ECONOMIC SITUATION.

HL Deb 07 August 1947 vol 151 cc1159-264

3.25 p.m.

Debate resumed (according to Order) on the Motion moved yesterday by Viscount Samuel: That there be laid before the House Papers with reference to the economic situation.

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)

My Lords, the complete unanimity which the Motion just passed received at the hands of your Lordships makes it a little more difficult to refer again to what I trust will not be too controversial a matter—the economic situation of this country. Your Lordships' House was placed at some disadvantage in the opening of this debate yesterday by reason of the fact that the debate was well on its way before your Lordships were made acquainted with the proposals of His Majesty's Government. Now that your Lordships have had an opportunity of reading and carefully examining the Prime Minister's statement on the situation, I trust that the changes proposed by His Majesty's Government have satisfied you that the Government are fully seized of the seriousness of the situation, and can be relied upon to carry the proposals through. I trust that the report which appears in one of the morning papers, that the Opposition propose to divide against the Government on this question, is not true.

I listened to every speech during the debate yesterday and was impressed with their restraint and, indeed, their quality, particularly the speeches of the noble Viscount, Lord Samuel, and of the noble Marquess, Lord Salisbury. I must say that I have for twenty-five years greatly admired the way in which the noble Viscount, Lord Samuel, marshalls his facts and the clearness with which he states his case. There are very few noble Lords, or, indeed, members of another place, who have had such a long, responsible and distinguished period of service as the noble Viscount. I am not going even to hazard a guess as to his age, but his vigour and industry are such that one would hardly think that he had been so long in public life and rendered such valuable service. The noble Marquess, as he always is, was reasonable, conciliatory and helpful, and I trust that to-day's debate will be conducted in the same manner. I would like to refer to the maiden speech in this House of my noble friend, Lord Trefgarne. I will not reply to the points which he put, because I am going to leave those to be dealt with by my noble friend, Lord Pakenham, but he made a first-class speech, as one would expect of him after his long record of useful service in another place.

I would like now to make some reference to conditions as they existed during the crisis at the conclusion of the First World War. In both wars everyone had a job to do. At the end of the 1918 war there was considerable difficulty with regard to the placing of men in industry. Indeed, without being unduly critical of the administration at that time, it can be said that the suffering of the people of this country in those first two post-war years were incomparably greater than those in the first two post-war years at the conclusion of the recent war. First we had a short inflationary boom, then we had heavy deflation. Controls were removed, with the result that food prices in this country reached the unprecedented height of no less than 291 points above that of 1914. With the removal of controls, wages tumbled.

At that time I was employed in a colliery in receipt of a minimum wage of £5 per week, which I received until April 30, 1921. During the week preceding May 1, a notice was posted at the pit top informing me and all my colleagues employed in the mining industry in South Wales, that, as a result of the removal of controls, if I continued to work at the colliery, my wage would be reduced from £5 to just over £2 a week. Where is there an agriculturist in your Lordships' House who has not some memory of the removal of the control of agricultural prices at the same time, and of the result? Industrial disputes raged in almost every industry. In 1919, no fewer than 34,970,000 working days were lost through industrial disputes. The year 1920 was even worse: 26,570,000 working days were lost. The following year was worse still, for in 1921 no fewer than 85,870,000 working days were lost, making a total for those three immediate post-war years of 147,410,000 working days lost through industrial disputes. Compare that with the condition at the present time. Whatever criticism may be levelled against His Majesty's Government, the country have been spared that difficulty. From June, 1945, to June, 1046, 3,000,000 working days were lost through. industrial disputes, and from June, 1946, to June, 1947, 2,360,000 working days, making a total for the two years of 5,360,000 as compared with 6o,000,000 in the first two post-war years after the 1918 war.

That is not all the story. Every month after August, 1920, men were thrown out of work, the result being that the percentage of insured workers without employment rose to 15.4 in March, 1921, and to 22.4 in June of the same year. In June, 1921, no fewer than 2,110,000 registered as unemployed, the majority being ex-Service men. Hundreds of thousands of ex-Service men were wandering the streets with no unemployment pay, begging for jobs or charity. That was the beginning of a long period of unemployment in this country, for it was only in one year during the period between the two wars that the percentage of unemployed fell below 10 per cent., or, in number, 1,000,000. That was in 1927. The amount of misery, poverty and ill-health caused by unemployment can never be estimated.

That is a short description of the methods adopted by the then Government to deal with the crisis. The crisis was dealt with on a basis of low wages, unemployment and the misery of the people of this country. That is not His Majesty's Government's method of dealing with the present problem. I am not pretending that we are not again faced with a postwar problem. We should analyze it to see what it is, and what are its causes. Apart from weathering the very difficult post-war reconversion period, His Majesty's Government achieved the successful demobilization of over 6,000,000 men and women, who have been transferred from the pursuit of war to peace-time production in the last two years. It has been accomplished with the minimum of industrial dislocation and with a scrupulous concern for individual justice. During this period, unemployment has not risen above an average level of about 400,000, except for a few weeks during the winter fuel crisis. That record speaks for itself, and I thought it should be stated in this House.

This nation pooled all its manpower and wealth and poured all of it into the fighting of the last war. The result was that the war was won, but we became a very much poorer country. We have lost much of our foreign income and we have an unprecedented national debt which, it will be remembered, was just £700,000,000, in 1914. At the conclusion of the 1914–18 war it was £8,000,000,000, and at the present time is seine £26,000,000,000. Our industrial and productive potential needs building up and reconditioning. We have commitments which, in the unsettled state of foreign affairs, involve the use of a large number of our men for military and non-productive purposes at home and abroad. With all these difficulties, we are seeking to provide a higher and better standard of life for the people. We are seeking to provide full employment at good wages, and to give the people of this country a fair share of the amenities of life; we are seeking to provide a new social service, better housing and better education. Towards these objectives we are anxious to have a full response from the people of this nation, for without this the task which it has set itself will not be accomplished.

There is not one single member of your Lordships' House but who will say that the people of this country deserve what the Government intend them to have.

It is not my intention to cover any of the ground traversed by my noble friend Lord Pakenham yesterday. I will only repeat that the difficulty which brought the crisis to its head is the reduction of dollar resources to make up dollar deficits brought about through a dollar shortage, which is world wide. On this matter the noble Marquess, Lord Salisbury, expressed a hope that the borrowings from America have not been frittered away. I think I can give your Lordships a guarantee that they have not been frittered away. How have they been spent to date? For food for the people of the United Kingdom, 25 per cent.; for food, and so on, for the Germans, 11 per cent.; for raw material and petrol, 27 per cent.; for machinery, etc., 14 per cent.; for purchase of ships, 7 per cent.; for tobacco, 12 per cent.; and for films, 4 per cent. That is how 1,540,000,000 dollars have been spent in the United States. I think the noble Marquess will agree that they have not been frittered away.

The crisis is the reflection of a shortage of goods outside of the dollar area which, in its turn, is an inevitable legacy of the destruction of the war. But, it should also be pointed out that during the past year or two, owing to bad harvests and the recent cessation of the operation of U.N.R.R.A. in Europe, dollars have tended to flow into the United States. If this country could supply more goods for export, other countries would be less disposed to convert sterling into dollars in order to buy American goods. At the present stage of the nation's affairs what is needed is an immediate increase in the production of dollar-earning and dollar-saving goods. This increase should come as soon as it is possible. There is little time to obtain increased production by reorganization and re-equipment of which so many of our industries are in need. Some quicker method, such as additional effort and, indeed, longer hours, should be made until such time as our balance of trade begins to right itself, and our economic position improves.

The trade unions, through the National Joint Industrial Council, have already heard the Government's case, and have decided to recommend in the essential industries that their members should agree to the recommendations, for they fully understand what is at stake. Like so many noble Lords, I am not a trained economist nor a currency expert; indeed, I should be happy to describe myself, as the noble Marquess did yesterday, as "just a common man." I thought while he was speaking that if only he had been the boss and I had been the trade union leader, how peaceful industry would have been in this country! That is, of course, if he and I had been allowed to practice what we preached. But we all have sufficient knowledge of economics to realize that this nation's economy, which has been built up for a century on the basis of import and export trade, cannot be maintained unless the export trade, visible and invisible, overbalances the import; and that when we are left to our own resources, our salvation must depend upon the balancing of that trade and the stepping up of production for export. This cannot be too strongly emphasized. By itself a large increase in our production of coal would enable us to export coal to meet the needs of countries who are at the present time suffering considerably as the result of the lack of this valuable fuel, in addition (and this is most important) to meeting all our fuel requirements in this country, avoiding the tragic necessity of importing coal from other countries, and reducing oil consumption 10 a minimum. I propose to deal with the coal industry a little more fully later.

The Government proposal is not only to deal with coal. It asks for further increases in production generally, particularly in the production of steel and of manufactured articles dependent upon steel—engineering, shipbuilding, textiles—not only to meet more demands, but to enable us to fill the gap between our import and export trade. Dealing with production, the question of the person who is employed upon production must be brought into the picture. One has heard so much about harder work, and how necessary it is. I entirely agree; but it must be harder work for everyone. The manual worker of this country becomes a cynic when he is lectured. He is of the opinion that there are too many persons who are ready to lecture and give advice—persons very like the parson who told his parishioners: "Don't do what I do, but do what I tell you"; which means that those who lecture are themselves often in a much too comfortable position, and perhaps do not have sufficient regard to the importance of the person who is engaged in manual employment and his surroundings. I refer to the man at the coal face, or working underground; to the man working on the land, at the steelworks, at the machine in the factory, on the railway; the seaman; and of course I include the members of the managerial and technical branches of industry—the man on the spot, without whom production is impossible and, indeed, less efficient. Without the closest co-operation of all those who work at the point of production the results which the nation requires will not be forthcoming.

In what industries is there a scarcity of labour at the present time in this country? In mining, in agriculture, in textiles, and in all the unattractive industries. Why is there this scarcity? It is because other industries not only pay higher wages in proportion but also offer much more comfortable jobs; and a large number of persons have discovered that the farther one gets away from the point of production, the better the person is paid and the more comfortable is the job. I left the pit to go to Parliament, transferred with one sweep from being a weekly wage earner to a salaried earner; and, for being a member of Parliament, I got, merely as expenses, nearly twice as much as I could earn by digging coal underground. I thought then with my colleagues that we were very badly paid. That is the situation in life generally, and our economy is becoming unbalanced.

I read that the waiters in a well-known refreshment house in London, because their takings have been reduced below £6 a week, think that the clients should now be allowed to give them tips. I wish I could get a guarantee of £6 for the fellows who dig the coal in this country. I may have something more to say about that later. We find that too many of the very best men on the production side leave it because of inducements to go elsewhere, and they will see to it that their sons are brought up in some other vocation where the general standard of living is much higher. There must be a realization that without the complete confidence and effort of the productive worker this nation is sunk. It is true that the distinction is not now as great as it was in the past, but there is still a tendency for the productive industries to be neglected and for the more comfortable jobs to be filled.

I was very interested in a letter which I saw in one of the daily papers yesterday from a Canadian, which reads as follows: A lot of us over here remember with affection the times we had in the Old Country. It was a comfortable place even in the uncomfortable times. But it seems to us there are still too many people in England who are too comfortable—they ought to get clown to it and do some real work. We would like to see manual work more honoured in Britain than it is. We over here don't reckon a man is a man unless he's done some manual work in his time. The sons of the richest do it. We would like to see, for instance, your students working their way through college as ours do. Britain has got to earn it can't be a nation of five-days-a-Neck clerks. That is not my opinion; it is the opinion of an observer from outside. How much truth is there in it? A full recognition must be given to the place of the manual worker in our national life, and no batter example can be given than that of the coal industry.

I was asked a number of questions yesterday, some by the noble Viscount, Lord Samuel. First of all, he dealt with the question of paper consumption and referred particularly to the paper consumption of the Government and how, if it was measured in a certain way, it would go 120 times round the Equator. I want to assure the noble Viscount that there is no need to go round the Equator 120 times. It is public knowledge that the Government use of paper has been reduced from 71,000 tons by nearly 3o per cent. I am not suggesting that it is not too much at the present time.

VISCOUNT SAMUEL

That is still 80 times.

VISCOUNT HALL

But the reduced figure of 55,000 tons is 55,000 tons of nearly 2,000,000 tons which is imparted and processed in this country, so indeed it is a very small proportion of the whole. I am not suggesting that it ought not to be further reduced, and I am sure His Majesty's Government have already taken notice of the suggestion made by the noble Viscount.

The noble Viscount referred to the Severn Bridge, and indeed there were very few noble Lords who spoke yesterday who did not refer to the Severn Bridge. I thought that there was much in what they said. May I say that up to the present the work has consisted of just making preparatory drawings and taking soundings? The next stage to be undertaken will be taken next year, and will consist of the construction of some concrete piers and anchorages. This will involve a very small amount of material and labour. The building of the bridge itself cannot take place for two years at least, and when the real work begins it can only commence after experiments have been concluded. The Government surely cannot be blamed for carrying out the necessary preliminaries and bringing the scheme to a position in which it can be put in hand as soon as conditions indicate that this is desirable.

The noble Viscount, Lord Samuel, does not often slip up, and I am very pleased that he did yesterday because I can now say that he slipped up very badly. I do not know whether he said someone had informed him or that he had seen it in the Press, that a coal miner who worked four days and did not continue for the fifth, that if he had worked on the fifth day—this is how I understand the matter—he would be only 2s. 3d. better off than if he stayed at home.

VISCOUNT SAMUEL

I did not state that as a fact. I said it had been stated and I wanted to know whether it was true or not.

VISCOUNT HALL

If I might say so, with all respect, it seems so ridiculous in itself, because it would mean that Income Tax would be based on a very high figure. Assume that a miner got his full one pound a day for five days, his income would have to be considerable before they would deduct 18s. for a day out of his income.

VISCOUNT SAMUEL

Let me add that the case which I read was that of a miner who said he had earned £9 in the four days. I do not know whether that is possible.

VISCOUNT HALL

There is a good deal of misconception in the minds of many people concerning the five-day week. No person employed in the pits of this country will get the bonus of the extra day's pay unless he works the full five days. If a person loses one day he not only loses one day's pay but two days' pay. So there again his earnings during the first four days must be something far in excess of the £9. Let me give the case of a person who is earning £9. In the case of a single man earning £9 a week, for the first day his gross wages would be £1 10s.; at the end of the second day his wages would be £3; for three days his wages would be £4 10s.; for four days his wages would be £6, and for five days £9, because the bonus comes in. Now tax deduction. The net income for the same man for one day would be £1 10s.; for two days £2 19s.; for three days 7s. would be deducted for Income Tax, for four days 15s. would be deducted for Income Tax and for five days £1 18s. would be deducted for Income Tax. But that would still leave him with £7 2s. or £2 better off than if he only worked four days.

LORD HAWKE

That is a single man?

VISCOUNT HALL

Yes; a married man would be correspondingly better off. If you take a married man with two children he would not pay Income Tax until he earned his £9. If he worked five days and got the full week's pay, which would be £9 gross, he would pay 8s. in Income Tax. I am pleased the noble Viscount put the question, because it does clear away a good deal of misconception in connexion with this matter.

The noble Viscount, Lord Portal, put a question about contractors and the difficulty of obtaining licences for subcontractors. I understand that unfortunately he is unable to be present to-day, but I can assure him that this matter is not quite as he stated, and I will explain the position to him when I see him.

A question was put to me concerning the employment of Poles in the mines. Up to the present time 2,400 Poles have entered employment in the mines; 3,281 have been trained at Government training centres, and of these 909 are already experienced miners and waiting to be placed. Another question which the noble Lord, Lord Croft, put to me was whether I could break down the figures of the 80,000 reduction in the Armed Forces. He thought these men were taken mainly from the men in the Army in the field. I cannot break down the figures, but I can give him the total strength of the Army as the Government estimated it on March 31 next year after the 80,000 have been deducted.

LORD CROFT

The question was whether those 80,000 will be chiefly from the ancillary troops who are employed in the Services as a result of our occupation of various countries, and I asked whether the actual field Force would be affected.

VISCOUNT HALL

I am afraid I cannot give the noble Lord the assurance that the field Force will not be reduced.

I want now to come to this question of coal. This debate centres very much around coal production. Many of your Lordships referred to the importance of coal and the difference which an increase of some 20 per cent. in coal production would make. Such a difference would revolutionize the whole basis of the nation's economy. It would do much to right the trade balance. It does seem very strange that this nation, whose great industrial world position has been based upon coal, should now be talking in terms of importing it. A combination of the importation of coal from hard currency countries and the converting of former coal-burning machines to oil-burning in many of our industries only aggravates the problem which we are so anxious to solve. Indeed, no other industry in this country, apart from agriculture, can make a better contribution to the nation's needs. Without coal our industrial, financial, and economic life and domestic comfort are at stake. The noble Viscount, Lord Samuel, said that the loss of 2,000,000 or 3,000,000 tons of coal lost us £200,000,000 of exports. That indicates the significance and the importance of this problem.

My own connexion with the coal industry covers a very long period, and during my life time I have seen its rise and fall. When I entered the pit in 1893, the coal output of this country was 180,000,000 tons. A substantial proportion of that was exported. That was during the days when we were building up those foreign reserves which became so beneficial to this nation during the period of the two world wars, and without which we could not have carried on the last war. It was the coal and the steel and manufactured articles which were produced from the 'eighties until the outbreak of war in 1914 which gave us those reserves. During the twenty years from 1893 to 1913 we saw a rapid increase in the production of coal in this country. In 1913 we reached the peak of 287,000,000 tons, the highest output of coal in our country. During that year we exported to foreign countries and for bunkers 100,000,000 tons of deep mine coal, which brought credits to this country. In 1945 and 1946 the output of coal in this country went back to where it was in 1893. The nation's wealth, it can truly be said, was built upon an abundance of cheap coal—too cheap. At no time over the past sixty years has output fallen to the very low point which it has reached during the past two years, and at no time for eighty years have we exported less coal than we are exporting this year.

I do not propose to dwell too long on the conditions which existed in the coal-mining industry of this country in the old days, other than to tell your Lordships that I myself cut thousands of tons of best Welsh steam coal for which I received 1s. 1½ d. per ton after the coal had been weighed a mile and a half from the coal face and after deduction for the small coal screened away—I was paid for the large coal. I ought to say that in addition to that 1s. 1½ d. I got a percentage of 10 to 15 per cent. on the ton. Such were the wages paid in the mining industry at that time, whilst the living conditions were not becoming to a great industry or, indeed, to a great nation which was in the main responsible. The history of the lives of the miners and their treatment by the nation in obtaining cheap coal is a chapter about which the less said the better, and I trust that that chapter will be closed for ever. I want to see a completely new era, and I trust it has commenced, in which the nation fully acknowledges the importance of coal, more particularly to the persons who are called upon to produce it. A completely new start is needed and we have to see that this new start comes.

In 1938, the year which is so often referred to at the present time, we produced 227,000,000 tons of coal, and we produced that amount of coal with 782,000 miners. It will interest your Lordships to know that we produced that coal upon the basis of an average of a five-day week—indeed, less than a five-day week. The average number of shifts worked during 1938 was 4.96 per week. Of that coal 181,000,000 tons was used for consumption in Britain and 46,000,000 tons was sold for export. Last year the number of persons employed was just under 700,000 and they produced 189,000,000 tons of coal, of which 184,500,000 tons was used in this country, and 4,000,000 tons, plus another 4,000,000 tons from stock, was exported to meet urgent requirements abroad.

In 1938 the output per man shift at the coal face was 3 tons. In June of 1946 it was 2.75 tons, and in June, 1947, it was 2.87 tons. The over-all output in 1938 was 1.14 tons and in June, 1947, 1.8 tons per day. I would like, in fairness to the coal miner of this country, to give the comparative figure in all European countries, with the exception of Russia. The figures I am about to give represent the proportion of the 1938 output. It was 55 per cent. in the Ruhr; 56 per cent. in Holland; 70 per cent. in Poland; 73 per cent. in France; 79 per cent. in Belgium, 81 per cent. in the Saar and 89 per cent. in this country. This means that, much as we complain about output in this country, we are better off than the countries to which I have referred.

There has been this reduction in output notwithstanding the substantial increase in machinery, and many reasons can be given for it. I would say that I have been a very strict advocate of the introduction of machinery into coal pits—not because I have not recognized the disadvantages, and there are many. I hope that some time I may be able to speak to your Lordships concerning the difference between hand-got coal and machine-mined coal. The machines are doing away with a considerable amount of laborious work, but the machine is not human, and I suspect the machine is responsible for the condition of the coal supply to so many people at the present time, for we lack sufficient manpower for cleaning the coal at the pit surface. In addition, the plant in many cases is ineffective, and the coal itself does not get an opportunity of doing its job properly.

I regret that I have taken up so much of your Lordships' time. The noble Lord, Lord Pakenham, dealt in his speech with the increase of manpower into the coal mining industry. The target of 730,00o is being approached and I hope we shall soon have reached that target— and then I shall be able to inform the noble Viscount that another target has been touched. The number of face workers has also increased during the same period by over 8,000. And there has been a large intake of machinery, such as conveyors, of which 1,000 were introduced during the first six months of this year, and 470 coal cutters. Orders amounting to £9,500,000 have been placed for new machinery during the second period of this year.

