§ Debate resumed (according to Order) on the Motion moved yesterday by Lord Cherwell, That there be laid before the House Papers relating to the economic situation and the further steps proposed by His Majesty's Government to meet that situation.
§ VISCOUNT SWINTON
My Lords, I am sure the whole House would wish that my first words should be words of welcome to the Leader of the House on his return. We are all delighted, after his arduous pilgrimage, to see him looking so well, literally and, no doubt, metaphorically in the pink. I do not think he ever gets very red. We are also equally delighted that rumour once more has proved a lying jade and that he returns to us still as Leader of the House. I apologize to noble Lords for not being able to hear some of the concluding speeches yesterday, but all of them I have read. To-day we look forward to the speech of the Leader of the House, whom we always hear with interest and often with profit. The House will be particularly anxious to listen to him to-day, when our minds are so full of Commonwealth relations and Commonwealth co-operation, and I make no doubt at all that the arduous tour which he so nobly undertook and so strenuously carried out has done much to cement these relations.
I want again—one cannot do it too often—to express our grateful appreciation for the practical and generous help which once more the senior partner in the Commonwealth has received from our other Commonwealth partners. It is peculiarly appropriate that the noble Viscount should be speaking to-day. in view of the important announcement which was made here and in another place yesterday about the new tariff Agreements. Of course it is impossible to pass judgment upon those Agreements without knowing 350 the details. I must say that, although I recognize that the treaty-making power resides in the Crown, that under the Constitution His Majesty's Ministers can make treaties, I think in a matter of: such importance it would be right that Parliament should have an opportunity of expressing an effective judgment instead of merely being in the position of recording what must be academic criticism if faced with a fait accompli. Certainly I am sure we shall wish to debate these proposals, or these conclusions I ought to say, as soon as the full facts are available. I understand the noble Lord, Lord Pakenham, can give me an answer to this question. We are committed to these definite mutual tariff concessions, and we have with these tariff arrangements what is called a Trade Charter of some ninety pages. I ask whether Parliament is to be committed to that without consideration and debate? It seems to me, because I gather this is of a permanent nature, that it would be most improper that the Government should commit us to this without first taking the views of Parliament. I do not seek to criticize it. I have not familiarized myself with it fully. But I am sure it ought to come before Parliament.
All we can do to-day is to enunciate a a few general principles and I think that should be done. In assessing any tariff or trade agreement there must be two considerations. First, what is the immediate advantage? and second, what are the future prospects? I regard the second, the future prospects, as far the more important. It may he that you get an immediate deal which gives you an advantage but which may not be an advantage in the years to come. That I think is particularly true in dealing with Imperial Preference, because not only are Imperial arrangements within the Commonwealth firm and enduring, while other commercial treaties are not always so, hut experience shows that where Imperial Preference begins to develop, it grows and fructifies and increases the mutual trade through the years. Frankly those considerations, from which I do not think the Leader of the House would differ at all, are much reinforced by the fact that we have to read these particular tariff arrangements an the light of this Trade Charter, about some of the provisions of which I must say I feel a good deal of anxiety.
351 I do not propose to repeat all the arguments which I have used in recent speeches on Commonwealth economic cooperation and with which I know the Leader of the House has been good enough to familiarize himself. I would only affirm the conclusion of those speeches—this is not a choice between cooperation within the Empire and cooperation with the outside world, not a choice between Empire trade and world trade, not a choice of co-operating with the Empire or co-operating with Europe. Not at all. Happily there is no such dilemma before us. On the contrary, as I have tried to show, and I think succeeded in showing in these speeches, this economic co-operation is not only essential to the Commonwealth, but essential to the restoration of the trade of the whole world.
I pass from that subject to some of the things with which the Chancellor of the Duchy of Lancaster (Lord Pakenham) dealt yesterday. He endorsed and did his best to elucidate the recent statements of the Chancellor of the Exchequer. I have no doubt that the great economists who have been disputing these matters, Professor Robbins and Mr. Harrod, will persist and elucidate all the obscurities which exist. That is very desirable, not as an intellectual exercise, but in order that the country may know the facts, and that, knowing the past, we may be able to judge and be wiser for the future. The noble Lord yesterday confined himself to a repetition—in some ways it was an elaboration, and in others a summary—of the speech which the Chancellor of the Exchequer made in another place a few days ago. But the Chancellor of the Exchequer has made two speeches. As your Lordships will remember, he made one speech on August 7 and he made the other on October 24. I do not know whether I am very muddle-minded—if I am I am apparently in good company with the great economists—but I find it increasingly difficult to understand and reconcile the figures which the Chancellor of the Exchequer has given. I have No 1ntention of trying to find my way through all this great maze to-day. I would only draw attention to three points.
First of all, I would point out one general discrepancy and inconsistency. In August, your Lordships will remember, the Chancellor of the Exchequer said that 352 we must aggregate the American and the Canadian credits and treat them as one; that our drawings and spendings on both those credits must be treated as a whole. But in the October figures, so far as I can follow them, and I have read them over and over again, all the figures he gave to another place are drawings and spendings on the United States credit only. By eliminating the drawings on the Canadian Loan from these October figures, and aggregating all expenditure against the United States credit, he appears in these October figures to leave a balance of £187,000,000 sterling unaccounted for. I would ask, if not the noble Viscount, the Leader of the House, the Chancellor of the Duchy, when he replies to enlighten us on that.
The second point I want to make is this. I find those figures equally difficult to reconcile in the particular. I am not going to go through them all; I will take only one. I take the drawings of the rest of the sterling area, excluding the United Kingdom. On August 7 the Chancellor of the Exchequer stated that the net drawing of dollars on this account by the rest of the sterling area for the twelve months ended June 30, 1947, was 50,000,000 dollars, or £12,500,000; but on October 24 the Chancellor of the Exchequer gave the total net drawings by the rest of the sterling area up to August 20 as 620,000,000 dollars, or £155,000,000, plus an unspecified proportion of another 150,000,000 dollars or, say, £37,500,000. Assuming, as I must, that the Chancellor of the Exchquers figures in August were right, those are most alarming figures. It means that between July 1 and August 20, whereas the net drawings had only been £12,500,000 in the twelve months which went before, in that period of less than two months something between £140,000,000 and £180,000,000 net was drawn.
I take only a third point on these figures. I take the Chancellor of the Exchequers own figures from another aspect, the one to which Mr. Harrod, in a very clear and succinct letter in The Times to-day, has drawn attention. The drawings on the combined credits of the United States and Canada were £1,025,000,000. The adverse trade balance of this country over that period 353 was £573,000,000. That leaves a difference of £452,000,000. How was that difference distributed? Who received it, and for what? What was it spent on? How was it paid out? Requited or unrequited, what undisclosed assets have we to show for it? And may I add this? Surely this does show that the suggestion which I made in a previous debate, that we should have a White Paper showing the whole of this matter clearly and beyond a peradventure, is absolutely necessary.
I want to deal with only one other point in the Chancellor of the Ex-chequers speech, because in a sense it was a reply to a question which I put in this House. He had a good deal to say about convertibility. I think there are three things upon which we can all agree. The first is that nobody doubts that there was a definite undertaking in the Loan Agreement that current trade balances should be made convertible as from July 15. The second thing on which I think we should also all equally agree, is this. If this hazardous and premature obligation was to be undertaken—and the Chancellor of the Exchequer himself has stated with what anxiety he did it; after all, it was four years ahead of the time contemplated by Lord Keynes—it was surely incumbent upon the Government to have an absolutely watertight plan and system which would control that convertibility strictly within prescribed limits. The third thing on which I think we shall agree is that nothing could be worse for the United Kingdom, or for the United States, or indeed for the other countries of the world, whether inside the sterling area or outside of it, than that we should enter upon convertibility, exhaust practically the whole of this great credit, and then have to abandon the enterprise which we had undertaken barely two months before.
Could this disaster which has hit us all have been avoided? The Chancellor of the Exchequer says it could not. He says—and I am sure he is correct in saying this—that he did not receive from the United States an offer to postpone convertibility. It was never suggested that he did receive a formal offer. What I did ask him—and I venture to refer to it—was whether there were warnings. After all, things do not happen in the formal way, particularly with people with whom you are in close and daily relations.
354 Friendly and confidential talks go on between the people who are working together. That is the way things happen. I quoted in September an article by Mr. Herbert Ellison, the Editor of the Washington Post, a very distinguished publicist, in which he said this:The same shortsightedness occurred in the matter of currency. Weeks before the British, under the. Anglo-American Loan Agreement, were called upon to institute pound-dollar interchangeability, Washington officials ran up the danger signal and hinted that a waiver ought to be applied for, but Mr. Dalton took no notice. On the contrary, he expressed confidence that the pound would be able to weather the exposure. The failure to do so caused surprise only in London.Was. that tentative suggestion made? If it was, was it rejected by the Chancellor with a song in his heart? Whether the suggestion was made or not, it was the Chancellors duty to appraise the prospects rightly and to warn the United States Government—if they did not warn him—of what dangers there were likely to be. Frankly, I am amazed—and I think your Lordships are—at the complacency of the Chancellor of the Exchequer at the reverse which we have suffered under his financial leadership. What would be said of a General who completely underrated the: forces arrayed against him, who made faulty preparations and inadequate plans, who dissipated his forces, lost the battle and was forced to beat a hasty retreat? I do not think such a General would long hold his command.
I turn now to a subject of a very different character, the courageous and realistic speech of the Minister for Economic Affairs. I think there is only one criticism which is on so many lips and it is this: Why was not that speech made a year ago? He can count upon our support for all constructive plans. The noble Lord, the Chancellor of the Duchy of Lancaster, showed yesterday, as, I thought, an inclination to answer the questions of my noble friend Lord Cherwell by putting a number of interrogatories himself, and which he was kind enough to address more particularly to me, I seem to recall that in the late President Hardings administration there was a member of that administration—unlike the noble Lord he was one of the lesser lights of that administration—who was noted, if for nothing else, for one well known cliche which was this: "You tell 355 me and Ill tell you." However, the noble Lord said that I always try to give a constructive answer and I will do my best to do so.
The questions that he put to me were these. First of all: "Do you support cuts?" I thought the noble Lord, Lord Cherwell, answered very fairly when he said—he was interrupted in this speech—that that was a rather difficult question to answer in a categorical manner without all the details and without full knowledge. I did not think that at all an evasive answer.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM)
May I interrupt the noble Viscount for one moment? I need hardly say, as I made plain yesterday, that I was not asking for details.
§ VISCOUNT SWINTON
I see. I have not consulted my noble friends, although I think I probably speak for them, but at any rate I will speak for myself and others can say in the debate whether they agree. I do not think we should be asked to accept uncritically—and I do not think that is so—all the cuts as an indivisible whole or a completely inspired creed. For instance, I would take petrol. When the petrol cut was announced we happened to be meeting more or less immediately afterwards, and I ventured then to express the view that the maximum saving that you could get out of this petrol cut would be far outweighed by the inconvenience, the hardship, the loss of efficiency entailed and by the inflationary stimulus which would be created by money which had hitherto been spent in motor taxation, the upkeep of cars and motor-cycles, the purchase of petrol, the repairs and so on being made available to chase the ever-dwindling supplies of goods. We know now that the supply of goods must dwindle further.
On that occasion the noble Lord, Lord Latham, who did not otherwise intervene in the debate, was good enough to interject that what I said was nonsense. Well, from what has happened since I gather that there are quite a number of people, not only on one side of the House, who think that what I said was not such nonsense but had a deal of good sense behind it. For my part, I would say this—and I answer the question categorically. If 356 I am satisfied that cuts, however unpleasant, are necessary in the circumstances of to-day, I would accept and support them. But I am bound to say that if a realistic policy had been presented to the country a year ago, and if our resources had been conserved and wisely directed, much less drastic action would be necessary at the present time.
I am so sorry to interrupt the noble Viscount, who is being so helpful. He says that if he is satisfied that cuts are necessary he will support them. Can he tell us whether he does believe that in fact cuts of this order of magnitude are necessary?
§ VISCOUNT SWINTON
I believe that we are in such a condition to-day that you have to make considerable cuts. I say that on the information at my disposal, and I see no other way out of the frightful mess into which you have got us. The noble Lords other question was wider and more general. It was—and I think I paraphrase it fairly—"Will you support our policy?" I would answer for my own part equally clearly. In so far as your policy is devised single-mindedly to the one thing that matters, to increased production to pull the country through—in the words of the most reverend Primate, the Archbishop of Canterbury, to help the country in its hour of need—and to surmount our difficulties as a United Nation I will support you all the way—all the hard way. But if in our hour of need you seek to divide the country by projects which can only distract us from the one aim that matters, then we are in duty bound to oppose it.
