Lords Sitting of 6 July 1944

Preamble
The House met, The LORD CHANCELLOR on the Woolsack.
Prayers.

VALIDATION OF WAR-TIME LEASES BILL. [H.L.]
The LORD CHANCELLOR (VISCOUNT SIMON): My Lords, I beg leave to introduce a Bill to validate agreements purporting to create tenancies for periods depending on the duration of the war and certain other events; to provide for the construction of such agreements and other tenancy agreements; and for purposes connected with the matters aforesaid; and to move that it be read a first time.
Moved, That the Bill be now read 1a—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

RURAL DISTRICT OF LUDLOW (CRAVEN ARMS AREA) ORDER.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR INDIA AND BURMA (THE EARL OF MUNSTER): My Lords, I beg to move that the Motion which stands in my name on the Paper be agreed to
Moved, That the Order made by the Secretary of State for the Home Department under the Sunday Entertainments Act, 1932, and laid before the House yesterday, be approved.—(The Earl of Munster.)
On Question, Motion agreed to.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (WORKINGTON) BILL [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.
MINISTRY OF HEALTH PROVISIONAL ORDER (NORTH LINDSEY WATER BOARD) BILL.
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.
MINISTRY OF HEALTH PROVISIONAL ORDER (WARRINGTON) BILL.
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.
NORTH WEST MIDLANDS JOINT ELECTRICITY AUTHORITY PRO VISIONAL ORDER BILL.
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.

FINANCE BILL.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, I rise for the purpose of moving—with the brevity which is suitable, having regard to the business set down for to-day, and suitable perhaps also because an unelected Assembly is not primarily concerned with the details of the Bill—the Second Reading of the Finance Bill. This Finance Bill has one feature which is of interest to all of us: it is one of the very rare cases in which the Finance Bill of the year leaves the rates of the various taxes practically unaltered. The usual excitement about the Budget speech is whether the charges on the citizen are going up or going down. On the present occasion my right honourable friend the Chancellor of the Exchequer has answered that question by saying that, in substance, taxation would not be changed. I do not think that situation has previously occurred since the year 1913. One is reminded of the problem of the schoolmen as to what would happen if an irresistible force should find itself working against an irremovable obstacle, and I suppose we must accept this equilibrium as an indication that the enormous powers of the Treasury, when backed by the House of Commons, are for the moment exhausted in their efforts to squeeze more

703
out of the orange than has already been secured. The consequence is that the ordinary speech about the Finance Bill does not fall to be made at all. But what has been done in connexion with this Finance Bill and indeed with a number that have preceded it, is to take the opportunity of a rather wider survey—some survey of the past of course, but mainly a survey as to the part which finance has to play in the period immediately following the crisis of the war.
Your Lordships will observe that, as it happens, the Motion for the Second Reading of the Finance Bill is raising a subject essentially involved in the debate we had yesterday and which shortly is going to be continued to-day. In the very brilliant speech made yesterday by my noble friend Lord Samuel, he asserted, with I think general agreement, that by this time we might fairly claim that the financial policy of the country during the war had been well devised and achieved. Essentially it consists of three things. From the very earliest days of the war the decision was taken that the existence of war was no reason for reducing taxes but, on the contrary, was a reason why the heaviest possible taxation of all kinds should be imposed, particularly direct taxation, both in order to provide as much as could be provided by taxation to meet the tremendous expense of the war, and also because by that means a most important contribution is made to resist the dangers of inflation. That has been done, and we shall all be prepared to testify, I think, that that principle has been most thoroughly and consistently applied.
The second principle, which is also of enormous importance, is that under the conditions of war a Government like ours ought to be able to borrow, and can borrow, at an extremely cheap rate. I do not say whether that can always be continued, but at least it can be done under war conditions when great control is exercised by the Government over the raising of money for other purposes. Thus we have achieved what, in earlier wars, might have been regarded as quite impossible, and certainly is very different from what was achieved in what is called the Great War. The Government are raising the loans they need at rates of between 2½ and 3 per cent., and in no
704
case going higher. That is very important both as a proof of the solidarity of the country and as a proof of the security in which we fundamentally stand and because, of course, it leaves us with a very much smaller debt charge to face at the end of the war than would arise if we had to borrow at a high rate of interest.
The third of these matters which I also regard as quite fundamental, and which we have treated as fundamental from the very beginning of the war, is that everything possible should be done to induce the pactice of saving throughout the whole population in order that the spare money which arises from abundance of work and overtime, and in some cases from rises in wages, should not be used to force up the prices of commodities and thereby contribute to inflation, but should be used, as far as possible, by way of loan to the Government at a low rate which gives a perfectly good security to the lender and at the same time contributes, by the very fact that the money is so used, to destroying the evil tendencies called inflation. I do not think, after this long period of war has gone by, there would have been many people who thought at the beginning that we could hold firmly by these propositions and do so well by them. We are justified in saying that in that respect our financial management has been successful.
Let me state, in two or three simple sentences, the matters which impress me most. Does the House realize that at present, with this enormous expenditure, day by day, on the war, we are borrowing less than half of the money we need? The Chancellor of the Exchequer put the amount—it was the best he could do—at the round figure of £5,000,000,000 of war expenditure in the current year—a prodigious sum, an incomprehensible sum. The plain fact is that we have not found it necessary to borrow as much as half of our needs because we have succeeded in raising, by taxation, 52 per cent. of the whole. In that way we have enormously lightened the burden which will fall upon this community in various ways when the war is at an end. I remember, and I reminded myself of it to-day, a statement made by a previous Chancellor of the Exchequer in the course of the last war—it was in the third year of the last war—when some criticism was offered that we were not

705
raising enough by taxation, in which the then Chancellor of the Exchequer took very considerable credit on behalf of the country when he said "no country has done what Great Britain has done—namely, provide 26 per cent. out of revenue for the total expenditure of the war." As your Lordships see we are doing exactly twice as well as this in this present year.
Now comes what is the really interesting thing in a financial review such as the Chancellor of the Exchequer made in presenting his Budget and such as, much more briefly, is appropriate on the present occasion. What can be done by the wise use of our financial machine to prepare to meet those new problems which will arise from the need of industry to transform itself quickly from a war machine to its essential role, the mainstay of our peacetime prosperity? That is the really interesting financial question. In answer to that question two observations may be made. The Chancellor of the Exchequer dealt with both. He spoke of some notable proposals designed to make our taxation system play a helpful part in the modernization and so in the progress and development of industry. I will just call attention to these two.
First of all, he mentioned a provision which for the most part is not to be found in the Finance Bill but is part of the scheme to which he is working. It is very necessary when the time comes to give every kind of encouragement that our financial arrangements admit of to industry in respect of its improvement and enlargement so that we alter the burdens imposed on industry in a way that will act to assist rather than to obstruct the revival and full effectiveness of our trade and output. Consequently the Chancellor of the Exchequer referred to these two matters. First of all we must improve by proposals which will encourage the modernization and re-equipment of industrial plant and machinery. Consequently he contemplates a special initial allowance to be given to machinery and plants whereby one-fifth of the actual expenditure on plant and machines in any year will be written off against profits. In connexion with some of the matters mentioned in the debate yesterday we see the importance of that. You want to encourage industry to adopt modern plant to substitute up-to-date machinery for that which may be
706
almost worn out, and by this proposed plan one-fifth of the cost which is incurred in installing new machinery and the like is to be regarded as written off then and there as an initial deduction. The profits to be accounted for to the Treasury by Income Tax will be reduced for the purposes of assessment by one-fifth of the new expenditure which is thus described. I must say I think that a very valuable encouragement to the revival of industry. It has never been done before and it is done with the express purpose of enabling our industrialists to get to work under the most favourable conditions in the shortest time.
The other provision I would specially mention, which is like it in character but different in its application, has to do with research. There must be something wrong with a financial system which does not by the way it arranges its taxes actually encourage research, which is very expensive and often is slow in producing the hoped-for result. Therefore, a second provision is announced which will have this effect, that from an appointed day industries will be encouraged to improve their competitive capacities by the fullest use of scientific research and the application of research to methods of production, and any research expenditure of a capital nature will be allowed as a deduction of profits from Income Tax over a period of five years or over the life of the assets. There again I hope your Lordships appreciate the extraordinarily beneficial character of that. It is very uncommon in Income Tax law to allow a deduction from tax profits on the whole of capital expenditure. Most people would say it was contrary to the general principle of our Income Tax law, but here is a case in which it is proposed to say: "You will prove that you have expended capital amongst other matters on research in connexion with your business with a view to improving its ultimate productivity, and we will allow you to deduct that capital expenditure from your profits and will only require you to pay Income Tax upon the balance." Any research expenditure of a capital nature will be allowed as a deduction from profits for Income Tax purposes over a period of five years or over the life of the assets, and in addition current research expenditure, such as expenditure on salaries and wages and materials being used for the purpose of research, will be allowed as a deduction.

707
It does seem to me that those two features that I have picked out as mere instances are extremely important and have a very close relation to the main subject of our debate yesterday and today. The truth is that it is possible to use the financial instrument if you act wisely so as directly to encourage employment and productivity in circumstances which we are likely to meet with after the war. I have thought it better to pick out those two points and make them as clear as I can rather than survey the whole area of the finances of the Bill because I am sure both these matters are of great interest to your Lordships, and they have, as I have said, a very close bearing on the subject of our debate today and yesterday.
There is one feature perhaps in the financial statement of the Chancellor of the Exchequer which I should mention which is not so satisfactory. We started the war amongst other things with this idea—and we put it into force at once—that in order to keep down the cost of living, and in order therefore to stabilize rates of wages at a certain level, we would use great sums for the purpose of cheapening by way of subsidy some essential commodities. We had a subsidy for milk, we had a subsidy for bacon, we had a subsidy for bread and for a good many other things. Even at the beginning of the war, in my time at the Treasury, those subsidies amounted to as much as £70,000,000 a year and the cost has since extended until I think it is now £240,000,000 a year. Those subsidies were for the purpose of keeping down the price charged to the public for prime necessities and therefore of indirectly removing one of the main causes for which increased wages are often demanded. There would not be any justification for using such vast sums of public money if we did not to some extent secure that result. That result has not been altogether secured because rates of wages which, before the war, were something like 25 per cent. above a certain standard, are now 40 per cent. above that standard, if not more. Consequently, it will be necessary to look very closely into the matter of subsidies, and the Chancellor of the Exchequer has given notice that he himself considers that this matter ought to be somewhat altered to
708
achieve the purpose for which it was designed. I am not aware of any other matter in which our methods of financing the war can be said to have failed. Indeed, it would not be right to say they have failed here. It is only that the subsidies have not had their full beneficial result.
If you take the thing as a whole, my submission to your Lordships is that the Finance Bill and the policy it contains should be unhesitatingly welcomed by your Lordships' House. In so far as it lies within the Government's power industry shall after the war enjoy as favourable conditions as possible in which to face the challenge which the post-war situation will present. Our policy is aimed at that and thereby at assisting the employment policy as set out in the White Paper which this House is now engaged in discussing. We do it in two ways. First, we do it by continuing the sound financial and economic policies so far pursued and by helping industry to achieve a successful change-over from war to peace production in conditions of assured stability at home. We do it also because these proposals made by the Chancellor of the Exchequer in the realm of taxation assure you that all reasonable steps will be taken to make that policy a deliberate instrument of industrial prosperity. By this marriage of financial policy with industrial and social policy we may look forward with confidence to achieving a stability at the end of a period which has brought so much that is hazardous and dangerous. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
VISCOUNT BENNETT: My Lords, far be it from me to cast a shadow upon the bright picture which the noble and learned Viscount, the Lord Chancellor, has painted, but I observe that the Bill not only does increase taxation but does so retroactively. Clause 20 provides that there may be rates of Income Tax charged for 1943–44 which exceed the standard rates for the year by excess amounts such as Parliament may hereafter determine.
THE LORD CHANCELLOR: Speaking without the book I think that is a provision which has to be made now in case it should be desired to alter Surtax in the following year.
VISCOUNT BENNETT: That is Clause 19, but Clause 20 says there may be higher rates of Income Tax for 1943–44. I draw attention to it only because the noble and learned Viscount on the Woolsack does not often overlook anything and perhaps he has not had his attention directed to that.
On Question, Bill read 2a: Committee negatived.