The miners do not desire to be pampered. Indeed, this improvement in their conditions can be regarded as no other than giving them the just treatment which has been denied them in the past. I shall never forget a peroration of my fellow countryman, the late Earl Lloyd George, in dealing with this coal question at the conclusion of the 1914–18 war. He said: I have seen the coal miner under many conditions down in Wales. I have seen him as a worker; there is none better. I have seen him as a soldier; there is none braver. I have seen him as a singer; there is none sweeter. I have seen him as a footballer; and he is a terror. I have seen him as a politician; and there is none sounder. Always a loyal friend, but a dangerous enemy. I believe that that does give a description of the miners of this country. They want appreciation; they do not want pampering. They want conditions applied to them which ought to be applied for men who have to do the kind of work which these men have to do.

Miners and management—and I say this as one of their colleagues—should respond to the demand which is now made for larger increases in production. The target set in consultation with the miners' representatives could well be passed. It should be done, and then the miners, with other industrial workers, can turn a severe industrial reverse into a glorious victory. There is a job for every citizen in this combined offensive. The Battle of Production must be won. If we do not get the coal to meet our requirements and leave a substantial amount for export, the battle will be lost. No responsible miners' leader would be doing his duty if he did not express dissatisfaction with the present output of coal. The nation is hungering for more coal; for it would give us more steel, more goods of all kinds, more imports, more exports; it would raise Britain's prestige in Europe and the world, and would make Britain independent of assistance from other nations.

To-day we meet a new challenge, a challenge to the capacity of the British people. It is within our competence. It demands renewed efforts and sacrifice. We must meet this challenge as we have met others in the past; and history will recall these months through which we are passing as a great opportunity courageously undertaken by the whole of the British people.

4.18 p.m.

LORD CHERWELL

My Lords, I am certain that the whole House has listened with interest and pleasure to the speech of the noble Viscount. I am sure that most of us will agree with the late Earl Lloyd George's description of the miner, except perhaps in the adjective which he applied to the miner as politician. It is just fifteen months since I moved for Papers in your Lordships' House on the economic position of this country, and in particular the likelihood of inflation at home and of an unmanageable negative balance of payments abroad. At that time I was reproved, even from the Liberal Benches, for being unduly gloomy. I do not think anybody would echo that reproof to-day.

It is, of course, a commonplace that no other nation is so vulnerable as ours. The Chancellor of the Exchequer, according to the Press, declared a few weeks ago that even to maintain our present exiguous ration we should have to import 75 per cent. of our bread, 56 per cent. of our meat, 64 per cent. of our bacon, 73 per cent. of our sugar and something like 90 per cent. of our cheese and butter. Everybody knows that we paid for our imports of food partly by exporting coal, partly by working on raw materials, such as wool and cotton, iron ore and the like, and partly by services such as banking, insurance, and shipping, and partly from the profits derived from investments made abroad in the bad old days of private enterprise, when our exports greatly exceeded our imports and we had something left over to invest in foreign countries. It was upon this precarious foundation that our swollen population of 47,000,000 people, 53o to the square mile, nearly one per acre, was built up.

In the early months of the war, when we were fighting alone, we had to sell a great part of our foreign investments to pay for munitions and food. When Lease-Lend started, we were able to concentrate on munitions production and to allow our exports to lapse to one-third of their pre- war volume, since our immediate needs were satisfied gratis from America. But when Lease-Lend was ended so abruptly in 1945, it was plain that we should starve unless we could export enough to pay for our imports. To tide us over whilst we were building up our exports, the. United States and Canada lent us some £1,250,000,000 worth of dollars. But it was clear that unless we could expand our exports sufficiently to pay our way before the Loan was exhausted a crisis was inevitable. Anybody would surely have expected, in these circumstances, that the Government would make every effort to expand their production and our exports as quickly as possible, at no matter what cost to their predilections and their Party dogmas. They were working against time; nobody expected the Loan to last more than three years. Nothing could exceed in importance this terrific problem. The noble Viscount has jest told us that they had the advantage in that they had practically no strikes and no unemployment; we hope that they will not have some unemployment as a result of the circumstances which are new arising.

My complaint against the Government is that they failed to tackle this superlatively urgent problem. Let us look at one or two examples. As has been stated by the noble Earl, Lord De La Warr, the most direct and immediate way of replenishing the national larder at a minimum cost in dollars is to increase food production at home. It was estimated, during the Coalition Government, that more than £100,000,000 worth of food over and above the high war-time level could be grown in this country; and prices have risen since then. What happened? Instead of increasing our agricultural supplies, the Socialist Government have allowed them to dwindle by something like £100,000,000 worth. The not le Lord, Lord Pakenham, told us yesterday that the Government were going to make intensive efforts to foster agriculture and hoped to achieve an increase of £100,000,000 worth by 1951–52. That will just about put us hack where we were during the war. Why did the Government let it drop below this when our need was so clear?

Let me turn to coal, the topic to which the noble Viscount has just devoted so much attention. Since the invention of the steam engine it has been plain, as he said, to the meanest intelligence that our industries could only flourish if we got enough coal. I do not know, of course, whether the intelligence of some members of the Government is not sufficiently mean to appreciate this; they move in such rarefied esoteric realms that a dirty black substance like coal eludes their observation. It was not always so. When it appeared in the winter of 1944–45 that there was a remote risk that there would be a shortage of coal in the coming year, the Government of the day at once took steps to increase manpower in the mines, to stop coal exports and similar practical measures to improve the position. The Socialist Government could think of nothing better to do than to nationalize the mines.

I do not deny for one moment that nationalizing the mines may have had some psychological advantage. Socialists have been preaching to the miners for generations that all their hardships were due to the wicked capitalists and that it only needed nationalization to put everybody on easy street. Once the Labour Government were in power the miners might well have thought that they were being cheated if nationalization had been withheld. The idea that it would materially increase coal production was really naïve. Can it really be that the Minister of Fuel and Power was taken in by this soap-box claptrap, and that he thought that nationalization would increase output by 10 per cent? If production did not approach consumption, there were only two courses open: either to get more men into the pits or to get the men to work harder—or at any rate not less hard—than before. What happened? On the day that the Labour Government came into power the number of men on the colliery books declined, though not very much, and only in April of this year did it again reach the figure of July, 1945. The noble Lord, Lord Pakenham, can check this in the Digests; that is where I obtained these figures.

LORD PAKENHAM

Since the noble Lord has been kind enough to refer to me, may I ask him whether he has in his mind-offhand the general trend of the figures before the Labour Government came into power?

LORD CHERWELL

Certainly. The output per head over the period from 1922, apart from the General Strike, up to 1937 went up steadily, except for one year when the Labour Government were in power, and a brief interval between 1929 and 1931, when I think the Labour Government were again in power. Apart from those two setbacks, the trend was steadily upwards.

In the hour of our most urgent need, on top of all this, the five-day week was introduced. It is all very well to paint a rosy picture of the results, but the fact remains that in June the weekly output per head for the number of wage earners on the colliery books was only just over 5.1 tons, as against just over 6 tons in 1937. The number of men in the pits is down 10 per cent.; the output of coal is down 22 per cent.—and this despite the increasing mechanization. I do not want to-day to recapitulate in detail the monumental incompetence which allowed the short-fall of 2 or 3 per cent. of coal to throw 2,000,000 men out of work, and which will probably cost us some £200,000,000 worth of exports. What should we think of an explorer who, finding that he had taken 3 per cent. less rations with him than he intended, ate them all in the first fifty weeks and starved to death in the last fortnight before the relief ship arrived? The whole handling of the coal situation is only another example of the Government's obsession for their long-term nationalization panacea as against immediate effective remedies.

I will mention one other instance of the same mentality. It was perfectly plain at the end of the war that we must at once renew and increase our electrical generating capacity. Demand had swollen, and maintenance and re-equipment had perforce been inadequate. What was the Government's remedy? To nationalize the electric industry. Does anyone really believe that this can give one extra unit of electricity in the coming year? Of course not. Two years have passed and great quantities of electrical generating machinery have been exported. And only this year did the Government finally decide to build a new power station in London. Admittedly they did take some short-term action concerning electricity. Notwithstanding the shortage of electrical generating capacity which stared them in the face, they increased the supply of electric fires and cookers which consumed the current. That is surely an extraordinary method of planning.

Let me not recapitulate the later stages of the Government's hysterical efforts in this matter, how the Chancellor took off the purchase tax in the first year, and thus ensured that fires were bought and installed, how that led to a breakdown in the electrical generating stations, and to the current being cut off under the euphemism of shedding the load, how the Chancellor promptly doubled the tax in this year's Budget; and then, finding that modern houses had been finished without chimneys so that no other means of heating and cooking were possible, how he had to halve it again before the Finance Bill was passed. All these are merely instances of the planner who has failed to plan in big broad outline trying to recover by thrashing about amongst the details.

It is strange that the Government should have failed to build electrical generating stations, for they seem to have a fatal passion for capital expenditure. According to their plan 20 per cent, of the national income is to go in capital equipment and maintenance. Whether this might be right or wise in normal circumstances is arguable, but obviously it can have no effect whatever on production for some time. Even if half this amount—if £8000,000,000 or £9000,000,000 worth of raw material and labour could be used to produce goods for export, and if the goods could be sold, all our troubles would vanish. Yet steel and labour which can be used for motor cars for export are being used to electrify railway lines, although trains can be drawn quite well in the old-fashioned way by locomotive and although we are so short of electricity. Although millions of square feet of factory space were built in war time, enormous new factories are being erected all over the country. Instead of getting on with manufacture, factories are being re-equipped with the most modern machinery. In the long run, of course, that may be a good thing to do, but we have not got a long run, we have got to mend and Make do. We must produce now, and not prepare to produce later.

The Government's prime error seems to be that they confuse short-term and long-term remedies, and instead of concentrating on meeting our short-term problems they have spent the last two years messing about with remedies or what they believe to be remedies, for long-term problems. Some of their ideas such as growing groundnuts in Central Africa to relieve the fat shortage, may be quite good in the long run, but it will not help us turn the corner next year. Other ideas, like nationalizing our principal industries, we believe to be radically bad. But, be these ideas good or bad, not even the most fervent Socialist can pretend that they will take effect so quickly as to augment our production and exports appreciably before bankruptcy stares us in the face. Those facts, happily, seem at last to have dawned upon the Government, as I all pleased to discover from some of the statements made by the noble Lord, Lord Pakenham, yesterday, and of the noble Viscount who has just sat down.

Though there are still traces of their obsession for long-term remedies, some of their proposals, if they can be carried out, should take effect immediately. If the number of miners can be increased by 2 per cent., it may be hoped that coal output will rise proportionately. An extra half an hour on a seven-hour day, if no bottlenecks arise, would increase coal output by some 14,000,000 tons. We all hope that this will be achieved, but it was stated by a very expert speaker in another place yesterday that for technical reasons is this was not possible. I had hoped that perhaps the noble Viscount would be able to correct this.

VISCOUNT HALL

I do not accept that statement.

LORD CHERWELL

I am much relieved to hear that. The noble Viscount speaks with great authority, and I sincerely hope that the increased half an hour may really lead to a corresponding increase in output. The noble Lord, Lord Pakenham, may remember my asking him some fifteen months ago how the Government expected to get labour into some of the important industries working for export, such as textiles, in conditions of full employment without direction. I am sorry that his hopes of achieving this have riot been fulfilled. However, I think it is a brave decision of the Government to take the unpopular steps required, even though belatedly. Once the British people realize the serious nature of the emergency they will certainly respond. But surely it was obvious a year ago flat something like this would be necessary.

Was it really inevitable to let the crisis break before anything was done?

I am sorry that the noble Lord, Lord Pakenham, made no reference in his speech yesterday to the question of incentives to increased production, and to the removal of red tape which has clogged the wheels of enterprise. Anybody who has had anything to do with industry has heard heartbreaking stories of the frustration and friction caused by the number of forms and permits required before anything can be done. The noble Viscount assured us that the amount of paper to be used was being reduced. I was much relieved to hear that.

VISCOUNT HALL

It has been done.

LORD CHERWELL

I see. But the amount used even now is still enough to send one form every morning to every individual in the United Kingdom, and it seems to me that is rather an excessive amount of paper to send out. How can the Government expect anyone to face all the worry and trouble involved in any expansion when go per cent., or even 97 per cent., of any reward for extra work is confiscated? It is all very well to hate the rich. If, to satisfy this hate, penal taxes are imposed on them not only are the rich hit but the whole country is impoverished. Whether they like it or not, the profit motive cannot be swept away with a stroke of the pen. I hope that Ministers will harden their hearts and pander to it in every walk of life. It may not be very high-minded but it is human nature. The Government must face facts as they are, and not as they would like them to be. If they want people to work and struggle to increase output they must make it worth their while.

I now turn to the financial side. Though I listened with great attention and pleasure, as I always do, to the noble Lord, Lord Pakenham, who spoke on this matter yesterday, there are some facts which I find it difficult to understand. Above all, the extraordinary suddenness with which this crisis in our affairs has overwhelmed the Government is inexplicable. In the White Paper published in February no hint was given of any immediate danger. According to this document we expected to draw on the dollar Loan at a rate of less than £30,000,000 a month, leaving us a credit in dollars of £620,000,000 at the end of the year. Yet now, only five months later, it emerges that in the first seven months of the year we have drawn nearly £540,000,000 worth of dollars; that is to say at the rate of £77,000,000 a month—more than two and a half times the expected rate. Surely the Government should explain this monstrous miscalculation. How can we trust planners who are out to an extent of two and a half times. It cannot be due to the rise in American prices, for they have only risen 10½ per cent. above those obtaining in the last quarter of 1946; and in partial compensation export prices have also risen by 8½ per cent. It cannot be due to the fuel muddle. For, whatever it may cost us in the long run, our exports in the first half of the year were only £100,000,000 below expectation.

The noble Lord, Lord Pakenham, yesterday gave us a series of figures which accounted for £405,000,000 of our dollar drafts, a rate of nearly £60,000,000 a month. It is very strange that the February White Paper should not have foreseen these vast demands, which were more than twice the amount forecast. What is the explanation of our colossal July draft of £175,000,000? Surely the £405,000,000 spent in six months cannot have risen to £537,000,000 in this one month. I am glad to hear that the convertibility obligation was not to blame. I hope that we have not given any undertaking to convert any of the abnormal sterling balances which should have been blocked as soon as the war ended, and which we should be very chary of repaying until our affairs are in better shape.

Some of these are genuine commercial transactions. But the vast preponderance, especially those claimed by India and the Middle East are not genuine at all. Why should the United Kingdom pay many of our Allies for the use of their ships in the common cause? Why should we pay the Egyptians for building fortifications for their country, or the Indians for making airfields required for their own defence? Anyhow, there is no reason why we should pay excessive prices. Above all, it is improper to convert these exaggerated prices in inflated currencies claims at pre-war rates of exchange. If these balances are to be recognized then they should be scaled down to take account of these factors. They should have been blocked as soon as the war was over, and not used until proper arrangements were made. Instead, it seems that they have been drawn upon to the extent of scores of millions of pounds. In other words, we have sent abroad after the war valuable goods which could have been sold for scores of millions of pounds of current cash, and all we have in return is the cancellation of a minute part of these alleged phoney debits.

I come now to the completely inexplicable volume of our foreign spending. The Foreign Secretary told us on April 30 that since the war we have advanced or sent abroad £740,000,000. This is more than the whole of our drawings on the American Loan. We, the country which bore the heat and burden of the day, the only country which fought the war from beginning to end, burdened with an internal debt of £550 per head of the population, and owing abroad, if the phoney figures are accepted, £80 a head, have advanced since the end of the war to foreign countries, some of which gave little or no help and others which fought against us, £740,000,000. Now we are surprised that we have an unfavourable balance, and that bankruptcy stares us in the face. One way of keeping the wolf from the door of course is to take the door away, but it is not usually a very adequate means of saving the family from misfortune.

It is no use saying that about half of this sum is recoverable. It may be in the long run, though I doubt it; but we are not concerned with the long run; we are concerned with the short run. If we lent France £100,000,000, and she has used it, this means that she has had £100,000,000 worth of goods from this country. If we had sold these goods to a hard currency area we should have had dollars with which to buy our food. It is no good saying that France will one day be able to pay us back and that we shall be able to buy the food then. We are going to be very hungry this year. We cannot wait.

In this connexion I should like to ask the Government a question. As I understand it, the currencies of all the countries that signed the Bretton Woods Convention should be convertible—I believe as from July 15. In this case there would no longer be hard and soft currency areas, except for those countries who staved out. Is this arrangement having unexpected repercussions, in the sense that former soft currency areas are deterred from importing? Again, are we taking steps to have dollars declared a "scarce currency" with all the easements as regards quotas and discrimination that this should give? Many of us would welcome information on such points.

The Government's intentions to increase exports, and thus help to bridge the gap in our balance of payments, are, of course, excellent. But they are only broad intentions. No quantitative estimate of their effect can be made. Their negative contributions to recovery, on the ether hand, can be measured. The proposed cuts on food—£12,000,000 a month—are very severe. All the others put together are trivial compared to this. But how far will they go to meet the crisis? .In June our negative balance on visible imports and exports was no less ban £60,000,000. In the first seven months of this year the drafts on the American Loan have averaged £77,000,000 a month. Unless we can jump up exports, and what is more, exports to hard currency areas, by something like £40,000,000 a month—nearly 50 per cent.—these cuts in imports, severe though they are, will barely go a quarter of the way to bridging the gap.

Failing some spectacular immediate expansions of exports, what will our position be? The Government are apparently banking on the Marshall offer. I hope and trust that this will help Europe. I am not so confident that it will help us. We are no longer to be treated on special terms. We are in the queue with the others. Unless things work out very differently from the way they usually do we shall find ourselves at the end of the queue. Every other country, except perhaps Belgium, produced before the war something like 80 per cent. or more of its own food. We alone produce less than 50 per cent. Such is the Government's weakness in stating and pressing our case at international conferences that we nearly always end with a smaller allocation than the others. I am most anxious lest we should supply all sorts of goods to the Continent without getting paid, whilst we run up dollar debits to finance our own needs. This happened after the last war. I fear that it may occur again.

The root cause of our troubles is that the Government are trying to do too much. For years electors have been assured that there is no limit to what can be achieved once Labour is in power, and now they think they can claim the reward promised for their votes—a high standard of life, social services, less work, and so on. Everywhere we hear talk of reduced hours of work. Sometimes it is a five-day week; sometimes a 40-hour week. How much effect this has had it is difficult to say. Where output per head can be readily measured it is certainly down. As I have said, coal output has dropped over 6 tons per week in 1937 to less than 5¼ tons since May. Bricklayers, who used to lay about 450 bricks a day, now lay between 250 and 350 a day. In the textile industries the production of yarn is down 45 per cent. although the number of people engaged in cotton spinning is only down to 22 per cent.

I know that some of your Lordships believe that the reduction of output per head can be made up by cutting the effort devoted to distribution. It is true that there may be some waste there, but the manpower in distribution is already down by some hundreds of thousands; and that, of course, is why we have all these queues. To try to make up for shorter hours in the factories by slowing up distribution is merely to reduce the man's work and increase the woman's. She will have to stand round longer waiting for others to get served ahead of her. If output per head is down the number of people contributing to the amenities of our everyday life is also reduced. We have about 3 per cent. more of the working population in the Armed Forces. We have another 3 per cent. more in the Civil Service.

The immediate raising of the school leaving age, although neither schools nor teachers were available, has taken another 2 per cent. or so out of the working population. Thus the proportion of our people contributing to the amenities of the community is some 8 per cent. less than before the war. If the rest turn out 10 per cent. less per head there must be a drop in the standard of life of between 15 and 20 per cent. I do not assert with any confidence that the output is down by as much as 10 per cent. Where it is down, it is often due to a shortage of fuel, and to delays and difficulties in getting raw material. Stocks were allowed to run down in 1946, and bottlenecks are developing in all directions. Vast quantities of forms and permits have to be filled up to correct any minor shortage, which formerly could have been rectified in a day or two by a telephone call.

It is unfair to blame the workers in many industries for slackness, when the real cause for the reduction in output is shortage of raw materials, fuel and the like. However, whatever the cause, the total amount available for consumption is down. Even if we had the same total output as before the war, the fact that we have—no doubt quite properly—diverted 6 to 8 per cent. more of the national income than before the war to social services—education, health, old age pensions, and so on—must mean that the poorer classes will have normally some 6 to 8 per cent, less purchasing power in their pockets to spend. The cost of schools, teachers, hospitals and doctors has to be met by someone. As has been pointed out again and again, the so-called rich have been soaked to such an extent in order to pay for the Armed Services, the swollen Civil Service and so on, that there is nothing more to be got from them. But, misled by generations of propaganda, the unhappy man in the street thinks that he can get all these social services free, and still have as much to spend as before. When he finds he is getting less, he strikes for higher wages. With labour sub-divided to the degree that it is, any group can hold the community up to ransom and can secure the rise demanded. Prices go up, and the vicious spiral is in full swing. This is largely responsible for the continuous inflation we have experienced since the Labour Government have been in power.

The only way to cure this is to spread the truth, and bring the facts home to the people. Unless rewards are offered, both to wage-earners and management, which rise and fall with rising and falling output, production will remain stagnant, or will even decrease. Unless production rises, social services, however desirable, must involve a fall in the workers' purchasing power; that is to say, a drop in the amount of food he can buy, the amount of tobacco he can consume, and the amount of clothes he can obtain— broadly, the amenities he can select and enjoy in his own home. To explain this, of course, implies denying the tales that have been preached by the Socialists at street corners for generations. It is a hard thing to ask them to do. But the Government have demanded sacrifices all round. Let Socialist Ministers make this contribution. Let them face the facts and broadcast the truth.

