Sitting of 19 April 1932

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
NEW WRIT.
For the County of East Sussex (East-bourne Division), in the room of Edward Marjoribanks, Esquire, deceased.—[Captain Margesson.]

PRIVATE BUSINESS.
Private Bills (Standing Orders applicable thereto complied with),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto, have been complied with, namely:—
London County Council (Money) Bill.
Bill to be read a Second time.
Provisional Order Bills (Standing Orders applicable thereto complied with),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto, have been complied with, namely:—
Ministry of Health Provisional Orders (Derby and Stalybridge, Hyde, Mossley and Dukinfield Tramways and Electricity Board) Bill.
Bill to be read a Second time To-morrow.
Provisional Order Bills (No Standing Orders applicable),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, no Standing Orders are applicable, namely:—
Ministry of Health Provisional Orders (Lindsey and Lincoln Joint Smallpox Hospital District and Wandle Valley Joint Sewerage District) Bill.
Bill to be read a Second time tomorrow.
London County Council (General Powers) Bill,
As amended, considered; to be read the Third time.

SEA FISHERIES PROVISIONAL ORDERS (No. 2) BILL,
"to confirm certain Provisional Orders made by the Minister of Agriculture and Fisheries under the Sea Fisheries Act, 1868, for the regulation of an oyster and mussel fishery and the establishment and maintenance of a several mussel fishery in the estuary of the Wash, in the county of Norfolk," presented by Sir John Gilmour; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 62.]
ORAL ANSWERS TO QUESTIONS.
  TRADE AND COMMERCE.

    LIMITED LIABILITY COMPANIES (FAILURES).
    Mr. RHYS DAVIESasked the President of the Board of Trade the total number of limited liability companies which have been formed since the War; the number that have gone into liquidation or have otherwise ceased to function; the total amount of capital lost to shareholders through the failure of such companies; and the number of prosecutions which have been instituted in connection with any of such failures?
    The PRESIDENT of the BOARD of TRADE (Mr. Runciman): The total number of limited liability companies registered in England and Scotland during the years 1919 to 1931 inclusive is 115,020. It is not possible without a very lengthy investigation to state how many of these companies have been dissolved but the number of companies of all classes irrespective of their date of registry dissolved during those years is 59,182. I regret that the remainder of the information desired is not available.
    Mr. DAVIES: Can the right hon. Gentleman give any approximate figures in reply to the part of the question which relates to the amount of capital lost?
    Mr. RUNCIMAN: The amount of capital lost to shareholders cannot be stated with any accuracy, because during liquidation it very often happens that a certain amount of capital is repaid, and there are some other factors of an uncertain character which would make the figures unascertainable.

    FRANCE (QUOTA SYSTEM).
    Mr. MITCHESONasked the President of the Board of Trade whether he proposes to make representations to the French Government on the subject of that Government's decision to establish a quota for various kinds of cotton goods?
    Mr. RUNCIMAN: As I have said in reply to previous, questions of this kind, I do not think that general representations against the restriction by quota of cotton goods or any other class of goods would serve a useful purpose, but I should, of course, be ready to consider representations if the quotas proposed were such as to involve discrimination against this country. The French Government have expressed a desire that United Kingdom exporters of cotton goods should enter into negotiations on the matter with French cotton organisations, and I understand that arrangements are being made to that end.
    Mr. HAMMERSLEY: Can my right hon. Friend say on what year the proposed quota will be based?
    Mr. RUNCIMAN: I am afraid I could not do so without notice.
    Mr. HANNONasked the President of the Board of Trade whether the French import quotas for various goods for the current quarter, published in the Board of Trade Journal of 14th April, have been the subject of negotiation between His Majesty's Government and the French Government before they became operative?
    Mr. RUNCIMAN: The quotas in question are in respect of the same goods as were subject to quota in the first quarter of the year. No discussions took place on the quotas for the second
    1380
    quarter, so far as I am aware, but the original quotas for leather, leather goods and certain electrical apparatus, which are among the most important articles so far as United Kingdom trade is concerned, formed the subject of discussion between the trade interests in this country and those in France. His Majesty's Government are not parties to such discussions.
    Mr. HANNON: Will the right hon. Gentleman tell the House what takes place when the French Government contemplate the imposition of a quota against us? Do they make representations to us, and do negotiations take place before these quotas are imposed by the French Government, or have we to await the announcement of their decree before we know where we are?
    Mr. RUNCIMAN: The arrangement of a quota is a matter entirely within the competence of the Government which is imposing the quota; and the only ground on which we can protest is when there is discrimination against us.
    Mr. HANNON: Is the right hon. Gentleman prepared to assure these countries that retaliatory measures will be adopted if they impose quotas against us?

    GERMAN MACHINERY (EXPORT DUTY).
    Major PROCTERasked the President of the Board of Trade whether his attention has been drawn to the action of the German Government in putting an export tax on all machinery transferred from German factories for use in factories to be set up in this country; and, in view of the effect of these duties on the possible establishment of new industries in this country, will he make representations to the German Government for the removal or modification of these prohibitory taxes?
    Mr. RUNCIMAN: I am aware of the high export duty which has been placed on the exportation from Germany of used machinery of certain descriptions. This duty is applicable to German and foreign-owned machinery alike, whatever the country of destination; and, in the absence of any evidence of discrimination, does not afford grounds for representations to the German Government.
    Major PROCTER: Is the right hon. Gentleman aware that this tax amounts to £400 per ton, and that it is delaying the erection of new factories in North-East Lancashire?
    Mr. RUNCIMAN: If there are any new facts to be brought to my notice, I shall be happy to look into them.
    Sir NICHOLAS GRATTAN-DOYLE: Can the right hon. Gentleman say whether these restrictions apply to the textile industry?
    Mr. RUNCIMAN: They apply to certain forms of machinery which may be used in any industries.
    Colonel WEDGWOOD: Are we to understand that the right hon. Gentleman believes in and desires the expansion of the importation of foreign capital to this country?
    Sir PERCY HARRIS: Is this one of the results of the Abnormal Importations Act?
    Mr. RUNCIMAN: It has no connection with it whatever.

    IMPORTS (BRITISH AND FOREIGN SHIPPING).
    Mr. MITCHESONasked the President of the Board of Trade the total amount of imports which have entered British ports in foreign ships and British ships, respectively, during the period 1st April, 1931, to 31st March, 1932; the total amount of exports carried in British and foreign ships, respectively, from this country during the same period; and the comparative figures in each case for the period 1st April, 1930, to 31st March, 1931?
    Mr. RUNCIMAN: I regret that the desired information is not available.

    FILM INDUSTRY.
    Mr. MANDERasked the President of the Board of Trade whether any film studios have recently been erected in this country by American or other interests; and whether he is contemplating any legislation in connection with this matter?
    Mr. RUNCIMAN: I am not aware that any American or other foreign interests have recently erected film studios in this country, and the second part of the question therefore would not appear to arise.
    Mr. MANDER: Will the right hon. Gentleman consider the advisability of increasing the quota of British films shown in this country?
    Mr. LYONSasked the President of the Board of Trade whether, in order to encourage the further development of the British film industry, he will introduce legislation to increase the quota of British films?
    Mr. RUNCIMAN: The Government do not intend to propose an amendment of the Cinematograph Films Act, 1927, in the direction suggested by my hon. Friend.

    FOREIGN COUNTRIES (IMPORT RESTRICTIONS).
    Mr. MABANEasked the President of the Board of Trade whether there are in existence any treaty provisions intended to prevent the imposition of surtaxes on British goods entering Tunis; and whether the recently imposed 15 per cent. surtax in Tunis is discriminatory?
    Mr. RUNCIMAN: United Kingdom goods are entitled to most-favoured-nation treatment in Tunis by an exchange of Notes of 8th March, 1919, between His, Majesty's Government and the French Government. In the opinion of His Majesty's Government the surtax in question is discriminatory.
    Mr. MABANE: Will the right hon. Gentleman consider making representations in reference to this discriminatory tax?
    Mr. RUNCIMAN: We are already making representations to the French Government on the whole question of the 15 per cent. surtax, and communications are passing on the subject.
    Mr. MABANEasked the President of the Board of Trade whether there are in existence any treaty provisions to prevent the imposition of a 15 per cent. surtax on British goods entering Morocco?
    Mr. RUNCIMAN: Yes, Sir.

    BRITISH COAL (FOREIGN IMPORT RESTRICTIONS).
    Captain PETER MACDONALDasked the President of the Board of Trade if he can make any further statement as to the progress of negotiations with the Governments of Germany, Belgium, Italy, and Portugal with regard

    1383
    to the discriminatory measures recently adopted by them against the importation of British coal?
    Mr. RUNCIMAN: His Majesty's Ambassador at Berlin has been instructed to make further strong representations to the German Government. Replies to our representations have now been received from the Belgian and Italian Governments, and are under consideration. The recent increase of 5 per cent. in the Portuguese Customs duty on coal imports is not considered to be discriminatory.
    Captain MACDONALD: Are these other countries going to be allowed to disregard commercial treaties, without any retaliatory measures being adopted by His Majesty's Government?
    Mr. RUNCIMAN: No, Sir.
    Mr. HANNON: Can the right hon. Gentleman say at what stage he proposes to tell these countries that discriminatory tariffs against us will be no longer tolerated?
    Mr. GODFREY NICHOLSONasked the President of the Board of Trade whether negotiations are proceeding with the French Government with a view to securing an increase in the quota allotted to British coal; and what is the nature of the pressure being exerted by the British Government?
    Mr. RUNCIMAN: Yes, Sir. The French Government have been pressed for an early reply to our representations regarding the method of calculation of the coal quota and the inequitable operation of the licensing system.
    Mr. NICHOLSON: Is the right hon. Gentleman hopeful that satisfactory results will eventuate from these negotiations?
    Mr. RUNCIMAN: That is a matter of opinion.
    Mr. MARTIN: Is the right hon. Gentleman keeping in touch with the owners and miners' representatives in the exporting districts in this matter?
    Mr. RUNCIMAN: Yes. We are in the closest touch with them day by day.
    Mr. HANNONasked the President of the Board of Trade if his attention has been called to the preferential treatment of Dutch coal as against British by certain municipalities and institutions in Germany; and if any representations have been made to the German Government on the subject?
    Mr. RUNCIMAN: I have seen it both affirmed and denied in the Press that certain public utility undertakings in Berlin and Hamburg are diverting their custom to Dutch coal. I am making inquiries and will let my hon. Friend know the result.
    Mr. HANNON: When can I put a question down to my right hon. Friend on this subject, with the hope of getting some definite reply?
    Mr. RUNCIMAN: Towards the end of next week.
    Mr. LAWSON: How much longer are we going to conceal from ourselves the fact that these measures against us are retaliatory?

    WEIGHTS AND MEASURES ACT (COBS AND PATENT FUELS).
    Mr. LECKIEasked the President of the Board of Trade whether he has now considered the resolution passed by the Walsall Town Council in February, requesting that Sections 20 to 29 of the Weights and Measures Act, 1889, which relate to the sale of coal, should be extended to apply to the sale of coke and patent fuels; and what action he proposes to take?
    Mr. RUNCIMAN: Legislation would be necessary to give effect to this proposal. I cannot do more at present than promise that it will be considered when an opportunity occurs for amending the Weights and Measures Acts.

    AUSTRALIAN WOOL (IMPORTS).
    Captain HUNTERasked the President of the Board of Trade if he is able to state the percentage of the total imports of wool into this country originating from Australia?
    Mr. RUNCIMAN: During the years 1929 to 1931, the proportion of the total imports of raw sheep's and lambs' wool into the United Kingdom that was consigned from Australia was 33.4 per cent. by weight and 35.5 per cent. by value,

    1385
    while the proportion of the retained imports that was consigned from Australia was 37.2 per cent. by weight and 39.4 per cent. by value. It is believed that all but a negligible amount of this wool consigned from Australia originated in that country.

    IMPORT ADVISORY COMMITTEE (RECOMMENDATIONS).
    Mr. LOGANasked the Chancellor of the Exchequer whether he will inform the House as to the nature of the first list of recommendations which he has received from the Import Advisory Committee?
    The FINANCIAL SECRETARY to the TREASURY (Major Elliot): I must ask the hon. Member to await the statement which will be made by the Chancellor of the Exchequer this afternoon.

    MANCHURIA.
    Mr. COCKSasked the Secretary to the Overseas Trade Department whether he has any information regarding the effect on British trade of the Japanese occupation of Manchuria?
    Mr. JOHN COLVILLE (Secretary, Overseas Trade Department): Information received by my Department is to the effect that United Kingdom trade with Manchuria has not been seriously affected by the Sino-Japanese conflict in that territory. The position is, however, being closely watched.

    EXCHANGE RESTRICTIONS.
    Mr. HAMILTON KERRasked the Secretary to the Overseas Trade Department whether his attention has been called to the severe handicap which is still being placed upon industry by exchange restrictions in various foreign countries, more particularly in Hungary and Austria; and whether he will take immediate action to remove this disability?
    Mr. COLVILLE: I am sending my hon. Friend a copy of the reply on this subject which I gave yesterday to my hon. Friend the Member for Platting (Mr. Chorlton), which shows that I am in close touch with business interests on this difficult question.
    Mr. KERR: Have there been any negotiations with the collecting houses?
    Mr. COLVILLE: That is one of the subjects under consideration.

  COMPANIES ACT.
  Sir CHARLES CAYZERasked the President of the Board of Trade what steps the Solicitor to the Board of Trade proposes to take to see that the 235 companies, guilty of illegal conduct, under Section 110 of the Companies Act of 1929, as on 5th April last, are compelled to observe the law so that the public may be protected against loss?
  Mr. RUNCI MAN: Letters are sent by the Solicitor to the companies in default, and, when the circumstances are such that legal proceedings are warranted, steps are taken to prosecute for non-compliance with the requirements of the Companies Act. I would add, however, that the great majority of the companies now in default are of no public importance.

  DYESTUFFS (IMPORTATION REGULATION) ACT.
  Mr. LOUIS SMITHasked the President of the Board of Trade whether any consideration has yet been given to the question of policy that is to be adopted in connection with the Dyestuffs (Importation Regulation) Act; and, if so, what decision has been reached?
  Mr. RUNCIMAN: This Act was extended until the end of the present year by the Expiring Laws Continuance Act, 1931. The future policy will be considered in due course.

  BRITISH ARMY (CEREBRO-SPINAL FEVER).
  Mr. McENTEEasked the Financial Secretary to the War Office how many of the cases of cerebral meningitis at Windsor were among troops quartered in the modern barracks; bow many were among troops in the older quarters; and whether full sanitary provisions are made in the quarters of the guard at Windsor Castle?
  The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): There are no strictly modern barracks at Windsor, although improvements have been introduced from time to time. Since 1st January there have been nine cases of cerebro-spinal fever, five of which occurred at Victoria Barracks and four

  1387
  at Combermere Barracks. The answer to the last part of the question is in the affirmative.
  Mr. McENTEE: Can the hon. Gentleman say whether the cause of this disease has been traced?
  Mr. COOPER: No, Sir.

  SCOTLAND

    MILK MARKETING SCHEME.
    Mr. WEDDERBURNasked the Secretary of State for Scotland if he can make any statement as to the progress of the organised milk marketing scheme for Scotland?
    The SECRETARY of STATE for SCOTLAND (Major Sir Archibald Sinclair): I would refer my hon. Friend to the reply which I gave yesterday to a question on this subject by the hon. Member for North Lanark (Mr. Anstruther-Gray).

    ALLOTMENTS (UNEMPLOYED PERSONS).
    Mr. LEONARDasked the Secretary of State for Scotland whether he is aware that the provisions of the Agricultural Land (Utilisation) Act, 1931, with regard to allotments for unemployed persons, have been nullified by the Government's failure to provide any funds for that purpose; and whether, in view of the prevailing unemployment in many parts of Scotland, provision will now be made for allotments for unemployed persons in terms of the Act?
    Sir A. SINCLAIR: I am aware that, owing to the financial stringency, it has been impossible, up to the present, to provide for any scheme of State assistance for the purpose mentioned in the question; but, as the hon. Member is no doubt aware, a voluntary scheme has been organised by the Scottish National Union of Allotment Holders and the Society of Friends, and it is hoped that the funds at their disposal will be sufficient to meet the applications by unemployed persons in Scotland for assistance in cultivating allotments during the present year.

    PROPOSED PIER, GLENELG (GRANT).
    Mr. LEONARDasked the Secretary of State for Scotland whether, in view of the representations which have been made
    1388
    for a grant towards the construction of a pier or slip at Glenelg, Inverness-shire, and in view of the urgency of the matter for public safety in travelling and for the transport of cattle and sheep to and from markets, a grant will be made at an early date?
    Sir A. SINCLAIR: The provision of a pier or jetty at Glenelg is a matter in the first instance for the consideration of the county council of Inverness-shire. Should that body apply for a grant-in-aid, the application would receive due consideration.

    ACQUITTED PRISONER, GLASGOW (FINGER PRINTS).
    Mr. McGOVERNasked the Secretary of State for Scotland if his attention has been drawn to the case of an individual who was recently charged with a crime in Glasgow and discharged as innocent; and why his finger prints, which were taken at the time of arrest, were not destroyed, thereby saving the man from taking action in court seeking their destruction?
    Sir A. SINCLAIR: I am aware of the case to which the hon. Member refers. I understand that, in accordance with practice, the finger prints and other records were destroyed when the charge against the accused man was found not proven, and that his agent was informed to this effect some time ago.
    Mr. McGOVERN: Why is it necessary for this man to apply to the court if the finger prints have already been destroyed, and why was no assurance given in the court that such a course had been pursued?
    Sir A. SINCLAIR: I do not know whether it is necessary for him to apply or not, but the case is still sub judice.

