Lords Sitting of 6 August 1947

Preamble
The House met at half past two of the clock, The EARL OF DROGHEDA on the Woolsack.
Prayers.

  GOVERNMENT OF INDIA (GOVERNOR'S ALLOWANCES AND PRIVILEGES) (AMENDMENT) ORDER, 1947. GOVERNMENT OF BURMA (GOVERNOR'S SALARY, ALLOWANCES AND PRIVILEGES) (AMENDMENT) ORDER, 1947. GOVERNMENT OF BURMA (HIGH COURT JUDGES) (AMENDMENT) ORDER, 1947. MESSAGE FROM THE KING.
  THE EARL OF CLARENDON: My Lords, I have the honour to present a message from The King signed with his own hand:
  "I have received your Addresses praying that the Government of India (Governor's Allowances and Privileges) (Amendment) Order, 1947, the Government of Burma (Governor's Salary, Allowances and Privileges) (Amendment) Order, 1947, and the Government of Burma (High Court Judges) (Amendment) Order, 1947, be made in the form of the respective drafts laid before Parliament. I will comply with your request."

ELECTRICITY BILL.
Returned from the Commons with certain of the Amendments agreed to, and certain others disagreed to with Reasons for such disagreement: The said Reasons to be printed.
TOWN AND COUNTRY PLANNING (SCOTLAND) BILL.
Returned from the Commons with certain of the Amendments agreed to, and certain others disagreed to with Reasons for such disagreement: The said Reasons to be printed.

HOUSES FOR AGRICULTURAL WORKERS.
LORD AMHERST OF HACKNEY: My Lords, I beg to ask the first question which stands in the name of my noble friend the Earl of Selborne.
[The question was as follows:
To ask His Majesty's Government whether they can state whether any, and if so how many, of the 7 000 houses which the Chancellor of the Exchequer has announced have been completed in rural areas, have in fact been let to agricultural labourers.]
LORD HENDERSON: My Lords, I think that the figures quoted by the Chancellor of the Exchequer were intended to relate to the number of new permanent houses completed by rural district councils at the end of April, 1947. We have only recently begun to obtain returns of the number of houses let to agricultural workers, but according to the latest returns 1,819 new permanent houses have been so let.

HOPS REORGANIZATION COMMISSION.
LORD AMHERST or HACKNEY: My Lords, I beg to ask the other question which stands in the name of my noble friend the Earl of Selborne.
[The question was as follows:
To ask His Majesty's Government whether they can state when the Report of the Hops Reorganization Commission was received and when it is going to be published.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF HUNTINGDON): My Lords, in answer to this question I would say that the Report of the Hops Reorganization Commission was received in March, 1947, and it is hoped that copies will be available within the next month.
LORD AMHERST OF HACKNEY: Does not the noble Earl consider that five months is rather a long time to wait for the publication of this Report? After all, there are many hop growers who are put to serious inconvenience and possible loss by this delay.
THE EARL OF HUNTINGDON: We do realize the difficulties of delay, but this is due to difficulties of printing. There is a very big hold up in printing, but we are making every effort to get the Report through.
EARL DE LA WARR: Does the noble Earl really say that the only reason for the non-publication of the Report for five months is due to printing?
THE EARL OF HUNTINGDON: Yes.

COAL FOR TEXTILE FACTORIES.
LORD CALVERLEY: My Lords, I beg to ask the question that stands in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government, whether in view of the fact that the wool textile industry has ample stocks of raw material and an increasing number of operatives the appropriate department will give a guarantee, that factories creating their own steam power shall have the necessary stocks of coal from now onwards and give the industry the opportunity to expand its export market in the "hard currency" markets.]
LORD CHORLEY: My Lords, coal allocations to the wool textile industry, as indeed to industry generally, during the summer months are based on the actual rate of consumption last year. Special provision has been made for deconcentrated firms and, in addition, limited increases in allocations over and above last summer's consumption have been made in certain cases. As regards additional supplies of coal for an expansion of production by the woollen industry, I would refer my noble friend to the reply I gave on this subject yesterday to the noble Lord, Lord Barnby.
LORD BARNBY: My Lords, arising out of that reply, with the indulgence of the House, may I ask this? The noble Lord stated that the coal allocation is on the basis of 1946 and he is no doubt aware that the wool textile industry was last year on a much lower level of activity than it is at the present moment in response to the urgings of His Majesty's Government. Therefore, such an allocation, apart from the actual deliveries against the allocation,
1024
is grossly insufficient for the existing requirements of the wool textile industry. Secondly, can the noble Lord name any other industry of that size, comparably situated, which is operating entirely on raw material of sterling area origin, with its present activity far above that of previous years but still below orders, where a large part of the production is being directed into export?
LORD CHORLEY: My Lords, with regard to the first of the supplementary questions put to me by the noble Lord, my noble friend is well aware that the wool textile industry, and other industries, would welcome much larger allocations of coal; and, indeed, as my answer made clear, there have in fact been allocations over and above the allocation originally made. They have been rather small, but during the last months some thousands of tons of coal over and above the original allocations have been allocated for the wool textile industry. With regard to the noble Lord's second supplementary question, I am afraid that I am not in a position to answer it without notice, but if he would be so kind as to set it down for me in writing I will see that he gets an answer.
LORD BARNBY: My Lords, since the reply given is not a full reply to the suggestion that allocations are below actual requirements, may I ask the noble Lord if he would be good enough to make representations to the proper quarter on that subject so that it may he dealt with?
LORD CHORLEY: Certainly.
LORD CALVERLEY: My Lords, as the one who asked the original question, I content myself with saying that the reply is Most disappointing, and I hope to have the opportunity of drawing the attention of your Lordships' House to it later.

SUNDAY ENTERTAINMENTS ACT, 1932.
CITY OF YORK ORDER;
COUNTY BOROUGH OF READING ORDER;
BOROUGH OF BEXHILL ORDER;
BOROUGH OF ECCLES ORDER;
URBAN DISTRICT OF REDDITCH ORDER.
LORD WALKDEN: My Lords, I beg to move that these Orders be approved.
Moved, That the Orders made under the Act by the Secretary of State for the Home Department, for extending Section one of the Act to the said areas, be approved.—(Lord Walkden.)
On Question, Motion agreed to.
House adjourned during pleasure, and resumed by The LORD CHANCELLOR.

AGRICULTURE BILL.
2.42 p.m.
Order of the Day read for the consideration of Commons Reasons for disagreeing to certain of the Lords Amendments.
THE EARL OF HUNTINGDON: My Lords, I beg to move that the Commons Reasons be now considered.
Moved, That the Commons Reasons for disagreeing to the said Amendments be now considered.—(The Earl of Huntingdon.)
On Question, Motion agreed to.

LORDS AMENDMENT.
[The references are to Bill No. 75 as first printed in the House of Lords.]
Page 12, line 6, at end insert—
("Provided that no direction shall be given either while a supervision order is in force or otherwise which shall alter the character of a holding from that which existed when the contract or tenancy agreement was made.")
The Commons disagreed to this Amendment for the following Reason:
Because the Amendment would unduly restrict the powers of the Minister to secure good estate management and good husbandry.
THE EARL OF HUNTINGDON: My Lords, this Amendment, which has been disagreed to by the Commons, has been discussed fully in your Lordships' House both in the Committee stage and in the Report stage. In view of that, I beg to move that the House doth not insist upon the Amendment.
Moved, That this House doth not insist upon the said Amendment to which the Commons have disagreed.—(The Earl of Huntingdon.)
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 25, line 22, after ("Minister") insert ("give notice to the landlord that he proposes to")
The Commons disagreed to this Amendment and the following Amendment for the following Reason:
Because the interests of the landlord of a holding are sufficiently protected without the appeal provided by the Amendments.
THE EARL OF HUNTINGDON: My Lords, I beg to move that the House doth not insist upon this Amendment.
Moved, That this House doth not insist upon the said Amendment to which the Commons have disagreed—(The Earl of Huntingdon.)
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 26, line 3, at end insert—
("(3) Any person to whom notice of a proposal is given under paragraph (a) of the last foregoing subsection may require that the proposal shall be referred to the Agricultural Land Tribunal established under Part V of this Act, and the provisions in that behalf of the said Part V shall apply accordingly.")
The Commons disagreed to this Amendment and the preceding Amendment for the following Reason:
Because the interests of the landlord of a holding are sufficiently protected without the appeal provided by the Amendments.
THE EARL OF HUNTINGDON: My Lords, I beg to move that the House doth not insist upon this Amendment.
Moved, That the House doth not insist upon the said Amendment to which the Commons have disagreed.—(The Earl of Huntingdon.)
On Question, Motion agreed to.
2.47 p.m.
EARL DE LA WARR EARL DE LA WARR had given Notice that he would move the following Amendment in lieu of the Amendments at page 25, line 22, and page 26, line 3, not insisted upon:
Page 26, line 3, at end insert—
("(3) The Minister shall not grant his approval under the last foregoing subsection of the carrying out of an improvement consisting of the erection of buildings or the making of roads until lie has given to the landlord notice in writing of the proposal to grant the approval and the landlord to wt ors such a notice of a proposal is given may require that the proposal shall be referred to the Agricultural Land Tribunal established under Part. V of this Act, and the provisions in that behalf of the said Part V shall apply accordingly.")
The noble Earl said: My Lords, I beg to move this Amendment in lieu of the Amendments the omission of which we

1027
have just accepted, but I think it may perhaps be for the convenience of the House if we first heard the noble Earl's comments on the Amendment in lieu rather than make my remarks.
Moved, That this House doth propose the said Amendment in lieu of the Amendments at page 25, line 22, and page 26, line 3, upon which the House doth not insist.—(Earl De La Warr.)
THE EARL OF HUNTINGDON: My Lords, in answer to this Amendment which has been moved by the noble Earl, Lord De La Warr, your Lordships will remember that we debated this very fully in both the Committee and Report stages of the Bill. The question is one of compensation, and as I understand it the intention of the Amendment is to give the landlord the right of appeal to the Land Tribunal in the event of the Minister agreeing to an improvement such as the erection of buildings or the making of a road which the tenant, desires to undertake. I submit that there really is not a great deal of substance in this Amendment.
It can be looked at either from the tenant's point of view or the landlord's point of view. If we look at it from the landlord's point of view we may assume that the tenant wishes to erect some buildings for new cowsheds or whatever else it is he wants to do. The landlord, for his own reasons—perhaps he disagrees with the tenant's ideas or otherwise disapproves—refuses to give consent. Now there is nothing in the Bill nor, so far as I am aware, in the law of the land, to prevent that tenant carrying out the improvements. The question is whether the tenant will have the right to claim compensation. In other words, he can carry out the improvements, but unless he gets the landlord's consent he will not be able when he leaves the farm to get compensation in respect of the various improvements which he has carried out.
Originally the landlord had to give his consent, but now the Minister can step in, which means, in practice, that the local agricultural committee will be empowered to examine the project and if they think it is sensible and workable they can say: "We agree that the tenant should go ahead." The tenant then carries out the project, whatever it may be, and at the
1028
end of his tenancy the tenant—and this is the point I should like to make particularly clear to your Lordships—can claim compensation not for the amount of money which he has spent on the buildings, but solely for the amount by which he has improved the value of the holding to an incoming tenant. That is the criterion on which the compensation is judged, and if there should be a difference of opinion on it, the landlord can go to arbitration on the question as to whether the compensation offered is fair or not. In view of that I earnestly suggest to the noble Earl that there is sufficient protection for the landlord. I do not think many would dispute the rightness of the argument that if the landlord's holding has been improved in value he should pay reasonable compensation; and I think he is protected by the fact that it is based on the increased value of the holding and that in the event of a dispute the matter can be referred to arbitration. I think that there is not a great amount of substance in the Amendment and I hope that the noble Earl will withdraw it.
THE EARL OF RADNOR: My Lords, I should like to draw the attention of the noble Earl to one particular aspect of the question. A tenant may spend considerable sums of money. The landlord is bound to pay to the tenant at the termination of his tenancy whatever in the ultimate issue the arbitrator may say he should pay. The tenant could give notice within a year of building work and it would naturally be a strong assumption in the arbitrator's mind that the work was necessary and that he was improving the holding, because it was done with the consent of the Minister. It is once more proof that consideration for the landlord is very nearly non-existent in this Bill. I do not suppose there is any chance of His Majesty's Government retreating from the position they have taken up over this, but I feel I must register the opinion that in this particular case the Government are once more being very unfair to the owner of land.
EARL DE LA WARR: My Lords, it seems to me that if the landlord were ever let in for what might well be extremely heavy compensation at the end of a lease, it would be an improvement in the Bill if the landlord in such circumstances were given a right of appeal.

1029
However, we have conducted this Bill with great amity, particularly towards the latter stages, and I think it would be a pity to finish up on an unhappy note. Therefore, whilst in no way withdrawing my opinion that the Bill would be improved if the Government were to give greater justice to the landowner than is given at present, I beg leave to withdraw my Motion.
Motion proposing an Amendment in lieu of Amendments not insisted upon, by leave, withdrawn.

LORDS AMENDMENT.
Page 39, line 37, after ("that") insert ("no such reference shall be made before the expiration of three years from the commencement of the tenancy and")
The Commons disagreed to this Amendment for the following Reason:
Because the Amendment would hinder the carrying out of the objects of the clause.
THE EARL OF HUNTINGDON: My Lords, I beg to move that this House doth not insist on this Amendment.
Moved, That this House doth not insist upon the said Amendment to which the Commons have disagreed.—(The Earl of Huntingdon.)
On Question, Motion agreed to.

TRANSPORT BILL.
2.55 p.m.
Order of the Day read for the consideration of Commons Reasons for disagreeing to certain Amendments last made by the Lords.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT ADDISON): My Lords, I beg to move that the Commons Reasons for disagreeing to the said Amendments be now considered.
Moved, That the Commons Reasons for disagreeing to the said Amendments be now considered.—(Viscount Addison.)
On Question, Motion agreed to.

LORDS AMENDMENTS.
[The references are to Bill 65.]
Page 48, line 23, leave out from ("undertaking") to ("in") in line 24;
Page 48, line 27, leave out ("twenty-five") and insert ("forty");
Page 48, line 36, leave out subsection (3).
The Commons disagreed to these Amendments for the following Reason:
Because they would so limit the number of undertakings acquired by the Commission
1030
as to place the Commission in a position where they could not adequately perform the duties laid upon them by the Bill.
VISCOUNT ADDISON: My Lords, these three Amendments follow on one another. Your Lordships will perhaps remember that there were five groups of Amendments wherein we differed from the other place or made Amendments to Amendments made in the other place. The first one has been accepted by them. These are disagreed to. I do not think we need argue further at great length. We have already argued on many occasions, and therefore it would not be right or seemly if I were to detain your Lordships by repeating the arguments now. I hope that your Lordships will agree at this stage that we should not insist upon the Amendments. I beg to move.
Moved, That this House doth not insist on the said Amendments to which the Commons have disagreed.—(Viscount Addison.)
VISCOUNT SWINTON: My Lords, I certainly agree that we need not debate again what has been debated already for fourteen or fifteen days; but I should like to say a few words, and, like the Leader of the House, following the old precedent, deal with the whole of the Amendments together. As always, in any relation of life, differences seem to attract more attention than agreements. It is so in marriage and in other fields. But I think it is remarkable, as the noble Viscount the Leader of the House has said, that in a Bill of such enormous importance and complexity, and so controversial in character, such a vast number of Amendments have been made after full argument and debate by common agreement between us here and accepted in in another place. That fact shows the value of reasonable debate under our Parliamentary system. The Bill has been greatly amended and improved. There is scarcely a clause or a schedule-that has not been changed in some way. Our differences are now reduced to three,. and I would like to say just a word about them.
There is an old issue which we hive debated very much—namely, what is a fair test of long-distance traffic. I must say I regret that we could not hive agreed on the forty miles. The odd thing is that the real reason for the first Amendments being rejected was not any

1031
dispute that forty miles was a reasonable test, but because "they would so limit the number of undertakings acquired by the Commission as to place the Commission in a position where they could not adequately perform the duties laid upon them by the Bill." That is a very different reason from saying what is or what is not long or short distance traffic. I think it is rather unconvincing. The risk of this business is not that it will be too small but that it may easily be too big; and I am very much afraid that the real reason why this Amendment cannot be accepted is the anxiety of the Government to resist a reasonable measure of competition, even where under their own Bill they lay down that competition is to be accepted.
In the same way, when you come to the area in which the permitted operator is to be allowed to operate you cut him down within even more narrow limits than your definition of "long-distance transport" and "short-distance transport." The reason for that is alleged to be this: that it would "unduly hamper the Commission in the performance of the duties laid upon them by the Bill." Why should it "unduly hamper the Commission" if the permitted operator is to be allowed to do the forty miles, which indeed is the test—or one of the tests—when taking over? It would not unduly hamper the Commission. The Commission can have as many vehicles as they please; they can go wherever they like on long haul or short haul, and with return loads; they can do anything they please. I am very much afraid that the people who will suffer and be unduly hampered are the hauliers who are permitted to continue operating and—this I regard as a much more serious matter even than that, though that is a very grave injustice and disservice—the general public who use these services. It is because we have had the interests of the travelling public and the trading public primarily at heart that we have persisted so much in these Amendments.
In the same way, the final Amendment, upon which we shall not divide but which we did ask the other place to consider in another form, is something which greatly affects the public interest. In a sentence, it was simply this: That there should be the same law for the
1032
Commission as for the permitted undertaker. For centuries it has been an elementary principle of British justice that no undertaking and no person, whether it be a State-owned undertaking or a private undertaking, should be outside the law and above the law. Now, unhappily, for the first time and, I hope, for the last time, we allow in an Act of Parliament the principle that one of these new Government undertakings is to be outside and above the law; there is to be a different law for them, and for their competitors. In conclusion I would say that seems to me to be a strange application of the test which the Lord Chancellor very fairly asked us to apply in these matters, that we should give a fair chance to the State undertaking. If we have got to have these State undertakings, we all wish to give them a fair chance, but we do not wish to give them a position of privileged monopoly outside and above the law.
LORD BEVERIDGE: My Lords, This matter has been very fully discussed, and I think even the last discussion in this House showed the House the real difference between us on some of these Amendments. I hope that the House will allow me time to say why, to me, while the line taken on the first set of Amendments on Clause 39 does not seem to be good sense (and I do not think it seems good sense to most of this House), it is good sense as compared with what is proposed for Clause 52, on page 66. The line taken on Clause 39 by the Government, and by the other place, is that if they did not take over compulsorily a large number of lorries, they would not have enough lorries. That is really nonsensical, because they could afterwards always buy as many lorries as they wanted, or they could make them. That is not the permanent evil. It would still leave it open for the private enterprise man to do whatever he could. The real harm is done in respect of Clause 52; and that is quite different. That is not concerned with what lorries are taken over; that is concerned with imposing an additional restriction on the lorries which are left.
Roughly speaking, 30,000 lorries are to be taken over with those A and B licences, and very nearly four times as many, nearly 120,000 lorries, are to be left with private enterprise on the figures given by the Government themselves. The

1033
30,000 lorries are to be allowed to do anything, but the 120,000 lorries are to have additional restrictions which means that they are to be incapable of running more than 25 miles from their home. That is simply diminishing the efficiency of four-fifths of your existing fleet. That is what this proposition does; it diminishes the efficiency of four-fifths of the existing fleet. To this we are asked to assent on a day when, in an hour or two, the Government are going to put before us a Bill urging the necessity of the utmost production with the fullest use of all our resources. I venture to suggest—I do not want to use strong language—that anything other than "criminal lunacy" is not a fair account of that proposition, which is to take a whole lot of lorries which have, in fact, been doing more than 25 miles. The Government say that there is a great deal of traffic between 25 and 50 miles, and that that was their reason for not accepting the 50-mile limit. A great many lorries which were doing this are to be sterilized and made incapable of doing it. Who is to do their work? You will have to have new lorries or you will not do that work; and this at a time when productive efficiency is the thing we most need to have.
When we come to the next debate, that on the crisis, many of us will admit that the main lines of the crisis would have affected any Government. The main lines of the crisis are beyond the control of the Government. The Government, however, will not escape criticism after this if they have aggravated the crisis by sticking to a stupid line in spite of changing circumstances; just as, last February, they insisted upon their foolish line of not controlling effectively tobacco and films and other useless imports; just as, after that, although they had had warning of the crisis, they went on to the five-day week in the mines and gambled on that five-day week. Now, in this same predicament, they are sticking to a wrong line in the face of changing circumstances, being unable to adjust themselves; they are acting on this line for sterilizing four-fifths of our A and B licences.
I will say at once that I am sorry those who are responsible for the general conduct of affairs in this House should feel that we are bound in this House to accept this. So far as I am concerned, I should be perfectly willing to be the one person in the Lobby against it. My reason for
1034
not doing that is that I should be sorry because so many other people would have to go into a different Lobby. Before I sit down I want to register, in the strongest possible terms, my objection to this proposal to destroy the efficiency of a large part of our road haulage equipment at a time when every maximum efficiency is essential in the interests of the community. I am sure this country will have to retrace its step, as I think it will have to retrace other steps introduced by this Government. But I am alone. I am a new member of this house, and all I can do is to take what opportunity I can of protesting in the strongest possible terms against the particular line taken on that particular Amendment.
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 66, line 8, leave out ("twenty-five") and insert ("forty").
The Commons disagreed to this Amendment for the following Reason:
Because it would unduly hamper Commission in the performance of the duties laid upon them by the Bill.
VISCOUNT ADDISON: My Lords, I beg to move that we do not insist on this Amendment.
Moved, That this House doth not insist on the said Amendment to which the Commons have disagreed.—(Viscount Addison.)
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 49, line 27, at end insert—
("(6) In any proceeding under this section before the arbitration tribunal established under Part VIII of this Act the obligation, of giving to the tribunal all information in his power as to the manner in which the undertaking or the relevant part thereof was carried on during the period mentioned in paragraph (a) of subsection one of section thirty-nine shall rest on the person on whom the notice of acquisition has been served and provided that such obligation has been duly performed the burden of proof that the undertaking is such an undertaking as is specified in Section thirty-nine shall be placed upon the person contending that the undertaking is such an undertaking.")
The Commons disagreed to this Amendment for the following Reason:
Because it imposes a procedure which is both inappropriate to the proceedings in question and impracticable.
VISCOUNT ADDISON: My Lords, this is the Amendment to which the noble Viscount, Lord Swinton, referred in his

1035
speech. As he said, we have discussed it at great length and I do not think it is necessary to repeat the arguments. I beg to move that we do not insist.
Moved, That this House cloth not insist upon the said Amendment to which the Commons have disagreed.—(Viscount Addison.)
VISCOUNT SWINTON: It was the last one to which I referred.
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 74, line 4, at end insert—
("(c) If on a complaint made by the holders of an A or B licence to the licensing authority that the Commission, in the exercise of their function of providing transport service for the carriage of goods by road, not being ordinary long-distance carriage, are competing unfairly against the aggrieved licence holders by seeking to provide more than a fair proportion of the facilities required, the licensing authority may, if it thinks fit, refer the matter with its report and recommendations to the Minister, who may make such order as in all the circumstances he may deem to be just, requiring if necessary the Commission to withdraw or alter such facilities.")
The Commons disagreed to this Amendment for the following Reason:
Because it is inconsistent with the general scheme and intention of the Bill.
VISCOUNT ADDISON: My Lords, this is the same except that it was to this Amendment particularly that the noble Viscount referred. At any rate, my remarks do apply here, and I hope that your Lordships will not insist.
Moved, That this House doth not insist upon the said Amendment to which the Commons have disagreed.—{Viscount Addison.)
On Question Motion agreed to.

ISLE OF MAN (CUSTOMS) BILL.
Read 2a (according to Order): Committee negatived.
Then, Standing Order No. XXXIX having been suspended (pursuant to the Resolution of July z8) Bill read 3a, and passed.