As to the immediate urgent problem of our balance of payments, all we can do is to hope that the Government proposals, even if they be not a cure, will eke out the Loan long enough for a cure to be found. The cuts in imports, severe as they are, and hardly as they will press on our under-nourished people, must be accepted with a good grace. But they will go only a quarter of the way to bridging the gap, and unless all classes throw their whole weight into the export drive, and augment exports by some 5o per cent. within the next few months, we shall face the same sort of crisis again next spring, with further harsh cuts in our consumption—unless, of course, we are given further breathing space by the generous, warm-hearted American people. We cannot go on spending £450,000,000 a year more than we produce. Equally, we cannot allow ourselves to become pensioners of the American people, and expect them to work six days a week so that we can work five. We must make ourselves self-supporting and able to pay our way.

If the Government had a year ago taken measures to this end, of the sort they have adopted now, we might never have come to this pass. Instead, they spent themselves in futile long-term pseudo-remedies like nationalization. All we can do is to hope that it is not too late, and that a united nation will be able to find a way out of the tragic conditions into which the Government have led it.

4.57 p.m.

VISCOUNT CECIL OF CHELWOOD

My Lords, I have had the misfortune for some years now to dwell in a political wilderness and, therefore, I am not quite so much interested in the Party question as I used to be. I do not doubt that my noble friend who has just concluded his interesting speech is perfectly right in saying that the Government have made a great number of mistakes. I never knew a Government that did not do that, and I have not the least reason to suppose that this Government are wiser than those which have preceded them. But, substantially, I cannot help feeling that the main point of this crisis is that we have got to pay the bill. We did not know what an enormous bill it was going to be, but we did know that it was going to be a big bill. Now we have got to pay it. I do not propose to follow my noble friend in his line of argument, as I should be quite incapable of doing so, and it would rather interfere with the other things that I wish to say. Similarly, I do not propose to examine the emergency proposals which the Government have produced. I will only say that I hope they are enough. I have some little doubt about that, but I am quite sure that something of the kind is essential, and I am glad that the Government are, at any rate, doing their best to discover the best means of meeting the immediate situation by the kind of steps which I suppose any Government would try to take in the same conditions.

The reason why I venture to intervene in this debate is rather different. I have for more than fifty years taken a very great interest in one aspect of our economic policy and problems. If I may, I will state the point quite simply and shortly. I entirely agree, of course, with what the noble Lord, Lord Cherwell, said about the immense sums that we have to pay for our imports. There no doubt that our daily life requires large quantities of imports; that is to say, we have to buy extensively from producers in foreign countries, and in order to do that—apart from loans—we have got to sell them a corresponding amount of our own manufactured products. That is common knowledge, and familiar to everybody. It is also equally familiar that of our products one of the most important—perhaps the most important—is coal. There we have a rather different position. We have lots of coal, but we have got to get it out of the ground. It really is a question of how much we can get out of the ground, not only for what we want to buy from foreign countries, but for the purpose of carrying on our own manufacturing. We have got to get these great weights of coal out of the ground, and we have not nearly enough for our present needs.

Several suggestions have been made as to how we could increase that production. I shall have a word to say about it later on, but I put aside for the moment the appeals which have been made by people from all parts of the political world to those engaged in the production of coal to work harder and more successfully. Apart from that, it is said you could do a great deal if you had better machinery. I do not think anyone now really suggests that that is a remedy which is of much use at the moment. To begin with, you would have to make the machinery or import it, and that alone would mean that you would have to have a fresh expenditure of coal immediately. I think my noble friend Lord Hall said that the re-equipment of the mines is a very elaborate and lengthy business and would not have had the slightest effect on the crisis with which we are at present dealing.

Then it is said that the management of the mines has been very defective and that that might be put right. I dare say it has. I am not an expert on the matter and I do not pretend to know, but I have read a good deal on the subject lately and I have not seen any very strong evidence that the management of the mines has been defective in any general respect except one, and that is the cooperation between the employers and employed. There is no doubt that there has been a very great failure there. Some people put that down to the perversity or dishonesty of the employers or employed. Personally, I do not believe that is true. I have no doubt that some of them, like the Government—I do riot mean this Government but all Governments—are stupid and make mistakes, but I believe that both employers and employed are, broadly speaking, well-meaning and patriotic citizens; so I do not believe you will do much good by altering the management in that sense. But there can be no doubt that industrial relations in the coal mines are far from satisfactory—there is no doubt about that at all. I have been in public life now for more than half a century, and I very much question whether I could find two consecutive years during that period in which there has been no serious trouble in the coalfields. There has always been trouble. Some of the disputes have been very serious indeed, such as the dispute which ended in the General Strike shortly after the First World War, and there have been several others of almost comparable importance.

My noble friend Lord Hall gave a number of figures showing the immense loss of days work that had ensued in the past—not now but in the past—by reason of the strikes, disputes and difficulties that have arisen. I have no doubt at all that difficulties of that kind between the employers and employed in the coal mining industry—this applies to other industries as well, but I am dealing this evening only with the coal industry—mean an immense loss of power, partly by the strikes and partly by the general deterioration of the quality of the effort that is being made. I have no doubt it has meant a tremendous diminution of our wealth in various ways. You must reflect how frightfully serious it has been in times of crisis. I remember very well in the First World War how fearful it was that in one of the very many crises we had there were great strikes in the coal industry, and it looked as though the whole country was going to be held up. It would have been held up, I have no doubt, except for complete surrender to whatever the strikers asked for in order to get the work going again. Therefore, it is a very serious matter indeed. It is not only the actual strikes. We are tired of hearing all the charges about slackness (not only by manual workers, because I am talking of all the people engaged) absenteeism, discontent and consequent loss of cooperation. That is a common topic in the Press. I do not know if any ingenious statistician has worked out what has been the loss occasioned by these disputes, but it must have been prodigous. All these suggestions (of which we have heard a great deal in this debate) of the various steps which might be taken are really fleabites compared to the central difficulty of our industry at this moment.

This is, of course, quite commonplace, and I ought to apologize to your Lordships for repeating it, but it is essential for my argument, which is going to be a short one. I will ask what has been done to meet this; what steps have been taken? I think very little. No doubt there has been a great deal of talk about the necessity of improving conditions of labour, increasing wages and lessening hours. Many people have suggested that if you do that you would have what has been called the incentive to work which is necessary, and that there would be no further trouble. I can only say, as an onlooker, that in my lifetime I have seen those expedients tried over and over again but apparently without anything like permanent success. I must say that looking at it as an individual, or as what the Leader of the Opposition called "a common man," I cannot help feeling it is a complete mistake in psychology to suppose that you can get harder work or more successful work by means of that kind. I do not mean for a moment to say that that is a good ground for not improving wages or conditions of labour. Of course that ought to be done. I am sure the noble Viscount, Lord Hall, impressed every one of us with the grave evils that have existed in this industry and the necessity for putting those evils right. That should be done not as a means of getting the men to work harder, but because it is just and right that those evils should be put right.

That is the position. I do not want to be misunderstood as being one who denies the existence of these evils, but only that I do not think that is the way to get over this particular difficulty. Looking merely at the psychology of it, I cannot think that an increase in the reward makes one work harder. I have worked for money a good deal in my lifetime, but I never remember saying to myself that I must work very hard and so be able to earn a lot of money, whereas if I worked less hard the reward would be so much less. I do not believe that the offer of large wages is in itself going to produce better work. Of course, if the wages should be so low that the people are not able to do the work, that is a different matter altogether. But I believe that this is not the right way of proceeding. I believe that if we want work, whether it be from managers or manual workers, and we want them to put their best into it, the first essential is to get them to believe that the work they are engaged in is of public importance and that its success depends upon their exertions.

As my noble friend Viscount Hall put it—I did riot take his words down—but I think he said something like this—without the confidence of the manual workers the future of this country cannot be assured. What we have to aim at is to create a personal interest and a sense of responsibility in this industry as in all others. I do not think that is going to be easily accomplished by eloquent appeals, although no doubt they should be made. In my experience the effect of eloquence is evanescent. It may sometimes by itself produce good resolutions but rarely does it produce continuous effort. What is wanted is an organization of the industry in such a way as will make all feel, from the manager down to the last-joined apprentice, that the mine or factory in which they are engaged is their mine, their factory, for which they are responsible.

It has been suggested by my noble friends here—and I hope they will forgive me for being a heretic in this matter—that nationalization is going to do the trick. With the greatest respect, I cannot believe that. I cannot see how that is going to be a real influence in convincing the worker that he is the proprietor, the owner, the person interested in the nine. In point of fact, under the nationalized system, if he perceives something wrong he will not have any more influence in putting it right than he had under the old system; that is to say, practically none. If he does a very good job of work the consequence to him as a citizen—because that is the point of view we have to take—is a very remote connexion. It will no doubt be some satisfaction to him—at least I am told it will—to know that his efforts are not going to enrich the "bloated capitalist." I do not deny that that motive exists—I should feel it myself, I know. But I do think that in England at any rate it is not a very strong motive. It is powerful in some countries on the Continent, but I believe it belongs to the domain of class jealousy, and that is a rare disease in England.

I am not saying that nationalization is wrong always and in all cases. Nobody but an idiot says that—even a greater idiot than I am. It is obvious that it is quite right in some cases and quite wrong in others, and where it is right by all means let it be tried. I do not believe it will have any effect in improving industrial relations. We must have a direct participation in the undertaking by those employed in it. In ordinary undertakings, I suppose, under the old system, the final control is exercised by the board of directors elected by the shareholders. Under the new system, the nationalized system, there will be, I presume, something in the nature of a committee of management—there must be—and the members of the committee of management, will be chosen, very indirectly, by the taxpayers. I submit to your Lordships—and this is my central point—that it is essential if you are really to get a hold of this problem that there should be on such board or committee direct representatives of those engaged in the work. They should be precisely in the same position as the other members of the board or committee. They should have exactly the same rights as their colleagues. They should have the same full information, and the same liberty to make practical suggestions or criticisms. There should be a full recognition of the fact that their co-operation is essential to the success of the undertaking. A change of that kind could, of course, be made immediately, it does not require any alteration of structure.

That is only a part of what I recommend—I mean what is recommended—under the name of co-partnership. I believe myself that it is an important part, but only a part. With it would naturally come profit-sharing and even in some cases a sharing of capital. I am speaking now of what actually happens. Such a system once established would carry with it many subsidiary arrangements for the settlement of contentions and controversies, should they arise, the provision of housing and other amenities, the encouragement of education, and the preservation of health—in a word, for the maintenance of a full community life in the undertaking. That is not mere theory, that is what actually happens in an undertaking I have known about and of which I still have some knowledge—the South Metropolitan Gas Company. They publish a little paper once a quarter, I think it is, explaining what has been going on. From that it is seen that there is a full community life, and there has never been any trouble at all with the managers or with the manual workers.

I am perfectly aware, of course, that proposals of this kind are regarded with suspicion by two influential sections of opinion. I am speaking with the frankness which your Lordships recommend to all speakers in this House. There are the old-fashioned employers who reject the notion of any interference in management by their workers. So far as this is a question of principle, it certainly seems to me that the people who provide labour for the undertaking have just as good a right to be consulted in its management as the people who provide the money. They are equally essential to the undertaking and they are or ought to be just as much concerned in its failure or success. Of course I admit that if it can be shown that the presence of representatives of workers on the board of directors or the committee of management impedes the success of the undertaking, that would be a very powerful argument against what I am submitting to your Lordships. But experience does not bear out any such objection. On the contrary, the evidence is all the other way. It is quite true that the experiment has not been tried in a very large number of cases; but examination will show that wherever it has been fairly and honestly tried the results have been admirable.

Then on the other side there is a section of the trade unions. Certainly not all of them—I have had the honour of collaborating with some of the very best and most respected of trade .unionists in the advocacy of the changes I am now recommending—but there are trade unionists who take a different view. They seem to fear that a change aimed at improving collaboration in particular undertakings would tend to split up the industry and to make the workers less powerful both in labour disputes and in politics. If that is the view held I can only say that it seems to me a very regrettable point of view. Labour disputes are not a good thing intrinsically. They are in the nature of industrial war, and should have no place in a properly organized industry. By all means let the unions continue their present activities as a safeguard until such an organisation has been successfully and beneficially established. But do not let us refrain from working for full industrial co-operation from a fear that it might interfere with the conduct of industrial disputes.

As to the political effect of such a plan as I have suggested, I do not believe that it would make the slightest difference in the world. On the other hand (and here I am on very delicate ground, I know) I submit that the difficulties which according to the newspapers are besetting some of the unions—the unofficial strikes, the shop stewards movement, yes, and so far as it has gone and has any importance, the drift towards Communism—may be due in part to the tendency towards a kind of union bureaucracy, an aloofness, and a consequent disregard of local feeling and prejudices. If I am right in that, closer local co-operation would strengthen and not weaken the unions. In any case I venture to appeal to your Lordships and to the Government to give this aspect of our economic difficulties full and earnest consideration. It was very well said by my noble friend Lord Brand in his speech the other day, that our hope of prosperity depend on national union; and the same thing has been repeated eloquent), by the Prime Minister and by various other leaders of opinion. Some have even gone as far—I think one of your Lordships did yesterday—as to suggest a political Coalition. I earnestly hope we shall not be driven to that. I have a horror of Coalitions, except perhaps in war-time. They seem to me to make for inefficiency and insincerity. But to industrial unity there is no such objection.

The other day a distinguished scientific professor, Professor Oliphant, recited a list of the horrors which a new war would bring—not only atomic bombs, but a great many other things. It was terrifying reading. The only safeguard is the preservation of peace; there is no other way to stop it. I believe that nothing is more necessary than industrial good will and co-operation in this country and in the Commonwealth, which has always been the chief adversary of war. What I am recommending is nothing new. The civilized world is engaged in one of the greatest controversies possible. On one side is what is called dialectical materialism—a horrible delusion. On the other side is what I must venture to call applied Christianity; and it is that which I am advocating this afternoon.

5.27 p.m.

LORD LAYTON

My Lords, it would be tempting to follow the noble Viscount, Lord Cecil, into the questions which he has raised. It is noteworthy that he is broadening out the enormous interest which he has always had in international affairs into the realm of industrial affairs. He will find many supporters on this question, myself amongst them; and so will the noble Viscount, Lord Hall, in his opinion that we should not have as much coal as we are having today if we had not nationalized the industry.

I wish to bring the debate back to the general question which arose out of the Government's statement, but as there has been so much said about coal this afternoon I cannot resist the temptation to add just one footnote on that subject in the form of some figures. In the last complete year of peace before the 1914–18 war, that is to say, 1913, the internal consumption of coal in this country—not production but production less exports—was 184,000,000 tons. In 1920, the year after that war, the internal consumption was 181,000,000 tons. Between the General Strike and the world depression of the 1930's the internal consumption of coal was 179,000,000 tons. In 1939 the internal consumption of coal was 180,000,000 tons. In 1946 it was 181,000,000 tons—though I am told that this was not worth the 181,000,000 tons of 1913, owing to the ash and the poor quality. But it is an interesting fact, which has a bearing on the future, fiat the internal coal consumption for a third of a century has been almost on a horizontal line, with only very slight fluctuations and practically no increase.

I have tried to get an exact estimate of how much the physical production has grown during that period; it must have been by at least 50 per cent.; it may have been much more. The noble Viscount, Lord Samuel, in his opening speed yesterday, referred to the need for the 'getter utilization of coal, and that, of course, has its bearing on the problem. I do not want to suggest that we do not need more coal than we use at home, because what coal we can produce is invaluable in the international balance of payments; but from the point of view of British productivity and its future development, we do not need to budget or plan ten years ahead for sending more and more hundreds of thousands of men into the mines. It is the back room boys who will solve the problem for us.

I come back to the general issue. The grim story that was revealed yesterday in both Houses of Parliament in the Government statement really marks a turning point in British economic history. For 156 years we had leadership and assets abroad. Our ancestors built up a great inheritance abroad which lifted the standard of living of the people. That trend received a very sharp blow in the First World War. We lost a very large part of our foreign investments, and we had to meet the competition of industries all over the world. That meant that we had a period of very considerable readjustment which lasted a decade. The Second World War has given a much greater blow of that kind to Britain, and we are facing to-day, therefore, not merely the problem of reconversion from war but a problem of adaptation to a new situation in which Britain has lost its investments. It is like a family that has lived on its accumulated capital plus its work, and now it has lost its accumulated capital. We have to budget for a situation from now onwards—and this debate marks the fact that the whole country realizes it—in which we have to depend on our earnings, and on our earnings alone.

The Government statement, therefore, is of enormous importance in the sense that it is the first broad outline in what is a new departure, the building up from bedrock for this country. But it is only the first step; it is very sketchy, and it is not until this debate and the debate in another place have been completed that we shall be able to fill in the details of that very broad sketch. It is very difficult to judge, too, how far it will go to meet the immediate situation. Previous speakers have said that they doubted whether it would meet it, and certainly I feel that it is insufficient. I hope that, in the reply to the debate, we shall have a closer estimation, but, so far as I can see, after allowing for all the cuts that are announced, the economies already made that were announced a month ago, the economies in Germany, in the Services and so on—after everything has been put into the pocket, it is certainly less, at a very generous estimate, than £300,000,000 compared with a deficit of £600,000,000 and a deficit in the hard currency areas of £800,000,000.

Naturally the question arises how the Government propose to fill that gap. I have no doubt that other speakers will put this point as a question. I suggest that that is the picture, as I see it, and I hope that the noble Lord, Lord Paken- ham, will be able to check up or give the correct picture when he replies. The fact that it is only a sketch means that it is very difficult to follow it point by point, and therefore I am not sure that the more useful course would not be to follow the precedent set by the noble Viscount, Lord Bruce, and consider the situation disclosed in the statement in a broader setting. It is of value to do that because one gets the background, as it were, to this problem; it helps to show the scale of the problem and also, which is of vital importance in judging the proposals, the question of how permanent the situation is with which Britain is faced. Are we budgeting for a long period, or for a short period?

I want for a moment to give my attention to the specific question of the economic relations and bond between the United States and this country because, after all, this crisis is, in one sense, a question between the United States and Britain. I first want to make the point that the dependence of this country on the United States for its imports is quite abnormal and contrary to the whole trend of recent history. I have a curve here which I can describe in words quite easily, showing the percentage of our imports which come from the United States. The curve shows three peaks. The trend in the latter half of the nineteenth century was for us to draw more and more imports from the United States, which was, at that time, opening out enormously with its development of cotton, wheat, oil and so on. There is a strong upward curve in our drawings from the United States, for which the United States in return took finished commodities. It reached its peak in 1897 at a figure of about 26 per cent. or thereabouts of our total imports coming from the United States.

Between that time and the First World War that percentage fell rapidly, because we turned to other sources of supply for our food, and because the United States wanted it at home, and became industrialized. The curve drops steadily to a materially lower figure in 1914—below 20 per cent. Then came the First World War, and our need to crowd all our shipping on to the North Atlantic, and during that war the percentage rose to 36. That is a very sharp upward move in the curve. But, as soon as the war was over, it was followed up by a sharp downward move, and then the sagging tendency renews itself. In 1934, that percentage was down to 11, and in 1938 it was slightly higher at 12 and a little per cent. Then the Second World War came, and in 1944 it had risen higher than in the First World War to no less than 40 per cent. There is a trend shown in the curve, with a peak in the First World War and a peak in the Second World War. Some of that peak has fallen off with the stoppage of munitions, but the point is that for the time being the drop in the curve has been checked, because the recovery of all our other markets has been so delayed.

This is a crisis of prolonged adjustment, speaking economically. What are the causes of that delay and how far are they capable of adjustment by policy? Of course, first of all, there is the slow speed of peace-making; two and a half years and we have not yet peace with Germany. That unquestionably is a fault which has to be shared, and this country cannot escape altogether from a part of the blame for that, seeing that Potsdam was a joint responsibility of both Conservative and Labour sides—I think it was stated as a national responsibility—and that the signing of Potsdam was one of the things to which this country agreed, which has undoubtedly served to delay our economic recovery. That has reacted in various ways, including a reaction on the world supply of food. In that respect not only have we made political mistakes but we have had bad luck with the harvest. Sir John Boyd Orr has said: The food position of the world is no better than it was a year ago and, unless measures are taken to provide the war devastated countries with agricultural equipment and other requisites for the 1948 harvest, a severe food shortage will last for at least two years more. There is no doubt at all that the world shortage of food is one of the most important things which is delaying the adjustment of which I have spoken. But there is one factor, of which I will only speak very shortly, which I think is attributable wholly and completely to His Majesty's Government, and that is the delay in really getting out plans, of which yesterday's statement was in a sense the first attempt. The closing down of the war-time planning organization, and the slowness with which the Government have pulled themselves together for the purpose of planning, undoubtedly played an important role in delaying reorganisation.

Note in passing that, if my thesis is correct, and I am sure the economic trends are certainly sound, this tendency to drop in our dependence on the United States might well be thought to have a bearing on the famous discrimination clause in the Loan Agreement, because it is sometimes supposed that the Loan Agreement assumes that the proportions of our imports from all sources will, in all circumstances, remain the same. But, of course, as my noble friend Lord Trefgarne, who spoke about this matter yesterday, pointed out in his description, that is not the case. What the clause says is, that the proportions are to remain the same where the imports are under control, except on account of commercial considerations. In other words, if other countries than the United States wire offering the same goods cheaper, we should be perfectly entitled to take them. The clause in fact, as was stated yesterday, is not operative at the moment in the main, because, broadly speaking. the other countries concerned have not got the goods to supply to us. But I do agree with Lord Trefgarne—and I think perhaps this may be dealt with in Ire reply from the Government Bench—that there is a very strong case for saying that the non-availability of dollars is a commercial consideration under that clause, and that in fact would in present circumstances, or might shortly, become a difficulty in regard to the promise not to discriminate as between sources of supply.