Sir Stafford Cripps appealed to us all to make our contribution. Quite sincerely I believe that we all want the opportunity and the lead. It does indeed need all, and all the best that we all can give. I would say to Sir Stafford: "Do not ignore or fail to evoke the vast variety of experience which is necessary to you in this tremendous task." It is a world-wide campaign, and we have here in this land invaluable intangible assets born of long and varied experience. I can best sum them up by the American expression "the know-how." We have got the "know-how" and it is a priceless asset. It is a combination of knowledge of markets, of reputation and of good will. That great aggregate is the 357 sum of thousands of individuals, individual enterprise, knowledge and, I would almost say, instinct. I remember the late Lord Cunliffe, the Governor of the Bank of England, was once asked by somebody: "How do you know a good bill from a bad one?", and his answer was: "By the smell." That is absolutely true, and it is that largely acquired, half instinctive, inherited knowledge which, like our craftsmanship, in industry, is a most priceless asset; and I can assure the noble Lord that I have not lost my faith and confidence in the craftsmanship or the craftsman. But this experience, this knowledge, cannot be regimented. You can mobilize it only by giving individuals their chance.
Sir Stafford spoke of the importance of flexibility in the export programme. He was speaking in the sense of being able to divert from one product or one market to another if this or that avenue closes. To succeed in that difficult manoeuvre—and it is a difficult manoeuvre—industry and plans must be flexible in other ways. Firms must be encouraged and free to go out and sell and exploit markets, and to take decisions on the spot with the widest latitude under the general plan of operations. Controls of material, where they have to be maintained, should be flexible and should be administered as simply as possible and by people who understand what it is all about. I was delighted yesterday with the pronouncement which the Chancellor of the Duchy was authorized to make on this subject in response to an appeal I had made to him previously. I think this simplification is all-important. Excessive and creaking controls breed bottlenecks and delays, and these create increased costs of production. They make firm delivery dates impossible and they create a feeling of frustration in workers and management all through industry. I do not know whether we can reach these targets; we certainly cannot achieve them without greatly increased coal production. I do not know whether we can reach them at all. I am sure we shall all do our best—management, workers, everybody. But to get near the targets it is essential to have an unimpeded flow through the factories, and to secure that you must avoid delays. We must build up stocks and fill the pipelines.
One other thing: among our great intangible but real assets are our good will and the desire of people all over the 358 world that British trade and commerce, and British credit, shall continue to retain the confidence they have so long enjoyed. The sterling area, which has been defined as a geographical term of art, has in fact been in the past, and will be again I believe in the future, if we pull together, something much wider than that term of art implies. All over the world, in the great populous marts or in the most distant sparsely-populated places, great merchants or little producers, generation after generation, when they had something to sell drew a bill on London—a tremendous asset, due partly to the "know-how" and to something we had that others tried to get. But no one could filch that away from us. They made their contracts here; arbitration was settled here. All over the world, by their past tradition and for their present interest, primary producers, traders, merchants, want that confidence restored. It has been shaken, but we can restore it. We must restore it. Two things can restore it: sound policy and united effort. For all of us to-day those two are the two great commandments; and therein lies our duty to our country and to the world.
§ 4.35 p.m.
§ THE LORD PRIVY SEAL (VISCOUNT ADDISON)
My Lords, I should like, first, to thank the noble Viscount who has just spoken for his very generous references to myself. Thanks to the abundant kindness of friends everywhere, and to the efficiency of the British flying boat, I have been able to make this long journey and come back in good health. I appreciate very much, particularly in view of the impressions I retain of that journey, what the noble Viscount said towards the end of his speech. Nothing truer could be said than that in this time of difficulties our greatest asset is that the British people have, as he describes it, the "know-how" which is appreciated all over the world. I found everywhere an appreciation of that quality of ours and, so far as the Commonwealth is concerned, the one question that I met with everywhere was, "What can I do to help?" Behind that question was an appreciation of the vital facts to which the noble Viscount has referred.
I shall confine myself mainly to these aspects of the issues before your Lordships House. But before I do so I would like, if I may, without introducing any 359 note of polemics in the light of what the noble Viscount has just said, to refer to something which the noble Lord, Lord Cherwell, said at the beginning of his speech yesterday. I think it was very unfortunate and is likely to have a bad effect, because wherever one went in ones travels the first duty one had apparently was to try to convince people that Britain is not down and out. It has been represented all over the world that we are done for. That is very damaging. Moreover, it does not happen to be true. The British people are what they were, and I have no doubt that whatever Party be in power—this is not a Party observation—their qualities will see us through in the course of time. But the sort of thing the noble Lord said has done a lot of harm. Lord Cherwell, at the beginning of his speech said:I do not intend to-day to devote much time to the general collapse of the will to work brought about by fifty years of Socialist propaganda … I asserted that there is a general lack of the intense activity to which we were accustomed before the war.With the greatest possible respect to the noble Lord, when he says things of that kind—which I shall show in a very few minutes are not correct—he is rendering a great disservice to the nation at this time. It is on that account that I venture to make these observations while I have the opportunity. I will give one illustration of the inaccuracy of that general accusation (for that is what it comes to) or insinuation.
We all know that formerly the gap between the cost of the raw materials and supplies of food that we required and receipts from our exports was made good by the earnings of our shipping and of our overseas investments. So far as the overseas investments are concerned, they are practically all gone. We sacrificed them in the fight. So far as the shipping is concerned, something like 11,000,000 tons were sent to the bottom of the sea by the enemy. I believe that repairs and so forth made good a considerable amount by the end of the war, and we were left with a net deficit of something like 7,000,000 tons, as compared with pre-war tonnage. I made inquiries this morning on this particular point. It is quite evident, whatever might be the mistakes of the Chancellor of the Exchequer, the Minister for Economic 360 Affairs or anybody else, that it is physically impossible, without a considerable amount of work and time, to replace those ships which earned us so much money.
I want to refer to the effort that is being made, which has not been advertised at all and which, I think, if we took the noble Lord at his face value, would not be understood in the least. Here are the actual figures published by Lloyds on October 22. The work in hand at British shipyards is running at the highest level for twenty-five years. In the quarter ending September 30, merchant ships under construction totalled over 2,000,000 tons—50,000 tons higher than the previous quarter. The United Kingdom shipbuilding industry is now building more ships than all the rest of the world put together. I suggest that that is not done by people standing about with their hands in their pockets. That is not done unless people are working; and they are working. I give that only as an illustration which should not be overlooked. I wish the noble Lord would try to refrain from publishing this imputation on our fellow countrymen. I am not saying that some of the criticisms which we hear about the efforts are not properly directed, or that we should not make quite legitimate criticisms. I think the criticisms made by the noble Viscount who has just spoken are very material. I have only mentioned Lord Cherwell's observation because I was really hurt by what the noble Lord said. It does a great deal of harm, and it ought not to be said. That is the only controversial note I shall introduce. I do that only because really I was (shall we say?) goaded into it by what the noble Lord said yesterday. That sort of statement has done us, and is doing us, a lot of harm.
Now I come to the matters which lay behind the negotiations which are in progress, and on which the preliminary Agreement was signed this morning in Geneva. I agree with the noble Viscount opposite that it is impossible to exaggerate the importance of our Commonwealth trade. I have in front of me figures which I know are repeated from year to year, and they are really very remarkable. It is a list of countries which take British exports in the order of the value of the exports that they take. There are three countries which top the list regularly. They are the Union of South Africa, Australia and India. Those three countries 361 regularly take more British exports than any others. It is remarkable that a country like the Union of South Africa, with a very small population, should regularly take more British exports than the United States, and that Australia, with 7,750,000 people, should similarly absorb a much greater value of British exports than that vast country. We have not been selling enough to dollar countries; that is quite plain. So noble Lords may rest assured that, in undertaking these negotiations, we were on the alert all the time to safeguard essential Commonwealth interests.
There is another matter which I thought perhaps would have been referred to already in the debate, but it is as well that I myself should mention it now—namely, the Clause 1n the Loan Agreement affecting discrimination. That is very important, and I am glad to say that the matter has reached a clearer stage. At one time, it was sought to be represented, shall we say, that it would be difficult, without discrimination, to continue our large-scale imports from some of our Commonwealth countries. Some considerable time ago I deliberately had this matter put to the test. It is clear that the intention of the word "discrimination" in Clause 9 of the Agreement does not apply to what may be described as bona fide commercial considerations. If you take, for example—I give it only as an example—the South Africa citrus fruit trade, there you have a large-scale production which has grown up and been developed for the supply of the British market. It is quite evident that, with a large productive enterprise designed and carried on for the supply of a particular market, provided the charges are reasonable, the maintenance of that connexion is a first-rate commercial consideration, and, therefore, the continuation of the practice of buying that produce is not a matter of discrimination. I will not continue the analysis.
§ VISCOUNT ADDISON
The same would apply to Australia. And, if any other interpretation had been made, it would have knocked the bottom out of our Commonwealth system. I want only to assure the House that we are fully alive to the importance of that matter.
362 I may now interject a few observations on another question—the immense help which we shall receive from Australia with regard to our supplies this year. As the House knows, we have a four-year contract with Canada, under which we obtain a basic supply of 160,000,000 bushels of wheat per annum, and the price arranged for this year is one dollar sixty-five cents. None of our Canadian farmers have made any difficulty about that price being substantially lower than it was, but one dollar sixty-five cents is a very good price. I remember years ago we used to hear that there was a constant prayer for dollar wheat. However, my point is that there are 160,000,000 bushels and our home supplies, and the gap to be filled after taking into account our home supplies and this Canadian supply is, as a rule, in round figures, somewhere between 60,000,000 to 80,000,000 bushels. Last year Australia could supply us with only about 5,500,000 bushels. They have had a favourable rain, happily for us, and expect a very good crop. The House will be glad to know that we were assured that the Australian supply this year will not be less than 50,000,000 bushels, and it may be more. I hope it will be, and I think it will be. But the point that I am making is that that is wheat for which we have not to pay dollars. That is the vital thing; and help of this kind is extraordinarily valuable in these days. I can multiply very easily the instances of the helpfulness which all quarters of the Commonwealth have sought to give us, and the House is well aware what South Africa, as well as Australia and New Zealand, is doing.
I will now turn for a minute to the history of these negotiations, and then I shall have finished. I am doing this in order to answer, so far as I can, the questions of the noble Lord. We decided a long time ago that the preparation for these discussions at Geneva should take the form of consultations in London between ourselves and the representatives of the Dominion countries. They took place and occupied a considerable amount of time, and they have resulted in the Agreement which has; been signed this morning at Geneva. There were seventeen countries co-operating, including the members of the British Commonwealth. The purpose was to seek a lowering of trade barriers; but it has. been a clear 363 understanding between us all through that there will be no abatement of preferences between us unless a satisfactory equivalent is received in return. The Dominions have been with us all through these negotiations, and I believe I can truly say they are satisfied with the result.
The first question which the noble Viscount asked me was: Would Parliament have any opportunity of discussing this Agreement? As I understand the arrangement, it is that the detailed document will be published on November 18. Noble Lords will be aware that when there are seventeen countries negotiating about the tariffs and charges on a bewildering variety of articles, the resulting document will be a big one. I have not seen it myself, and when I do I do not think I shall be able to follow it completely. It is a sort of Bradshaw's guide of international tariffs. But, of course, it is obvious that before the date I have mentioned it would be very improper to disclose any details of the arrangements which have been arrived at. The noble Viscount recognizes that. However, it will be open to any country to withdraw its adherence to the protocol by means of a provisional application, on giving sixty days notice. The general Agreement will enter into force thirty days after the instrument of acceptance, and there will, therefore, be full opportunity for Parliament to consider the Agreements as a whole before they are applied. That is the answer to the noble Viscount. There were one or two other questions which he asked me, some of which I have already answered in advance. I think he wanted to know definitely to what extent we were tied to this Agreement. The arrangement is that we shall be free at the end of three years, if we so desire.
§ VISCOUNT SWINTON
Will the noble Viscount allow me to interrupt? As I understand it, there are two separate but connected things.
§ VISCOUNT ADDISON
I am coming to that. The arrangement is that we shall be free at the end of three years to revise or give notice of revision of particular concessions, and so on, if required. Then the noble Viscount asked me as to the relationship between the tariff Agreement and the document I have in my hand relating to the Trade Charter. I may say, 364 in regard to the preparation for the Trade Charter, that many parts of it are included in the tariff Agreement; but the Trade Charter, which is in draft, will be discussed in Havana at the Conference beginning on November 21. It is to be hoped, of course, that the Conference will arrive at an agreed international Charter; but even if they do not, this tariff Agreement will stand with regard to tariffs. It will be separate, and is not an essential concomitant of the other.