LAW OFFICERS BILL.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, I am sorry to have to inflict myself upon you again but I can explain this Bill in a very few minutes. It provides that where the Attorney-General is not available to do whatever he ought to do the Solicitor-General may do it for him. It is a remarkable fact that we should have lived for so long a time under a Constitution which contained no such provision. Of course, difficulty would arise if there were no Attorney-General, but hitherto I believe it has always been possible to find a proper person to be Attorney-General. If, however, the Attorney-General happened to be ill, or absent on public duty in another country, it would be extremely inconvenient if duties which are specially confined to him could not be discharged for him by his comrade the Solicitor-General. The Attorney-General is the only person who can direct certain prosecutions, and there are other instances of that kind. It has been thought well therefore to provide that if the Attorney-General is not available the Solicitor-General would be able to act for him. I beg to move.
Moved, that the Bill be now read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a, and committed to a Committee of the Whole House.

INDIA (MISCELLANEOUS PROVISIONS) BILL [H.L.]
House in Committee (according to Order): Bill reported without amendment.
PARLIAMENTARY ELECTORS (WAR-TIME REGISTRATION) BILL.
House in Committee (according to Order): Bill reported without amendment.

EMPLOYMENT POLICY.
Debate resumed (according to Order) on the Motion moved by Lord Woolton yesterday—namely, 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.
LORD WESTWOOD: My Lords, it is with considerable diffidence that I rise to address your Lordships for the first time, but as the subject of the Motion which the noble Lord, Lord Woolton, moved yesterday is of intense interest to me I ask your Lordships to bear with me for a few minutes in a spirit of patience and forbearance. I would like to try to bring some practical points before the noble Lord and the Government, not with a view of unduly criticizing but of helping. As the war moves on towards its later stages people are thinking more and more about the future, wondering how the two outstanding and interlocked problems of raising the standard of life everywhere and of providing steady employment for all are going to be solved. That they are soluble and that they must be solved if there is to be any kind of stable equilibrium in the world after the war, there is no doubt; but what the nature of the solutions will be is still far from clear. However, there are many keen minds engaged in the search, and they seem to be looking in one particular direction, where the outlines of a something which is new and promising and, at the same time, strangely familiar, are beginning to take shape dimly through the mist.
On one point there is no haziness of doubt—namely, that the peace, when it comes, must be a solid and enduring one. For the first time, the State has recognized its responsibility for finding jobs for all its citizens. The White Paper on Employment Policy should be of particular interest to our fighting men, the uniformed women behind the lines and to every war worker. They have an assurance that they will not be thrown on the scrap heap when peace is won. But although the Government's broad proposals are sound, there are objections which must be met and omissions which must be rectified. I am particularly pleased that in Chapter I of the White

711
Paper they have accepted the principle of international co-operation. I feel, however, that the main weakness of the White Paper is that it takes it for granted that there will be unemployment. I contend that unemployment must not be allowed to start.
The White Paper has revealed some interesting possibilities for the future, but there are many more sides to this complex question. In the past, whenever unemployment figures mounted to unpleasant proportions, people shook their heads and fell back on one or two explanations. One school of thought said that unemployment is an inevitable part of the evolution of mankind and there is no real answer. The other school of thought admitted that you could reduce unemployment, but denied that you could ever abolish it completely. In the last thirty years we have had two World Wars which have proved both those theories false. In the last Great War we had full employment in this country. In the present war it is the same. In consequence, nobody can ever again say that full employment is impossible. In fact the whole unemployment situation has changed its perspective. To-day it is not a question of whether we can get full employment, but of whether we can get full employment without war. Before that question can be answered fully, it is necessary to discover how war keeps the wheels of industry turning so vigorously. In the first place, in war-time, the Government not only ask but conscript millions of people to become their employees. This, apart from the actual fighting, the Government do to carry out the huge orders which it has placed with industry.
This brings me to a very vital point, as in peace-time the Government would hesitate to place orders of such a leviathan character as they do to-day. In war they are not so much concerned with the cost of things and they spend freely. At once the key to the whole thing is revealed. Employment basically depends upon spending. If the Government, or a group of private financiers, spend freely to step up production, unemployment begins to dwindle. If spending becomes generous enough unemployment ceases altogether. The White Paper, of course, recognizes this fact but it does not explain the process from the man-in-the-street's point of
712
view. Once the Government, or private financiers, stop spending money the fact reflects itself all the way down the scale. A snowball of non-spending begins to run its course, and once these snowballs are started they are not easy to stop. In their final form they represent a slump. Spending, then, is the key to the situation. But how does spending differ in war and peace? The answer is obvious. In war-time the Government spend sums of money they would never dream of spending in peace-time, as they are not worried by fluctuating market demands. It has taken two wars to explain the far-reaching effect of right spending on the life of the nation. It has also taken four years of the present war to change the attitude of the nation to employment generally.
There are several other startling facts which the war has brought to light about unemployment, but the major contribution still centres on the function of spending. Figures may prove the point more conclusively. The Government expenditure in 1929–30 totalled £775,000,000. In 1942 we spent something like £5,500,000,000. And here is the interesting thing. Back in those sluggish years of 1929–31 not only the Government but the nation as a whole would have been horrified if anyone had come forward and suggested that expenditure should be increased in such a bold fashion. We should have been appalled by the thought of bankruptcy or inflation or some other evil. Yet to-day, when we are making this colossal outlay, we are not threatened by bankruptcy, and our credit in the eyes of the world appears to be as sound as ever.
The first major mistake we made in trying to bring unemployment under control in the past was to wait until a slump had gained a stranglehold on industry before we considered any drastic action. The Government's White Paper suggests a cure for this. It proposes to create an economic brains trust which will keep careful watch on all our major industries and sound the warning whenever depression threatens. One vital question immediately presents itself: How long before it occurs can they anticipate a slump? Since shipbuilding is important to this country, I will take that industry, with which I am intimate, as an example. The yards are working at full pressure to-day,

713
but many of the workers are wondering whether history will repeat itself and bring them the "dole" along with the peace. Men everywhere, when we give "pep" talks to speed up production, ask: "What is to become of us after the war?" Are the shipyard workers and the marine engineers to be treated in the same way as they were treated after the last war? Are we to have British ships built in British yards and repaired in British yards instead of being sent abroad?" The Utopia which these men were promised after the last war has been receding ever since. The gap between the two wars, as far as shipping and, in particular, the shipbuilding industry were concerned, shows a sorry tale. Notwithstanding the obvious fact that it was the Merchant Navy in the last war which saved our people from starvation, the shipping industry and all its ancillary industries were allowed to deteriorate. My concern so far as the shipping industry is concerned is for security of employment and the safeguarding of the interests of thousands of British craftsmen, whose hands fashioned and built Britain's world-famous ships.
The idea of waiting for the appearance of the soup-kitchen in shipbuilding yards before placing orders for ships may be a sure method for the shipowner to buy at the lowest price, but it was a poor consolation for the shipyard worker who depended on the industry for his livelihood. The "dole" paid out to idle shipyard workers between the two wars, during the period of depression, would alone have built a great fleet at no additional cost to the nation. On the North-East Coast and in other shipbuilding areas poverty was rampant. The Government introduced schemes to alleviate distress and set up trading estates. These areas were first termed "distressed areas," and then, as that was found distasteful, "depressed areas," a ad finally "special areas." I now see that in the White Paper the term "development areas" is employed, and I think that that is a much better name.
Let us draw some lesson from this experience and look ahead. A full measure of employment cannot be assured after the war for the shipbuilding industries unless the employers together with the workers and their leaders all play a part
714
in its future prosperity, none of them being sleeping partners. The national characteristics which developed shipbuilding and shipping are assets of immense value; they are part of the heritage of our country, which will continue to fructify. There is immense scope in the future for improved ship and marine engine design, but we must have courage and vision if we want to put the industry on a sound footing, and recognize that we have no longer a monopoly of skill or material or plant. Our enemies are already alert. The Nazis, we are told, have made plans to win the peace mainly at the expense of British shipowners, shipbuilders, manufacturers, exporters and seamen. The German naval shipyards, which hitherto have been concerned only with warship construction and repair, are now engaged on the construction of a giant new Transatlantic liner, a motor ship designed to capture the cream of the passenger traffic between Europe and the New World, and this has passed out of the design stage and has been given the name "Der Vaterland." In other yards, where U-boats were once built, work is being carried out on a fleet of fast 18-knot motor ships to carry both passengers and freight, with specially designed refrigerating vessels earmarked for the African service. Certain Japanese shin-owners, and notably the Nippon Yusen Kaisha, have completed plans for laying down a merchant fleet of 16-to 18-knot passenger and cargo motor ships with excellent passenger and crew accommodation, especially for the London service. This means that our enemies have schemed subtly to liquidate in peace the ships and seamen of Britain, who have defied their fleets in the years of war.
Shipbuilding in this country is entering on a new era, and, if it is to regain its supremacy—and it was once responsible for four out of five ships under all the Flags—it must free itself from the shackles of the past. The barnacles of old customs and agreements which hindered efficient production must go if the industry is to flourish and 'be prosperous, and both sides must realize this. All concerned in making the industry a success must work together for the common good, instead of one section trying to maintain and improve its position at the expense of others. It is no exaggeration to say that for every man employed in the con-

