, and we were unable at that time to relate these stocks of consumable commodities with those who should, and wished to, consume them.We are all too familiar with this picture of people starving while wheat is burnt and milk poured down sewers. I do not want to dwell on it, but I should like to remind your Lordships that it is only a very wealthy nation which can afford to keep a large army of unemployed. After this war we certainly shall not be able to afford such a wicked luxury.
In the White Paper there is one exceedingly interesting idea which to a limited extent does try to cope with the situation. This is the plan for decreasing the contributions paid into the social insurance scheme during a depression and increasing them during a boom, using this method as an automatic regulator. I should like to call the attention of the Minister who will answer for the Government in this debate to what seems to me to be a fallacy in the scheme. To make this scheme effective in curing or preventing a depression, while contributions from workmen should be decreased in bad times, at the same time surely employers' contributions should be increased.
§ THE EARL OF HUNTINGDON
When the depression starts to lift workmen's contributions should start to increase, and 696 employers' contributions to decrease. The reason is that in a depression the decrease of workmen's contributions will provide more purchasing power. That is the origin, I understand, of the scheme. At the same time, for this to have any effect we must limit drastically the production of consumer goods. If we, therefore, increase the employers' contributions it will reduce profits which will reduce the production of consumer goods and the scheme will work both ways.
§ THE EARL OF HUNTINGDON
I was coming to that point. I was going to say that your Lordships will raise the obvious objection that by hitting the employers harder, by increasing their contribution, the Government will increase the tendency for employers to dismiss workmen and reduce wages because profits are lower. But this could easily be offset by the Government doing several things—fixing wages so that they cannot be reduced, taking on any men who are dismissed on public works, encouraging other men to join training centres, and, if absolutely necessary, paying relief to such men at a minimum wage rate. By so doing you will during a depression conserve the purchasing power of the working people. I know that this may sound rather unorthodox finance, but for all that I hope that the noble Lord will consider it. This suggestion has two other advantages; it would help to keep the insurance payments balanced and would also, for what it might be worth, be an added incentive to everyone to keep a steady and high level of employment.
Apart from this idea of manipulating the insurance fund, I confess that the measures in the White Paper for relieving the employment situation do not seem to me to be very effective for obtaining good results. It is proposed, by regulating rates of interest on money, and by giving certain facilities to industrialists and to local authorities, to induce these people to curtail their production during prosperous times, when large profits can be made and when everybody feels like spending money, and to launch out into big schemes and undertakings when the depression sets in. But directors are, after all, the servants of the shareholders, the officials of local authorities are the servants of the ratepayers, and human nature is human nature. I think that only if the Govern- 697 ment were prepared to guarantee these gentlemen against any loss, or finance undertakings on an enormous scale, could this proposal have any effect against the terrific panic which does tend to start with the onset of a period of depression.
Apart from the White Paper, there is a red herring which I think has been used to confuse the issue; and that is foreign trade. Here again surely the basic issue is clear. I do not wish to belittle the importance of foreign trade which, of course, is vital to us. But I think it is right to say that about 80 per cent. of our production before the war went to supply the home market. This is the core of the problem, this distribution to the home market of 80 per cent. of our production. Some things we import because we can get them more cheaply than we could produce them in this country. For instance, certain foodstuffs. We also import some raw materials which we have not got, and which we need for our industries, and some useful and luxury goods. Surely, as long as we can import the absolutely necessary materials for industry we are all right and there is no real danger. Obviously the better bargain we can get in exchanging our produce for these things, the better off we shall be. But this does not fundamentally affect our problem of distribution for the home market and it does not determine the possibilities of full employment. The only question, it seems to me, is whether a better bargain could be got for these imports by the Government using the tremendous bargaining weapon of the British market, and perhaps purchasing in bulk, or by the individual industrialist only interested more in his own particular transaction and the profit he will get.