§ VISCOUNT SWINTON
That I appreciate, and I am very much obliged. My real point, however, was that I wanted to be quite sure that we should not be committed to the Trade Charter, which I understand to be a permanent document—a sort of world-without-end document—without Parliament having a chance of approving it, or assenting to or dissenting from it.
§ VISCOUNT ADDISON
Not having received notice of that particular point for a specific answer, I am afraid I cannot give any reply, but I am sure that that will not be the case. Without having referred the matter to those directly responsible for a precise answer, I should not think we would be committed to a document of this importance without an opportunity being given to discuss it.
I think that answers the questions which the noble Viscount put to me, and I would like to reassure him and the House generally as to the complete confidence between ourselves and the Commonwealth territories all through these very intricate negotiations, and the desire throughout on both sides that not only should we maintain but that we should greatly increase the trade between us. We recognize that as a part of the effort we have to make. We have to do very much more than we have ever done before to make use of the territories adhering to the Commonwealth. That is why this enterprise is now being carried on in Africa to supply us with ground-nuts. It is only one of many commodities the supply of which I believe we can, by active operations, greatly increase from our own Colonies and Dependencies; and in addition there is what can be done in the self-governing Dominions. So far as the self-governing Dominions are concerned, I can say that they are now searching in various practical directions to see what more they can do to help us. But it 365 is quite clear that one of the most important results which ought to flow from this tariff Agreement is an increase of exports from this country to dollar countries. If it does not achieve that, it will have been a failure. But I think the House will agree, when the details are published, that mutually satisfactory arrangements have been made which should lead to a substantial increase of British exports to dollar countries, which is one of the governing purposes of the negotiations. As the House knows, I have not had an opportunity of entering upon the other points raised in the debate. I intervened only in order to give reassurances with regard to Commonwealth matters, and I thank the House once more for its kindness to me.
§ 5.2 p.m.
§ LORD BRAND
My Lords, I propose to make some general remarks which have more reference to the future than to the past. I do not propose to deal with the very controversial question of the drawings on the American Loan. There are a good many controversialists in that held already and I confess I do not understand fully the published figures, which are the only ones at my command. The really important point seems to me to be how much of the Loan was used for paying off other lenders to us. We cannot pay any lender out of our own resources: we can only pay him out of some other lenders resources. And what the figure was I have not been able fully to ascertain.
So far as the future is concerned, I notice in the recent speech of the Minister for Economic Affairs that: he says, in making his estimate of the dollar deficit for 1948, that he allowed for drawings by other countries in the sterling area on the most restricted scale possible for them, and on the small-balancing payments, which we may be forced to make in gold and dollars to other countries. It seems to me that very much depends in the future on the Treasury and the Bank of England being able to conduct our financial affairs within these limits. It may be very difficult to keep within these limits, but the Bank of England and the Treasury are fully aware of its importance and one must hope that they will be able to do it. I myself welcome the courageous and comprehensive speech of the Minister for Economic Affairs, because it shows that the Government have at last faced the 366 necessity and extreme urgency of a solution of our great problem. It is quite clear that we can become independent financially only by a hard road, and by a very hard road. Only so can we do what is all-important to us and to the whole world, that is, establish the full credit of sterling as an international currency once more. This is of importance not only to us, but particularly to all the sterling area, whose only external assets in many cases consist of their sterling balances in London.
I must say I also admired the sparkling speech of Mr. Churchill in another place. I whole-heartedly agree with him on the fundamental importance of what he calls "the vital creative impulse." I recognize that broad planning at the top is row going to be necessary always and more particularly in conditions of scarcity such as now exist, but otherwise I am a wholehearted believer in private enterprise in competitive industry. It is quite certain, to my mind, that it is disastrous to abolish or even weaken the price system and also the profit system, or what I prefer to call the profit and loss system, because so many writers on economics when I look up the index in their books have much to say about profits out nothing to say about losses—it is very important to make that distinction. As a layman in politics, I venture to suggest that the Conservative Party might be bolder in the defence of profits. I consider profits are wholly defensible and in fact indispensable in private enterprise, and I think we would do well, those who believe in them, to state the case for them. I agree that all this should be accompanied by some procedure against restrictive habits on the part of industry, such as we have in the anti-trust legislation in the United States and by the use of taxation if necessary to remedy the gross inequalities in distribution. But just the nationalization of competitive industry by itself, if it is tried, will be found injurious to the community and in my opinion it is obsolete in its character.
The main weakness of Socialism, as I have said once before to your Lordships, is that the Socialists pay too much attention to distribution and not enough to production. Another weakness, in my opinion, is that they have imagined that the internal problems of a country can be dissociated and isolated from its external 367 problems. To my mind, they are like the crew of a ship in a storm, thinking that, if they swab the decks, everything will be all right and that it does not matter whether they guide the boat or not. I think it is in these two tendencies of Socialism that are to be found fundamentally the reasons for the delay that has taken place in dealing with our tremendous problems. Yet, as Mr. Churchill recognized, the Governments immediate primary duty is to secure our food supply, and I would add to that, our raw materials. If you take those two, they amount to nine-tenths of our imports. Our real task, as the Minister for Economic Affairs knows very well, is to provide for our imports, and particularly these nine-tenths. That is a difficult task and in fact is the whole object of the plan of Sir Stafford Cripps.
I may say that when I lived in Washington during the war from 1941 onwards, and when for two or three years I was responsible for the supply of food from the United States and Canada to this country, I used to sit in my office feeling very oppressed by the thought of how after the war my country was going to pay for the hundreds of million pounds worth of food that I was sending over free; and to that you can add raw materials, which were also obtained free. I came back to London once a year, and found to my surprise that public opinion, in so far as it was not fixed on the war, was fixed on the Beveridge Plan—I mean no disrespect to my noble friend, Lord Beveridge—and on other social schemes, and on what seemed to me to be dividing up a cake which would not be there. I believe that during that time, and since, our people have been largely blissfully unconscious that they have been living on other peoples money, which made everything comparatively easy. Certainly it made balancing a Budget quite easy, compared to what it is going to be.
If we did so well in the war, then naturally the ordinary man thought we could do very much better after it, and have a higher standard of living as soon as the war was over. People forgot that we borrowed £4,000,000,000 from the sterling and other countries, that we got £7,000,000,000 of Lend-Lease and Mutual Aid, and, furthermore, that we afterwards got the American and Canadian Loans. I think this was the mood of 368 the last Election, that we could have a higher standard of living after the war in view of what had happened in the war; and it was on this view that the promises of our Government were based. But those who thought in this way were under a delusion as to the real facts. We were, of course, enormously impoverished by the war, and for the time being it was quite certain that the real standard of life could not be higher, but must be lower. There thus developed what must have seemed to the outside world a paradox. We had not the means of livelihood—that was clear—but we seemed to think we were rich; many wished to work shorter hours, and wages became relatively higher than before the war. All this, of course, was only possible if the production of the country was much higher in the sort of way that the production in the United States has become enormously higher since the end of the war; in fact, it has nearly doubled compared with pre-war times. That may be possible for us in the future, if we aim always at more production, and if we consider production as far more important than distribution—although, of course, everybody wants to see a fair and just distribution.
In this connexion I would like to refer for one moment to the two principles which my noble friend Lord Pakenham mentioned yesterday. He said, I think, that the principles of his Party and his Government were that every human being was of equal importance, and that it was the responsibility of the Government that natural resources should be disposed of to the greatest advantage of the community. If my noble friend means by "important" that every human being has an immortal soul, and all these are equal, I am prepared to agree. But clearly not every human being is of equal importance from the economic point of view. Some enrich the country by their brains, and others do not. If we go purely for equality in this country, then I think we are doomed. As to the responsibility of the Government that natural resources should be disposed of to the greatest advantage, I think that that happens best of all by the efforts of the community through the price system. To my mind that second principle of my noble friend looks like too much responsibility on Whitehall, compared with Mr. Churchill's "vital creative impulse," on 369 which latter we must in my opinion, depend.
The exhaustion of the Loan has now brought us to the real crisis. Nevertheless, while it was quite clear that the Loan would help us while it lasted, it was also quite clear that it would not last very long. We might well have assumed that it might last a few months longer, but that does not mean that we could not and should not have taken much earlier steps to see that the deficit of our balance of payments was reduced below the enormous figure at which it still stands. It is now clear that the drastic plan of the Minister for Economic Affairs is obviously necessary, if for no other reason, for the sake of our reserves. He has said that, even if his plan is successful, our reserves will be only £270,000,000 at the end of 1948. I remember during the Washington negotiations that we always took 1,000,000,000 dollars as the absolute minimum of reserves for this country and the sterling area; we thought that we should never allow our reserves to fall below that figure. As we are now, if Sir Stafford Cripps' plan is a success, our reserves will be only £270,000,000 at the end of 1948, and we shall be running then at a deficit of £250,000,000, or 1,000,000,000 dollars a year. So that another year at that rate would bring our reserves down to practically nothing.
It is clear, therefore, that the difficulties of our future are too great even to be solved solely by Sir Stafford Cripps' plan. Sir Stafford estimates that after the August import cuts of £200,000,000 in dollars the deficit at the end of 1948 will be £475,000,000 and therefore he first proposes four steps. The first is to produce more ourselves in the way of agriculture. I am a farmer, and I know that that will take time. The second is to substitute soft for hard currency purchases. Sir Stafford himself says that not a great deal can be done in that way at present. The third is to increase visible and invisible exports; and fourthly, we must develop our Colonies. The development of our Colonies is also a long-term issue. We come down therefore to the Vital question of increasing our visible and invisible dollar exports to the dollar area, and unless we can do that up to his estimates, we shall be still worse off at the end of 1948. As to the restrictions ahead, if one adds 370 up all the cuts in his plan, the important point is that the total dollar cuts made by us in the last few months will amount to £300,000,000, which is a tremendous figure, not very far short of £1,000,000 a day. With regard to our over-all balance of payments, and not simply our dollar deficit, Sir Staff 3rd Cripps was more or less silent. He gave some months ago a figure of £372,000,000 for our total needed export increase, but I imagine that under the new scheme the amount required to be exported to the non-dollar countries is greatly reduced. Nevertheless, we shall require a very large amount of exports to them; how much I do not know.
All this shows the immense size of the task before us, which can only be solved negatively through restrictions and positively through greater exports. I hope we shall all concentrate on the positive solution of the problem, but it would be very optimistic to think that we can do more than reach the export target yet. I gather from the figures that that target supposes an increase on the 1938 rate of exports up to 164 per cent. or certainly over 160 per cent. That is an enormously high target to reach. With our united efforts possibly we may reach it. Even if the exports are manufactured, the next problem is to sell them, and we certainly will not sell them unless our quality and particularly our prices are in line with those of other countries. They will not be in line with other countries if we have in this country a combination of further inflation and still maintain, as I hope we shall, our present rate of exchange. In any case, we shall require the most energetic salesmanship, especially in the dollar countries and particularly in the United States, and energy which we have not always shown, in my opinion at any rate, in the United States.
While the policy of wholesale restrictions is, I think, absolutely necessary, it is very depressing, since our problem in the end can only be solved by a great increase in international trade. At the moment however we are reducing our international trade. This reduction of our trade leads to the reduction of other people's trade, and as in 1931 we go down on a descending spiral of international trade. But desperate diseases need desperate remedies, and so far as I can see the cuts that Sir Stafford Cripps has proposed are absolutely necessary. All the 371 more imperative is it, in my opinion, to get imports from, and to develop a balanced trade with, the non-dollar world, particularly with Europe. We ought to develop that trade whether we do it bilaterally or possibly by triangular trade or even multilateral trade, and some such developments might not be impossible. I do not know whether your Lordships have read the report of the Committee on Payments Agreements which was a sub-committee of the Paris Committee presided over by Sir Oliver Franks. It is quite an interesting document. A transferable currency system for Europe is suggested which, if it is to come into force, would need considerable aid from the United States. If it is possible to bring it into effect it holds out considerable possibilities for the development of inter-European trade.
I do not intend to bore your Lordships with many remarks on inflation. I would say, however, that I saw very close at hand the immense inflations on the Continent of Europe at the end of the last war, particularly in Germany, and I do not believe that the public of this country understand in the slightest the meaning and the desperate results of terrific inflation. It has not only economic results, but enormous social results, and to my mind Hitler was the direct consequence of the lunatic inflation which took place in Germany. All economists argue that we have serious and all-pervading concealed inflation here. I agree with them that there is inflation and I think that there is a grave danger that such inflation as we have might easily get worse. It results, of course, as your Lordships know, from the spendable income in the country being much greater than before the war, from there being much less goods, from prices being controlled and from subsidies being given. Therefore a great part of the population has money to burn, and the consequence is constant pressure on all supplies, loss of stocks, tendency to work less for unspendable money, particularly when it is taxed with Income Tax.