715
struction of the hull of a ship, three additional men are indirectly provided with employment in other industries—coal, iron and steel, furniture and furnishing. In other words, the industry gives employment to about a million people. It has often been said that when shipbuilding is busy the country is prosperous. A ship is perhaps the most important single munition of war. "Without ships we cannot live; without ships we cannot conquer." These words of the Prime Minister are deeply impressed on the national mind. A bold programme of shipbuilding to provide the most up-to-date vessels in the world on the cessation of hostilities will be necessary if we are to regain our lost prestige and be in the forefront in shipbuilding. Shipbuilders and their workpeople are equally concerned as to the future, and will welcome a statement from the Government as to the post-war policy for this very important industry.
I wish to touch on another important point which I feel would assist the industry and assist employment. I believe that His Majesty's Government should take early steps to secure a drastic revision of the tonnage laws, and that a clean sweep of the old laws should take place. The fly in the ointment, however, is that some of the shipowners and certain civil servants will take a great deal of pushing before something is done; but, if something is not done soon, the ships which will be built at the end of this war by our builders will not be as good as they should be, and will not give the service to the community which they ought to be allowed to give. The blame for this will be entirely at the door of those who postpone decisions. The proper way to deal with this matter would be by calling an international conference. This is difficult, but at the present time there are only two nations which count, the United States of America and ourselves, and if the two of us were able to reach agreement all the others would fall in with a revision which has been for years overdue.
The present concentration on post-war housing policy should not be allowed to obscure the urgency of equal concentration on a policy for shipbuilding, ship repairing, shipping and marine engineering. It so happens that shipbuilding is
716
one of those industries where the economic brains trust which is to be set up can measure the possibilities for some time ahead. The White Paper shows that there are several possible courses of action which can be followed. One method suggested by the Government for bringing this about is to decrease taxation when things are bad. This would give the people in any particular industry or area greater spending power when danger is threatened. Again, the Government could permit certain industries to make bigger claims for depreciation of machinery, on the strict understanding that this extra saving on running costs is spent on improving the equipment. Whenever special allowances of this kind are made, they should always be linked with the proviso that the money must be spent again in one form or another. This spending immediately means an increased demand for goods of some kind, which in turn means that more men and more women are employed.
Full employment does not necessarily mean everyone working hard and for as long as possible; what it does mean is that we must not waste any of the labour that is available inside the regulations which may be laid down. We can afford to dispense with the labour of the too young and the too old and to reduce the hours of those who do work, in proportion as we make efficient use of the labour which is available for employment and adjust our economic arrangements so as to produce what we really need with the least possible expenditure of effort. For instance, we are going to need something like four million houses after the war. If the Government spent generously on those they would get their money back in the form of rents or taxes, they would employ hundreds of thousands of people and maintain the purchasing power of those people at a high level. The same applies to any private building company which may undertake the job.
During the last war many promises were made but unfortunately were never fulfilled. "Homes for heroes," "A land fit for heroes to live in"—yes, but you have to be a hero to live in some of the houses that were called homes. We are often told that on this Empire of ours the sun never sets. While that may be true it certainly is true that there are houses occupied by some of the heroes of the last war on which the sun never

717
shines. As the right to work is surely, after all, the right to live, and as our lives are not our own to dispose of as we think fit, surely we have the right to live in decency and comfort. Deeds, not words, are needed to carry conviction to the workers, who have been so often deceived in the past, but who are looking forward with confidence to the White Paper.
Whatever drastic means for dealing with widespread unemployment caused by slumps are put forward, the first question everyone asks is: Can we afford it? I suggest that this question should be applied to the slump itself, not to the methods of curing it, because slumps, too, are very expensive things. In fact, they cost far more money than any unemployment relief scheme. The huge depression between the years 1930 and 1934 cost the United States and Great Britain no less than £22,000,000,000 in terms of national income. It is the same with every depression we have ever known. Far more money is lost to the ordinary man in tie street and to the nation when things are bad. In fact, the question we should rightly ask to-day is, "Can we afford a slump?" and the answer is very definitely "No." Too many slumps will ruin a nation far more quickly than too many schemes to cure unemployment. The war is costing us roughly £14,000,000 or £15,000,000 every day. In 1938, if we had spent for 25 consecutive days what we have now been spending every day for some years, it would have cured the unemployment problem. The first necessity when a slump threatens is not only to spend generously but to spend wisely. We have a certain target in view in war-time, and we strain all our financial resources to hit that target. In war-time it is necessary that money which might have been spent by the ordinary man and woman on little luxuries should be saved, and either put into savings certificates or the banks, and be re-invested by the Government in war production. The problem of unemployment is closely linked with the problem of security, so once we get the developed sense of security money will circulate far more freely.
There is another very important point. The abolition of unemployment must not be exploited by the workers or by the employer. There should, however, be considerable improvements in wages and
718
standards of living as full employment brings greater prosperity to the whole country; but worker and employer alike must exercise patience, tolerance and broad-mindedness. If one thing is certain among all the welter of post-war planning which is beginning to take shape and form to-day, it is the need for good will between the different sections of the community. A gradual change is creeping over the face of our working life, but it may easily collapse if we are not patient. These issues will not come to a head immediately after the war. As the White Paper says, there can be no lack of work in the first year or so after peace is declared. The trouble may arise three or four years from now, and then will be the time to see these things in their true perspective.
May I again repeat what I said at the beginning—namely, that unemployment should not be allowed to start? We hear a great deal nowadays about post-war planning, and the plan is always good. "We must make a plan" was the invariable remark of one of the late John Buchan's characters whenever he or his companions found themselves up against anything, and a very sound remark it was. There is never anything to be gained by an endless plunging here and there in the hope that the right way will suddenly appear by magic. Therefore I welcome the White Paper because one day, and with a suddenness that will take a good many people by surprise, this war will end. On that day we shall all have to begin to think differently and act differently, and if we do not have a plan we are going to be caught napping. What are we going to do in the days that will follow the war? What do we want to do? What do we intend to do? These are all questions that the man in the street is asking, and which I am glad to say the White Paper has faithfully tried to answer, and we all sincerely trust it will meet with success.
Let us get a few things firmly fixed in our minds. We are not the victims of circumstance, we are the rulers of circumstances. We can, if we really wish and have the necessary will-power and determination, mould the world to our desires. The old saying that God helps those who help themselves has a lot of sense in it. We can cultivate optimism, we can cultivate self-reliance, we can believe the best of people instead of the worst, we can

719
hope instead of despairing, we can shoulder responsibility instead of dodging, we can ignore minor discomforts, petty mishaps, little irrelevancies and idle regrets, and we can look forward and upward. How, then, are the objects outlined in the White Paper to be reached? This is where I foresee many difficulties. For instance, what is to be done with Controls after the war? Where is the line to be drawn between private enterprise and public ownership? How far does a scheme depend on the policies of other Governments? Vital issues of individual liberty are involved. Our enemies gave their people work and promised them everything but liberty. If we can combine economic and social security with personal freedom we shall be the first nation in the world to do it. Perhaps Britain's political genius is equal to the task.
Lone BALFOUR OF BURLEIGH: My Lords, it falls to me, succeeding the noble Lord who has just spoken, to offer my congratulations, and those of your Lordships, on the maiden speech which he has just delivered. I am quite sure that we shall all look forward with great pleasure to hearing the noble Lord on many future occasions. The White Paper which the noble Lord (Lord Woolton) has presented to your Lordships is a great State document. It has been accepted almost entirely by every section of political opinion throughout the country except what I have heard described as the "lunatic fringe." There is a lunatic fringe at both ends of the political world and, with that exception, the welcome to my noble friend's White Paper is unanimous. I believe that this Paper will justify—I hope it will justify, if performance follows promise—the use of the rather overworked word "epoch-making" because it will mark the end of one epoch and the beginning of a new one.
I wish to say also that in my opinion, and I am sure in the opinion of your Lordships, the speech with which my noble friend introduced this Paper to your Lordships' House, was a great speech. I do not know with what degree of unwillingness or willingness my noble friend undertook the arduous duties of Minister of Reconstruction. I rather suspect it was only a sense of public duty which led him to leave a post where he
720
had made a conspicuous success in order to take on duties of a very arduous and of an uncertain kind. If that be so, I am sure your Lordships will join with me in assuring him that what we hope for, above all things, is that his sense of duty will compel him to administer the execution of the measures foreshadowed in this White Paper, which his pre-eminent common sense, his clear perception of human values, and his dispassionate consideration of what is reasonable, so amply justify him in doing.
I cannot help being struck by the difference between the reception of this White Paper and the reception accorded to what is called the Beveridge Report. The Beveridge Report was an important paper dealing with social services. This Paper transcends that Paper in importance by any number of times, by any multiple you like to give it because the Beveridge Report was concerned with dividing the national income, or national wealth, while this Paper is concerned with the creation of it. There will not be a cake to divide in social services, or housing, or any other of the numerous plans, claims for which are being staked, unless that national wealth can be produced. This Paper points the way in a manner in which it has never been pointed before to the same extent, to the greatest possible national wealth. Full employment, or a high and stable level of employment which means exactly the same thing, commends itself particularly to me because it is the way to produce the maximum national wealth.
We are all inclined to pick out a crucial sentence in this Paper. My noble friend Lord Samuel picked out as his crucial sentence that "technical efficiency … is the dominating factor in the growth of real national income." I agree that that is a gem; this Paper is full of gems. I pick out a different sentence. The crucial sentence which I should pick out is on page 19 where, after stating that action taken by the Government to maintain expenditure will be fruitless unless wages and prices are kept reasonably stable, the Paper goes on to say:
"The principle of stability does mean, however, that increases in the general level of wage rates must be related to increased productivity due to increased efficiency and effort."
That, I consider to be, the sentence which I should select as the most crucial in

721
this great White Paper. The few remarks I ask leave to address to your Lordships would be with regard to the long-term aspect of this policy. Short-term control is a matter of immense importance and difficulty and is dealt with very fully and very ably in the Paper, but what really interests us most is the long-term policy.
I am interested to see, and greatly impressed with, the wisdom which has so arranged it that the very first paragraph of Chapter I refers to our exports. I emphasize this because I notice a tendency in some quarters rather to diminish the importance to be attached to exports. My none friend Lord Addison, who I regret is not in his place to-day, is rather inclined to diminish the importance of exports; but exports are, of course, vital, and I should like to offer to the House a reason which I think will appeal to noble Lords opposite for attributing such great importance to our export trade. Exports, in the first instance, are vital in order that we may have the wherewithal to purchase those imports which we cannot supply for ourselves. That is undeniable. Then comes, perhaps less in order of priority, the necessity of providing for those imports which can be supplied here but less cheaply than we can import them. There you get a measure of expediency which may be adjustable according to the case.
A very good reason for the importance of exports is that in this great new policy, on which we are embarking, co-operation with other people is the order of the day. Unless you buy their exports you are not playing your part in the new world which the noble Lord is inviting us to enter. Consequently, it is a great mistake only to regard our exports as being for our own benefit. In so far as they allow us to purchase more freely imports from other countries, they are contributing to the common end which is the end we are now setting out to achieve. I should like to make one more comment on what my noble friend Lord Addison said yesterday. He said, with regard to some remarks made at a General Election:
"In the course of it people were actually persuaded to believe—I hope 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."
722
It is not so extraordinary if you bear in mind that the whole point of the remark is what amount of goods money will buy. People are better off with x money which will buy a given quantity of goods than they would be if 2x will not buy as much. That is what you have got to remember in considering the question of money. The need for exports brings one straight to the need for efficiency in industry, and the need for efficiency in industry is immensely important also from the point of view not only of enabling us to sell our exports but in order to get the maximum production of wealth.
I listened with great sympathy to what fell from my noble friend Lord Trent when he referred to the danger of what he called ruthless efficiency. I thought that that was a curious thing for an industrialist to say, but I am quite sure I understood what the noble Lord meant. He meant ruthless efficiency in bargaining. I entirely agree with my noble friend that it is a great mistake to have ruthless efficiency in bargaining. We surely have learnt that a good bargain is a bargain which is good for both sides. My noble friend did not mean to dispute that we must have ruthless efficiency of industrial and other processes. That efficiency results from the combination of the highest skill in management with the highest skill in labour all contributing to the greatest possible production of wealth, all giving us a bigger cake to divide. Skill in management is mainly in organization and research on which my noble friend Lord Samuel is so keen, and skill on the labour side is manual dexterity. Efficiency of course also diminishes human toil and that seems to me to be an immensely valuable by-product of efficiency. The greater the efficiency the less the effort in terms of human toil.
I want to digress for a moment to refer to what fell from my noble friend opposite, the noble Viscount, Lord Samuel, in his rather amusing remarks about the past history of different Parties. The noble Viscount, if I may say so, has a happy knack of fitting his history to his theories in such a way that they invariably prove him to have been the only person who after the event was completely right. I am not concerned with the exchanges that took place between him and Lord Latham. Those exchanges have happened before and I hope they will happen again. We