ECONOMIC SITUATION.
3.13 p.m.
VISCOUNT SAMUEL VISCOUNT SAMUEL rose to call attention to the economic situation; and to move for Papers. The noble Viscount
1036
said: My Lords, the Motion which I now beg to move has been upon your Lordships' Order Paper for some weeks, awaiting an opportunity for discussion in a crowded programme; and to-day, being a day set down some time ago, happens by coincidence to be the very day on which the other place are debating the same matter, and on which a Government statement of prime importance is to be made in both Houses. I am well aware that your Lordships' expectations are all concentrated upon that statement. So far as I am concerned, I have to speak before it is made, and with no knowledge of its contents. It is with me a case of first come, worst served. The goods are to be kept under the counter until 4.30 p.m., or thereabouts, and when I asked whether it would not be possible, as has been done on some occasions, to see beforehand a White Paper or a summary of the Government's statement, I received the answer, "Sorry; no Papers."
The Bill we have had distributed to us in advance. It confers the widest possible powers, as in war-time, on the Government of the day, and its value depends upon its application. It is not the powers which are to be conferred but how they are to be used which is of importance; and until we have the statement later this afternoon it is impossible to form any opinion on the merits or demerits of this measure. Therefore, I shall not endeavour to discuss it. My Motion has been couched in the widest terms, in order that any of your Lordships who has some special aspect of the economic situation prominently in his mind and who wishes to dwell upon it, should be at liberty to do so. Indeed, this vast subject, which contains a number of different questions, does contain many which are inter-related closely with one another—the balance of imports and exports, production and consumption, taxation and currency. All those things are inseparably inter-connected, and whenever you touch one you touch all the rest, so it is easy for us to lose ourselves in a maze of statistics and technical terms.
Happily, the facts of the case have been fully and frankly stated to this House, in a debate two weeks ago, in a speech given by Lord Brand, which has aroused widespread attention in this and

1037
other countries, together with a speech by the noble and learned Viscount, Lord Simon, who also made clear some of the principal facts of the situation. They are well known, and I shall not endeavour to repeat them; but I would first venture to draw your Lordships' attention to what are the causes of the present situation, for it is only when you arrive at causes that you can find your way to remedies. It is so in these matters, as in all matters, that the first step to remedies is to find the causes.
Here, in their origins, they are well known. The great nations of the world cannot devote half their manpower to destruction instead of construction, cannot devote themselves to destroying ships, bridges, railways, harbours, power plants, factories, houses, to disrupting the lives of the peasantries in the great producing countries of the world, and to robbing them of their essential supplies of fertilizers, feeding stuffs, and so forth, without having to suffer for it. When all this has been continued for six years, the world must expect to suffer. There is a Chinese saying: "In the track of great armies there must follow lean years." It was so after the Napoleonic wars when, in this country, the people lived through a decade of utter misery; it was so after the war of 1914 to 1918 when, subsequent to a few years of fictitious prosperity, the world was plunged into the most widespread and most severe economic depression that it had ever known; and now, two years after the great war, we see similar dangers impending.
It is true that we were able to overcome the immediate consequences of all those destructions to some extent. Your Lordships will remember that when the war was over it was widely expected that with the disorganization of transport over the greater part of Europe, the destruction of cities, the expulsion of masses of the population and millions of people wandering about homeless, in all probability the war would be followed by famine and widespread epidemics sweeping over Europe. Happily, those worst results were avoided, thanks to the energetic and successful action of the Allied Military Administrations, supported afterwards by the United Nations Organization and its organ U.N.R.R.A.
But contrast the conditions in the Eastern hemisphere with those in the Western hemisphere. The United Stases was not in the war for two years and, during that period, took a leap forward in productive capacity arid in prosperity. It suffered no devastation, it had no difficulties with regard to coal, oil, fertilizers, and it has lately enjoyed record harvests. Its people have a high technical capacity that enabled them to take full advantage of all those opportunities, and the result is that the United States now is enjoying a very great abundance both of production and of consumption. Lord Brand mentioned that the industrial output per man-hour in United States industry is sometimes double, sometimes treble,,.hat in our corresponding industries. One might give a comparatively small illustration to show the difference at this moment in conditions in the two countries, if one recalls that the London Times consist; of eight pages, the New York Times consists of forty, while the Sunday edition of the New York Times includes as many pages in a single copy as the whole of the Sunday Press of this country, London and provincial together. Price control having been removed in the United States to a great extent, prices there have lately been soaring.
As a result of all these conditions, international prices of food and materials compared with before the war are higher. Copper has doubled; wheat and lead more than trebled, cotton has risen fourfold, and maize fivefold. In this country, as an example, hardwood timber has doubled in price. Softwood timber, which is our chief requirement, multiplied three times. The noble Lord, Lord McGowan, in a recent address, mentioned that the .peat industry of which he is the head, Imperial Chemical Industries, paid in 1939 for its coal per ton, 195. 8d. It is now paying 42s. 9d., involving an additional cost of production in that firm alone of Dyer £3,500,000 a year. II: is true that we gain higher prices for our exports. For the first quarter of this year export prices stand at III per cent. above pre-war prices. But our import prices have risen by 140 per cent., meaning a much heavier costs on balance on a very much larger figure.
These rising costs have resulted in increased expenditures by Governments everywhere, for all their charges have risen, and in industries as well, for the working people cannot live on the money

1039
wages they received previously in the conditions to which they have been accustomed. As a result, many Governments have been driven to increase their currencies. Currency, as a consequence, has fallen in value and in several countries runaway inflation has resulted—Greece, Hungary, Italy and again in China, where the Chinese dollar was before the war equivalent to a Hong Kong dollar. Now the Hong Kong dollar will purchase 10,000 Chinese dollars. Even in France, that highly organized and progressive country, the franc, which in the memory of your Lordships was valued at 10½d. and regarded as Is., at the present time at the official rate is ½d. and at the unofficial rate one farthing, and a depreciated farthing at that.
These conditions present everywhere a very grave financial danger, because the whole economic system of the nations has been changed by the abandonment of the gold standard. In earlier years imports and exports were made to balance by changes, often fractional changes, in the bank rate which encouraged exports or encouraged imports, or discouraged one or the other. Depending on the fluidity of capital and labour and upon free markets for demand and supply, this automatic system was self-regulating. But it was found to result in an alternation of periods of good trade and bad. It resulted in depressions, bankruptcies, and unemployment on a wide scale, and that was borne by the populations because it was regarded as something inevitable, in the nature of things. They said: "We are having hard times," and waited until in the course of nature they came to an end. But of late, during the last twenty years or so, the peoples have decided on a different course, on what is called a managed economy, and it has been inescapable that we should do so owing to the course of events. And now all these affairs are not connected with any physical reality like gold reserves, which could be measured and seen and published, but the stability of currencies depends only on the policies of Governments and the wisdom of Parliaments. If a managed economy is managed well, all is excellent; but if it is managed badly we may be brought to utter ruin.
One other factor I would mention in relation to the special position of this country. The published figures show a
1040
very striking shift in the position of our imports which are published under the head of food and tobacco, comparing the sterling area and others connected with it with what are called hard currency areas—United States, Canada, Argentina, Cuba. I would invite the attention of your Lordships to this fact, which is very important but to which I have seen little attention directed hitherto. In 1938, the last year before the war, imports of food and tobacco which we had to pay for coming from what is now a sterling area were £207,000,000. Last year that had slightly increased to £227,000,000. That was in soft currency countries, but imports from the hard currency area in the earlier year, 1938, amounted to little more than £126,000,000 and last year amounted to £319,000,000. In the earlier year the amount from the hard currency area was one-third of the whole; now it is about three-fifths of a very much larger figure. There is one of the reasons of dollar shortage and one of the principal causes of the predicament in which we find ourselves.
So, my Lords, there is the series of causes that have brought us to our present situation—war destruction, short supplies, higher prices, rising cost of living, rising prices, expansion of currencies, and the danger of a runaway inflation. What is to be the remedy? One of your Lordships, speaking to me an hour or two ago about the speech I was about to make, said, "I hope you will be able to show us some way out other than hard work." Well, I am afraid that is not possible, but at all events one can indicate some way by which we can make hard work effective and see that it is not wasted by bad direction. The remedy, of course, those having been the causes, is to reverse those causes. If these have brought us to where we are, to do the opposite should bring us out again.
The world has been busily making good the physical destruction of the war. You will find everywhere bridges rebuilt, roads repaired, railways being re-established, factories being rebuilt, machinery being installed, and all that must have its effect. Ships, above all, have been built and they may bring those fertilizers which are so essential for the production of foodstuffs in the Far East, Central Asia, and the Middle East and for the

1041
prosperity of those agricultural countries on the prosperity of which the whole world so largely depends. And these courses should bring about lower world prices for the essential commodities. If that could come about, then the cost of living would fall. If the cost of living fell, then the strain on the currencies would be relieved without any diminution of the standard of life of the peoples. But it is important that that process should not be sudden, should not be catastrophic. In that way it would bring the holders of present stocks into ruin or bankruptcy and produce panics on the stock exchanges, and if the result were a sudden deflation the effect for the time being might be disastrous. If it were a gradual process, that would be the right road to recovery.
Our own position might well be very simply stated and has been simply stated in Parliament, in the Press, and in numerous economic addresses everywhere. We are buying more than we produce and sell, at present prices of imports and exports. The remedy is that we must buy less, or at lower prices, or sell more, or at higher prices, or we must do all those things. To put it briefly, we must cut down consumption, or increase production, or both. The quickest measure is to cut down consumption. That can be done almost instantly, while to increase production takes time. To cut down consumption is the more urgent matter; to increase production is the more important.
In adopting this short-term remedy of cutting down consumption we ought to be most careful not to prejudice and hinder the better long-term measure of increasing production. If you give the people, owing to your cuts in consumption, less food, less variety in their diet, less warmth, worse housing, fewer holidays, and, indeed, inadequate amusements, then the effect of that will be to lessen production also. We are continually hearing of the vicious ascending spiral—the rising prices, rising wages, rising prices again, and so on ad infinitum. But there is another spiral, equally vicious, the descending spiral—less consumption, meaning less energy and less efficiency, resulting in less production, and the less production again resulting in less consumption, and so on ad infinitum. Therefore, I trust the Government in the measures which they are going to pro-
1042
pose (I do not know what they are) will he very careful in any proposal to cut down the essential food supplies of the working classes of this country.
Furthermore, it should be remembered that if you cut down your imports ruthlessly, the matter does not stop time. What are imports to us are exports to some other country. If we cut down the exports of those other countries, they, also, will have to cut down their imports, and their imports are our exports. Consequently, you get the repercussion of cats in imports. in the cuts in exports, and your balance of trade may not, in he end, be improved at all. That kind of thing is happening at this very moment, with some of our suppliers from whom we are stopping purchases having in turn to stop their purchases from us; and, consequently, our export trade, which we are so anxious to increase, is damaged by our own act. If we proceed along that then we shall again be back in the position of the 1930's, when there were barriers and counter barriers erected all over the world against trade (this country, I am sorry to say, taking a leading part in he process), which resulted in the disastrous and prolonged depression of that period. We are told that we are obliged to cm our coat according to our cloth. But the amount of cloth is not something fixed for all time, and the policy we should seek to pursue is not less coat, but more cloth. I hope the Government Bill, which proposes above all to increase production—and agriculture is quite rightly mentioned as a prominent feature in that policy—will try rather to increase the cloth than to cut down the coat.
It will set up new targets, and I should feel more hopeful about the targets flat are to be proposed if our experience of those that have been set up in the last two years had been a happier one. We all know that it is much easier to set up a target than to hit it. But what has. happened to those that were proposed by the Government hitherto? A target was set up for our export trade—many people think lower than the circumstances required—but it has not been reached. A target was set up for coal production—again much lower than our circumstances required; there is a general consensus of opinion that it should not be 200,000,000 tons, but at least 220,000,000 tons—hut that has not been reached. The housing

1043
target has been abandoned. The savings target is not being attained. The cheap money standard which the Chancellor of the Exchequer set up has also not been reached. The only matter, it seems, in which expectations have been exceeded has been the rise in the birth-rate! It may be that I have omitted some cases where the figures set out to be reached have, in fact, been attained. I do not wish to be unfair, and would, therefore, specifically ask the member of the Government who is to reply later in the debate if he can give some comfort and encouragement to the House and to the country by mentioning any targets hitherto set up which have in fact been attained. This statement to-day is to give us a plan. The Economic Survey for 1947—that White Paper—in the first place, came much too late. It only appeared in February of this year, and it should undoubtedly have appeared in the preceding year. It was a survey, as its name indicates, and not a plan; it was a diagnosis, not a treatment. We will await the statement of to-day in the hope that it may be something much more.
I will make a few observations, very briefly, on specific points that many of us trust will be dealt with. The building of houses and the housing programme. The cost of new houses has gone up to three times, in many cases, what it was pre-war; and the increase in the costs of building has been greater in the last three months than at any time since 1939. We are always accustomed to watch the languid labour in the building trade. It would be interesting to know what inducement is to be given to the building worker to work with more zest. The wartime regulation which prevented bonuses being given in the building industry for better work has, at long last, been repealed. That ought to have been done years ago. The noble Lord, Lord Quibell, in this House, with much knowledge, courage and tenacity, has dwelt on this matter on many occasions. It would have been far better if his advice had been followed long ago. There has been, I believe, an inquiry into building costs. What has happened to that inquiry? When shall we get its Report? I would address a question to the Government on that point.
With regard to coal, we are accustomed to concentrate on the production of coal
1044
—the tonnage produced per man—and it is, of course, a matter of prime importance. But not less important is the question of the efficiency in coal use—the utilization of coal—a matter to which the Royal Commission, of which I had the honour to be Chairman now some twenty years ago, devoted very close attention. A recent Report of the Parliamentary and Scientific Committee, published a few weeks ago, mentions that 70 per cent. of the potential energy of the coal is being lost; only 30 per cent. is used in our furnaces. If that 30 per cent, could be increased to 33 per cent.—only one-tenth that would be equivalent to the production of 20,000,000 tons more coal, and would in itself go far to solve our immediate problem. That, of course, is a long-term achievement, but it is one which in the general plans of the Government ought not to be lost sight of.
Furthermore, a great loss in coal productivity is due to the great deterioration in the quality of coal during and since the war. The calorific value of the coal that is now sold is far too low. Of the 200,000,000 tons produced, no fewer than 25,000,000 tons is worthless ash, and all this has to be transported about the country and handled by labour, with no advantage to our productive power. The fuel crisis saved 2,000,000 tons of coal in the earlier part of this year, but it is estimated—so the Report of the Parliamentary and Scientific Committee says—that that saving of coal was produced at the cost of the loss of 200,000,000 in our exports.
Take the comparatively minor instance of paper. The Government use of paper has increased from 40,000 tons to 71,000 tons, and the Government now consume 3o per cent. more paper than all the publishers of all the books of every kind throughout the country. I asked a friend of mine who is one of the heads of one of the principal paper manufacturing firms, if he could give me an illustration which would bring home to your Lordships what is the extent of the present consumption of paper by the Government. He said that if the weight of paper now consumed by the Government were to be devoted to Government forms of the standard size of 13 inches by 8 inches, they would stretch end to end round the Equator, and not merely round the Equator but 120 times round the Equator. I

1045
think there might be some economy in consumption there.
Again, capital expenditure. I am sure that everyone was amazed to read not only that the Severn Bridge project has been approved—which is quite right—but that the work was to be put in hand in the immediate future. If the action to be taken with regard to the Severn Bridge is merely to complete plans and to do the necessary prospecting work and so forth, well and good, but surely this is precisely the kind of work that ought to be kept in reserve for times when it is necessary for State action to be taken to restore or maintain full employment, and not to put a demand upon steel production for an immense tonnage at a time when steel is in such short supply for construction so urgently required. Similar observations will apply to railway electrification and to a considerable part of the programme for new factories. Mr. Roy Harrod, the economist, indicates from Government figures that they now propose to allocate for the construction of new factories no less a sum than £119,000,000.
Are the Government going to do anything to check monopolistic restrictions, whether on the side of capital or of labour, whether from the trade associations or from the trade unions? I would ask, in parenthesis, whether we may hope that next Session we shall have some legislation to check the abuse of monopoly in industry, a matter upon which I think all Parties are now coming to an agreement. Who is to plan all these things? The Government have set up, after long delay, an Economic Planning Board under the chairmanship of Sir Edwin Plowden, but it is doubtful whether that Board is adequate, or could be adequate, to so vast a task.
I wish to ask, not as a subject for debate to-day, for it is far too wide for that but it is closely relevant to the subjects that we are discussing, whether the Government yet realize that the structure of the Cabinet itself is wrong for the present condition of our politics; that the Report of the Haldane Committee of thirty years ago urged that there should be a small Cabinet, perhaps of Ministers not heavily charged with departmental duties, who should be free to think, to explore, and to plan, and that that is one of the urgent needs of our country. We did it in 1916, again in 1931, and again in 1940.
1046
Whenever there comes a grave crisis w e revert to this plan of a small War Cabinet or Economic Cabinet, or whatever it might be, but afterwards we abandon it, and we have this great Cabinet of sort e twenty-two members who have to deal with an immense burden of departmental and legislative work. I would strongly urge that the country should give its early attention to this matter, for in fact the only adequate planning board is the Cabinet itself.
I come, in conclusion, to two other questions of a more political character. One is the question of taxation, which is a prime factor in all these matters, and the other is our relations with the United States of America. With regal d to taxation, your Lordships will have observed that several economists have been urging that so far from taxation being diminished, it ought to be increased in some form or other in order, as they say, to "mop up" excess purchasing power; that it is a good thing that there should be less money in the pockets of the people so that they should not spend, or should not create a demand for goods which do not exist or are in short supply and thereby raise prices still more. That whole argument appears to me to be misconceived. In the first place, if the increased taxation is to be used for military expenditure, or for an enlarged and excessive administrative machinery, then you are not mopping up purchasing power: you are merely transferring it from one group of people to another group of people, and very often you are transferring it from producers to non-producers.
Also, if the people desire to spend they will spend, because there are enormous is war savings easily available which can be withdrawn at any time by cashing certain securities or by withdrawals from the Post Office. It remains there in colossal masses of millions of pounds, ready to be called upon at any moment if the people wish to buy. So the remedy is not to take away money which belongs to the people, but to persuade them to spend it rightly or not to spend it at all but to put it by and postpone their purchases. The remedy, therefore, is not more taxation but a re-invigorated savings campaign which, if successful, will achieve the same purpose much more

1047
effectively and with much less heartburning. Furthermore, what right have the Government to maintain, beyond the need, taxation that was imposed and was accepted, without demur, for war purposes? People of all classes agreed readily to make whatever financial sacrifices they might be asked to make in order to save the country from conquest.
The Chancellor of the Exchequer, Dr. Dalton, took pride in the fact that he had reduced the taxation by £500,000,000, but that is a very inadequate sum. He has reduced it by £500,000,000, but he ought to have reduced it by very much more. Indeed, on each occasion that he retains any war taxation, he ought to justify his reasons for doing so. Otherwise, he is merely retaining for one purpose money which was contributed for another purpose, and that might be termed malversation of funds. Meanwhile, the money trickles away in this immensely swollen expenditure by the Treasury. We have a Chancellor of the Exchequer with a "song in his heart" and a hole in his pocket.
A great part of this expenditure is on the Defence Services. No less than 900,000,000 is devoted to the Army, the Navy, and the Air Force and to the occupation services in Europe and elsewhere. The Economic Survey presented this year showed that 11 per cent. of the income of the whole nation is now going on the Defence Services—more than two shillings in every pound on the average—although the German Army, Navy and Air Force are no more and it was because of them that we had to subscribe these enormous funds. The Italian as well have gone; the Japanese, too. If we are concerned with the adequacy of national defence, as we all are, we should remember that our own solvency is a factor in that defence. Our own efficiency and prosperity and political stability are prime elements in strategic power and the best contribution that we can make to the United Nations, and a prior condition to all others, just as an individual man's own health, efficiency and happiness are the first condition of his usefulness to his neighbours. Furthermore, our national security depends upon having some economic reserve in the event of a fresh emergency. With Income Tax at nine shillings in the pound, an immense Surtax and a heavy
1048
indirect taxation, to a total of £3,000,000,000 this year, there is no reserve in case of any further unforeseen emergency.
All this burden of taxation is indeed a check upon industry and enterprise. I have seen it stated, and I ask the Government whether it is true, that a miner, after he has worked for four days at the present rates, if he works a fifth day, for that day's labour after deduction of increased Income Tax, he will receive only two shillings and three pence or some sum of that kind. Consequently, knowing that if he goes down into the pit for that day, facing its dangers and discomforts and the heavy toil from morning till night, he will come back in the evening only two shillings or thereabouts the richer, he is very much tempted to stay at home and avoid labouring for so meagre a reward. The consequence is that not only do we not get the coal but the Chancellor of the Exchequer does not get the tax, so that we make the sacrifice without any benefit. I ask the Government whether this is true, and if it is true what action they propose to take.
Furthermore, if it is true that there is too much money chasing too few goods, if you impose penal taxation there will be less money; but at the same time if penal taxation discourages production you will have less goods; therefore if you have less money on the one side and less goods on the other your economic situation is the same as it was at the beginning. These violent remedies ought not to be adopted merely to show how courageous we are, how ready we are to make sacrifices if need he, to bear heavy taxation and the rest of it for the sake of the country, or how ready Parliament is to face unpopularity in order to save the people from themselves. All these arguments are beside the mark. Is the policy right or not right? Is it necessary or not necessary? Those are the questions that have to be answered, and all the rest is mere rodomontade. The conclusion is that the policy should not be ruthless taxation to prevent people having more money than in the belief of the Chancellor of the Exchequer is good for them, but a great reduction in this present burden of £3,000,000,000 a year. This is a matter especially for the other place rather than for your Lordships' House to scrutinize. But I confess we may feel great surprise

1049
that the other place has not appointed a National Expenditure Committee to go into these matters. I had the privilege to be the first chairman of the first Committee that was established in the years 1917 and 1918. I think we did good work. Certainly the Committee in the recent war did excellent work but they have been dissolved, and not reappointed, and it is astonishing that the other place have not yet appointed that Committee.
My last point is the political and economic relations between this country and the United States. The greatest change in world politics since the end of the war in 1919 has undoubtedly been that the United States of America is no longer isolationist. When they were isolationist that was a terrible handicap to the rest of the world. And now that Russia has become isolationist that, as we all agree, is obstructing the advance of mankind. But the United States now participates in the common burdens which rest upon the nations. If she did not participate—though she has done so in her own interest and for the sake of her own economic and strategic position (and it is right that she should do so) as well as from the sense of duty and good will and humanitarianism which is instinctive in the American people—if there had been no lend-lease during the war, no American Armies to come to aid us and our Allies in Europe, no supplies and armaments, no American Navy or Air Force at work, we should all be in a sad state at this hour. She emerged from the war bearing an immense load of taxation and a colossal debt.
In addition, President Truman in his Independence Day address this year, told us that the expenditure of the United States since the war in World Relief and Reconstruction and in the World Bank and Fund was nearly 20,000,000,000 dollars, or £5,000,000,000. If the Loan which is now coming to an end had never been granted the crisis in which we now are would have come in a much more acute form long before. As Mr. Ernest Bevin said on July 4:
"If ever a country merited thanks and not criticism it was the United States."
I for one would whole-heartedly endorse that. We have further, at the present moment, the Marshall offer, and one may hope that some of the restrictions which were imposed as a condition of the
1050
American Loan may be mitigated. B it whatever America does, it is essential that Europe and this country shall become economically self-dependent. We haze looked to America for a breathing space and we have been given a breathing space. Perhaps we shall have a little further breathing space. But that we should spend our lives lying on our backs in a kind of economic iron lung, with air pumped into our lungs by the Americans, would be a position that would be quite intolerable.
From the standpoint of our domestic politics here the present crisis is, of course, an opportunity which offers a strong temptation to opponents of the Government to upset them since they dislike the Government's general policy. But the Government would have been very foolish if they had assumed that the crisis was nothing more than that. In 1931 the Labour Party was drilling into the people that the whole of the economic crisis of that time was a "Bankers' ramp." It was nothing of the kind. It was the result of irresistible economic forces. As the noble Lord, Lord Pethick-Lawrence, speaking on economic affairs for the Government said, earlier in this year:
"The crisis of 1931 was brought on and aggravated by wild movements of capital between financial centres."
That has been obviated by controls which have since been imposed, but the Government to-day realize the reality of this crisis, that it is not some political machination, and that their whole life, indeed their very existence, depends upon dealing with it.
Those who, like Lord Brand, insist upon the reality of these dangers do not create them; on the contrary, they lessen them, because they save us from the shock of surprise which we should feel if they came upon us unwarned and unprepared. The Government are now asking us as a nation, to rally in their support for the measures, that they are about to take. I am sure-that the nation would he ready to do that, yet I feel in duty hound to point out to the Government that, if they expect that, they must conduct their affairs in general' with that object in view. Here, I would make special reference to declarations that have recently been made, and which caused me very great anxiety, by leading members of the Government, to the effect that they intend in the coming Session of