    HOUSING.
    Mr. McGOVERNasked the Secretary of State for Scotland if his attention has been drawn to the case, which was heard at Glasgow Valuation Court on 11th April, where a house factor charged £12 10s. as a premium on a two room and kitchen house; and what action he proposes to take to protect tenants from such methods?
    The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): I have seen a Press report of a case which I

    1389
    assume is that referred to by the hon. Member. From the terms of the report, it seems unlikely that the house was under the Rent Restrictions Acts, in which case the landlord and tenant were free to make any agreement they pleased as regards the payment to be made for the tenancy of the house.
    Mr. McGOVERN: Do I take it that it is entirely legal now for house factors and landlords to claim premiums from working-class tenants who are looking for houses?
    Mr. SKELTON: I have nothing to add on that point, but where the Rent Restrictions Act is not concerned it is open to the landlord and tenant to agree to an extra payment in return for a lease.
    Mr. McGOVERN: Will the hon. Gentleman consider preventing such an extortion from poor tenants in a city like Glasgow?
    Mr. SKELTON: That, of course, is a large question of policy about which I cannot reply.
    Lieut.-Colonel FREMANTLE: Is there a chance of the Rent Restrictions Amending Bill, which is urgently required, being brought in?
    Mr. SKELTON: That, again, is a question of policy about which I cannot reply.
    Mr. KIRKWOOD: Has not the tenant a right under the Rent Restrictions Act to withhold the payment of rent until what he has paid in key money has been consumed?
    Mr. SKELTON: I have already explained that if it comes under the Rent Restrictions Act, a landlord who attempts to exact payment is liable to a heavy fine.
    Mr. McGOVERNasked the Secretary of State for Scotland if his attention has been drawn to the decree granted, on Friday, 8th April, 1931, against tenants by a Glasgow sheriff in a property at 55 to 69, Dalness Street, Tollcross, which has a demolition order; and if he will set aside the decree?
    Mr. SKELTON: The answer to the first part of the question is in the negative. I have, however, made inquiries and I understand that on Friday, 8th April, 1932, two tenants at Dalness Street, Toll-
    1390
    cross, Glasgow, were sued in the Ejection Court. One case was continued till 13th May; and in the other the sheriff, after hearing parties, granted an instalment of 6s. per week and continued the case sine die. My right hon. Friend has no jurisdiction in the matter.
    Mr. McGOVERN: Is it not the case that under the Rent Restrictions Act a decree cannot be granted by a sheriff in regard to property for which a demolition or closing order has been made; that the courts have always held that, and that this case is a complete departure; and will the hon. Gentleman inquire into it?
    Mr. SKELTON: That raises another question which cannot be answered now.
    Mr. McGOVERN: May I press the hon. Gentleman for a reply. Has not a decision previously been given——
    Mr. SPEAKER: That question does not arise out of the answer.
    Mr. MAXTON: It has reference to the question on the Paper, and my hon. Friend is asking for a reply. He has repeated precisely the question on the Paper, and has asked whether as this decree of ejection has been made in regard to a, property which has been ordered for demolition, the hon. Gentleman will get the Secretary of State to set aside the decree, which has been made illegally?
    Mr. SKELTON: I have already answered that. May I explain the law with regard to a civil decree. Whether correct or not, the Secretary of State has no power to have it set aside.
    Mr. MACQUISTEN: Is not the proper course to have it decided in the courts?
    Mr. KIRKWOOD: Arising out of that reply—
    Mr. SPEAKER: Mr. Leonard.
    Mr. KIRKWOOD—
    Mr. SPEAKER: The hon. Member knows quite well that we cannot debate these questions.
    Mr. KIRKWOOD: On a point of Order. This is a serious case where people have been put out, and the law is emphatically that they must have alternative- accommodation. There is no

    1391
    alternative accommodation here; they have simply been thrown out, and their house demolished.
    Mr. SPEAKER: Mr. Leonard.

    ROAD IMPROVEMENT, SKYE.
    Mr. LEONARDasked the Secretary of State for Scotland whether he is aware of the need for road improvement in the north of Skye; and what steps he proposes to take to ensure that this work will be proceeded with?
    Sir A. SINCLAIR: I have no information to the effect suggested in the first part of the question. As regards the second part, the maintenance and improvement of public roads is a matter for the county council as road authority.

    WRITS (REGISTRATION).
    Mr. J. S. C. REIDasked the Secretary of State for Scotland what steps, if any, are to be taken to carry out the recommendations regarding registration of writs and other matters contained in the Departmental Committee's Report of 1928?
    Sir A. SINCLAIR: Important changes in the methods of registration were proposed by the committee referred to, and it was found desirable last year to ask the committee to meet again to consider certain difficulties. After consideration of the committee's further report in which they adhered to their recommendations, I have addressed a communication to the Legal Societies with a view to ascertaining whether the recommendations of the committee are acceptable to them; and I hope that a decision will not be long delayed.

  COAL INDUSTRY.

    WORKING HOURS.
    Mr. G. NICHOLSONasked the Secretary for Mines when he anticipates that he will be able to make a statement on the policy of the Government with regard to hours of work in the mining industry and to Part I of the Coal Mines Act, 1930?
    The SECRETARY for MINES (Mr. Isaac Foot): These questions are engaging the earnest attention of the Government, and a statement will be made as soon as it is possible to do so.
    Mr. NICHOLSON: Can the hon. Gentleman be more explicit about the date?
    Mr. FOOT: The date cannot possibly be given in view of the fact that negotiations are taking place.
    Mr. McKEAG: Will the hon. Gentleman state between whom are the negotiations taking place, and in view of the desirability of avoiding even the possibility of conflict will he do what is possible to ensure that negotiations between the owners and the men are not left until the very last moment?

    BOYS (EMPLOYMENT UNDERGROUND).
    Mr. TINKERasked the Secretary for Mines if he has completed his inquiries into the position of boys working underground between the hours of 9 p.m. and 5 a.m.; and if he will bring in a Measure to place them in the same position as boys working on the surface?
    Mr. ISAAC FOOT: I am not quite clear what inquiries the hon. Member has in mind. I discussed this question with representatives of the Miners' Federation in February last, and informed them that I should be happy to consider it in detail when I had their arguments before me; but I have not yet received this information.
    Mr. TINKER: Do I take it from the reply that the hon. Gentleman is to get some further answers from the Miners' Federation?
    Mr. FOOT: I am waiting for fuller information, for which I have asked.

    OUTPUT.
    Mr. TINKERasked the Secretary for Mines if he will give the latest figures in his possession showing the output per man-shift worked with separate figures for Lancashire; and will he give corresponding figures for the years 1913 and 1923?
    Mr. ISAAC FOOT: During the year 1931, the output per man-shift worked by all workers employed above and below ground at coal mines in Great Britain was 21.61 cwts., and in Lancashire and Cheshire 17.12 cwts. I regret that corresponding figures for 1913 are not available, but in June, 1914, they were 20.32 cwts. and 15.19 cwts. respectively. In 1923 the figure for Great Britain was 17.83 cwts., but that for Lancashire and Cheshire separately is not available.

  IMPERIAL ECONOMIC CONFERENCE.
  Mr. LYONSasked the Secretary of State for Dominion Affairs whether he will issue a schedule of goods of foreign origin which have come into this country via Canada on preferential terms for the quarter ended 31st March, or the nearest convenient date; and whether the entry of such goods after a certain percentage of Canadian labour has been expended thereupon will be on the agenda for revision at the forthcoming Ottawa Conference?
  The SECRETARY of STATE for the DOMINIONS (Mr. J. H. Thomas): As regards the first part of the question, goods may be admitted to preference on importation into this country only on satisfactory proof being given that they have been consigned to this country from a part of the British Empire and (with certain exceptions) that at least 25 per cent. of the value is derived from materials grown or produced or from work done in a part of the British Empire. If, as I assume, the hon. Member means by goods of foreign origin goods manufactured in Canada from foreign material, I regret it would not be possible to give the particulars required. As regards the second part of the question, I would refer the hon. Member to the reply which I gave to the hon. and gallant Member for Keighley (Captain Watt) on 1st March.
  Mr. HANNON: Has not the attention of my right hon. Friend been called to continuous abuses of this concession through semi-manufactured articles from foreign countries being introduced into the Dominions and sent on to this country? In view of the unfair competition of those goods with the products of this country, will he bring the matter before the Ottawa Conference?
  Mr. THOMAS: I am delighted to observe that the hon. Member is alive to the difficulties which confront us. I will certainly keep the point in mind.
  Captain P. MACDONALDasked the Secretary of State for Dominion Affairs whether any appointments for business advisers to the British delegation to the Ottawa Conference have yet been made; and what bodies have been invited to put forward the names of such advisers?
  Mr. THOMAS: I am in communication with the British Committee on Empire Trade and with the Trades Union Congress on this subject, but no appointments have yet been made.
  Captain MACDONALD: Will the right hon. Gentleman say what bodies he is consulting?
  Mr. THOMAS: The British Committee on Empire Trade and the Trades Union Congress. Those are the two bodies that represent the industrial side—capital and labour.
  Mr. LAMBERTasked the Secretary of State for Dominion Affairs if agriculture is to be represented at Ottawa by other than Government nominees in a similar manner as industry will be represented there?
  Mr. THOMAS: Yes, Sir. The position was explained yesterday by my right hon. Friend the Minister of Agriculture.
  Mr. LAMBERT: Can the right hon. Gentleman say by whom the representatives will be nominated?
  Mr. THOMAS: In the main the suggestions with regard to appointments will come from the different interests concerned.
  Sir P. HARRIS: How many hundreds of representatives will there be altogether?

  NEWFOUNDLAND (DISTURBANCES).
  Mr. McENTEEasked the Secretary of State for Dominion Affairs if he will state the present position in Newfoundland; whether any assistance to maintain order was asked for by the Governor; and whether any sailors were landed?
  Mr. THOMAS: I have received this morning the following message from the Governor of Newfoundland:
  "Acts of disturbance and violence had been committed in Saint Johns and there was grave risk of disorder continuing and spreading. The strength of the constabulary force of Newfoundland was entirely inadequate to control the situation which had arisen. His Majesty's Government in Newfoundland are deeply grateful for the invaluable assistance which has been rendered by the visit of His Majesty's Ship "Dragon," which has enabled the strength

  1395
  of the constabulary force to be increased to a number which it is hoped, with the voluntary assistance of civilians including a large number of ex-service men, will prove adequate to preserve law and order.
  No men were landed, except for shore leave, from His Majesty's Ship "Dragon," which left 17th April.
  General conditions at present are quiet."
  Mr. McENTEE: Can the right hon. Gentleman say whether it is proposed to hold any inquiry into the causes of this disorder, and, if so, whether the inquiry will be public?
  Mr. THOMAS: The hon. Member will know that if there had been similar difficulties in this country no one outside would be entitled to say what our domestic policy ought to be. Newfoundland is a Dominion, and is responsible for its own government.
  Mr. McENTEE: But can the right hon. Gentleman say whether he has any information of a proposal to hold such an inquiry on the part of Newfoundland?
  Mr. THOMAS: No, Sir, and I have not inquired.

  SOUTH WEST AFRICA.
  Mr. PARKINSONasked the Secretary of State for Dominion Affairs whether any action is being taken to include the mandated territory of South West Africa in the Union of South Africa?
  Mr. THOMAS: I am not aware of any such action. I would refer the hon. Member to the terms of Article 2 of the Mandate which, as he is no doubt aware, is exercised by His Majesty's Government in the Union of South Africa.

  DOMINIONS (DEPORTATIONS).
  Mr. LECKIEasked the Secretary of State for Dominion Affairs whether, in view of the number of men and women who are being deported from the Dominions owing to the impossibility of finding them employment, and are thus becoming a, charge on the Poor Law in this country, he will consider some scheme for stopping the further flow of deportees back to this country by giving them tem-
  1396
  porary assistance to tide them over the next two months in the country where they are located?
  Mr. THOMAS: I have carefully considered the hon. Member's suggestion, but I fear that it is not practicable to give effect to it.
  Mr. PIKE: Will the right hon. Gentleman assure the House that this question will be one for discussion at the Ottawa Conference?
  Mr. THOMAS: No. The implication in this question is that His Majesty's Government will hold themselves responsible to make contributions to migrants in distress, and I could not possibly accept such a responsibility.
  Mr. MAXTON: Are we to assume that at the Ottawa Conference there will be no discussion about the conditions of the poor people in various parts of the Empire, but that the Conference will deal only with trade interests?
  Mr. THOMAS: I assume that the object of discussing trade interests is to benefit poor people.
  Mr. MAXTON: The right hon. Gentleman knows perfectly well what I mean. Does he think that discussions in this House about trade generally are concerned with the welfare of poor people—
  HON. MEMBERS: Yes!
  Mr. SPEAKER: That question does not arise out of the answer.
  Mr. MAXTON: May I repeat my question, which is a serious one? Am I to understand that at the Ottawa Conference there will be no discussion on the general social conditions of the people in various parts of the Empire?
  Mr. THOMAS: On the contrary, I hope that the discussions will be concerned with the general conditions of the people in different parts of the Empire. The general conditions of the people in all parts of the Empire are dependent on a sound trade policy.
  Mr. MAXTON: That is the Tory way of looking at it. That is the difference between the right hon. Gentleman and myself.

  AGRICULTURE.

    MILK MARKETING SCHEME.
    Sir WALTER PRESTONasked the Minister of Agriculture whether the Government scheme for the marketing of milk arid milk products will be available before September, when the producers and distributors meet to fix prices for the following year?
    The MINISTER of AGRICULTURE (Sir John Gilmour): The Reorganisation Commission for Milk which, as announced yesterday in the House, I have now constituted, will be asked to submit a scheme without avoidable delay, but after the Commission's scheme has been considered and submitted by producers, it would not be safe to allow much less than nine months for the various preliminary stages laid down in the Act to be completed. I am afraid, therefore, that the scheme cannot be available in time to come into operation before 1933.
    Sir W. PRESTON: Is the right hon. Gentleman not aware that, if the price of milk is dependent upon the Milk Combine for another 12 months, every farmer in the West of England who has to rely on his milk trade will be bankrupt, and can nothing be done to hasten things?
    Sir J. GILMOUR: I am hoping that the outcome of the steps we are taking to deal with the milk problem will be a better organisation among the producers of milk.

  INDIA (ARCHEOLOGICAL DEPARTMENT).
  Mr. MOLSONasked the Secretary of State for India what economies have been effected by the Government of India in the archæological department; and whether he is satisfied that no irreparable harm will be done to that department by those economies?
  The SECRETARY of STATE for INDIA (Sir Samuel Hoare): I am sending my hon. Friend a copy of a Memorandum circulated to the Indian Legislative Assembly last November on this subject. I have no reason to think that the Government of India, under whose control the Department is, are unmindful of the desirability of avoiding economies which may permanently impair its usefulness.

  FACTORIES (EMPLOYES).
  Commander COCHRANEasked the Secretary of State for the Home Department if he can give for the latest convenient date the total number of factories in England and Wales and in Scotland, classified for both countries in accordance with the number of persons employed?
  The SECRETARY of STATE for the HOME DEPARTMENT (Sir Herbert Samuel): The returns made under the Workmen's Compensation Act by occupiers of factories in respect of the year 1930 have been classified into certain groups according to the number of persons employed, and I propose to circulate this information with the OFFICIAL REPORT. The figures have been tabulated for the whole country and I regret it will not be possible to give separate figures for Scotland.
  Factories covered by the returns under the Workmen's Compensation Act for the year 1930, divided into size groups according to the number of persona employed.

  Number employed.

  Number of factories.

  Percentage of Total.

  1–25

  97,463

  76·3

  26–50

  11,571

  9·1

  51–100

  8,113

  6·4

  101–250

  6,830

  5·3

  251–500

  2,421

  1·9

  501–1,000

  949

  ·7

  1,001 and upwards

  421

  ·3

  127,768

  100·0

  These figures will be published with further particulars, and any necessary explanation in the forthcoming Annual Report of the Chief Inspector of Factories for 1931.

  EXECUTIONS (DEMONSTRATIONS).
  Mr. MANDERasked the Home Secretary whether his attention has been drawn to the fact that a person formerly included by his Department on the list of approved hangmen is now travelling the country fair-grounds with a show demonstrating an actual hanging; and whether he will take steps to prevent such practices?
  Sir HERBERT SAMUEL: I have seen a report in the Press, but I regret that there is no means, as far as I am aware, of preventing such representations.
  Mr. MANDER: Will the Home Secretary make inquiries?
  Sir H. SAMUEL: I have no power to take any action.
  Mr. MACQUISTEN: Does the right hon. Gentleman not think that this exhibition may have the effect of preventing serious crime? Could he not offer this performer to Chicago after his tour here?

  UNEMPLOYMENT.