723
on this side of the House always derive great enjoyment from them. But what I am concerned about a little was his remarks about the Conservative Party and Free Trade.
I suppose a good many members of your Lordships' House are not old enough to remember the beginning of the controversy about Free Trade, but there were never such stalwart Free Traders as Conservative Free Traders. I am reminded that a by-election is taking place in Chelsea at this moment and my mind goes back to a contest at Chelsea forty years ago when my father, who I think was a prominent member of the local Conservative Association, advised the local Conservatives to vote for the Liberal candidate in Chelsea who was a Free Trader rather than for the Conservative who was a Protectionist, or what was known in those days as a whole-hogger. My father was a stalwart Conservative if ever there was one, and there was an amusing sequel to that incident. An institution which I believe still exists in Northumberland Avenue called the Constitutional Club summoned a general meeting of its members and expelled him with ignominy from the club. The amusing sequel was that they then found out or remembered that he was the club trustee, and they had to go to him asking him rather politely if he would be so kind as to sign the transfer of investments to get them out of his own name after he had been kicked out of the club.
Where I take objection to the noble Viscount's history is in its incompleteness, because he went on to say that the Conservative Party had backed Protection. Of course what converted the Conservative Free Traders and a great many other people to a measure of Protection was the fact that the whole world went Protectionist, and it is no more use to be Free Trade in a Protectionist world than it is to be unarmed in a completely armed world. The one thing is as fatal as the other. While the policy of Protection did not cure unemployment—I would not say for a moment that it did—I think it did perform some service to British industry, perhaps to the motor car and other industries, although I do not want to argue about that now. I say a truce to these arid controversies. Let us now look forward. Let us forget these old arguments
724
about Free Trade and Protection forty years ago. What do they matter now? I think we have the root of the matter in this White Paper now, thanks largely to the noble Lord.
VISCOUNT SAMUEL: That is what I said.
LORD BALFOUR OF BURLEIGH: I am very glad of that but we will agree to differ about the history. I return to the White Paper and I come back to the need for co-operation. I said just now that exports came first because they were in the first paragraph of Chapter I, but the noble Lord has found a way of making international co-operation come in before them because he has put it in the Foreword. I am delighted to find he has given his full influence to the new policy of collaboration between all countries to pursue policies of full employment to their full advantage. He quoted the statement of the Chancellor of the Exchequer which I think is worth referring to because we have all got to remember it:
"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."
There I think we must all unite in giving the noble Lord our most cordial support.
I admit that one has got to take note of the very interesting point raised by the noble Lord, Lord McGowan. If we are all going to collaborate, if the nations are to collaborate to get rid of these restrictive practices with a view to an increase of trade, this is going to raise some very difficult questions to do with the defeated enemy nations. I am not suggesting that the noble Lord or the noble and learned Viscount on the Woolsack will give us an answer to that question to-day, but it does seem to me immensely to complicate this question of future international trade. I can see a basis for a gentleman's agreement between nations that we shall not any of us resort to artificial devices either of subsidies or other devices which have become so familiar in the last few years for helping our own trade. When it comes to applying that to your defeated enemy I think the difficulties in practice are going to be very great indeed.

725
I would like to make one or two remarks on the financial aspect of this White Paper. I do not think it is unfair to comment that the paragraphs on finance which may have emanated from the Treasury speak with rather an uncertain voice. It almost looks as though different people had different opinions and by way of settling it they had all been allowed to state their own opinion in their own words. But I do not want to stress rather minor differences which may appear. I would like to express approval of the great suggestion which is made about varying the rate of the social contribution. That seems to me an extraordinarily good suggestion and one which I should like to welcome whole-heartedly. I would like to inquire whether perhaps that could not be carried a little further. I am going to venture to read to your Lordships a short extract from what seems to me to be a good article in the Economist of the 10th June on this point. It is quite short, but it raises a point of a very technical character which I hope the noble Lord will look at. The quotation is:
"What is relevant to the stabilization of capital expenditure is that taxation on industry, whether high or low, should be varied from year to year in accordance with the needs of the general economic situation. Thus, it is agreed that the rate of taxation on maintenance and replacement expenditure (however those words are defined) should be nil. Would it be possible to contrive a mechanism by which a small rate of tax was paid on replacements expenditure in some years and a subsidy is other years, the average still being nil over a long period? Similarly it may be right that profits reinvested in the improvement or extension of the business should bear tax at the full standard rate of Income Tax; or it may be right that they should pay a lower rate. But in either case, could the rate be made to vary about an average? And are there any means by which taxation can be used to induce greater stability in the Folding of stocks?"
It is a very technical and very difficult matter, but that proposal is to some extent foreshadowed in one paragraph of the White Paper—I think paragraph 72.
The question has been raised whether the White Paper means that there is an intention to budget for a deficit. None of us like the idea of budgeting for a deficit, although theoretically that course may be perfectly sound, but the thing works both ways. I would heartily support budgeting for a surplus. That is suggested in the White Paper. Once you have the proceeds in the bag you can
726
with equanimity look forward to budgeting for a deficit.
With regard to financial matters generally I entirely support the view expressed I think from the other side of the House that the Treasury should be supreme in this matter. Of course, during the war the Treasury is supreme. I imagine that the Bank of England takes its orders from the Treasury more or less as a department of the Treasury. I remember when the noble and learned Viscount on the Woolsack was Chancellor of the Exchequer we did have a lot of what I think was rather absurd—what word shall I use?—I do not like to say "goings on," but the Chancellor of the Exchequer would not admit that he took responsibility for the bank rate. There was always a doubt whether the responsibility was that of the Governor of the Bank of England or the Chancellor of the Exchequer. There ought not to be that doubt, but the noble and learned Viscount always hedged about it and would never take responsibility. Now it is clear that the responsibility is that of the Government and in my opinion that ought to be so. The Government ought to have responsibility for financial policy, for the ruling rates of money and for the amount of purchasing power in operation which is a potent factor in regulating booms and slumps. If information is required it is always available from the banks through the channel of the Bank of England.
Before I leave the financial side of this matter I would like to say that I think the financial machinery of this country never really gets the credit it deserves but gets a great deal more of the blame than it deserves. The public in this country have become so accustomed to its financial machinery which looks after their accounts and manages their bank transactions with such extreme smoothness that people do not realize what a wonderful machine it is. I should be the last to say that mistakes have not been made in financial policy but what about mistakes in political policy? Noble Lords opposite think that a great deal of harm came from a return to the gold standard and the gold standard is a kind of fetish responsible for everything that went wrong. But what of the political decisions taken, such as the application of sanctions in the Abyssinian matter when we had not got America in the League of Nations? That seems to me about as colossal a political

727
blunder as ever was made. But I do not want to job backwards. Let us look forward and support the noble Lord.
Finally, there is the great question whether full employment is compatible with the maintenance of freedom. I feel absolutely confident that it is and we have got to see to it that it is. There are those who are already beginning to deny it. I say that they are the defeatists. They are as suspect on this matter in time of peace as the defeatists are now in time of war. I should like to inquire into their motives for to-day any man who says that a state of full employment cannot be attained without loss of freedom is seeking to preserve something which he might not be proud of if he had to admit it. I think such people are seeking to preserve either licence or privilege and that applies to the defeatists of the Left as much as the defeatists of the Right. In the future, the test of our citizenship will be whether we are more interested in what we can contribute to the common fund than in what we are going to draw out of it. If every adult man and woman can give an honest right answer to that question then the noble Lord will be greatly assisted in leading us into the promised land to which the White Paper marks out the way.
LORD MELCHETT: My Lords, there have been two notable features of this debate. One is that of all the documents discussed in your Lordships' House none has received more general acceptance from all Parties and all speakers than the White Paper, and the speech of the noble Lord who introduced the debate received and deserved just as warm a reception as the White Paper. Therefore, I find myself in these days when queues are fashionable joining a long queue of those who have congratulated the noble Lord and the Government upon the production of the White Paper. There is another queue in which I find myself. A number of speakers claim to have approved the general views expressed in the White Paper, and indeed in the case of the noble Viscount to have carried them into practice many years ago, long before they were fashionable in many circles. That is another queue I should like to join, because as it happens I divided your Lordships' House on the question in 1932 and was opposed and
728
defeated by the Government. If it had not been for the remark made by the noble Lord, Lord Balfour of Burleigh, about jobbing backwards and for the fact that the debate has already gone on a long time, I had intended to quote rather freely from the remarks I then made, but I shall exercise restraint and go on to other matters.
One point raised by the noble Lord, Lord Woolton, I think requires some examination. It is the tendency now to assume that the unemployment question has been solved by totalitarian countries or that full employment has been achieved by them. I do not believe that to be true. No totalitarian State has ever arrived at the stage of full employment unless it was preparing for war. We have, as a matter of fact, never seen a totalitarian State in the world that was not preparing for war. Until we have seen a totalitarian State that was in fact running on a peace-time basis and able to provide its population with an increasing standard of life for a reasonably long period, I think it is a most dangerous assumption that a totalitarian form of government is able to achieve full employment. I wrote a letter to The Times about the statement made by the Home Secretary a little time ago. I think it is a dangerous fashion of thought and I do not believe it to be true.
There is a second point deriving directly from this White Paper which I think requires examination. That is the question of exports. It has been dealt with by other speakers and I do not want to go into it other than to say that exports are of course very important, and in view of the remarks which fell from the noble Lord, Lord Woolton, as to what has happened to our overseas investments we cannot exaggerate the importance of our export trade. It does seem to me that the White Paper does not deal adequately with the agricultural situation. Here, there is an opportunity for development which I think can hardly be exaggerated. The noble Lord, Lord Addison, said that we could employ another million men in this happy, cheerful and healthy industry. I would not contradict him. I hope his estimate is correct, but if not a million, then certainly a very large figure would be correct. There is no industry in this country in which the gap between scientific knowledge and applied science is wider than