But sooner or later a change—the disappearance of our undue dependence upon the United States—will take place. Can we accelerate that? If you look at markets very briefly-it is not possible to discuss this at length—the Empire has already been spoken of in this context, and is a very great standby. There is another very important issue in the case of India. It cannot be too strongly stated that India for many years was cur largest single market. An economic agreement with India is of the greatest urgency at the present time, and it is to be hoped that our commercial relations with India will be developed during this period of change.

The vital area, of course, is Europe. if I may take it from the point of view of food, which is such a key issue at the moment, it is not always realized that the greatest wheat producing Continent is Europe west of the Urals, leaving out Russia. Indeed, the average wheat harvest in the five-year period 1930–1934 in Europe was almost equal to the combined wheat harvest of the United States and Russia put together. The wheat production of France in 1938 was greater than the wheat production in that year of Canada. That certainly is not generally realized. The 360,000,000 in Europe are growing a large part of their wheat, and it is only the overflow-margin that moves backwards and forwards across the world. I have quoted Sir John Boyd Orr's reference to the fact that it was feared that this year's harvest will be less than was estimated. It is likely to be six per cent. down, and that reduces that harvest, which is the harvest of the greatest wheat-producing continent of the world, to 72 per cent. of the pre-war figure. That is a very big drop, and the gap has to be filled by drawing on the margins that sail the seas. Until that has been corrected, our economy cannot correct itself, and the whole situation will remain in disequilibrium.

The meaning of those facts is important. If the food production of Europe is to be reviewed, the price of wheat, and of many other things which are rising higher and higher because of shortage, must come down, and the ratio between food prices adjusted in the right direction. It is vital also to our balance of payments, for this reason, that as the basic production of Europe recovers Europe can become a most important market for British exports. Therefore I deeply and profoundly disagree with the noble Lord, Lord Cherwell, who seemed to think that the discussions which are going on in Paris were not of great importance, and rather under-rated the importance to us of the Marshall Plan. I venture to suggest that there is nothing in the situation more vital in providing the answer to the present situation than the Marshall Plan. The conclusion I would draw from what I have been saying is that there has been a delay, and the time-table has been prolonged, by mistakes of government, by political reasons, and by bad luck, for another two or three years. That has naturally to be put into the balance when we are considering the length of the period for which we have now to legislate.

I would like quickly to say something about the background at home. Here again, I find 'myself in disagreement with Lord Cherwell. It is important that this point should be cleared up if possible from the Government Benches. I do not accept his proposition that our production is less than it was before the war. On the contrary, I believe the figures show that a total goods and services estimated quantitatively for 1946 were about 115 in relation to 100 in 1936, and are at the same level now, after having fallen during the coal dispute. Steel is up. The volume of railway traffic is up, passenger and goods. The consumption of gas and electricity is up. Coal consumption is about the same. Taking all industries together, the total production is up.

If that is so, why the crisis? And of course the answer is that even 115 is still insufficient contrasted with our abnormal commitments, commitments so big that no production index we may expect to attain in a reasonable space of time can equal it. I include not only the need to maintain pre-war standards of living and strengthening them in that part of the population where they need strengthening, but also immense capital replacements, arrears of maintenance, modernization and in certain directions re-equipment of industry. There is involved an immense Government expenditure of capital on health services and education, and on that same national income has to be charged the upkeep of the British zone of Germany and of course our military commitments. When you add those together they are, out of all proportion, in excess of our present production index. Therefore it seems to me, although it was not very clearly defined in the statement. from the Government, that the most important internal step is to reduce capital commitments. For two reasons. One is in order to reduce inflationary pressure. The other is that if you concentrate your production into a more limited number of channels you will get a speedier production, which is cheaper from the export point of view and puts money in the hands of people who are turning out corresponding goods to balance. In short, less money and more goods.

When it comes to the points of the plan, I must talk generally, as it is impossible to go into details. They require a great deal of thinking over. Broadly, so far as they go as a series of headings, I do not think anybody would have any quarrel with them. Agriculture must clearly stand in the front, certainly as a long-term proposition. The only complaint one would make is this: Why is it a long-term proposition and not an immediate one? Cuts in capital commitments were vaguely referred to, but I take it that the intention of the Government is to prune these programmes very drastically. To do that and to concentrate industry will unquestionably involve some power of direction both of firms and labour, but I think the Government must not expect a blank cheque here. And it will not be misunderstood if the powers in the Bill that is to come are scrutinized with a very keen eye indeed.

A moment ago I used the word "concentrate" and I want to suggest that it may prove indeed necessary to do some concentration of industry, possibly for export and possibly in other directions, on an analogy with the concentration of industry which took place during the war. I want to make the point very forcibly that it must be done in the closest' collaboration with both sides of industry, with the major part being taken by the employers and organized labour. When I say that, I mean it is impossible to do that sort of thing to-day centrally from Whitehall. The only way is to give leaders of industry a job of work to do, not bring them back into a Government office. That is the only way to get unity of purpose of the whole nation in this terrific campaign.

I am reminded of a conversation I had with M. Monnet, whose plan for France attracted a great deal of attention a year ago. I said: "How is it you have managed to put over so many things and get them accepted by labour—increase of hours and so on—which one would have expected would have met with so much obstruction? " He said: "We made them realize it was their plan." We never allowed a Government official to take the chair at any meeting; it always was either a representative of labour or of capital. We put the position before them with all the relevant material and asked them to suggest the answer. It therefore became "Our Plan," and when a change of Government took place and there was a disposition on the part of the Government to water down the plan to current resources, to see how they would work for the rest of the year, the Labour representatives at once got up and said that if that was all that was going to happen they washed their hands of be whole affair, because they could not ask the workers of France to accept longer hours unless there was some assurance of prosperity at the end of five years to hope for. They had made their plan, they were linked to it and they were going to hold to it whatever Government came in or went out. That is the conception we have to put over in this country. If we have to concentrate industry or take other measures for moving labour and capital about, I recommend most strongly that general conception.

I have only one other point to make and that relates to cuts. Quite rightly the Government have refused to cut raw materials, except in the case of timber, which is a capital cut of the kind I indicated. Any general cut in raw materials means industrial paralysis and a gradual reduction of the means of buying anything more. The food cut is very severe. So far as I can gather it represents about 50 per cent. of cur present purchases from hard currency areas. I think that figure is probably right but it may be checked.

THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM

That is food?

LORD LAYTON

Yes, food cuts. It is of that order of magnitude, and that is a very considerable figure indeed. It is not to be supposed that it can possibly be placed from soft currency areas at once; it may, to some extent, but obviously only in a small measure. Important points were made in the Prime Minister's statement, when he said, first, that the impact of that would be on points; and, secondly, that if the rationing had to be cut, it would be cut on a discriminating basis. No doubt subsequent speakers will ask the Government how, in the light of that big cut, it is possible to maintain the nutrition of the country. I only want to say one thing on that, and it is this. With all its disadvantages, it does strike me as a wise and sound thing to-day to withdraw from the market for all food in hard currency countries, except for our long-term contracts. I say that largely because it may help to lower the general price level of food, which is a vital element in the international balance of payments. That may be stigmatized across the Atlantic as a buyers' strike. It will probably be imitated by other countries, but they will imitate it for the same reason that we have had to do it. A buyers' strike is obviously a misnomer when, in fact, you withdraw from the market because you have no money to buy. That is the situation. If it should have the effect of lowering prices, it will have been a very important contribution towards the re-establishment of our balance.

In saying that, I would like to make it quite clear that I am not saying it in any sense of hostility to the United States; nor has anything I have said been of that nature. It is obvious that every reference that has been made to the United States has made it quite clear that, first, this country cannot conceive itself going on indefinitely as the pensioner of the United States; and, secondly, that we have the profoundest gratitude to the United States for what they have done during and since the war. This is my last word. I agree with the noble Lord who said that our relations with the United States would be best on a basis of complete understanding and frankness. That is how best we shall maintain our co-operation with them. As I say, this country realizes its enormous debt of gratitude to the United States. We must, however, destroy illusions between the two countries, which exist on both sides; and it is only when we destroy the illusions harboured on one side or the other that we shall be able to enter into that co-operation between ourselves and our cousins across the sea, which is, as I see it at all events, the hope of the world.

6.3 p.m.

LORD HAWKE

My Lords, I am quite incapable of commenting on the very learned and brilliant speech of the noble Lord who has just sat down. It is clearly one that will have to be studied with great care in the OFFICIAL REPORT. But I particularly like one of his final statements, that there was a hope of heating down these awful prices we are having to pay for foodstuffs by sitting out of the American market for a time. I hope the noble Viscount, the First Lord of the Admiralty, will not forget his promise to tell us at some future date some of the technical details of coal, because I, for one, will be a very interested listener. I am anxious to buy 100,000 tons of coal to ship to the Western Hemisphere next year, and if the noble Viscount could suggest some co-partnership scheme at the coal face, then between us we may be able to come to terms.

VISCOUNT HALL

Shall we go down together?

LORD HAWKE

Currency convertible into other currencies seems to me to be a mark of civilization, but whether we have aspired to the mantle of civilization before we have the power to support it is a matter for argument. The superficial cause of the present crisis is obviously the world shortage of dollars, but I wonder whether, if this reason had not occurred, another would not have been found before long. The moment our currency becomes convertible we, as a great trading nation and the banker of the world, have to behave like a banker. In other words, we have to manage our affairs with discretion and circumspection, or there is a run on the bank. The world must have confidence in our ability to restore our war losses, and I cannot think that we have altogether achieved that confidence. War is the great destroyer, and it .s the duty of any Government in office after war to restore, as soon as possible, as much as possible of the national economy: or, rather, it is the duty of the Government to create the conditions under which the people can do the restoration, because it is not Governments that do these things, but men and women. If these matters are tackled properly, then the confidence of the world will be gained, and a balance kept here which will tide us over the temporary period of trade deficit.

In the first instance, this means production. But production in itself is not enough, because if all production went in current consumption there would be no margin for restoration or, indeed, for exports. To accompany production, then, we must have savings. To achieve this we must create an atmosphere in which production and savings can flourish. What sort of atmosphere do we want for this purpose? We must not have inflation, because that is the deadly enemy of abstinence. At the same time, we do not want too much deflation, because that is not good for production. Men must feel that by extra effort, or by extra risk, they can obtain an extra reward and keep it for themselves. Men must also think that by postponing tasting the fruits of that reward it will fructify with time. In other words, they must feel that they may get better value for their money if they wait; that their money will not melt away by inflation, or be confiscated by the State, but meanwhile can earn a satisfactory interest.

Every man must become aware of his responsibility to provide against misfortune. If he leaves these things to the State, the State, by his very neglect to save, will itself be unable to provide these things for him, for social security means nothing unless backed by a large volume of private savings. If we can create an atmosphere of this sort men can exert themselves and may exercise abstinence in the consumption of the fruits of their toil. They will not exert themselves for the State, or save for the State, in times of peace, for man is still an individualist and the family, thank God, is still the economic unit of the State.

What steps have His Majesty's Government taken to produce this atmosphere, and what results have they achieved? In the first place, a great burden of taxation has been maintained. Now at first sight taxation is deflationary; it takes the spending money out of the pockets of the people. But when it goes too far it is inflationary. When you try to take more than a certain proportion of the national income away from the people by taxation, the reaction of the body politic is to increase the national income not by production—far from it—but by inflation; and in fact production will decline through lack of incentive. In another direction, high taxation is inflationary because it enables the Government to employ too large a proportion of the nation on unproductive tasks.

There is a further inflationary effect of high direct taxation. It acts as a bludgeon, distinguishing only very little between men in the same income class. The man whose commitments are very large will find the load overwhelming. He will live by selling assets, and if the inflation caused by taxation helps him in this he may well be followed by others who have not the same need to do so. In other words, bad habits are catching. Another great evil of high direct taxation is, of course, evasion, which can have never been so rife as it is in this country to-day, from the old age pensioners to tae millionaire, and many fine brains are wasted advising on legal avoidance. To sum up, taxation, particularly direct taxation, creates a slow but vicious circle of inflation, accompanied by a widespread evasion and sapping of the will to produce. So far the actions of His Majesty's Government in the field of taxation have not been such as to provide an atmosphere suitable for production and abstinence.

I now turn to another factor which has been equally disastrous, and that is the cheaper money drive. In the course of this campaign. His Majesty's Government have increased the price of every income-producing asset in the Kingdom and with it, of course, the price of every other asst, thus further adding to the inflation. In the event, the inflationary atmosphere caused by these two main factors has been quite disastrous to savings and production. The standard of expenditure of the nation has been higher than the situation would justify, and has not been deterred by any example set by His Majesty's Government. The result has been too low production and too high current consumption, leaving too little for savings. and restoration.

Who got us into this mess? The noble Lord, Lord Calverley, said he thought it: was the economists. These witch-doctors of the modern State certainly speak out in no uncertain manner, but they very rarely achieve unanimity, and I think the task of a professional economist at the Exchequer in attempting to act as a judge and not as an advocate in his own court must be overwhelming. How are we to get out of the mess? When in doubt I suggest that recourse to the methods of our grandfathers is frequently a wise proceeding. A classic remedy for over-consumption and living beyond our means is dearer money, and I suggest that this should be applied at a level which Will defend itself now and after January 1. It is no good losing the battle for 2½ per cent. to find another battle of doubtful outcome on the 3½ per cent. loan. The Alamein line may well be further back. Classic remedies for under-production are reduction in direct taxation and in Government expenditure. If Government ex- penditure on subsidies and emoluments is drastically reduced, and indirect taxation is maintained, surely we could aim at an Income Tax of something in the neighbourhood of 5s. in the £ thus giving a great incentive to practically every member of the population. A further smaller point which has been brought to my notice, and of which I hope the Government will take notice, is this. Is it not an anomaly that in these days the old age pensioner, between 65 and 70, if he goes to work loses a portion of his pension?

Then we come up against one of the greatest problems of the modern State. and that is savings. The modern State exists largely as a machine for removing money from the pockets of those who have the tradition of saving and handing it over to those who have unfortunately not acquired that tradition. In these circumstances, how can we get the immense volume of saving which is required to-day out of the people who now have the wherewithal to save? On these Benches we stand for high wages for high production, but somehow out of those high wages we have to obtain this enormous volume of savings to implement these various Bills that we have had before us.

The best solution that I can see is to shift the method of taxation more from direct to indirect taxation, in the belief that the wage earners will thereby get more through increased production, and the salary earners will get more through less taxation. We must then launch a great campaign to try to see that as much of this money as possible is saved. The salary earners are easier to deal with, for they have the long tradition of life insurance and so on which we must seek to increase. The wage earner is a really difficult problem, and I suggest a much more realistic approach by the National Savings Movement. They could appeal less to the general patriotic instincts of the people than to the more private instincts of home and family. This may mean letting the cat out of the bag that the State is a bad universal provider, but it has got to be done sooner or later.

Our need for savings is desperate. The noble Lord, Lord Layton, suggested that we must cut down our capital commitments. My thesis is precisely the same; we must either save more money or cut down our capital commitments. We desperately need houses. Cannot we marry these two things together? Cannot we provide an inducement for the thrifty, that a man can own his own house if he chooses to deny himself in order to buy it? After all men will deny themselves a great deal if by so doing they can avoid thereafter a long sojourn with their mothers-in-law! If by these and other methods we can get greater production and greater savings we shall regain the confidence of the world. The balances of the world will stay here if we offer attractive rates of interest, and in due course they will be spent on our goods. Meanwhile they will tide us over any temporary trade deficits.

6.21 p.m.

LORD DUKESTON

My Lords, we have had a debate, lasting now almost two days, which has been at a very high level, and it is exceedingly difficult to avoid traversing the ground already covered. I will do my best to lay a little emphasis here and there, and I come to the immediate problem which confronts us now. Most economists, although they always talk about a short-term policy, invariably expound a policy which obviously could not operate for a period of years. If we can apply our minds to what I think the noble Viscount, Lord Cecil of Chelwood, referred to as the central problem of to-day—namely, how to secure an immediate increase in production—we may be helping the country and perhaps making the approach to the long-term policy a little easier than it would otherwise be. If, of course, this great economic problem were something that we could approach by simply wiping the slate clean, and making an entirely new start, the task would be relatively easy.

But we cannot escape from our history. We cannot evade the traditions or the prejudices which have grown up in our midst, and I think it is profitable to face them quite frankly. I was very much interested in the brief survey made by my noble friend Viscount Hall, and particularly in his arithmetic in which he balanced the position in the post-war world after World War No. r as contrasted with what has happened now. Those of us who lived through that period have bitter recollections of how the first post-war effort in 1919 broke down, with lamentable results. I do not think that is going too far back. at all if we are to understand the problem that confronts us to-day. In fact, if I were going to analyze this problem thoroughly I should go back prior to the First World War.

Perhaps I may tell your Lordships' House that from 1911 to 1914 I was never out of a strike. I do not think I ever advised one, but I led many and I make no apology. We were living then in a period of rising prices and declining wages. We had acute unemployment, and it is difficult to imagine what might have happened if the war of 1914 had not brought the social conflict to an abrupt end. I am very pleased that it did end, but I am not too happy about the cause that brought it to an end. Some noble Lords will remember the development of the conflict in that early episode of the Liverpool Dock Strike. I will not relate that history, but some noble Lords present will remember it, perhaps as well as I do. It is just as well that we should have that kind of background in considering what it is we have to do now.

We hear many complaints of absenteeism. We all deplore it, but we are apt to forget that throughout the interwar years absenteeism was called by a different name: it was called "short-time working." In those years the workpeople largely became inured to that kind of short-time working as an alternative to total unemployment. It is very easy to make speeches and appeals, but, human nature being what it is, we do not change the character of a people as easily as all that. Those of us who, had to handle those great human problems know the difference between stating what we would like to achieve and getting people in the mass to conform to what appears in the debates in your Lordships' House and elsewhere to be so very reasonable. I agree as to the reasonableness; but when we have to handle men in the mass we find matters rather different from the form in which they are presented in debate, even at the high level of your Lordships' House.

I do not want to traverse the ground covered by my noble friend Viscount Hall relating particularly to the mining problem, but perhaps I may say this. We shall not completely understand the mining problem by just looking at the arithmetic. There are thousands of men in the mines to-day whom it would be very difficult to describe as miners if we are talking in terms of mining efficiency. We have a lot of unwilling miners in the mines, and our misfortune is that we have got no other supply front which to replace them. If the new policy of the Government of bringing home men who are serving overseas results in bringing some more willing recruits into the mines, then I think there is a reasonable prospect that we may be able to step tip our production.

But let me for a brief moment, and in no sense of offering an apology on behalf of the miners, say quite frankly that the miners are getting a little tired of being singled out and lectured. That is the impression that the miners create upon me, and it is certainly the opinion of their leaders. Too many people in the country are always thinking in terms of what the other fellow ought to do. We accuse the miners of absenteeism. They go to the "dogs" and they do many things that inevitably interfere with the flow of production, but miners' leaders find it exceedingly difficult to go into a mining area and chastise the miners for absenteeism when within the very region of their pits and their habitations 50,000 to 60,000 people attend the Doncaster races. I suggest that it is not an easy task, even if we were to convey into that area all the oratory of your Lordships' House, to persuade the miners that it is wrong for them to go to the dog tracks, when all and sundry may go to the Doncaster Races. I am not condemning them; I like a little sport myself. But if we are going to approach this problem, it should be understood that everybody must conform to what, for the time being, might be regarded as the new morality in relation to productive effort. I must say that the miners will be no worse than any other element in the community. I think it is very necessary that your Lordships should be reminded of those matters in consideration of this problem.

There are some points to which I think we ought to refer, which, so far as I have heard, have not hitherto been referred to at all. We have to effect economy in raw materials and power supply, wherever that becomes practicable. We have this great difficulty of the electricity load, and our information is that we must at the peak period shed no less than one-third of that load. But that is only the beginning of the problem. How are we to deploy our labour force in the industries of the country to effect that end? It means further sacrifices. It means that we shall have to recast our systems of work; it means we shall have to consider—and perhaps I am not giving any secret away if I say it is at present under active consideration—making arrangements whereby young persons and women can work in hours in which at the present time they are prohibited from being employed. It may mean a six o'clock start for young people of sixteen years of age. These are very easy things to suggest, but those of us who have to get them accepted have an entirely different problem. I am convinced it must be done, and I think we shall hear more about it in the course of the next few days. It may mean an extension of the third shift system of working, or, in some particular industries, even four-shift working. I suggest that these are matters which cannot be put into operation simply by committing them to paper, and putting them on the notice board in the factory or workshop.

I was very interested in the point raised by the noble Viscount, Lord Cecil of Chelwood. I am of the opinion that very few people in this country realize the degree of co-operation that exists in industry. One noble Lord made a reference to unofficial strikes, sporadic disputes, and things of that sort, and reminded us that we can always get Press headlines for that kind of thing, but we never get any publicity for the day-to-day work that is carried on by the leaders of industry, which is far more important. That is the misfortune of the circumstances. Perhaps I can tell your Lordships one or two things that are being done. I believe that the extra half hour for miners is actively under consideration; and I think I can say, so far as the leaders are concerned, that that policy will be urged upon the miners of the country. It required a great deal of co-operative effort to achieve that.