    SCOTLAND.
    Mr. DAVID ADAMSasked the Minister of Labour (1) the number of coopers unemployed in Scotland?
    (2) the number of coopers employed in connection with the production Scotch whiskey in 1914 and 1931, respectively?
    The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. R. S. Hudson): At 25th January, 1932, the latest date for which statistics are available, there were 1,277 wholly unemployed men on the registers of Employment Exchanges in Scotland who were applicants for work as coopers. Separate statistics of the number of coopers employed in connection with the production of Scotch whiskey are not available.

    TRANSITIONAL PAYMENTS.
    Mr. TINKERasked the Minister of Labour the number of public assistance committees his Department have communicated with in respect of their application of the means test; and will he say what has been the result?
    Mr. HUDSON: I am not clear what the hon. Member means. A great many points of detail with regard to administration have naturally arisen in all parts of the country, and I could not attempt to give any exhaustive list.
    Mr. TINKER: May I take it that there are to be no communications with those authorities which are not carrying out the instructions or wishes of the Department?
    Mr. HUDSON: We are in communication with the authorities which are not carrying out the letter and spirit of the Act.
    Mr. TINKER: Do these inquiries include any of the authorities where the percentage of dismissals or disallowances are very high?
    Mr. HUDSON: I should like notice of that question.

    SUNDAY PERFORMANCES (REGULATION) BILL.
    Mr. GURNEY BRAITHWAITEasked the Prime Minister whether His Majesty's Government intends to adopt the Sunday Performances (Regulation) Bill in order to assure its passage into Law during the present Session?
    The PRIME MINISTER (Mr. Ramsay MacDonald): I would refer my hon. Friend to the answer which I gave yesterday in reply to a question by my hon. and gallant Friend the Member for Enfield (Lieut.-Colonel Applin).

    SILVER.
    Lord SCONEasked the Chancellor of the Exchequer if he will consider arranging a conference with representatives of the principal silver-producing countries, including India., with the object of so controlling the future output that the value of silver may rise sufficiently to enable those eastern countries, whose main currency it is, again to absorb our manufactures, and thus assist the reduction of unemployment?
    Major ELLIOT: I would refer the Noble Lord to the answer given to my hon. Friend the Member for Gravesend (Mr. Albery) on the 5th April.

  GOVERNMENT DEPARTMENTS.

    LORD CHANCELLORS AND EX-LORD CHANCELLORS (SALARIES AND PENSIONS).
    Mr. PARKINSONasked the Chancellor of the Exchequer the total amount paid in salaries and pensions to Lord Chancellors and ex-Lord Chancellors during the last 20 years?
    Major ELLIOT: The total amount of salaries and pensions to Lord Chancellors and ex-Lord Chancellors of England in respect of the last 20 financial years is £466,183.

    LAW OFFICERS (FEES).
    Mr. VYVYAN ADAMSasked the Chancellor of the Exchequer the method whereby the amount of fees payable to His Majesty's Law Officers in particular cases is determined?
    Major ELLIOT: The fees payable to the Law Officers of the Crown in particular cases are determined in accordance with the Treasury Minute dated 5th July, 1895, which was laid before the House as House of Commons Paper No. 431/Session 2, of 1895. I am sending my hon. Friend an extract from this Minute.
    Mr. ADAMS: While thanking my right hon. Friend for his answer, may I ask him whether the substantial emoluments of which the English Law Officers of the Crown are still in receipt are deemed to be a measure of their Ministerial superiority over all the other Members of the Government, and their professional ascendency over the vast majority of the practising members of the Bar?
    Mr. McENTEE: Will the right hon. Gentleman publish in the OFFICIAL REPORT the extract to which he has made reference?

    TRANSFERRED OFFICERS (REPLACEMENT).
    Mr. McKEAGasked the Financial Secretary to the Treasury by what means it is proposed to replace the number of civil servants, totalling about 600, who have recently been transferred from various Government Departments to the Customs and Excise and Inland Revenue Departments?
    Major ELLIOT: I would refer the hon. Member to the answer which I gave on the 14th April to the hon. Member for Walthamstow, West (Mr. McEntee) of which I am sending him a copy.

  NATIONAL FINANCE.

    NATIONAL INCOME.
    Major NATHANasked the Chancellor of the Exchequer whether His Majesty's Government has made any estimate of the national income for the current or any recently past revenue year or any recent period, and of the distribution of such national income among the various ranges of income?
    Major ELLIOT: I regret that no official estimates are available.
    Sir ARTHUR MICHAEL SAMUEL: When shall we have a separate report of the Revenue Department which will give these figures?
    Major ELLIOT: I am afraid I could not say just now.

    INCOME TAX.
    Mr. NEIL MACLEANasked the Chancellor of the Exchequer whether he is aware that a number of people have been refused transitional benefit on the ground that the income of a son or daughter is sufficient to enable them to be maintained by those relatives; whether he is aware that when the son or daughter make a claim on their Income Tax form for an allowance, on the ground that they are maintaining their parents, the Income Tax officials refuse to allow the claim; whether this is done on instructions from the Treasury; and, if not, whether he will issue instructions for such claims to be considered and, where genuine, allowed?
    Major ELLIOT: I would refer the hon. Member to the answer given to a similar question asked by the hon. Member for Bothwell (Mrs. Shaw) on the 9th of February last.
    Mr. MACLEAN: Can the right hon. Gentleman inform the House whether he has issued any instructions relating to consideration being given by the Inland Revenue officials to the claims which have been put in?
    Major ELLIOT: The answer given on the 9th February pointed out that there were no provisions in the Income Tax Act which would enable action to be taken such as the hon. Member desires.
    Mr. MACLEAN: Is it not a hardship upon those people that they should be placed in such a contradictory situation as to be held to be wholly maintaining their parents and not be allowed to claim a rebate of Income Tax?
    Major ELLIOT: The point is that there are no such provisions under the Statute.

  LEAGUE OF NATIONS (COMMISSION).
  Mr. RHYS DAVIESasked the Secretary of State for Foreign Affairs

  1403
  whether any report has been received from the League of Nations of the travelling commission appointed some 18 months ago to inquire into the traffic in women and children in the East?
  The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Eden): No, Sir.

  LIBERIA.
  Mr. MANDERasked the Secretary of State for Foreign Affairs whether, in view of the fact that the Liberian authorities have now decided to reject the proposals made by the Council of the League of Nations for bringing about reforms to which His Majesty's Government attach importance, it is proposed to instruct the British representative at Monrovia to make any further representations to the Liberian Government?
  Mr. EDEN: My right hon. Friend is not aware that the Liberian Government have taken any decision so unwise as that suggested. The proper time and place for them to make their intentions known will be at the Council meeting next month.

  BRAZIL (BRITISH INVESTORS).
  Mr. POTTERasked the Secretary of State for Foreign Affairs if he will request His Majesty's Ambassador in Brazil to ascertain the reason why the authorities of the State of Rio de Janeiro have not yet terminated their default upon their obligations to British owners of their bonds?
  Mr. EDEN: As stated in the reply given to my hon. Friend the Member for the City of Chester (Sir C. Cayzer) on the 21st of March last, negotiations on this matter are in progress. My right hon. Friend does not consider that any useful purpose would be served by making the proposed inquiry at this time.

  RENT RESTRICTIONS ACT.
  Mr. LECKIEasked the Minister of Health whether, in view of the dissatisfaction which exists, he will take steps to deal with the question of the permitted increases in rent under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, during the present Session?
  Lieut.-Colonel MAYHEWasked the Minister of Health whether he is aware that excessive rents are being charged for decontrolled and other classes of property occupied by the lower-paid workers; and if he will now consider the desirability of promoting legislation to counteract this?
  The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Ernest Brown): My right hon. Friend is afraid that he cannot add anything to the replies he has recently given as to the introduction of amending legislation.

  LOCAL AUTHORITIES (CONTRACTS).
  Mr. GLEDHILLasked the Minister of Health if he will take steps to urge upon local authorities the desirability of giving preference to British goods when placing contracts for supplies for grant-aided schemes?
  Mr. E. BROWN: Local authorities have already been urged to make use to the utmost extent practicable of goods and materials of home production and, where that is not practicable, to give preference to goods and materials of Empire origin. I will send my hon. Friend copies of the circulars in question.

BUSINESS OF THE HOUSE.
Ordered, "That the Proceedings of the Committee of Ways and Means be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]
BILLS REPORTED.

  JURIES (EXEMPTION OF FIREMEN) BILL.
  Reported, so far as amended, from Standing Committee C.
  Leave given to the Committee to make a Special Report.
  Special Report brought up, and read;
  Report and Special Report to lie upon the Table, and to be printed.
  Minutes of the Proceedings of the Standing Committee to be printed.

  TRENT NAVIGATION BILL.
  Reported, with Amendments; Report to lie upon the Table, and to be printed.

FINANCIAL STATEMENT (1932–33).
Copy ordered, "of Statement of Revenue and Expenditure as laid before the House by Mr. Chancellor of the Exchequer when opening the Budget."—[Major Elliot.]
Copy presented accordingly; to lie upon the Table, and to be printed. [No. 63.]

ORDERS OF THE DAY.

  WAYS AND MEANS.
  Considered in Committee.
  [Sir DENNIS HERBERT in the Chair.]

  FINANCIAL STATEMENT.
  3.30 p.m.
  The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): Among the many strange events which have characterised the financial year which has just closed, we must record the occurrence of two Budgets, a feature which I do not say is unprecedented, but for which I have not been able to find a comparable parallel in peace-time during the last 100 years. I need not now recall the events which necessitated the second or emergency Budget, but the Committee will recollect that last September my Noble Friend the Lord Privy Seal found himself face to face with a prospective deficit of no less than £74,000,000. To make good that deficiency and to balance the national account demanded the highest courage and determination on the part of the Chancellor of the Exchequer, and, at the same time, a supreme confidence in the readiness of the people to undertake whatever burdens and sacrifices might be laid upon them in order to support the national credit. My Noble Friend was fully equal to the occasion. Although, to use his own words, his task was one of the most disagreeable that had ever fallen to his lot, he produced a scheme which was universally acclaimed, both at home and abroad, as a model of severe but sound and salutary finance. By a combination of economies and new taxation, he was able to provide for a reduction of Debt of £32,500,000, and for a surplus of £1,500,000. To-day, we have the satisfaction of recording that not only have my Noble Friend's anticipations been fulfilled, but that the small surplus of £364,000 which we actually show must be taken in addition to the fact that, instead of the £23,000,000 which it was proposed to take last April from the Dollar Exchange Fund, it was only necessary to take £12,750,000. If, therefore, we add to the £364,000 the £10,250,000 which is the difference between those two figures, we see that
  1412
  we are really to-day £9,000,000 better off than my Noble Friend anticipated last year.

  FINANCIAL STATEMENT.

    REVIEW OF PAST YEAR.
    I must now proceed to show how this remarkable result, which has produced a profound impression upon instructed opinion in all parts of the world, has been brought about; and, of course, in all cases the figures I shall take in making my comparison will be those of the September Estimates, and not those of April last. Taking first the Expenditure side, hon. Members will recollect that, under the Finance (No. 2) Bill of 1931, the Fixed Debt Charge was reduced from £355,000,000 to £322,000,000. That was due mainly to the fact that the provision for the Sinking Fund and the second half-yearly payment of interest on the American Debt were excluded from the Fixed Debt Charge, in accordance with the Hoover Moratorium; and it was also due to the fact that powers were taken to borrow for the redemption of the Victory Bonds which were tendered in payment of Death Duties. The reduced charge included a sum of £32,500,000 of Sinking Fund in order to meet our contractual obligations, and the whole of this has been duly provided from revenue.
    When I come to the Supply Services, I find there one of the major factors in the happy result to which I have already alluded. Last September, the sum arrived at for Supply Services, after taking into account the increase due to the decisions which stopped the borrowing for the Unemployment Insurance Fund and the Road Fund, was £473,800,000 in round figures. That showed an increase of £34,000,000 over the sum estimated in the preceding April; but from it the National Government proposed to make economies amounting to £22,000,000, bringing the figure down to £451,800,000. But then there were Supplementary Estimates amounting to £514,000, which again raised the level, and so the final figure stood at £452,300,000. How far have the Estimates been realised? I would ask the Committee to recollect that we made a number of concessions in pay cuts, which cost us substantial sums, but, in spite of that, the economies have been more than made good, and, in addition, the reduction in the figures of unemployment came

    1413
    to our aid, so that in the end we were able to show, instead of economies of £22,000,000 savings amounting altogether to £34,500,000, the final Exchequer issues being £439,200,000. It will be seen, therefore, that the savings on the Expenditure side are responsible for more than the £9,000,000 by which we have exceeded the surplus anticipated by my Noble Friend, thus satisfactorily confounding the sceptics who believe that politicians only keep one kind of promise, namely, that they will spend more of the taxpayers' money than their predecessors did.
    Now let us glance at the Revenue side. I will refer first to the less important items—Sundry Loans and Miscellaneous Receipts. Sundry Loans show a small falling off of £1,500,000, due to the postponement of certain repayments by Colonial Governments, which have since been received and which will be brought into account in 1932. Miscellaneous Receipts show a decline of nearly £13,000,000. That is owing to the fact, to which I have already alluded, that I only paid in £12,750,000 from the Exchange Fund, and, as the total amount, including accrued interest which was in the fund, was £37,750,000, there remained, at the beginning of the present financial year, exactly £25,000,000. I shall return to the subject of this account at a later stage in my observations. The Committee will not be surprised to notice that there is a reduction in the receipts of the Post Office of £700,000, which, of course, is due to the general decline in business.
    I now pass to the Customs and Excise, which brought us in a satisfactory total of £256,052,000, showing an increase of £3,000,000 over the September estimate of £253,000,000. As no doubt hon. Members have already realised, a good part of that increase is due to measures which were not in the mind of my Noble Friend when he was framing his Estimates in September. Up to the end of March we collected from the Abnormal Importations Duties £1,165,000, from the Horticultural Products Duties £164,000, and from the 10 per cent. Revenue Tariff £760,000, making in all a little over £2,000,000 from these three classes of Import; Duties. As to the taxes which were increased by my Noble Friend, namely, those upon beer, tobacco, oils, and entertainments, all of them show an
    1414
    increase over the estimate with the exception of beer, and even beer has not done so badly as was anticipated by some enthusiasts. We expected a revenue from the increased duty of £4,500,000. Actually we have only got £3,200,000, but, after all, in these hard times £3,200,000 is not to be sneezed at, and I make my acknowledgment to those who, as they have told me, have paid more money for worse beer rather than disappoint expectations of the country. Two more duties I must mention which have proceeded in opposite directions. Spirits continued their downward path. [Interruption.] I hope my hon. Friend will keep up his spirits. They have given me over £1,000,000 less than was anticipated. On the other hand, the recent activities of sugar importers, into whose motives I do not think I need now inquire, have provided me with £1,300,000 more than I had expected. For further details of items in the Customs and Excise I may refer hon. Members to the White Paper which will be in their hands later in the afternoon.
    When I come to the Inland Revenue I find myself in face of a cheerless and unexpected deficiency in one item, namely, the Death Duties. In September my Noble Friend estimated the yield from the Death Duties for the year at £83,000,000. That was itself a drop of £7,000,000 from the sum which he had put down for this item in April. But, as a matter of fact, we only obtained £65,000,000 from Death Duties and, therefore, suffered a drop of no less than £18,000,000. Of course, the estimate in the case of this particular item must always involve a certain amount of guess work, but it is founded upon the consideration of the average of a series of years. Only this year the average has been altogether upset by the tremendous depreciation in capital values, and particularly Stock Exchange values, which was accentuated for a time by the conditions that prevailed after the suspension of the Gold Standard. It will be realised that this has damaged the revenue twice over, first of all because the total of the value on which the assessment is made has declined, and, secondly, because with the decreased valuation you bring the duties down to a lower level of charge. To those two general causes there must also be added a particular

    1415
    one, namely, the unprecedented shrinkage in the number of millionaire estates which came into charge during the year. It is very puzzling. I cannot explain the circumstance, unless the very rich have entered into some sort of patriotic conspiracy to cling to life until their estates regain their normal contributory value. I have been tempted sometimes, in looking at these figures, to repeat the exclamation which was made by a British general in the Peninsular War. When his men showed signs of hesitation in obeying an order to charge, he shouted out to them, "Come on, you rascals, do you want to live for ever?"
    To the £18,000,000 that I have lost from Death Duties I must add another £3,000,000 for the deficiency in the Stamp Duties. They have only given me £17,000,000, the lowest yield since the War. Here, again, we see the effects of the general depression in trade, which has resulted in a severe shrinkage of Stock Exchange activities and in the diminution of new issues for industrial capital. Putting these two items together, there is a loss of £21,000,000, a figure enough to wreck any Budget in ordinary times, but, as a matter of fact, this Budget has been saved by the Income Tax and Surtax payer. The Income Tax, at £287,400,000, has given me a surplus of £15,400,000, and the Surtax, at £76,700,000, is up nearly £4,000,000, and the history of this great achievement seems to me to be highly creditable to all who have been concerned in it. It was exceedingly difficult, when the second Budget was introduced in September, to say how much of the increased taxation could be gathered in during the financial year. The revised Budget came at a time of year when the ordinary work of assessment was nearing completion, and it was doubtful, to say the least of it, whether it would be possible to translate the new graduations in the tax into the assessments in time for collection on 1st January. Even suppose the assessments could be got through in time, still it remained doubtful how far the increased amount of the tax would affect the collection itself. In the end, thanks to great efforts on the part of all concerned, the Income Tax machine turned out the assessments in record time. Then the fate of the Budget de-
    1416
    pended on the willingness to pay of the taxpayer himself and everyone knows how nobly he has played his part. There was a magnificent response to the national appeal for early payment, and all alike, companies or individuals, the Surtax payers or people only with small incomes, showed that sense of duty and of citizenship for which we can always rely on the British people in times of crisis.
    The effect of this early payment went a long way beyond merely providing a surplus in the Budget. These payments were made much earlier in the last quarter of the year than usual. At one time they reached such a flood that the collectors were unable to keep pace with the inflow in getting out receipts, quite a new and strange form of the embarrassment of riches. But I am not unaware—in fact, I have full evidence of it in my own post bag—that these heroic efforts must have entailed enormous mental anxieties in many small households which had to find the ways and means of meeting this tremendous strain upon their financial resources. I hope, at any rate, that they have this consolation to-day, that not only have these advances effected a substantial saving in the cost of all Treasury Bills, but that the stimulus of their example has braced and reinvigorated the spirits of people in many other lands and has led them to look again to Great Britain with fresh confidence and hope in her capacity to lead the world in overcoming their difficulties. The Income Tax payers and the Surtax payers do indeed deserve our thanks, but I should like also to tender my thanks to all officers engaged in assessment and collection of the tax. They had a great task imposed upon them, and they carried it out successfully in accordance with the best traditions of the public service.