1051
Parliament to proceed with the measure of the nationalization of the iron and steel industry. I am convinced that that would be profoundly ill-advised. That industry is different from all the others that have so far been the subject of their nationalization policy.
This is not the occasion, however, on which to go into the differences. At the General Election, the nationalization of iron and steel was mentioned, but it was brought into no prominence; and it cannot be said that there is any specific mandate for a measure of that character. The Government have repeatedly said that they would not persist with nationalization unless the case were established, on the merits, in each instance. That has not been done with the iron and steel industry, and we have no information as the outcome of an impartial inquiry to tell the nation what are the conditions of which the Government complain. It may be thought that this is irrelevant to our present discussion, but it is not because, if the Government proceed with this policy, they will find themselves faced with a far stronger, and more determined and more widespread opposition than any that has attended the previous articles in their programme. They cannot expect to command the unanimous and cordial support of the nation for them and their policy if, at the same time, they divide it from top to bottom on a most important matter of political controversy. I feel bound to say that, and to say it in advance, for it may be the last opportunity before we meet for the King's Speech to be read to Parliament.
The dangers and difficulties that attend us are very great. When we here watch the introduction of some new Peer and welcome him to these Benches, we hear the Writ of Summons read, and in it are the words that he is "Summoned to attend without fail, on account of the difficulty of the said affairs" with which Parliament was asked to deal—"the difficulty of the said affairs and dangers impending." Those words have become common form. They can be traced back to the Writs of 'Summons of members of this House to the time of Edward III. For 600 years in Parliament after Parliament, and century after century, this House and the other Howe have been summoned to deal with the difficulties of the said affairs and the dangers impending. Sometimes those
1052
difficulties are very acute, and the dangers are very imminent. And it is such a moment to-day. They have been dealt with for 600 years. We shall deal with them again. I beg to move.
4.7 p.m.
THE MARQUESS OF SALISBURY: My Lords, this is, I suppose—indeed I hope—the last important debate in which we shall engage in this House before the House rises for the summer recess. It takes place, as your Lordships know, in what can only be described as somewhat sombre and menacing circumstances. I suppose we are all aware that an economic crisis is approaching with giant strides—a crisis which is likely, as the noble Viscount, Lord Samuel, has already said, to test to the utmost the courage and resolution of this country. This crisis, of course, has not come on us suddenly. I think most of us must have been aware of its steady, inexorable approach for a great many months now. It has been rumbling away in the distance like thunder, but undoubtedly a very large section of the British people, and, I am afraid, certain sections of the Government with their customary optimism, have hoped that it would pass us by. It is only now that we are starkly faced with the fact that the storm is close upon us, and that in a matter of months—or even of weeks—it is likely to break.
Anybody who rises to speak just at the moment that I do in this particular debate is clearly in a certain difficulty. First of all, I am in the difficulty that I am following the noble Viscount, Lord Samuel; and I hope he will allow me to say how admirable and comprehensive was the statement that he has given to the House, and how very effectively he has covered the whole of the ground. Moreover, as I think the noble Viscount himself said, we all know that the Government spokesman sitting opposite is to rise to his feet to make a statement of first importance directly I sit down. I do not know what is in that statement; and that inevitably, to a certain extent, as I am sure your Lordships will understand, if I may use a colloquialism, cramps one's style. At the same time, the essence of the problem which faces us is, of course, already well known, and moreover the discussions which we had on the Second Reading of the Finance Bill and to which the noble Viscount, Lord Samuel, has

1053
already referred, did, of course, follow much the same lines and cover much the same ground as that which is to be covered to-day.
In the course of that debate, as he himself said, there were two very remarkable speeches, one by the noble Viscount, Lord Simon, and one by the noble Lord, Lord Brand, which certainly deserve further examination by this House. Indeed, the very nature of our problem is, even for someone who is not a trained economist, simple to define, although I am afraid it will be extremely complex arid obstinate to resolve. The noble Viscount, Lord Samuel, has already adverted to this, but I should like, if I may, to reemphasize what he has said. What, after all, in the plainest possible words, is the cause of our present difficulty? As I see it, it is this. We were a very rich country and now, as the result of two disastrous wars, of which. I think we bore the main brunt, we are temporarily a very poor country. That is always an extremely uncomfortable position for anyone to be in. It is very easy for either countries or individuals to increase their expenditure and become more extravagant and luxurious. As I think Dr. Johnson once said—I paraphrase his words—"There is no such thing as a luxurious nation. Every nation is as luxurious as it can afford to be."
While it is the easiest thing in the world to spend more money, it is the hardest thing in the world to spend less. To economize, either for individuals or for nations, is the most unattractive of all policies; and yet that is what we have quite clearly to do. We are in the position, as I see it, as I think has often been pointed out, of a man who has had a serious operation. Through no fault of his own, he has had to undergo this operation, and it was the only alternative before him, apart from death. No doubt it is very satisfactory to him that the operation was successful, and that the mortal peril has been averted. But that operation undoubtedly was both enfeebling and very expensive; and clearly a man could not hope, after such an experience, to be as rich as. or richer than, he was before. On the contrary, he would have expended the savings of years on his medical treatment, and he has to re-create the wealth which has been dissipated before he can live anything like so well as he did before.
1054
Moreover, as I am afraid is our case, he may have friends from whom he has borrowed, in order to carry him through this great emergency, and who have to be repaid. That seems to me, broadly speaking, exactly our situation; and, as Lord Samuel said in his speech, it has been complicated by the additional circumstances in the international sphere which make our situation—since we are a nation dependent on imports—particularly clangorous. I see not the slightest reason why, in the future, we should not be as prosperous as we have been in the past; or even far more prosperous; but we shall only recover if we are wise and prudent now, if we cut all unnecessary expenditure, if we work harder and save more. If we refuse to face facts, a3 a Government and as a people, if we continue to live above our income, if we attempt to make both ends meet, not by our own labours, but by sponging on our friends, there is nothing before us bet bankruptcy and misery. That is the hard bleak fact which is facing this country at the present time.
If I have a complaint against the Government it is that up to now they have not rammed it home sufficiently to the people of Britain. They have, as they constantly tell us, courageously faced the future, but they have not, until comparatively recently at any rate, even attempted to face the present. I well understand their difficulties. They have for years and years honestly preached Socialism as a cure for our ills, and they came into power at a time ideally fitted to try out their experiment. As I attempted to point out to your Lordships in the debate on the Address, at that time the country was already rigidly regimented for the purposes of a war, and no doubt they had a powerful and perhaps irresistible temptation to take advantage of a situation which might never recur.
But, my Lords, once they had embarked upon this experiment, it had to be made to appear to succeed. I filly recognize the difficulty before them. They could riot risk disillusioning their supporters. By hook or by crook those supporters had to be made to see immediate and concrete results of this new policy which was to be tried on the country. So the Government were driven on to a policy of increasing money wages, if not real wages, of

1055
shortening hours, of nationalizing industries (with all the dislocation which that involves), and of embarking on great and spectacular schemes, such as the Severn Bridge scheme, with all the risks that that policy involves. I will not now go into whether these things were in themselves desirable or not. I have no doubt that a good case can be put forward from the other side of the House for them, and an equally good case put forward from this side of the House against them. I imagine that on both sides of the House it would be cordially agreed that higher wages, shorter hours and better social services are in themselves excellent. I do not imagine there is any difference of opinion in any Party in this country on that.
Probably there might be more difference of opinion about the virtues of nationalization; but this is not the moment to debate that. The point I would make in this: that many of these things, however desirable they may be in themselves, may well be beyond our powers in the situation with which we are now faced. This is no time for overspending. I would ask the Government to remember the classical dictum of Mr. Micawber, that an annual income of twenty pounds and an annual expenditure of nineteen pounds nineteen and sixpence results in happiness, but that an annual income of twenty pounds, with an annual expenditure of twenty pounds and sixpence results in misery. Mr. Micawber was perfectly right, and this is a fact which is being painfully driven home to us at the present time.
We must first re-create our prosperity which was dissipated by war and then, out of the superfluity of the new wealth which is created, we shall be able to afford all those things which are now beyond our capacity. That is the course which has been adopted, I believe, by the Socialist Party of Belgium, and I suggest that the Socialist Party of this country would have done very much better to follow the same example. What was the purpose of Ministers trumpeting abroad and at home, as they have done, that "all is roses in the garden here," that the working people are better fed, and better off, and richer than they ever were before, when in fact they knew that this was only done by our
1056
living far above our income, and owing money in almost every part of the world? It only deluded the people here, and bewildered the people of other countries.
The Government were able to maintain this fiction by two devices. The first was the American Loan, to which the noble Viscount, Lord Samuel, has referred. As we all know, that money was lent by the American people to put us on our feet again. The idea was that it should be spent partly on capital goods, on modernizing industry, and so on, and partly on essential raw materials and foodstuffs. That was the purpose for which the Loan was meant. I do not say now, and I did not say at the time, that all the conditions attaching to that Loan were such as we should ourselves have chosen. For instance, I understand that Article 9 of that Loan is now being interpreted by certain sections in the United States as impairing our right to trade with the other nations of the British Commonwealth as and when we wish. That is a limitation which we, on this side of the House, have always disliked intensely. Any limitation of our trade with the sister nations of the Commonwealth is abhorrent to us, and I hope that the Government have made it clear to our friends across the Atlantic how onerously and how unfairly that provision is now working. But, broadly speaking, having got the money, I think it should have been spent for the purposes for which it was intended, instead of which a very great proportion of it was in fact frittered away on a thousand and one objects, the main purpose of which was to make the British people think they were better off than in fact they were.
The second device which was adopted by the Government was to divert the attention of their supporters to the distribution rather than the creation of wealth. Again, my Lords, it is not my purpose today to discuss the ethics of this. I think it is quite possible to argue that some people in the past have been too rich, and that other people have been too poor. But even so it must be remembered that to overload the burden of taxation on any section of the community, whatever it may be, must reduce the incentive they have to create new wealth. Lawyers, doctors and business men, just as miners, will not do the job if their reward is given to them with one hand and taken away with the

1057
other. That is a fact of human nature which we must all recognize.
But what we should realize in considering our present problem is that the mere redistribution of existing wealth will not in any way increase our capacity to buy in the world markets. That is a fact too often forgotten. If I may use a simple analogy, the national income is like a great cake divided into innumerable slices, some big, some very small. By merely altering the size of the slices, you do not increase the size of the cake. It remains exactly the same size as before. What the Government have done, and to that extent they are blameworthy, is that they have made the working man think that by the very act of redistribution not only he but the country will be better off. That is a very dangerous delusion, because he gets the impression—and many have this impression—that to make the country more prosperous he has only to ask for an increase of wages, whereas in fact unless that increase is accompanied by an increase of production, all that has been achieved is to decrease the buying value of the pound, and neither the country nor the individual working man is any better off. It also has the effect of making him regard his employer—the private employer and not the State—as an enemy, whereas both employer and employee, are in fact limbs of the same body, essential to each other.
Now Nemesis has come. The American Loan is running out and the Government and the country have to face up to realities. As the noble Lord, Lord Brand, has said, there is a gap of £450,000,000 a year between the cost of our imports and the yield of our exports—a gap which has got to be filled by some manner of means. It will be very clear to your Lordships that I am not an economist like the noble Viscount, Lord Samuel. I am what is popularly known nowadays as the common man. But I hope, unlike some common men and perhaps unlike some members of the Government, that I am not too proud to learn, and I have therefore read with very great care the speech of Lord Brand in the debate on the Finance Bill, to which I referred, and I found several things. The first thing that was clear was that there is no quick cure for our ills, no short cut back to prosperity. But there are certain points which were made by him and by other noble
1058
Lords, and certain courses that they did recommend.
Though they recognized that it may be necessary, as a temporary measure to restrict imports and to cut down consumption, they stressed, as Lord Samuel did to-day, that it is far more important in the long run to increase exports. That means that we must divert all the manpower we can from unproductive occupations, however desirable they may be in themselves, to productive enterprise for foreign consumption and encourage that manpower to produce as much as possible. That seems a simple and platitudinous observation. But it is clearly very much more difficult to put into practice than to enumerate in theory, for in order to encourage the worker to produce, as we are finding out now rather painfully, he must be given an incentive; he will never produce for the mere pleasure of producing. And this means not only giving him wages, but something to spend those wages on. I remember during the war, when I was at the Colonial Office, we had exactly the same trouble in Central Africa in inducing the natives to 'produce essential raw materials. They would not do it unless we gave them cotton piece goods, which were then very difficult to obtain. That was the necessary incentive.
Although we are not natives in Central Africa, the same thing is true of people in this country. In fact, increased purchasing power, about which there is a great deal of talk in the Government White Paper, really must mean, strange though it may appear, ability to purchase more. That means there must be more to buy in the shops, if the term "purchasing power" is not to appear to the ordinary working man to be a mere hollow sham. Personally, I consider that it would have paid us temporarily during the past year or two to release more consumption goods for the home market. I believe that by doing that we should have stimulated the appetite for buying. Then, in order to satisfy that appetite, the working man would have had to speed up his work and the general rate of production would automatically have been increased. There would have been a general starting up of the industrial machine, as we knew it before the war. The present situation, where higher wages means that the working man buys exactly the same am mint

1059
and pays more for it, provides no incentive but only an increased sense of irritation and frustration.
The second point to be remembered, as I understand from the speeches in the Finance Bill debate, is that we should decrease the number of purely unproductive labourers. We are told in the Press—I do not know if it is true—that the Government are contemplating a reduction in the Armed Forces. I believe that that would be deplorable, if it were in any way possible to avoid it. This is the only matter in which I found myself in strong disagreement with the noble Viscount, Lord Samuel. We must all recognize the force of what the noble Viscount said this afternoon; but our Armed Forces are by no means too large now, and they play an essential part in maintaining our prestige in the world. Unless we have some backing of armed force, the Foreign Secretary will be fatally hampered in the conduct of foreign affairs. In fact, it will be almost impossible for him to have a foreign policy at all. In that sense I do not regard the Armed Forces as unproductively employed. I beg the Government, however great the need—and we are all anxious to help them to put the country on its feet again—not to give way to panic measures in this respect. It is really essential, not merely to release so many bodies and hope that they will be re-absorbed somewhere else, but to see that the men released will be useful for the purposes for which they are needed. Otherwise the only result would be to gain a very small advantage which is not in the least comparable with the injury which will be caused to our authority in the world.
But what about the civil servants and the employees, both of the Central Government and the local authorities? There have been all sorts of intelligent anticipations of what the Government propose to do. I do not know how accurate they are. We shall know in a very few minutes. But one thing I have never seen mentioned is any interference with the great army of civil servants; it is not mentioned in any paper—in the Daily Herald or any other. We were told some months ago that this vast army already amounted at that time in one form or another to about 2,000,000 persons. That is a colossal proportion of our population of about 50,000,000, men, women and children.
1060
These civil servants, if I may say so respectfully, buzz round the head of ordinary citizens nowadays like a swarm of mosquitoes. In our view, a considerable proportion of them are not producing any valuable results at all, and the numbers are going up every day. I read in the Press only two days ago of the large number that will be needed to operate the Town and Country Planning Bill. That is in addition to those which already exist. There is no mention in any Government pronouncement up to now that there is to be any reduction of these 2,000,000 civil servants, and yet they propose to reduce the Armed Forces. Could they not look at these 2,000,000, first, before they begin to tinker with these soldiers, sailors and airmen who are maintaining our position in every part of the world?
Thirdly, as I understand it, there is one further action which the Government could take, which has already been referred to this afternoon, I think, by the noble Viscount, Lord Samuel. They could scrap ruthlessly any schemes, however good in themselves, which are not calculated to produce an immediate return. I would not include housing in those schemes. First, because the Government have not made much progress in housing up to now; and, secondly because you cannot expect the working man to produce anything like as much as he should if he is not decently housed. But schemes like the Severn Bridge, which has already been referred to, certainly come into the category of "unnecessary." The noble Lord, Lord Pakenham, may have read the letter of Mr. Roy Harrod in The Times; I have no doubt many people drew his attention to it. Mr. Roy Harrod said there, rightly or wrongly, that the steel to be used meant the abandonment of the manufacture of 100,000 cars which might have been sold on the foreign market. If that is accurate—which I feel sure it is, knowing Mr. Harrod's reputation to divert that steel from the export markets in our present situation seems to me almost insane.
There are, no doubt, many other examples of economies which noble Lords could give. The noble Viscount, Lord Samuel, referred to factories. I think, also, that the Government might well reconsider schemes of local authorities for public buildings of various characters, to ensure that if they have to be built at

1061
the present time they should be built with the utmost economy. My experience has always been that local authorities, if they do build, will build as extravagantly as they are allowed to. One cannot blame them, because they are all proud of their locality, and they want to have better buildings than anyone else, whether they be schools, or public buildings of other character. But, unhappily, we are not in a position where we can have the best of everything. That is the sort of economies which the Government might well examine. And it is incumbent on them to examine them now, if we are to get through our troubles at all.
Finally, I do hope that the Government, instead of slanging and damning the employers as a class, will encourage a more co-operative attitude between them and their workmen. What is needed to-day—and this, I think, is common to all Parties alike; we are all agreed about this—is a new spirit in industry. Your Lordships have heard me refer on numerous occasions to the subject of copartnership. I think my noble relative, Lord Cecil of Chelwood, is going to say a word on this subject to your Lordships later on in this debate, and I do not propose to anticipate him. But that is one method by which a new spirit might be stimulated. I recognize that it is not applicable to all industries, especially in the limited and technical meaning which the word has now acquired. But what does seem to be essential—I am sure noble Lords opposite will agree—is that we should stimulate the spirit of partnership (I use that word in the very widest sense) between the various sections that make up industry.
We must recognize—and I hope the Government will recognize this, and will ram it home to their supporters, some of whom, if I may say so, seem to be lamentably misinformed on the subject—that the capitalist, the manager and the labourer are not essentially hostile elements. They are all members of one body, and are as valuable to each other as the stomach is to the brain, or the hand to the mouth. If the body of industry flourishes, they will all benefit: it the body languishes from lack of co-operation, they will all suffer. If profits increase, there is more to be distributed to everyone; if profits decrease, there is only ruin and unemployment for all concerned. That may seem
1062
to be crude, simple and puerile; but it is a truth not realized by nine-tenths of the people of this country at the present time, and I think the Government must shoulder a certain responsibility for that. If one reads the speeches of men like Mr. Shin-well and Mr. Bevan, they are full of attacks on the boss, and there are many other members in the other place, on the Labour side, who take the same attitude. Therefore, when I stress this, I beg noble Lords to believe that I am not saying something which does not need saying. It does need saying, and it needs to be said far more by the Government themselves than by me. If we cannot get co-operation, not only will individuals suffer, but the wealth which is the lifeblood of the country will gradually and steadily be drained away.
The great danger of the present Government's policy of discrediting employers is, it seems to me, that it takes away tie relationship which did exist before—whether it was a perfect or imperfect relationship—and replaces it by nothing else. I have been told by people in touch with the coal industry that there is already considerable disillusionment among the miners at the results of nationalization. They expected a new heaven and a new earth, and they find that they have only exchanged one employer for another, yet more remote and unapproachable than the one they had before. By all means, let us encourage joint works councils, and every possible device to humanize industry. Let us bring the employees into closer contact with the management, and make it possible for them to be certain that they are receiving a fair share in the profits. But do not let us fall into the illusion—do not let the Government fall into the illusion, or the workmen or anyone else—that merely to alter the ownership of shares automatically increases the incentive of the workmen. That is not true. The figures of absenteeism in the coal industry show that it is not true.
So far as State ownership has any effect—I may be prejudiced—I think that there is a danger that it creates the illusion in those who work under it that it will be possible to obtain, by political pressure, higher wages for less work. There is that danger, arid noble Lords opposite would be wrong to neglect it; and it is, of course, contrary to the most elementary principles of economics. If that illusion exists, I would say to the Government,

1063
even if they do not feel that they should abandon a policy to which they quite honestly attach importance, let them go rather slow with it until times improve, when greater risks can be taken. Let them remember the sad fate of little Johnny Head-in-the-Air, who pursued rather the same policy as that adopted by His Majesty's Government. Do let them eschew, during this emergency, anything in the nature of purely doctrinaire schemes; and let them concentrate rather on the practical task of creating a situation where the more a man or woman earns the more he or she is able to buy with those earnings and the better life he or she is able to give to the rest of his family.
I do not know what the Government propose to recommend as the solution of the present crisis—we shall hear in due course—but if the gist of their proposals is only further restrictions, further controls, heavier taxation, and further discouragement to private initiative, I am afraid the result will be disastrous, both to themselves and for the country. They will be discredited at home and abroad. Unless, before it is too late, a truly expansionist policy is firmly established, that rickety scaffolding to which the noble Lord, Lord Brand, referred in his speech, which is at present supporting our economic. structure, will begin to creak and crack and finally collapse, and the fall of this country will be very great.
I cannot say that a first view of the Supplies and Services (Transitional Powers) Bill, which was published yesterday, is very encouraging. It seems to envisage new controls, possibly of an extremely far-reaching character. One can only hope—and this is all I wish to say about it, because we shall have a further opportunity of speaking on it—that the discussions in Parliament will remove that impression. At any rate, I hope that the Government will make every effort to limit these new controls so far as is possible.
My Lords, this is a time for wisdom; it is a time for greatness. If the Government continue to pursue a purely sectional policy they will receive only sectional support, and they can expect to receive no more. That will mean in effect that, in a great crisis in our history, the country will be split from top to bottom. But if they will pursue a national policy, I can assure
1064
them that they will receive the support—and I am quite certain I speak for all who sit on these Benches—of all of us who hold the future of this country dear.
4.42 p.m.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM): My Lords, one would have to be very thin-skinned and pusillanimous and unfitted to public life to object to the tone of either of the two speeches to which we have just listened. There were many statements made by the noble Marquess to which I and those of us who sit on these Benches take strong exception, as will appear during this debate. But no one could question his desire to play a most patriotic part and to give the most patriotic lead in the difficult circumstances in which we find ourselves. I hope that he and the noble Viscount, whose speech won such acceptance in all quarters—although there were one or two things he said which I would like to take up with him later—will forgive me if I do not reply to their points this afternoon as closely as would normally be the custom in this House. Statements such as the suggestion that the Loan was frittered away, and the suggestion that all civil servants were unproductive and other statements or implications of that kind, I would like to challenge very forcibly, but I think the House will be looking this afternoon for a clear indication from me of the Government's policy in these difficult times.
I say at once to my noble friends behind me that I have never been more proud than I am this afternoon to be a member of the Labour Party, but I know that they will be the first to express the hope that this policy which it is my duty to unfold will be one which will appeal to the whole nation. The noble Marquess has told us that he found himself in somewhat of a difficulty (which I could well appreciate) owing to the fact that I was to follow him, and that until I had spoken he would not be aware of the measures we were proposing. I should ask the indulgence of the House to make what is in effect another man's speech this afternoon. Not only the whole of this country, but a great part of the world, is listening to hear what the Prime Minister is saying at this moment in another place, and for the purposes of this debate I should imagine that the House would regard it as quite essential that at any rate the main lines of the Prime Minister's speech—that which

1065
is most substantial and operative in it—should be placed before your Lordships. Therefore I ask your Lordships' indulgence to adhere very closely to the form of speech that the Prime Minister has chosen. I should hasten to say that if I depart from his ideas he must in no way be held responsible, and he should be able to take suitable reprisals himself, but I think I shall best serve the purposes of this debate by following the course I have suggested.
I shall perhaps be excused from travelling over the main course of our economic fortunes since the end of the war in view of the fact that we had such a thorough debate on the economic situation in March. Many points were made on both sides, and I myself thought that everything was most satisfactory about that debate except the Division. That, of course, is the one weakness of the debates in your Lordships' House the discussion is incomparable but it is not always rounded off in quite the same satisfactory way. In that debate your Lordships will recall that the economic life of the nation was very thoroughly studied from all angles, and I would only add to what emerged on that occasion a very short review of events during the first part of this year.
By the end of last year there were already many satisfactory features about our recovery, but certain adverse developments were showing themselves. They sprang from various causes and one of the most striking, and of course one of the nearest home, was the failure of European production in industry and agriculture to recover as we had expected. That caused not only ourselves but Europe, and indeed many other parts of the world, to enter upon a position of dependence upon the Western hemisphere for which there was no previous precedent. This was already beginning to show itself some, months ago, but the tendency has become much more marked since. The result of that was that we in this country—to speak only of ourselves for the moment—have been increasingly compelled to buy from dollar sources, and another result has been that dollar prices have risen very sharply. Prices of our exports have risen, but prices of imports have risen considerably more. At the end of last year—and it is still more obvious now—we had to buy a larger proportion
1066
of our imports from dollar sources and we have had to pay much higher price, than we anticipated. As a result of these developments, which became 'more and more marked, the balance of payments position deteriorated sharply during the first half of 1947.
At the end of last year we were really doing quite well in respect of our balance of payments, if you think of all the losses we suffered during the war. We were paying for about 80 per cent. of our visible imports out of visible exports; this compared very favourably with the 60 per cent. of our imports for which we were able to pay before the war with our visible exports, when of course we had very large invisible exports which came to our assistance. But during the last few months the position has steadily deteriorated. I will not trouble your Lordships with the over-all position, because what concerns us most this afternoon is the increase in the dollar deficit, and I propose to confine myself to that. I should warn the House that I intend to ask their permission to speak at the end of the debate, just before the noble Viscount, Lord Samuel, exercises his right of reply, so that if I fail to touch upon some aspects of the matter which seem crucial there will be every opportunity of asking me to do so more fully in my reply. I might mention, what I know will be of very special interest to the House, that on all that concerns coal the noble Viscount, Lord Hall, will speak to-morrow with special authority. He will deal with many other points as well.
For the year 1946 our total dollar deficit was under £350,000,000, even if we include the Canadian dollar outgoings. In the first six months of 1947 our U.S. dollar deficit was £405,000,000; that is, it was more for the first six months of this year than for the whole of last year, and represents an annual rate, if it be sustained over the whole year, of £810,000,000. If we take this figure of £405,000,000, which is the dollar, deficit for the first six months of this year, £176,000,000 represents our own trading deficit with the U.S. In addition we spent in dollars £29,000,000 on purchases from the United States for Germany. Those two figures taken together come to rather more than half the total deficit. Further, we had to provide £l18,000,000 in collars

1067
as part of the payment for our own purchases from the rest of the Western hemisphere, including Canada, Argentina, and Brazil. All these figures are in pounds, but they represent the dollar deficit. I hope that Lord Cherwell will not find it difficult to make the necessary adjustments!
LORD WOOLTON: Was the 350,000,000 first mentioned in pounds or in dollars?
LORD PAKENHAM: All the figures are in pounds. We had also to provide in U.S. dollars £58,000,000 net for purchases by sterling area countries in the United States, £10,000,000 for purchases by sterling area countries in the rest of the Western hemisphere, and £14,000,000 net for similar purchases by European countries. The big items are £176,000,000 for our own trade deficit with America, £29,000,000 for Germany, £118,000,000 as part of the payment for our own purchases from the rest of the Western hemisphere, and £58,000,000 for purchases by sterling area countries in the United States.
The most serious aspect of this situation from the immediate point of view has been the acceleration in this dollar drain during recent months, and of course this is clearly reflected in the rate of our drawings on the United States credit. Of the total credit of £937,500,000 we have to date drawn £687,500,000, leaving £250,000,000 undrawn. By the end of 1946 we had drawn £150,000,000. If the House wishes to have these figures I will give them month by month. From the beginning of January to the end of March we drew £125,000,000; in April and May £162,500,000; in June £75,000,000, but in July we drew no less than £175,000,000. I have no desire whatever to conceal that figure—indeed, it would be most improper to hide it from your Lordships—but it would also be wrong to paint too alarmist a picture. Our view is that this very high rate of the drain upon us in July was exceptional. Further, we should also, in order to fortify ourselves for the discussion, observe that in addition to the £250,000,000 still outstanding of the U.S. credit there remain to us £125,000,000 of Canadian credit and our ultimate reserves of nearly £600,000,000. That makes nearly £1,000,000,000.
LORD WOOLTON: That is a gold reserve?
LORD PAKENHAM: Our ultimate reserve in gold or similar assets. Of course, as the noble Lord will be the first to point out, these ultimate reserves represent the reserves of the sterling area as well as our own, and they cannot be allowed to fall below a certain point. It is quite clear that the drain cannot be allowed to go on, even at the rate at which it was running before July.
I come now to this debated question of convertibility, and here I am taking particular care to choose my words. It is sometimes assumed that all our difficulties have arisen because of the Loan Agreement with the United States and in particular its provisions concerning convertibility and non-discrimination. I should like, therefore, to explain to the House how we view these matters. Convertibility is not merely or perhaps primarily a matter of our Loan Agreement with the United States. It is, in fact, a necessity of many of our commercial deals with other countries, as the noble Lord, Lord Woolton, knows very well. These countries owing to the world shortage of dollars, are as sellers demanding either convertible sterling or dollars. In a seller's market buyers cannot be choosers, and so we have been driven to pay dollars or convertible sterling for supplies from some of our main suppliers.
The problem of convertibility is thus a problem of the world shortage of dollars more than a problem arising out of one particular Loan Agreement with America. It is most important to lay stress on that fact. We should look round the world and realize that the whole world, with the exception of only one or two countries, is suffering from an acute dollar shortage. Before the war sterling in London could be transferred into any other currency for current use anywhere. A return to this position has always been an objective of the Government. The American Loan was designed to help us to return to that position at the earliest possible date, and on this policy, whether in our own selfish interest or in the wider interest of world economy, we have no intention of turning our back. But it is clear that in the world shortage of dollars the formal obligation under the Loan Agreement puts an increasing strain upon us.