In my own humble opinion I say that undoubtedly the Government should have the power to find out what in future years will be most needed in the way of goods; and they ought to have some control as to what is produced and be in a position to get the very best bargain possible in exchanging our produce for that of other countries. But most important of all, this country—and in this I agree very much with the noble Viscount who spoke earlier in the debate—must do everything it can to raise the standard of living in other countries: in Europe, in Asia and in Africa. On this depends most the prosperity and success of our export 698 trade. Even if—and this is where we come to the red herring—some nations, (the Japanese, for example), try to undercut our prices, surely the answer must be, not to try to reduce our own standard of living, but to excel in skill, organization and technique so as to get the best bargain we possibly can. I, for one, think that if the organizational powers which we have seen used to launch a Second Front in Normandy were turned to reorganizing the economic system of this country we should stand first in the world.
With these criticisms, what does one suggest as a solution of this problem of full employment? I feel that all speeches should contain some attempt at construction, and I would suggest that, in order to ensure full employment, the Government must control four things: prices, wages (in consultation with the trades unions), hours of work and what is produced. Noble Lords on these Benches believe that this can best be done by the State owning the most vital and the biggest of our industries, but whether this is done or not, these four things must actually be controlled by the Government—prices, wages, hours of work and what is produced. When consumer goods begin to be abundant, wages should be raised; in fact they should be kept on a level with rising profits. If this is done you will always find a market for the goods produced. If there is a danger of inflation prices should be controlled. Should absolute production ever exceed absolute demand—which I think most economists consider is unlikely—it is obvious that the balance can be redressed by reducing the hours of work or better still by concentrating more labour into social services. It is a strange thing that the more labour there is concentrated in the social services the less will our economic system be affected by the trade cycle of boom and slump.
Undoubtedly the best feature of all, I should say, in the White Paper is the suggestion for the establishment of an economic staff to study economic conditions, to foresee economic trends and to give advice on economic measures. There must soon come a time when such a staff will become part of the Government, and I suggest the most important part. Such a staff is absolutely essential for any modern State and I for one welcome this prognostication of its birth. There is one last point I should like to make, and this, 699 I think, really is the problem that is worrying many people of all Parties in this country to-day. Many of your Lordships will, I hope, agree with me that mass unemployment can obviously be abolished. The Soviet Union has abolished it by introducing Communism; Hitler has abolished it by concentrating on war and war production; we have abolished it while fighting this war. What noble Lords may be asking themselves is whether unemployment can be abolished without complete regimentation of the individual.
It is quite clear that by complete regimentation we could do away with booms and slumps, we could successfully direct the army of unemployed into useful and productive work. We might even reduce the probability of future wars, which are so largely due to economic causes. But is this worth the price of the sacrifice of the independence of the individual? That, I think, is the basic problem which is worrying many people to-day. It is a trenchant question. I believe that this country can be organized and our production planned without any such regimentation. I believe that a man ought to be able to choose, within limits, what work he wants to do, and I believe also that anybody who has talent or ability should have the chance to use it. There should be no need to direct a person into a particular industry or job; it would be better to attract that person with inducements of better wages, better housing, better conditions generally, and the guarantee of permanent work.
I think that all this could be done, provided the Government keep control over the four necessary pieces of organizing machinery which I have mentioned. Let us give private enterprise full scope, but not the power to exploit or interfere with the happiness of others. Nobody will justify the liberty of one man to become a slave-owner or a war-lord. Let us harness initiative to the general good rather than to individual profit, and we shall be surprised by the good results. The greatest brake on tyranny or regimentation is true democracy, democracy in which people concern themselves with and take a real part in running the country. Let us make every effort to achieve such a democracy, rather than fight against the planning and organization which are essential to our State to-day.
§ LORD SOUTHWOOD
My Lords, on behalf of the noble Lord, Lord Westwood, I beg to move that this debate be now adjourned.
§ Moved, That the debate be now adjourned.—(Lord Southwood.)
§ On Question, Motion agreed to, and debate adjourned accordingly.