    NATIONAL DEBT.
    I do not think that I ought to conclude any review of the past year without some allusion to the changes which have occurred during the year in the National Debt, including the Sinking Fund of £32,500,000 and various minor receipts applicable to Debt redemption. There was, in fact, a total sum of £33,688,000 of cash applied which resulted in the cancellation of Debt to the nominal amount of £39,720,000. Against this we have to

    1417
    set the borrowing for the increased cost in the repayment of foreign credits advanced to the Treasury last summer. That shows an apparent loss of £22,711,000. As I have pointed out on one or two occasions previously, there is no real loss at the present time on account of the appreciation of the value of the gold which is held in the Issue Department of the Bank of England.
    Mr. DAVID MASON: The Bank of England is a private concern.
    Mr. CHAMBERLAIN: The hon. Gentleman does not seem to appreciate that the profits of the Issue Department belong to the Exchequer. There are further additions to the nominal amount of Debt which are due to certain operations connected with National Savings Certificates. Under the conversion offer which has been open for some time to holders of National Savings Certificates a considerable amount of accrued interest has been capitalised, while £8,400,000 was borrowed under Section 29 of the Finance Act, 1928, to meet the interest on the encashment of Savings Certificates for which no margin was available in the Fixed Debt Charge. Hon. Members need not have any concern about these transactions. They are not in any way inconsistent with the general anticipations of my right hon. Friend the Member for Epping (Mr. Churchill) when he introduced the principle of the Fixed Debt Charge in 1928. As to the result of the Savings Certificates conversion scheme, this will be open until the end of this month, and therefore it will be some time before it is finally known, but up-to-date £65,000,000 has been converted, which is a figure which we consider perfectly satisfactory. I would, however, take this opportunity of reminding the holders of certificates who have not yet converted that there are now only 11 days left to them in which to exercise their rights, and I think that in their own interests they would do well to make use of one of the special offers which are still open to them before the offer is finally closed. The only other conversion operation of the year was in connection with the 4½ per cent. Treasury Bonds which fell due on the 15th of this month. Holders were given the option of converting either into 4½ per cent. Conversion Loan or into 4
    1418
    per cent. Consols, and 95 per cent. of the Bonds have been converted.
    That closes my review of the year, which, I think, in its financial and commercial aspects, must be described as one of the gravest in our history. Trade depression, which was deep and wide at the beginning of it, has grown deeper and has extended more widely throughout the world. The curse of unemployment has lain heavily upon many struggling households where the luxuries of life have long since been discarded, and even the bare necessaries have had to be carefully measured. Cuts and reductions of income have been suffered by many people in all walks of life. Taxes have been piled upon taxes until it has no longer been possible to meet them out of revenue, and capital has had to be sacrificed to meet them. Taken as a whole, the year has been one of anxiety, difficulty, and hardship, and it is only in the last few months that some revival of trade and employment has led us to hope that at last the worst has passed. We shall all part with the year 1931 without regret, and I believe that the Committee will not be sorry that I can now pass to what are perhaps the more interesting problems of the year 1932.

    ESTIMATES FOR 1932–33.
    4.0 p.m.
    Coming to the current year I have a preliminary explanation to make. In the present Budget, I am including no receipts for Reparations and Allied War Debts, and I am including no outgoings for our own War Debt payments. In ordinary conditions those items should constitute a self-balancing chapter in our finances. The future position is dependent upon the results of the Lausanne Conference. Various alternative assumptions might have been made, but it seemed to me that the best course was to refrain at this stage from all conjectures and to treat both sides of the account as being in suspense. This procedure will entail a consequent modification of the Fixed Debt Charge, but that does not imply that any fresh decision has been taken as to our policy upon these delicate questions. On the contrary, I adopted the procedure proposed as being the best calculated not to prejudge any of the issues involved, and I am sure that I shall have the assent of the Committee in expressing the view that a discussion at the present time

    1419
    would be inopportune. The general policy of the Government was stated by me to the House on the 2nd February, and that statement continues to represent the Government's views as to the objective at which we should aim. I have similarly decided for the time being to omit any estimates of receipts for those Dominion War Debts, the service of which was suspended until the 1st July at the time of the enunciation of President Hoover's plan. Although these debts stand upon a different footing from those of Inter-Allied War Debts, the two questions are, to a certain extent, inter-connected, and I think it wiser to treat them both as in suspense. Later in the year, when we know the outcome of the deliberations which will begin next June at Lausanne, I shall submit to Parliament whatever proposals may be necessary to give effect to the measures we have agreed upon. In the meantime, however, I must point out that these assumptions deprive me of some £10,000,000 which was included in the forecast of revenue last September, when it was assumed that, after the expiration of the Hoover Moratorium, the previous position of Reparations and Debts would be restored. From the decisions I have just described, it follows that the interest on both the half-yearly payments of the American debt will be excluded from the Fixed Debt Charge, which is consequently reduced from £322,000,000 to £308,500,000. Of course, that includes the provision for Sinking Fund, which remains unchanged at £32,500,000. Northern Ireland Services amount to £6,800,000, and Miscellaneous Services to £3,500,000. The total for Consolidated Fund Services, therefore, comes to £318,800,000.

    EXPENDITURE.
    I come to the Estimates for the Supply Services, and in consideration of this question no doubt the Committee will desire to know how far savings which we expected to make last September can still be anticipated in the light of our present information. My predecessor estimated in September that, taking into account the decision to bear on the Votes the services of the Unemployment Insurance Fund and the Road Fund., instead of borrowing for them, the total required for Supply Services would be £526,000,000.
    1420
    From that the National Government pro posed to effect savings amounting to 70,000,000, leaving a, total of £456,000,000. The Estimates which have been presented to Parliament, however, amount only to £447,204,000, so that the Committee will see that the savings we now anticipate total nearly £79,000,000, instead of the £70,000,000 expected last September, and that result, I must remark, has been achieved in spite of concessions on pay cuts which amounted to £3,500,000, and also a sum of £1,250,000 unprovided for which was found to be necessary for Income Tax collection and work under the Import Duties Act.
    Of course, a large part of this extra saving is due to the fact that we anticipate continued diminution in the figures of unemployment. But there have been reductions over the other Departments of State larger than those which were forecast last autumn, and I desire here gratefully to acknowledge the assistance which I have received in this respect from my colleagues in charge of the spending Departments. Of course, the ordinary expenditure does not include the two self-balancing items. The first, the Post Office, amounts to £59,188,000, and the Roads to £22,910,000. Omitting these two figures, the total of the Supply Services is £447,204,000. I have already given the Consolidated Fund Services as £318,800,000, and, adding those together, we get a total estimated ordinary expenditure of £766,000,000 for 1932, including the Sinking Fund.

    REVENUE.
    Now I have to give my estimate of the revenue which we can expect, on the basis that taxation remains exactly as it is now. I have noticed when I go to my dentist and he says to me, "I am afraid that I am going to hurt you a little now," I always brace myself up and bear the pain with greater fortitude than when I get from him an unexpected jab. Bearing that analogy in mind, I think I ought to warn the Committee that the next quarter of an hour will not be an altogether agreeable one for them. I will again take the least important items first. I put the Exchequer yield of Motor Vehicle Duties at £5,000,000—a trifle over the receipts in 1931. I put the receipts from the Post Office at £11,7700,000, which is £500,000 less than last year's Estimate, but about £200,000 more than the actual

    1421
    receipts. I expect the yield from Crown Lands to reach £1,250,000. Sundry Loans and Miscellaneous Receipts will be considerably down, owing to the exclusion of Reparations and War Debts, and also owing to the cessation of the special transfer from the Exchange Account which appears in last year's Estimates. I put them respectively at £4,350,000 and £17,500,000. The Committee will observe that both the Exchange Account and the Rating Relief Suspense Account have disappeared entirely from the Budget picture, and the revenue this year will obtain no support from either of those sources.
    When I come to Inland Revenue, I approach graver matters. It may be recollected that last September my Noble Friend the Lord Privy Seal thought it necessary to anticipate that there would be a fall of £35,000,000 in Inland Revenue below the £437,000,000 which had been estimated for 1931; that is to say, he put the yield of Inland Revenue for this year at £402,000,000 on the basis of the then existing taxation. Additional taxation was imposed which he estimated at £57,500,000. The addition of these two makes a total anticipated revenue from Inland Revenue of £459,500,000. I have had to review that figure in the light of the actual receipts last year and of the information which has since come into my hands. I put the yield from Land Tax, Mineral Rights Duty, Excess Profits Duty and Corporation Profits Tax at £2,000,000. I think I am entitled to expect a, slow but continuous recovery in values during the current year, and accordingly, to expect a corresponding recovery in those taxes which are immediately affected by the change, namely, Stamp and Death Duties. I am Budgeting for £23,000,000 in Stamps, an increase of £6,000,000, and of £'76,000,000 from Death Duties, an increase of £11,000,000 from the exceptionally low level which those taxes reached in 1931.
    But when I come to consider Surtax and Income Tax, I have to remember that these taxes are not based upon profits and income accruing in the present year, but principally upon those of the year that has passed, that is, a year which reached a climax of depression unprecedented in our experience both for its depth and for the extent of the field which it covered. The Estimates which have been furnished to my advisers by
    1422
    certain business concerns who are good enough to give me this assistance, enable me now, I think, to form a fairly definite idea of the maximum amount of profits which can come under charge for Income Tax, and, therefore, of the maximum yield of Income Tax which may be expected, and I am sorry to say that it is quite clear, from the information which I have received, that I must anticipate a heavy fall both in Surtax and Income Tax. I cannot estimate for the year a yield of more than £66,000,000 from Surtax, nor taking into account the extra allowances for wear and tear on plant and machinery which were promised last year for 1932, for more than £260,000,000 from Income Tax. That brings us to a total for Inland Revenue of only £427,000,000, or no less than £32,500,000 below the Estimates provisionally put forward last September by my Noble Friend. I can hardly imagine a more convincing demonstration of the fact that we have approached the practical limits of the return from direct taxation. Whatever our fiscal views may have been in the past, no Government to-day could possibly afford to neglect other sources of revenue which have not been tapped to the same extent.
    Fortunately, this Government took time by the forelock, and I can now proceed to investigate what Customs and Excise can do to bridge the chasm that has been left by Inland Revenue. I will omit for the moment the new tariff duties, including those on Abnormal Imports and Horticultural Products. The older duties I estimate to bring in, Customs £140,275,000 and Excise £124,200,000, making a total of £264,475,000. That is an excess of £10,000,000 over the receipts last year, but although I am certainly hoping for an improvement in the economic conditions of the country this year, I am not basing my estimate for this extra £10,000,000 upon that improvement. It largely arises out of the fact that this year I shall get a full year's yield out of taxes which, having been imposed only last September, only gave me a half-year's yield last year. Mainly, therefore, on this account, though not entirely, I estimate on the basis always of existing taxation, increases of over £4,800,000 on beer, over £4,900,000 on oil, £1,500,000 extra on entertainments, and I have put up tobacco by 24,500,000, partly because of the full year's yield of the increased duty, but partly because there were con-

    1423
    siderable forestalments in the year before last which reduced last year's revenue. On the other hand, I feel bound to assume that the decline in the consumption of spirits will continue, and I am allowing for a drop of nearly £2,000,000 in the yield from that duty. I am also allowing for a fall of £2,300,000 in the sugar Duty, owing to the forestalment to which I made reference earlier in my speech. As to the other items, I think I may refer hon. Members to the detailed Estimates which they will find in the White Paper.

    IMPORT DUTIES.
    I would ask the Committee to consider for a moment what the position would be if I had to stop there. We have an ordinary expenditure estimated at £766,000,000, and up to the present the revenue which I have available amounts only to £731,275,000. There is a deficit there of £34,725,000. When I recollect the Debates which took place on the Import Duties Bill, not so many weeks ago, in this House, and when I think of all the scorn that was poured out from the benches opposite upon the idea that a 10 per cent. duty was necessary for revenue unless it were for the purpose of reducing the burdens upon the Income Tax payer, and then I consider this tremendous deficit of nearly £35,000,000, I cannot help thinking that the critics look rather foolish to-day. Where on earth, I wonder, could we have found this great sum if we had been debarred from the consideration of Import Duties? The sequel will show that not only were we right in making a revenue tariff the basis of our new proposals, but the actual rate which we fixed upon, the 10 per cent. rate, proves to have been as nearly adapted to our needs as could possibly have been expected from men who had no experience to guide them in exploring an unknown field.
    Let me come then to the yield that I expect to get from the new duties during the current year. On the assumption that the Abnormal Importations Duties expire on 19th May, or that they are replaced by other duties on the recommendation of the Tariff Advisory Committee, I am only expecting £250,000 from that source. On the other hand, the Horticultural Products Duties go on until next December, and I am putting
    1424
    down the yield from them at £750,000, so that between the two I get together exactly £1,000,000. The 10 per cent. Revenue Tariff is, of course, of much greater importance. The tariff has only been in operation since 1st March. It is much too soon to say with certainty what its effect is going to be upon the revenue, more especially as there was a considerable amount of forestalment before the duties came into force, and, therefore, in the earlier weeks the amount of the revenue was very much disturbed. In fact, any estimate of the revenue from this tariff must, I think, at the present time be of a highly conjectural character, but after carefully considering the whole matter I have allowed myself to expect from this source a yield during the present year of £27,000,000.
    But the general ad valorem duty does not entirely exhaust the sources open to me from the Import Duties. The Committee is aware, I think, that there is in my hands an interim report from the Tariff Advisory Committee which contains certain recommendations as to additional duties. In accordance with the Statutory directions I have consulted the appropriate Departments upon these recommendations, and I hope before the end of the week to make an Order under Section 3 of the Import Duties Act. Hon. Members would, no doubt, now like to know exactly what those recommendations are, but I am sure they will recognise that it is very undesirable to disclose any earlier than is necessary precisely what we are going to do, because the only result of that might be to enable enterprising traders to forestall our intentions. That being so, I propose to ask hon. Members to possess their souls in patience until the recommendations are published later in the week. But for the purpose of this statement I have had to make some estimate of the revenue which is likely to accrue from the Order which I shall presently be making, and, although, here again, in the absence of experience, one's estimate must be somewhat conjectural, I think I am justified in expecting a further £5,000,000 in addition to the amount which I have already estimated to receive from the general ad valorem tariff.
    Adding up the various items of Customs and Excise, I arrive at a total

    1425
    of about £297,500,000. If you add to that the figure from Inland Revenue of £427,000,000 and the revenue under other heads of £39,800,000, you get a total of £764,300,000. The position then is this:

    £

    Estimated expenditure

    …

    766,000,000

    Estimated revenue

    …

    764,300,000

    Prospective deficit

    …

    £1,700,000

    EXCHANGE EQUALISATION ACCOUNT.
    Before I deal with the matter of that prospective deficit, I want to describe to the Committee certain proposals which will appear in the Finance Bill. During recent weeks the exchange position of this country has been one of considerable difficulty. There has been a great loss of confidence abroad and that loss of confidence has led to large accumulations of liquid capital which can very easily be moved from one financial centre to another and can, therefore, materially assist the operations of speculators. The effect of the transfer of this liquid capital is to exercise a very disturbing influence upon the exchanges—particularly upon sterling exchange, which is no longer linked to gold.
    Since we were so successful in repaying the credits which were raised abroad last year and in balancing the national accounts the tide of liquid capital has been setting very strongly in towards these shores. That is flattering to our vanity, but at the same time it is sometimes a serious embarrassment to our trade, and, moreover, in so far as it does not represent a genuine and permanent improvement in the balance of trade it is apt to give rise to dangerous development. In such circumstances nobody can say with certainty that the ebb may not set in presently. Therefore, I have been driven by the force of events to this conclusion, that, if we are to avoid violent and perilous fluctuations in our currency, especially those which are due to these speculative operations, if we are to enable this country to function effectively as the main international centre of the world, then it is essential for us to hold adequate reserves of gold and foreign exchanges, in order that we may meet any sudden withdrawal of short-dated capital and check and repel these speculative movements.
    I will try to describe to the Committee the proposals which I have in mind, and I must ask for their indulgence if part of this matter appears to be somewhat technical in character. I propose to wind up the old Exchange Account and to use the assets as the nucleus of a new account to be called the Exchange Equalisation Account. I propose to ask the Committee to give me powers to borrow up to £150,000,000 for this account. The details of assets in the account will not be published, but they may take various forms, either gold, or sterling securities, or foreign exchange. That will give us a very large and extended power of purchasing exchange. The new powers, combined with the powers already possessed by the Bank, upon which, of course, the main responsibility for the management must continue to rest, will enable us to deal far more effectively than we could otherwise have done either with an unwanted inflow of capital or, if the alternative should again arise, with an outflow of capital from this country.
    4.30 p.m.
    There are certain other purposes for which this Exchange Equalisation Account can be used conveniently. First of all, there is an accounting question connected with the weekly returns of the Bank of England. Hon. Members know that there are two departments in the Bank—the Issue Department and the Banking Department. The Issue Department is liable for the note issue amounting to some £400,000,000, against which it has assets in gold and securities. The Banking Department, on the other side, is the one in which the purely banking business is carried on. The management of the Issue Department is by law entrusted to the Bank, but its profits can concern only the Exchequer, because the Exchequer is entitled to any interest earned or any profits made in the Issue Department. On the other hand, the profits of the Banking Department are for the account of the Bank. My proposals only affect the Issue 4.30 p.m. Department, and I have given this preliminary description in order to show that they do not confer upon the Bank any new privilege or any new profit. The Bank will continue to bear itself any risks which may be involved in foreign exchange operations carried on in the

    1427
    Banking Department. That arrangement is made at the Bank's own desire, and I am sure it is one which will be approved by the Committee.
    With the pound divorced from gold the accounting arrangements of the Issue Department present some difficulty. Its liabilities for the Note Issue are in sterling. Those of its assets which may consist of foreign currencies fluctuate in terms of sterling; but so far as its assets consist of gold—including any gold that may hereafter be acquired—the law requires the gold to be valued at the old par. Thus, the Issue Department cannot, with the exchange at $3.80 add £100 to its gold holding without showing an apparent loss of £28; and, in the same way, it cannot sell £100 of its gold holding without showing an apparent profit of £28, while its holdings of foreign exchange fluctuate in value every week. Our currency authorities ought to be free to hold such amounts of gold and foreign exchange in the Issue Department as may be required without being hampered by technicalities of this kind. On the other hand, we must be very careful to keep full cover against the Note Issue. I consider that in order that at all times and in all conditions the assets of the Issue Department—that is to say, the backing of our currency—should be consistently and conservatively valued, the gold in each return should be valued at the old par, and all the foreign exchange assets should be valued at the current rate of exchange irrespective of their purchase price.
    In order that the account may at all times precisely balance on this basis, my proposals provide that at any time when a valuation on this basis shows a deficiency resources to the corresponding amount shall be passed from the Exchange Equalisation Account to the Issue Department of the Bank, and that when a surplus is shown that the converse operation shall take place. I ask the Committee to observe that both of these accounts are worked for the credit of the Exchequer, for the use of the Exchequer, and for the account of the Exchequer. Therefore, it does not very much matter whether any particular asset is for the moment in one account or the other, both are for the account of the Exchequer.
    There is another point. In connection with the credits which were raised by the Bank of England last year from the Banque de France and the Federal Reserve Bank the undertaking was given at the time, and Parliament was so informed, that any loss arising from the transaction would be made good to the Bank. The Finance Bill, accordingly, will contain a provision charging £8,000,000, which is the outstanding loss on that transaction, to the Exchange Equalisation Account.
    I may be asked: Suppose that these powers are given to the Government, will that be the final end to the fluctuations in the exchange; will it mean that the exchange will be kept at a fixed point, or at any rate that it will be maintained within a fixed range of values? I am not going to give any such assurance. When you consider the economic disturbances which are still occurring in the world, and of which we probably have not even now felt the worst, it is perfectly useless to pretend that we can hold our exchange position exactly as we please independent of anything which is going on around us. On the other hand, we can say this, that those who are charged with the conduct of our currency will be much better equipped in the future with these powers to maintain that currency steady than they have been in the past; and that to that extent we should see a great improvement.
    There is another question: Will these transactions involve the Exchequer in any loss or in any considerable loss. I think the answer to that question must be that that is a very conceivable possibility. We do not know what is going to be the future of gold prices. We do not know what settlement will be reached as regards Reparations and War Debts, and other matters, which are now disturbing the world. These uncertainties rule out any possibility of our being able to return to gold immediately. We do not know when or in what circumstances we may return to gold, or at what level. If in the long run we were to return to gold in such a way that the pound stood at a higher gold value than the average level At which purchases of exchange had been made, the transactions would inevitably show a loss. This is a possibility, but it is not one which should deter us. If we are merely seeking safety from an

    1429
    accounting point of view, we can proceed as we did in the earlier period of the suspension of the Gold Standard between the years 1919 and 1925. The pound would be allowed, substantially, to take its own course, liable to fluctuations with every seasonal movement of trade or every outburst of speculation, or change of sentiment caused by developments abroad. The problems of the present time are in many ways altogether different from those which faced us immediately after the War. In my judgment, the risks entailed by the uncontrolled fluctuations of the currency today outweigh the possible loss on the transactions which I have mentioned.

    MINOR MATTERS.
    I come to one or two minor matters which will be contained in the Finance Bill. First it will provide for the extra Income Tax allowances for wear and tear of plant and machinery, to which I have already mace allusion, and which seem to have passed out of public memory in recent weeks. I am quite certain that when this comes into operation it will be of considerable benefit to industry. The next item is also one of interest to industry. It has been pointed out by their organised representatives that in a time of prolonged depression, such as that through which we have been passing, and from which I hope we are going now to emerge, traders are liable to be penalised because the allowances for wear and tear take priority over the carry forward for losses. That priority is not always unfavourable to the trader, but there are many cases in which it may deprive him of a deduction for Income Tax purposes which otherwise would have been allowed. Accordingly, I am putting in the Finance Bill a provision to ensure that every trader is given the allowances in the order most favourable to him.
    The next point concerns a change that was made in last year's Finance Act, transferring to the Board of Inland Revenue the power of appointing collectors of taxes. That step was an essential preliminary to the reorganisation of the tax collection service on modern lines. That work is in process now, and I think it has gone far enough to enable me to say that the new system is not only showing itself to be more economical and more efficient but also more con-
    1430
    venient to traders than the old. But in order that it may be completed, and completed as rapidly as possible, it is now necessary to provide reasonable terms of compensation for those members of the existing staff for whom no place can be found under the new system or whose interests will be detrimentally affected. Accordingly, I am putting a Clause in the Bill which will deal with that point.
    My last point is one which arises out of the inequitable position springing from a recent decision in the courts of law, a decision that the pensions of certain retired employés are not chargeable to Income Tax unless they are paid under contract and are legally exigible by the pensioners. I am sure that everyone will agree that all pensioners should be treated alike in this respect, whether their pensions are voluntary or contractual, and I am proposing to put that on a proper footing in the Finance Bill.
    Having disposed of these matters, I now come back to revenue. The Committee will realise, I am sure, from the position I have disclosed, that I have no opportunity of giving relief this year to the Income Tax payer. I am afraid that he will find little consolation in the reflection that the hard necessity which has enforced this decision must have afforded much mental relief to hon. and right hon. Members who were so much disturbed a little while ago as to the distribution of an imaginary surplus. The fact is that the path of financial stability is not only hard and stony but long and weary, and, although we may now begin to see the light between the trees we have still far to go before we can emerge into easier ways. But at least the path may be made less arduous by mutual aid.
    I have already spoken of the wonderful response made by the taxpayer last January, but there is one feature of the national effort on that occasion which I want to mention now with particular appreciation. A number of local authorities and certain industrial concerns were public-spirited enough to undertake themselves to pay Income Tax for their employés, and allow their employés to pay them back by instalments. Altogether there were about 100 arrangements of that kind. It generally took the form of the employer finding the whole or part of the money and then recovering it from

    1431
    the employé by deductions from the monthly payments of his remuneration. In that way not only was the tax secured to the Exchequer, but the burden of the incidence on the employé was materially eased. There is no question that the demand for the major part of the Income Tax in one lump sum does weigh very heavily upon small households where there are no considerable reserves of cash, and any system which enables the payment to be spread over several months is bound to afford relief to the taxpayer.
    Unfortunately, it is impossible, for administrative reasons, to collect Income Tax by a number of instalments, and, therefore, the only way to secure a spread-over is to arrange, through the medium of the employers, for deductions from the monthly payments. I think it would be in the public interest that schemes of this kind should form a definite and permanent feature of our tax system. I want to make an appeal to local authorities and to large industrial concerns to come into arrangements of this sort. Of course, they would be purely voluntary. They would only be made with the assent of the employer and would only extend to such of the employés as desired to take advantage of it, but there is one important difference which I would propose to make from the special and temporary arrangements that were made last year. I do not propose to ask the employer to find the money in advance. I only propose to ask him to pay over to the Revenue what he has already actually deducted from the employé. The sort of idea is that if you take the instalment payable in January, the spread-over should be extended over all the six months, from October to March. The employer would, of course, hand over to the Revenue the amount of the tax which he had collected from the employé, at dates to be arranged between the 1st January and the end of March. A similar arrangement would apply for the July instalment.

    CHANGES IN TAXATION.
    The changes of taxation which I am going to propose are not many in number or large in character, but such as they are I think they are supported by weighty considerations which merit the attention of the Committee, in addition
    1432
    to providing me with the small amount of extra revenue that I require.
    I have received many pathetic appeals to try to alleviate the hardship which was inflicted upon the beer-drinker last September. Those appeals have been based not only upon the suffering caused to those who found their favourite beverage too dear, but also upon the disastrous results which, it is said, are likely to accrue to other industries concerned and the consequent failure of revenue in this direction. I must say that I have regarded these considerations with the sort of feelings with which an angler might regard a river that is being over-fished. In my opinion, beer is over-taxed to-day. But then what industry, what individual, is not overtaxed? In the circumstances in which I find myself, the paramount consideration must be present revenue. I am advised that if that 31s. per standard barrel were remitted, it would cost me something like £10,000,000 a year—and the Committee can see that I have not got it. Very regretfully, I have come to the conclusion that I can do nothing at present for beer.
    There is another subject to which I have given a good deal of consideration in the last few weeks, and that is the position of the co-operative societies. Under the existing law the co-operative societies enjoy a privileged position, in that they pay Income Tax only under Schedules A and B, and not under Schedules C and D, and it has been calculated that under A and B they pay about £500,000 a year less than if there were no exemption and the profits were charged to Income Tax as in the case of an ordinary trading business. The ordinary trading company pays Income Tax at the full standard rate upon its undistributed income. The co-operative societies, in their privileged position, pay much less, and that has given rise to vigorous and growing protests on the part of the general trading community, who say that a gross injustice is being done to them in thus favouring their trade rivals.
    Their grievance, I think, is accentuated by the fact that the principle of mutuality, upon which the privilege is based, is not being strictly observed. I am informed that some societies grant the whole, and others a part, of the privileges of members to non-members also, and no doubt that is done for the purpose of inducing the non-member to

    1433
    come into the fold. A part, though not the greater part, of those who came to me and advocated the taxing of cooperative societies went a good deal further. They contended that the so-called "divvy," or discount on purchases, was really in the nature of a profit, and that it ought to be taxed in the case of co-operative societies just as ordinary profits are chargeable to Income Tax in the case of trading companies.
    On the other hand, I need perhaps hardly say that all these contentions are disputed, and disputed with some heat, by the co-operative societies. The Government approached this subject without prejudice either for or against the co-operators, but they do think it is highly undesirable that our system of taxation should give rise to a burning sense of injustice, whether ill or well founded, on the part of any section of the community, and therefore they would very much like to see this dispute cleared up once and for all. In 1919 the Royal Commission on Income Tax considered this matter, but, as perhaps you would have expected from the composition of that body, they found themselves unable to reach unanimous conclusions, and there was a majority report in favour of the taxation of the reserves of the co-operative societies and a minority report against it. Since then conditions have changed in many respects. The Government think that there ought to be a new review of the circumstances by a differently constituted body. They have, therefore, decided to set up a small, impartial committee to investigate the matter—
    Sir WILLIAM DAVISON: Is there any time limit?
    Mr. CHAMBERLAIN: —and they hope that the result will be a settlement of this long drawn-out controversy, which can be embodied, if necessary, in legislation in the next Budget.
    Last year my predecessor took a first step towards changing the basis of taxation on motor cycles from unladened weight to cylinder capacity of the engine. The trade organisations have pressed the adoption of the latter basis, on the ground that it would give the designer a freer hand. After consulting the Minister of Transport, I propose therefore to complete the change 'by fixing the rates of
    1434
    duty at 15s., 30s. and £3, according to whether the engine is of a capacity not exceeding 150 cubic centimetres, exceeding 150 and not exceeding 250 cubic centimetres, and exceeding 250 cubic centimetres, respectively. The effect of this scale, which will come into force as from the 1st January, 1933, will be to reduce the duty payable on some cycles, but to increase it on a comparatively small number of cycles now in use which conform to the present limit of 224 lbs. in weight, though their engine capacity exceeds 250 cubic centimetres. To these existing vehicles I think it would be unfair to apply the increased rate of duty. I propose, therefore, that any cycle registered for the first time before the 1st January next on which duty has been paid at the rate applicable to a cycle under 224 lbs. unladened weight shall in future continue to be liable to the lower rate of duty applicable to cycles with an engine capacity between 150 and 250 cubic centimetres. The loss of revenue under this change is negligible.
    I come to another matter which has been causing great anxiety to the Government, namely, the position of the sugar industry, both at home and in the Colonies. We could not possibly contemplate with equanimity the collapse of either the beet-sugar industry at home or the cane sugar industry in our Colonial territories. On the other hand, the Committee will see that in the financial position which I have revealed to them it is absolutely necessary that any assistance which is offered to the sugar industry should be limited only to what is entirely and absolutely necessary. Taking the home industry first, the present subsidy for beet sugar is 7s. 3d. a cwt., including the molasses subsidy, and that will last for another two years, till 1934. But last year the then Labour Government, recognising that the price of sugar had fallen very substantially, undertook to give a temporary special measure of assistance to the industry in the shape of an advance of ls. 3d. a cwt., to be given for one year only to those factories which were prepared to pay a certain minimum price for beets to the growers. If you add to those two forms of assistance, making 8s. 6d. a cwt. in all, the difference between the Excise Duty and the Customs Duty on sugar, namely, 3s. 6d., you get a total maximum assistance given to

    1435
    the home sugar industry last year of 12s. a cwt. As the special assistance expires this year, if nothing is done that comes down to 10s. 9d.
    The Government, however, have decided that they will give again in 1932 the same assistance as was given last year, namely, 12s.; and to replace the ls. 3d. special advance which was given by the Labour Government, I propose to lower the Excise Duty on sugar by that amount. As to whether this concession should be continued in a future year, or as to what is to happen when the present Subsidy Act expires in 1934, I am not at present in a position to express an opinion, but with a, view to receiving guidance on this and other matters, the Government have further decided to appoint a Committee to inquire into the conditions of the United Kingdom sugar industry as a whole, including production, refining, and distribution, and to ask this body to report to them before the present Subsidy Act expires.
    5.0 p.m.
    I have also, in consultation with my right hon. Friend the Secretary of State for the Colonies, considered the question of assistance to the Colonial sugar industry. This Committee is aware that sugar has declined very seriously in price in the last three years. At the end of 1929, when the West Indian Commission reported, the average price of West Indian sugar was £12 per ton c.i.f. London. The Commission recommended a guaranteed price of £15 per ton. A little later Sir Francis Watts recommended a similar or equivalent price in the case of Mauritius sugar. Neither of those recommendations was accepted by the Government of the day. Since then there has been a further precipitate fall in the price, which has now come down to £8 2s. 6d. for preferential sugar c.i.f. London. I am told that to meet this fall the planters have reduced their costs to an extent which only a few years ago would have been thought impossible; but I think there is no doubt that they are in a desperate position, and that many of them are only just carrying on in the expectation that some relief will be obtained from the Mother Country.
    I have come to the conclusion that that request for relief is justified. Accordingly I am proposing that during the next
    1436
    five years there shall be an increase of is, per cwt. in the amount of the preference on all Colonial sugar imported into the United Kingdom, the duties on foreign and Dominion sugars remaining at their present rates. In addition I propose to grant during the same period a special supplementary preference equal to a further 1s. on a limited quantity of Colonial sugar to be allocated by the Colonial Office among the several producing Colonies in proportion to their total sugar exports. The limited quantity entitled to the second shilling is fixed at 275,000 tons for 1932. Both these preferences will be liable to adjustment if during the five years the sterling wholesale price of foreign full duty sugar rises beyond 7s. 6d. per cwt. The cost of these concessions, which date from to-morrow, I estimate at £1,100,000 in the present year.
    I have one small change to propose in the Silk Duties. This relates to the provision under which articles of apparel imported by a person for his own use and not for sale may, at the option of the importer, pay a specific duty on the weight instead of an ad valorem duty on the value. This concession was made in 1926, partly because in the case of a private person the retail and not the wholesale price of the imported article generally forms a basis of assessment for ad valorem duty, and partly because of the difficulty of the Customs determining values in the case of these private importations. I am not going to discuss now whether the use made of the concession has been as strictly confined to private purposes as it was at the time intended. Sufficient to say that under the Abnormal Importations Act the apparel for private use is being treated in exactly the same way as apparel for sale, and it is anomalous to follow one method under the Silk Duties and another under the new tax. In those circumstances I propose to repeal the concession as from to-morrow, so that all importations for apparel, whether paying Silk Duties or the new tariff duties, will be treated alike, that is to say, they will pay duty on the ad valorem basis. It is impossible to say what revenue is at stake, but I am taking credit for a small extra £25,000 from this source.
    These changes leave me with a deficit of £2,800,000, and in seeking for the