I noticed a few words of a well-known American, Professor Viner, in a magazine in this country a day or two ago which put the consequences rather vividly and, I think, not altogether inaccurately. He said, and rightly, that the present system makes leisure over-attractive as compared with wages, stimulates absenteeism, and 372 while making very little else available, does make available unlimited quantities of time-consuming services, such as entertainments, travel and mid-week football. Moreover, inflation, so long as we have a fixed exchange, discourages exports, attracts imports and draws labour and materials towards unessential consumption. Of course, the tendency to inflation is now accentuated by the exhaustion of the Loan and by the reduction of imports following on the programme of the Minister for Economic Affairs.
It is also, of course, accentuated by our capital expenditure and this is the reason for Sir Stafford Cripps' proposal for a £200,000,000 cut in capital expenditure. I consider this necessary although extremely regrettable. Perhaps even more cuts will be required, but I do not agree with some very good economists, who I think exaggerate when they say that if we only cut capital expenditure enough our balance of payments problem would solve itself. I do not share that view, and I do not believe, however far you cut capital expenditure, that that result would follow. Heaven knows that in fact for the interests of our country we are not spending enough on our capital plant; we ought to be spending a great deal more, if we had the resources. But we can only get those resources by much greater production. That is one of the instances which shows how greater production per man-hour would be so extraordinarily valuable to this country. If anything like the Marshall Plan goes through, I should like to express the strong hope that capital expenditure on the modernization of our industries will have some part in it. I believe nothing is more important or more productive than increasing the productivity of our industry in that way. I do not believe we can afford to let the efficiency of our industry and its plant fall further than it has fallen already.
But of course we have to go further than merely reducing capital expenditure in order to stop inflation. We shall have to do either some or all of these things, reduce Government expenditure, reduce subsidies, increase taxation—it is to these that the Chancellor of the Exchequer must look. I do not propose to suggest which he should do, or that he should not do all. His task is a very difficult one. But if prices rise in consequence of what he does, and wages follow, then 373 no good, of course, will be done. We should continue then the spiral of wages and prices; and the consequences would be disastrous on the price of our exports and also ultimately on sterling. If on the other hand he could succeed and if inflationary purchasing power were diminished relatively to goods, then wages would again become more attractive than leisure, production would increase and labour would be better distributed.
I should like finally to make a few brief comments of a general character. Our problem is more difficult than that of any other country, because we are more dependent on the outside world. That is not our fault. It is due, as I think the noble Viscount the Leader of the House indicated, to the loss of our invisible exports, to our Government expenditure abroad, and particularly to the rise of prices of imports. None of those things is our fault; and if you take simply our visible trade, we are doing better than we did before the war. I may say I have left out any mention of our external debt which also presents an enormous problem, but which we cannot properly see how to deal with, until we have made both ends meet. The really serious effect of the war is the division of the world into two halves—the Western Hemisphere, where production has not been diminished at all, and the rest of the world which is suffering from the devastation of war.
The Paris Committee, as no doubt your Lordships know, estimated the dollar deficit of the sixteen co-operating countries in 1948 at £2,000,000,000–8,000,000,000 dollars; in 1951, still at £700,000,000 or some 3,000,000,000 dollars. Against this one has to bear in mind that already in 1938 these same European countries owed the United States yearly about £350,000,000, which at the present value of money is £700,000,000. Therefore, we did in fact owe the dollar countries in 1938 as much already as it is estimated we shall owe them in 1951. There was this enormous difference, that in 1938 we balanced our triangular trade through the exports of other countries to the United States and the dollars thus available and we shall probably not arrive at that sort of equilibrium again for a good many years. Therefore, this dollar problem is a continuing one for some time. Some people are inclined to blame the United States for this result. I do 374 not think they would do so if they remembered what is t0 me a very sobering thought, that without the surpluses of North America we in Europe should be dying by the million now. Thus we can be thankful that North America, Canada and the United States produce these surpluses, even if they do not buy a great deal from us.
We, of course, must do our share to solve the problem by exporting, as far as possible, to the Western Hemisphere and the United States must also do its share. But we must remember that the United States has always been a debtor country for decades, ever since her beginning, and she has still more than any country I know a debtor-country mentality. But we also have a certain mentality which we must change; we have the mentality of a creditor country. We were always generous in lending our money to other countries and sometimes are so still. The late Lord Keynes, I remember, compared us to the Lady of the Manor, the Lady Bountiful, who did not know she had lost all her money and who still went on being very charitable and very kind to the people of the village on somebody else's money. That is what we are inclined to do at the present moment.
The great gulf facing us now has to be filled, either by extreme austerity, or by some external aid. The plain fact is that we cannot at the moment completely support ourselves. I fear that living for so many years on borrowed money ill prepares us for the effort of living entirely on our own efforts. We are faced with the difficult problem of changing the outlook and belief of millions of our working fellow countrymen and women. Can they accept the truth that their improved standard of living is only on paper, and that the real improvement of their standard of living depends on increased production? All other classes in the community have faced this problem, and have had their standard of living reduced. The wage-earner has to face, not a reduction perhaps in his real standard of living, but the fact that his money standard of living now is not real, and that it can only be real when the country has greatly increased its production It is no good increasing wages as long as you have full employment; all you will have then is greater inflation. Improvement in this country, therefore, depends on the united 375 efforts of each and all of us, on the managers of industries, savers, shareholders, merchants, researchers, inventors, workers, all filled, I hope, with the vital creative impulse.
If unity among all these classes were achieved what might we not accomplish? I think we should get much nearer to what the United States accomplishes now. The British people deserve better than to have to face the hardships which they are going to face, but I am not without hope that good may come out of evil. I do not know whether your Lordships have read Professor Toynbee's great work, The Study of History, which is devoted to the rise and fall of civilizations. His theory is that out of a challenge always comes a response, and that response is the origin of civilization. That is the opportunity now before the British people.
§ 5.41 p.m.
§ LORD LAYTON
My Lords, my first duty is to express on behalf of my noble friend Lord Rennell his regret that he cannot be here this afternoon to hear the rest of this debate and any reply that may be made to the questions that he himself raised yesterday afternoon. The noble Lord left a sick bed to come down to this House yesterday, and he has had to return to it. Before I come to the chief point which I wish to raise this afternoon, I would like to touch very briefly on some points that have arisen during the debate. The noble Lord, Lord Pakenham, referred at the beginning of his speech yesterday to the question of how far we had in fact got in our production. Some said it was a little better than pre-war, some said it was the same as pre-war, and some said it was less than pre-war. I have taken some pains to check a statement which I made the last time I addressed the House on this matter, using the indices of national general production which we have been accustomed to use on The Economist for twenty years. They confirm that the production of the country is certainly at a pre-war level, and almost certainly substantially above it. Evidence of that is manifold.
First of all, there are more workpeople in work. The Bankers' Clearing House figures, corrected for price changes, show that the total transactions in the country are appreciatively larger than before the 376 war. The carriage of goods other than coal and minerals—that is, general merchandise—on railways is appreciably up. The internal consumption of coal and of gas and electricity is higher. The production of sulphuric acid, which is a very important test for the whole range of chemical industries, is above pre-war levels. It is difficult to get an exact figure, but I am quite satisfied that the statements that have been made in this House are not just aspirations, and that they are backed by very considerable evidence.
If that is so, then why the crisis? The answer is that we were faced with the destruction wrought by the war, the enormous de-stocking in this country and in Europe, which is of supreme importance, and the fact that on our ordinary current trade account we have to deal with what we have lost on foreign investments and that we have had to provide over the last two years £300,000,000 or £400,000,000 of Government expenditure overseas. To cope with all that would have required not pre-war production but 30 or 40 per cent. above pre-war production. The picture is not one of a moribund nation but of a nation which is not yet geared to carry out the immense recovery programme it has before it. If we have to keep our people up to the knowledge that, as the noble Lord, Lord Brand, has just said, they have to go the hard way, it is at the same time a disservice to under-rate what has already been done.
I think that everybody in this House would associate himself with what the noble Lord, Lord Brand, has said about inflation. But in the statement of that case, too, I think it is very important that we should not use words that may mislead. For example, I think that some harm has been done by the statement that has been made and has gone the rounds about £7,000,000,000 of purchasing power chasing £6,000,000,000 of goods. That was an epigram that appeared in a White Paper, the purpose of which was to bring home to the country the danger of inflation and to discourage labour from pressing for wage advances, but it has been taken in the country to mean that there is an extra £1,000,000,000 somewhere lying about in the banks or in people's pockets, Which is trying to find some goods to buy. What that statement actually refers to is that while personal 377 income, alter paying tax, in 1946 was £7,305,000,000, expenditure on consumer goods and services in that year was £6,584,000,000, a margin of £721,000,000. Speaking broadly, the difference, of course, was private saving—that is to say, saving not only by private persons, but by firms and so on. There was a corresponding margin in the figures for 1939; in 1938 it was £339,000,000, and the corresponding figure for 1939 was £526,000,000. It is indeed to be hoped that there will always be a wide margin of that kind, for out of it comes the normal capital creation.
There is, of course, an inflationary danger if that figure gets large, because people will wish to spend if their expenditure is not bringing them up to the standards which they desire. They try to spend on consumer goods instead of saving. There is always this play between the two, and the savings fund is a potential source of inflation. It is really rather important to get statements in a form which does not misrepresent the situation, for they are apt to have a harmful effect—for example, in casting doubt upon the value of the pound. I repeat that I am not using this argument to show that there is no danger of inflation. It would be foolish to do that, particularly at the moment when the margin is being widened by the cut in imports and an increase in exports. But it is very important that we do not use formulae which exaggerate our difficulties.
The noble Lord, Lord Pakenham, asked whether we agreed with the cuts and with the programme that the Government has decided upon. I think that everyone in this House will have to say that in existing circumstances there is almost no alternative. But I would emphasize that these measures must be regarded definitely as temporary measures, and with a qualification, or rather with a warning about an excessive transfer from home production to export. The point was made in another place by Mr. Churchill, when he put forward the view that No 1ndustrial country has maintained a large export of manufactured goods except on the basis of a large home market and there is indeed a real danger that if the pressure to export is pushed too far a vital injury may. be done to the living industry in the home country itself. This point was hinted at by the noble Lord, Lord Dukeston, in his speech last week, 378 and I hope he will underline what he then said and keep it to the forefront.
I come now to the main topic which I want to put before your Lordships this afternoon; it has a bearing on what we have just heard from the Leader of the House. Since the recess there have been several great events in the economic field—the suspension of convertibility; the continued rise in the price of our imports and in particular wheat, which a week ago to-day reached the astonishing figure of 312 cents per bushel in Chicago, and the setting of the targets which were discussed here yesterday. I am not sure, however, that the most important event or, at all events, an event of equal importance, has not been the drawing up and publication of the Paris Report on the Marshall Plan. The mere production of that Report in the time has been a very great achievement indeed, and it is fraught with far-reaching consequences. I should like to pay a tribute to the work done by Sir Oliver Franks and his colleagues. I think he has put the European countries under a great obligation, and it is, or should be, a source of pride to us that the movement initiated by Mr. Marshall has been helped So greatly by a distinguished leader from this country.
I would like also to add that in the discussions that are going on now and are likely to go on, we must have as a background an immense sense of gratitude to the United States for the initiative they took and for the attitude they are now taking. The policy of Lease-Lend has been described as one of the most Unselfish acts of history. I think we are moving towards a situation in which the United States may actually repeat, in times of peace, that great act. In the past month there have sometimes seemed to be difficulties and uncertainties in Washington; but the course of events has moved in a way which should give us considerable gratification and hope. President Truman has called an emergency meeting of Congress. It has become clear that very prompt and immediate aid Will be given to France and Italy. That will be helpful to us, for every assistance given to the Continent will ease our position. But it is peculiarly gratifying because it is clear evidence that there is growing in the United States, in a way which one could hardly have expected to happen, a very remarkable appreciation of the problems of Europe and of 379 our own country. If the situation in Europe comes to be really understood by the leaders of opinion in the United States, I personally have no doubt that the United States will do the right thing.
Meanwhile, parallel with this work of the Paris Committee have been the negotiations at Geneva. Those negotiations are unique in the wideness of the field covered, and I should be surprised if they do not show a greater reduction of tariffs at one time than has ever occurred before. In particular, they will, I think, show—and I expect them to show—a very substantial reduction in the American tariffs. The President has big margins in which he may move. He has the right to reduce the tariff rates by no less than 50 per cent. I hope and believe that it will be found, when that vast documentation is presented, that there will have been a substantial lowering in general of the United States tariffs.