1069
So far as non-discrimination is concerned, the provisions of the Loan Agreement have hardly been operative at all, because we have in fact bought practically all the available supplies from outside the hard currency countries. In other words it is the low production in other countries that has driven us to buy so largely in the Western hemisphere. That position, however, is now changing, and with the cuts in imports now proposed, the question of discriminating purchases becomes of much more importance, and will be a very real factor in our future food and raw material purchases.
The House will wish to know what steps have been taken with regard to the points I have just been discussing. The matter, of course, has been under constant discussion between His Majesty's Government and the United States Government for some time. There was a way open to us to give notice under Clause 12 of the Loan Agreement, but this would not cover the whole field, and therefore we proceeded to seek a further consultation on the whole of the implications of the Loan Agreement and the other difficulties with which we are faced, and against the background of the present facts of our position and its developments. I am sure your Lordships will not underestimate the importance of what I have just said. We suggested to the United States Government that as a first step there should be official discussions on these matters, and I am glad to be able to tell your Lordships that Mr. Marshall immediately replied agreeing to these discussions, which will therefore take place as soon as they can be arranged. I should make it clear that these discussions will not, of course, cut across the proceedings of the Paris Conference, but I would repeat, even while stressing the importance of these discussions, that the ultimate solution of a general recovery of productivity all over the world, and not only as as hitherto been the case, in the Western hemisphere, is to spare no effort to remedy our own immediate position, and to make sure that we can play our part in world recovery.
I now come to what may be called the more concrete measures, and I hope your Lordships will forgive me for approaching them first analytically, in the abstract. I will be concrete enough in a moment. First, we shall apply ourselves to a further
1070
redevelopment of our resources at home. We must concentrate as much of those resources as can be most effectively used for the reconstruction and development of the basic industries. Secondly, we must increase our total output so that we can stand on our own legs as soon as possible; it is a question of concentration. And thirdly, we shall press on with our pans for the expansion of production in the Colonial Empire. But none of these plans, however rapidly we press on with them, can have an immediate effect; therefore we must turn to what we may call the negative side of the problem, and I hope that the noble Marquess, when. he has studied what I am telling your Lordships to-day, will agree that some negative side is essential—that it would be quite impossible not to introduce anything that he would regard as a new control
THE MARQUESS OF SALISBURY: I did not say that. I said I hoped it would not consist only of that.
LORD PAKENHAM: I am very pleased to give the noble Marquess that assurance. If we take first the details of the positive side of the programme, let us ask what is the position of the basic industries. I make no apology for beginning with coal, and I will unfold the broad outlook of the Government and the immediate proposals, leaving the n able Viscount, Lord Hall, to discuss the whole matter with infinitely greater personal authority. Since the beginning of the year the numbers of wage earners on the colliery books has shown a substantial net increase of 27,000. There is every prospect that we shah reach the target of 730,000 by the end of the year, particularly if the Poles who are willing and available are accepted in the industry. So that, while I cannot inform the noble Marquess that that target has already been reached, I can give him an assurance that there is a target, and perhaps the most important one, which we certainly hope will be reached by the end of the allotted period. It is going very well. I do not feel that the noble Marquess, who is at heart an optimist, though he sometimes conceals it, will quarrel with these figures. We have put before the mineworkers' leaders a proposal that while preserving the five-day week and the general regulation of hours of labour, there should be, as an emergency measure for a limited period, an extra half-hour's work per

1071
day. I know that the leaders of the miners are doing their utmost to reduce absenteeism to its lowest possible level. The aim is an average weekly output of at least four million tons of deep-mined coal, plus some open-cast coal, from September 1, 1947, to April 30, 1948. But we must push on beyond that to increase our output as rapidly as we can.
Second, and second in importance only to coal, comes steel. During the winter months production should be running at an annual rate of about 13.5 million ingot tons, and production over 1947 as a whole should reach 12.5 million ingot tons—about the amount forecast in the Economic Survey. So there again I can hold out considerable hope to the noble Viscount, Lord Samuel, that the target will be realized. But this is not enough, this 12.5 million tons; and shortage of steel has recently been acting increasingly as a brake both on production in the manufacturing industries and on construction. Our target for 1948 therefore is 14 million ingot tons.
As for transport, increased production will throw an additional strain on our transport system, handicapped as it already is by depleted rolling stock and by lack of repair and maintenance during the war years. In applying the general measures which I have outlined, the Government have in the forefront of their minds the need to provide the transport industry with the resources needed to enable it to overtake arrears and meet this additional strain. Many of these matters will be dealt with more fully by the Prime Minister in his speech.
I turn to agriculture—perhaps the most fundamental of all our industries, and incidentally the greatest potential saver of dollars, which has to produce so much for us in these days. The Government are setting a high target before agriculture: nothing less than an extra £100,000,000 worth of food by 1951 to 1952; that is to say a 20 per cent. increase on present output. This is a stupendous task, and I feel it is one to which the agricultural leaders in your Lordships' House will address themselves with special enthusiasm. I am sure the noble Earl, Lord De La Warr, will agree that nothing less would have been worthy of the occasion. It will involve immense effort, not only on the part of the agricul-
1072
tural community, but on the part of the Government themselves. More labour will be needed on the land, and in order to obtain labour, many houses and hostels will he needed. The production of special agricultural machinery and other equipment must be speeded up. The maximum supply of feeding stuffs must be obtained so that our production of beef, bacon and eggs can be expanded as rapidly as possible. The whole weight of the Government will be thrown into supplying these necessities and into removing any possible hindrances to production.
To get these results we must have sufficient manpower, and the Government have already suspended the call-up of young men needed in agriculture. We shall need 100,000 more workers. All this will involve substantial capital outlay and heavy commitments on the part of the agricultural producers. The Government will take account of this and the Minister of Agriculture will announce this month new scales of prices for future production. These, I believe, will give the farmers confidence to embark again on expanding production and will provide them with the additional resources which will inevitably be required. Once again, county and district agricultural committees will be asked to take a lead, and I know that I can appeal with complete confidence to all the members of the House, so many of whom command great influence in the countryside, to play their part in this particular enterprise. I could, of course, refer to many other industries, for instance, the engineering and textile industries, but I think I had better pass over them since the House will wish me to pass on to exports—with which, of course, those two industries in particular are very closely connected.
If there were more time and if he would like me to, I should like to take up rather strongly the cudgels with the noble Marquess on this subject of the export trade. I do not want to misrepresent him and I will wait to hear what other speakers on his side of the House say, but I think he thought we had laid too much emphasis on the export trade or had devoted too large a proportion of our resources to export trade since the war; I should strongly disagree with him if that indeed is his view. In the Economic Survey, the export target was put at 140 per cent. in volume of 1938 to be reached

1073
by the end of 1947. Here I am bound to concede to the noble Viscount, Lord Samuel, that this is a target which will not be reached, owing to the fuel and weather crises at the beginning of the year. That target of 140 per cent. cannot be reached, but various measures which the Government are intending to take for the re-deployment of our resources will have as one of their principal aims to get as near to that target as may be, and certainly we intend to reach and pass it during 1948. Our target will be 140 per cent., using 1938 as a basis, to be reached by the end of the first half of 1948, and it will be 160 per cent, by the end of the year 1948, so that, if we are having a similar debate in rather happier circumstances next year, I hope to be able to assure the noble Viscount that not 140 per cent., but 160 per cent. is well on its way to realization.
This target is, of course, very difficult of achievement but we are determined to concentrate our resources in such a way as to make sure that we do reach it. But how are we going to attain these targets? Looking at the matter once more analytically, there are two points to be borne in mind: first, we must increase productivity and, secondly, we must direct our efforts into the channels where production will be most fruitful. If we may take for the moment this direction of effort into the most fruitful channels, this may, and in fact will, involve some sacrifice of individual liberty, though as little as possible, on the part of the employers and workers. I am anxious to be extremely frank with the House in all this, and I say boldly that some sacrifice of individual liberty, the right to do exactly what one likes in the choice of one's job, is quite inevitable if we are to secure the results which we all have in mind. We shall have to ask or issue directions to firms to ensure that their capacity is not used to produce those goods which will bring in the largest profit, but those goods which are most needed and which are in the interests of national economy. It will be much more agreeable if we can secure that result without exerting forcible pressure; but the power to give directions will have to be there.
On the other side, we shall have to take some measure of control over employment of labour. During the war, as the House will recall, we had to use full powers of direction of labour. It has
1074
been the desire of the Government and indeed of the whole country, including, I am sure, this House, to move as quickly as possible towards complete freedom of the individual in these respects. I am not sure that we have not moved too fast, as things have turned out, but I do not think anybody of substance or standing in any Party protested at the removal of the controls when this was effected. We propose, therefore, to re-impose control over the engagement of labour, which was almost universal during the war but which has since been removed from all industries except coalmining, building, and agriculture. This will enable all workers leaving one job and seek rig another to be guided into that class of work in which they can best assist the country in overcoming its economic difficulties.
Of course, control of engagement only controls the movements of those falling out of employment. To find the necessary manpower for essential employment it may be necessary to take steps to limit employment in less essential work. I have no precise advice to offer the House with regard to "pools," but I must say that to me "pools" are at the very bottom of the list of non-essential work. That is a personal view, if you like. In addition, in order to avoid workers remaining unemployed or taking up non-essential instead of essential employment, it will be necessary to resume, to a limited extent, the use of powers of direction of labour. This is not a resumption of the general powers of direction, but an essential supporting measure to enable the control of engagement to be effectively exercised. I should like to add this, that my right honourable friend the Minister of Labour is at this moment discussing the details of measures to be adopted with the National Joint Advisory Council, that is to say with the employers and the employed. So much for the attempt to direct our resources into channels where they can be most fruitfully used.
LORD ALTRINCHAM: Would the noble Lord forgive me for interrupting, but is it intended to direct women as well as men?
LORD PAKENHAM: Perhaps the noble Lord, Lord Altrincham, will allow me on this particular matter to confine myself to the rather careful statement made, in view of what I have just told the House

1075
about the discussions that are going on between the Minister of Labour and the representatives of the employers and the workers.
LORD WOOLTON: I thought the word "labour" did include men and women.
LORD PAKENHAM: The discussions are going on this afternoon.
I will come next to the question of increasing total production. The Government have decided that as an emergency measure we must work for longer hours to contribute to increased production. In order to increase production, we have decided that, as a temporary measure, we must ask for that. What is needed first is a lengthening of the hours of work in those industries which have adequate supplies of raw materials, and whose output provides exports or savings in imports, or is essential to the expansion of other industries. As I have said already, the Prime Minister has put to the coal-mining industry the proposal that an extra half an hour a day should be worked for a specific period, and the Government will have to make similar proposals to other industries in this category. The increase of production will also require some increase of hours in transport to enable the additional production to be moved, and to prevent wagons from being left loaded at weekends. I will only add to this part of my speech the clear proviso that there is no intention of interfering with the negotiating machinery of the industries concerned. I would like to repeat that all these proposals are to be regarded as of an emergency character, to operate only until we can begin to see our way clear on the economic front.
I should just say one word about management. We are most anxious, of course, as will be everyone in your Lordships' House, that management shall play its full part, and shall be given every encouragement. I say that specifically in view of the questions which have been put to me. But, where management shows inefficiency or a lack of will to serve the nation's best interests, steps will have to be taken, just as was done on occasion during the war. I do not want to strike too gloomy a note on that matter, because it will be the last resort. What we all hope for, and I believe will see, is the closest good will and co-
1076
operation between capital and labour in this very difficult period.
I should say a word about what we intend to do overseas. The House will, I know, have noted with approval recently the far-reaching plans, which the Colonial Secretary has initiated, for making available to the world the potential wealth of our African Colonies. These schemes, however, will take time to mature, and so, of course, will the schemes which I have mentioned for increasing production. We must turn, therefore, to certain measures which can be put into operation more rapidly, or whose effects, shall I say, will show themselves more rapidly. I turn, first of all, to the proposals which we are making for the reduction of our expenditure. There is first of all the very large sum which we are expending in Germany for the feeding of the German people. My right honourable friend the Foreign Secretary stated very clearly in another place on Monday that when the present scheme runs out, we cannot spend any more dollars for this particular purpose. Therefore, discussions and a review must be undertaken, in order to devise other plans. I do not think I will add any more, except to emphasize my own conviction, having a personal responsibility in that field, of the imperative necessity for such a review and such discussions at the earliest possible date.
I come next to our Defence Forces. Here we can find some succour in two ways: by reducing numbers and, therefore, expenditure overseas, or by reducing the total size of the Forces at home and overseas. Of course, by doing that we do, in addition to saving money, provide more labour for work at home. I may say, without subscribing to all the implications which might or might not be drawn from what the noble Marquess said—he did not press the argument very far—that I entirely share the spirit in which he approached this particular subject. As one who was until recently, in a junior Ministerial capacity, responsible for the Army, I certainly should strongly deplore anything which left us unable to defend ourselves in time of emergency.
At present we have some 500,000 men and women in the Forces overseas. The Defence White Paper, prepared in February of this year, was based on the

1077
assumption that during 1947-48 it would be possible to make substantial reductions in the level of our Forces overseas, but emphasized that it would not be such as to endanger our commitments, and that the numbers required for those commitments would not be affected unduly by these successive decreases. Now we expect to withdraw some 133,000 men from overseas by the end of December, 1947, and to raise the total withdrawal overseas to over 200,000 men by the end of March, 1948. In addition to the 200,000 British troops withdrawn, we are now planning to return to their homes before the end of this year some 34,000 non-United Kingdom troops, the cost of whose work is being borne by the British Exchequer, and this will yield a further saving. I would emphasize this point, that despite this acceleration in the rate of withdrawal from overseas stations, and although calculated risks which have been carefully studied are being accepted thereby, there is no change in our foreign policy, or in the defence policy which underlies or supports that foreign policy. I entirely accept what the noble Marquess said in regard to there being no sound foreign policy without adequate defence.
Now I turn to the second question of the total strength of the Armed Forces. In the Defence White Paper it was estimated that between January 1, 1947, and March 31, 1948, the numbers in the Forces would be reduced from 1,427,000 to 1,087,000. This estimate of the reduction to 1,087,000 by March 31 of next year was based on certain assumptions about withdrawals from overseas, and assumed the fulfilment of a large part but not the whole of the programme. But, after careful review, we now consider that the number of men and women likely to be in the Forces on March 31, 1948, can be reduced to 1,007,000, that is a reduction of 80,000 from the figure of 1,087,000 which was previously planned.
I now come to the import programme. Information was given in another place on July 3 of the provisional import programme for the year mid-1947 to mid-1948, amounting in all to £1,700,000,000. That took account of certain classes of goods which were described in another place, and with which I will not therefore detain the House to-day, but if members of this House will consult the records of another place they will find that both my
1078
right honourable friend the Chancellor of the Exchequer and the Lord President, in his speech on July 8, made it plain that this import programme was provisional, and that further cuts might well be necessary. The Government have now decided that the following further cuts must be made. My right honourable friend the Chancellor of the Exchequer was recently authorized to levy an import duty on films, and it is now proposed to limit remittances on foreign films to 25 per cent. of the earnings of those films. In the statement of June 30, my right honourable friend the Chancellor of the Exchequer said that we might reduce our imports of petrol. A reduction of 500,000 tons will save approximately £4,000,000. This I am afraid will necessitate the reduction of the basic allowance to private motorists by one-third, and a reduction of 10 per cent. in supplementary allowances. We are most anxious not to impede the movement of merchandise by road, but some reduction in the allowance for the use of commercial vehicles will be necessary, and the issue for commercial road transport will be cut by 10 per cent. All this will come into operation on October 1. The maximum economies will also be made in the use of petrol by the Fighting Services.
My right honourable friend, the Chancellor of the Exchequer, proposes as from October 1 to reduce the foreign travel allowance from £75 for twelve months to £35 for fourteen months, with a corresponding reduction of allowances for children to £20. Allowances for business men travelling abroad will also be more strictly limited. I am afraid our business men must make it quite plain that they are spending all the money for business purposes. That has not been universal. There will be a reduction amounting in value to £5,000,000 in the import of miscellaneous goods of luxury types. It is necessary to apportion this cut with great care so as to avoid the risk of damaging the economies of other countries. The field for saving in imports of raw materials is very small if damage is not to be done to our productive effort, but some saving must be achieved. There will be a cut in the imports of timber amounting to £10,000,000.
A NOBLE LORD: Timber!
LORD PAKENHAM: The House will realize that this represents a cut not in the

1079
very low level of supplies which we have been able to import recently, but in the considerably higher level we have been hoping to reach. I hope it may be possible to make some saving by postponing part of our cotton purchases.
THE MARQUESS OF SALISBURY: I am not quite clear about timber. Is this a reduction of the target we hope to attain or of what we have obtained?
LORD PAKENHAM: A reduction in the programme of supplies which we hope to bring in.
A NOBLE LORD: Can the noble Lord give us the figures of that target?
LORD PAKENHAM: They will certainly be supplied before the end of the debate, since, with the permission of the House, I shall be speaking again.
Finally we come, as the House has been eagerly expecting, to the programme of the Ministry of Food. From what I have already said about home food production, the House will have realized there will be no cut in the import of feeding stuffs, which will rather have to be expanded as increased supplies become available. We have decided that we must make an immediate and substantial reduction in the purchase of food from hard currency sources. We have no other option in the situation in which we are placed. We have, therefore, given instructions which will bring about a reduction in regard to all these purchases of the order of £12,000,000 a month. The buying of essential foods from these areas will not be interfered with, but we must largely confine ourselves to these purchases.
The House will wish to know what effect this decision is likely to have on our level of distribution of food stuffs in the coming months. That will depend, as the noble Lord who is so uniquely learned in these, matters will be the first to recognize, on a number of factors. It will depend on the degree to which we are able to buy food-stuffs from soft currency sources. In so far as they can be regarded as more favourable from the commercial point of view, the question of discrimination under Article 9 of the Loan Agreement will not arise. So far as we can see, these sources are more favourable from a commercial point of view, but where such purchases cannot be justified
1080
under the terms of the agreement we shall be exploring the situation with the United States Government to see what steps can be taken to obtain supplies from soft currency areas. The second factor which will determine the effect on our ration-scales of these cuts is how long this policy will be continued. It will be necessary at once to increase the points value of a number of basic foods largely distributed under the points scheme. As to basic rations, we shall do everything in our power to maintain them, and we shall not take risks with our stocks. If rations have to be reduced as a result of the policy I have outlined, the Government will introduce a differential ration scheme designed to give preference to heavy manual workers. Preparations will be made forthwith against this contingency coming to pass. Restrictions on consumption in restaurants and hotels will, in any case, be enforced forthwith.
I am nearing the end, but before 1 close I must say a few words about the measures intended to counter inflation. Obviously some of the measures I have outlined will restrict the amount of goods and services available for home consumption, without any corresponding reduction in purchasing power, and thus inflationary pressure may at first be increased. We shall, therefore, have to take such action as may prove necessary to prevent unstable purchasing power creating an unbalanced situation. I learnt my economics at the feet of Mr. Harrod and I am not going back on the old master now. I cannot claim that the proposals are inspired by his principles, but it seems to me that they are in accord with them. We must concentrate on projects which will give quick returns. Projects in themselves desirable will have to be postponed, and such schemes as the re-equipment of agriculture and mines must take precedence over them. There must be a re-deployment and re-timing, including a postponement of the general building programme, but this must be done to give first place, to building houses for miners, agricultural workers, and other kinds of workers.
I should say, because I think it would be neglectful of my duty if I did not say it in this place, that in this uphill struggle we do not stand alone in this country. Quite apart from the sympathetic interest of the United States, we have kept our great partners in the Commonwealth fully

1081
informed and, as is well known to your Lordships, every one of them has done, and is doing, all they can to help us. I would humbly recommend to the House that they read the speech which the Prime Minister is delivering elsewhere. He will be ending it with an appeal, whose authority I cannot begin to emulate. I would simply ask that, having heard this statement, your Lordships consider it very carefully. I am sure that everyone here will recognize it as an honest attempt to meet a grave national emergency, honestly presented. Be that as it may, I am quite certain that it will be honestly considered by all your Lordships, and I leave it to the judgment of the House, quite content in the thought that for two days your Lordships will discuss what His Majesty's Government are proposing to do to remedy the present very difficult state of affairs.
LORD AMWELL: Might I ask the noble Lord a question before he sits down? He spoke about the direction of labour. Has he anything to say about the direction of idleness?
LORD PAKENHAM: Yes, I have a lot I could say about the direction of idleness, but I have detained the House for a considerable period. If the noble Lord is thinking of the gentlemen who are nowadays known as "spivs," I would agree that we must wage unceasing war on them.
LORD AMWELL: My definition would be pretty wide, I can assure the noble Lord.
LORD PAKENHAM: I would join with the noble Lord, however wide his definition, in saying that we have no use for slackers at this time. But I do not believe that when this appeal goes out to the country there will be much slackness to be found in Britain.
5.41 p.m.
VISCOUNT PORTAL: My Lords, the noble Marquess who spoke before Lord Pakenham was at a great disadvantage, because he spoke before he heard what the noble Lord had to say. Until I arrived here to-day I thought I was going to speak before the noble Lord, Lord Pakenham, and my comments are comments prepared before he spoke. judging by the notes which were taken of Lord Pakenham's speech by members on the
1082
Government Front Bench, it would take a man of my mentality some time to get ready to question the noble Lord on the figures and facts which he gave us during his speech. The noble Lord took us rack to a debate on the Government White Paper in which both he and I took part in March of this year. At that time I had the privilege of following the noble Lord, Lord Pethick-Lawrence, who stated in his speech that the Government had made a most courageous effort in producing this great plan. My retort to the noble Lord then was that it was an analysis that was produced, and the plan was to come. The same remark on the White Paper was made by the noble Viscount who opened this debate. Since that time practically five months have elapsed, and to-day we have heard the plan of His Majesty's Government, which has been unfolded by the Prime Minister in another place.
I propose in my speech to deal with a few important aspects with which I have been intimately connected. I spoke at some length in March on the question of coal, on which the noble Viscount, Lord Hall, is going to speak later. Therefore, I will not deal with that at any length to-day. I spoke on the last occasion on the importance of the production of coal in this country as being the one raw material on which the future of the country depends. I think I am right in stating that with approximately 718,000 men employed in the coal industry to-day (whether that figure be right or wrong, it is one for comparison, and makes no difference), based on the pre-war figures of output per man—namely, the figures for 1939—they should produce 208,000,000 tons. One should therefore expect that at least this figure of 208,000,000 tons a year would be reached, without the additional figure for open-cast coal which the noble Lord, Lord Pakenham, mentioned. I think the target for open-cast coal is 10,000,000 tons, but it is difficult to keep to that target because it depends on excavators and things which have to be obtained from America. If you put the figure for open-cast coal at 8,000,000 tons, that would bring the total to 216,000,000 tons a year. The Foreign Secretary himself made an appeal in Durham that we should get back to the 1938 figures of coal production.