729
in agriculture. Therefore we have more to expect from that than from any other section.
Generally speaking, industry in this country is under-capitalized. Our American opposite number produces very nearly twice as much per man, but then, of course, he has more capital behind him. And this point arises especially in connexion with the capitalization of the agricultural industry of this country. I believe that up to £1,000,000,000 could be spent on our agricultural industry before any question of saturation would arise. If that be true—and I invite the Government to give it their consideration and decide whether they think it is or not—it would mean that there would be created a magnificent market in which we could sell our industrial goods. We could sell there to our own farmers, and the goods would not leave the country but would remain here as part of our national assets. Furthermore, we should have the increased produce of the land to relieve any difficulty that might arise with regard to imports. I think that the economic question in relation to agriculture requires far more careful thought by the Government than it has apparently been given, so far as one can judge from the White Paper.
From the subject of agriculture I wish to turn to another matter which the noble Lord, the Minister, raised in his opening speech. He asked those of us who are engaged in industry to take our products abroad in the spirit of the merchant venturers of Elizabethan days. Well, that is a very powerful and, if I may say so, picturesque appeal, and one to which one would like to respond. I do not think that the noble Lord will find that the adventurous spirit of British industry has altogether departed, but I would venture to remind him of this point. The merchant venturers of the Elizabethan age were not only great exporters; they also laid the foundations of the Empire, and the Empire is another vast economic consideration which, I suggest, receives too little attention in the White Paper. I do riot wish to be thought to be cavilling at the White Paper. I think it is a very great document and I am very grateful to the Government for producing it.
THE MINISTER OF RECONSTRUCTION (LORD WOOLTON): If I may inter-
730
rupt for a moment may I urge the noble Lord not to apologize? What he is saying is just the sort of thing that we want. We submitted the White Paper in order that we could get the views of noble Lords. I sincerely hope the noble Lord will not apologize.
LORD MELCHETT: The noble Lord is very kind. I repeat, I wish to say how pleased I am with the White Paper, and I may say that I hope it will not be long before we have a White Paper on the Empire in relation to the important question of what can be done to bring a single economic policy into being for this great heritage of ours for which we are still so very largely responsible. We ought, I feel, to be able to solve our economic problems within our Empire. My father spoke on this subject many times in your Lordships House, and I too have addressed your Lordships upon it before now. I believe that what I suggest can be accomplished. I think that great attention should be given to this matter by the Government who are now going forward so vigorously in this matter and giving evidence of such enlightened views on the whole economic question. The views expressed in the White Paper clearly mean that these problems are going to be tackled in an enlightened spirit. The White Paper points out not only what can be done here but also what can be done in other countries and in other parts of the British Empire.
My noble friend Lord Addison yesterday raised a very interesting point. He said that there was no policy for wages in the White Paper. He then went on to argue that, in the cost of production, there were a great many other matters besides wages, and he quoted a number of factors. As a matter of fact, if the noble Lord wrote those down he would find that they are nearly all wages. You cannot have a wages policy in a White Paper of this kind because the whole of the national income moves into wages or salaries in one form or another. The noble Lord went further and suggested that a national minimum wage should be laid down which would purport to cover the necessities of life and a certain standard of living for the individual. I think that he does his friends and supporters, the trade unions, something less than justice in putting forward a plea of that kind. That is exactly what they set out

731
to do, and, if I may say so, they do it extremely well. They are very fair and reasonable bargainers and they protect their men extremely well.
I think that the organization of British trade union machinery as part of our industrial enterprise in this country is a very remarkable and a very fine thing. Comparisons, we know, are invidious, but if we consider the trade union organization of this country and those existing in other parts of the world, I think we shall agree that we have a great deal to be proud of. I should not like to see any Government interfering with that and I think that the trade union movement would probably object to any such interference. There is this danger in laying down a minimum wage standard; that it tends to become the maximum wage. Therefore I think it is a great mistake to fix a minimum wage. There is no future for the production of goods unless you are going to have rising wages to provide the money for the purchase of those goods when produced in rising quantities. That is the sole basis on which one can hope for any progress.
Finally, I would like to say this. If one takes a broad outline of the economic shape of the world we live in, one finds still a perpetual rise in the capacity for production and the requirements for production of the nation. In the old days that rise was very largely due to the increase in the population. That has largely come to an end but the rise still goes on. It is due to a great extent to research, and to additional scientific knowledge acquired through the years and put into industrial practice gradually. The rise is mitigated from time to time by the very serious disturbances with which the economic world is afflicted, particularly the type of slump and depression to which Lord Westwood referred, in which you lose almost more than you lose in a war. The White Paper sets itself out to mitigate this depression and so far as possible to abolish it for ever. It seems to me that it is likely to succeed.
Two great requisites are required for further progress—equilibrium and stability—and I believe that they are likely to be achieved under the provisions of the White Paper. You want stability against violent depression and equilibrium in this sense, that it is no use producing an unlimited quantity of some material
732
in a world which only requires a certain quantity. It is no use producing, let us say, 5,000,000 tons of copper if the world only requires 3,000,000 tons. You must produce whatever goods you are going to produce with a view to maintaining the equilibrium of the total requirements of the country. You must not, for example, produce a quantity of steel which is out of all relationship to the coal production. That equilibrium was very largely provided for in the pre-war world by an elaborate process of international agreements and trade agreements of all sorts, sometimes between nations and sometimes between private firms. I see no reason why that machinery should not go on preserving equilibrium if left alone. I see no reason why the policy laid down in the White Paper should not give us stability. On the basis of these two most important, indeed, indispensable, pre-requisites, I see no reason why we should not obtain a satisfactory answer to the major economic problem of how to provide mass purchasing power for a world capable of mass production. That is really the problem which we are up against. Like every other noble Lord who has spoken, I think that this White Paper is a great contribution to the solution of the major economic problem of our time. I wish the noble Lord, the Minister, all good fortune in the task of carrying out what is here visualized.
VISCOUNT BENNETT: My Lords, I regret that I was not present yesterday at the opening of this debate. I desire to make a few observations to-day, despite the fact that I have not yet had the opportunity of reading all that was then said. I should like first of all to congratulate the Government, as all previous speakers have done, on the production of this White Paper. This is an age of science and scientific advance. We are told by experts that this is the day of preventive medicine. We have now applied the principles of preventive medicine in this field, and instead of undertaking the cure of unemployment we have undertaken to prevent it, which is in accordance with the general scientific advance of the time. We inoculate against typhoid and tetanus and diphtheria and other diseases, and thereby prevent them. Now the Government, after much scientific exploration, have submitted to this Parliament proposals for the prevention of unemployment. I think

733
it will be generally agreed that it is much better to prevent unemployment by securing employment than to try to cure unemployment after it has actually happened.
I suppose that most of your Lordships have read the report prepared by the British Committee of the International Chamber of Commerce, in which they deal with world trade in greater detail than it is dealt with in this White Paper. Many of the observations made in that report find a place in this White Paper. They are in agreement upon essentials; they believe that it is possible to achieve a cure for unemployment by providing employment, and that is their conclusion after very careful study of the whole situation. As I see it, employment means work for production, and the consumption of the products by the domestic population or by export. It appears to me, therefore, that the first consideration must be the question of markets. As I see it, markets divide themselves into three classes. First of all there is the home market; secondly, the family or Empire market; and thirdly, the foreign market. With respect to the home market, you have economic problems, you have economic and political problems, and you have purely political problems. There have grown up in this old country industries which perhaps would not be established here for the first time if they did not already exist; and, while the White Paper makes some provision for the shifting of industries as well as of labour, and contemplates the possibility of new industries being established in consequence of wider knowledge and of inventions, it does not make any provision for the maintenance of the home market.
In my judgment—I say this with great deference, especially in view of what the noble Viscount, Lord Samuel, said yesterday—there can be no such thing as a cure for unemployment in this country unless the home market is assured to the people of this kingdom. Here is a market of 45,000,000 people or more, and unless that market is largely available to the producers of this kingdom I cannot see that it will be possible to cure unemployment or to provide full employment. Rightly or wrongly, Parliament did come to the conclusion that it was necessary to take some action by way of tariffs to deal with that situation.
734
In the report prepared by the Chambers of Commerce dealing with the problem of tariffs, they point out that tariffs may be necessary, but should be as low as possible; and, of course, revenue tariffs are matters regarding which no complaint can be made. It is against high tariffs that complaint is made.
The noble Viscount, Lord Samuel, referred yesterday to the word "protection." I have always objected to the use of that word in that sense. Tariffs are merely instruments to afford to the people of this country an equal opportunity with their competitors, and nothing more. Anything which transcends that is bad, and anything that is less than that is no good. In this country you have competition from within, which we all understand, and competition from without. That competition from without is sometimes most ruinous because of the low standard of living of the competitor. We have only to think of the sale of Japanese bicycles in South Africa, and of the standard of living in Japan and the cost per unit. Even in this country and in Canada and other parts of the British Empire we found Japanese goods, the costs of production of which were found to be very much less than in this country or in the other countries of the Commonwealth.
VISCOUNT SAMUEL: Does that apply to American motor cars?
VISCOUNT BENNETT: Yes, very much so, and I will tell the noble Viscount why. With the mass production of motor cars in the United States of America, they can produce them at a lower cost than any other people except the Japanese, who say that they will be able to submit to the customers of the world a motor car costing £100.
VISCOUNT SAMUEL: That is not a question of the standard of living of the American people.
VISCOUNT BENNETT: The American standard of living is the highest in the world.
VISCOUNT SAMUEL: And yet you want protection against it!
VISCOUNT BENNETT: I find many people here have the greatest difficulty in understanding why America has clung to Protection for so long. It is not difficult

735
to understand. Abraham Lincoln put it better than anyone else. He said: "I am not a learned man. I know nothing of economics, and when you talk to me about tariffs and economics I do not quite understand; but this I do know, that when I was a boy the steel rails for the railroads then being built in America were made in Belgium and Germany and England, and the Belgian, the German and the Englishman got the price for them and did the work, and we got the rails. Our Congress put on something called a tariff, and as a result we have the rails and we have the work and we have the money too." That appeal to the American workman during all these years has been decisive. On more than one occasion he has stated that his cost of living is higher than it would otherwise be, but on balance he believes it is better to have work and a good living rather than none at all.
That is exactly the position in this kingdom. Unless some measure of protection is afforded to the producer in this kingdom, giving him equal opportunity with his competitors, I do not see how we can prevent unemployment. What is required for that purpose can be found by a Tariff Board without difficulty, as it has been in the past. The right has been given to this nation to appear before the Tariff Board in Canada, and it did so, with the result that tariffs were lowered, although on more than one occasion an application was made to increase the tariff.
Unless the home market is assured to the people of this kingdom, you cannot cure unemployment. This is the greatest market that there is. Everyone understands the value of the home market; the question is how to retain it. In the days before there was even a low tariff in this country—and it is a low tariff—I remember looking at a saucer in a hotel, and it had on it "Made in Germany." That should not happen. It was made in Germany because the surplus products of any country can be dumped in any other which is willing to receive them. That is exactly what has happened here and elsewhere. The surplus products, after satisfying the home market and the ordinary export demands, are dumped on the markets of countries which will accept them, and the result is the complete destruction of the home industry. That is why in the United States and Canada and
736
elsewhere provision is made for dealing with that situation. That is not dealt with in the White Paper, but unless provision is made to secure this market and to secure equal opportunity to British manufacturers against the world, I cannot think that you can secure full employment.
Secondly, you have already adopted that principle in connexion with your motor industry. Mr. McKenna would not in any way be described as a high Protectionist by anyone. We all knew him as quite the opposite. Nevertheless, we have a tariff on motor cars that ensured to this country a prosperous motor industry. Would anyone say for a moment that we could have had a motor industry of the extent we have in this country today but for the McKenna duties? I took the trouble to make some inquiries about this. I found that the motor industry in the United States was buying its raw products at a price much lower than that at which it was possible to procure them here, and the duty here about equals the difference in the cost of raw materials that enter into the production of a car here and in America. That is the reason the rate was fixed by Mr. McKenna at that time, and so good a Free Trader as Mr. Asquith, as he then was, quite believed that it was essential that these duties should be imposed. If there was a necessity for them then for that purpose, there is a much greater necessity to afford an equal opportunity to the British manufacturer to carry on and maintain employment by securing this market as far as possible to the producers in this country.
The second market, that of the Commonwealth and Empire, or as I prefer to say, the family market, is absolutely essential. I would like to echo what was said by a previous speaker, Lord Melchett. The greatest address that I have ever read or heard upon the question of the possibilities with respect to Empire trade was one delivered by his father, and I still say that anyone who will take the trouble to read the late Lord Melchett's addresses will at once realize that within the four corners of the Empire there is a market that may be made available to the people of this country that will ensure constant and stable employment. I am sure that that is so. All you have to do is to take on the one hand the products of the Empire, and on the other its necessities, and you will find