The things to which I have referred are matters which are now under active consideration at the highest level by the Joint Industrial Advisory Council, to which I made some reference in your Lordships' House some little time ago. That body is constituted, on the one side of the Federation of British Industries and the Employers' Confederation, and the T.U.C. on the other side. I am pleased to be able to inform your Lordships that we are now bringing into more active operation the Regional Production Boards, and we are going to hand on these policies to them, and also hand on to them the responsibility of implementing them when they are finally agreed to. I do not think we shall have to wait very long. I suggest that this is a degree of co-operation which has never previously existed in this country. In war-time, of course, we do many things under the urge of fear; but people are no longer afraid of the enemy at the gate—although there is an economic enemy, and there is a battle of production that we have got to try to win. I believe this is the way of winning it.

If we can begin by establishing national and regional machinery, bringing the representatives of industry together, I see no reason why we should not extend that form of co-operation right from the top to the workshop level (or the other way round, if people like to put it that way). The things we have to do to effect an increased production mean a suspension of agreements which have taken half a century to build up; and industry, in this old industrial country of ours, is so complex that it is difficult to touch it at any point without creating a new problem. It is so in the staggering of hours, which I think is a very large contribution to our production effort. Even there we find that special arrangements will have to be made for women and young persons to work six hours with just an interval of fifteen minutes; and the moment we are through difficulties of that sort we are into problems of transport, because the alteration of hours of employment inevitably brings up new transport problems. We shall not get women to work double day shifts unless the transport is there to take them home.

These changes will have to be attempted in localities and in parts of the country where traditionally the workers have always resented and resisted the obligation of double-shift working. But I suggest that, with the incoming of more modern machinery, nothing can be more profitable in the great textile industries of the country than to get double day shift working. I suggest that if co-operation by both sides of industry can be built up to give effect to some of these changes, the result will be an enormous economy. I was in Lancashire recently and saw some of the new American spinning frames. They are very expensive machinery; I believe three of these machines cast £64,000. But I was very sorry to learn that for sixteen hours in the day they stand idle. These are some of the difficult competitive facts that this country has to face, because in other parts of the world the machines turn over wherever practicable, apart from maintenance at the weekend, twenty-four hours in the day. It seems to me that that is the only kind of efficient production upon which we can restore our economy.

I know that Viscount Cecil of Chelwood had to go. I am very sorry; I wish he had been here because I want to say something about this problem of co-partner-ship. It has a very bad name. I am not saying that the idea is wrong, but, apart from the exceptions—and the noble Viscount mentioned one that I know something about, and it is an exception; I had better say that—employers for many years used this as a means of seducing workers from their allegiance to their trade unions. It is a fact that, unless some new name is coined for it, it simply is not going to work. That is the way that things inevitably develop. I was very pleased to hear what he had to say regarding forms of co-operation in industry, but I doubt very much whether he is up to date in his information. I say that kindly; I am inclined to the view that he has rather forgotten the machinery built up even in the very industry to which he referred. Here is a rather glaring example of something I have already mentioned. The specific reference that he made is to a company that has never been associated with the Joint Industrial Council for that industry which was one of the first to be formed. That is the kind of thing that creates much of the suspicion that is in the minds of the workpeople in this country.

I am one of those who believe that we have to make a new approach to this problem. I said so in my presidential address to the British Trades Union Congress. We have to turn our back upon all those restrictions and practices which hitherto, for good or ill, were practised in the belief that in some way, shape or form they protected the workers' interests. In a statement that I made in a Sunday newspaper—the article was written more than a month ago but appeared only this week-end and I quote it with the consent of your Lordships merely to prove that this is no new idea—I said: Wages and working conditions are no longer the sole incentive. Young people will not be content to stake their future in industries where the incentives of the nineteenth century and the first half of the twentieth century left the workers generally at the mercy of conditions which they themselves had no voice in regulating. So that we have got to do a little propaganda on both sides of industry and we must start from what I think is the reasonable position of accepting the view which I rather gathered is the view of the noble Viscount—that those who invest their life in industry have as much right to a say in the management as those who invest their money. I think that is incontrovertible. You cannot have at the disposal of an employer, even if that employer be the State, a reservoir of labour that can be called upon at any time, dismissed or put on short time, arid expect that labour to remain always on tap to meet the employer's convenience. That day has gone. Much of that kind of thing practised over so many years has built up a great deal of the bitterness that we have to do our best now to remove.

I was interested to hear my noble friend Viscount Hall, when dealing with the problem of the miners, making a general reference to the basic industries of the country. It is a fact: the farther you get away from the basic industries, the greater the prospect of enjoying not only reasonable wages, but the best working conditions. If we are going to attract people back again into those basic industries, then those industries have to be shaken up. I confess immediately that the mining problem is a problem entirely apart from others, notwithstanding the general principle that I am now enunciating. We cannot take modern factory conditions down the mine and right through to the workings: we know that to be a physical impossibility. If we think of the basic textile industries of the country and we come to realize that there is a labour shortage in cotton textiles alone of something approaching 200,000 people, how are we to attract back again into that basic industry women who have had a war-time experience of working under ideal workshop conditions, receiving a higher remuneration, and working under conditions in which they could leave and go home looking as respectable as though they were employed—in many cases, at all events—in an office? So I think the basic industries have got to be shaken up.

It is not a bit of use just assuming that this is a problem of labour reluctant to work hard and all the rest of it. I believe that the present generation are no worse than the past. In many respects I think they are much better and give a far better labour effort than they have ever given before. I suggest to your Lordships' House that there is a far greater co-operative spirit in industry as a whole now than has ever existed before in this country—fortunately for us. We have had none of the post-war bitternesses at the end of this war, notwithstanding that there has been here and there a sporadic strike which I suggest has been quite unnecessarily magnified. While that has been a little irritating, there is no reason at all why it should be given such a prominence as to throw a rather heavy shadow upon the workers' effort generally.

I shall not trouble your Lordships by traversing any of the main economic factors that have been referred to, but I have this as as a growing conviction. It is perhaps not all to the bad that this crisis has come upon us. I think that the sooner this country can stand on its own feet the better it will be for our future. The less we need to lean upon any other country, the better it is going to be for us in the long run. I have had sufficient recent experience to be able to say that, where we can meet people in the mass and be less inclined to score Party points than to put the facts of the existing economic situation frankly before them, I have found no reluctance at all on their part to express their willingness to cooperate to the full. Our duty is to try to marshal that spirit and that will, and I am certain that if, now that we are confronted by this difficult economic situation which we know is to hand, we face that courageously and make an appeal to our people, they will respond in a manner that will give us a productive effort which will contribute very largely to getting us out of the present difficulty.

6.50 p.m.

LORD WARDINGTON

My Lords, I do not know whether it would be to your Lordships' convenience that we should adjourn. I cannot flatter myself that what I have to say is going to be of any outstanding value, but I am afraid I cannot say what I had proposed to say in less than a quarter of an hour or twenty minutes. So I am in your Lordships' hands.

LORD AMMON

Perhaps noble Lords would agree that it would be convenient if we adjourned now.

THE MARQUESS OF SALISBURY

I agree.

[The sitting was suspended at nine minutes before seven o'clock, and resumed at twenty minutes past eight.]

LORD WARDINGTON

My Lords, the noble Lord, Lord Hawke, who spoke just now said that as he was not a banker he was not going to indulge in any arithmetical calculations and statistics or figures. Although I am a banker, it may be a disappointment to your Lordships—or much more likely a relief—that I, too, am not going to trouble you with statistics and figures. It is really with considerable diffidence that I venture to address to the House a few remarks, as so much has already been said and there is so little which one can say which will be of any great help. We do, however, owe a great debt of gratitude to the noble Viscount who initiated this debate and who has so clearly and eloquently demonstrated the seriousness of the crisis with which we are confronted. It is because of that seriousness that I hope I may be forgiven if I emphasize some points which have already been made and make some obvious and, I am afraid, rather platitudinous remarks on matters which are well known to your Lordships but are perhaps not known generally outside to the same extent; and they may help me in making the general outline of the picture a little clearer.

We are, as the President of the Board of Trade (Sir Stafford Cripps) stated the other day, engaged in the battle of the balance of payments. I wonder how much that conveys to the general public. The plain fact is that we have been 'living beyond our means and that we are buying from abroad a large portion of our food without which we cannot exist, and a large portion of our raw materials without which we cannot find employment for our people, and we are paying for them with the help of money borrowed from America, of which only a small balance is still available and which, at the present rate of expenditure, has a very short life. What then? I have seen in my business career, only too often, the truth of Shakespeare's dictum that "A loan oft loses both itself and friend." If it fails in its original purpose of setting business on its feet again, if it is frittered away, if by some miscalculation or unlucky chance it proves insufficient for its purpose, how else can we pay for what we need when the loan is exhausted. We have a limited amount of gold and dollar exchange. I think the noble Lord, Lord Pakenham, told us yesterday that it amounted to £600,000,000. That, I presume, must be kept largely in reserve for any acute emergency.

Of course, our main method of paying for our imports is by our visible exports, if we can produce them. For instance, as we saw the other day, it might be possible to buy timber and wheat from Russia, arid pay for it by the export of our machinery. Or it might be possible to buy meat from the Argentine, and pay for it by the export of rails, textiles, or anything else they want. That sounds quite easy and understandable in ordinary conditions. But what has happened? We have failed to strike a bargain with Russia, and the Argentine has imposed restrictions on imports into her country, with the result that what would have been of mutual advantage to all three countries—as all proper business should be—is for the present, at any rate, not possible or is severely restricted. The same tendency to restrict imports is apparent in other countries, and may, as we have lately heard, prove unavoidable in our own case.

The great majority of our imports are paid for by the export of physical and visible commodities. But we have had in the past a very valuable adjunct to this means of payment in the shape of invisible exports, as they are canal. The nature of these is well known to your Lordships, but in order to complete the story perhaps I may be permitted to enumerate them. They are the freights paid by other countries for the carriage of goods and passengers in our ships; the premiums paid by other countries on policies taken out with British companies; the loans and services rendered to foreign countries by our financial houses; and.. lastly, the interest on investments, due to our companies and to individuals who have invested their capital abroad. Closely allied with that is the question of profits which British Companies operating abroad have made, and which they desire to remit home. All these invisible experts fulfil precisely the same function as the physical export of visible goods. My noble and learned friend Viscount Simon, on the Second Reading of the Finance Bill, showed very clearly how these had dwindled from being equal to half the total value of imports of goods and raw materials in 1913, to only one-sixth of the value of our imports in 1946. I am afraid they will drop still further in the future, because not only have our investments been largely disposed of, but restrictions are being imposed on the remittance of profits earned overseas while, paradoxically enough, the Governments concerned are expressing themselves anxious to welcome foreign capital into their country; though how they can expect capital to be invested there if the resultant profits are not allowed to be remitted home I do not know.

I know of no other means of paying for our necessary imports than those I have mentioned, and if we cannot pay for them the only alternative is that we shall have to do without what are to us necessities, with all the accompanying hardships and deprivations involved. When we were discussing these matters the other day the noble Lord, Lord Lucas, said that he was satisfied that the nationalization of our industries would so improve our exportable capacity that everything would be all right. No doubt he said that with all sincerity, and it is a belief which is shared by all his colleagues on the Benches opposite. I wish I had the same confidence and the same grounds for optimism. Seeing is believing, and I look round and fail to see any grounds for this optimism. What I am going to say is merely to illustrate my own view, and I am riot saying it with any Party view. When I look round I see that the Bank of England has been nationalized for many months. What has been the result of that? It has not provided an extra ha'p'orth of value, arid has done no good to anybody. Indeed, if we are to attach any importance to the silly cry which I see is being resurrected in some quarters lately—and which has as little substance now as it had when it was started in the early 'thirties—that our financial troubles and the slump on the Stock Exchange are due to a bankers' ramp, then I am afraid we are driven to the conclusion that the nationalized Bank of England has either participated in that ramp or has failed to do its duty in stopping it.

Coal mines have also been nationalized, and what has been the result of that? We all know that we are suffering from a shortage of coal and an increase in price. This, above all else, perhaps, is our greatest handicap. It is impoverishing and hampering all our industries and failing to provide an appreciable quantity for export. Again, look at our railways. Are we travelling in any greater comfort or security than we did during the war, when the trains were crowded with the movement of troops as a necessary consequence of the time? Are we paying more, or less, for the privilege of standing in corridors? Are we paying more, or less, for the cartage of goods? Indeed, we are threatened with an increase of rates which will add to the cost of all manufactured goods and still further hamper our capacity to quote competitive prices for our exports.

If it is retorted that railways are not yet nationalized my reply would be, "What good does a mere change of ownership effect?" It is the control which is the material factor. If an individual finds that his business is in trouble, does he seek to put it right or does he think the only remedy is to sell it to somebody else? When a house is found by the local inspector to be insanitary or unsafe, do the local authority purchase the house or do they tell the owner to put it right or pull it down? In all these examples I entirely fail to see how a mere change of ownership can remedy our ills, while on the other hand it adds materially to the difficulties and complications of an already difficult and complicated situation.

I have tried, in this brief broad outline, to show the difficulties which we have to face in paying our way. For many months we have been entitled to ask the Government how they propose to meet the situation. Up to yesterday they seemed, generally speaking, to pin their faith on the good effects to be achieved by the nationalization of our chief industries—an expectation which, as I have said, I have seen no signs of being justified. It is true that there has been a certain amount of exhortation to the country but until yesterday we had little information as to what the Government's plans were. And even after yesterday, although perhaps I see the targets more clearly, I am none the wiser as to how we are to hit them. Occasionally a lone voice is raised to show our people the critical nature of our position. I read the other day the report of a speech by the President of the Board of Trade. I agree most heartily with practically everything he said. Perhaps your Lordships will allow me to repeat a few of the things that he mentioned.

He gave pride of place to priorities for production, and his remarks here, of course, apply particularly to coal, the fundamental basis of all production. He explained that we could not as a country continue to live on "tick," any more than we could as individuals. He realized that we were in for a hard time, and that any further reduction of imports would mean definite hardships which would have to be faced, that a lower standard of living was inevitable, and that to increase profits, salaries or wages, or to shorten hours without further production, would merely increase the inflationary process and be of benefit to no one; quite the contrary. All this I believe is absolutely true. But what good are mere notes of warning, if their sound is drowned by that tiresome bird singing songs of triumph in the heart of the Chancellor of the Exchequer? The Government have not been speaking with one voice, and people are slow to pay attention to the discordant utterances of different Ministers. I know the position is a difficult one; it is very hard to be always preaching to the people, and the public are growing weary of exhortations unless they are accompanied by definite instructions, a recognition of facts, and a clear programme for reconstruction.

Perhaps I may be allowed to illustrate this by a small episode which happened to myself, though I confess that I did not come out of it with flying colours. I chanced to make some allusion, in an address to shareholders about two years ago, to the difficult times ahead and to the necessity for hard work and redoubled efforts in order to restore prosperity. This was reported in the Press, and I received a letter from an unknown and indignant correspondent asking how I could be so hard-hearted and unsympathetic. Did I never think of the toil and hardships ungrudgingly undertaken by thousands of members of the Mercantile Marine, who unceasingly brought me my daily bread over stormy waters, threatened from above, below and on the surface? Did I not agree that they deserved some rest and relaxation? I replied as best I could, saying that they had been seldom out of my mind, and that when I thought of them it was always with pride, gratitude, and admiration; but that the hard fact remained that the renewed efforts of everyone were required to make good the destruction of wealth—wealth of men and material—caused by the war, and to enable us satisfactorily to effect the conversion from war to peace conditions.

Shortly afterwards I received another communication, which definitely closed the correspondence, asking, "What is this that I saw in the Press? Lord Wardington has retired from the Chairmanship of the Bank and is proposing to live a life of leisure for the future." It is much more pleasant to preach comfortable things, but it is much more useful to state facts, however uncomfortable; and it is better still to take action in plenty of time. I find it encouraging and not unhelpful in the present emergency to recall the words of the late Lord Tweedsmuir. In his delightful last book, Memory Hold The Door, written after the first Great War, he writes: It was a war won not by the genius of the few but by the faithfulness of the many. There was no leader, civil or military, to whom I felt I could give unreasoned trust, but I could confide implicitly in the mass of my own people. He also confessed to finding encouragement by saying that an undercurrent of optimism is in good times a luxury but in bad times it is a necessity. I share John Buchan's confidence in the mass of the people, but they must be bravely led and, above all, they must be told the truth in a way which carries conviction to their minds, and shown a clear road to victory, one that they can recognize and follow hopefully to the end.

I can believe that the announcement of yesterday required some courage on the part of the Government, after all the pleasant promises which have been made. But cannot they take an example from our war leader, whom they so often are inclined to decry, and, though happily they are not now called upon to promise "blood and tears and sweat," can they not convince the people that in this present crisis the greatest of these is the last?

Let me take the case of coal for a moment, because, as I have already said, it is fundamental to the whole situation. A return to our pre-war figure of production would, to a large extent, sweep away our difficulties by keeping our industries going without interruption or unemployment and even by providing a balance for export. I like to speak of our miners. All my younger days I spent in their neighbourhood in the North. I knew runny personally and frequently I went down the pits. I know them as a sturdy, brave, independent race. They are not money-grubbers. When they have earned enough to satisfy their immediate wants, they like to spend their days in the open air enjoying their sports and games; and who can wonder at this? I sympathize entirely. But once convince them of a serious emergency and they will throw all that to the winds. When any of their comrades are in danger, they rush to their assistance without thought of hardship or of peril. When their country was fighting for its life in two great wars, none were bonnier fighters than the miners. If they were convinced now that again their country is literally fighting for its life from want of coal, I believe you would have the same response.

I do not know whether noble Lords have read that special article in The Times this morning on the mining industry. It is written, I think, realistically and sympathetically, but it points out that they are not convinced of the existence of a crisis. As the noble Viscount, Lord Hall, said, "How can you expect them to think there is a crisis when they see money being spent on all sides and huge crowds enjoying themselves?" They see no visible instances of a crisis. We have been talking of visible and invisible exports. I wish we could make the signs of crisis more visible, so that they really could be appreciated. How can you expect other countries to give us help and sympathy when they know we have the coal which, if won, would get us out of most of our difficulties, and yet is left undrawn? As Lord Brand pointed out in a letter to The Times a few months ago, they see the American Loan, which was meant to give us a breathing space in which, by our own exertions, we could restore our leading position in the world again, acting as a soporific rather than a stimulus. My Lords, I am very conscious that my contribution to this debate is of little constructive value, but my final belief is that, if the nation as a whole recognizes the serious nature of the crisis as clearly as your Lordships, all will be well. I can only hope that that recognition will take place before the full effect of the crisis shows itself in visible form in every home in the land.

8.52 p.m.

LORD ROCHDALE

My Lords, having listened with some attention to many noble Lords who have spoken during this debate, I am more than ever convinced that we have two quite separate problems facing us to-day. There is the short-term problem and the long-term problem. Many noble Lords mentioned this, in particular the noble Viscount, Lord Bruce, and, therefore, I will say very little about it; but I mention it now because I want to make one particular point about it. It seems to me that there is a very serious danger that the country as a whole will overlook the fact that there are these two problems. They will take it for granted that, if we make this tremendous effort that we have been called on to make now, then in a relatively short space of time—perhaps a year or so—everything will perhaps get substantially right, that we will get back into calmer waters, and can then carry on at the same level of individual effort that we have to-day. Never was there a more fallacious idea, or a more dangerous one.

If we are to maintain our present standard of living later on, after this present period of temporary austerity, if we are indeed to improve our standard of living as so much recent legislation pre-supposes, then we must rise to a higher level of effort. Of course, that is obvious to your Lordships, and to anyone who thinks about it, especially when one realizes the great amount of wealth of one kind and another that has been flung away and dissipated in the war, and the extent to which we have lost a large proportion of our invisible exports. It was only those invisible exports, which indeed had taken generations to build up, which in point of fact made it at all possible for us to have the standard of living that we had become accustomed to before the war. The gap between what we produce and what we consume, which of course the war has widened, can only be narrowed again by improved methods of production (we hope through an ever-widening use of our developing scientific knowledge), and also by improved external conditions. But again we must rely, to a very large extent, on increased individual effort on the part of everyone and not of one particular section of the country.

We are now being asked to make a supreme effort to get over the present position. That, I take it, is to meet the immediate crisis. One accepts that; the details have to be worked out and we shall see how they develop. I am not sure that it has been made sufficiently clear that, whatever we are called on to do now, to meet the long-term problem we must arrive at a higher level of national effort that is possible to sustain indefinitely. Until it is accepted that the immediate crisis does not cover the whole scope of our problem to-day then, however brilliant our planners, however hard the people work, and however favourable other factors in time become, the present short-term efforts will be worth a relatively small amount. We have to use this short-term period of austerity to prepare plans for the indefinite effort that will be required during the coming decades. During the war a great appeal was made to us. That appeal was driven home by numberless early disasters and it produced an effort unprecedented in our history. I do not believe that anything like an effort on that scale is to-day possible. We had then one quite clear objective—victory. Everyone could appreciate that. To-day, to the ordinary man in the street the objective is far more confused, and the dangers are not so easily seen in advance.