    1437
    wherewithal to fill this gap I would recall to the Committee the explanation which I gave during the Debates on the Import Duties Act, as to the presence, in the free list of that Act, of tea. I said then that if the taxation of tea were to be considered it could be considered more conveniently in the Budget, where it has held a place for hundreds of years—from the epoch of Queen Elizabeth down to that of my right hon. Friend the Member for Epping (Mr. Churchill). The duty on tea has been sanctioned by a long line of Chancellors of the Exchequer belonging to all parties of the State. In 1929, when the duty was removed, it was 4d. per lb. on foreign tea, with a preference of two-thirds of a penny for tea from the Empire. The duty at that time was bringing in to the Exchequer nearly £6,000,000.
    I propose to revive the duty upon foreign tea at the old rate, but the old preference of two-thirds of a penny per lb. seems to me to be totally inadequate to the present circumstances, and I propose to increase that to 50 per cent. making the duty on Empire tea 2d. a lb. This new preference will be the same as the preference originally was in the first years after the introduction of the system of preference, and it is notable that, whilst the preference was subsequently reduced in 1922 to 1⅓ pence, and then again in 1924 to two-thirds of a penny, the proportion of Empire tea to the total consumption of the country fell, first from 90 per cent. to 84 per cent., and since the preference was abolished with the removal of the duty it has gone down to 81 per cent. I am hoping that with a 50 per cent. preference we shall see the proportion of Empire tea regain its former figure in the process of time, and that meanwhile some help may be afforded to the hard-pressed tea industries of India and Ceylon.
    But I must mention that there are at present large stocks of tea in the country, perhaps as much as six months' supply. If I am not to lose half a year's revenue, which I certainly cannot afford, I must bring those stocks into my net. I find myself, therefore, compelled to impose a Duty upon them, and that Duty, of course, will be an Excise Duty. But in order to avoid the complication of trying to dissect into their Empire and foreign constituents the stocks of tea in the
    1438
    country, I propose to make the levy at the rate of 2d. per lb. As I do not want to be called upon to make an inquisition into the affairs of every little grocer in the country, I propose also to exempt from this Excise Duty all stocks in individual ownership not exceeding 1,000 lbs. in weight. I expect to get from the Tea Duty this year £3,600,000.

    BALANCE SHEET.
    With this receipt I can strike my final balance.

    £

    The Estimated Expenditure for the year is

    766,004,000

    The Estimated Revenue, adding in the £33,000,000 from the various Import Duties and taking account of the different changes I have outlined, will be

    766,800,000

    The Budget is, therefore, balanced with a small surplus of

    796,000

    I have now finished my exposition. I think it has been generally recognised that I have had to open my first Budget in circumstances of unusual difficulty. The whole country is crying out for relief from taxation, and many people believe that that relief will carry us a long way on the road to prosperity. To the people who have been cherishing expectations of anything of the kind the announcement that no relief shall be given to them is bound to cause disappointment, and at first perhaps even resentment. In such circumstances there would be a natural temptation to seek a little popularity by gambling on the future, to take a more optimistic view of the revenue, to propose some spectacular remission of taxation in the hope that the luck would turn and that justification would be found in the general revival of trade.
    But if such a temptation has occurred to me I felt it my duty to resist it, because I believe that nothing could be more harmful to the ultimate material recovery of this country or to its present moral fibre, than that we should indulge ourselves with hopes, possibly ill-founded, certainly premature, which might tempt us to relax the efforts which have already produced a wonderful revival of public confidence. To be obliged presently to retrace steps too hastily taken now, might

    1439
    well shake that recovered confidence past repair. On the other hand the exercise of continued restraint a little longer will surely bring us in the end a greater and more certain reward.
    Everyone who has ever scaled a mountain knows how the peak which seems so close as he approaches the base, vanishes from his sight the moment he begins his ascent. Again and again, as he continues to mount, he thinks he sees the summit, only to find that there is another ridge behind. There comes a moment when he turns a corner, when he beholds at last the goal of his ambition before him, and with only a few steps more, he stands upon the final crest. So too we of this nation, though as yet prosperity is hidden from us, can feel assured that, so long as our faces are turned upwards and our hearts are strong, we are moving in the right direction. One day, perhaps almost before we know it, we shall find ourselves upon our mountain top. Hard work, strict economy, firm courage, unfailing patience—these are the qualifications that are required of us, and with them we shall not fail.

    CUSTOMS AND EXCISE.

      1. TEA.
      Resolved,
      "That—
      (a) As from the twentieth day of April nineteen hundred and thirty-two, there shall on the importation into the United Kingdom of tea be payable a duty of Customs at the following rates—
      Tea, not being an Empire product within the meaning of that expression as used in Sub-section (1) of Section eight of the Finance Act, 1919 the lb. fourpence;
      Tea, being such an Empire product as aforesaid the lb. twopence:
      (b) An excise duty at the rate of twopence the pound shall be payable on tea which was imported before the twentieth day of April, nineteen hundred and thirty-two, and is in the ownership or possession of any person who holds more than one thousand pounds thereof, but not including any such tea which is shown to the satisfaction of the Commissioners of Customs and Excise to have been intended for use by the person in whose ownership or possession it was and not to have been intended for sale or for use in the preparation of a beverage for sale:
      (c) The enactments relating to the allowance of drawback on blended tea prepared
      1440
      from teas on which customs duties have been paid shall extend to blended tea prepared from teas in respect of which either of the duties payable under this Resolution has been paid."
      Mr. LANSBURY: It is the custom, I believe, that on the occasion of the Budget the serious discussion of the Chancellor's proposals is postponed to another day and I do not intend to depart from that custom this evening. It is also customary for someone on the Opposition side, usually either an ex-Chancellor of the Exchequer or someone who has been connected with the Treasury, to offer congratulations to the Chancellor of the Exchequer on his speech. It falls to me to do so this afternoon and if the right hon. Gentleman will allow me to say so, how ever strongly I disagree with him—and no one knows better than he how often and how vigorously I disagree with him—I have never at any time had anything but a keen appreciation of his courage, his ability and his intellectual honesty in putting his case. I have never been under any delusion as to the right hon. Gentleman's policy in connection with anything on which I have disagreed with him, and this afternoon he has presented this very difficult financial statement with his usual ability.
      I think in all parts of the Committee there will be agreement that while this statement may be good in parts, and while it may be bad in parts, at least a considerable amount of ability was required to compress it into the very short time occupied by the right hon. Gentleman. There are very few men in the House of Commons who would have performed the task equally well and certainly none who would have performed it better than the right hon. Gentleman has done. Having said so I should like to congratulate the Prime Minister on having persuaded the Cabinet to follow him at least in one direction, and that is in the policy that when you come to a stiff gate you should have a committee. The proposals in this Budget call for further congratulations to the right hon. Gentleman. It is certainly a matter for congratulation to him that he has two of the late high priests of the temple of Free Trade sitting side by side with him and supporting him in the heresy put before the Committee this afternoon.

      1441
      As to what Lord Snowden thinks about it all I would like to put him before the mirror of truth and compel him to reveal his mind. I should like also to know something from him upon another subject in regard to which I can again congratulate the Chancellor of the Exchequer personally. That is the question of the Land Tax valuation. The Chancellor of the Exchequer last year prophesied that Lord Snowden's Budget would be the last Free Trade Budget and I hope that the Home Secretary glories in the fact that he is taking part now in the presentation of the first Protectionist Budget after a long number of years. The right hon. Gentleman the Chancellor also prophesied last year that a lot of things would happen before the land valuation was put into operation. To-day he has the satisfaction of knowing that he has wiped that proposal out of our financial arrangements and any hon. Member who takes the trouble to read Lord Snowden's speech on the introduction of that proposal will find that Lord Snowden then said that if only the taxation of land values were adopted we would remove one of the greatest hindrances to trade recovery. What is a poor humble person like myself to say when these giants in the business of high finance disagree and agree to differ in this fashion?
      I was much struck by the Chancellor's statement that we had reached the limit of direct taxation and I would like to ask someone who speaks to-morrow on behalf of the Government to tell us from where this other money is coming. It is not coming from heaven or out of the sea. It is coming out of the pockets of people somewhere or other. The right hon. Gentleman may say, "Oh, the foreigner pays." [HON. MEMBERS: "Hear, hear!"] That is all very well but I ask hon. Members to recall that when the import duties were being discussed hon. and right hon. Gentlemen were on their feet declaring that this industry must be exempt and that industry must be exempt, or else British industry would be ruined. If the foreigner is paying what is the difference? The thing is too absurd. It is the people who consume who will pay.
      I only wish to say this in conclusion, because my hon. Friend the Member for Limehouse (Mr. Attlee) will deal faithfully with this Budget to-morrow. The
      1442
      fundamental difference between ourselves and the Government on this question of the condition of trade in this country is that we say that a restoration of trade and industry cannot be hoped for on any sort of policy which involves economic nationalism. You cannot expect and you never will secure any advance in the condition of the world except by international co-operation. We who sit on these benches hope that when the Prime Minister goes to Geneva he will go there determined that, not merely the question of War debts and reparations will be dealt with, but that the whole question of international trade and international exchange will be dealt with also. I could not be expected to understand completely all the Chancellor's proposals for dealing with exchange, but we are quite certain that stability will never be achieved in the world until there is a stabilised currency which applies not to one country, but throughout the world. We also believe that there can be no real peace in the world until the consumption of goods matches the production of goods. We do not believe that the world is suffering from want. We believe, on the other hand, that it is suffering because mankind has not yet discovered how to distribute the abundance produced by mankind. That is the position which we shall take up in the discussion of these Budget Resolutions.
      Mr. REMER: I wish to record my keen disappointment at the fact that the Chancellor of the Exchequer has not seen fit to make any alteration in the Silk Duties. I wish to enter the strongest protest against the fact that this should be the one industry of the country to be deprived altogether of any sort of protection. I think that is a monstrous thing, and I wish to indicate to the Chancellor of the Exchequer that Amendments having been drafted, in anticipation of the absence of any mention of the silk industry in connection with these proposals, we propose to move those Amendments during the Committee stage and to fight for those Amendments by every means known to Parliamentary procedure.
      5.30 p.m.
      Sir WILLIAM DAVISON: I hope that as chairman of the Income Taxpayers Society of Great Britain I may be allowed to say a few words on their behalf with regard to the Budget which has just been

      1443
      opened by the Chancellor of the Exchequer. I need not say that we regret that he has not felt justified in reducing the standard rate of Income Tax. This great load of Income Tax cannot be borne indefinitely by taxpayers. We know the expedients by which taxpayers met that Income Tax in January of this year, by borrowing from their banks and by postponing expenditure which was needed, thereby causing further unemployment. Indeed, the Chancellor in his speech to-day said that no longer is it possible to meet this taxation out of revenue, and that capital has to be sold in order to meet it. The Chancellor's speech has shown how the annual capital levy of the Death Duties has fallen off. The springs are gradually drying up; estates are halved and quartered by Death Duties, and the incentive to thrift is being undermined in all classes of the community. The hopes of the Income Tax payers were raised by speeches from you, Sir, earlier in the year on 4th February, when you introduced your tariff proposals—
      The CHAIRMAN: I do not quite understand the hon. Gentleman's reference suggesting that the occupant of the Chair introduced these proposals.
      Sir W. DAVISON: I was saying that the hopes of the Income Tax payers of the country were raised by the remarks of the Chancellor of the Exchequer in his speech introducing his tariff proposal on 4th February, when he testified to what the Income Tax payers had already done to help the country in its emergency. He said then:
      "I do not believe you can find anywhere else in the world such an exhibition of self-sacrificing and devoted patriotism as has been shown by the British taxpayer during the last year."—[OFFICIAL REPORT, 4th February, 1932; cols. 280–1, Vol. 261.]
      Later in the same month the President of the Board of Trade said:
      "The strain placed upon those direct taxpayers has gone fax enough, and the time has come when we ought to relieve them of some of that burden. If we do not relieve them we shall undoubtedly be doing injury to the people who are dependent upon them in the industries which are now requiring more and more capital".—[OFFICIAL REPORT, 9th February, 1932; col. 696, Vol. 261]
      It is indeed a serious thing for the industries of the country that this
      1444
      war taxation should be continued in time of peace. In our opinion, there is only one remedy. The Chancellor himself has said that we have come to the extreme limits of direct taxation. The only remedy is a drastic reduction in expenditure. Only yesterday I asked the Financial Secretary to the Treasury to give me particulars of the total numbers employed in the various Government Departments in 1913 and last year, and the total amount of expenditure in each of those departments. He put me off by giving me a long list of Blue Books in which I could obtain the information. I think that it would have been better in a matter of this importance if he had given this statistical information; it would not have taken an officer of his Department long to get it out.
      In the short time available, I have been able only cursorily to look into the matter, but it seems to me that there is not a single department, as compared with 1913, which has not enormously increased its expenditure and largely increased its staff. We shall never get a proper reduction of expenditure until the various departments of State are rationed on the 1913 basis. Is it indeed an extravagant proposal that, after a great war involving the loss of capital to this country of something like £7,000,000,000, we should put our expenditure at the limit of the year immediately before the War? Mr. Bonar Law, that very wise statesman, said that if we paid our debts and did not receive payment of our expenditure from our enemies, it would mean that the standard of living in this country would be reduced for two generations. The standard of living has not been reduced; to all classes it has been improved. Hence we have this enormous amount of unemployment and the large numbers of unfortunate people who are dependent on the dole.
      It is not usual for a long speech to be made on the opening day of the Budget, but as chairman of the Income Taxpayers Society, and on behalf of Income Taxpayers throughout the country, I wanted to voice the view that the limit of direct taxation has been reached, and that the only way in which the country can be restored to prosperity is by drastic reductions in expenditure. We do not want any further Commissions or in-

      1445
      quiries. This Government of all the talents may very well go down in history as the Government of impartial inquiries into truth. We want the Chancellor himself in the months that are coming to go wholeheartedly into this question of the reduction of expenditure. It is the only way in which taxation can be reduced, prosperity restored, and employment revived.
      Question put, and agreed to.

      SUGAR.
      Resolved,
      "That on and after the twentieth day of April, nineteen hundred and thirty-two,—
      (a) there shall be payable in the case of sugar consigned from and grown, produced or manufactured in a colony or other country to which this Resolution applies, in lieu of the preferential duties of customs now payable on such sugar, the following reduced duties:—

      Article

      Rate of Duty.

      In the case of sugar accompanied by a quota certificate.

      In any other case.

      s.

      d.

      s.

      d.

      Sugar of a polarisation exceeding 99 degrees the cwt.

      3

      6·5

      4

      8·2

      Sugar of a polarisation exceeding 98 but not exceeding 99 degrees the cwt.

      2

      7·2

      3

      8·2

      Sugar of a polarisation not exceeding 76 degrees the cwt.

      1

      4·2

      1

      10·8

      Sugar of a polarisation exceeding 76 degrees and not exceeding 98 degrees

      Intermediate rates varying, in the case of sugar accompanied by a quota certificate, between 1s. 4·2d. and 2s. 7·2d. the cwt., and, in the cane of any other sugar, between 1s. 10·8d. and 3s. 8·2d. the cwt.

      In this paragraph the expression 'quota certificate' shall mean a certificate issued by the Secretary of State certifying that the sugar in question forms part of the quantity of sugar which may be imported from the colonies and other countries to which this Resolution applies at the lower rate of the reduced duties payable as aforesaid:
      (b) There shall be payable, in lieu of the duties of excise now payable on sugar, the following reduced duties:—

      s.

      d.

      Sugar of a polarisation exceeding 99 degrees the cwt.

      4

      7

      Sugar of a polarisation exceeding 98 but not exceeding 99 degrees the cwt.

      3

      7.1

      Sugar of a polarisation not exceeding 76 degrees the cwt.

      1

      10.2

      Sugar of a polarisation exceeding 76 and not exceeding 98 degrees, intermediate rates varying between 1s. 10.2d. and 3s. 7.1d. the cwt.:
      (c) There shall be payable, in the case of molasses, glucose and saccharin consigned from and grown, produced or manufactured in a colony or other country to which this Resolution applies, in lieu of the preferential duties of customs now payable on such molasses, glucose and saccharin, the following reduced duties:—
      Molasses (including all sugar and extracts from sugar which cannot be completely tested by the polariscope), if the sweetening matter contained therein—

      s.

      d.

      amounts to 70 per cent, or upwards the cwt.

      3

      0

      exceeds 50 per cent, but does not amount to 70 per cent. the cwt.

      2

      2

      does not exceed 50 percent. the cwt.

      1

      0½

      Glucose—

      Solid the cwt.

      3

      0

      Liquid the cwt.

      2

      2

      Saccharin (including substances of a like nature or use) the oz.