In that connexion I ask the representatives of His Majesty's Government whether they do not think it worth while to try and make that document intelligible to the public. The noble Viscount, Lord Addison, was a little afraid that the huge volume would be pretty well meaningless, and anyone who has seen tariffs knows well that they are quite unintelligible to the non-expert. But twenty years ago, at Geneva, the Economic Section of the League of Nations, in preparation for the Economic Conference of 1927, did devise a technique for estimating the levels of tariffs. It is so desirable that the public should know what has happened that I would like to commend to His Majesty's Government that an attempt should be made to summarize what will otherwise inevitably be an incomprehensible series of facts and figures.
This parallel negotiation is very important. It is true that tariffs are not at this moment of overriding significance for a large part of the world, because of the quotas, licences and controls of a quantitative kind which exist in many countries. The immediate tariff changes, however, are going to affect our sales in dollar areas; and it is vital that, when the controls and restrictions are relaxed and trade comes to depend once more upon tariffs, the tariffs that will then become effective shall be in accordance with a liberal commercial ré gime. It is therefore very 380 important to consider this régime now, and how it will fit in with our relationship to Europe.
The noble Viscount, Lord Swinton, observed that we must develop our trade both in Europe and with the Empire. I want to stress that most emphatically. The two policies of development of trade in Europe and in the Empire are not incompatible. On the contrary, the closest economic association with both is essential for our economic recovery; we could not hope to attain any of the targets set before us unless we developed an increasing trade in both of these directions. This is very clear from the export figures. We have to, expand our exports some 60 or 70 per cent. It is quite out of the question to do that by concentrating alone on either the Empire or Europe. We need all the markets we can get. I associate myself fully with what has been said about the importance of developing Empire trade and about our enormous debt to the countries of the Empire for the splendid way in which, not only through the war but since, they have helped us financially and by taking pains to see that we get adequate food supplies. I was gratified to hear from the noble Viscount, Lord Addison, that the Australian wheat supply is likely to help over a very awkward corner in the coming months.
The figures show that both in 1938 and in 1946 British exports to Europe were 40 per cent. of our total gross exports. Excluding India for the moment from the list of Dominions, our exports to the Dominions and Colonies together was also 40 per cent. in both years. India, which is faced with very special economic problems and whose trade we must do everything we can to develop, brings up the Empire proportion to 46 per cent. in one year and 48 per cent. in the other.
§ LORD LAYTON
India's proportion was 6½ per cent. in 1938, and 8⅓ per cent. last year. That leaves about 12 per cent. for the whole of the rest of the world, including the United States, to whom we sent 5⅓ per cent. in 1938, and 3⅓ per cent. last year. That is the picture of our export trade—40 per cent. in Europe, 40 per cent. in the Empire (48 per cent. if India is included), and 12 per cent. in the rest. My case is that we 381 must base our economy on the two major areas and associate our economy as closely as possible with them both. As I have said, it is not possible to conceive of the necessary increase of exports in one or the other. I need not pursue that argument in detail. We know the limited population of the Dominions. The very fact that they are already buying a high percentage of their imports from this country means that the margin for exports may be considerable but not great enough for the enormous gap we have to fill. The Colonies and their development are also of very great importance, but it is a long-range development. The United States is an enormous market, and it will help us a little to get into it. Our quality goods should tell. But if we think that the 70 per cent. increase that we need can be made up in quality goods, we should be flying in the face of history and experience.
There remains Europe, and Heaven knows that is not a too encouraging picture! To develop that trade requires a great effort and a concentration of effort. But our exports to Europe are not at their peak. The figures I gave for 1946 contain almost no coal. If we exported the amount of coal to Europe that we exported in 1938 it would add £70,000,000 to our present figure, and would push the European proportion up to some 47 per cent. With Germany in her present condition and with the prospect of full recovery not very likely in the near future—for we must accept that her recovery will be prolonged, not only for physical reasons, but for the deeper reason of the vital destruction caused to her man-power by the two World Wars—it should be possible for Britain to maintain her position as the chief workshop of. Western Europe. It is not as though this were merely taking advantage of a short-term market. We should be able to hold that position and maintain a large trade with the countries of the Continent.
In helping Europe we shall also help to solve our food problem. We used to buy from Europe a high percentage of our dairy produce. Europe has been sending us recently something less than one-third of her normal supply. She is clearly important to this country from the point of view of shipments of timber, a vital material which is holding back many of our industries. From the British 382 point of view, Europe's recovery is essential. It requires a positive effort, including a definite plan. The Marshall Report indicates what some of these definite actions must be—an increase in output by food-exporting countries in the next four years, and our own increase in coal production sufficient to provide some coal for export; projects for improving the fertilizer supply from participating countries and the production of agricultural machinery; co-operative measures to increase timber production; repairs to ships in one another's yards; and special agreement; for the allocation of coal and coke in such a way as to maximise steel production.
I would draw your Lordships' attention particularly for a moment to that last point in the plan—the agreement to be drawn up for the allocation of coking coal in such a way as to maximise steel production. The sixteen nations are committed to the proposition that they lay on the table their steel and coal plans and that the distribution of coal shall be such as to increase the output of coke and so maximise steel production. This is a definite undertaking for co-operation to integrate the economies of the two countries. It is obviously not possible to plan in detail the economies of sixteen countries, but it is possible to plan the general direction, and we have undertaken to do that. We have also undertaken to devise schemes for the exchangeability of currencies and for the removal of internal restrictions.
I venture to suggest to the House that it is essential that we should participate to the maximum in that effort of collaboration. To do so, however, carries certain important implications. It means that we accept the fact of our interdependence with countries in Europe; and that in turn has military and political consequences. I am convinced myself it means that there must be a permanent body, or a body in existence so long as this cooperative action continues, to deal with the allocation of materials and generally to concern itself with the carrying out of the plan. The first stage is one of direct and specific arrangements. But the proposition also raises the question of our commercial policy, and how to arrange it in such a way as to cover both close development with Europe and with the Empire.
383 It will be remembered that, with the encouragement of the United States, the plan contemplates the possibility of a Customs Union between the countries of Western Europe. The question at once arises as to whether we are to be in or out of that Customs Union. The proposition stems in a sense from the old orthodox doctrine (the doctrine in the minds of the United States State Department has been quite obvious when they have endeavoured to raise some objection to our preferential arrangements, and it is a doctrine which was also orthodox in this country) that a Customs Union is good, but that any preferential system is bad. It involves discrimination, and, therefore, it is bad. I speak as a member of a Party which has always been a Free Trade Party—I myself have put the case for Free Trade as strongly as I thought it possible to put it—and I would like to say that I think that particular contrast has got to be reconsidered.
The test of whether commercial policy is good or bad should be, in the words of the Resolution which set up the Conference on Trade and Employment which is about to meet in Havana, and for which the preparatory arrangements have been made at Geneva, whether it "promotes the expansion of production, exchange and consumption of goods." A Customs Union may be very bad for world trade if the tariff wall is very high. For example, the Customs Union of the United States, with the mountainous tariff wall which was imposed under the Hawley-Smoot tariff of 1929, was very damaging to world trade. Preferences in a moderate tariff, if they serve the purpose of integrating neighbouring or mutually complementary economies, may, in fact, greatly add to world trade. In the light of those principles, we face the fact that in practice a Customs Union, in the sense of an agreement on complete abolition of internal duties and a uniform tariff, is not a possibility with a British Dominion.
I would also express the opinion that a Customs Union is not a possibility for the countries of Western Europe for a long time to come. It has been proved possible to get such a Union between Belgium and Holland, but a general Customs Union for all Western Europe, with no duty and a uniform tariff, is a long way off. One of the reasons is that these countries must have their Customs duties for revenue 384 purposes. In countries where the administrative machine is not capable of raising direct taxes they are dependent to a large extent on revenue from customs duties. That is broadly true of most agrarian countries, and even in this country our Income Tax laws have made special arrangements for the farmer. Nevertheless, discrimination has grave dangers. It is, therefore, desirable to redefine the terms on which regional or group agreements should be permitted. I think that when we approach the problem from the point of view of whether arrangements will or will not increase production and trade, it will be found possible to get a solution which will avoid the apparent clash between the suggestion for the Customs Union for Europe and for the Empire.
In saying that, I am not speaking entirely theoretically, because it so happens that in the year 1931, when the Labour Government was in power, I was asked by Mr. Arthur Henderson, the Foreign Secretary, to go to Geneva as a member of an economic committee to try and suggest means of dealing with the rapidly developing economic crisis of that time. That situation had been made politically worse by the declaration of the Austro-German Customs Union. The only instructions I received from Mr. Arthur Henderson were to find, at all costs, an alternative, to the Austro-German Customs Union. I will not weary the House with, the story of a very interesting series of discussions between June and August, but I did carry back from Berlin a plan under which, on the basis of reciprocal 10 per cent. revenue tariffs but with permission to Great Britain to admit Empire products free or at any figure under 10 per cent., Germany and other countries concerned were prepared to negotiate a treaty with Great Britain. I arrived on a Monday morning but I saw in my paper When I reached Harwich that the Labour Government had fallen. That project was too late and the crisis speeded rapidly to its climax.
If I may interrupt the noble Lord, I was wondering whether he was suggesting, now that the Labour Government has risen to its feet again, that his thought could be applied to-day.
§ LORD LAYTON
That indeed is to some extent why I have mentioned these facts. Certainly the thought may be 385 applied to-day; it is very relevant. History has repeated itself in several respects in the course of the crisis and the solution may be of a similar kind in the field of commercial policy. I would not go further, particularly as I have not been concerned in the discussions in Geneva. I would not wish to say what form the final solution should take, but I would only assent most emphatically that where there is a will there is a way. In my opinion—and I want to make this point clear and emphatic—it is possible, as well as desirable, to integrate the economy of this country with that both of Europe and of the Dominions overseas. That is a point which I wish to make most seriously.
I want to add only one further point. In his remarks yesterday the noble Lord, Lord Pakenham, lamented, as we all do, the drift of events which have divided Europe into East and West. In pressing the case as I have for the integration of our economy with Western Europe, it may seem that we would be solidifying that situation. I do not think so. I suggest that if, through the Marshall Plan, we secure united action in Western Europe on economic affairs, the point would be reached where Western Europe could discuss with Eastern Europe the basis of their mutual trade relations as a whole. After all, Western Europe needs Eastern Europe and vice versa. It is imperative, and under the umbrella of the United Nations it should be possible for those matters to be negotiated. Trade must exist between Western Europe and Eastern Europe, and if the Marshall scheme can be a step towards the renewal of trade relations, then the plan will have contributed not only to prosperity but to the peace of the world.
§ 6.24 p.m.
§ LORD DUKESTON
My Lords, we have had two days' debate which I think has served a very good purpose, but from my point of view it was marred by the noble Lord who opened the debate by his reference to what he described as the effect of fifty years of Socialist propaganda destroying the will to production on the part of the workers. It is unfortunate that some people who seem to live in their little ivory castles should descend into a world of reality and bring with them some of these dreams. The amazing thing is that we should have fought through six years of warfare and two years 386 of peace in which the leadership of the trade union movement was very largely engaged in production drives and in using its machinery and its man-power to ensure that we were not let down during the war, and certainly did its best jointly with the employers' representatives to ensure that the switch from war-time to peace-time production should be made without any of the unfortunate occurrences that marred the first two post-war years after World War No. 1. I think perhaps I can do some good by reminding the noble Lord of what happened. It might be beneficial if I suggested that Hansard of that period should be read.
At the end of the first two years we had 2,500,000 unemployed. We had a national mining lock out on our hands which shook the country, from top to bottom. We saw the formation of the Triple Alliance. A state of emergency was declared in the country, and if ever this country was near to revolution it was during that period. I suggest a study of those years merely to prove that almost the whole of the positive suggestions that emerged from the noble Lord's speech were expedients that really led to the circumstances I have mentioned. We took off the controls; we resorted to the old laissez-faire or pull-devil-pull-baker methods. We were at each other's throats. Even at the end of that first epoch of industrial strife the industrial leaders on both sides—and, I think I may add, the politicians—proved quite inadequate to the task of establishing some form of peace within industry upon which alone we could base the prospects of a productivity which would have restored our economic fortunes. I wondered when I heard the noble Lord's opening statement whether he really wanted to provoke that kind of thing again. There is no foundation in fact for what he had to say, and I will come in a moment or two to his comparisons with American productivity. I suggest that in the existing circumstances, when everybody appears to be doing his best 10 create an atmosphere in which we can get on to our economic feet again, the greatest disservice that anyone can do is to accuse either side of a disinclination to pull its weight, or of throwing monkey wrenches into the machine.