1083
One of the main points of my speech is in regard to the question of the allocations and priorities of raw materials. I want to deal with this question as a whole but I will take steel as an example of one of the raw materials to which the noble Lord alluded. That is a product which affects nearly every industry in this country, and it is one of which, as the noble Lord stated, we are in short supply at the present time. I am sure your Lordships will agree that I am entitled to speak on this question of raw materials allocations and priorities, as during the war I had a lot to do with it for His Majesty's Government, both at the Ministry of Supply and at the Ministry of Production. I want to say, here and now, to be fair to the Government, that I know the difficulties which they are up against. One of the difficulties which they are up against to-day is that during the war there was only one customer—the Government—and now you have thousands of customers. Quite early in the war, before I was responsible for allocations (it was when the noble Lord, Lord Llewellin, and Sir Arnold Plant were going into this question of allocations) a scheme was thought out which prevented priorities from absorbing all the raw materials. The point about that is that if during the war priorities had run riot, there would have been nothing at all left for the civilian population of the country. The noble Viscount, Lord Hall, now that he has become a sailor once again, will know better than I do that if the Admiralty particularly want something, especially during a war, they are not backward in asking for it. That applies to the Army and the Air Force as well.
A NOBLE LORD: Or backward in getting it.
VISCOUNT PORTAL: If that scheme had not been propounded by the people who were there before me, there would have been nothing left for the Board of Trade or the civilian population of the country. To emphasize my point, I would mention that two years after the scheme had been in force in this country the Americans, who had come up against exactly the same difficulty, asked us to send a mission to America, and three experts went out under Sir Arnold Plant to explain our scheme of allocations. I
1084
think it will be found that the Americans thought it worked very satisfactorily.
I have taken the question of priorities as a whole, before coming to the question of steel itself. After the fuel crisis in the early part of this year the Government laid down six first priorities for the allocation of steel. Those priorities were:

(1) Electricity generating plant required by electrical undertakings.

(2) Machinery and equipment for deep-mined and open-cast coal production.

(3) Plant and equipment required by gas undertakings.

(4) Equipment for coal to oil conversion.

(5) Freight locomotives, railway wagons for transport of coal, and steel rails for the essential maintenance of the permanent way.

(6) Atomic energy projects.

I agree that these are all highly important, four of them being for the Ministry of Fuel. But what I should like to know is, what is the effect of these if you balance up the requirements of steel for the exporting firms of this country, who are going to be asked to step up production? I was discussing this position with the head of one of the largest concerns producing motor cars in this country, a man whose name is a household word, and who employs a very large number of men in the motor car business, and he told me that the motor car industry is at the present time utilizing a bare 60 per cent. of the man hours that its equipment and the demands for its products warrant, both at home and overseas. This state of affairs is almost wholly due to lack of material, and predominantly to the lack of steel.
With substantially less than its present factory capacity and equipment, however, the motor car industry before the war was producing nearly 400,000 cars a year. In 1945 requisitions were made and accepted for material to produce a similar quantity. In actual fact, because the materials were lot forthcoming, the output of 1946 was only 219,000 cars. Towards the end of 1946 the rate of production in the factories did reach something approaching pre-war level. Since then the allocation of steel to the industry has been progressively cut. To people in industry to-day this is difficult to understand, as the output of steel to-day has an annual target of approximately 12,000,000 ingot tons. If I may, I will correct the noble Lord, Lord Pakenham, because I obtained that figure this morning. At the present time

1085
it is not quite reaching 12,000,000 ingot tons; it is running closer to 11,000,000 than 12,000,000 tons. I wanted it to be 12,000,000 to make my point, and that is why I took infinite trouble to verify it.
The target is 12,000,000 ingot tons per annum, as against 10,000,000 tons in 1939. I am only taking this as an illustration of what we are up against. Before the war, motor manufacturing utilized about 8 per cent. of the total steel production, and to-day the allocation to this great industry represents only 4 per cent. Therefore, the steel that is being produced in Britain is being diverted into other channels. Do these channels represent the high conversion factor of foreign exchange that is represented by a fabricated motor car when it is shipped overseas, and do these channels represent our industries or specialities that can also claim a high conversion factor of foreign exchange? It is from this point of view that one has to look at the six priorities fixed by the Government—and this is the point to which I wish to draw the attention of the Government—to see if the balance is fairly maintained for our export trade.
If we have to step up our production for exports, how can you ask the motor industry to produce more, when at the present time they can utilize only a bare 60 per cent. of their man hours? There is nothing worse, if you understand factory management, than to have your men working at 60 per cent. There are other exporting industries who are in exactly similar plight. One must remember, too, as the President of the Board of Trade has told us, that the sellers' market is on the decline, and the extra cost of working short time in these industries will make it very difficult for us to export in competition with other countries. What we should do—and this is my own view upon it—instead of starting with priorities, is to see, first of all, what we can do without, and having cut out all the non-essential requirements then see what remains to be provided for.
Before I finish on this question of allocations and licences I wish to put one point which I think is most important. I alluded in my speech on the White Paper to the enormous number of forms to be filled up and the time that one has to wait before one can get requirements through. The machinery is, to say the least, overtaxed. Your Lordships have
1086
heard that point raised again to-day. Not only in the Civil Service, but in every industry to-day, you are losing all the extra labour which has to be taken on to cope with these forms. It is so easy to talk about football pools. I have never taken part in football pools of any sort, but if you got me on other subjects of sport I could not speak so impartially. I am putting forward a suggestion which I think may be accepted. If to-day you go to a main contractor for new pl ant and try to get him a licence, you will find that he has twelve or fourteen subcontractors all trying to get their licences separately; that is to say, you get four-fifths of your job ready and then one of your sub-contractors cannot get a licence for some pipe.
I think a great number of forms would be saved to-day if the main contractor acted as agent for the sub-contractors, and took out an omnibus licence for the lot. I assure your Lordships that I know about this subject, and I think the Ministry of Supply are always ready to listen to one's views. This will mean a lot of extra controls and more officials, so, for goodness sake, where we can, let us see if we can quicken a machine which is getting slower and slower, and get it back to the regulated pace which we knew. It will be necessary to try to get the essential industries working at their maxima m output, and this means that their manpower must be made up to full strength. I asked the noble Lord, Lord Pakenham, when I was speaking on the Government White Paper in March, whether in view of the fuel crisis it would not be more logical to stop building new factories until we were certain that the existing factories had enough fuel, power and materials to run at full time. My reason for suggesting this was that if men could not work full time, either through lack of fuel or other raw materials, the cost of production would work out at such a high figure that when the sellers' market was on the decline it would be difficult to find markets for our goods.
I consider that this question becomes much more urgent in the present crisis. Most of these factories are being built in the designated areas, which were the distressed or special areas before the war. In those days we helped to start up many industries in these areas where large numbers of unemployed, who were not

1087
wanted for the mines, lived. Now the position is reversed. The first priority for people in the mines to-day should be houses. Many more men are wanted for the mines, and these new factories must draw to them men who are required for work in the mines. The noble Lord knows my views about the diversity of employment. The question of the number of men who are required for production must be looked at, together with the great number who are having to be employed by the Government in administrative jobs, which also adds to the number of men employed in administration in the various industries themselves. Production must come first, and with the various controls that it may be necessary to institute for the time being, the number of men required for production must be carefully watched.
We in this country have fought two great world wars, and the last one, which for a year we had to carry on alone, overstretched our national resources. In both these wars we found ourselves unprepared; and we suffered accordingly. Now we have a very grave economic crisis, and although force of circumstances has brought this upon us we cannot escape responsibility for our part of it. We have, to my mind, been living too much in a world of illusion. We have won our two World Wars because at the last moment we faced up to the situation. I am sure that in the same way we must face up to our present crisis, and in that way we shall pull through once again.
6.0 p.m.
LORD TREFGARNE: My Lords, as this is the first time that I have ventured to speak in this House I ask for that indulgence which your Lordships are so generously inclined to give at such a time. May I begin by saying how much I appreciated the fairness which, it seemed to me, animated the speeches made by the noble Marquess, Lord Salisbury, and the noble Viscount, Lord Samuel, and also that of the noble Viscount who has just sat down. As Viscount Samuel truly said, there was a very great temptation to make use of this momentous occasion in order to launch a political attack on the Government of the day. I am very glad to feel that, in this House at any rate, the temptation was resisted of blaming the
1088
Government in whose time these maladies have come to the surface rather than of assessing those irresistible events which are the true cause of our trouble.
I want to say a word at once about the tremendous announcement which came to us out of the mouth of the noble Lord (Lord Pakenham), about the measures which the Government are taking. I am not a strong Party man, like a great many members of your Lordships' House, but I felt that Lord Pakenham had good cause to say that he was proud of the measures which this Government have brought forward. Not only did he, as I thought, demonstrate that these troubles had come upon us very largely from circumstances entirely outside our control, but the figures he gave, which I am sure your Lordships will read more attentively in the morning, illustrate that many immense factors which were entirely beyond anything that could possibly have been foreseen have brought about the predicament in which we temporarily find ourselves. I do not know whether your Lordships will think it out of place for me to say a word Of praise, even in the middle of the struggle, but everybody who has had any part in the business of government—I have had only a very small part myself—knows how thankless a task it is. I hope, therefore, that your Lordships will not feel it out of place if I pay a tribute of respectful admiration to members of the Government, particularly those who have, through lean and dangerous years, borne the tremendous fret and fatigue of public affairs. When they are faced, as they are at this momentous crisis, with the bringing in of far-reaching and drastic and courageous measures, it would be a very unfair man indeed who abstained from paying them personally and politically some tribute for what they have done.
If any of us had any doubt before the noble Lord, Lord Pakenham, spoke, that this was primarily a dollar crisis, such doubt must have been removed by what he said. Although those measures which have been announced here and in another place to-day go a very great deal of the way to meet our immediate situation, I am still not entirely satisfied that the long-term causes of the economic disequilibrium between ourselves and the

1089
United States have been fully faced by this Government or by any of their predecessors. I want, quite plainly, to suggest to the Government that they should address themselves resolutely—I do not know what has happened in the last few weeks—to regaining a greater liberty of action in relation to that fundamental matter known as discriminatory arrangements. The relative agreements which bind us to those arrangements beginning, I believe, with the Mutual Aid Agreement of 1942, are couched in extremely obscure terms. As an ancient English philosopher put it, they are full of patent and latent ambiguities. They have also some very obvious loopholes.
When we read through them—I am beginning with the Unilateral Declaration of 1941, the Mutual Aid Agreement, and the Loan Agreement which your Lordships debated in March of last year—it is obvious in almost every clause that our negotiators have had to build bridges across almost unbridgeable disparities of opinion. I want to suggest that perhaps one of the greatest needs as a foundation for our future economic relationships with the United States is that there should be some dual machinery which will enable us more effectively to explain our difficulties to the United States, and will enable the United States to explain their difficulties to us. We always have the negotiators' reports after these agreements, and your Lordships will recall hearing the late Lord Keynes tell us that he felt, after only two days in Washington, that the distance between us and the United States was wider than the wintry waste of the North Atlantic.
Then again, we hear that in the actual terms of the agreements themselves, they are not only far from satisfactory to the United States but, as we know in this country, far from satisfactory to us. Whenever we attempt to gain some greater measure of agreement with the United States, we are always told that there is either a Presidential election or a Congressional election, or some other political reason why it is impossible for the United States leaders to go further to meet us in the direction that we desire. At the same time as Lord Portal was engaged in the Ministry of Production, I had a very humble Ministerial role there and had something to do with the administration of these arrangements in
1090
relation to the United States, and I must say I was immensely impressed during those years with the extreme disparity of opinion between us and that great country on questions affecting the Productive capacity and the export trade of the United States.
In The Times of last Monday a statement was made which bears out what I have attempted to say. It was by the very able Washington Correspondent of The Times. He said:
"According to Mallory Browne, of the New York Times, what Mr. Attlee must say concerning Britain's economic situation—
and, of course, what the noble Lord, Lord Pakenham has said to-day—
"'will be the gravest pronouncement since the declaration of war in 1939.' If this should .prove to be measurably true, it is a fair assumption that no more than a few hundreds of Americans will fully understand how such a point of urgency has been reached or comprehend the complexity of causes whereby a loan of 3,750,000,000 dollars, which was theoretically to last until 1951, should in 1947 be near to exhaustion. The part which developments in the United States have played in accelerating the speed at which the crisis has approached will for the average American be secondary. It is upon failings in administration of affairs by the British Government that he will concentrate, and in particular upon their alleged inability to see how less than adequate was their firmness in dealing with conditions within their control. Admittedly this will not he entirely fair. It tales no account of the tact that next to the United States the United Kingdom has made greater progress in peace-time production than any other country."
I should like this suggestion put forward to the Chancellor of the Exchequer and also to Mr. Bevin: that it may be that their long and patient efforts in these fields are not being as efficiently and skilfully backed by our information agencies in the United States as they might be, end that if we are to walk hand in hand together as two nations—as I believe we ire bound to do—we must surely pay some attention to these extraordinary differences that arise between us.
I want to say one word about the question of the discriminatory arrangements, and particularly about the parallel obligation which rests on the United States to reduce tariffs, contemporaneously with the abandonment by ourselves of preferential arrangements. I am hound to say that I have grave doubts whether it is possible for any Government in the United States to make any substantial reduction in the United States tariff at all. We have

1091
watched the course of events there, how they have firmly resisted any rise, or any adequate rises, in the imports of raw materials and other imports; and how at the same time they have permitted, by the abandonment of price controls, a rise in their own prices amounting to 50 per cent. since the date of the loan to us in the case of those goods which are the subject of our purchases from them. They have invented, or if not invented, at least revived the ingenious protective practice of requiring a percentage of home-produced raw material, rubber, to be included in all manufactured goods. They have established large preferences, I believe, in the case of imports from the Philippine Islands and other dependencies. It was only very narrowly that an entirely new tariff on wool and woollen goods into the United States was avoided, and it may yet be revived.
Therefore, I say it is quite clear that the present policy of the United States, which will be pushed to its uttermost limits, is a policy of high exports and low imports, with tardy and reluctant balancing of the account by overseas loans and investments. I am not putting that forward as any complaint against the attitude of the United States, but I say that our policy must be founded upon an understanding of what is possible for them. Some people say that this policy is due to the attitude of the pressure groups in the United States, but I think that is not entirely a correct appreciation of the position. It is a fundamental part of the national outlook in the United States.
But apart from the national outlook, and the Government machinery as such, the National Advisory Council, which would have to approve any such reductions, is an inter-departmental body in which many voices are heard. Anyone who has had any experience of inter-departmental bodies on which many departments are represented will know what a tremendous task those who form one group on the committee can effectively play in getting through policies to oppose which a large amount of influence can be mustered. And it is not only in the international attitude of the United States but in the inter-State relationships also that this outlook is to be seen. I believe it is correct to say that in ten States there are ports of entry, with all kinds of restrictions. In twenty-eight
1092
other States there are considerable preferences for the goods and products of those States. Then, in the United States generally, the Press, publicity hoardings, and so on are always lurid with appeals of a. protective character of the "Trade at Home," "Buy Minnesota" type.
I would like to summarize the matter in a short way. Nowhere in the world have restrictive and protective practices been so variously and ingeniously expounded as in the United States. This, of course, is not due to any excessive parochialism in that country. It has a very material and substantial foundation. It is founded upon the enormous, steady acceleration of their productive capacity which has been going on, at a rate which economists know about, for a great many years, and it took a tremendous lurch forward during the war. Though I am not proposing to give your Lordships a great number of figures, I have three figures here which indicate, first the gross national product of the United States in 1939, the gross national product in 1943, and the gross national product today. There are some noble Lords present who like to watch these things and who know the figures already, but perhaps I may be permitted to remind others.
The gross national product in 1939 was 106,000,000,000 dollars; in 1943 it was 187,000,000,000 dollars. That was with 10,000,000 of her best producers absent on military service. That was a rise from 106,000,000,000 dollars to. 187,000,000,000 dollars, and to-day, with the return of her Armed Forces and certain other adjustments which have to be allowed for, the current gross national product is 225,000,000,000 dollars. Therefore, between 1939 and 1947 the gross national product of the United States has more than doubled, a phenomenon in international economics which must be taken account of throughout the world and in particular by Britain in formulating her trade relationships with that country. I think that it is highly probable that there may be some measure of inflated value in that. I have taken these figures from an extremely authoritative source and, as we all know, figures are liable to a certain amount of annotation and explanation in statistics, but I think that is a fair generalization because the figures prove that the gross national product of the United States is to-day double what it was in 1939.

1093
Therefore, how can they begin to consider admitting large quantities of foreign goods into their markets if they can possibly avoid it? Remember that the penalty ever present in the minds of United States statesmen is the peak unemployment figure which reached twelve millions between the wars, and even in 1939 was eight millions. I am not pretending that they have to find exports for the whole lot, but unless they can find some substantial outlet for this enormously increased productive capacity, they are faced with devastating problems of unemployment. So far as Britain is concerned, we received in the first quarter of this year only 332,000,000 dollars' worth, whereas we exported to the United States exports to the value of 47,000,000 dollars, of which the largest single item was old brass. Therefore, even with that small marginal outlet to Britain of her export trade, there is an enormous adverse balance of trade between ourselves and the United States. So I want to ask the noble Lord, Lord Pakenham, if I am not adding to his many distractions at the moment, what substantial grounds have the Government got to expect that there is possible any material reduction in the United States protective system? I notice that it appears to have been dropped out of the financial agreement of 1945: it was always tagged on to all previous agreements. This time it was not even tagged on, and I think there must be some very frank facing up to this question in our current negotiations with the United States.
It may be asked—and it would be a perfectly fair question—what good purpose is served by emphasizing these differences? I answer that, unless in this country we gain a full understanding of what it is possible for the United States to do in its trade relations with us, and unless they gain an equal understanding of what it is possible for us to do, which they have not yet succeeded in accomplishing, then we can never arrive at a satisfactory common trade policy. I want to say that I regard myself as second to no man in my desire for friendship with the United States. Nothing that I have said must he taken as being critical of the United States. I say with sincerity that in Britain there is a great affection for the United States, and we are bound together by a common ultimate aim and outlook. I think there are greater
1094
dangers in the world than the American export surplus. We are bound together by so many common factors. I say that people who are bound together in that way might just as well get into the habit of giving each other those ordinary indications of approval or disapproval which will enable them to travel along the same road together, or they are going to have a very uncomfortable time. I do not think that any mealy-mouthed excessive refinement of diplomacy is a very effective method, and no one wants anything in the shape of rudeness. Sometimes I think that the old methods of wrapping it up, if I may use a colloquial expression, have been employed far too much in our commercial negotiations with the United States.
I am certain that your Lordships will feel that the chief duty of any who ask for the ear of your Lordships in this debate is not to recriminate but to make plain what course of action they propose. I have excluded from my remarks Any question of moral incentives. I did not hear anything in the speech of Lord Pakenham on that subject, but I am not proposing to enlarge upon that because I feel that it might come more becomingly from one of longer standing in your Lordships' House. I feel that without that many Of the other steps will Ix in vain.
So that the main proposal which I want to submit—I know others will submit it as well—is that we must regain liberty of action to reconstruct the whole pattern of our trade, and in particular that we should reject the interpretation placed upon Article 9 which prevents us from making discriminating arrangements with our Dominions and Colonic. It is really a monstrous proposition that, if we have the sterling to buy food from our Dominions and Colonies but have not the dollars to buy it from the United States in equal proportions and price, then we must sap our strength and vigour by declining to buy it at all. I cannot understand why, whatever might have been our plight, we have so confused the minds of the American public, who are not too easy to put these things across to, by allowing an interpretation of that to be possible in any Agreement that we might have entered into with them.

1095
These raw materials and foods form an infinitely larger proportion of our mutual trade than any manufactured goods. I have a figure of the 1947 import programme of £1,450,000,000 of which £1,240,000,000 consisted of food and raw materials. Quite clearly, if we tackle those enormous spheres of imports, we shall do a great deal more than we can possibly do by nibbling at manufacturers and so on, although I do not say that manufacturers should also be excluded. I further say that we ought to be free in certain cases to enter into bilateral trading arrangements. I accept fully—although I do not claim any knowledge; I only listen to the experts themselves, and I have listened to them for a great many years—the proposition that multilateral trade is the grand ultimate aim looked upon as a possibility of achievement over the course of the next twenty or thirty years. I think it is a thing to which we should harness ourselves. But as an aim to be looked upon as a practical proposition in the next five years, I feel it is nothing more nor less than a Utopian international theory. It is true there is some machinery in the International Monetary Fund for making provisions for these emergencies, and I should like to ask what the Government think of those safeguards which make it possible for the International Monetary Fund to declare dollars a scarce currency, and to relieve us from all those obligations. I should have thought that it was pretty plain that the dollar has been a scarce currency for a long time now, and nothing has happened on the part of the International Monetary Fund.
My Lords, I am going to conclude with these words: that I have no doubt whatever that Britain will overcome the present economic embarrassment. It was necessary to get worse, and now we are in a position to say, in the words of the poet whom we share with the United States:
"The worst is not, so long as we can say 'This is the worst'."
Of course, we know that in the United States there is still a considerable amount of misgiving about Britain and the British future, but I think the United States have always been a little prone prematurely to write off the strength and power of Britain, and, at the same time,
1096
they have not altogether burned the boats of co-operation, just in case. They have still held our hand, and they have proved to be justified in doing so in the past. My Lords, as often before, the world needs the strength and influence of Britain, and I believe, as often before, that Britain will save herself by her exertions and the world by her example.
6.32 p.m.
VISCOUNT BRUCE OF MELBOURNE: My Lords, it is my privilege to offer congratulations to the noble Lord who has just sat down upon his maiden speech in this House. I understand that he is not altogether unfamiliar with a deliberative assembly, but your Lordships' House differs in some respects from any other deliberative assembly in the world. It has the reputation, I believe, of being a most difficult place in which to speak, and I can confirm that from my own experience. But I congratulate the noble Lord upon having so triumphantly overcome those difficulties.
This debate is concerned with the economic position of this country, and I venture to suggest that it is concerned with it not only from the short-term, but also from the long-term view. There has been a tremendous marshalling of facts, and a great deal of information supplied, although by no means all that we ought to have if we are to judge the situation. I think from that it emerges quite clearly that our position is that, at the moment, and for some period ahead as far as can be seen, unless we can take very drastic action we shall be purchasing more than we shall receive from our sales abroad. Unless we can cure that situation this country is running towards bankruptcy, with the destruction of the standard of living which we have built up over generations. That is a situation which is serious beyond words, and to-day we have all waited with great expectation to hear the statement of the Prime Minister as to the action which the Government contemplate taking.
We have heard a summary of that statement in this House. It is somewhat difficult to judge, from a first hearing of so important a statement, as to whether it does meet the circumstances, and whether it is likely to achieve the result we all want to see. But I would say, for my part, that I would be prepared to accept that statement if, on a close examination of it, one found

1097
that it does not contain any word which implies anything of a sectional nature, that it is the statement of a leader in a national crisis, calling for national unity; and if it is of a character likely to restore that national unity which we had during the war, which is just as essential to-day—a unity which enabled us to accomplish the seemingly impossible in those critical years. That, I think, should be the fundamental feature to such a statement. We do not know whether it has that in it or not, but I pray to God that it has, and that it will rally this nation, because it is vital that we should again become a united people.
On the acid tests of the things that it may contain, it seems to me that it is relatively simple to get down to the fundamentals. As I see it, it is fundamental that at this time we should take whatever steps are necessary to try and bring about an equilibrium between our exports and imports. That means that we must take drastic action internally. We have most certainly at this stage got to ensure that we do get the best utilization of our available materials, and the best use of the labour force that is at our disposal. If we are going to do that, it seems to me we have got to abandon many projects that may be eminently desirable in themselves but which, at this particular moment, we just cannot afford. One has been referred to to-day, the Severn Bridge. It is almost inconceivable that we should go on with that, and employ material and labour upon it at this time. Equally, we have got the question of the electrification of the railway system, and we have got the planning of great new satellite towns. All these things will be desirable at some time, but I cannot believe that any one of them ought to be gone on with to-day. What we have to concentrate on with regard to our imports is that we should only bring in the foodstuffs that are essential for maintaining the standard of living and the morale of our people, and the raw materials which are going to contribute to, and which are necessary for, an increase in our export production. Those tests, I think, have got to be applied to what the Government are doing, and, if they are doing those things, then it seems to me those are the things that are essential.
But again, we have got to have leadership from the Government in this crisis,
1098
in saying, with regard to the question of its being necessary, as it probably is, ..hat in respect of labour there may have to be some alteration in hours or in conditions and in things for which the Labour movement has fought for years. You can only achieve those things by the Government's determined leadership, by the Government assuming the responsibility, and, if you will, the unpopularity. It seems to me grossly unfair always to be seeing trade union leaders and negotiating with them, because it is inevitable in those circ am-stances that you are forcing the unfortunate trade union leader, more or less, to take the responsibility for the things he is asking his people to do. That is not his responsibility, it is the responsibility of the Government. In that respect it seems to me. we must have real leadership from the Government. Those are some of the things concerned with the short-term policy that we are pursuing, and must pursue if we are going to keep out of trouble. If we find on examination that the Prime Minister's appeal is an appeal to the nation, if it has no sectional flavour in it at all, if we are of the opinion that the action the Government are taking is wise and necessary, then we are all going to respond to it. We must recognize that it is going to mean the imposition of discipline and sacrifice on this country—discipline and sacrifice which the country will have to impose to a great extent on itself, for there is a limit to what the Government can do.
One thing which worries me very much is the statement we have had to-day that there is only £250,000,000 left of the great American Loan, and that the outgoing from that credit in the month of July was £170,000,000—admittedly an inflated figure, as has been pointed out. But £250,000,000 is a very short distance from the absolute crisis, and it is only at this eleventh hour that the Government come forward with definite proposals. In view of the calls on this loan, I suggest that we ought to have foreseen a year or eighteen months ago that this crisis was coming, and taken steps to meet it. I do not accept the explanation that has been given, that the non-recovery of Europe as rapidly as we hoped and the consequent rise in all dollar prices was the cause of the present crisis. If neither of those things had happened, the amount

1099
at our disposal, in the light of the difficulties we were up against and the task we had to reconstitute our industry and economy, should have caused to be taken months ago such prudent steps as are being taken to-day.
LORD AMMON: My Lords, I am very sorry to interrupt the noble Viscount, but may I point out that there is a Royal Commission at a quarter to seven.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The following Bills received the Royal Assent:

Companies,

Agriculture,

Transport,

Isle of Man (Customs),

Town and Country Planning.