      1

      6½

      (d) There shall be payable in lieu of the duties of excise now payable on molasses, glucose and saccharin the following reduced duties:
      Molasses (Including all sugar and extracts from sugar which cannot be completely tested by the polariscope), if the sweetening matter contained therein—

      s

      d

      amounts to 70 per cent, or upwards the cwt.

      2

      11

      exceeds 50 per cent, but does not amount to 70 per cent. the cwt.

      2

      1½

      does not exceed 50 per cent. the cwt.

      1

      0½

      Glucose—

      Solid the cwt.

      2

      11

      Liquid the cwt.

      2

      1½

      Saccharin (including substances of a like nature or use) the oz.

      1

      6

      (e) The colonies to which this Resolution shall apply shall be all the colonies except Southern Rhodesia, and the other countries to which this Resolution shall apply shall be territories under His Majesty's protection and territories in respect of which a mandate of the League of Nations is being exercised by the Government of the United Kingdom, being territories to which section five of the Import Duties Act, 1932, for the time being applies.
      (f) In the application of this Resolution to any duty chargeable on manufactured or prepared goods under section seven of the Finance Act, 1901, the first day of July, nineteen hundred and thirty-two, shall be substituted for the twentieth day of April, nineteen hundred and thirty-two.
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      SUGAR (DRAWBACKs).
      Resolved,
      "That—

      (a) on and after the twentieth day of April, nineteen hundred and thirty-two, there shall, in lieu of any drawbacks which would otherwise be allowed in respect thereof, be allowed, in the case of the following articles, that is to say—

      (i) sugar on which there has been paid a customs duty at a colonial preferential rate or an excise duty;

      (ii) sugar produced in the United Kingdom from material on which such a duty as aforesaid has been paid;

      (iii) molasses produced in the United Kingdom from material on which such a duty as aforesaid has been paid;

      drawbacks at the rates provided in the following Tables, but subject to all provisions applicable to the drawbacks which may now be allowed in the case of sugar and molasses:

      Provided that—

      (i) the reduction of the rates or amounts of any drawbacks shall not have effect in relation to any goods as respects which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rates in force before the twentieth day of April, nineteen hundred and thirty-two;

      (ii) the grant of a specified amount of drawback in respect of a specified weight of any article includes the grant of a proportionately less amount of drawback in respect of any less weight.

      I.—Sugar.
      Degree of polarisation and rate or amount of drawback.
      Of a polarisation exceeding 99 degrees:
      Where the rate of duty paid was 4s. 8.2d., 3s. 6.5d. or 4s. 7d. the cwt., a drawback at the same rate as the duty paid.
      Where a customs duty was paid on the higher colonial preferential scale at a rate less than 4s. 8.2d. the cwt., a drawback at the rate of 3s. 10.9d. the cwt.
      Where a customs duty was paid on the lower colonial preferential scale at a rate less than 3s. 6.5d. the cwt., a drawback at the rate of 2s. 9.2d. the cwt.
      Where an excise duty was paid at a rate less than 4s. 7d. the cwt., a drawback at the rate of 3s. 9⅔d. the cwt.
      Of a polarisation not exceeding 99 degrees:
      Where a customs duty was paid on the lower or higher colonial preferential scale, a drawback equal to the duty chargeable on sugar of the like polarisation in accord-
      1448
      ante with the scale on which duty was paid.
      Where an excise duty was paid, a drawback equal to the excise duty chargeable on sugar of the like polarisation.

      II.—Molasses.

      Nature of molasses.

      Amount of drawback.

      Where customs duty paid on higher colonial preferential
      scale.

      Where customs duty paid on lower colonial preferential
      scale.

      Where excise duty paid.

      s.

      d.

      s.

      d.

      s.

      d.

      If containing not more than 50 per cent, of sweetening matter and weighing not less than 14
      pounds to the gallon.

      0

      11

      0

      8

      0

      11

      If containing more than 50 per cent, but not more than 60 per cent, of sweetening
      matter.

      1

      4½

      1

      0

      1

      4½

      If containing more than 60 per cent, but not more than 70 per cent, of sweetening
      matter.

      1

      10½

      1

      4

      1

      10

      It containing more than 70 per cent, but not more than 80 per cent, of sweetening
      matter.

      2

      6½

      1

      9½

      2

      6

      If containing more than 80 per cent, of sweetening matter.

      2

      11

      2

      0½

      2

      10

      (b) In this Resolution—
      The expression 'customs duty at a colonial preferential rate' means a customs duty charged by any Resolution passed in the present Session on sugar or molasses consigned from and grown, produced or manufactured in a colony or other country to which that Resolution applies;
      The expression 'the lower colonial preferential scale' means the scale of the duties chargeable under the said Resolution in the case of sugar accompanied by a quota certificate;
      The expression 'the higher colonial preferential scale' means the scale of duties chargeable under the said Resolution in the case of sugar not accompanied by a quota certificate.
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      SILK.
      Resolved,
      "That as from the twentieth day of April, nineteen hundred and thirty-two, a person importing for his own use and not for sale an article of apparel made wholly or partly of silk (including artificial silk) shall cease to be entitled to the option conferred by Sub-section (2) of Section five of the Finance Act, 1926, of having the article charged with duty by reference to the whole weight thereof.

      1449
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913."

      AMENDMENTS OF IMPORT DIMES ACT, 1932.
      Resolved,
      "That it is expedient to amend the Import Duties Act, 1932, in the following particulars, that is to say:
      (1) The Treasury may be authorised, on receiving a recommendation from the Import Duties Advisory Committee, by order under the said Act to direct that goods of all or any of the classes or descriptions specified in the recommendation shall be removed from the First Schedule to the said Act.
      (2) Provision may be made for allowing, in accordance with a scheme prepared by the Import Duties Advisory Committee and approved by the Treasury, a drawback of any duties chargeable under Part I of the said Act, in the following case and subject to the following conditions, that is to say—

      (a) Drawback may be allowed—

      (i) in the case of goods manufactured in the United Kingdom, being goods of a class or description specified in the scheme;

      (ii) in respect of such quantity of any material of a class or description so specified as is contained in the goods or is specified in the scheme as being the average quantity of material of that class or description so contained, and as respects which it is shown to the satisfaction of the Commissioners of Customs and Excise, in accordance with rules to be made by them, that duty has been paid;

      (b) the rate of drawback, which shall be fixed by reference to weight or some other measure or quantity, shall be a rate specified in the scheme, and shall not exceed an amount equivalent to the average amount of duty paid in respect of material of the kind in question;

      (c) the drawback may be allowed for any period or periods whether continuous or not or without any limit of period;

      (d) the Committee in preparing, and the Treasury in approving, the scheme must be satisfied that, having regard to all the circumstances, including the interests of any producers in the United Kingdom of materials of the kind in question, it is in the national interest that drawback should be allowed as provided by the scheme.

      (3) Provision may be made for exempting from the duties chargeable under the said Act any consignment of machinery in respect of which the following conditions are satisfied, that is to say—

      (i) that the machinery belongs to a class or description to which the Import Duties Advisory Committee have recommended that the provisions of this paragraph should apply; and

      1450

      (ii) that the Treasury, after receiving the recommendation from the said Committee to the effect that machinery of the kind in question is not for the time being procurable in the United Kingdom, and that it is expedient to allow its importation duty free, and after consultation with the Board of Trade, have by licence authorised such importation;

      (4) Provision may be made for the variation or revocation of any Order in Council made under the said Act declaring that section five thereof (which relates to colonial preference) shall apply to a territory in respect of which a mandate of the League of Nations is being exercised by the Government of the United Kingdom."

      BICYCLES (EXCISE DUTY).
      Resolved,
      "That in lieu of the excise duties now chargeable in respect of bicycles under paragraph (1) (a) and (b) of the Second Schedule to the Finance Act, 1920, there shall on and after the first day of January, nineteen hundred and thirty-three, be charged the following duties of excise, and references in any enactment to the full amount of the duties chargeable in respect of mechanically propelled vehicles shall be construed accordingly.

      Description of vehicle.

      Rate of duty.

      £

      s.

      d.

      Bicycles:

      Where the cylinder capacity of the engine thereof—

      (a) does not exceed 150 cubic centimetres

      0

      15

      0

      (b) exceeds 150 cubic cenmetres but does not exceed 250 cubic centimetres

      1

      10

      0

      (c) exceeds 250 cubic centimetres

      3

      0

      0"

      INCOME TAX.
      Charge of Tar.
      Resolved,
      "That—

      (a) income tax for the year 1932–33 shall be charged at the standard rate of five shillings in the pound, and in the case of an individual whose total income from all sources exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;

      (b) all such enactments as had effect with respect to the Income Tax charged for the year 1931–32 shall have effect with respect to the Income Tax charged for the year 1932–33.

      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      HIGHER RATES OF INCOME TAX FOR 1931–32.
      Resolved,
      "That Income Tax for the year 1931–32 in respect of the excess of the total income

      1451
      of an individual over two thousand pounds shall be charged at rates in the pound which respectively exceed the standard rate by amounts equal to the amounts by which the rates at which Income Tax was charged in respect of the said excess for the year 1930–31 respectively exceeded the standard rate for that year.
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      INCOME TAX (VOLUNTARY PENSIONS).
      Resolved,
      "That—

      (a) Where a person has ceased to bold any office or employment and any pension or annual payment is paid to him, or to his widow or child, or to any relative or dependant of his, by the person under whom he held the office, or by whom be was employed, or by the successor of the last mentioned person, then, notwithstanding that the pension or payment is paid voluntarily or is capable of being discontinued, it shall be deemed to be income for the purposes of assessment of income tax and shall be assessed and charged accordingly;

      (b) For removal of doubts it is expedient to declare that the words 'annuity' and 'pension' in the charging provision of Schedule E to the Income Act, 1918, and in Sub-section (1) of Section seventeen of the Finance Act, 1923, include respectively an annuity and a pension which is paid voluntarily or is capable of being discontinued.

      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      STAMP DUTY.
      Local Authorities Audit.
      Resolved,
      "That section sixty-one of the Finance Act, 1921, shall have effect and shall be deemed always to have had effect as if, in all cases whatsoever where by virtue of any enactment the accounts of any local authority are subject to audit by district auditors, it required the stamp duty chargeable in respect of the audit to be calculated in accordance with the scale fixed under that Section."

      AMENDMENT OF LAW.
      Resolved,
      "That it is expedient to amend the law relating to National Debt, Customs and Inland Revenue (including Excise, but not including the Law contained in the Import Duties Act, 1932, save as may be provided by any other Resolution passed in the present Session) and to make further provision in connection with Finance."—[Mr. Chamberlain.]
      Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Commander Southby.]
      Resolutions to be reported To-morrow.
      Committee also report Progress; to sit again To-morrow.
      The remaining Orders were read, and postponed.

      ADJOURNMENT.
      Resolved, "That this House do now adjourn."—[Commander Southby.]
      Adjourned accordingly at One Minute before Six o'Clock.

TRADE AND COMMERCE.
  RUSSIA.
  RUSSIA.
  INSOLVENT TRADERS.
  INSOLVENT TRADERS.
  RUSSIA (CLAIMS, BRITISH SUBJECTS).
  RUSSIA (CLAIMS, BRITISH SUBJECTS).
  NORTHERN RHODESIA.
  NORTHERN RHODESIA.
  BRITISH EMPIRE (NATURAL-BORN SOUTHERN IRISH).
  BRITISH EMPIRE (NATURAL-BORN SOUTHERN IRISH).
  BRITISH ARMY (BREAD SUPPLY, BEACHLEY CAMP).
  BRITISH ARMY (BREAD SUPPLY, BEACHLEY CAMP).
  WHISKEY AND WINES (REVENUE).
  WHISKEY AND WINES (REVENUE).

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
The Lord Hindlip—Sat first in Parliament after the death of his father.

MINISTRY OF HEALTH PROVI- SIONAL ORDER (NORTHAMPTON) BILL.
Brought from the Commons; read 1a; and referred to the Examiners.

WHEAT BILL.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (EARL DE LA WARR): My Lords, in moving the Second Reading of this Bill I do not think it is necessary to labour the condition of the arable farmer. It has for some time been almost universally admitted that something has to be done to relieve his present position. In August, 1930, Mr. Baldwin, speaking officially on behalf of the Conservative Party, adopted the policy of the wheat quota with a guaranteed price. In the same month Mr. Snowden, now a member of your Lordships' House, made an announcement on behalf of the Labour Government. He said:
"….as soon as the conclusions of the Imperial Conference are known, the Government will undertake whatever practicable steps can be devised to put cereal growing in this country on an economic foundation."
And I myself seem to have some slight recollection during the months that followed that announcement of working with the then Labour Minister of Agriculture at a wheat quota scheme in an endeavour to find a practicable means of carrying out that pledge.
LORD ARNOLD: Does the noble Earl suggest that the Cabinet of the late Labour Government had approved of a wheat quota scheme? No public announcement to that effect was ever made.
EARL DE LA WARR: The position was that we were definitely committed to the preparation of a scheme, and the scheme that was being prepared is well known and has been mentioned in public by Dr. Addison himself—a wheat quota scheme with a maximum price as an essential part of it.
LORD PARMOOR: I do not like to interrupt the noble Earl, but I am sure he is under a misapprehension about that. I will not say more. I dislike very much discussing what goes on in a Cabinet meeting, but in my opinion the noble Earl is under an entire misapprehension.
LORD ARNOLD: Hear, hear.
EARL DE LA WARR: I do not know whether it is worth while wasting time on past history. Let us come to more recent times and look at the Third Reading debate on this Bill in the House of Commons. Let us see what Major Attlee said, speaking officially on behalf of the Labour Opposition. He said that the Opposition
"entirely agreed that there was a case for assistance, and they entered upon the discussion of the Bill, not in au attitude of point-blank hostility, but with the idea of seeing how far the Bill could really be made a decent and workable instrument to take its place in the reconstruction of this country."
That does not sound like a very serious disagreement on the principle of the measure. And if, for a moment, I might take your Lordships back to the point that has been raised by the noble, and learned Lord, Lord Parmoor, I would quote from a speech by Dr. Addison in which he said:
"In so far as the Government's scheme has been described up to now Viscount Snowden has conceded to a Conservative Minister, without the accompanying conditions, a thing which he obstructed by every device of postponement and objection that he could invent for more than twelve months when it was put forward by a colleague in the Labour Cabinet."
Loan MARLEY: What is the date of that?
EARL DE LA WARR: It was made during the last few months.
LORD ARNOLD: I will not interrupt the noble Earl again, but I will deal with this matter in my own speech.
EARL DE LA WARR: If I might suggest it to the noble Lord, I think he has made a most admirable decision. Finally, the Government come before Parliament with a scheme that has been agreed to as to all the details of its machinery by the interests concerned—the milling interest, the flour importing interest, the corn merchants and the farmers. If I might be allowed I would like very much to add my tribute to, and my thanks for, the invaluable assistance which we have received from the representatives of those interests, without whose assistance we could never have hoped to prepare in so short a time a scheme based on the practical realities of the industry.
It is perfectly true to say that there are a number of dangers in the policy we are now laying before Parliament. There are many keen and experienced agriculturists who feel that by the adoption of this policy we are committing the country to the permanent encouragement and extension of a crop that cannot be grown economically in the country, at the expense of the consumers of bread. But I venture to suggest that they are completely overlooking a very fundamental fact in the situation at the present moment; that is, that it is fair to say that there is no single great wheat exporting country in the world that does not contain within its boundaries a vast mass of wheat producers who we know are at present on the verge of ruin and, therefore, producing at a financial loss. There is no expert in the world to-day who, if he valued his reputation, would venture for a moment to prophesy what course wheat prices are going to take over the next two years. Who, therefore, dares to attempt a definition of the word "economic" in relation to wheat prices at the present moment? That is the point overlooked by those who have this fear that I have mentioned.
I venture to suggest to your Lordships that those who are responsible for the drafting of this scheme have demonstrated, by the details that are contained in this measure, that they are fully aware of the difficulties and dangers which confront us in the adoption of this policy and have made every endeavour to face those difficulties and dangers What is the scheme that we lay before your Lordships to-day? The aim of the Bill is to give to the farmer, the wheat
24
grower, a secure market and a standard price. The secure market is provided, as your Lordships will see if you turn to the Bill, in Clause 1, subsection (3). The provision is that wheat unsold after the end of the month of June—that is in the last two months of the cereal year—must be purchased to the extent of 12½ per cent. of the ascertained production if an order is made by the Minister. The conditions of the trade give us every indication that this provision amply covers the demands of the situation, because the normal surplus at that time of year is very much nearer 2½ per cent. or 3 per cent. than the 12½ per cent. that is provided.
The standard price your Lordships will find in Clause 2, subsection (2), the price of 10 s. per cwt. or 45 s. a quarter. Wheat will continue to be sold on a free market until at any rate the period which I have mentioned, the end of June. That means that the wheat grower will still be responsible for the sale and the marketing of his wheat, and will still have an inducement to produce the best quality and market it in the best possible way. At the end of the year the Minister will determine what has been the average price for the year, and the difference between the standard price and the average price will constitute the premium, or, as the Bill calls it, the deficiency payment which is due to the grower. Perhaps, if I give your Lordships an example, it will make that clear. The standard price is to be 10 s. a cwt.; the approximate world price to-day in round figures is 6s. a cwt.; the difference between those figures, which is 4s., will constitute the deficiency payment. The sum required for making this payment world be obtained by payments from the millers and the flour importers into a quota fund to be administered by the Wheat Commission. Your Lordships will find that point dealt with in a simple little clause on page 6, Clause 3, which is very brief and to the point, and I think your Lordships will agree it is perfectly clear in its intention. Briefly, the purpose of the clause is this, to ensure that the payments by the millers and the importers into the quota fund (the liability to pay into the quota fund) shall entail exactly the same expenditure on them as if they were subject to a quota system for the physical admixture of a fixed percentage of home-grown wheat.