Through the speeches of two or three noble Lords has run the theme that Sir 387 Stafford Cripps has made a great speech in another place, with which we all agree, but that that speech might more profitably have been made a year or eighteen months ago. I think we should try to understand the social climate in which we have lived during these two years. Is it seriously suggested by anybody that we could have attempted to do what is now proposed in the first six or twelve months after the end of the war? I suggest that in the then existing circumstances, when the minds of the demobilized soldiers and the millions who were being switched from war-time production were turned towards the uncertainty of peace—the economic uncertainty from their point of view—those of us who had the handling of that man-power problem knew we were on a knife's edge. Whilst in theory these things may be proven—economists, of course, can figure these things out—the responsibility of handling a working population of 19,000,000 or 20,000,000 people who have opinions of their own regarding these matters, no matter how mistaken those opinions may be, is entirely a different problem.
The noble Lord, Lord Brand, gave us what I think was a positive contribution to the debate, and one which I enjoyed very much. I do wish, however, that the noble Lord would try to understand the modern industrial labour movement. I have never heard anybody in the trade union movement talk about "dividing the cake." I do not know whether the noble Lord has been reading the history of the Chartist movement or of the Levellers period, but that has never been said by any responsible leader of the trade union movement in this country in the last twenty years. It is purely a figment of the noble Lord's imagination and has no place in the realities of the circumstances in which we are to-day grappling with these problems. I think we should try to understand the temper of a nation that has been at full stretch for six years of war. It is well known to those who have had to handle this problem—and I say this advisedly.
When the noble Lord talked of there being no effort to attract demobilized labour into the industries where they were needed, I could only ask myself where he has been living. We were engaged continuously upon trying to get demobilized men and women from the 388 munition factories into the textile and other basic industries of the country. I suggest that noble Lords are not informed of what took place in that period; it is a known fact that whether these people were demobilized men and women from the Services or were displaced employees from the munition industries, at that time none of them really wanted to go into the basic industries of the country. And there are very obvious reasons for that. As I suggested in my speech a few days ago, the basic industries of this country have been so neglected, and the conditions reveal such a disparity, that the miners who left them for the Forces, or the miners who in the first year of the war left the mines for munition work, had made up their minds never to go back again. Whatever else may be said for or against nationalization of the mines, one thing that is emerging is the tendency of the ex-miner to return, in the belief that he has a greater assurance of continuity of employment, a better prospect than he has ever had before, and conditions acceptable to miners generally in that industry.
I would suggest, then, looking back over these two years, and realizing the magnitude of the problem with which we were confronted, that we have done remarkably well. Why do we always make comparisons with America? Why not make them with Europe, with France? What is the real comparison between the European countries—of whose economy we are part—and the United States? The use of fuel and power in the United States, compared with fuel and power consumption in Europe, is in the ratio of four to one. It was two and a half to one before the war. Give the British worker that motive power, give him the facilities, give him the modernized plant, and no worker in the world can outpace him. That really is the drive. And we know, notwithstanding our economic problems, that we are not going to pull out of this difficulty by expecting to draw it out of the brawn of the worker. It simply cannot be done. I suggest to noble Lords that we face the issue as practical people, with a knowledge of the difficulties that are confronting us, but bearing in mind that a pat on the back does nobody any harm; you get far more from people that way. I should welcome the opportunity of seeing the noble Lord, Lord Cherwell, experiment with his methods in attempting to get production among some of the 389 industrial groups that it has been my good fortune to lead in many industries of the country!
Let us look at one of the major difficulties at the present time. I do not believe that we can escape our ties with Europe. I do not believe it for a moment. Take the position of France—and I think that is a far more reasonable comparison than a comparison with the United States. If the industrial towns of the eastern seaboard of the United States and Canada had been bombed as this country was, if their plant and machinery had been destroyed to the same extent, if they had lived under the same conditions of austerity, then I could have understood the comparison. But obviously they have been immune from the worst effects of war and were quite differently placed. We are very pleased that that is so, because we can draw upon their help. But let us look at the case of France. I understand that before the war the production of grain in France was 8,900,000 tons a year. At the present time it is 3,800,000 tons. In the case of Italy, the figure was 7,400,000 tons before the war, and to-day it is 4,700,000 tons. That is the picture of productive capacity in Europe. If it has done nothing worse it has brought them in competition with us for goods which hitherto could have been supplied only from dollar countries; and so, of course, prices and everything else have risen against us.
I suggest to noble Lords that when we come to make comparisons let us, so far as practicable, compare like with like. We in this country have always known, and in fact it is part of the Socialist case, that the basic industries of the country were so neglected by capital not having been ploughed back and used for modernizing that no one other than the State could really put those basic industries upon a footing of efficiency. None of us who have been advocates of the policy of nationalization ever believed that within a few months a mere change of ownership would of necessity have produced a revolution in the productivity of those industries; and no one really expects it. But the fact is, that it could not possibly be done by any other means.
Those proposals, or something near akin to them, have been made continuously, particularly in the last quarter of a century. So no one was astonished that 390 the public opinion of the country supported the Party which alone had the policy which would give those basic primary industries an opportunity of being brought up to a state of efficiency. With the experience of the miners in mind—I need go back no farther than the Sankey Report or the period of 1921—anyone who had ever considered the problem of that great basic industry, without whose efficiency we cannot possibly rebuild the industries of the country, knew that nationalization alone was the thing that could give it at least an opportunity. This has not been advocated as a matter of pure theory; nor in the policy of the Socialist Party in this country is it put forward purely from a theoretical point of view. In other words, our policy is to nationalize those industries which we know are essential to the building up of the great secondary industries of our country, and particularly to enable us to get on with our export drive.
I want to conclude by saying that I think we have had a very good debate. I do suggest that in these discussions, and particularly in the emergency in which we are now living, we should not only welcome the willingness of everyone to make a contribution, but we should go out of our way to give the leaders of industry—and I say this for the employers just as much as I do for the trade union leaders or the workers generally—every possible encouragement. It does no good at all to criticize them in the difficulties with which they are attempting to cope. A little encouragement, even from noble Lords in this Chamber (whose words, I am pleased to say, are read in the Press) would come as a welcome stimulus, particularly to those men who have given unselfishly of their services—men who have carried great managerial responsibilities, men who have had to retain the leadership of trade unions, men who have always been prepared to go up and down the country to address mass meetings jointly with employers, urging workers to give us this productivity without which we know we cannot put this country on its feet again. I do suggest that it is our bounden duty to stand by their side, to give them every possible encouragement in their work. If we can generate that team spirit, I do not think we need to look upon our future in the gloomy way in 391 which there is a tendency in some quarters to do. With faith in its own people, this country will pull through. And everybody who makes a contribution towards generating that faith and confidence is making a worthy contribution to the world's objective that we are all attempting to reach.
§ 6.44 p.m.
My Lords, I want to deal with just one or two points which concern the primary task which all of us at home have before us today—namely, the task of producing for export. I noticed in this morning's Times that the President of the Board of Trade is reported as saying that "he did not want everything referred to London for decision." I personally welcome that statement whole-heartedly, but it remains to be seen how far it is, in point of fact, put into effect by His Majesty's Government. That we shall have to wait to see. But, all the same, I still view with some apprehension the opportunity that this present crisis may give to His Majesty's Government for even greater direction in detail of industry from Whitehall. I want to illustrate that with one or two points.
We are given to understand that businesses which at the present time are neither exporting an adequate proportion of their production nor able or willing to convert their production so that it can be exported, in the last resort may be closed down altogether. I presume that it will be done by re-direction of labour, by restriction of raw materials, and by restriction of coal and power to those particular firms. I do hope, however, that before any such drastic action is taken, the most careful consideration will be given to every individual case to see whether manufacturers, possibly with expert advice and assistance from outside, cannot in point of fact have their firms brought into the present industrial system instead of having them wiped out, with all the difficulties of reinstating them if opportunity ever returns later on.
I am not dealing here with the hardships, great as they may be, that closing down would mean to individual firms, nor indeed to the hardships which, I believe, would also accrue to many of the workpeople, because I cannot see that, if a firm is closed down, it will necessarily be possible for all those employed in it, 392 with their varying types of skill, to be re-directed to tasks where they are wanted at the moment. I feel quite sure that there may be some left over. We have also to consider those who are being redirected. Of course, if they are re-directed to businesses in their own locality, all well and good, but if they are to be redirected to other localities, we come immediately up against this housing problem which is becoming more and more difficult, we are told. However, that point is an entirely different one from the one I want to make. I want to refer rather to the tremendous dislocation of the total producing power of the country resulting, by closing firms down, rather in a delay to the export drive than in an acceleration of it, and certainly also prejudicing what is just as important, our long-term industrial success.
There seems to be in certain quarters a belief that you can divide industries neatly into two categories; those that export, on the one hand, and those that do not export, on the other. Of course, that is entirely a false conception of industry as it is in this country to-day. There are innumerable small firms, as your Lordships know, making all sorts of things—small parts, special materials, components of one kind and another—and it may appear that some firms do not, in point of fact, export but that they are making production to feed another industry which, in turn, may be feeding another industry which, in turn, is exporting. Even in that description I think I have over-simplified the case. The ramifications of the situation are absolutely innumerable, and I think I can best describe it my referring to the old story of the big fleas and the little fleas, the ramifications going on ad infinitum. I should just like to give one or two examples to show the sort of thing I have in mind. Take, for instance, the case of the manufacturer of paint. How can you possibly prove that the manufacturers of paint can export so much of their production and divert so much of their production to the home market, unless you have gone to enormous trouble to find out exactly where the paint going to the home market is, in fact, going to be used? If you come to think of it, there is hardly a single article which can be exported which does not, at some stage of its manufacture, require in greater or less extent a modicum of paint. The same applies to a 393 large number of other industries. Take the manufacturers of packing materials—and I refer not only to paper and string and binding, but I mention particularly, adhesives. Unless you have the same priority with those industries as with the exporting industries the thing is not going to work.
I can give a great many other examples, such as the case of manufacturers of screws, nuts and bolts. I heard of a case only to-day where a firm had all the preparations for exporting their products, and yet they could not do so because they could not get the office equipment they wanted for doing the clerical work in connexion with the exports. On inquiry, they were told that the people who produced the essential office equipment had not got the essential priorities. I believe that to try and control our industry centrally, except along the very broadest lines, is not only bound to fail but the result will be to slow down industry and, in the end, to use an old phrase, will bring about what we greatly fear coming upon us—namely, quite considerable unemployment. Why do I think that? For the reason that I am quite sure there is no man or body of men with sufficiently superhuman qualities to be able, even if they can make one, to run the plan necessary for controlling our very complicated industrial system in detail. Unfortunately it is often only the greatest men who realize their limitations in that respect, and I suggest that it is up to the Minister for Economic Affairs to demonstrate that he is sufficiently great to realize that fact.
I want to turn to another similar aspect, the question of industrial stocks. This has been mentioned in passing by one or two noble Lords to-day. I have a fear that one of the symptoms of this craze for centralization of planning may be an attempt to save dollars by reducing stocks of essential raw materials in the country to the minimum level which, mathematically perhaps, may appear to be safe, but which, in point of fact, from the practical aspect are totally unsafe to enable industry to carry on. These fears have not been minimized by an analysis which I have been reading recently of some of the official figures of raw materials given in a publication you all know about, the Monthly Digest of Statistics. I have been able to detect there a tendency to allow stocks, particularly of certain im- 394 ported raw materials, to fall not merely below what they were before the war, but even quite substantially below what they were at the end of the war. I would like to mention just one or two, purposely avoiding the stocks of coal and steel, which have been mentioned by other noble Lords, and which are in quite a category by themselves.
First of all, let us take the case of one or two of the non-ferrous metals, such as zinc. I see in the monthly statistics that the figures show that virgin zinc in this country is now only one-fifth of what it was at the end of the war. Another form of zinc is down to two-thirds of what it was. Lead is down to a quarter of what it was; tin to a half, and so on. Then I took an entirely different type of stock, one of which all of your Lordships realize the importance. Soft woods are down to half of what they were at the end of the war, and one-third of what they were before the war. This figure of a half seems to be open to some question, because I noticed a little footnote that rather surprised me in regard to that particular stock. It said that the figures for July, 1946, reflect adjustments made by bringing stocks down to a realistic basis. I do not know what "a realistic basis" means, but I should hope that the figures in that monthly digest were always realistic.
It would be quite easy to mention lots of other instances, at any rate to give sufficient ground for the uneasiness that I have, and to justify my raising this matter of industrial stocks here this evening. I realize, of course, that figures are often misleading, and there may be very many good reasons in individual cases why these falls have taken place. For instance, it may merely reflect the using up of stocks and reserves which have been built up for war purposes during the war and which are now no longer necessary. It may be that, to some extent, they reflect merely seasonal fluctuations. It may be in some cases that we no longer need materials in such quantity owing, perhaps, to their high world cost, or to the fact that we may have developed some equally good and cheaper substitute. It may, of course, be due also, as undoubtedly it is in some cases, to world shortages. But I cannot possibly feel that every drop in these raw materials stocks can be explained away as easily as that, and I am really concerned lest this is a 395 definite policy—I will not go so far as to say a policy of window-dressing, but to save present dollar expenditure, resulting, as I am trying to show, in a further crippling of our ability to produce and export.