Since the war we have been suffering from many things, as your Lordships have indicated—the effect of the post-war world conditions, shortages of many commodities, and so forth. But one factor which I do not recollect having heard mentioned is the natural reaction after five years of over-exertion. That natural reaction has not been minimized by propaganda—and, to be quite fair, by example—whether justified at the time or not. What I am referring to is that propaganda which came all too near the gospel of "Rights before responsibilities." I hope that noble Lords will understand me when I explain that I am not saying that by way of condemnation but, just as a doctor before prescribing a cure must make a diagnosis, I see this as a factor which exists and which must be taken into account. The result is that our effort to-day has sunk back, despite what industry has done during the last two years—to give honour where honour is due, industry has made a considerable effort—not to where it was before the war but to a lower level.

One has only to look round to realize that that is apparent at all levels of income. I believe that the great demand for the five-day week which we have heard so much about—I am not referring to the five-day week in the coal mines because I know nothing about the coal industry—is a symptom of what I have been trying to put to your Lordships. Personally I am very much in favour of the five-day week. I only wish that when I was working a five and a half day week, before I became a member of your Lordships' House, it had been a five-day week. But, having said that, one must realize what are the implications of it. They are too often overlooked. I know it is claimed that with the longer week-end the Monday morning will be approached with greater vigour, and the output will go up, which will more than compensate for the loss of the Saturday morning's work. That may he true in some cases, but in other cases it is not possible, owing to different factors altogether.

I believe those who enjoy the system far too often regard it as a means of being able to take up other more interesting week-end occupations which, in point of fact, sometimes prove to be so exhausting that the value of what should be a longer period of rest and refreshment is actually lost. This is no theoretical danger, but a very real one. The lesson is obvious and needs no further statement from me, except that I would like to say this. I believe that, possibly due to a lowering of the feeling of responsibility of individuals to the community at large and, therefore, to the individual becoming less susceptible to periodic national appeals, such appeals are, at best, likely to lead to only temporary bursts of activity. They are rafter like inoculations, to which in time the individual becomes immune. That is Why I instinctively feel a certain measure of suspicion about the present appeal which His Majesty's Government ire making to the country as a whole.

I would feel more happy about it if one could have some assurance on three points. The first is that it is not just one more of a series of appeals, and the second is that it is intended that it should, so far as possible, be of relatively short duration. I can illustrate that by suggesting that human beings are like machines. If you take an aeroplane or a motor car and run it flat out indefinitely, it breaks down. What you try and arrive at is the maximum optimum level of cruising speed at which it can carry on indefinitely. The third point on which I should like an assurance is that it is intended that the breathing space which this great effort is going to give us will be used, not merely to wait for some assistance from outside or for some improved conditions in the world generally, but to enable a long-term economic Flan (the noble Earl, Lord De La Warr, mentioned a ten year plan when referring to agriculture to be followed in this country. That long-term plan should be as impartial as possible, within reason, so that every member of the community can pull his weight, and not 'for one or more sections of the community to go a little easy in their efforts.

I have said something about the five day week as regards the individual. I should like to say something about that with regard to the machine aspect, because that is equally important. It is important in that, whilst admittedly there are many industrial tasks where the efforts of the individual can directly influence the output, there are equally a number (and I would not be surprised to find that there are more in this second category) where the machine goes at a certain optimum speed and is largely unaffected by the effort of the man or woman who tends it. That is often the case with heavy machines and with chemical processes where the machine goes at a certain speed and where, therefore, the output is solely related to the hours that the machine runs. The difficulty, of course, occurs where you get these two types of process in the same factory: that is to say, the kind of process where direct effort on the part of the operative can affect the output, and the process where direct effort on the part of the operative cannot affect the output.

In the first case, however hard the operative works, however much effort he puts in, the output must be limited by the second category. Of course, if you then change a factory from a five and a half day week to a five-day week, with the output of the slow-running machine not being related to the effort put into it, the change will be bound to produce a bottleneck there and a new balance will have to be reached. The balance, of course, can be arrived at in various ways, it may be by that particular machine running longer hours and the operative working overtime. My own feeling is that for one section of an industry to have to run overtime where the others do not, is not really satisfactory. You may put in new machines to do away with that bottleneck. That is an excellent plan, but to-day machinery is difficult to come by and may take two, three, and one has heard cases of four, years for delivery.

That brings me to my next point, which is the question of what is the policy of His Majesty's Government as regards the export of productive machinery. I would like to see a thorough review of the whole policy here, because I am not at all sure that we are not—to take a metaphor—exporting far too many of the geese which might well lay the golden eggs for us to-morrow. Is it that as a temporary and short-sighted expedient to raise more hard currency we are trying to make do with what old machinery we have, and are giving our competitors the more up-to-date modern machinery to beat us with in the future? After all, there is bound to come a time when the balance is such that the only way to increase our effective manpower is to do so by more automatic machinery, more modern machinery, more remote controls and so forth. In the 19th century it was because we led the world in the adaptation of machinery that we led the world in industrial effort. We want to be quite sure to-day that we shall have sufficient modern machinery at least to hold our own with the other great industrial countries of the world.

I have one other point on a similar subject which I want to mention. It is with regard to the question of manpower, a subject which the noble Viscount, Lord Ridley, mentioned. I am quite sure that there is a considerable, though obscure, loss of manpower in industry due to the shortage—I want it to be quite clear that I am not referring to the shortage of fuel and power—of quite minor things, small spare parts, special kinds of oil or special kinds of chemicals, of which in the ordinary way, before the war, we would automatically hold considerable stocks. To-day it is not possible to get many of the things I have in mind, except from hand to mouth, with the result that a whole department may quite easily be held up. While that department is held up, or is merely running slow, the operatives cannot be transferred to more productive work elsewhere. However keen they are to work they cannot produce that amount which their numbers would otherwise indicate as efficient. It is a very difficult problem, but my own feeling is that one of the reasons why there is this shortage of essential spares or factory stores is often that there is a lack of practical experience on the part of the individuals who operate the controls. I suggest that there is considerable opportunity for investigation in that direction.

In conclusion I should like to say this. Whatever practical measures the Government may decide to make, whatever steps they may take, I believe they will fall far short of the goal which they are intended to reach unless they are accompanied by a very much fuller sense of responsibility and duty on the part of everyone: in other words, a much fuller realization of fundamental values—call them ethical or spiritual values, or anything you like. I believe this is inherent in the British character. For the moment it may be somewhat in abeyance, but it is there. It is there to be evoked, and it must be evoked. This should be done not merely by the Churches, not merely by the schools and universities, which have a great responsibility in this matter, but also, I suggest, it should be done in the Forces and especially in the case of the young national service men when they are called up. I believe it can also be done through the trade unions. I believe there is a great opportunity there.

This is a task to which every one of us who realizes the need ought to put his hand, and we should do it not merely by precept but by example. It is a task which is not easy. It calls for tremendous imagination and great vision. That being so, I will presume to finish with a quotation which is particularly and literally appropriate to-day, as never before: "Where there is no vision the people perish."

9.13 p.m.

LORD QUIBELL

My Lords, I have listened with patience and interest to nearly all the speeches that have been delivered to-day, and certainly at this late hour one faces a problem in addressing your Lordships' House after so many speeches have already been delivered. I should like to refer, in a sentence only, to the speech of the noble Lord, Lord Wardington, in which he talked about the nationalization of the railways. I presume that he intended to convey the impression that he was not in favour—at least not enthusiastically in favour—of such nationalization. He said that he did not think there would be any guarantee that the railways would run any better under a nationalized service. But, talking of guarantees, so far as the passenger service where I come from is concerned, it could not be any worse.

I travelled up the other week from Doncaster to King's Cross and we averaged thirty miles an hour—and that was an express. I threatened the railway officials at Doncaster that I would fetch out the old "Rocket" from Darlington! That averaged thirty miles an hour, and it was the first railway engine that ever ran. I think that everything that has been done with regard to the nationalization of the railways has been justified. I wonder what the noble Lard, Lord Wardington, who I understand has been engaged in a very lucrative business—I only wish I had been a co-director of his—would have said if directors from the L.N.E.R. had come to him and asked for money to rehabilitate the railways. I have an idea he would have said, as I would have said in similar circumstances, "You have got to show me something better than that, or 1 cannot recommend anything for you to my co-directors. You must either show that there is an increase in income or a diminution in expenditure, or you will get nothing to rehabilitate your railways."

The noble Lord, Lord Rochdale, said that we had lost one of our greatest assets. I keep hearing about these invisible assets. I like the visible ones myself. But is it not true to say that the real asset we lost as a consequence of the two wars was the greatest of our losses—the virile manhood of this nation? Are we not as a consequence short of manpower? We all know and remember the brightest and best, most physically fit: men who went out to the war, hundreds of thousands of whom never came back. In many of our major industries we are housing machinery to an extent never before dreamed of, and yet we have not been able to make up the leeway. You cannot get away from the fact that there are still some coal mines in which it would be no help whatever to have plenty of machinery. Yet, according to some people, all you have to do to get more coal is to increase the number of coal cutting machines, and so on.

I want to refer to another matter. Coal, of course, is vital to our steel trade. I have heard speeches delivered in which there was much talk about the lack of initiative and of modernization in the steel trade of this country. I think that is only partially true. It has been stated that when industrialists at one lime wanted to modernize and to build works in geographical centres, either near water or where their raw material was, public men objected because it would destroy the whole social life of the neighbourhood to which those works were to be removed. I remember very well the case of Llanelly, when the steel works were to be moved. I was then in another place and representatives from those Parliamentary Divisions interviewed me because it was suggested that they should go into the Division that I then represented. What was the object? They said "It will destroy things completely. We have here schools, hospitals, churches and chapels, and you must not move those steel works to a site where they would be more efficient because it would destroy the whole economic life, for the time being, of that neighbourhood." Yet in that neighbourhood there were out-of-date plants. The consequence was that there was a plant that could have been more modern, but it was never put up.

I could take you to a steel works where there is not a shovelful of coal used, apart from local coal. The waste gases are taken from modern blast furnaces. They are then put into a gas cleaning plant. From there they go to the modern gas engine, a German gas engine, which in turn generates electricity, some 3,500 kilowatts. And the motors in turn run the whole of the steel plant, a steel plant that is turning out over 10,000 tons of steel without a shovelful of coal going into it. In my view coal is the key to most of our present troubles. Industries are compelled by force of circumstances to save coal and fuel and power. The cost of coal is such a vital factor in the production of a ton of steel that every bit of economy that the management of any steel works can effect they do effect. From Monday morning to Monday morning they are trying to find new devices in order to save this vital product. But if, alongside that, other firms continue to manufacture electric fires and electric irons and other equipment for household purposes, to such extent that it takes four or five places as big as Battersea power station to run them when they are installed, you will never solve the problem. We must cease to manufacture those things for which we cannot afford fuel and continue to manufacture those things that are essential to our recovery.

As I understand it, we want more from agriculture, and we expect to increase it by 20 per cent. Any agriculturist who knows anything about it knows how easily that could be achieved; it is a very modest claim. What is wanted is a little more courage and vision so far as agriculture is concerned. I remember reading a book—and I am perfectly certain that there is some truth in it—written over thirty years ago, when I was a young man, by Prince Kropotkin. It was called Fields, Factories and Workshops, and the writer laid down the premise that England could feed itself. That book left a great impression upon my mind. If England could not entirely feed itself, it could far more nearly do so than it is doing to-day.

I went on to a farm on Sunday—the better the day the better the deed! I went to have a look round on some farms belonging to a man who I consider is one of the most efficient farmers in the country. He farms 5,000 acres, and I went round to have a look at what was happening. Three days before I went there was a field of peas. When I arrived it was sown with turnips. Machines went into the field—American machines—took the peas out, and put the turnips in. The crop of peas was then put on two lorries and taken out of the field, and within 36 hours from the time it left the field the peas were all tinned. That is efficient farming. This farmer has the machinery for it. He has the money for it. He used to farm 12,000 acres, but he says that owing to the burden of taxation being so heavy he is losing his interest in farming. The consequence is that he has given up 7,000 acres of his land. He said: "Here am I, with all this modern machinery, with fertilizers, and with the means for ascertaining the quality of the land. My father farmed here eighty years ago, and if I could not grow two crops on one field I should not be much of a farmer. Anybody can grow one crop a year." But with all the modern machinery, and so on, what he did was to take his early potatoes up, twelve tons to the acre, and the pasture is growing up for his sheep at the back-end of this year.

His name is a household word in this country and he is a fine farmer, but what has it done to him? He has put up 140 cottages for his tenants, as I once mentioned before. I went to have a look at those cottages. They put to shame any cottages that we are building through the councils in the urban and rural districts of this country. He has left a bit of the old character in these homes. They fit in with the village. When I looked round some of the cottages that he has built for his men, with the aid of £100 under the Housing (Rural Workers) Act, it made me feel ashamed to think that, having made a mistake, we had not the courage to turn round and re-enact that measure. We ought to have turned round and been honest about it, and re-enacted it, in order that he might continue with this great work. That man is not alone, but that is an example from Willingham in Lincolnshire. He has done more than the two or three rural district councils. He is a modern farmer.

As to increasing production, what he says is: "I want my farm workers to be comfortable"—and there is a bathroom, a toilet, sewage works, and adequate water supply, all seen to by this man, who takes a full personal interest in all that happens in the farm and the village. I commend that to your favourable consideration in the campaign for increased production. If I could get one or two no Die Lords who are interested in agriculture, and who want to see what the possibilities are, it might help them to see how satisfied and comfortable these men are. They have a beautiful house, far better than the houses in my town of Scunthorpe, with gardens and everything to make them happy and comfortable and contented. The consequence is that it gets work out of them. This man is like the Scotsman who, when a man was having lunch with him, said: "You get it into you, and I will get it out of you." My friend is of that breed. He says, in regard to the production of meat, that the way to overcome that problem is not to expect the meat to come from the Argentine. He was feeding 1,000 pigs just before the war, when he could get the feeding stuffs. Now he cannot get feeding stuffs. Heaven knows, pork is not everybody's meat, but I would like a nice loin of pork for next Sunday's dinner. And no doubt there are not a few here who would like to join me in it. The farmer says, "Give us the feeding stuffs and we will produce the meat," but it will be a long time before we get back to the old position with regard to the supply of beef.

I am certain that, with all the improvisations that the Government are making in this—some of them may be right, they may all be right—they are not a solution to this problem. The solution, surely, is more production all round. We all know it. Let me give you one case. I know three camps that have been built for German prisoners of war. I know where there are six to seven hundred Poles living like gentlemen. (I do not worry about them living like gentlemen—provided that they are not living on me.) But there they are; well groomed and well fed. They have not a five-day week; in fact they start at twelve and knock off at one for dinner. There is in the immediate neighbourhood a camp to which German prisoners of war could easily be taken. This camp must remain empty while somebody, either at the War Office or the Air Ministry, or some hole and corner place in the De- fence Services, is deciding whether or net it is to be wanted in future. There are a team of thirty people to see that squatters do not go into it—thirty hefty fellows going into a camp that should properly be used by German prisoners of war!

Put the prisoners in; bring in four to five hundred Poles in that neighbourhood, and you will have solved the problem of labour for the great extension of steelworks at Scunthorpe. The kind of thing which irritates people who live among them and who see the practical solution, is the sight of these well-dressed fellows walking about. They are our guests, of course, but they have overstayed their welcome, so far as I am concerned. I would say: put them in camps and tell them: "Now you either work, or you go home." I would be more generous than Saint Paul, who said: "If any would not work, neither should he eat." I would not say that, so long as they did not eat anything of mine. A large number of Poles are running about doing nothing. There is a jot to be done and it is fair that the manpower available should be fully used.

There is no solution whatever in these little bits of savings. They may for a short time make a contribution, but the major contribution is for all who car. to work. I know of a certain foreman who sacked a man and sent him to the office. The man at the office, however, told him, "We cannot sack you," and sent him back. This is not a rare case; it is multiplied by hundreds. After that, of course, the foreman has no control over the man and the office say that if the mart is sacked the Labour Exchange will send no others. The consequence is that there is not that deep personal interest and keenness in industry. Those engaged in industry say: "This will not last, and it does not matter. We will give way to them." That is fatal. We shall never recover the equilibrium we want to recover unless we can kill that spirit and give more encouragement to them; and, as I say, harness everybody, both the management—who are not as keen as they might be—and the men, to get us out of the present difficulties.

9.35 p.m.

THE EARL OF RADNOR

My Lords, I think your Lordships always listen with great interest to a speech made by the noble Lord, Lord Quibell. I have often wondered whether I ought not to offer him a beckoning finger to come over to this side of the House. I am deterred from that, because I feel that his forthright common sense would pick holes in any administration or any Party of which he was a member. I found his speech very encouraging because, though I am not an economist and, therefore, probably ought not to take part in this debate, I see the problem that lies before the country in comparatively simple terms. It is a problem of food and fuel. Fuel is needed to keep the wheels of industry turning, and to provide the exports which we need. Other noble Lords have already spoken on this subject in this debate; it is a subject of which I know very little, and I do not propose to say anything about it. However, I do wish to say a word or two about food, because food is even more important than fuel. Food is necessary to keep us alive and, more than that, it is necessary to enable us to continue to work.

I was rather perturbed by the speech of the noble Lord, Lord Pakenham, which foreshadowed not only a curtailment of non-rationed foods and luxury foods, but also a possible curtailment of what he called basic foods, which presumably are the rationed foods. We know that in this country to-day our rations are very nearly as low as they possibly can be, if men are to continue to work. I do not know about industry, but the workers in it possibly have opportunities, through canteens and Civic Restaurants, of getting for themselves food which is off the ration. But I do know about agriculture. I know perfectly well that the agricultural workers, especially at times such as seed time, when they work hard, and hay harvest or corn harvest, when they work long hours, do not get enough food. I may tell noble Lords opposite that if we should be blessed this year—as we were not last year—with good harvest weather, men who are working on the land will be finished by mid-day Thursday, because they will not have enough food. If there is to be any curtailment of food in the future, I hope it will not affect the meagre rations which the countryman and the agricultural worker get to-day. Might I add also—this is rather irrelevant—that I hope that growing children will not be affected. I happen to be a father of a family, and I know their appetites. My purpose in rising was to deal very briefly with the contribution which agriculture can make to the present crisis. As I have said, food is the most important problem that lies in front of us. May I say, incidentally, that I listened with great interest to the speech of the noble Lord, Lord Dukeston? I was interested in his comment that the peccadilloes—shall we say—of the agricultural industry, and of industry generally, have been too much stressed—particularly with regard to the fuel industry. May I suggest to him that when we are short of anything we blame the person who produces it rather than ourselves? I only hope that when we are short of food later on, the agriculturist will not be blamed in equal measure with those who produce our coal.

The target set for agriculture is to save £100,000,000 of hard currency by 1951–52. I do not think that that necessarily means that the production in this country will have to be stepped up by that amount, because I do not know the relative prices we are paying for foodstuffs from the hard currency countries, compared to the prices that are paid to our own producers. Like the noble Lord, Lord Quibell, quite candidly I think that is a very modest request. After all, as recently as February of this year that suggestion was put to this House by my noble friend Lord Teviot. At that time the noble Earl, Lord Huntingdon, poured scorn on the possibility of achieving anything like £100,000,000, and he was backed up by the noble Viscount the Leader of the House. We now come to that £100,000,000—or rather noble Lords opposite have come to it of their own volition—and it would have been very much better if they had accepted it in February last, rather than now, when it is too late to start a campaign for next year. May I say, incidentally, that I hope the agricultural community will be told as soon as possible what is expected of them? It is August now, and we are in the middle of harvest. If we get a bad day in the middle of harvest we get on with our preparations for the autumn sowings. We want to know what is asked of us, and we hope that we shall be given that programme, arid the prices we are to be paid, at the earliest possible moment.

The noble Lord, Lord Quibell, said that England can feed itself; or rather he quoted somebody else who said that. I would not go quite so far as that, but the extent to which England can feed itself will depend upon the price which is paid to the farmer. It does not depend upon orders. You can issue orders right, left and centre and you will not get results, because it depends upon the price. I said this before, and I say it again: The price negotiating machinery is good, but the spirit in which those price negotiations are entered into by the Government is that of driving a hard bargain. If the Government are to get the full co-operation of the farming community they must not drive a hard bargain; they must be generous.

The noble Lord, Lord Quibell, spoke about a friend of his who was farming 12,000 acres, and he talked about vision and imagination. That is all very well with 12.000 acres, but the average size of farms in this country is 83 acres. The man who is farming 83 acres has little time for vision or imagination. He has his feet on the earth, and his nose on the grindstone. All he is looking to is his bank balance, his bank manager and the price. The friend to whom the noble Lord referred is farming good land. There is good land in England—a lot of good land—but there is also a lot of not so good land.

It is the smaller people who, in the ultimate issue, will make the difference between real want in this country and comparative plenty. It is these people who must be nursed and given a price for their produce which will justify them in their own eyes in continuing to produce to the absolute maximum. I know that it will mean that farmers on the better land will make a big profit, and it is unfashionable nowadays to be anybody who makes a big profit. But surely the Chancellor of the Exchequer can look after anybody who makes such a profit, and if by allowing some people to get deeply into the clutches of the Chancellor of the Exchequer at the same time you encourage a lot of small people to produce to the utmost, surely high prices in these circumstances are fully justified.

There are certain other things which are necessary in order to ensure that we get all the production that agriculture can give. First of all, there are what I call the weapons—fertilizers, machinery and feeding stuffs. We must have the fertilizers we require. My noble friend Earl De La Warr has talked on the question of machinery. We want the machinery within a reasonable time, not a year or two years hence. We also want—and this is very important; it has been a ruining sore in the agricultural community fir a long time—spare parts, especially for American machinery. These spare parts are not coming in, and surely His Majesty's Government, with all the powers they now have and all that they propose to take under this new Bill can ensure that someone makes those spare parts for that American machinery, if we cannot get them from America, and so keep that machinery running. This will make all the difference, especially in view of the probable shortage of labour.