737
that you have there provision for almost every want that one could possibly think of in the buying countries, capable of being supplied by those which are the producing countries. There is an opportunity. It is true that there are those who are violently opposed to giving preferences in the family market to the products of this land or the Dominions or Colonies. Why should not a family afford some benefits to its own members? The basis of this White Paper and of the Paper on world trade is to be found in two words— "Good neighbours." We are asked to be good neighbours to the world, and we ask the world to be good neighbours to us. There is nothing inconsistent in my being a good neighbour to my neighbour, and also in looking after my own family in preference to my neighbour. This family, spoken of sometimes as the British Empire and sometimes as the British Commonwealth and Empire, certainly affords an opportunity for the producers of this kingdom to find there what is essential—a market for their products.
Lastly there is the foreign market, which involves the whole question of exports and the whole question of international relations. The White Paper is based on the assumption that friendly international relations such as prevail among good neighbours will be maintained. That means that no tariffs will be raised so high as to prevent the interchange of goods. It is pointed out in one of these Papers that it is undesirable that there should be by any possible chance tariffs so high as to prevent those who may owe debts to the country which imposes the tariff to pay them in goods and services, which is the only method by which they can be paid. I am not going to enter into the question of international agreements or of the kind and type of agreement that should be utilized. But I think that those of your Lordships who are industrialists are well aware of the type of agreement that has been made by some countries. We have at least some assurance with respect to international markets in the Atlantic Charter, in the Agreement with Soviet Russia, an agreement for twenty years at any rate, and in the Agreement with the United States. That gives us some assurance of the good neighbour attitude of mind towards the problem of markets.
738
But it does seem to me to be idle to suggest that we can get along without an export trade. I cannot follow the suggestion I have heard made by more than one noble Lord that we pay too much attention to exports. This island is not self-sustaining. It has to buy food products. How is it going to pay for them? That is the whole problem. It can only pay for them by selling something in order to get money in the currency of the selling country, to pay for what it purchases. I see no method by which we can pay for our food products except by exports. We certainly cannot pay from the interest on our investments. I see it stated that in 1938 our interest on investments abroad amounted to £200,000,000. That is a large sum of money, and practically the whole of that has been utilized for the maintenance of our existence, for our integrity as a people, our very existence as a nation.
We have therefore three markets—the home market, the family market and the foreign market. The home market is a political and economic problem over which we have complete control. We could have, if we so desired, much to say with respect to the family market. I have noticed an attitude of criticism of some parts of the preferences, but I did not notice it in 1897 when Sir Wilfrid Laurier gave a British preference of 25 per cent., later increased to 33⅓ per cent. There was no criticism then. Just why there should be any criticism when the process is reversed, and a preference is given by Britain to the goods of the Dominions, it is difficult to understand. So important did the late Lord Salisbury regard the matter that he even went so far as to denounce the treaties with Germany and Belgium in order that that concession made by Canada of a preference to British imports into Canada should be made available for British producers.
The question of the third market—the foreign market—is one over which we have somewhat greater control that at first sight might seem possible. This is the only great country in the world in which there is a market for agricultural products. You have the United States, Canada, Australia, New Zealand, and others as producers of agricultural products, but this is the last great market left for agricultural products. Therefore this country, by the machinery of modern

739
tariffs, has an opportunity of saying something as to whether or not it shall have access to the markets of countries who seek here a market. The United States after the last war imposed the highest tariff in its history. That had a tremendously serious effect on Canadian economy and upon the economy of this country. Later on they passed a Statute by which the President has the right, after inquiry before a tariff board, to reduce the tariffs by executive action but not by more than 50 per cent.—and 50 per cent. of the last great tariff of the United States is a very high tariff. Yet for some strange reason, after we had made provision for preferences, concessions were given to the Argentine as against Cananda. I do not think there should be much difficulty in the British people deciding which fruit is more palatable—that which comes from the Argentine or that which comes from Canada. I cannot but think that the question of markets is the all-important question in maintaining employment. If your factories work and there is no sale for their products, what happens is a condition of slump to which Lord Westwood referred.
I assume that there will be opportunity for discussion of the various projects with which the White Paper deals when they are reduced to the form of Bills and submitted to your Lordships for consideration, but I cannot but think that we must give more and more attention to the question of markets if we are going to effect the purposes we have in mind. In this scientific age we are applying to the problem of employment scientific methods, and if we are to continue to do that I submit we can only succeed if we keep in mind the fact that there must be consumption of what we produce. Consumption means markets; and markets mean action, political and economic, and involve, of course, the question of finance and exchange. I shall not trespass upon your Lordships' time to discuss the question of exchange. That now is in the hands of a great conference, but quite obviously, unless some solution can be found for that problem, our position will be rather difficult. We are greatly concerned with the problem of exchange. When the noble and learned Viscount on the Woolsack stated that finance was all-important, he might have gone further
740
and said that, without a sound financial basis, we cannot possibly obtain the employment that we seek. It seems to me that that is the basis of everything.
While efforts are being made to deal with that in a manner which will be satisfactory, one might be permitted at this time to say that the percentage of the daily expenditure of this country which is taken from the pockets of the taxpayers is the most remarkable incident in this great war on the purely economic side. There has been nothing comparable to it, so far as I have read history. In the last Great War, whenever we got to the point of 30 per cent. being found by taxation, it was thought to be extraordinary, and here we are finding over one-half of the expenditure of the greatest war in world history by taxation.
One of the Ministers the other day said that this country was "broke." What he meant by that was that we had lent to the State to the limit of our capacity. Instead of the State taking money from us, as it has the right to do, taking our all in time of crisis, when our very existence is at stake, the State has given us the opportunity of lending to it and has paid interest. One of the great things that distinguishes this war from the last, from the financial standpoint, in addition to the features pointed out by the noble and learned Viscount, is the fact that this interest is payable to ourselves. Most of our borrowings have been from ourselves. That means that the money is going to come back to us, and that is overcoming in anticipation, so to speak, some of the difficulties we had to meet after the last war. Nothing can equal the importance of the fact that when these vast obligations of ours are being serviced by the payment of interest, that money at once goes into circulation here, and every certificate holder is an embryo capitalist. It is that which is the important thing to remember in connexion with the financial side of this great conflict.
There are a few other points I should have liked to discuss, but in view of the fact that I should merely be repeating what has been already said, I shall not do so, except to say that I cannot but think that this White Paper represents a very great step forward. Whether we can realize to the full our expectations I

741
do not know, but my noble friend Lord Westwood, whom we were so pleased to hear, is wrong in assuming that when so many men are under arms that can be taken as a testing time for employment. Three or four million men have been taken, mostly from industry, and it is difficult to describe the soldier as being employed. It is true that there is no unemployment—that there is complete employment—but part of them are employed in the destruction and annihilation of other people. Speaking as one who has lived most of his life in one of the Dominions, I may say that we have endeavoured to take advantage of all that could be learnt from the wide experience of this country, and while we realize that you have deep-seated prejudices with respect to many things—perhaps I should say convictions rather than prejudices—the fact is that you have been to the world a beacon light. From the prestige of this old land many peoples have learnt lessons of liberty and freedom, but never in my judgment will they have greater occasion to look with pleasure and satisfaction, and with greater desire to emulate your efforts, than if by persistent effort, wide vision, looking far beyond the narrow confines of to-day, you are able to give statutory effect to the provisions of this White Paper. It will be a historic achievement. It will be an achievement which will put this country higher still on the pedestal it has occupied during all the centuries. That is my opinion, as I study this White Paper. The great dominating fact in it is not the question of finance or employment, but the question of maintaining good neighbourly relations with the other peoples of the world.
LORD WARDINGTONMy Lords, like the noble Viscount, Lord Bennett, I was unable to be here towards the end of the debate yesterday and I trust that if what I want to say has already been said much better by previous speakers your Lordships will forgive me. But I should like to say one or two words in support of this Motion. I think the White Paper is a very great achievement, one worthy of the encomiums that have been showered upon it and reflecting the greatest credit upon all those who contributed to its production. It was a sincere and realistic endeavour to grapple with and throw light upon a subject which is full of complexities and contradictions,
742
and I for one who have long tried to grope my way through the many productions written on these problems welcome most warmly this attempt to arrive at something which can practically deal with the conflicting theories on this very important subject. If therefore I dwell on one or two difficulties, it is not with any desire to make a destructive criticism, but because to my mind there are difficulties in the practical application of some of these proposals. If these are not real difficulties, I hope the noble and learned Viscount, who I understand is to reply to the discussion, will be able to enlighten me. If, on the other hand, they are real difficulties and are recognized as being material, I equally hope he may be able to inform your Lordships how best they can be overcome.
The fundamental point of the scheme of the White Paper generally is to iron out the irregular curve of employment and thus obtain a high and stable level of employment; in other words, to abolish alternate booms and slumps in trade. That is a highly desirable object. I do not think it is a criticism of any moment to say that the White Paper does not aim at absolutely full employment (which perhaps in any case is unobtainable in all the circumstances). I think the measures set out in the White Paper by which this gift of high and stable and level employment can be obtained are more likely to achieve success than many of the proposals which have clouded my brain in recent years. They are in general terms to relieve the burden of taxation and contributions to insurance schemes and to lower the rates of interest with a view to encouraging investment in times of depression, and by so doing increase the amount of purchasing power in the hands of the public, whether of individuals or of companies, so that the wheels of trade my be kept going and employment increased. Per contra, when trade is brisk and shows signs of developing into an unhealthy boom, to reverse the process by increasing taxes and contributions to insurance schemes and to raise the rates of interest and restrict capital investment. Those are not new ideas. I remember reading a little book on the subject twenty years ago, when I was travelling to America, which was very much on the same lines. Of the many pamphlets and other productions with which we have all been deluged