Let me quote one example of what I have at the back of my mind. I was given the instance not very long ago of a certain firm who were producing a plastic product which was to be made for export, but in order to increase their exports of this article they needed additional raw materials which in fact were a particular kind of resin. They got in touch with the authorities concerned and they were told: "We are very sorry, you cannot get any more of this resin because it is wanted for export." In other words, they were exporting the raw material rather than allowing it to be processed and earn the extra dollars which could be got by this use of it before export.
In the early part of this year we had, of course, a very good, though all too unpleasant and still too vivid lesson as to the effect of the low level of stocks; I am referring to the coal shortages. But the point I want to make now is that the extent of the economic disaster that that brought about was out of all proportion to the effect that the actual figures of coal stocks might have suggested to the unwary if they looked at them really from a mathematical point of view. Of course coal and steel are cases by themselves; but shortages of coal and steel are by no means the only shortages which are going to hamper industry to-day. There are plenty of other materials which, if in short supply, will seriously interfere with the export drive. It is not only stocks of raw materials. There are other forms of industrial stocks which are of equal importance. No doubt your Lordships will be able to call to mind cases in which the completion of a big piece of production has been held up owing to the lack of some quite insignificant item. Possibly a great piece of machinery has been held up for some particular ball bearing. Maybe, as in a case I heard of the other day, a whole batch of motor cars on the assembly line were held up for a certain amount of paint. Maybe, as in another case I heard of, a whole batch of perambulators were held up for want of tin-tacks. One could go on quoting all sorts of 396 similar cases where the production drive is definitely being held up for want of industrial reserves. It does not matter whether they are raw materials, semimanufactured materials, or actual components, you must have them.
The lesson I am trying to point can be applied throughout the whole of industry. It is one I cannot over-emphasize or repeat too often. If we are going to get real efficiency from industry, we must have adequate reserves at all stages. The Minister for Economic Affairs, in another place last week, drew attention to the difficulties that transport was up against, and he particularly drew attention to the shortage of wagons. What he said then only serves to stress the point I am making. If there is this difficulty in transport, if movement of stores from one place to another is held up, there must be adequate reserves of all kinds. A quite small deficiency here or there may make very great difficulties further on in the industrial system. It reminds me of the old adage: "For want of a nail the shoe was lost, for want of a shoe the horse was lost, for want of a horse the rider was lost, for want of a rider the battle was lost." And it will be for want of industrial reserves very largely that the export targets may also be lost.
It is very easy to agree with what I am saying, that these reserves are essential, but it is not always realized exactly what that means. So far as raw materials go, it means tying up in stocks dollars and other forms of currency, and so far as spare parts or semi-manufactured components are concerned it means diverting them as a sort of insurance premium. In other words, it means tying up effort which might otherwise be diverted straight away into dollars, and earn the foreign currency which we so much need. Obviously cuts in imports are essential, but not cuts in imports of raw materials which are urgently required for our exporting industries. In conclusion, I would beseech the Government, to whatever else they direct their energies in this matter, to take the greatest care to see that an adequate amount of dollars is allocated to financing essential industrial reserves which alone will make our export target possible of achievement.
§ 7.6 p.m.
§ LORD BARNBY
My Lords, in the course of debate many references were 397 made to changes in tariffs and Imperial Preference and the Geneva Convention, particularly by my noble friends, Lord Altrincham and Lord Tweedsmuir, and by Lord Swinton, who went into particular details with Lord Pakenham. I wish to ask the noble Lord, Lord Pakenham, a question of which I have given him notice. My long experience in the United States has shown me that the wool schedules are the most controversial point in the whole tariff list; and, as has been seen repeatedly, the wool tariff has caused the greatest delay in the negotiations. My wish was to make sure that I am correct in assuming, from what has been said this afternoon, that no details of any of these tariff changes will he announced until after November 18, when it is reported that the signing of the Agreement will occur. Experience has shown that on Capitol Hill in Washington in any tariff negotiations there is one curious habit, by which details of tariff changes come out well in advance of anybody else hearing about them. It is all-important that changes should be simultaneously announced, and I particularly ask the noble Lord, Lord Pakenham, if he can assure the House that the complementary compensatory schedules arising from any particular change in raw materials under the tariff agreements will follow the custom of the past. It has been suggested that this may not be followed in this instance.
In the course of this debate we have had the privilege of hearing many contributions of great weight on the top level of economic theory, and all those who were fortunate enough to hear the noble Lord, Lord Brand, this afternoon will feel that he presented to Lord Pakenham a responsibility to try and convince his colleagues in the Government that much of what has been said by them will need correction. My desire in intervening in this debate—and I am glad to find myself the last speaker before the noble Lord adds to his very extensive remarks of yesterday—is to come down from the higher theme of economic theory and reasonings to the very low level of industrial practice. My wish, before the noble Lord, Lord Pakenham, replies, would be to advance and press in this discussion the kind of reasoning that is heard from those managing directors and factory superintendents who are trying to deal with this problem of getting increased production.
398 It seems to me that there are three points on which an appeal could be made, and it is to the noble Lord, Lord Pakenham, that I particularly address them. Among those men there is the feeling that if the country is in the position of difficulty that is being constantly stressed, it should be possible to arrange some temporary trace in industrial practices to achieve some response to the lofty appeal which we have heard from Sir Stafford Cripps. The men who in their day-to-day work are trying to bring this al: out ask, "Why is it not possible, without much difficulty, to revert to extended hours, even if only for a short period?" There is also the difficulty of restrictive practices. Could they not be suspended for a time? Only last week I had a conference in industry with several trade union leaders, and I found an attitude of insistence on restrictive practices. Your Lordships could never understand the backward feeling there is among some trade union leaders in certain industries in the country. I well remember the feeling of desperation on the part of managements that there would be this resistance. Then there is the two-shift operation. Why is there this resistance to the two-shift operation? All over the world two and three-shift operations are worked, but I have heard trade union leaders say that in no circumstances will that be conceded here.
§ LORD BARNBY
Textile. My first question is whether it is not possible for the Government to arrange a campaign throughout the country to educate these trade union leaders.
I turn now to the employers' side. The trade union leaders say that the employers have to make concessions also. There is no doubt that the concessions which have to be made by the employers in order to get this higher production can be obtained. But there again I ask the Government to try and get rid of some of this bureaucracy and frustration, about which the noble Viscount, Lord Swinton, spoke so lucidly and emphatically. It is that which is hampering increased production. Cannot the Government arrange to employ some of the production engineers in Government Departments which are concerned with securing industrial production, and which are responsible for 399 putting out all these forms, in order that the whole system of Governmental frustration should be diminished?
The third point I make is this. Can we not facilitate priorities to improve amenities? How can we get people into these industries if the Government resist every kind of attempt to improve priorities, or will not give the necessary supplies to permit circumstances in which production can be improved, and the workers' Lord lightened? The noble Lord, Lord Dukeston, challenged me a few moments ago. Only last week I heard a trade union leader say that in no circumstances would they permit their members to take part in any works councils; they did not believe in them. The noble Lord will be surprised at that, but I can quote chapter and verse. I make an appeal to the Government to correct that attitude, because the employers cannot get anywhere if the operatives will not play.
I now want to turn to the Industrial Organisation Act, which your Lordships passed last year. Under that Act it is right to set up development councils. Those councils have merit, but not in those industries where already the arrangements between both sides of industry are so effective that what can be done is already being done. There again I would ask the Government to arrange a truce. The noble Lord, Lord Dukeston, in the course of his remarks (and he brings to this House, to our general benefit, a long experience and great practical wisdom on all these industrial matters) surprised me very much in asking the question: Why do we compare industrial production here with that in the United States? We take the United States for the very good reason that we wish (as we all do in our private lives) to set the target as high as possible. Production in the United States is the highest in the world by every method of computation. Therefore, why should we not make comparisons with the United States?
The noble Lord went on to urge greater mechanization. We do want greater mechanization. That is why I come to the point of which the noble Lord, Lord Cherwell, reminded us in his opening remarks—the insufficiency of fuel stocks, which brought about the difficulties last winter. The noble Lord rightly emphasized that all through last spring and 400 summer repeated warnings were given to the then Minister of Fuel and Power. Those warnings were repeatedly disregarded by Mr. Shinwell, and we all know the result. As the noble Lord. Lord Cherwell, said, it had nothing to do with the weather. It was, as the noble Viscount, Lord Swinton, said, Mr. Shinwell's fault. I may say that I am a little surprised that one who took such a heavy fall off the Cabinet horse should have somehow scrambled back and continued in the hunt. It is a curious thing, too, that the Government should have chosen this moment to cut down the production of electrical equipment and to reduce the budget put forward by the Central Electricity Board, so diminishing the very thing for which the noble Lord, Lord Dukeston, is rightly appealing.
I would add a final word on these targets of export, as to the achievement of which Lord Brand had some misgivings. I find that all industrialists in the country in the industries with which I come into touch have the greatest misgivings as to the possibility, not of producing the goods if we get the coal, but of finding a market for them. If we can have electrical power to order, we can sell the goods to the world at our prices. Is there going to be an outlet for that tremendous volume in a world in which we are giving a lead in restricting trade? It is because of my grave misgivings on that point that I conclude with the hope that the noble Lord, Lord Pakenham, will be able to give some additional reasons why he believes this gap can be bridged without any more drastic action than that already suggested by the Government.
§ 7.20 p.m.
My Lords, I shall not detain the House very long, because although the hour is not in the abstract very late, I know that a number of your Lordships have public engagements of great importance this evening. Therefore, I must ask the leave of the House to reply by letter to a number of detailed points which have been raised, especially those raised in the last speech and the speech of the noble Lord, Lord Rochdale. I would just inform the noble Lord, Lord Barnby, that no answer can at present be given to the question he asked at the beginning of his speech, since the Government representative at the Geneva 401 Conference undertook not to reveal information about the details of the Agreements until they are published simultaneously by the contracting countries.
I will pass over far too rapidly the notable contributions of noble Lords behind me, in particular those by the noble Lord, Lord Dukeston, and the noble Lord, Lord Lucas. I would heartily re-echo from this place the conviction which the noble Lord, Lord Dukeston, is so well qualified to express, that given the tools the British working man cannot be beaten by any man anywhere in the world. To the noble Lord, Lord Lucas, I would give the assurance that all the considerations he mentioned have been very carefully taken into account in any cuts in capital expenditure. It will be recalled that the noble Lord, Lord Kenilworth, was somewhat concerned about the £100,000,000 which was to be spent by the Coal Board. That is, in fact, essential expenditure, but that it should be undertaken at this time is I think some answer to the noble Lord, Lord Lucas. There were also contributions from the noble Lord, Lord Shepherd, and the noble Lord, Lord Strabolgi.
I feel that the noble Viscount, Lord Swinton, is entitled to a somewhat fuller reply than it would perhaps be appropriate for me to give him this evening. Of course he has already received from the noble Viscount who leads the House an answer to a number of his points, but a speech of that substance and constructive outlook should receive rather fuller treatment from me than I may be able to give it. There are just one or two points arising from his remarks to which I would like to refer. He is still concerned as to whether in one way or another, formal or informal, the right honourable gentleman, the Chancellor of the Exchequer, should have at one point been offered the chance to escape the convertibility of sterling. I made inquiries after the noble Viscount spoke this afternoon, and I am assured that there was no such opportunity open to him.
He raised, as I rather anticipated so keen a debater would raise, certain arguments advanced by Mr. Roy Harrod in The Times this morning. I suppose that few have lived in closer and more friendly contact with Mr. Harrod than I have, unless it be the noble Lord, Lord Cherwell, when we all worked together at Christ 402 Church. I am bound to say—and I hope this will not get me into trouble with my old college—that there seems to be a temporary decline in higher thought at Christ Church. Mr. Harrod assumes that the balance of current invisible items during the period was not unfavourable, and he proceeds to develop an argument based on that assumption. He appears to have overlooked entirely our military expenditure abroad and the cost of occupying Germany. Perhaps the noble Lord, Lord Cherwell, will convey that, I will not say to his right honourable friend, but to his eminent and academic friend and friend of nine, to see whether in a subsequent debate any kind of reply will be forthcoming from Mr. Harrod's side. Mr. Harrod—and let me say it publicly—has slipped up badly, and there is no reason why a spokesman of the Government should not say so clearly and emphatically.