I should like to spend a moment or two on the question of feeding stuffs. The noble Lord, Lord Pakenham, said that every endeavour would be made to keep up the supply of the necessary feeding stuffs. In the debate in February o this year, to which I have already referred, the noble Earl, Lord Huntingdon, made two remarks—he pointed out that they simply could not get feeding stuffs and also that a great many of the high-protein feeding stuffs came as the residue of oil seed and that that was not availably. I know of nothing that has happened between February and now which has made feeding stuffs for stock more available than they were then. I am quite certain that high-protein feeding stuffs are not available. I very much doubt whether the coarse grain feeding stuffs will be available, because they are still being used for direct human food. That means that in our agricultural programme, if it is intended to increase the amount of livestock—as I presume it is—we must pay a great deal more attention to the production of the necessary feeding stuffs at home. In other words, as my noble friend Earl De La Warr pointed out, we must press on with silage and grass drying: the steel and metal necessary to make the machines for that purpose must be available, and I hope the Minister of Agriculture will bear that in mind when he get his programme in order.

Shortage of labour, of course, underlines the necessity for keeping our machinery strength up to standard and increasing it. By that means one can, to some extent, mitigate any labour shortage. Also if we are going to restore the labour situation we must have not only new houses—we must have houses; the noble Lord, Lord Quibell said that and quoted his friend as having built a very large number of houses (I do not know when he did so, but if it was recently he must know ways and means of which the average landowner has no knowledge)—but we must also have the opportunity to improve our existing houses and so attract to our farms those young men whom we want to see on the land.

I would suggest that the landowner should be given a considerable measure of freedom to build houses, instead of, as now, being tied down by the four to one ratio. When any question of a tied house crops up he finds himself in grave difficulties. That question of tied houses is a very interesting one. I think the dislike noble Lords opposite have for tied houses is one of those things that were conceived in ignorance and nurtured in prejudice. I beg the noble Lord seriously to consider whether it would not be very desirable, at least in those cases where it is necessary to erect houses in a remote district, to relax all restrictions to enable the landowner to build those houses, and so encourage the keeping of stock in remote places where otherwise it would not be possible to make a contribution to agriculture.

Capital—that is to say, the landowner—is willing and anxious to play its part, but it needs more freedom. The ordinary landowner to-day is anxious either to repair his property, or improve it, or to build on his land for agricultural purposes. But he is tied down by regulations, by licences, by forms and questions, and finally he probably does not get the necessary permission. Give him more freedom and he will play his part. At least give him such small things as freedom to use the produce of his own estate in the form of timber, or it may be gravel for cement, or things of that sort, without having necessarily to apply for a licence. It would not make a lot of difference and it would not often be abused. I hope that more freedom can be given in that sort of direction.

I would, however, point out that if there is to be that real progress, that real step forward in agricultural production that is so necessary, it is inevitable that the landowner will have to get on an economic footing. That may involve a general rise in rents all over the country, because I think that to-day there are few big estates where the gross rents cover the gross outgoings, quite apart from any question of taxation. I feel it right to utter that warning because, as I know well, expenditure is bound up with prices, and it may have some effect on prices, although rents even to-day are only 10 per cent. of the total outgoings of the farmer. Therefore even a substantial rise all round in rents would not have any great effect upon the farmer's outgoings.

I have two other short points. I have mentioned the question of the programme largely from the short-term aspect. I know from experience, as a liaison officer, as my friend Earl De La Warr knows, that when it came to the point of getting the counties to do their job, the one thing they said was: "What do you want us to do? What acreage do you want? If you will tell us, we will get it." That is short-term programme. I would also support Earl De La Warr in pleading for a long-term programme to be given to the agricultural industry, affording not only security to the farmer but also security to those who will invest their money in the land in the way of improving capital equipment. The world food situation is not good. We know perfectly well that there are many Far Eastern countries which are short of food. Their standard of living is rising, their population is rising, and their production is not keeping pace with the rise either in the standard of living or in population.

I would take that point further, and I base my remarks on some information which I received quite recently from a member of a good will mission which went to South America on behalf of the Ministry of Agriculture. It was backed up by a banker who has considerable connexions with South America. Before the war, every country in South America was a food-exporting country, and South America is, or rather was, one of the great reservoirs of meat for the world. To-day there is one country, and one country only, in South America which is food-exporting, and that is the Argentine. All the rest are now food-importing countries. Therefore, His Majesty's Government, certainly so far as meat is concerned, can, I think, go right ahead with a really long-term policy, in the sure and certain knowledge that any increased production in this country will be absorbed by this country without fear of competition and without fear of loss, because the world situation is such that it cannot be rectified for a very long time.

There is a great deal more that one could say on this subject, but I do not want to turn this into an agricultural debate. Finally, I wish to say that food is such an important part of the Government's programme that your Lordships, with all the knowledge that there is on both sides of the House on the subject, ought at the earliest opportunity in the next Session to have a very serious debate upon the food situation. By then we shall know what the plans of the Ministry of Agriculture are and what the prospects are, and I hope that that debate will take place at a very early stage in the new Session, when presumably we shall not be quite so rushed with new legislation as we have been in the last few weeks.

10.0 p.m.

LORD WOOLTON

My Lords, when the Prime Minister of the country calls for a new "Battle of Britain" to rescue the country, then it behoves every one of us, according to our various and several capacities, to do what we can. I would like, if I may, to speak with the full confidence of those who habitually sit on these Benches and to assure His Majesty's Government that, in harmony with our traditions and according to the constant practice of members of this House, we shall do everything that we can to help. But, of course, nothing could be further from the truth than to think that the best way of helping the country is to refrain from making observations of a critical nature.

As I listened to the noble Viscount this afternoon, so persuasively talking to us, I wondered if I dared make a critical speech afterwards, or whether he would think that I was endeavouring to sabotage the efforts that he and his friends were making. When he told those stories of the past, and excited our sympathy regarding the unemployment that took place between the wars, he almost made me feel that he was reviving the bitterness of the past. Of course that period of unemployment was dreadful. It was at its worst when the Labour Government were in power. I do not say that with political bias, but I have just been exercising myself to trace unemployment over a number of years.

The noble Viscount who opened the debate will remember how bad it was at the period when the Liberal Party were at the height of their power. It was bad in a Tory reign, and it was worse under a Labour Government. Quite frankly, l do not think it had anything to do with the politics of any of them. I think it was due to economic circumstances that were entirely divorced from the Party politics of the time. The only thing that I would say is that recalling the bitterness of the past—and the unemployed undoubtedly had much reason for bitterness—will not help us in any way to find a solution to our present difficulties. It is the business of Parliament to be a centre of discussion, a centre of debate, and whilst I am always conscious that in this House one must be careful to speak in a manner that almost disguises what political views one has, the noble Lord, Lord Quibell to-night (most effectively, I thought) disguised his political views. He was following the modern practice, but only the modern practice of course, of your Lordships' House.

But there is room for conflict; there is room for expression of contrary views; and it is on the anvil of such discussion that very often we can beat out some practical instrument of effective government. I am bound to say that I think the anvil of discussion, and the bating out of some practical instrument, i very necessary to-day. We have had a most interesting and enlightening debate. I am sure that all of us are most grateful to the noble Viscount who leads the Liberal Party for having started it. What a wealth of opinion we have had! The noble Viscount, Lord Bruce, came along with his great experience and delivered, I thought, a speech of economic interest equalled only by that of the noble Lord, Lord Layton. Then we had my noble friend, Earl De La Warr, speaking with so much authority on the subject of agriculture. The noble Lord, Lord Quibell, I thought "spilled the beans"—if I may use such a phrase in your Lordships' House.

Then, for the first time in my life, I had the pleasure of listening to the noble Lord, Lord Dukeston, in what seemed to me, if he will forgive my saying so, a speech of great wisdom and great statesmanship. Yesterday we had the noble Viscount, Lord Portal, who was responsible for starting all these systems of priorities: perhaps sometimes he wishes he had not done it ! He was in at the beginning, and I thought he gave the Government some good advice. I hoe they will take it. All these noble Lords have added very much to our wisdom and the debate has been severely practical. It needed a little practice put into it. I imagine that there are few of us who did not have feelings of great sympathy with the noble Lord, Lord Pakenham, when he introduced this subject yesterday. The noble Lord has endeared himself to this House, not only by the breadth of his mind but by the courtesy with which he treats his critics. Sometimes he almost makes us feel we are his friends; and many of us wish we were.

LORD PAKENHAM

So you are!

LORD WOOLTON

He gave us the close reasoning of the student. But yesterday he was delivering somebody else's speech. They had brought him from his job of looking after Germany in order to do it. I have since had the opportunity of reading his speech in detail, but when the noble Lord finished he left me in a haze. We had figures: he gave us a lot of figures which I could not fathom. They did not seem to me to add up to anything. I found them most confusing. What we really wanted was a national balance sheet, so that we knew what our income was in terms of production, how much of our consumption was being consumed at home, and how much was going in export. I should have liked to know where our expenditure overseas was taking place: how much in hard currency, and how much in soft currency. It is all very complicated. I wonder why the Government did not adopt what has been the practice of Governments for some time past, and give us a White Paper beforehand, setting out all the facts and enabling us to be just a little more intelligent, as we needed to be, as we listened to the noble Lord making his speech.

I have a suspicion as to why they did not. I do not believe they knew themselves. The Government have not been very forthcoming about all this. This debate has taken place because the noble Viscount put it down. There has been a good deal of pressure brought on the Government, both from their own side in another place, as well as from those who sit opposite them, to let us know what the facts were. I know that I may be accused of looking at the thing with some bias, but I cannot help but feel that the Government have just been drifting on and on. The danger has been very obvious for months. We have been telling them about it, and the newspapers have been telling them about it. Why did the Government wait until the last days of Parliament before coming along and telling us this dreadful story? If they had come earlier, then the speech of the Prime Minister, made in another place—of which the noble Lord, Lord Pakenham, was merely the vehicle yesterday—might, indeed, have been a constructive speech for the expansion of trade and of production in this. country. Instead of that, what was it? It was a speech of shreds and patches, which left us feeling at the end that there was little real plan for the expansion of trade.

The noble Lord, Lord Dukeston, was the man who gave us the real plan of what was going to happen to the industry of the country; it was his speech which I found most convincing, and not the speech which the Prime Minister made yesterday. We have just drifted on. Many of us feel that we have drifted very near to economic disaster; and I think that the Government must feel that, too. I wonder whether it was necessary. The result is quite clear. The Government have shaken the confidence, not only of the people who sit in the Houses of Parliament, but, I venture to think, of the country, in their competence. As the noble Marquess the Leader of the Opposition said: What have you been doing? In the pursuit of your policies and your expenditure, you have been giving the people of this country a feeling that they are living in times of easy money—an appearance of success—and now you come and tell them what the true position is. Again we have the call for sweat and for toil, but the Government have not given the country the leadership which makes people feel that they are gallant in toiling and making sacrifices.

That is the reason why, reading over the speech of the Prime Minister, as I did last night, I began to wonder what all this amounted to when we came down to facts. I observed, for instance, that he made some observation about controlling capital investment. Why has he not been doing that? Why has not the Chancellor of the Exchequer been controlling capital investment? What is the good of telling us now that that is the thing to do? Then there is going to be something done about transport (I know just a little about transport), and it has to be speeded up in the future. Gracious me! there is not a railway manager in this country who is not at his wits' end. I go over the stocks of one of the railway companies. I ask them how much they have got a week ahead—sometimes only half a week ahead—and what they have done about it. Their answer is: "We have rung up the Government Department, but we cannot get any satisfaction." I do not know what they are going to do about it. The Prime Minister did not tell us yesterday. He just said that something had to be done, but it is all left vague except for the fact that the nation, in its hour of trial, must: be more controlled.

That is the result of that speech—more controls. Do you think that is really right? We are stiff with controls. Those of us who are engaged in industry cannot: move because of the number of controls, and really what we want is less control. I am not appealing for less control in order that some of us may go and make more money. It is not that at all. Money has ceased to be of interest to us—it all goes to the Chancellor of the Exchequer anyhow. We want freedom to be able to do our jobs in our businesses, and we have not got it now because of the multitude of controls that are impeding production. Since we all want the same thing, I beg the noble Lord, with his great intelligence—because he must see the problem—to see what he can do, whilst retaining the essential controls, to free human beings in order that they may put their best work into the country at this time of stress. The Government will never get anybody out of trouble; it will be the people of the country who will do that, and I beg the Government to give industrialists an opportunity of exercising their capacity.

I tried to look at this problem last night. I put this question to myself: Supposing this was a business in which I was engaged—and that is what it is all about; is it not?—and I found myself in the lamentable position we are in now, what would I do? Well, I will tell you what I will do, but, thank Heavens, I have never had any practical experience of being in this position, and I hope I shall never be sufficiently incompetent to be in it. The first thing I would do would be to cut down my unproductive labour. That is the first thing a business man does when he finds himself in trouble. In the language of trade, he goes and looks at his overheads. I beg the Government to go and look at their overheads and see how many people they are employing in order to rule ibis country, and see whether it would not be possible to reduce the number to create a little unemployment among the non, productive classes. They would not be unemployed long, because they would be very readily trained; they have all the capacity to be trained and they would be readily absorbed in the productive industries of the country.

I say to the Government: Look and find out how much unproductive labour you are carrying, because it is only by the production of goods that you secure the creation of wealth. After the last war—if I may also go back to those days—there was a body called the Geddes Committee. Well, of course, that was thoroughly bad. I do not remember which Government was in power at the time, and for the sake of my argument I had better not know.

SEVERAL NOBLE LORDS: It was a Coalition.

LORD WOOLTON

But of course it is all wrong that a Government should call in other people in order to go through its business, unless it recognizes that it is bankrupt and is calling in the receiver. I do not ask the Government to form a Geddes Committee, but what I beg the Prime Minister to do is to form a Committee of his own Cabinet to go through these several Departments of State and see how many people they can get rid of. They should see how many controls [...] is possible for them to relax without giving up the essential principle. These controls are like rabbits, they just breed on one another. I imposed many of them on this country, but I was constantly having to fight against the temptation to add more controls, simply in order to see that the controls we had already were properly carried out. The noble Lord may say, "We have heard this story before." But I make this suggestion for another and a wider reason.

We are at the present time in the position of a person who needs credit; and the United States, being the nation that have accumulated all the credit that is going about, are the people to whom we shall go. We can rely upon it, I am sure—and I have many contacts with them—that we shall have sympathetic consideration if we are a credit-worthy people. But the first thing that they will look at, since we do not want to appeal to their sentiment to lend us money, is to see whether we are credit-worthy. And the place to begin to be credit-worthy is at home. It is not until we have a reduction of our overhead charges in running this country that we can with any confidence go along to the United States and ask them to give us further credits.

Of course they will want to give us further credit, because they have the credit, and what good is credit if you do not use it? They will want more trade, and we are not only their friends and their allies, but we are the best market that the United States have. If they are to find an outlet for their very great production—a production which has increased as technological advances have been made to such a great extent during the last few years—they will be anxious to trade with us. They will find that they are on a sound economical line if they do extend to us the facilities that will enable them to trade with us. That is what Britain, as a creditor nation, has done for generations. It is such credit that has built up the Argentine, that has built South America, that went so far to build up the United States itself.

As a result of the efforts we made during the war, when we were alone, the position has changed now, and the United States are the creditor nation. I was very delighted to hear the note of optimism in the speech of the noble Lord, Lord Pakenham, when he talked about the conditions of the American Loan—the conditions of convertibility and of discrimination. I will not say any more than just this. I hope that the Government will be successful. The United States cannot possibly say to us, "If you cannot trade with us, because you have not the dollars and we will not give you those dollars, then you shall not trade with anyone." That is not the way in which a great nation can possibly behave, and I hope that the negotiations which the noble Lord and his colleagues are to have with America will meet with success and will be most sympathetically received. It may, indeed, be that the people of this country in the short run—in the immediate run—will be very dependent upon the success of those negotiations.

I must look at the remedies that the Government are proposing, and I can only express a good deal of concern about them. What are the remedies? Some new targets, and a cut off the joint! I think that is about what it comes to. I do not see any point in having targets if you cannot shoot. We have had a lot of targets before, and how much better off shall we be because the Government say we must have higher targets, we must have greater exports, more agricultural machinery, more rural houses? And what is the value of this word "must"? It is for them to tell us how we are to get them, to give us the organization to get them. We are willing enough; manufacturers are willing enough to make more agricultural machinery; people are willing enough to build more houses, even to pay for them to be built.

Then we are told that we must work harder. I believe there is an awful lot of nonsense being talked about people working harder. In the engineering industry, with which I have some connexion, I find most people anxious to work harder. But they have not the materials. Give us the steel and we will make more motor cars. I do not believe that working men are finding any particular enjoyment out of not doing a full day's work. They know that the order books are full, but they know also that the amount of material they have at their disposal will not keep them going for long; and I believe that is the reason for their slacking off. It all comes down to coal.

Only yesterday I was talking to an American who was very concerned about the state of this country. He has, I think, some considerable influence. He said: "If you want anything from America you have got to go and dig more coal." I hope that we shall dig more coal. I would venture to say this to the Government: Do not bother about going round preaching to the miners. You—not we—have been doing the preaching. Give them some inducement. Put some goods into the shops so that their wives will see and want. The miners will have to go to work then, because their wives will encourage them. It is an incentive that is wanted—not a mere money incentive, but a better standard of living. And that is the thing, I am bound to say, which I cannot see how we are to achieve. We have no objection to the cutting of the petrol ration or of the travel ration. I hope Ministers will set a good example to the country this year and stay at home. Last year they went away from this country with great speed in order to get more food. They said it was to improve their education.

What are we going to do with these food cuts? I cannot make out what is to happen. The public do not understand when you tell them not to eat any more hard currency. What they want to know is: Are you going to cut the rations? Are we going to have less bacon, less cheese, less meat? Those are the things that come from hard currencies. Are we going to have less? Do you really think that the people of this country can live on less and still give you more production? What a trouncing I got from the Leader of the House a few months ago, when I ventured to say that the people of this country were in danger of having a food shortage! He trounced me for something that I did not say.

He said that I said the country was starving; I did not say that, but I do begin to wonder what is to happen. Do tell us. The Minister of Food must know, and he ought to tell us, so that the people know where they are, because I have the greatest possible fear of any serious reduction in the food supplies of this country if we are to pull through. It is no use saying that we are to have a differential rationing. I know; I have tried it. What a differential rationing does is to impose on the authorities the obligation of splitting up the country into hard workers and not-so-hard workers. That will create jealousies and discontents all round, and inevitably it will be unjust. I beg of the Government, at whatever risk to the American Loan, do not reduce the health of the country at a time when you are begging it to produce greater efforts.

I have talked longer than I wanted to, and probably longer than your Lordships wanted me to. I conclude as I began. The Government will have full support from these Benches; it will inevitably be critical support but it will not be destructive support. We must ask the Government to do some things. We must ask them, first, to make adequate arrangements with the United States of America regarding convertibility and regarding the non-discrimination clause. Secondly, we must ask them to exercise a rigorous economy in the use of unproductive labour in this country. If they will do those things, then both in Parliament and out-side Parliament the Government may rely upon it that, according to our se Feral capacities, we on these Benches will do our best to support not the Socialist Government but His Majesty's Government, because we are concerned in the welfare of the country and it is our bounden duty to help in a time of emergency.

10.33 p.m.

LORD RENNELL

My Lords, had my noble friend, Viscount Samuel, had the opportunity of hearing the statement made by the Prime Minister before he opened this debate, he, no doubt, would have referred to certain of the points to which I propose to refer in the very short time that I intend to take. Before doing so, I would like to say that, so far as I am concerned in taking up the theme from where he left it, I must entirely agree with him and with other speakers who have said that the crisis which has come upon us is not, of course, the fault of the present Government. It is the inheritance of two wars and more especially of the last war. To try and attribute or hang the blame for what has happened on the Government would not only be unfair but entirely unconstructive in the position in which we find ourselves to-day. That, however, is not to say that the crisis which has come upon us has not in certain respects perhaps been aggravated by what has been done and by the policy which has been pursued and, above al], by the lateness in applying the remedies which were announced yesterday in another place by the Prime Minister and summarized here by the noble Lord, Lord Pakenham.

The remedies to the crisis, which I need not perhaps elaborate after the long debate which has taken place here, fall into two parts: those which are applicable from a short-term view, and those which may be said to cover a long-term policy. On the short-term view may I say only this—and at least one of the remarks that I have to make is applicable to the other part as well—that I am myself, as I believe are many others in this country since the statement was made yesterday, filled, I regret to say, with a strong sense of the inadequacy of the remedies which have been proposed. The first note of serious warning was struck in March, when two debates took place in another place and in your Lordships' House on the economic situation of the country. It was by then already apparent that the crisis which has now happened was inevitable, or would be inevitable if remedies were not applied in time. It is common knowledge to all of your Lordships that no remedies were applied at all, in spite of the warnings which were then given.