743
in recent years, that produced by Messrs. Lever Brothers on similar lines has attracted me most.
In order to guide the authorities as to the proper moment when to apply these remedies and which remedial measures to choose, a statistical service is to be organized. I am afraid that means more forms for industry to fill up, but if it produces the desired result I am sure it will be worth while. I hope, however, the statistics will not be used by every kind of crank to be twisted and turned to suit his own particular theories. I sympathized very much with the Chancellor of the Exchequer the other day when he said there were people who lived in these regions with a freedom and an agility which he confessed he sometimes viewed with alarm because he himself moved in them somewhat laboriously and with faltering steps. If that is true of the Chancellor of the Exchequer how much more true is it in my own case. In these difficult and complicated subjects anything which darkens counsel is to be deplored, and I trust the ingenious and subtle-minded theorists will avoid the temptation of drawing all sorts of clever but unpractical conclusions from the data supplied to the central service. In saying that I am assuming this data will be available to the public.
There does, however, appear to me to be a real difficulty in applying the proposed remedies. When times are bad I fancy everyone will welcome them, but when times are good, when trade is brisk and so brisk that there are signs of an impending boom, how will industry like any restrictive measures? I rather fancy it will be inclined to kick against them. There has always been an outcry against any form of restriction when trade is active. Sometimes the scapegoat is the Bank of England because of the high rates of interest; sometimes the outcry is against a restriction of credit and sometimes the blame is put at the door of the gold standard. At the end of 1920, just before the collapse of the post-war boom after the last war, was a time when we were off the gold standard. It was the same in 1929 when we were on the gold standard, yet the gold standard is supposed to have been the chief scapegoat. Whenever trade is brisk and everything has a tendency to be still more so, any
744
attempts to check it are always likely to be strongly resented, and it will require almost superhuman powers of perception to determine the exact moment when the activity of trade is approaching the danger point. On the Stock Exchange there is a saying that "tops and bottoms are babies' food" and he will indeed be a wise man and still more a brave man who will apply the curb at precisely the right moment, not either too soon or too late.
I will give an instance of the difficulty which I see that concerns me professionally. At the end of the war there will be a shortage of all kinds of goods and a great demand for them accompanied by a release of purchasing power which will still further accentuate the discrepancy between supply and demand. This is a time when by general agreement, however much we may dislike it, Controls in some degree, and possibly an extension of existing Controls, will become necessary. It is after all a matter of common sense, as the Minister of Labour has rightly told us, otherwise there will be a wild scramble. In any case I think there will be many signs and dangers of a boom period. According to the proposals of the White Paper that is the time when restrictive measures ought to be applied.
On the other hand there is a contradiction that puzzles me. Bankers have been exhorted to be extra liberal in granting credit facilities in order that demobilized men may be helped to start businesses, and bankers have expressed their willingness to do everything they can in this direction. That does, however, seem to run counter to the principles laid down in the White Paper. I should be much obliged if anything could be said to clear up this point.
Unfortunately, I was not able to hear the early part of the discussion yesterday and I did not have the pleasure of hearing the noble Lord, Lord Addison, but reading the report of his remarks I thought he was a little hard on the Bank of England for their action in 1931. It certainly was a humiliation that the Bank of England should have to turn to France and American for help in order to get the necessary gold to meet external obligations. Nobody, I imagine, disliked that more than the directors of the Bank themselves, but the alternative

745
would have been to surrender without any struggle, and I do not suppose the noble Lord, Lord Addison, would have thought that a less humiliating action on their part. It must be remembered that the crisis did not originate here. It was the result of panic on the Continent, of withdrawal of deposits, and restrictions on credit, which, of course, had repercussions on the Bank of England; and the great demand for withdrawals of money, which it did its best to meet, resulted in its being defeated by circumstances.
I entirely agree with what the noble Lord said about the desirability of close co-operation between the Treasury and the banks and he will be pleased to know —no doubt he knows it already—that the relations between the Treasury and the Bank of England and between the Bank of England and the bankers, are very much closer and more helpful than in by-gone years. Why should it not be so? We all want the same thing and we are all prepared to do our best to bring it about. This co-operation between the Treasury and the Bank of England is, however, quite a different thing from legal and political control over the banks or the Bank of England. I hope the noble Lord will not think me impertinent if I remind him—I have mentioned it once before in your Lordships' House—that it was a Labour Government which took the responsibility, and accepted the credit, for putting into force the Dawes plan for reconstruction of the German financial system. One of its cardinal provisions was that the new German bank of issue was to be entirely free from Governmental control or interference. The noble Lord may answer that that was a perfectly correct principle to apply to a German Government but that it should not be applied in this country. Personally I cannot help feeling that in many other countries besides Germany Governmental control and domination by political Governments contributed in no small way to the financial dislocation which we experienced particularly in the 1930's.
Another point to which I would like to refer because of something said about it by the noble Lord, Lord McGowan, with which I have every sympathy, is in connexion with cartels. Everyone agrees that these are capable of abuse, and may degenerate into devices for keep-
746
ing up prices and creating monopolies, and so may militate against the general good. Yet the principles behind them are identical with those enunciated in the Atlantic Charter, which emphasizes the necessity of avoiding cut-throat competition and advocates international agreements and co-operation and the creation of spheres of interest. It is exceedingly hard to understand why things which are commendable between nations are criminal between industries.
I would like to say one word if I may about our export trade, because its importance cannot be exaggerated. Everybody agrees that export trade sufficient to pay for our food and raw materials is essential, but I would like to go a little further and say that export trade is desirable for its own sake. Every debit has a per contra credit and no exporter would export unless he could get payment for his goods. Generally speaking, he can only be paid for those goods by imports into this country. The more he exports the greater employment he provides and the more his wants are met from imports. I saw that one honourable member in a debate in another place said exports had nothing to do with the provision of work. How he come to that conclusion I cannot imagine. The greater our exports the greater will be our employment. If we were self-sufficient I agree' that additional exports would be unnecessary, because if we were self-sufficient we would not want to import anything, but that is far from being the case.
Then there is the question about unbalanced Budgets. If that merely means, as I interpret it to mean, that in some years it may be desirable owing to the state of employment not to insist on a balanced Budget, but that in subsequent years a deficit would be made good when employment was better, I see nothing to quarrel with, but of course it will have to be carefully watched. If it appeared that we were unbalancing the Budget without thought and regarded a series of unbalanced Budgets as a matter that did not signify, then our credit as a nation would certainly suffer, but on the lines proposed by the Chancellor of the Exchequer I see no difference in principle between this and a commercial company establishing a dividend equalization fund. This White Paper does not pretend to be a cut-and-dried scheme with all its i's

747
dotted and t's crossed, but it does seem to me an honest, carefully-thought-out plan to be corrected where necessary in the light of experience, and I have little doubt that your Lordships will heartily approve the Resolution.
VISCOUNT ELIBANK: My Lords, in the very few minutes left before this debate ends I should like to congratulate the Government on bringing up this question which I regard as one of the most vital of those with which we shall have to deal after the war. My own experience goes back to the time when I represented one of the constituencies in the largest industrial area in Scotland after the last war. The question of unemployment then created the most tragic results and very nearly led to industrial civil commotion in that part of the country and in other large cities in Great Britain. I feel that the Government are very much to be congratulated on having brought this question forward, and on having dealt with it in such a comprehensive manner. I wish them all success in their efforts, and I hope that the scheme outlined here when put into practice will bring the fruits which we desire.
But I should like to say just three or four words in regard to the question of export trade. I followed the remarks of the noble Viscount, Lord Bennett, with the greatest of interest. He divided our trade into three: the home market—and I agree with everything he said about that—the family market, which is the Empire market, and the foreign market. I have never been what is called a hide-bound Protectionist. I do not believe that even the noble Lord over there, if he had followed my public career, would have found that I had ever given expression to high Protectionist views. But I have been a supporter, and an out-and-out supporter, of Empire trade ever since I first went into the Empire myself nearly forty years ago.
I believe that the Ottawa Agreements—and I say this quite deliberately—have been of the greatest advantage to this country. Not only were they of the greatest advantage in peace-time before the war, but they were of the greatest advantage when we entered into the war because we then had in being arrangements with the Commonwealth under which large supplies of food were coming
748
regularly into this country. It may be necessary to modify the Ottawa Agreements to some extent, but I do urge upon the Government that they do nothing which will destroy them. I submit that those Agreements should remain alive "within the family," as the noble Viscount, Lord Bennett has said, to the advantage of this country, of the Empire as a whole and of the British Commonwealth itself. I maintain that we have just as much right to make our arrangement within the Empire as the U.S.S.R. have the right to make their arrangements among the many Republics which form that great nation, and just as much right to do so as the American Government have to make similar arrangements with their own States within the United States of America. That is the point which I really desired to bring before your Lordships.
I would also suggest that it is most important that we do all we can to raise the standard of living throughout the world. Unless the standard of living is raised everywhere we cannot expect to have steady employment in this country. I suggest, further, that we can help in this way by the development of the backward areas in Asia and Africa with their teeming millions now living under what are, in many cases, almost abject conditions. We have to do everything we can to raise their standard of living, and in doing that we can help our own trade. I agree with the noble Viscount, Lord Samuel, as to trade restrictions. Our object should be to assist trade to flow more evenly and more smoothly and to enable all the nations to take advantage of the raising of the standard of living elsewhere. Cheap money is naturally bound up with that question, and I am very glad to see that the White Paper has made special mention of that. With those few words I commend this White Paper and I would only add that I am extremely glad that the Government have brought it forward at this period.
LORD WINSTER: My Lords, I feel that I should apologize to your Lordships for intervening now in a debate which, through circumstances beyond my control, I have not been able to attend previously. I shall intervene only for a very few minutes. When I entered your Lordships' House the noble Lord, Lord Wardington, was speaking and I was particularly glad