§ VISCOUNT SWINTON
In fairness to Mr. Harrod, whose figures I quoted, speaking from memory, I think he said that £452,000,000 was unaccounted for, and he assumed that the invisibles cancelled out. Does the noble Lord say mat the expenditure of the Government abroad is enough to wipe out that £452,000,000?
No, I am not going so far as that. I am only saying that Mr. Harrod is out of court, and when he returns to the charge with a reasonable application to put before us in this House, I shall be very pleased to reply to it.
As regards the indictment of the noble Lord, Lord Cherwell, that has already been rebuked in effective and proper terms by more than one speaker from this side of the House. He raised six points, none of them bearing closely on present policy, but all of them harking back to the past. I will not go over those points again, because they have in any case been fully debated. However, let me reply to them quite shortly in this way. I will take three of them and deal with them together. They were that: there was not enough guidance into export and other essential trades, that too much capital expenditure was embarked upon, and that not enough attention was paid in our export policy to the relationship between dollar and soft currency areas. In all those cases I say broadly that, while it 403 may be possible that if we were able to play the hand again, knowing exactly what was going to happen, we might have improved on our record, I can assure him that in our view—and, I am bound to say, this seems to me fairly obvious—the situation would have been a great deal worse under the control of the noble Lord's friends.
As regards the fuel crisis, that would take us rather far afield; but the fact that the noble Lord's Party were much more strongly against all forms of austerity—including bread rationing—establishes the strong presumption that they would have been still slower than we were to reduce consumption. There again there is the strong presumption—I put it no higher than that—that things would have been much worse. As regards the question of loans and gifts abroad, I can only point out that they were carried out as part of a foreign policy which has received to a remarkable extent the unanimous support of this House and of the country. As regards the charge that the Loan was wasted, or that considerable sums were spent which should not have been spent under the terms of the Loan Agreement, I can only employ words which I should hesitate to use myself, but since they come from a Liberal throat I will venture to make use of them: "It is a rotten charge to suggest that the Government have allowed a considerable part of the Loan to go down the drain."
Now I will come to the points with which I am afraid I shall deal far too briefly. I refer to the points raised by the noble Lord, Lord Layton, and the noble Lord, Lord Brand, in two notable speeches. The noble Lord, Lord Brand, is anxious, it seems to me, as to whether one can reconcile an emphasis on increasing total production with an emphasis on redistributing our efforts and resources in favour of the export market. I have been in touch with my right honourable friend the Minister for Economic Affairs on this subject this morning, and I will give the House very briefly in my own words what I hope is a reasonable summary of the mind of my right honourable friend and of the Government as a whole.
The redistribution or redeployment of our national effort in favour of the export market is literally vital to us. I am afraid that Government spokesmen use the word 404 "vital" so often that there are apt to be cries of "Wolf" when the word is heard, but there is no doubt about it this time. We cannot continue to live as a nation at anything like the standard we have hitherto enjoyed unless we produce more for the export market. Noble Lords will have studied carefully Sir Stafford Cripps' insistence yesterday at a Press Conference that "willing service is worth any amount of compulsion." We want people to volunteer to help, and we do not want to compel them unless we are absolutely forced to. It would be a great mistake to suppose that the instrument on which we are relying to solve this crisis of maldistribution is the instrument of the compulsion of labour, though compulsion is being held in reserve to deal with the few people who refuse to do their duty when it is clearly and helpfully pointed out to them.
Thirdly—and this relates more closely to the remarks of the noble Lord, Lord Layton—we all agree that what we want is more production, which means, of course, harder work on all levels, alike for home and export. That has been stressed in your Lordships' House repeatedly by many speakers on all sides. The export trade must have overall priority in order to obtain a bare minimum of imports. The proportion of exports cannot be whittled down unless there is an extra effort all round. The Home market has got to suffer, at any rate in the short run. So it is imperative that our people should realize that unless this extra effort does take place the supply of consumption goods here will simply have to come down. But what, of course, we want, and we are all at one in calling for, is just that extra effort which would enable us to have both an increase of exports and the maintenance of our standard of life at home.
This brings me finally to the question of how this effort is to be initiated, and leads one on to very wide ground covered by previous speakers and particularly, in a manner which I found it at times difficult to follow, by the noble Lord, Lord Brand. At this moment he will not perhaps expect me to join issue over the whole field of Capitalist-Socialist controversy; but since he has replied to my suggestion that there was a basis for politics in the equality of man, I must, in turn say one word to him. Each of 405 us is an immortal soul, and all are equal in that sense. But it is the responsibility of those in power and of those who put them in power to see that each one of us is given an equal opportunity in this life to develop his or her moral, intellectual and spiritual faculties. That would be, in brief, the best answer I could give at this moment.
I turn now to one other topic of the controversy and then I shall have practically done. The question is that of what kind of incentive we can provide for the people of this country. There is no doubt at all, as we shall all agree, that the spiritual motive—a man's religion—is the highest source of his inspiration; and any Government which neglected that or neglected to appeal to it would do well to shut up shop and clear out of the business at once. But a Government cannot leave the matter there; it must frame its arrangements so as to allow other legitimate motives to stimulate a man to effort. In the past the profit motive has been urged by one side, or, as the noble Lord, Lord Brand, reminded us, the profit-and-loss motive, and on our side we have urged that the motive of public service should be stressed far more than in the past. Sometimes our opponents have been described by us as cynics or brutal realists, and they have regarded us as Utopians or long-haired idealists. May I suggest that what we have all neglected perhaps as a motive only lower than that of religion and on a par with love of country is love of family: that great force which brings together all men and women of all classes and all races; and that all those responsible, on whatever Benches they sit, for influencing directly or indirectly the kind of appeal that His Majesty's Government make and the kind of laws they pass, should make sure that the family motive is enlisted much more actively than hitherto. It could be used far more effectively than ever before to serve our common good.
In a debate of this kind, we all recognize our duty to throw our own minds into the pool, because only in that way can we produce the constructive result we all desire. I would like, therefore, on behalf of the Government, to say how valuable this debate will be when all the speeches have been read and carefully considered. I hope we shall have other debates; no doubt noble Lords opposite and in other 406 parts of the House will call for further debates; and it seems to me that in the times through which we are passing now, there is no place better than the House of Lords to discuss these matters, in an atmosphere where hitting is hard but essentially clean from beginning to end.
§ 7.36 p.m.
§ LORD CHERWELL
My Lords, unfortunately I had an engagement which prevented my hearing the speeches in the latter part of the debate last evening. But I have read them with some care and I would like to reply to some of them if the speakers were here. I would only just mention that the noble Lord, Lord Shepherd, told us that when the Conservatives were in power there were 1,688,000 unemployed. I do not know which moment he selected, or whether that is an average. He added that at one time the figure even went to 3,000,000. It is true that they did reach about 2,900,000, but that was whilst the Socialists were in power in 1931.
The noble Lord, Lord Layton, raised the old question about total production. I will not enter into a long argument on this statement; it is a matter of definition. If you say you have get 18,400,000 people working now as against 17,800,000 or whatever it was before, you can, of course, make out any figure you like for the total product according to the theory on which you work; if you add entertainment or football pools and that sort of thing, then, of course, you can define your product in such a way as to prove your production is up. I do not know whether production of manufactured articles is up or not; but I should have suspected not. It does not look like it For we know that exports unhappily are not very much up on pre-war, if at all, and that there is almost universal shortage all over the country of almost every form of consumer goods. As to his proposal to extend trade with Europe, I think we should all agree provided we can get something back from Europe. We cannot afford to send out unrequited exports, and it does not look as if wet shall be able to get anything valuable from Europe for the time being.
I come to a point which seems to have excited a great deal of comment and excited speeches from the Benches opposite. I said I would not discuss in detail, I think it was, the collapse of the will to Work. I am quite ready to substitute 407 "decline in the will to work" if that would give anybody any pleasure. The noble Lord, Lord Dukeston, has said there was no evidence for my statement at all; he said also, I think, that it had no foundation in fact. I do not know on what he bases his statement.
Does the noble Lord take the view that this "decline of the will to work" has occurred only among the manual workers, or among all sections of the community, including the well-to-do?
§ LORD CHERWELL
I can only go by the facts that I can measure. There are only three that I need mention. In the mines, before the war, we were getting six tons per week per miner; now we are getting less than five and a quarter. In building men used to lay 450 bricks a day. That has become 350. In the cotton spinning industry 22 per cent. fewer people are spinning yarn, but we are getting 45 per cent. less yarn. I have not gone through the whole lot. You cannot go through all of them because usually the figures are not available. But here are three major items and in every one of them output is down.
§ LORD LUCAS OF CHILWORTH
Forgive my interrupting but upon such flimsy evidence the noble Lord bases the statement that there is a collapse of the will to work. Does the noble Lord not take into consideration any other circumstance—worn-out machinery, lack of capital equipment, and so on? Why castigate the working people by such an irresponsible statement as the "collapse of the will to work"?
§ LORD CHERWELL
It does not much matter whether you say "collapse" or "decline." I only mentioned the matter in passing. There is certainly a decline in those three very important trades. They are the trades which I have been able to measure; there may or may not be a decline in others.
§ LORD LUCAS OF CHILWORTH
It would not have been so bad if the noble Lord had said "collapse of production"; 408 but the "collapse of the will to work," coming from a responsible statesman sitting on the Front Bench opposite is indefensible.
§ LORD CHERWELL
I am reminded at this stage of the tag, Lucus a non lucendo. I shall stick to what I have said. I do not admit that the noble Lord can tell me what is defensible and what is not defensible. Here we have definite figures and it is no use saying that they do not mean anything. I do not think the figures given by the Leader of the House were really convincing. They do not prove that people are working faster or getting more out of their work.
May I interrupt once more? Surely, the noble Lord as a statistician is not going to base a claim of that kind on three selected industries. I know that the noble Lord is an expert on natural selection but surely this is a most unnatural form of selection.
§ LORD CHERWELL
Possibly the noble Lord might have found other industries to prove his point. If he defines as natural selection the selection of figures which prove his point, then the noble Lord is doing only what is natural to him. I particularly enjoyed the noble Lord's two speeches. They reminded me rather—not in tone but in general trend—of that character on the B.B.C. who always says, "It's being so cheerful as keeps me going." I do not think that the noble Lord really gave any answer to the questions we put or the errors that I pointed out. Of the six points that I mentioned, five have implicitly been admitted by the Minister for Economic Affairs, who has been busy reversing the trend that I complained about. The noble Lord said, If we played the hand again, very likely we should do better." I think that is an honest admission that mistakes have been made. He said that as to some things, the Conservatives would have done worse. That is one of those statements which no one can prove one way or the other. It is one of those agreeable beliefs, which, of course, everyone is at liberty to hold if it gives him any comfort.
Nor do I think the noble Lord was quite so clear and lucid as I had hoped, when he described and discussed what had happened to the American Loan. I certainly think that it is not at all fair to Mr. Harrod to say that unless he takes 409 account of expenditure abroad, he is out of court. He put forward a perfectly simple argument: we have drawn £1,025,000,000; our negative trade balance is £573,000,000; where is the £452,000,000? Why not tell us? Why not give us definite figures? It would be perfectly simple to give a table showing exactly where this £452,000,000 went. Surely, there is no mystery about it. Why not let the public know? It would give rise to less argument and less acrimony if we could have a table stating exactly what has happened to the dollars. There cannot be any secret about it.
I do not propose to go into any details now, but there are one or two very curious matters about the balance sheet which the noble Lord gave yesterday. The noble Lord gave a very nice balance sheet showing exactly how much went in our expenditure in the Western hemisphere, how much went to the sterling areas' expenditure in the Western hemisphere, the sterling areas in Europe, and how much went towards forming the International Bank, and how much was spent after August. When it was all added up it came to exactly what we had drawn from the American Loan. But what about the Canadian Loan? Nothing was said about the Canadian Loan, which, after all, is quite a considerable item—1,250,000,000 dollars. After all, we had that loan and 410 a good deal has been drawn out of that Loan. The figures which the noble Lord gave added up to what came out of the American Loan, but nothing was said about the Canadian Loan. It did not seem to me that we had really got this matter clear, and I think that in the interests of the Government and of the whole country it would be as well that the facts should be stated definitely in something in the nature of a balance sheet. It is now two and a half years after V.E. Day, and I think everyone agrees that we are rather worse off now than then. Nor have we any clear or bright prospect of what the future may hold. The Socialist Government have been in power during that time and they must take the responsibility for what has, happened.
§ LORD CHERWELL
I hope that the country will feel equally cheerful. If I wen; asked for an appreciation of the position in Stock Exchange jargon, all I could say would be: "Socialist Futures—sluggish." I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.
§ House adjourned at twelve minutes before eight o'clock.