Paisley Corporation Order Confirmation,

National Trust for Scotland Order Confirmation,

Nazeing Wood or Park,

Borough of Croydon (Rating),

Tynemouth Corporation,

London and North Eastern Railway.

[The Sitting was suspended at seven o'clock, and resumed at half past eight.]

ECONOMIC SITUATION.
Debate resumed.
VISCOUNT BRUCE OF MELBOURNE: My Lords, we must have a definite long-term policy which will enable us progressively to get rid of the restrictions and sacrifices our short-term policy must impose upon us and which will place us in a position to meet our obligations out of our own resources at the earliest possible moment. This involves a wide visioned and statesmanlike policy and a policy which is related to the financial and economic linking which exists in the world to-day. What I want to know, and want to know very much, is whether the Government has any such long-term policy. I do not think I am being unfair
1100
if I say that there has not been any indication of any such long-term policy that could be detected from the utterances of Ministers or from statements that have been made on behalf of the Government. It is quite imperative that we should have such a policy.
Again, I do not want to be unfair, but I think a criticism can be offered of the short-term policy. There has been an absence of decision, there has been a lack of vision, and there has certainly been an absence of such forceful leadership as would make this country understand what it was up against and definitely point the course that it had to follow. I venture to say, with regard to the long-term policy, that we shall never solve our problems unless we have these things—all these things—and the task rests on the shoulders of the Government.
For a few moments I would like to deal with what must be the basis of that policy. The basis of that policy must be an expansion of our exports. We have to rely on our visible exports as we never have done in the past. The reason for that is that we have sacrificed our overseas investments. We are not getting anything like the same return from our invisible exports as we did in the past. We are driven back upon our visible exports. There has been a great drive for exports. We all encounter posters exhorting the people to work and produce in order to bring about a great expansion of production for the purpose of export. But what I am not so happy about is, have the Government thought this problem right through to its logical conclusion?
Assume for a moment that there is a great response to the Prime Minister's appeal to-day, that we get a new spirit throughout Britain, that we restore the unity of the days of the war, secure increased production, and that that production is sufficient to live up to what the Government are asking of us. It is not enough, however, to produce; you have also to sell what you produce. At the moment, while the world is restocking and re-equipping, and restoring the devastation of the war, we can probably sell during the next year or two whatever we produce, despite the issues that have been raised to-day with regard to the limitation of our exports because we are proceeding to limit imports from the countries concerned.

1101
Equally, we know the facts are that we cannot physically produce enough so that our exports by themselves can bring about an equilibrium in the balance of payments. If our present plans for increased production succeed beyond anything we have so far had any evidence to support, then possibly in two or three years' time we might be producing enough to bring about that equilibrium through the increase in exports. But by that time the world will have completed its restocking, re-equipment, and restoration of the devastation of war; and then what we have to consider is where are we going to sell those exports? Although the target has recently been considerably reduced, and to-day we have been told we are aiming at only 60 per cent. by the end of next year over our 1938–39 exports, the basis we have all been working on for some time has been that if we were to export to the extent that was necessary to remedy our economic situation and put us in a position to meet out of our own resources our vital and necessary external payments we should have to put up our exports over 1938–39 by from 75 to 100 per cent.
Suppose we reach that position. In a speech I made in your Lordships' House not long ago I pointed to the fact that prior to the war, in the years of the 1930 decade, the markets of the world were not sufficient to absorb the production of the world as it was then. I also pointed out that there had been no great expansion of the world's markets since that date, but that there had been a growing increase in the world's production. The noble Lord who preceded me pointed to that fact and demonstrated the point I made in that speech, that American production has gone up over roc) per cent. over the war years—100 per cent. in that greatest of all industrial and agricultural nations. I pointed out that if America were to avoid catastrophic unemployment she would have to export to the world double in quantity and four times in value what she exported prior to the war.
I suggested that in that situation it seemed very difficult to discover where Britain was going to achieve an additional 75 to 100 per cent. of exports. I suggested that the only possible solution of our long-term problem was that there
1102
should be a great expansion in the total of the world's wealth by the development, with the aid of modern science and modern technique, of the latent resources of the less advanced countries. I do not propose to bore your Lordships by gong over all the arguments I used on that occasion. All I want to do is to reiterate the view that I then expressed, that if we are to find an outlet for these increased exports that we hope to bring about then there will have to be a considerable expansion in the world's total volume of trade and in the markets that will be available to us. The point I want to stress, or rather the question I want to put to the Government, is: what is the Government's policy to meet flat situation?
I would first suggest, and then I will analyze them, that there are three conceivable policies. There is first the policy to which I have always understood the Government were committed; that is, international co-operation on a full scale through the United Nations; it was contemplated that by that method, through the United Nations organization and its specialized agencies, there should be a great drive to increase the total wealth of the world. The second choice, assuming that full international co-operation were found for some reason or another to be impossible, is that we co-operate with America, rather abandoning the idea of the United Nations and linking ourselves up in some way with America. The third policy, assuming that the situation vis-à-vis America was impossible (for the reasons that were given by the noble Lord who preceded me—namely, that America has certain tariff policies and for political reasons will never accept the idea of receiving the necessary amount of imports to balance her exports and keep anything like an equilibrium) would mean that we should be driven under British leadership to try to form a group of nations with the same objective, but on a more limited scale, of increasing the wealth of the world by developing the resources under their control with our own Colonial Empire, and the co-operation of the Dominions
I do not know which of those three horses the Government are backing. I have always been under the impression that they were backing the first one; that

1103
is, total United Nations co-operation. If that be so, I would suggest that we must examine the position very carefully because, after all, we are going to stake the whole of Britain's future on whichever of these three horses we back. If it is to be full international co-operation, we want to examine it very carefully, and the Government surely must have satisfied themselves on certain points that I want to put to them. The first point which I would put to them is: Are they absolutely convinced that it will be possible to continue economic and financial co-operation through the United Nations in the future? The second one I want to put to them is: Do they believe that the Economic and Social Council will afford that leadership and direction towards this economic development which we hope to bring about by this means arid which, in fact, the Economic and Social Council under the Charter was designed to afford?
The third question I want to put to them is: Are they quite happy that the tasks of the specialized agencies of the United Nations are sufficiently defined, and that there is adequate co-ordination of their activities and co-operation between them? Finally, I want to put to them: Do they consider that the personnel that is being recruited for the United Nations staff and the staffs of the specialized agencies are of a calibre that can stand up to the tremendous tasks and responsibilities that are going to be imposed upon them? I have had considerable experience of the United Nations and of the specialized agencies, and I cannot believe that the Government is satisfied on those points. But the specific question I want to ask is: If they are not satisfied, what steps are they taking to put these things right, if they are going to stake the whole of our future upon the United Nations and the specialized agencies?
The second alternative that I suggested was that we were rather going to abandon the idea of acting on full international cooperation, and that we were going into the ring in co-operation with the United States. There I want to stress this point, and stress it very strongly: that I believe the United States Administration, even if there is a certain lag in the public opinion in America behind the administration, are perfectly conscious of these problems;
1104
that the Administration want to do the right thing, and that the Administration recognize that it is in the vital interests of America herself that she should afford the maximum of assistance to other nations of the world to try and get the world going economically. But I venture to suggest that it is not a practical basis to have one great creditor nation, even a nation as great as America, as really the sole support of the world's economical position. Politically they will not be able to maintain that position indefinitely. They will never be able to put it over to their own people.
Then there is the reverse angle: that nations are, unhappily, very nation-minded, and there is a sort of grim suspicion about accepting this unlimited aid from one great powerful and potent nation because every nation feels that a country which gets such an economic and financial domination is going to dictate its policy and, in various ways, to interfere with its own internal affairs. I do not believe it is practicable for any individual nation to carry out the task that has to be carried out to-day. Serious as our affairs are to ourselves, they are a relatively minor problem in the scale of the total of world happenings economically at the moment. A question has been raised as to the attitude that America might adopt in connexion with some modification of the provisions in Article q regarding discrimination. I am absolutely confident that there is not a shadow of a doubt what attitude the American Administration will take up. If it is demonstrated to the American Administration that we just cannot buy what we require, whether it is foodstuffs or raw materials, in the hard currency of the dollar, but we can acquire those things to keep ourselves going in the soft currency areas, they would, not in our interests but in their own, say: "All right, go and get it."
Serious as this problem that we are up against may be, I would ask your Lordships to recognize that we are not the only people on earth who have got a problem. The Americans, to my mind, are up against as tough, if not a tougher, problem when they look into the future, than we are. They are up against an incredibly difficult situation. They have advanced their standard of living progressively. They have done one thing after another that makes it vital that they

1105
should keep their volume of employment at the highest point. They have even introduced this idea that there must be parity between primary and secondary industries. The result is that you have wheat in America somewhere up to $2 to $2.20 a bushel, whereas in my own country, Australia, while the farmer would protest to high heaven that it was a great injustice, he would be extraordinarily satisfied with a dollar a bushel for wheat. That is the situation the Americans are up against. Do not always think we are the only people who have troubles. It will not be only American aid that will remake the world. America will not go on indefinitely providing the necessary credits. In any case, what would be the good of providing credits merely to keep people going? You have to provide credits to create new wealth or they will be wasted, as they were after the last war.
I have given two alternatives—complete international co-operation through the United Nations and their specialized agencies, or some special arrangement with America. The third possibility is the question of some sort of grouping of nations with the same objectives but on a more limited scale under the leadership of Britain. We may he forced to that. I hope that we shall not be forced to it; I hope that we shall secure full international co-operation. The picture is somewhat gloomy, but if we get over the short-term problem (and we shall get over it only by great sacrifice), and then plan the future on this basis of a group of nations which are out for these very objectives that we hope to secure internationally, I believe that we have a fairly satisfactory future in front of us.
But we have to decide between these three courses which we can adopt; and we have to decide before the American Loan runs out. If we go bumbling about and not making up our minds, we shall drift on until we come into the most appalling disaster. The third course, of course, would be based on complete cooperation between the group of British nations. On that, being very mindful of an undertaking given to your Lordships when I made an inordinately long maiden speech, I do not want to spread myself, although there is a great deal I would like to say.
1106
I will limit myself to one point on the immediate short-term problem. We are up against a terrific hurdle. We are making a great national effort. Why do we not consult more with the Dominions? The attitude of all British Governments—and, heaven knows, I understand it, because I suffered under it for twenty-rive years—is never to ask the Dominions to face up to anything, frankly to say, "What are you going to do?" The attitude is that: "We must not offend the Dominions; we must be polite to them." Yet they are fearless, outspoken peoples, and they will take care of themselves. They love to be forthright about everything, and for you to say what you want to do.
I venture to suggest. on this short-term problem, that it is a chance to say to the Dominions: "Come on; we are in a jam. What are you going to do? We have saved you many times through history, what are you going to do to save us this time? "Far from resenting it, they will welcome it. We have, perhaps, an opportunity of pursuing that line when, with a perfectly staggering youthful initiative and energy, the noble Viscount who leads this House is going on a great journey across the world by air. There is an opportunity for him to put this whole question of our immediate problem to the Dominions. Perhaps in that connexion I might be permitted to say—and I believe that I am expressing the sentiments of all member of this House—that we wish the noble Viscount every success in this great mission upon which he is embarking. On the other aspect of it, the long term policy, I will observe my pledge not to talk at length, but I hope that I shall have another opportunity to deal with this question.
I appeal to the Government: "Do not get caught again." You may not like an impartial observer saying that you have been caught before, but 1 think you have been. But, for heaven's sake, do not get caught vain. You must have your long-term policy; you must define it quickly; and you must tell the Americans that you are going along that road unless they will join with you m complete international co-operation. There are one or two other observations I want to make before I sit down. One great advantage of becoming relatively ancient, with a certain amount of experience behind you,

1107
is that you are permitted occasionally to offer advice. If you are not too boring in offering that advice, you are excused for exercising that privilege; and occasionally—I admit rarely—perhaps some notice is taken of the advice offered.
The advice I want to tender is directed to the Government, but before tendering it, I want to make two observations. One is that I have no political affiliations of any sort whatever; the second is that my personal views incline neither towards full-blooded Socialism nor rabid free enterprise. I believe that there are some activities—particularly those connected with vital services—which it is quite appropriate to nationalize. I believe that there are other activities—particularly those concerned with consumer goods—which should never pass under public ownership, but should remain under private control. Above all, I believe that it is imperative that the incentive for individual enterprise and initiative should be maintained. With those preliminary observations, I will offer my advice.
My advice to the Government is: Go slow on your programme of nationalization at this moment. My first reason for saying that is that if you do not you will deprive yourselves as a Government of an opportunity really to think out fundamental problems such as those which we have been discussing to-day—problems which are vital to the whole of the British race. The second reason why I say you should go slow is that if you do not you will crash one of the most efficient and best machines that have been seen, in the world—the British Civil Service. I am not talking now of the hundreds if not thousands, of additional persons who have been taken on in recent years; I am talking of the fundamental British Civil Service. That Service has stood up magnificently to six years of war and two years of continuous and extremely novel legislation. But they are getting very near to the cracking point now. If you impose any further burden upon them, I believe the senior civil servants, who are already showing the strain, will inevitably break under it. I know how serious that would be from an experience of seven years as a Prime Minister, and fourteen years as High Commissioner over here; and particularly during the period of the war, when I was located in the War Cabinet offices. I then had
1108
a great deal of contact with the Civil Service and I realized the tremendous debt which the Government and the people owed to that Service. My belief is that if you try to go too hard you will break them, and it will be a tragedy if you do.
My third reason why you should go slow on your nationalization policy is that you will divide this nation from top to bottom at an hour when unity is required as much as it was required during the war. My final word is that if you nationalize, or attempt to nationalize, industries that enter into competition in the markets of the world, such as iron and steel whatever the final results of your nationalization may be—and I am not commenting on that one way or another—by introducing confusion and uncertainty into the whole position you will handicap them just at the moment when they are being called upon to make the maximum effort towards producing for export. I apologize for giving my advice, but, as I say, the ancient have certain privileges, and I have exercised them. My final word would be that I believe we can get through all these troubles. The one thing that will defeat us is if we lose faith in ourselves, and there have been signs that we might. We have one asset which is the greatest asset any nation could possess—the character of the British people. It has seen us through innumerable crises during our long and, I venture to say, glorious history, and if we only trust, it will see us through again.
9.3 p.m.
LORD CALVERLEY: My Lords, I take comfort in addressing you because the noble Marquess, the Leader of the Opposition, confessed that he was no economist, and I believe he called himself an ordinary man. Sometimes I think he is an extraordinary man, as I admire his many talents. But that gives me comfort to transgress upon your Lordships' time for a few minutes in putting two local aspects. Here again I am encouraged after listening to the speech of the noble Viscount, Lord Bruce, because he has given us words of wisdom. I can assure him that even if he had been addressing the Parliamentary Labour Party, the Commoners as well as noble Lords would have listened to him with respect, and I believe they would have been prepared to follow much of his advice because it was given not only in a disinterested way but in such a wise way.

1109
That brings me to the subject of a trade which the noble Viscount, during his period of office as Prime Minister of Australia, did so much to foster. It affects the close relationship between my own county and the whole of what we may call the worsted and woollen textile trade. I confess that I was disappointed at the answer I received from the Government spokesman to-day in regard to the textile trade. The President of the Board of Trade has stated that it is a first priority. It is a first priority because, owing to the energies of our Dominions, we have ample supplies of raw material with which to manufacture beautiful cloth, which is the open door not only to soft currency countries but even to America. If a man has a few dollars in his pocket, he will be ready to invest them in British cloth.
His Majesty's Government has told what is called the textile trade to go forward, and that they can have the fullest allocation of raw materials. On the other hand, we find that the full development of those manufactures is going to be retarded because the Government will give only 65 per cent. of the coal that we need, even in summer; and when we think of the winter, we tremble. I do not want to bore your Lordships with too many figures, but thanks to the Bradford Chamber of Commerce I have the latest figures and some comparative ones. I asked them what we were doing two years after the previous war. I am not going to take the money value because of inflation.
LORD WOOLTON: We have got it now.
LORD CALVERLEY: The noble Lord is certainly correct that we have got far too much inflation; but if he wishes to compare inflations, let him turn to the Government of 1918–22 and examine their record. If he does not then say that as compared with that Government, we really are on the side of the angels, I shall be inclined to sit in sackcloth and ashes.
LORD WOOLTON: I agree that the inflation was greater then.
LORD CALVERLEY: Exactly; and if we do not watch it we are going to have it worse. Here is a chance of not getting it, because we bought that wool, thanks to Australia and other Dominions, on favourable terms. Therefore all we are asking for is more coal, not for any selfish
1110
reason but to earn more dollars and also to provide ourselves with those necessities which we shall need this winter, owing to this crisis which has come upon us.
LORD PAKENHAM: May I interrupt the noble Lord for one moment. I must have failed in my task if I seemed to disparage the importance of the textile industry.
LORD CALVERLEY: I did not attribute that at all to the noble Lord.
LORD PAKENHAM: I should like to take this opportunity of making it plain that, in the view of the Government, anyone who goes into the textile industry is doing a fine thing for the country.
LORD CALVERLEY: Naturally, with all the preoccupations of the noble Lord, he would not be aware that I put down a question to be answered by Lord Chorley, and his reply was definitely disappointing. In 1920, two years after the end of the previous war, the textile Norsted woollen trade turned out 264,000,000 odd linear yards of cloth. I will not mention its value because it was inflated. As time went on it went down because we had a slump owing 10 that inflation followed by deflation—very much so. In 1938, which was a normal year, we turned out 90,000,000, odd linear yards. In 1946, with fewer operatives—I mention this to show that British industry is not in slow gear altogether—the amount we manufactured was 73,821,000 linear yards.
In the first six months in 1947, it was over 35,317,000 linear yards. But here is the rub. After January of this year (during what one person described as a "heavenly visitation" to punish us British people for our cruelties to them—in other words, the heavy snow, and so forth) the production fell substantially. We are now picking up again, but what I want is to see that the catastrophe which came to Southern Scotland, the West of England, and the West Riding of Yorkshire shall not recur for the sake of 100,000 or 200,000 tons of coal, and that His Majesty's Government shall regard that as a first priority.
We have had one or two speeches decrying the production efforts of the operatives. I listened to the head of one of the greatest motor firms in this country—the Austin Company—making a speech

1111
which was not a propaganda speech but a factual speech. He acknowledged with pride that in their works, man for man, they were turning out more in the first six months of 1947—except when coal was short—than they did in the pre-war years prior to 1939. Some credit, therefore, is due to the British operative. I wish the figures from 1945 to date, as compared with 1918 to 1920, were available, and then the British people would have nothing to be ashamed of. There is a 12½ percentage of irresponsibles among the miners—and I speak as coming from generations of miners. I tell the absentees what I think of them. Gentlemen who visit the miners talk to the faithful ones who do not absent themselves, not to the offenders. I hope these offenders are going to have a change of heart—because the trouble is largely psychological.
One of the finest Ambassadors we have has been in Australia and New Zealand. He is to return to this country to-morrow, I believe. I refer to Viscount Montgomery. He will have a tale to tell of the spirit of co-operation among the people of our Dominions—a spirit which has been testified to by the noble Viscount, Lord Bruce, himself. We are going to have great news from Viscount Montgomery as to the co-operation of our Dominions, and in particular Australia and New Zealand. In passing, that brings me just to mention what the noble Viscount, Lord Bruce, called his short-term policy. Here I want to apologize to Lord Beaverbrook. I wish he was here. I hope his health is good. He is an ordinary man, but with greater vitality than most of us. I almost wish I had followed his advice when we had the Keynes debate and debated Bretton Woods, because those pure and undefiled economists have led us up the garden path and made promises which have been far from amplified. I do not know whether my noble friend, Lord Woolton, is an economist. I hope not.
LORD WOOLTON: Not after what you have just said!
LORD CALVERLEY: I would rather trust to the ordinary man than to these very learned, pure and undefiled economists, some of whom, like Lord Beveridge, sat at the feet of the mid-Victorian Manchester Liberals. Lord
1112
Beaverbrook told us what would happen to us if we ratified that clause, Clause 9 of the Keynes agreement. I believe that for the short-term policy it is the duty of His Majesty's Government to say (I believe they have already said it, and I should not be surprised if they told Mr. Clayton when they had the meeting in Paris the other day): "Look here, the Colonies are part of the family; they are grand-children and they are growing up. But our Dominions are our blood brothers, are they are in the family. Loan or no Loan, if we wish to trade with the Dominions, to take their goods, and send them what goods we can, we shall do so." It is the duty of His Majesty's Government to accept that offer.
The Americans are always preaching to us; they are always telling us where to get off. It is about time we told them where to get off—in a kind, Christian way, I agree. One of the principal American papers yesterday said that we were "cry-babies." Well, we are not hard-boiled; we are human. But we certainly are not cry-babies, and we are not going to be cry-babies. So they can put that into their pipes and smoke it! And if they do not want to send us any Virginia tobacco we will do without it. I think that if the Chancellor of the Exchequer, instead of putting that extra tax on tobacco and causing great hardship to our aged, as the coal people have done with coal, had made a straight cut, he would have brought it home to the nation that if they wanted to put their pipes in their mouths they had to suck them and do with less tobacco. Instead of doing that, Mr. Dalton wanted to make the best of two worlds. He wanted also to bank on the bad habits of the people and thus gain extra revenue. I disagree with Mr. Dalton.
The other night—I will not keep your Lordships very long—I dreamed that I had a reincarnation.
EARL DE LA WARR: It must have been a nightmare!
LORD CALVERLEY: It was a nightmare, because I dreamed I had been converted into a Conservative Peer ! I also dreamed that instead of Labour sitting on these Benches it was a Conservative Government—the noble Lord will perhaps admit that that is another nightmare—