749
to hear him, in the course of his speech, absolve the Labour Government from responsibility for the unfortunate financial events of 1931. The noble Lord places responsibility abroad—in distinction to the efforts of those who constantly endeavour to place the responsibility at the door of the Labour Party. I also heard Lord Wardington describe the White Paper as a sincere and realistic effort to deal with the problem of unemployment. "Sincere and realistic" are very precise and definite words, and may I call your Lordships' attention to what was said by the Chancellor of the Exchequer in another place when speaking for the Government on this White Paper? The Chancellor said:
"It is inevitable that there should be a certain element of vagueness in a preliminary study covering a very wide area of uncharted sea"
If ever I am engaged in making a sincere and realistic effort about anything, I hope that I shall be able to describe my efforts in rather more precise language than the Chancellor of the Exchequer was able to use in describing the efforts of the Government in this matter.
In fact, the Motion that we have been debating yesterday and to-day is really and simply the expression of a pious hope and nothing else, a pious hope in which a Government which almost certainly will not be in power after the war, accept responsibility for maintaining a high level of employment after the war. It is extremely easy to accept a responsibility which, in all probability, you will never be called upon to carry out, and this Motion, as I have said, is a pious hope and nothing more. But I rise really for the purpose of supporting what I understand was said by my noble friend Lord Westwood, in his maiden speech to-day, on the subject of employment in the Merchant Navy and the shipbuilding industry after the war. In that respect I may say that I share the surprise of my noble friend Lord Wardington concerning what was said in another place about our export trade having no bearing whatever upon employment. That, to me, is a most remarkable statement, and it is particularly so, I think, if one has the Merchant Navy in mind. Many promises are being made to the officers and men of the Merchant Navy at this moment. They are being told by Government speakers that a large and prosperous Mercantile Marine is their due, and that it will be the care
750
of the Government to see that we have such a Mercantile Marine after the war. Unless we are greatly to expand our export trade above pre-war figures, I really do not see how those promises to the Merchant Navy are to be carried out, and from that point of view alone surely a large and expanded export trade must be one of the first cares and responsibilities of any Government which is in office in the post-war period. I think we have to take great care at this moment not to make contradictory post-war promises, because promises of a greatly expanded agriculture can perhaps not be reconciled entirely with promises of a great Mercantile Marine.
With regard to what was said by the noble Lord, Lord Westwood, about the Mercantile Marine and shipbuilding, I certainly do not intend for a moment to go over the whole story of the pre-war situation of shipbuilding. It can be summed up in one word—Jarrow—and it is familiar to all your Lordships. I do want to make the point, however, that the fulfilment of the promises which are being made to the Merchant Navy and to the men engaged in the shipbuilding industry should not he regarded merely as an obligation to those two categories of labour, because these two questions of merchant shipping and shipbuilding are closely and intimately bound up with the much greater question of national security. The great dangers with which we have been encompassed during this war, and through which we have come safely, are dangers which have been mainly associated with our lack, when war broke out, of a large Mercantile Marine and of shipbuilding facilities to make good our deficiencies. In that respect, therefore, I hope that the noble Lord, Lord Woolton, will be able to say something on the question of employment in the Mercantile Marine and in the shipbuilding industry from the point of view of national security.
That is all that I wish to say, except that, as a member of the Labour Party, I welcome this deathbed repentance of a Government with a large Conservative majority, accepting the responsibility for maintaining a high level of employment. Any Government with that aim in view will always command the full support of the Labour Party.
LORD WOOLTON: My Lords, I have always found it more profitable in life to listen to other people's speeches rather than to my own, and at this very late hour I do not propose to make any long and complete reply to this debate. Indeed, there is little to which to reply. I have submitted a Resolution to you. The noble Lord, Lord Winster, says that it is a mere pious expression of opinion. Well, I hope that he will join in the piety, and at any rate support us in this. I gathered from his closing observations that he was inclined to give us support, even though he thought that it was a little late that this Government had repented. I will not for a moment be drawn into a political discussion, but, of course, if this Government—this mixed Government—have been a little late, there were other Governments (I do not particularize) who have been in office in the past, who have been a little late too.
I think that your Lordships have enjoyed this debate on the whole. It has been the first occasion for a long time when we have had a sign of some of the old political fun coming into a debate. I noticed that some of your Lordships, after you had had the fun, decided that these old-time quarrels were arid, but you had your fun first! I thought that that was very human. I am very grateful, speaking on behalf of my colleagues, for the support which you have given us. In fact, there has been only one discordant speech regarding this White Paper, and that fell from the noble Earl, Lord Huntingdon, who, having looked at it, said that he would have none of it and was going back to the true faith of complete Socialism. All the other speakers seemed to be in general accord.
The noble and learned Lord Chancellor, in his remarks on another subject, was good enough to relieve me of the necessity of dealing with one of the points which have arisen in this debate—namely, the importance of increased efficiency in industry and the help which the Government are prepared to give to that end. The noble Lords, Lord Addison and Lord Melchett, complained that we had not mentioned o agriculture, just as the noble Lords, Lord Winster and Lord Westwood, complained that we had not mentioned shipping. That was a temptation which those of us who were responsible for the White Paper had to withstand, because it is true that if we had particularized and
752
tried at this stage to give a precise panacea for the troubles of individual industries, I do not say that we should have been going into uncharted seas, but we should have produced a report of enormous length, and personally I think of less value, because there is something to be said for having principles in life.
There is a great deal to be said for the Government expressing in clear language in this Paper the principles for which we stand on this issue. I do not believe that any Government in the future, of whatever Party it may be, will be able to go back on those principles, because I believe that they are going to have wide acceptance in the country. It was because we wanted to establish those principles as simply as we could that we did not deal with particular interests. There is some reference to agriculture in paragraph 7, but there again it is very general. I have no doubt of the importance of the widest and soundest agricultural development possible in this country. My noble and learned friend the Lord Chancellor, after referring earlier to the concession which the Chancellor of the Exchequer was prepared to make for industry, passed me a note, for which I am grateful, in which he says: "These special allowances will extend to the agricultural industry as well as to other industries, and the landowner will be treated as a co-partner of the farmer in so far as he incurs expenditure on buildings, plant and machinery for the purposes of agriculture." I am grateful to the noble and learned Viscount for passing me that note, because I think that it will give encouragement to the agricultural industry. I am tempted to say something about agriculture, but I had better not do so, because there will be other occasions when we shall have a fuller debate on that subject.
The noble Lord, Lord Balfour of Burleigh, said that in this Paper he had found many sentences which had given him some pleasure. We have had a good many in the debate. The noble Viscount, Lord Samuel, in what I hope he will allow me to call his very brilliant speech yesterday, said two things which I shall remember and which I am sure I shall quote. I hope I shall always remember the author. They were "The cure for unemployment is employment," and "The proof of the pudding is in the

753
digesting." I am most anxious that the country should digest this White Paper, and that it should be very widely discussed, because it will be the substance, I believe, of many political conversations in the future.
I was very grateful for what I thought the courageous and constructive speech made by the noble Lord, Lord Trent, yesterday. He had gone to infinite trouble in order to come and address us. I found that speech very helpful indeed. He asked, like several of your Lordships, what we are going to do about these Controls. Well, there are various opinions about the Controls. There are some people, indeed, who like them. I will not wonder why, but I can tell your Lordships that we have already prepared a whole list of these Controls. We have had an official Committee working for some time to see which can be got rid of at the earliest possible moment, and how the other Controls can, with advantage to the country, be got rid of as conditions allow. The thing about which I would appeal is this: do not let us make a mad rush to get rid of Controls and throw the whole of industry into a state of disorganization in order that we might say we have got freedom. If the Govern-merit take the responsibility for exercising so much control as we have had to do during the war, then it is under an obligation to have an orderly unwinding of those Controls. I can assure your Lordships that we are not waiting until the war is over before we consider these things. In fact, I do not think we shall be more unprepared for the process of unwinding than we were for the process of imposing the Controls.
The noble Lords, Lord Trent and Lord McGowan, made some observations which I am very glad to have on record, regarding the question of restrictive practices. I thought it was interesting that both of these great industrialists in effect said to us yesterday, "Let the Government have an inquiry and let them satisfy themselves and subsequently public opinion, that these restrictive practices are in the interests of the country." I was very glad I pressed Lord Trent, as you would notice, to say whether he wanted that inquiry to be a public inquiry, and I was very glad that he said No. Do not let us get emotional about this question of restrictive practices and cartels. Let us look at that practically, see what
754
value they have; some of them may have value, some of them may not have value —I do not mean value for a restricted class, I mean value for the whole community. I can assure your Lordships that I think it is a responsibility of Government to inquire into these issues and, having inquired, to advise Parliament. And I can say that my cob leagues in the Government, I think, will share that view, and that you may subsequently expect to hear that we have set up a form of organization, I think an internal organization, that will make the inquiry for which Lord Trent asked.
Lord Balfour of Burleigh said we were dealing with the creation of national work and not the dividing up of it, and I thank him very much for that phrase, as well as for the observations he made on the efficiency of industry. Do not let us depreciate the efficiency of industry in this country. We have had a long period in which we spent much time—and the more intellectual we were the more time we spent on the process—in depreciating various things in this country. It went on during the pre-war period, and a lot of people were engaged in the occupation. They were wrong. When we came to the test of war we found that we were not the poor things that so many had said we were. Now let us look at British industry quite straightly. It has done a marvellous job during this war. I believe that it is going to do a marvellous job after the war. I am sure there are some things that are wrong about it. This is England, not the Kingdom of Heaven; why should there not be something wrong about it? But let us encourage the industrialists, and do not let us keep wondering whether British' industry is going to be all right after the war. I believe that it is. I believe that it will render a great service to the country, and I am quite sure that without a high standard of efficiency in British industry we are not going to be able to live.
If the noble Lord, Lord Wardington, were here, I would assure him that the Government have no intention of going on a crusade of Strength through Statistics. He seemed doubtful as to what we were going to do with them, but the noble Lord is a very famous banker, and he knows that they could not conduct that great bank over which he presides without a great deal of statistics being brought to the management of the bank.

755
We want just the same thing, and over a wide range, for those who are concerned with the government of this country. Lord Barnby asked me whether we would have statutory powers, and the answer is Yes, we shall take statutory powers in order to get those statistics. I hope we shall get those statutory powers by a Bill in Parliament, so that it remains as a permanent part of our organization and not as a war-time part of our organization. I have none of the doubts that Lord Warclington has about whether people are going to mistranslate these statistics. Statistics are merely a help to knowledge, and we must not be afraid of the weapons.
The noble Lord, Lord Teviot, who has been good enough to come to the House to-day at, I understand, considerable personal inconvenience, asked me many questions, and said he did not expect me to answer them all. Some of them I should like to answer. He asked whether the Government intend to carry out the deconcentration of industry. The answer is this. When my right honourable friend Mr. Lyttelton was President of the Board of Trade this process of concentration was started. At that time he issued a White Paper, and either in that White Paper or in a statement in the House he promised that favourable consideration would be given to the needs of those firms that have been concentrated when the time came for deconcentration—if there is such a word! Having brought the word "dehydration" into common use, I should not like to be associated with the word "deconcentration." It is quite clear that the Government are responsible here, and I hope it will gratify the noble Lord when I tell him that my right honourable friend the President of the Board of Trade has already set up machinery to carry out the undertakings which were given.
I have kept your Lordships much longer than I intended, but I do not think I could have occupied less time than I have done. You have given us in the course of the debate very great encouragement. I personally believe in this White Paper. It is a vision of the future, I agree. My noble friend Lord Balfour of Burleigh said it was a new world into which we were entering. It is a new world based on the old world. There may be idealism in this Paper, but we
756
should be a poor country if we did not have idealism. We should be a poor kind of people if we did not have some vision of the future. I believe that all these proposals are based on practical views, and I believe that the prospect we have in future is one that comes by way of steady evolution and the application of modem scientific methods. I am convinced that your Lordships will give us, by your vote, for which I now ask, the encouragement you have already given by the speeches you have made in accepting this White Paper.
On Ouestion, Motion agreed to.

MIDDLESEX COUNTY COUNCIL BILL.
Report from the Committee of Selection that the following Lords be proposed to the House to form the Select Committee for the consideration of the said Bills, namely:

E. Poulett,

L. O'Hagan (Chairman),

L. Boyle (E. Cork and Orrery),

L. Monkswell,

L. Kenilworth;

Agreed to, and the said Lords appointed accordingly. All Petitions referred to the Committee with leave to the Petitioners praying to be heard by counsel against the Bill to be heard as desired and also counsel for the Bills.