At that time, if your Lordships will cast your minds back, you will recall that it was said that this Government had been in power for a year and six months, during which time no coherent plan had been evolved. At that time there was a White Paper on the economic situation of the country and shortly afterwards an economic planning board was created, or was announced as being about to be created. Its creation, I think, has taken place only within the last few weeks. His Majesty's Government were asked at that time to take steps in the Government itself, as being the only place where a coherent plan could be evolved, and not in a planning board, to guard us against the crisis which has now come about, but nothing, I think, was done. It is true that one or two trivial cuts in imports were made, but no plan was evolved or stated, nor was it ever admitted that a critical situation was about to develop. As the noble Lord who has just sat down said, it was only under quite a considerable amount of pressure that in another place and in your Lordships' House those debates were allowed to take place which have brought home to us, and to the whole country, the full gravity of the situation.

If I may go back to the short-term remedies and show why they appear to be inadequate, I would refer your Lordships, without quoting, to the drawings on the American Loan in the first five months of this year, or indeed in the first four months of this year. There were average drawings of £60,000,000 a month. With the heavy drawings of July, it appears from a statement made in another place by the Chancellor of the Exchequer that the average drawing is something of the order of £77,000,000 a month. I find it very difficult, as Lord Woolton and as everybody else has found it difficult, to make any sort of Calculation on the figures published about the nature of the economies in exchange which will be effected by the various restrictions that have been announced. My noble friend, Lord Layton, arrived at a figure of approximately £300,000,000 a year, but, with all respect, I am inclined to think that that is on the high side, more especially as a large number of the economies proposed will not take effect until October 1. I prefer to take a figure of something of the order of £240,000,000 a year, of £60,000,000 a month, which is set against the drawings at the rate of £77,000,000. Even if drawings are not continued at this rate, on account of certain exceptional circumstances that may have taken place in July, and that we take a rate instead of £60,000,000, the economies in question cover about one-third of the deficit on our visible balance of payments.

If the situation is as grave as is shown by the statement made by the Chancellor of the Exchequer in another place to-day, that by some time in October—let us say the middle of that month—the American credit will have been exhausted, the economies which have been announced will be quite inadequate even to prolong the use of the credit for approximately two months from this date. After that we shall be thrown back on those resources which we possess in our own right—and not entirely ours inasmuch as they belong to countries which are members of the sterling area. I cannot believe that any of your Lordships will fail to agree with me that remedies of that nature are totally inadequate, for we must of necessity come to a crisis in six weeks from now unless our last remaining resources are to be employed, after which I leave it to your Lordships' imaginations what this country will do, not merely to keep the imports of raw materials going but to get enough food into the stomachs of the people. If, therefore, I concur in what has been said, as every one of your Lordships will—it is our bounden duty to help the Government and the country in its present state—I can only do so with the feeling that the programme proposed, in the near and possibly most critical short-term view, is entirely inadequate.

On the long-term programme I should briefly like to make several points. I ask your Lordships to throw your minds back to what the noble Viscount, Lord Bruce, said, and I beg the Government to consider whether (if in a few words I may summarize, perhaps even garble, what he said) the time has not now come to revise the whole of our attitude in the world and the whole of our policy. That in short was what he said. He asked for constructive thinking of the future without which any immediate short-term remedy was entirely vain. He gave three courses open to the Government. One of them must be chosen. In the programme which was announced by the Government yesterday, I saw no such thinking. On the long-term programme, or targets as they may be called, I see only an agricultural programme to develop our self-sufficiency in foodstuffs by 1951. Far be, it from me to try and analyse what those proposals amounted to. The noble Earl, Lord De La Warr, has said in convincing terms, which cannot by the nature of the facts he adduced fail to be critical, that the programme for which much credit is being taken by supporters of the Govern-merit is to restore the position of agriculture to what it was in 1944, as everyone who has any interest in agriculture has urged them to do for two years.

Is that the sort of programme which is going to get this country out of its long-term difficulties? Noble Lords opposite have heard from their own Benches that at least one of their number feels that the programme is wholly inadequate, a view which we on this side cordially share. But it is not only on the balance of payments that we believe there has been justifiable criticism. We on this side of the House—and I know I speak here not only for my friends on these Benches, but for other noble Lords on this side—have found the policy pursued by His Majesty's Government inadequate, in that throughout these last two years the various Departments have appeared to us to follow several separate policies of their own, which are not necessarily related to each other, or to a central plan.

If I may take only one example, to which I referred in the debate which took place in March, I would mention the financial policy followed by the Chancellor of the Exchequer. That is a policy which I consider to be ill-conceived, in the price which we have had to pay to reduce the short-term rate of money; a policy which has resulted, in my view—with which I think many will agree—in a decline in savings to a point where savings are, in point of fact, a minus, or where disinvestment is going on. That is not the result of pressure of economic circumstance. It is not, I submit, on account of the desire of people to spend their capital in a country where it is difficult to obtain the goods which they wish to have. In support of that, I would say that the desire to save is still as strong in this country as it was a year or two years ago, before this fall in money rates took place, and the rate of taxation to which we are subjected was maintained.

As evidence of that, I would ask your Lordships to consider what has happened. for instance, to life insurance. Never. I think, in the history of British insurance has there been such a large increase, month after month, quarter after quarter, and year after year, as there has been in the last two and a half years in growth of life insurance which, as your Lordships know, is one of the most popular and effective forms of saving. There are two figures only that I wish to quote. Though they are chosen from particular sources, I believe them to be representative of the trend of life insurance as a whole. If the figure of too is taken as new life policies taken out in 1945, the figure in 1946 was 212, and the figure in the first half of 1947—and that is perhaps the most important figure of all—was 310. In other words, the desire to save, where the method has been provided, where it is not subject to petal taxation, and where a reasonable rate of interest can be earned, has not only been fully maintained, but has been maintained, I believe, at the expense of saying by investment in securities provided by the Chancellor of the Exchequer. I believe that to be the result of a mistaken financial policy, for which we have ad to pay in the terms of the inflation which is visible to-day, and which is at least one of the most patent factors abroad in the apprehension which is expressed about our financial situation in this country.

I do not want to deal with any other facts at this late hour, but I would like to repeat what I said at the start. I do not think there has been an administrative continuity, or continuance of policy between various Departments. I regard the short-term remedies as applied as inadequate, and I fear that the long-term view is not one which will present itself to the imagination of people in this country to produce that effort which the Prime Minister has called for, and which we would all like to see brought in to the support of His Majesty's Government.

10.50 p.m.

LORD PAKENHAM

My Lords, I hope I have the permission of the House to address your Lordships for a second time. I am entirely in the hands of the House—looking at the clock and seeing that it points to ten minutes to eleven—as to whether I continue beyond the allotted hour of eleven or not, but I imagine that the House will wish me to cut my remarks rather shorter than if I had begun somewhat earlier in the evening. It follows inevitably that most of the score or so of very interesting and highly informed speeches will receive no adequate answer—indeed, no answer at all from me tonight. But I will do my best to write to noble Lords giving the answers to the particular points they have raised. And if they find that they are not getting the letters in time or are not getting enough letters, if they will let me know I will contact the score or so of Departments involved and see whether they cannot have suitable answers.

I feel a little like, I will not say a headmaster but a junior master, who is called upon to distribute the prizes at speech day. I feel that we have had so many excellent speeches that I should congratulate some speakers. To do so would be invidious, but in my own mind the speech of the noble Lord, Lord Dukeston, will stand out for a very long time, and of course we will remember many other speeches also. I must thank the noble Lord, Lord Woolton, for the kind things he said about me personally. He was so charming about my personality, and so brutal about the speech that I offered to your Lordships yesterday, that he has placed me in rather an embarrassing position. I must strongly resist this attempt at oratorical "debagging." It really cannot be permitted. I take full responsibility for every word in that speech. Indeed, I should be glad to go down in history, as another politician of no great ability, as "One-speech Pakenham"—all the more, as it was not of my own composition.

On a more serious note, I hope the noble Lord, Lord Woolton, will forgive my saying that the remarks he made about Ministers going abroad in order to get more food seemed to me—and I am sure he would wish it to seem to me—humorous in intention. I am sure he would not wish to be regarded as in any way serious, because he is always so very fair about Ministers and politicians of all kinds, and I know that he would not wish any misunderstanding to arise in future by people reading his speech.

LORD WOOLTON

It was purely humorous, but probably mistaken humour, and I beg your pardon.

LORD PAKENHAM

Now that I am certain it was humour, I appreciate it the more highly. The noble Lord made an appeal which I am bound to say drew so much enthusiasm from a certain part of this building that I actually heard clapping—for the first time since I have been a member of the House. It was, of course, rapidly quashed, but it is the first time that I have heard actual applause. While I hope that it will not occur again I think the noble Lord will go down to history as the first statesman for some years who drew clapping in this Chamber. But he did, of course, make a very solid contribution. I will try to reply, when I deal with the issue more generally, to the outlook that he presented to us, but I do not think any of us will deny the elevation of spirit that distinguished his speech.

May I come to one or two other speeches, dealing with them, I am afraid, far too rapidly? The noble Lord, Lord Cherwell, was relatively optimistic. I think he is generally regarded as the supreme architect of gloom in this House and indeed in public affairs. I have always found him gloomy, except during the war, when his spirit was always the most bright, and when he knew the darkest things that were going on, So it may be a good omen that his speech, while to others it might not be cheerful, to me was a positive tonic, far brighter than we have heard from him for a long time.

The noble Lord, Lord Cherwell, appears best in the senatorial toga of the national statesman, with the laurels on his brow suggestive of his services to the State. But just occasionally he dances with the cap and bells of the Party satirist. I do not think the cap fits him, and the bells seem to give a false and hollow sound. But today we have little cause for complaint, except with regard to his statistics. There I must leave the matter as between him and Lord Layton, who flatly contradicted him on the most important figures he produced. Perhaps the victor in this heat will allow me to take part with him in a final race in this respect.

I owe an apology to the noble Marquess who leads the Opposition in that I grossly exaggerated his objection to civil servants. What he actually said, to quote Hansard of yesterday, was as follows: These civil servants, if I may say so respectfully, buzz round the head of the ordinary citizen 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. The last statement is not literally true, because the numbers have remained substantially the same for a little while, but I owe an apology to the noble Marquess in that I said he accused all civil servants of being non-productive. I would assure the noble Marquess—and I am sorry he is not here at the moment—and Lord Woolton that the Government have taken immense trouble to give effect to economies. A high level Committee have been studying the matter for some time, and no pains are being spared to see whether we cannot bring the numbers down.

I pass on rather rapidly to the very weighty agricultural speeches from the noble Lords, Earl De La Warr and the Earl of Radnor. Lord Radnor has left the chamber and I feel that those who have left the chamber may perhaps come later in the queue concerning the replies. I see that the noble Marquess, Lord Salisbury, is with us again. I have just been saving that I did not do full justice to the noble Marquess when I quoted what I thought he had said about civil servants.

THE MARQUESS OF SALISBURY

What I said was not at all that the civil servants were not good and patriotic men and women, but that there were far too many of them. I cannot believe that there is need for an army of 2,000,000 persons in a population of little more than 40,000,000.

LORD PAKENHAM

I will not regeat the reply I have just given. The noble Marquess will find it in Hansard tomorrow. But perhaps I may just mention that a high level Committee are studying the whole position.

I come now to the agricultural speeches, and more particularly the speech of the noble Earl, Lord De La Warr. I am authorized by my noble friend, the Joint Parliamentary Secretary to the Ministry of Agriculture and Fisheries, who has gallantly remained by me in order to see that I do not fall into any pitfalls, to say that he and his right honourable friend do appreciate the support that the noble Earl has promised in the efforts the Government are making to expand agricultural production. I have, of course, no intention of competing with the noble Earl on agricultural matters. I have no claim to speak on agriculture, except that I am a farmer. I am not, however, a very expert farmer: perhaps I am a sort of "spiv" agriculturist! But at any rate I am fully advised on some of the statistical matters that the noble Earl has raised.

I am bound to inform him that his figures—though not his general view—appear to be mistaken. He seems to be in error in his main calculation. It appears that the Government's proposals will in fact increase agricultural production by 15 per cent. beyond the peak figure of the war years. The noble Earl informed us that production had already dropped 20 per cent. since the peak years; but my information, which I think, the best available in the country, is that production has dropped only 4 per cent. and not 20 per cent.

EARL DE LA WARR

I rather hesitate to interrupt at this late hour, but my figures are also, I think, the best able in the country, because they are largely the official figures. The noble Lord, Lord Pakenham, told us in his speech that it was hoped to increase production by 20 per cent. I assume that that means by 20 per cent. since 1944. I based that figure on estimates given to me by those who are universally regarded as authorities in the agricultural world. And they were backed up by the fact that the official figures, as published monthly by the Government, showed that there was a reduction of 1,250,000 acres in our tillage area as between the 1944 and 1946 crop. It showed us, furthermore, that whilst our cattle figures were approximately the same, and our chicken figures are approximately the same, our figures for sheep and for pigs were quite immensely reduced—although, as the figures for sheep do not go further than March, we have not got the full reduction caused by the hard winter.

I think the noble Earl, Lord Huntingdon, will agree that these figures for the tillage area take us only to June, 1946, and that it is generally known in the agricultural world that since then, owing to the bad autumn sowing and other factors, there is a large reduction in our tillage area as between June, 1946, and June, 1947. I am not going to argue whether it is 10, 15, or 20 per cent., but it is of a large order. If the noble Lord will inquire of agricultural authorities he will find that their opinion accords with mine.

LORD PAKENHAM

I am not going to pit my personal authority against that of the noble Earl, Lord De La Warr, but the Ministry claim that there has been a reduction, since the peak year, of 4 per cent. Here is clearly a sharp difference of opinion, and I think I must abide by the information given by the Ministry, which I have had only to-day.

I do not think that we have any cause whatever to be disappointed with the reception given to the Government plan, either in this House or in another place, or, indeed, in the country. It has been accepted, it seems to me, as a workmanlike beginning. I fully accept the general implication of the eloquent speech of the noble Lord, Lord Rennell, that the balance of payments problem is not one that can be taken in isolation. The balance of payments, for good or for bad, reflects the general health of our country. At the same time, the general plan will be judged as to whether it does or does not bring about a radical improvement in our balance of payments position. No one in this House in my hearing—and I have sat practically through the whole debate—has brought forward any strongly felt argument against any particular measure that has been taken.

The noble Lord, Lord Woolton, voiced at one moment a certain feeling of sorrow that it involved new controls. I am bound to suggest, without wishing to imply any sharp contradiction, that a moment or two earlier he was crying to Heaven that we had been very slow in controlling investment. I recall that he was sorry that our measures seemed to involve so many new controls. I do not think it is within the recollection of the House that anybody, in spite of these far-reaching proposals, has stood up and said "This will not do; that will not do; I object to this, I object to that." That, I am glad to say, seems to he the attitude not only of this House but of the country. I think we can fairly claim that no one has found the proposals evil in themselves. Some people may have argued that they might have been brought in earlier. I do not feel unsympathetic with that point of view. I only ask those who wish to cast the first stone in that matter to examine their own consciences to see whether they are without sin. I hope they will not examine them too long or else they may creep away and I may be left, like the lady described in the Gospel, practically alone.

EARL DE LA WARR

She was not blameless either!

LORD PAKENHAM

Even from this hallowed spot I never claim any infallibility, either for myself or for the Government; but I look in vain for anybody else who can improve very much on our own showing because, frankly, we had a great debate on all this in March and, although all sorts of grim warnings were issued, by the noble Lord, Lord Cherwell, and by others, no one suggested firm steps of the kind that are being taken now. I do not think if we examine the record of our critics during the time that we have been in power that they can claim that anybody has come forward with a clear cut plan—

EARL DE LA WARR

I must really join issue with the noble Lord on that. For the last eighteen months we have brought before the House a large number of Motions. We have put forward quite definite proposals. The Government have accepted them, but have done nothing about them. I must challenge the noble Lord on that point.

LORD PAKENHAM

I must ask the noble Earl to continue his agricultural battle with the noble Earl who sits on this Bench. Taking the plan as a whole, I cannot agree that anyone, Conservative, Liberal or of any other Party, has come forward with any plan of similar—

LORD WOOLTON

I must protest. We are not in office. The responsibility for these things is on the Government, not on the Opposition.

LORD PAKENHAM

Frankly, I do not regard that attitude as altogether worthy of the noble Lord. Of course, he cannot have all the details, although the Government may possess all the details. The complain: is that this is too much of an outline plan—

LORD WOOLTON

I was talking about the previous plan, of the past. It is not the business of the Opposition to come and tell the Government how to do their jobs by producing details of plans. It is the business of the Opposition to produce general ideas, to ask questions, to endeavour to cajole the Government into the right way of thinking: not to produce plans. The noble Lord cannot get away with that, however late it is.

LORD PAKENHAM

I am afraid that the noble Lord who has just spoken assumes a very lowly role for the Opposition. It is not for me to interpret the role of the Opposition, but I should be surprised if the noble Viscount, Lord Samuel, would agree with the interpretation of the duties of the Opposition.

VISCOUNT SAMUEL

Yes, I do agree. The Opposition have not the information which would permit them to bring forward detailed plans. That is the business of the Government.

LORD PAKENHAM

Of course, the operative phrase is "detailed" plans; but we are told to-day that these are not detailed plans; that they are plans for increasing hours, for assuming increased powers of direction of capital, and powers and control over labour. They are plans for import cuts. I cannot agree that those are in themselves detailed plans, or that it is beyond the power of the Opposition Parties to have thought out plans of that character in the light of the information in their possession. Frankly, if I were in the Opposition, I should hope to have made far more constructive suggestions than have flowed from them in the last two years.

The other main criticisms of these proposals are that they are all general in character, not sufficiently detailed, and that they do not go far enough. With regard to the first point, I think the House will agree that on the home front, in relation to the industrial side of the proposals, the Government have been well advised to consult with the leaders of industry, both on the side of the employers and on the side of the workers, before the plans were given final shape. And I am sure we all pay tribute to the spirit in which the leaders of the employers and of the workers have received these plans. There was also, of course, the international side of the matter. It is obviously impossible for the Government to know precisely what will flow from these conversations with the United States. I am genuinely grateful—and here I hope we can resume harmony—to the noble Lord, Lord Woolton, and to the noble Viscount, Lord Samuel for the message of God speed that they have given us in regard to these negotiations with the United States. It is obvious that both these negotiations and certain other happenings in the field of crisis that may or may riot happen outside this country are bound to have a great influence, quite apart from any steps this Government take, on the future of our people.

May I just say one or two words about the manner in which it seems to me we should approach the United States? I entirely agree, from a strictly limited experience, with what the noble Viscount, with all his experience, said about the right approach to de Dominions. We must remember to speak to them with absolute bluntness. That, I am sure, is also the right way in which to speak to the United States. It seems to me that one should address them with cordial bluntness, and I say that as one who is proud and glad to call himself a pro-American. The truth is—and we might as well face it, and the United States might as well face it too—that the world dollar shortage from which this country and almost the whole world to-day are suffering is a result of two main factors. On the one hand, there has been the failure of the Old World to recover as quickly as was expected, and, on the other, there has been the rise in prices in the United States, which has been much faster than any of us anticipated. That is dearly the background of the situation that will confront us in these talks with the United States.

I would suggest to the House that we should do well not to approach the United States in any suppliant mood. We must face them on a footing of complete equality in a spirit of self-reliance. It is not a question of trying to get something out of them but of joining with them in trying to put the world on its feet. The noble Viscount has made very forcibly the point that this country can never recover full prosperity until world trade recovers. That seems to me absolutely true. We will continue to pursue the multilateral idea in every way open to us. But I would add two observations. On the one hand, I cannot accept for a moment that the ideal of increased trade with the Empire and the ideal of an increased total of world trade are contradictory ideals. They are in every sense complementary and mutually dependent, and while we shall persist in pursuing this ideal of multilateralism in every way open to us, if it proves impossible to realize that ideal we do not intend to allow this country, in any circumstances, to be crucified on a theoretical hypothesis.

Our first duty as a Government is to see that the people do not starve, and I know the whole House is with me when I say that in the last resort that must take precedence over anything else. I do not think my expression of that mood will seem provocative to the United States. It seems to me the kind of mood which they should welcome most cordially in that great country. But, of course, in the last resort, as many of your Lordships have said so brilliantly, it does all depend on us. World factors and world situations and world negotiations if they go well make things better for us, and if they go badly make things worse, but in the last resort we shall be dependent on our own efforts.

In closing this debate, which may fairly be called memorable, I would like to convince any doubter that the Government is really making a national appeal for a national effort. I agree with what the noble Lord, Lord Woolton, said, that we must keep controversy in this country alive, that we must retain our own political standpoints and argue for them seriously and in a spirit of good fellowship, but in the last resort it will be the co-operation of this people which will pull us through once again. The spirit of the individual Englishman does not change much over the years, but the spirit of energetic co-operation is sometimes modified, sometimes seems to rise and sometimes to sag, and in fostering that spirit and making sure that it is even higher than at present—and I am not saying it is low to-day—a special responsibility falls on us in public life. We obtain certain advantages, great opportunities and much happiness, but at the same time we do bear the extra burden. It is up to us, of whatever Party, to make quite sure that the public are fully informed about the situation and that they realize that we mean ourselves to work together to give them the lead on which our country depends.

I said I was closing the debate, but I am giving way now to the noble Viscount, Lord Samuel. I would add in conclusion that the noble Viscount deserves our warmest thanks for initiating this debate, which should do great good throughout the country and the world.

VISCOUNT SAMUEL

My Lords, the practice of the House would allow me, as mover of the Motion, the right of reply, but I have neither the time nor indeed the need to avail myself of that right since a full reply from these Benches has been given by my noble friend, Lord Rennell. Feeling that this debate has fully served its purpose, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.