1113
and that the Conservative Government, which had been returned in my dream, were faced with hordes of rabid Labour Peers assailing them for what had befallen them. So I got up and I made a speech. I apologized to the then Chancellor. I said that he had got "a song in his heart," but that I would rather he had a song in his heart than the opposite. I then quoted the President of the Board of Trade from the speech of one of our great statesmen who said something about Sir Stafford Cripps' attitude being one of "strength through misery." This is where I woke up!
Noble Lords opposite tell us that we have not been thinking of this problem and, if my noble friend's "Back Room Boys" will only reflect, they have been preparing this propaganda. We have it in Yorkshire. I will send a few of the poems from our local evening papers, and then my noble friend will admit that it is about time that some of his propaganda merchants piped down. It is a great asset to the Labour Party, because we win votes by it, but that is by the way. But then we have had this thrust down our necks for months. We have had posters, which I do not like, on the walls saying that we have got to work or we want. Then, thinking what I might say if I were a member of the Government, my mind went back to August, 1939, when I was in the capital of the U.S.A., in the Senate house. I was being shepherded by a gentleman of the name of Mr. Truman and one or two of his Republican friends. The House was deserted, and the place was littered with paper. They had been having a paper snowstorm, because they had gone on their holidays before passing "Cash and Carry." They did the same thing with Lease-Lend; they carried it when they were compelled to.
I wish my voice could reach America. In the same way, they deferred passing the Keynes Agreement for, I think it was, nine months. We passed the Agreement pretty slickly and sharply, but if we had known what we know to-day, that they were going to defer agreement for nine months, until after the controls had been taken off in America, and that for every dollar, or every zoo cents., that we had borrowed from the Americans we should receive something in the nature of only about 55 cents.—and that is one of our problems—we would not have been so slick.
1114
I sometimes wonder what our Allies would have called us if we had lost the war. We have Czechoslovakia sending 4,000,000 Germans into our Zone. The population in our Zone, I believe, in Germany has been increased by 7,000,000. That is where the dollars have gone, because we are having to feed these people. It is a great tribute to the British nation that they come to us, but it is rather inconvenient because, as I Lave vulgarly put it, Britannia has only two breasts in order to suckle the infants, and I should think that we British people have any amount of children palmed upon us. It is the result of the British character and life which makes these refugees trust us. Already $700,000,000 has gone out of the kitty in fourteen days, because our Allies and other so-called friends, owing to the freedom of convertibility which came into operation after July 15, have claimed to be paid out in dollars. That ought to be recognized. I am grateful to The Times for printing a letter from Mr. Nicholas Davenport. We simple people do not understand economics, but he made the matter perfectly plain. If Lord Layton and other great newspaper magnates had taken the opportunity to print that letter in the provincial evening Press, not in the national morning newspapers, I would have given them 11 the newsprint they want, because it did enable plain people to understand the position. I am personally grateful to that gentleman, although I know nothing about him.
I do not pretend to know much about the long-term position, but I do know that one of our greatest assets, as the noble Viscount, Lord Bruce, very properly said, is the integrity of the great majority of the British people. Therefore the Government should not put their money on the United Nations alone. At the present time the danger is that the United Nations are going to be a fiasco and a farce like the League of Nations. The Government should tender to Mr. Ernest Bevin the advice not to enter into negotiations with the U.S.S.R. until Mr. Molotov and Mr. Gromyko have a larger vocabulary than they at present possess. We want the friendship of the Russian people. They think we are down and out. They make a mistake; we are down, but not out. We offer friendship to the Russians on equal terms and no appeasement, and sooner or later

1115
I hope the Russian people will realize it. That will be another great help to us in solving our difficulties.
EARL DE LA WARR: My Lords, I imagine that most of our minds are in much the same state and we are all looking forward to reading the speeches of the noble Lord, Lord Pakenham, and the Prime Minister to-morrow in order to clarify our views on what has really been said, because, as Lord Pakenham will realize, it is extremely difficult to carry in one's head all the impressions from a long speech of that character. I imagine we are all asking much the same questions as were asked by the noble Viscount, Lord Bruce. Are we quite sure that in every line this declaration by the Government is non-sectional? Are we quite sure it is adequate to the situation? Will it impress our people with the gravity of the situation? To what extent will it balance our adverse trade balance? To what extent—and I think this is a point the noble Lord did not mention, but it has raised a great deal of attention, and rightly, in the debate to-day—are quite unnecessary tasks now being carried out to be stopped?
A great deal of attention has been given already to the project of a Severn Bridge. Only two days ago I was motoring down to Portsmouth and was horrified to find that a fine wide road, along which one could go a great deal too fast as it was, was being doubled. Who wants that double road? Who thinks that this country can afford a road of that character at the present moment? I have no doubt that every one of your Lordships in this House could duplicate that experience.
There are many points on which I would have liked to address your Lordships to-night, but there is one very important statement that has been made by the noble Lord, Lord Pakenham. I think it would perhaps be useful if one of us were to restrict himself to dealing with that particular point. I refer to the noble Lord's statement on agriculture. Even so, I should have liked to widen the field and touch—as, indeed, it is essential to touch—on the contribution which the Commonwealth and Empire can make to our national food policy. I should have liked to follow the noble Viscount, Lord Bruce, on that. However, with the number of speakers there are on this
1116
debate, it is probably better for each one of us to concentrate on particular points in which we feel we may have some small contribution to make.
I think all of us will have welcomed the words with which the noble Lord, Lord Pakenham, opened his remarks on agriculture. He spoke of "this most fundamental point" and "the greatest potential saver of dollars." I think I am right in saying that never before in the history of this country have phrases such as that been addressed to agriculturists in time of peace. We are used to being wooed in time of war, but it is rather a new experience in time of peace. But I really could not quite follow the noble Lord in presenting this as a great emergency scheme to meet a sudden situation which had arisen. Here, in August, 1947, after two years of allowing the whole of that magnificent machine, built up during the war, gradually to run down—after allowing our production quite steadily to decrease for the last two years—we find that His Majesty's Government suddenly realize that now is the time to increase agricultural production.
In the present position of the country we do not want to look back too much—above all, we are now interested in the, future—but at the same time it is not unusual, in estimating future form, sometimes to give just a little study to past performance. In looking back on the debates of the last two years, I find that the warnings which were being given in this House started in December, 1945. During a discussion on the long-term policy statement then being made by His Majesty's Government, I find that I said:
"we are told that the country needs food, and we want to be allowed to play our part. I can assure the noble Lord that if we are given the tools we are determined to do our best to work and serve the interests of the country."
I then went on to ask for labour and houses, and the various tools that we needed.
Looking forward a little I find that in Tune, 1946, this House made an appeal to His Majesty's Government to give a clear lead to the agricultural industry, in the form of detailed production requirements for a minimum period of four years, based on an estimate of the food needs for the country for that period. I find that in December, 1946, I ventured to move a Motion: "That this House is convinced

1117
that agricultural production at home, both immediately and for many years to come, is essential for safeguarding the food of our people."
During the debate the noble Earl, Lord Huntingdon, made this rather startling reply:
"The truth, however, is that there is no possibility of a further large expansion unless we extend agriculture on to unsuitable land or make calls on materials and labour … and on fertilizers and machinery which would be out of all proportion to the expected benefits."
In February of this year the noble Lord, Lord Teviot, moved a similar Motion, and only three months later—I think in May, 1947—the noble Lord, Lord Woolton, rose to call attention to the growing danger of the serious shortage of food in this country.
This is a sad and gloomy story. The most sad and most gloomy point about it is that you cannot gear up the agricultural machine at short notice. Therefore, we have to start off this discussion with the knowledge that agriculture can make to the present plight of this country on the assumption that it will be twelve months, at the earliest, from now—and that is assuming that the plans of the Government are very much more advanced than I rather suspect they are—before we can make any effective contribution. Having said that—and I felt that I must say it—let us say now that we are finished with the past; that the essential strength of this country is that in times of difficulty we do rally and we do our best to help the Government through, no matter what that Government may be nor what may be their past misdeeds. Therefore, I would start off by saying to the noble Lord, Lord Pakenham, when he asks the agricultural industry for an increased production of £100,000,000 a year—I think it is by 1951—that that can be done, and that he can count on every member of your Lordships' House—I have not had a chance to consult them, but that is not necessary—who has any power or influence in the agricultural world to do his best to help the Government achieve that production.
I am afraid that there is another "but." I should remind the noble Lord that it is not a very hard task that he has set us and, speaking for myself, I
1118
wish it were a harder one. am not sure that the noble Lord himself realizes that all he is asking us to do is to go back over the last two years' loss of production. He mentioned a figure of 20 per cent. It is very difficult to get an accurate figure now, but most agriculturists would agree that what we have lost during the last two years is just about 20 per cent. of production. Therefore, by this great effort we shall get back to where we were at the end of the war, and to the point from which Mr. Llewellin and Mr. Hudson planned in 1944 a further increased production in post-war values of something between £140,000,000 and £150,000,000.
Therefore His Majesty's Government are asking the agricultural industry to produce £150,000,000 less than they would have been asked if the Llewellin-Hudson Memorandum had been adopted. I should be much happier if the request were of a larger order. I hope that in asking for £100,000,000 they are virtually saying that the industry must do its best and also that the Government will do their best to help the industry. I hope and believe that they consider the £100,000,000 as a minimum. I, an I think other noble Lords, would be much happier if we could be told this by the Government.
On one very important point I rather think the noble Lord, Lord Pakenham, went a long way to meet what I am now going to say. I am assuming that we are going to have the tools for the industry. The noble Lord said a good deal on this point that we may find to be satisfactory, but it is vitally necessary on all these points to be specific. What does one mean by tools? It is difficult to assess priorities, but in the first place I would put feeding stuffs. The Minister has made a welcome announcement that we are to have increased supplies of feeding stuffs. Speaking for myself, I would not be prepared to embark on a campaign to persuade farmers—particularly the small farmers of this country, who are the men to give us the quickest supply of pigs and poultry, incidentally without any extra labour cost, because the pigs and poultry are largely looked after by the farmer's family—to increase their population of pigs and poultry unless I had a full assurance that they would not be faced once again, having responded to the

1119
appeal, with the statement that no more feeding stuffs could be obtained. That has happened twice before, and we need a definite assurance from the Government that the supply of feeding stuffs will be sure and certain in the future.
Then there is the question of machinery. A short while ago the agricultural machinery trade was pleased to hear of a large allocation of steel which the Minister of Agriculture had been able to obtain. Unfortunately it was only an allocation, and not a supply. They are not getting the steel, and I would ask the noble Lord to look into that situation and decide what assurance he will give with regard to increased support for the agricultural machinery manufacturer. I have just had a letter handed to me by a noble Lord who yesterday received a communication—I will leave out the name of the firm in question—stating that they had been requested to deliver certain machinery but unfortunately, owing to the steel supply position, they were unable to commence production until the end of this year. Only yesterday I was going through a very long list of machinery that was being purchased by a friend of mine who is starting farming, and on almost every item it was stated that delivery was going to be something from six to twelve months, and on certain items even two years. The noble Lord, Lord Pakenham, will realize, I am sure, that I am not being difficult when I say that there are farmers all over the country who have been wanting to do their best for the last two years to increase production, and have been unable to get the machinery; and many of them have actually had tractors, and other machinery too, standing idle for months in their farms, unable to work for lack of spare parts.
One way in which the Government could make us feel convinced that they mean business in this matter of supplying agriculture with the necessary tools would be to stop this insensate export of agricultural machinery at a time when our land is lying idle for want of it. I have here some figures of agricultural machinery exported during the last five months. I work it out at between 21,000 and 22,000 tons. Only yesterday we were told that 3,200 more tractors had been exported during the second quarter of 1947. Are
1120
the Government going to stop that or are they not? I ask that very definite question, and I should be grateful if the noble Lord could give me an answer tomorrow. The noble Lord made a very welcome announcement that His Majesty's Government were expecting to find us another 100,000 men to work on the land. That is very welcome. But I do not know how they are going to do it, or by what power. I fully appreciate the difficulty.
LORD PAKENHAM: If I might interrupt the extremely interesting and helpful speech of the noble Earl, I do not think I ever said we were going to do it. We are certainly going to do everything in our power to help the agricultural industry to obtain the men.
EARL DE LA WARR: I think the phrase was "We need 100,000 men." I am not blaming anybody; but where is it going to be possible to find the labour to raise this £100,000,000 worth of food that is going to save exchange? And if the Government do not get the 100,000 men, we can take it that that cannot be done. I will go rather further. I rather question whether the Government are going to be able to find the 100,000 men; but if they do, I wonder if the noble Lord realizes that it will not do anything more than replace the 100,000 Germans—that, I know, is an approximate figure—that we are going to lose by next year. At the very best, if the Government are successful in getting this 100,000 men., we shall be in precisely the same position as regards labour as we are at the present moment. I feel I must seem extremely ungrateful to the noble Lord, Lord Pakenham, who I am sure thinks he has made a very helpful statement; but it is only right and just to the House and to the country that I should point out these matters.
We have been given welcome news of a real priority for agricultural housing. We shall obviously want to hear details of the scheme and how far those houses are really going to be built. I think that during the last eighteen months, or nearly two years, 7,000 houses have been built in rural areas, of which under 2,000 have been allotted to agricultural workers. Even if we had the full 7,000, it would not have gone very far in housing the extra 100,000 men that we

1121
need. I suggest to the noble Lord that the progress that is made in building houses in rural areas will have to be immensely speeded up if it is going to make a real contribution. I do not want to spend much time speaking about fertilizers, except to say that this Spring I am sure we lost a great deal of production through not being able to get nitrogen at the right time.
I have one last word to say on the subject of prices. I welcome what the noble Lord said on that matter. He said there was going to be a new statement by the Minister during this month or very shortly, giving a general scale of inducement prices—I. am not sure whether I am putting words into his mouth or not—but I hope that in assessing these prices he will keep in mind the fact that the farmer at the present moment is having to face a great deal more than the extra cost of wages. Every single item that he buys for the farm to-day is up in price. In the case of machinery, for instance, the price of £159 was quoted to me the other day for a binder; I would have expected to buy it for £60 before the war. That is the scale as regards everything that has to be bought. Prices have gone up. This is not merely a wages problem.
There is one other point which I feel I must make. A great deal has been said lately by noble Lords on every side of the House about the need to transfer our efforts from arable cropping to livestock production. I quite agree with that in principle. I feel, however, that it is an understatement of the problem. At the present moment the position is so serious and so difficult that we have not got a choice before us. We have got to do both. I would not like to ask farmers to embark on a large scheme of increased livestock production without some assurance that they were going to be safe as regards their foodstuff supplies. I have in mind a very large scheme of anything between 750,000 and 1,000,000 acres to be ploughed up this autumn and next spring, mainly to get feeding stuffs for our increased livestock. Only in that way can we really be safe in increasing to any considerable degree our pig and poultry population. We have had far too many disappointments from overseas as regards those supplies to be able to proceed at any price.
1122
I would point out that it is already August. If we are to have a big ploughing up of land, there is a great deal of land—providing we have enough rain to enable us to get the plough into it—which ought to be ploughed now. It certainly ought to be ploughed next month, and the noble Lord can take it that every week we lose now there is going to be, to that extent, a smaller effort with which to help feed ourselves after the next harvest. We must be told now what is wanted of us. Is the Government thinking in terms of an extra. amble or tillage area of 750,000 to 1,000,000 acres? If so, what crops are they thinking of? Are they going to give us national targets or are they going to give us county targets as we had during the war? I know that many noble Lords do not like these targets, but from my experience during the last war, even though a target has something to be said against it, it gives people something to work for, and I personally believe that it is necessary. We must have this more definite information for which I have already asked, about the resources, the machinery, the labour and the fertilizers that are going to be at our disposal.
This scheme of getting increased productivity from our land can be made a success only if it is planned and conceived on a long term basis. I am quite sure that the real background reason why we have not had increased production lately is that somewhere or other in the back of the mind, whether it is of the Board of Trade, the Treasury, or some other Department, is the idea that this is a crisis and things are going to be all right in a year or two, and that there will soon be a bumper harvest in the United States and Canada. How many times have we heard that lately, and so have never got going on a real plan for increased food production here! I believe that this word "crisis" is a very dangerous word, if it suggests a problem that is temporary. Certainly, with regard. to the problem that I am discussing, it is merely a crisis in the sense of a permanent change in national economy coming to a head. Nobody put that more clearly flan the noble Viscount, Lord Bruce, when he was speaking of the export future of Haas country. Nobody put it more clearly in pre-war days than the noble Viscount, Lord Addison, when I remember him using the phrase "Free Trade is as dead

1123
as Queen Anne." I remember him saying it when he was my Chief at the Ministry of Agriculture.
One further point is that, after all, we had a £10,000,000 deficit on our balance of trade the year before the war. This is not just a crisis problem, but is a problem caused by the permanent change of the economic position of this country. I feel it is worth mentioning that point in order to emphasize the fact not only that it is safe policy but that we must, from every point of view, take the decision now that we are going in for a long-term development of this industry. Everything that we can do in agriculture takes time. All the developments that are needed are going to take time to make. It is going to take a long time to get a return on the capital that will be invested in the industry, if we are to bring about this large increase in production.
Therefore, my Lords, I close by saying to His Majesty's Government: "Give us the lead. Give us the targets, the quite definite targets. Give us the tools. Above all, do this now; and give us details of what you want, how you intend to provide the tools, and when." My only regret about this statement is that the intention, apparently, is to return only to the 1944 level of production. But it is a tremendous advance on what we have been enduring during the last two years—the neglect of our industry, the refusal to give us an opportunity to contribute what we felt all the time we could contribute to the country. I assure the noble Lord, once again, that he can rest confident that he will have the wholehearted support not only of this House but of the whole industry.
9.59 p.m.
LORD AILWYN: My Lords, the noble Earl will forgive me if I do not follow him in his most interesting speech. I only wish I knew any subject as thoroughly as he does the subject of agriculture. Neither shall I attempt to follow other noble Lords in discussing those very intricate monetary problems which I feel in no way qualified to discuss. The few remarks which I shall venture to make, with your Lordships' permission, are more in the nature of reflections, the reflections as I believe, of the man in the street, the man not interested in Party politics
1124
or polemics, but concerned only, and mightily concerned, with the revival and resuscitation, and, indeed, the survival of this country.
When the country is in a jam, as it is at present, Party recriminations obviously can only waste time. They are a disservice to the nation in that large numbers of the best brains in the country are preoccupied in ascribing the evils of the present time to the sins of the Party to which they do not belong, instead of being wholly concentrated on finding a solution to these evils. It can be of no practical use, as your Lordships will agree, for the Labour Party to point to the reactionary doings of the Conservative Party in years gone by as being responsible for the present misfortunes. It is equally of no value for the Conservative Party to revile the Labour Party and the present Government for the ruin facing us. The man in the street says, "A plague on both your Houses!" The Socialists are in power, and are likely to remain there for some considerable time, so far as one can see, unless indeed, the Government are prepared to proclaim a state of national emergency and invite members of other Parties to come in and help solve the difficulties which may well be beyond the power of any one Party to resolve.
Many of us may disagree with large numbers of the measures being forced through Parliament. I myself think that the Government are ill-advised in putting through these large measures of nationalization and the social service schemes at the present time. I think they have failed, and are failing, to put first things first. They are more concerned to honour the promises they made to their Party in the past, ignoring the fact that the economic condition of the country at that time was vastly different from what it is now, than they are to find out at all costs the solutions of our problems by the obvious means of harder work and greater production, and get the country on its feet again. I think all this is deplorable, but there is nothing we can do about it. These measures are well on their way, for better or worse, to the Statute Book. We have to find a cure for the fundamental sickness from which the country is suffering, the loss of that will to work and pride of job in which I, for one, used to think the British workman excelled. I say without fear of contradiction that no country can

1125
long survive a malignant disease of that nature in the very core and centre of its being; and ruthless measures, not soft words, are required for its eradication. It is surely on that fundamental problem that the best brains of all Parties should get together and contrive a solution, for, let there be no mistake about it, the country is in dire peril, and there is no time to lose.
One wishes to level no accusations against any particular trade or branch of industry, but, as everyone knows, coal is the very essence of the problem. One sympathizes very much with the coal-miners' lot. I can imagine no more uncongenial occupation. But conditions today, both in matters of wages, hours of work, and equipment, are a vast improvement on what they were, yet the output per man hour is less than it was. Where are the Jack Lawsons of to-day? Any of your Lordships who do not happen to know that gallant little man I would recommend to read his book, A Man's Life, a veritable classic of life in the mines as he lived it forty to fifty years ago. We may well ponder why it is that the mining community to-day appears to be bereft of great hearts like that little friend of mine.
Why is it that the bricklayer, who used to lay his boo, 700, Boo and even 1,000 bricks a clay, is to-day laying his 250 to 350? I am glad that the noble Lord, Lord Quibell, is not in his place to get on my tail, but if he was I would hastily say that I am referring to my own part of the country. But as that is a very fine part of the country indeed, I have no reason for thinking that the conditions are not the same in other parts. A building contractor friend of mine was discussing his difficulties with me the other day, and deploring the fact that protests and entreaties to expedite output were all utterly useless, while any stronger action resulted in men just walking out and going elsewhere. Overtime is in general, as your Lordships know, forbidden by the unions; and, in any case, there is little enthusiasm for it owing to the high rate of wages and to the liability to tax. I have just had two painters carrying out a job of work for me—yes, I had the licence all right—and the leisurely way in which they plied their brushes had to be seen to be believed.
And so it goes on—every job of work costing twice as much as it should, and
1126
taking twice as long to complete as it should. Can it he—and one says this with great reluctance—that only a need of unemployment will once more bring the British workman to his senses, and stimulate him to do a decent day's work? It is certainly a melancholy thought that the country may now be suffering from too much instead of too little security of tenure in employment. What are they teaching in the schools? Is the dignity of labour and the vindication of existence by an honest day's work ever mentioned in the curriculum? Is it heresy to inquire just where all this education is leading us? Is it making for greater happiness and contentment? Watch the faces of Mal and women who pass by, and tell me if you see a greater degree of happiness and contentment on their faces. Does not one rather see depicted there frustration, boredom, indifference and, not infrequently, a kind of sullen discontent? At a time like this, when the ship of State is in danger of foundering, the Government chooses raise the school-leaving age—the most desirable measure when normal times return to us, but surely not now, of all times, when every available pair of hands is urgently required to speed up production.
To me it is plain that if we are ever regain our place in the world, if we are even to survive, there has got to be an immediate revision (I am not forgetting that the noble Lord, Lord Pakenham, has given us some information on this) of the present structure of wages and hours of work. If a ship is badly holed it is no earthly use manning the pumps until you have placed the collision mat over the hole and partially stopped the leak. The leak in this case, in my view, is the high rate of wages and the short hours of work. Until you get clown to this basic ill, and bring in a universal system of payment by results, and an end to all restriction on hours of work, you will get nowhere.
I know the difficulties. One sympathises with the Government very greatly. Immense courage is required to admit any sort of failure and to disappoint expectations. But the country is in danger and, as the Sunday Times said the other day, the nation needs rousing, not soothing.
Moreover, let us not forget that the world is watching us, and in particular. America requires to be satisfied beyond a peradventure that Britain is pulling her

1127
weight. When we faced the supreme crisis eight years ago a National Government was formed to see the country through that peril. Many of us regretted the break up of that Government. To-day the country is in no less danger, and I venture to say to your Lordships that the case for an all-Party Government to meet this peril which we are facing is, to my mind, an overwhelming and unanswerable one—a Government that will speak for a united people. That is all I have to say. I am well aware that there is nothing profound in any of these observations but they are, I believe, the reflections of the man in the street, or anyway the man living down my street.
10.12 p.m.
VISCOUNT RIDLEY: My Lords I would like to make a few suggestions, not on the international or strictly economic aspects of the troubles which we are discussing, but on the internal machinery to put into effect the kind of things that the Government have stated as their objectives. I was not exactly clear as to what the noble Lord, Lord Pakenham, said in the course of his speech. It was a little difficult to follow in every detail, as I am sure he will appreciate. But he did say, I think, that two of the things which the Government had decided to do were to work for increased production and increased exports. At any rate, that is an extension of the late policy of the Government and a line upon which there seems to be at any rate only one way to proceed. It is not easy to go into much more detail than that when you are considering the actual means which any Government may use for increasing productivity in any range of industries, and for enlarging the percentage of the amounts we actually export. I have for some time noticed a certain amount of the interaction between Government administration and industry itself. During the war and since there has been a Government regional organization in each of the areas. With one of those I have been connected for a long time, so I have had some opportunity of seeing how, at ground level, it works out.
As a background to considering these matters one should remember that over quite a range of productive industry capacity has largely increased since before the war. I do not say present output,
1128
but productive capacity has increased over a considerable range of the engineering industry which was largely re-equipped and modernized during the war. The potential is higher than it was. In steel making also the potential is higher than it was, and similarly in other basic material production. I exclude coal, as presenting a very special problem, but is it really true to say that when materials and fuel are available the output of industries which produce the basic materials on which we must live is in relation to the capacity, which is universally known? I do not think that is true. I believe that in most of the primary important industries the capacity to produce and the will to produce is still there, but it is not possible to see effective results unless the materials and the fuel can be obtained.
I have never believed in this campaign for higher production. There have been two Government campaigns recently: there was the production drive and there was the export campaign. One has never felt that there was really any sound sense in it when one knew very well that it was a matter of hand to mouth—that it depended on whether certain materials were there or not and whether there was to be heat, power, and electricity. That, to my mind, is the problem. It is a question of providing the material, and then you can go ahead. I am convinced that results will be achieved in that way. I know it is not so easy to find the material straight away, but I do make the point, because I do not believe that, so far as the ordinary working man of this country is concerned, the will to produce is absent. I am quite certain that we shall appreciate that when conditions become more favourable.
But in saying that our productive capacity over quite a wide field has gone up, one must remember also that the demand has gone up very much more. We have got quite a large, or at any rate substantial, export programme of capital equipment, and we get demands for capital goods of all kinds on Government account. There are a very large number of men still in the Services who have to be supplied with arms and equipment for training and for all their various needs. Lately, in the last year or so, the number of men engaged on production for the Armed Services has not been shown separately in the returns published by the

1129
Board of Trade. I do not suppose it is possible to separate them with any sort of accuracy, because many firms are engaged both on this production and also on what used to be called civilian production. But it seems to me quite clear that a good deal of manufacture must still be carried on in that direction. We were told this afternoon, I believe, that the overseas Forces would he reduced by 133,000 men, and as a result the total Armed Forces were to be reduced by 80,000. That means a very slight increase in the number of men who will go into industry and a very small reduction in the amount of the effort required to keep our Armed Services maintained.
LORD PAKENHAM: I ask the noble Viscount to look carefully at what I said on this subject earlier to-day. It is not very easy to explain this matter by question and answer.
VISCOUNT RIDLEY: I do not want to misquote the noble Lord, but I think I shall be right in saying that recent decisions on this point are riot going to mean a great reduction in the number of men who have to he maintained and supplied. I will not, however, put too much emphasis on the figures until the situation has become clearer. Again we have to remember that a large amount of Government building, and local authority building also, has taken place, and various roads, bridges, and tunnels are being constructed. New factories also are being built—factories which we most desperately wanted to be built in what are now called development areas, where we used to have bad unemployment. Noble Lords have referred to the Severn Bridge. That is one example of building by Government expenditure. We also have the Tyne Tunnel. I was one of those who agitated for the Tyne Tunnel for many years; and with great joy we managed to get it approved. But many of us had considerable doubts whether it was right to start it, as it has been started, within the last six or seven months. It is one of those things which one felt had much better be put off for the time being.
All these are necessary things and we want them; but we must remember that they add up to men's time and to materials. And—important materials at that. It became rather the habit in wartime to say it did not matter what a thing
1130
cost, it had to be done; and it was done, arid money was not taken into account. But some people have forgotten that money has, if an indirect, a very clear relationship with the time of men and. women in output, and also with time in. getting and distributing raw materials. I think this should be a lesson to us, and we must in fact choose which things are most urgent. I feel most strongly that we have not lately paid enough attention to the re-equipment of our own productive industry. A large range of our engineering capacity was modernized during the war, but there are a lot of other industries; there are such matters as the expansion of the steel industry. I think this summer's output of 13,500,000 tons is the highest achieved by that industry. It is hoped to raise it higher; hut it will not be possible unless the plant has been ordered in time.
What has delayed the ordering of sonic steelworks' plant? The fact that there has been a reconsideration of the whole programme of the iron and steel industry following on the appointment of the Government Iron and Steel Board. A proposal was prepared by the Federation for the modernization and rebuilding of tie whole industry, prepared by the Federation. The Government said they wish to review all this from the point of view of priorities—.and indeed I do not think one could say they were wrong. The result is that the Government Appointments Board has had to go through the whole thing from the beginning and approve each item. I realize that men appointed to such a position of responsibility could do nothing else but consider it from the beginning, to evaluate its problems and decide an the urgency of each, as well as the general position of each of the parts in the whole plan. But be result is that some time has passed and there are a large number of pressing projects of re-equipment and modernization for which the plant has not yet been ordered.
It is an unfortunate fact that quite a lot of this plant for steel making, and more especially steel rolling, has to come from America. Have we left ourselves in a position where we are not going to save dollars for expansion a few years ahead? I hope not. I fear we may have lost some time in that way. I would have liked to see some hard thinking about the

1131
things which we must buy from abroad with dollars and which we must have to increase our own productive capacity. That, to me, is the most urgent thing alongside the necessities which we must buy in order to keep alive. We shall not be able to build up this capacity for production and export unless we do that.
I consider also that we should look very carefully into all the miscellaneous items of imports. I think that was mentioned by the noble Lord who spoke for the Government, and I have no doubt it will be done. Some things are very difficult to understand. One sees the importation of utility furniture. It is difficult to understand why the equivalent amount of timber could not be imported and processed in this country. One hears of importations of all sorts of minor goods, not in themselves fundamental. That seems to be completely divorced from the main policy of making ourselves economically independent.
I am bound to say I feel some disappointment as regards the policy which was announced to us to-day although one must not be critical without having really been able to see it and study it properly. It is true there was a certain amount of positive policy about it. I would have liked to see more. I would have liked to see an intention by the Government to replan their conception of how they are going to bring about this increased production and exports. I think something is needed to put clearly in front of the people who are managing and working in production, and in more simple ways than those adopted up to now, what is required of them.
We want a new outlook in the administration of the controls of raw materials and allocations and so on. There is too much of the mentality of rationing and of making things go round. We want to get a feeling in everyone's mind that we are going in for an expansionist policy now, and we are going to get something going. I think it is an inherent idea in our Civil Service administration that everything must be fair in regard to certain commodities which enter into the manufacture of one thing and another, and they cannot be used at the rate that they are required because there is not enough. Then what happens? Every man is allocated a quota—a percentage of what was manufactured
1132
in 1939 or a different percentage of what he was allowed to manufacture in 1941; they are all put on the same kind of level and it is fair and right that they should be treated all the same. But the result, as I see it, is that none of them really gets what he wants, and therefore often there is not enough for the process to run properly. Would it not be more economic and more productive to make a new conception of distributing these commodities and to put in more modern and efficient plants to help people and say: "Here is your material, and your target is so much. You shall have the material, and it is not only an allocation: here, is the stuff."
The word "allocation" has become a menace. One hears it so often—"The coal allocation for the summer of 1946 was so much; the actual amount received was something quite different, and so much is going out again in the next month." Those are utterly meaningless figures. What is required for people to plan production is to know what they are going to get and to be certain of getting it. To me it would be far more sensible to try and get certain more modern and efficient units in each industry, to get them going properly and to keep them going. That is quite a new way of looking at these things, but I believe that is the kind of line of thought that the Government ought to study. You may say, "That is very hard on the firms that get left out." But what happened during the war? There was a concentration of industry over a wide, range of manufacturing directions. Firms were closed up altogether; they were just kept ticking over on a part-time basis, doing practically nothing but just retaining their name in the hope of starting up afterwards. It was thought to be worth it because everything was put on war production. I do not think anybody wanted it very much, and a lot of people were disappointed that their undertakings were practically stopped, but there it was, it had to be done. Is not that the sort of thing that we ought to be thinking about now?
That would mean, to me, also a simplification of the approach to all these problems. All your Lordships will be familiar with the kind of correspondence that has to go on to get a licence to manufacture a little more of this, or to be allowed a permit to buy some scarce piece of plant, or something like that. It takes

1133
too long, it is too difficult, and there is too much backwards and forwards correspondence. Would it not be better to do all that kind of thing with fewer but better people in the subordinate Civil Service jobs? Could we not get more people in a position to write back an answer saving "Yes" or "No" with some good reason for it? That would effect a saving in manpower in those employed in working these regulations. I see it also as a saving in manpower of the people who are trying to get on with their business, trying to obtain approval, and so on. I feel strongly about it because I worked at that kind of level in the Civil Service during the war. I saw so much of it, and I got so tired of the endless backwards and forwards complications, the consultations between one Ministry and another, and the committees for this and that. It is, to my mind, absolutely over-organized and over-involved. It really wants redesigning from top to bottom.
I am not, for one moment, saying that there must not be a system for distributing the materials, or for carrying out the Government policy in industry, but I am saying that it wants to be a simpler way, one that people will understand and will believe in, and which will be economical and will waste less time. It should be combined with a plan for exports, determining how much shall be sent to which country, according to which country will bring us the money we want and is likely to be able to pay for the things we have to sell. A policy of that kind would make a practical approach on which some sort of plan could be issued. This is the time which is going to be the test whether what is now called a planned economy can work or not, Up till now I do not think the central planning of our economy has worked. It has been put into operation. I think all of us want to see it work. There are only two alternatives: either to develop a centrally planned economy which does work, or to revert back to the old system of things taking their own place in the light of supply and demand, and so on. But that is not practical politics at the moment. What we want to see is something that does achieve the results that it should.
Are there not a good many examples of things which, up to now, have not worked? There was coal production, which others of your Lordships have
1134
talked about, and will do so. Whatever the rights or wrongs of it may be, it has not achieved the results that were planned for it. What has happened about all the foreign labour which it was planned was to go into our industry? I remember early in 1945 discussions going on about the employment of Italians in foundries. At the time there was a shortage of lab cur in foundries, and Italians who, I believe, were volunteers, were to come to this country and work in the foundries. Ever since that date there has been discussion about getting those Italians to come and work in the foundries. At some stage of the proceedings there was an agreement that they should come, and it was all worked out. There were so many men, and they were interviewed in Italy, and the whole business was settled, but I do not think any of them came. That broke down because in actual fact the men who were to work with them in the foundries would not have them. The Italians did not come. Whatever the rights or wrongs of it, that was planned by the Government machine. It was not Party policy. It was part of the plan to man up industry.
Similarly in the case of the Poles, was planned that they should work in ale mines and factories. That is all in the programme, but they are not there. Again it is not a question of politics. Cannot the machine work out and achieve the things it thinks of? Can it not do what it intends to do? I am taking cases at random. There are thousands me re, but I am giving the things about whit? I happen to know. Take the manufacture and maintenance of locomotives and railway wagons. One thing we need is to be able to shift iron ore and coal about, to take steel from the works and generally to keep industry going. For that we need to get wagons and locomotives repaired—perhaps locomotives less than wagons. For nearly three years there has been a tremendous demand for men and materials to repair railway wagons. It is set down as part of the policy of the various Departments concerned. They all say it is urgent, it is one of the things which must be done, but it has not yet been done. I was glad to hear the noble Lord say it is one of the things that are going to be clone. I hope Government Departments will really think up a m ay of getting it done.

1135
I think all this is the result of trying to do too many things and not concentrating on just that amount which can be related to the resources we have. That is a simple and straightforward method of planning and that is what one wants to see. I would add one word in support of what the noble Earl, Lord De la Warr, said about the prospect of increasing agricultural production. I do not know that it can be achieved quite so easily as was suggested, but I look on the statement made to-day with a great deal of hope. I do so having in mind the discussion we had on the Agriculture Bill. Some of us wanted to insert in the opening clauses defining the objects of the Bill a statement that maximum production was required in the industry. I will not say I am glad this crisis has brought the matter to our attention, but it has justified the feeling many of us had to emphasize in that Bill the demand on and expectation from the agricultural industry.
Like the noble Earl, I know there is going to be plenty of enthusiasm in the agricultural industry for this work, but there are many practical difficulties to be got out of the way—the export of tractors, the difficulty of getting licences to repair farm buildings, and the housing situation. Suppose we lose our German prisoners and get by one means or another the 100,000 men sought for, how are we going to house them? The statement was made this afternoon that rural housing is to be really a priority in housing. I look forward with great interest to see how that is going to work out in practice. We have heard statements made on behalf of the Government from time to time that rural housing is receiving the greatest attention, and the noble Lord, Lord Pakenham, this afternoon referred to houses for colliery and agricultural workers. We have not seen anything to inspire general enthusiasm in agricultural districts so far.
I am afraid we must face up to the fact that if we are to achieve any real progress in the housing of people in the country, it can only be at the expense of building fewer houses in the towns. I can see that it is not an easy thing for the Government to commit themselves to do. They have to be able to explain it to the much greater number of people who live in the towns. But there it is. It must mean that a higher proportion of the effort in building will have to be diverted to building coun-
1136
try cottages, to repairing them, to reconditioning them, and also, before very long, to repairing, extending and modernizing the equipment of the farms themselves. We shall not be able to go on at the increased rate of 20 per cent. to which the noble Lord referred—which is the same as two years ago—unless we can get more in the way of buildings, and more in the way of capital equipment on our farms. I do not believe that the rural district councils will be able to build houses at the prices at which they are needed, and in the places in which they are needed, for the men who are going to work on the farms. I feel convinced—whether or not it fits in with the Government policy, and whether they like it or not—that the only way to get it done is to get the farming industry itself to build the houses; whether it is the owner-occupier, the landlord or the tenant, it must be somebody who has an interest in building the cottages at the farms where they are needed.
I would have liked to say more about the agricultural aspect of this problem, because I feel that the inclusion of agriculture in this very important statement, at this very critical moment really means that we can look forward to working the prosperity and activity of the agricultural industry permanently into the economy of our country, from which so many of us have felt—at least, I have felt it—that it has been excluded far too long. Let us hope that the Government will look far ahead in this matter, and set before the industry a future which will make it possible for it to grow in the way we all want it to grow.
10.43 p.m.
LORD CROFT: My Lords, I should most certainly apologize for speaking at this time of night but for the fact that this debate is so vital to the whole future of our country. I will greatly curtail my remarks, since may noble friend Earl De La Warr made such an admirable speech on the whole agricultural question, and I found myself so much in agreement with what he said. I can eliminate that part of what I was going to say. In this connexion, I would only say that in my sincere belief it is absolutely imperative that we should produce from our own soil, and in our own factories the maximum amount of goods; otherwise, I do not see how we can survive this crisis.
If I may, I want briefly to indicate, first, that finance and economics hang

1137
very closely together in all these considerations. I was one of those who regarded the great campaign of war savings throughout the war as one of the finest contributions lo victory. I beg all my countrymen, and certainly anyone with whom I have any influence whatever, to put every spare penny they have into war savings certificates, into the Savings Banks, and into other loans, to help stabilize the position. During the last war I felt that this was a great achievement, and I can also claim that I did back it fully. I believe that in the five years during which I held a minor post in the last administration, 1 had the honour of speaking more frequently as a Minister, and of addressing larger groups of people, than anyone else during, all those war weapon campaigns. Therefore, I am very anxious to see that the national effort in these directions should continue.
I think it was last year that the Chancellor of the Exchequer called the nation to a great effort to give him all the funds he required in the 2½ per cent. Treasury Bonds. During that time he was making speeches which certainly conveyed to me the impression that he was determined to see that British credit was maintained at that level. I am well aware that world forces may disturb such calculations, but one expects the Chancellor of the Exchequer to have real reason for believing that he could peg the credit at that figure, and that in any great appeal which he made to the nation on that occasion to subscribe large sums of money at par the credit would be maintained. I believed that he must, as Chancellor of the Exchequer, have had real reason for believing that he could maintain British credit at that level; and once more I certainly backed him and persuaded every trust with which I was connected to do the same. But in a space of a few short months the capital value of that great issue has evaporated, so that to-day I believe it has declined by something like 16 per cent. or 17 per cent.
I know that the Chancellor of the Exchequer has stated that he thinks hereditary wealth is an evil thing. He definitely makes war on thrift if it is successful, but I venture to think that this collapse in the value of that great issue is just the way to destroy confidence. And I would suggest, if any means are available—because it is so imperative to maintain confidence—that the Chancellor
1138
of the Exchequer should do everything in his power to see that when the British public subscribe to back the nation in these measures they should not feel their confidence destroyed. I should have thought he would have been very miserable about it and instead of having a song in his heart, would have had a groan in his stomach. In the forty-one years I have been in public life I have never known anything which equals the failure to fulfil the implied promise which all those speeches conveyed to the general public.
I submit that His Majesty's Government are guilty for the second time in the recent history of. British Socialism, of failure to realize that a great world convulsion, such as these two great wars represented, when thousands of millions of pounds have been blown into the air in what must in the end be wasteful expenditure, cannot be followed by a rosy hour in which you can start every form of new experimental political work. Nor is it possible to engage in far-reaching or—I do not want to use an offensive phrase—what I have previously described as wildcat schemes of an ideological character. I remember that in DO the then Prime Minister, Mr. Lloyd George, who had played a great part in that war, promised us a land fit for heroes to live in; and I recall then that I incurred the wrath of many people, some of them my friends, by declaring that so far from prosperity being just round the corner, we must tighten our belts. The words I used were that we might have to face unemployment on a scale never before contemplated.
Alas, I was correct. I declare now my considered opinion that unless we wage our struggle for survival as a united nation, undisturbed and undistracted by all the uncertainties that are at present afflicting industry, and unless we have a cessation of all class and Party warfare, then unemployment will reach vast proportions and we shall find that our great social machinery which has been built up over the last forty years may well, if we are not able to get together, crash in ruins. Instead of shortening sail His Majesty's Government ought to be preparing to meet the tornado. They must have known what was; coming, probably eighteen months ago or longer; yet Parliament has wasted all its time and energy on vast schemes of nationalizing key industries, including what I unreservedly

1139
declare—having travelled pretty widely—was, up to the time of the war, by far the finest railway system in the whole world.
I hope—although it is contrary to the experience of all other countries which have been trying these things—that these hurried, ill-digested measures may prove to be a success, and that they will not aggravate an already perilous situation. We cannot say; time alone will tell. But what we do know is that during the process of this legislation—during the actual process—there has been an enormous movement for increasing wages and for shortening hours—I presume under political pressure—which appears to me to be deliberately inviting that very inflational spiral against which some of His Majesty's Ministers have warned the country. Recently, as a result of all this, we have seen that coal and all fuels are likely to be very much dearer in the days to come than in the recent past, and the cost of all travel must go up. An increase of 55 per cent. compared with pre-war passenger fares, was mentioned in another place only yesterday, and all freights must also go up.
What is that going to mean to our export trade—our life and death export trade? It can only mean something like an excise duty on all the exports from this country. Since it is now admitted by certainly two Ministers in high places that the "good fun" of soaking the rich at 19s. 6d. in the pound has reached its limit, it follows that in future nearly all these burdens must fall on the workers and the middle class. Surely we must call a halt and abandon this interference, however desirable in quiet times, with the greatest industrial system that the world has ever known, and instead of splitting the nation into two halves—and we have a right to recall that at least half the nation, probably more than half, voted against nationalization at the time of the last Election—let us abandon this division of opinion and let all shoulders be applied to the wheel. After all, you do not win a battle if one of your armies is firing all the time on your own front. If we are going to win the battle of survival we really must get together in a national effort, and not produce policies which create so much heartburning in one part of the country or another.
1140
I should like to say one word with regard to what was said by the noble Lord, Lord Pakenham with respect to the cutting down of the Fighting Services. I gather that the additional cut in the Fighting Services is to be 80,000 men. I would hazard a guess that that probably means something like 65,000 or 70,000 from the Army. I pray that the Royal Navy is not going to be weakened at this psychological moment, and I imagine that we cannot dispense with many of the Royal Air Force personnel. Your Lordships will recall that only some two months ago there was a reduction in the national service committal of fighting men which really amounted to the fact that in twenty-four hours I think, we reduced our future potential by 33⅓ per cent. However necessary that may have been for Party reasons, it was harmful to Britain's foreign policy and Britain's power to shape policy. If crimes were committed between 1930 and 1937 by the constant demand for the reduction of Britain's Armed Forces, surely to fail now to maintain our strength or to allow the Forces to fall below what is safe is sheer lunacy.
I feel that no good purpose is served by failing to speak frankly; and there is not the smallest doubt that there has recently been, and still is taking place, the greatest and most successful aggression that the world has ever known. We also see, in several directions, an effort actually to thwart the process of arriving at a peaceful solution. I do not think that war is probable; nor do I think that it is inevitable. But of one thing I am certain; and that is that if this awful thing should ever come again it will be due once more to British weakness and lack of power to resist aggression. I was glad to hear the noble Lord, Lord Pakenham, in his solemn statement to-day tell us that our defence policy will not be changed. May I have an assurance from the noble Viscount who is to reply to-morrow that any reduction of troops will be of the ancillary services at present servicing our Forces in various countries abroad and will not affect the composition of the field Forces? In other words, can we have an assurance that the field Forces will remain unchanged? I think we have a right to ask this question, because it is so recently that His Majesty's Government told us the absolutely irreducible minimum at which our defences had been put.

1141
I should like to ask two questions—and here I am speaking entirely for myself and without consultation with my friends. First of all, when you are asking for this reduction of 80,000 men in the Fighting Services in (to put it mildly) an uneasy world I would ask: How many Poles are there who are still not employed in useful work? If it is something like 80,000—and I believe there are over 100,000 Poles in this country, but some of them are being employed in the textile industry and some in the mines—I hope they will be welcomed in every industry, because no industry can afford to turn its back on any labour at the present moment. If there are 60,000 or 70,000 Poles who are still not usefully employed, it does seem to me a strange fact that you should re-reduce your Fighting Services while you have still that number of people in the country. I am very sorry for the Poles. I would not like to see any Pole driven back to what was his beloved fatherland if he does not want to go, because I think his fate might be a terrible one. These Poles, however, must either make their full contribution for their enjoyment of the hospitality of this country or they should be told to go somewhere else. Therefore, whether they are employed in agriculture or any other industry, why not put them in the scale against a reduction of the Fighting Services?
Secondly, I should like to refer to what the noble Lord, Lord Ailwyn, said earlier on. In my view it is most desirable that we should increase the school leaving age, although I am doubtful whether there are either the buildings or the teachers available to make it effective and other than farcical for the next year or two. If it is a question of getting rid of 80,000 Service men at this day because we are keeping out of industry—I do not know what the number is—100,000, 200,000 or 300,000 young men and women, it does seem to me that we ought to balance these things and consider what is vital in this moment of crisis. I would only say this: When we remember the tragedy of the last war, and the awful moments that some of us, of all Parties, went through, when we remember the time of Dunkirk and we all went to Westminster Abbey, when we remember how close we came to absolute and awful destruction, I would suggest, if it is a question of a short time until you have the schools and the buildings and
1142
the materials and the teachers, that we might possibly hold up this scheme. We should thereby save a dislocation of our defences, and add greatly to the efficiency of industry.
I am grateful for your Lordships' toleration. I would like to say a final with regard to the economic side of the question. I think that His Majesty's Government, although they had a warning from the Back Benches of their Party this evening in a most eloquent speech from Lord Calverley, will agree that some of us did utter solemn warnings with regard to the conditions of the American Loan when it came before your Lordships' House. I must confess that I was then unduly optimistic about the Loan in thinking that it would last until the end of 1948. I was wrong; I did not think that it was possible that it could have evaporated so soon. It must now be realized that Clause 9 of the Loan Agreement, no doubt so innocently entered into at the time, deprives us of our greatest opportunity of stimulating supplies of essentials in our own sterling area, in the Commonwealth and in the Colonial Empire. To have said that we would not stimulate our own production of such commodities as tobacco, sugar, maize and essential foodstuffs like wheat, instead of depending on the dollar, seems to me to have put a rope round the necks of British consumers in this country, and British Empire producers overseas.
I beg His Majesty's Government no: to play with this question any longer. Instead of drifting with the torrent towards the weir, I beg them to turn their craft into safety. Is not it now clear that if this island stood alone, in our present precarious position we could hardly hope to survive at all, unless we emigrated half of our population; and it is doubtful whether, in a disturbed, distracted and largely ruined world, they could be absorbed. Our one hope, it seems to me, is to spend the next ten years—and this is where I support the noble Earl, Lord De la Warr, who said that this is not a momentary crisis, but a whole change of our economy—in doing everything we possibly can to double our production, to rely on ourselves and, more especially, to develop the production of the Colonial Empire, of the new Indias and, of course, of our brethren in the other self-governing Dominions.

1143
To consent to a form of economic serfdom for something like fifty years, which prevents us partaking in this particular stimulation which, in turn, will make it possible for us to honour our debts to the United States, seems to me to be just stupid. What we have never yet realized, I suggest, is that this home market of our's is by far the most valuable business counter in the world, by far the greatest market in the world. I think I am right in saying that in the last year, the United States exported one-fifth of its total exports to this country in the form of foodstuffs. I believe their value was something like 600,000,000 dollars. These exports are surely very important to the American economy, and yet we have such a bargaining power. Why do we not realize that we can make most friendly arrangements with all countries who desire to enter this market? The last thing in the world we ought to do is to hamstring ourselves, and to deprive ourselves of freedom in bargaining in the years to come.
I have a most profound conviction, not for the first time not only that a reciprocal Commonwealth Empire can increase our own producing power, but that the depression of the Commonwealth Empire will hurt the United States just as much as it will hurt ourselves. After all, they are business people, and they will be ready to listen to what we have to say in the times of our difficulties. I would beg His Majesty's Government to take the earliest possible step, if they have not already done so, to approach the leaders of the United States, and to tell them that it is really impossible for us to get on a level keel again, much less to be able to repay what they have so generously loaned to us, so long as Article 9 of the conditions of that Loan stands. My own belief is that, when they realize our pre-
1144
dicament, we shall only have to approach them as honest men telling an honest story, and we shall find them ready to appreciate the difficulty.
I would only say, once more, that I believe we have now to get together as a nation. Nothing must stop us promoting a remarkable unity. It is true, as my noble friend Lord Ailwyn said—and I can personally vouch for this—that the great British people are not putting forward their best efforts. We shall only secure that unity with a really stimulating lead from the top. If that lead comes, I believe that all on these Benches, provided that the proposal is national, not sectional and not political, will give their utmost support and make any sacrifice that will help our dear country in these tragic circumstances.
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, I beg to move that the debate be now adjourned.
Moved, That the debate be now adjourned.—(Viscount Hall.)
On Question, Motion agreed to, and debate adjourned accordingly.

METROPOLITAN NORTHERN AREA (CONSERVATION OF WATER) ORDER, 1947.
Report by the Chairman of Committees of the House of Lords and the Chairman of Ways and Means in the House of Commons under Section 3 of the Statutory Orders (Special Procedure) Act, 1945, that no Petition has been presented against the Order: Laid before the House (pursuant to Act) and ordered to lie on the Table.
House adjourned at tea minutes past eleven o'clock.