25
Turning to Clause 2 of the Bill, your Lordships will see in subsection (3) a most important provision, which amounts to an automatic check upon the undue expansion of wheat growing in this country. There is a limit in that subsection, to the financial application of the scheme, to 27,000,000 cwt., or 6,000,000 quarters, of home-grown wheat. The amount at the disposal of the Wheat Commission for payment to the wheat growers will be that maximum quarterage of 6,000,000 multiplied by the deficiency payment of what is at the present moment 4s., a sum that amounts at present prices to approximately £5,400,000. In no circumstances can that sum be exceeded through the extension of wheat cultivation above the limit of 6,000,000 quarters. If more wheat than that is grown then the same sum of money will have to be divided over a larger number of quarters. Therefore there will be an automatic reduction in the amount payable to the grower and an automatic check on the undue expansion of the wheat crop. The scheme will be administered by a Wheat Commission appointed by the Minister. That is provided for in the First Schedule of the Bill. The duties of that Commission will be to collect quota payments from the millers and the flour importers, to issue wheat certificates to the growers as earnests of bona fide sale and purchase, and to distribute the deficiency payments when they are due. This scheme has been sometimes criticised and almost derided because of its complications. It is true that this is a complicated scheme, but I would ask your Lordships to realise that we are dealing with a very complicated and technical trade, and you will find that the criticisms on the complications of the scheme do not come from those who really know the trade and who are going to be engaged in working out this scheme.
Certain obvious questions inevitably arise in the lay mind as to the reasons for these complications. Why, it may be asked, if we are to have a quota scheme at all, not make provision for the direct physical admixture of a certain percentage of home-grown wheat in every miller's grist? Because, for geographical and other reasons connected with the trade a great number of the mills of
26
this country are not suited to the handling of large quantities of home-grown wheat, and if we were to adopt a scheme for wholesale physical admixture it would mean imposing immense unnecessary transport charges on the industry, and causing very considerable general disorganisation not only of the milling but also of the baking trade of the country. We may be asked, if we cannot adopt the direct physical admixture scheme, why not go in for the very much simpler technique of the Customs Duty? For this reason, that by our scheme we are imposing an increased charge only on our home-produced wheat, the liability for which is limited to 6,000,000 quarters, an amount, which is approximately one-fifth of our total consumption, and for the further reason that while we are increasing at present prices the return received by the home producer by between 60 and 70 per cent. We are actually only increasing the charge on our total wheat consumption by some 10 per cent., and imposing no charge whatsoever On the poultry feeder and the live-stock feeder.
Your Lordships must admit that it is a very remarkable achievement to have designed such a scheme. It means this, that if wheat had been put under the scheme for the 10 per cent. tariff there would have been as great a rise in the price of wheat all over the country with only a 10 per cent. rise in the price of wheat to the producer; whereas by this scheme we are able to give to the producer five times as much increase. The actual effect on the price of bread at its very maximum could only be a farthing on the 2 lb. loaf or a halfpenny on the 4 lb. loaf, and that is to be achieved by this scheme whilst giving to our producers a secure market and this guaranteed price. It does so whilst retaining the benefits of cheap imported wheat for the consumers of this country. That is the first function of this scheme. Secondly, it is carried out at no cost to the Exchequer—a most important provision at this time. It does actually contain within itself an automatic check on the undue extension of the wheat acreage. It further provides for the reconsideration of the price in three years time; and, lastly, it may well prove to be a foundation on which the various interests concerned will build an even more complete organisation covering the production, milling and importa-

27
tion of wheat into this country. I say, therefore, that the scheme does meet all the main objections that have been raised by the various critics of the Bill. Some have contended that there should be a declining price from year to year in order to make it clear to the producer that this is not a permanent scheme. They have suggested that that decline in the price arrangement should go on much longer than three years. I suggest to those critics that at this time of monetary chaos, when none of us can prophesy the value of money, it is very much better to stick to the actual settlement of the price during the next three years so that during that time we can watch both agricultural development and general economic development throughout the world.
Those are the main principles which have guided us in the production of this scheme. I would like to suggest to your Lordships that mere criticism of this scheme on behalf of such opponents of it as may exist is not sufficient. They have to be prepared if they wish to oppose this Bill to face the situation in the countryside and to meet the necessity for putting forward at least some alternative. During the last ten years no less than 2,000,000 acres of arable land in this country have gone out of cultivation. Over 120,000 men have left the countryside, to go where at this moment none of us can imagine. Is this the time to decree that yet further thousands of acres, hundreds of thousands of acres, of land should go out of cultivation, and that yet further tens of thousands of men should be rendered destitute—on what ground? On the ground that wheat is an uneconomic crop. If I may pursue that point I challenge noble Lords opposite to name any country, Canada, Australia, America, the Argentine, aye, even Russia, where the bulk of the wheat is being produced at the present moment, and to say it is being produced there at a profit. Are we quite sure that it is going to pay us to permit the further destruction of our countryside in order to avail ourselves of what may be the purely temporary possibility of purchasing cheap wheat? Temporary, I say, because the prices that exist to-day are due mainly to temporary causes of over-production and temporary causes brought about by
28
chaos in regard to the general world-price level.
One alternative to this policy has been put forward. That alternative is that the Government should encourage the transfer of production to other crops and commodities. I do not think anyone who has studied the agricultural situation for a moment would deny that the policy of the transfer of production to other crops and commodities besides wheat is in many ways a desirable one for this country to pursue, but do not let us deceive ourselves. Having a complete lack of policy in the immediate situation which is facing us is not going to lead to the transfer of production to other crops and commodities. Rather is it going to lead to the increased neglect of the existing arable land of this country. The farmer to-day is pledged to his last penny and even if he has the heart or desire he certainly has not the credit to engage in any schemes of transfer at the moment. Such a change in the system of farming requires confidence; it requires credit; it requires a balanced industry; it requires careful planning and organisation both of production and of marketing in other sections of the industry to which we want our farmers to transfer their efforts. This Bill supplies those conditions. It has already spread a great wave of confidence over the areas which we are discussing. By its provisions it automatically increases the credit of the arable farmer whilst the standard price and the market security guaranteed to the arable farmer will give time for the development of other items in our policy, the planning and organisation of other sections of the industry.
This Bill must be taken in perspective as part of the whole Government policy. It is part of our general policy, some of which reached a certain stage yesterday when the Reorganisation Commissions for milk and bacon were announced. We are also working in conjunction with the National Farmers' Union on the organisation of the potato industry and we are developing that most important side of our work, the standardisation and organisation of the production and marketing of meat, of fruit and vegetables of eggs and poultry. But if that work is to be successful it is essential that we should establish the basic conditions of credit and confidence and balance within the in-

29
dustry. It is essential that we should give these conditions to the farming industry at the minimum cost to the consumer. That we have done within the provisions of this Bill. I beg to move.
Moved, That the Bill be now read 2a.—(Earl De La Warr.)
LORD MARLEY: My Lords, I am sure the House will have admired the courage and the skill with which the noble Earl has introduced and explained this measure—not that skill was necessary in an explanation of the Bill, because I do not agree with him that it is a complicated measure. It seems to me to be singularly simple in essence, though some of its wording is complicated, and in my opinion unnecessarily so. I think the House will realise that the noble Earl had some difficulty in extricating himself from the position of having been Minister in the previous Government as well as in the present Government, and in attempting to support a measure now which is radically different from the proposals which were under consideration in the previous Administration—a measure which is not only radically different, but which he realises is fundamentally at variance with other aspects of this problem which he has supported in the past. I should think he will be sick to death of wheat and flour before he has finished with it. If the task of the Ministry results in any serious effect on himself, I am quite sure his epitaph will not be "No flowers by request" but "No wheat and flour by request."
The House will, I think, realise that some sympathy is due to the officials of the Ministry of Agriculture because during the past two years, and for all I know the past ten years, they have had policy after policy which they have prepared and worked out only to have them turned down by successive Cabinets. It seems as though it is impossible for a British Cabinet of whatever Party to come to any considered, long-term agreement on agricultural policy. Of course the noble Earl knows—he has had access to all the documents—that there have been draft after draft, report after report, and Royal Commission after Royal Commission which has considered and attempted to deal with this difficulty and never with any success of a lasting and durable character. Finally we come to the present Bill which is so utterly and
30
hopelessly inadequate to deal with the problem before us and so greatly at variance with any previous proposals for a solution that the time must come, if it is not with us at present, when the inadequacy of the measure will be realised.
EARL DE LA WARR: I do not want to interrupt unduly, but I think it would be well that not only your Lordships' House but the public should realise the exact position of this matter in the Labour Government. I do not want to deal with the question of policy, but the noble Lord was mentioning details, and the reason why the details of this scheme are different from the details of the, last scheme is that when we started with the details of that scheme, after discussion with the industry, that scheme became modified, just as discussion would have had to go on with the industry if the last Government had continued in office when some modifications, I am convinced, would have taken place. The reason why discussions did not take place was that the Labour Government was calling for the preparation of a scheme but was never able to make up its mind sufficiently to get in contact with the industry.
LORD MARLEY: That does something, my Lords, to clear up the statement that this was a similar measure to that under consideration by the Labour Government. I said that this measure was inadequate. In The Times of yesterday there was a criticism by Sir Arthur Hazlerigg, who said the present House of Commons knows little and cares less about the problems of agriculture. It is a well-known fact that in your Lordships' House there are many members who know a great deal about agriculture. I can only hope they will speak up to-day and not let this sort of measure go through without the criticism to which it ought to be subjected by those concerned in the industry.
The noble Earl told us that this Bill grew out of measures which were under discussion by a previous Government. This Bill arose because when the present Government came into office the Minister of Agriculture made a premature announcement that the Government had adopted a quota policy and a very well-known supporter of the Government, Mr.

31
Thomas, put his foot deeply into it when he announced that they were not going to stand the intolerable dictation of the milling interests, with the result that the milling industry opened an attack on the Government's policy, through advertisements in all the newspapers, leading to the complete withdrawal of that policy and the substitution of the present measure. I hope there is no disagreement on that reading of the position. Of course, as the noble Earl said, it is agreed to by all the interests concerned. If you surrender to all the interests concerned they naturally agree— there is no doubt about that. The withdrawal of the Quota Bill and the substitution of the non-quota Bill is clearly the position at present.
I have a quotation from a paper called The British Baker, which says:
"It is not without significance that the word quota is omitted from the title of the Bill. The complicated scheme for the sale of certificates to millers and importers has been thrown overboard. Even when this is allowed the Bill may be described as a step towards the Socialist or more precisely the Fascist State."
I should like to think, my Lords, that it was a step towards the Socialist State, but if it is a step it is a very meagre and small one and not towards the State that I should look upon as Socialist. The present Bill was conceived in a hurry. It is a wasteful Bill. The wording of it is extraordinarily complicated, though the meaning is simple. It is an unjust Bill and a Bill which I venture to suggest gives the minimum value to agriculture. It has been hurried on and hardly given adequate consideration merely that it may deal with the 1932 wheat problem. One would think that the wheat problem had only just arisen. The noble Earl referred to the reduction of acreage in the last few years. The reduction of wheat acreage has been going on for 70 years at least. It was 70 years ago that the wheat acreage reached a total of some 4,000,000 acres. To-day—I speak subject to correction—the acreage is only 1,400,000.
EARL DE LA WARR: Lower than that.
LORD MARLEY: It is lower than that already. The reduction has been a steady reduction. It is not a new problem. In the same way the price problem has affected the industry for just as long.
32
During the last 70 years prices have varied from something like 100 s. per quarter down to something like 20 s. per quarter. As the noble Earl rightly said, nobody could possibly prophesy what is going to be the course of wheat prices in the future. Great Britain, as a country, is probably among the highest wheat producers in the world of bushels per acre. I find that statistics show that Great Britain is only beaten by Denmark in the amount of wheat which is produced per acre. She is far ahead of Canada, the United States, the Argentine and Australia, and according to one of the most famous of the agricultural scientists who are helping this country at the present moment, Sir Rowland Biffen, Great Britain could easily increase her production from 32 to 40 bushels per acre; in other words, by intensive cultivation and improved varieties that improvement could be made. In his evidence before a Committee which sat about ten years ago he said that "England is naturally one of the best, if not the very best, wheat growing countries in the world. Its climate and soil are ideal." Hence its high production "without"— significant words — "without much trouble to the farmer."
It would be understandable if this policy outlined by the noble Earl were designed to increase the wheat production or acreage on some economic basis. That is a policy which has been supported by many agriculturists, as for instance Sir Daniel Hall and Sir Charles Fielding, and by many Royal Commissions, one after another. If such a policy of increased production of wheat in this country were linked up with something like the development of the use of an all-English loaf, which was recommended by Lord Linlithgow in the Report of the Linlithgow Commission a few years ago, there might be an understandable reason for the policy. If the noble Earl and the Government supported, for example, restriction on imports of flour into this country, in order to give more employment in the milling industry and in order to increase the supply of offals, it would at least be an understandable policy. That was the policy recommended by the Agricultural Tribunal of Investigation in 1923 or 1924. None of these things, however, are included. The Bill does nothing to increase and improve

33
wheat production. The explanatory Memorandum expressly lays it down (and the noble Earl affirms this) that it is desired not to encourage any extension of wheat cultivation to land unsuitable for the crop.
EARL DE LA WARR: Undue extension.
LORD MARLEY: The Memorandum does not say that. It says: "without encouraging the extension," and so the noble Earl is not in agreement with the Memorandum.
EARL DE LA WARR: I must ask the noble Lord to be accurate in his quotation. It is "to land unsuitable for the crop."
LORD MARLEY: I had better read out the words, it is so much easier. The Memorandum says: "without encouraging the extension of wheat cultivation to land unsuitable for the crop."
EARL DE LA WARR: The noble Earl has now completed the quotation.
LORD MARLEY: I quoted those words before. My point is that the Bill does not encourage the extension of wheat cultivation, and when we ask for a definition of the words "land unsuitable for the crop" the Minister himself begs the whole question by announcing in the House of Commons, in answer, that the way to deal with it is to ask this question: "Does it pay to grow wheat, prices and production costs being what they are?" That means that the Bill does not intend to encourage wheat production on any other land than that already under cultivation. If it means anything else, then it is a pity that the Minister and his chief assistant are not in agreement. I would point out that there is a penalty for increased production, because, as has been pointed out, there is a lower deficiency payment if production increases beyond the anticipated supply. I work it out that the total allowance will be 1,350,000 tons. It is quite easy for that amount to be exceeded, even on the existing acreage. I notice that in 1930 the acreage under wheat actually increased by 16,000 acres, and it was only because there was an exceptionally poor yield of wheat per acre that the total was as low as it actually was, but this maximum laid down by the Government was actually
34
exceeded by hundreds of thousands of tons in 1927, 1926 and 1925. So that it is a definite discouragement of any increased wheat production.
May I here ask the noble Earl if he could arrange with the Ministry for some co-ordination of statistics? Looking at the statistical abstract of the United Kingdom and comparing the figures with the "Agricultural Statistics" issued by the Ministry, I find in the Agricultural Statistics that the figures for the United Kingdom are omitted altogether and that the figures given instead are for Great Britain and Ireland. The Ministry may not be aware that Ireland has been divided up and that now the United Kingdom is only Great Britain and Northern Ireland. If, therefore, the Ministry would include in their Agricultural Statistics the figures for Great Britain and Northern Ireland and realise that they might just as well include Canada and Australia as Southern Ireland in the statistics for the United Kingdom, it would be a helpful thing. For all I know Ireland may not even be a Dominion before long, but the point is that co-ordination of these statistics would be extraordinarily valuable.
As I have said, the Bill does not deal with or encourage wheat production. It would be understandable if it did. It would be an equally understandable policy if the Government intended to deal with the real problem before the country, and that is the price of wheat. That is a monetary policy—a policy which would prevent the continual fall in prices, which has affected almost every product, and has, as the noble Earl pointed out, affected every country in the world. Surely there is room for a monetary policy on the part of the Government which would follow out the recommendations of the Macmillan Committee, prevent a continued fall in prices, and secure a general rise in the price level back to the 1928 standard. After all, that is the real cause of agricultural depression, and I may remind your Lordships that this very point was emphasised in the recommendations of the Economic Sub-committee of the International Economic Conference of 1927 at Geneva. It has been brought up again within the last few days by the New Zealand Government, who are putting on the agenda for the Ottawa Conference a proposal that the question of a monetary policy with a view to raising the price

35
level may be considered by the Conference. No doubt Mr. Thomas, who is leading the Government delegation to Ottawa—or perhaps not leading it, but being taken over there by others—will be able to deal with that aspect of this important problem.
The United States have recognised the difficulty, and in their new Reconstruction Finance Corporation to carry out their "reflation" policy they have allocated 50,000,000 dollars for agriculture alone, with a view to attempting to raise the price level, which will secure to the United States farmers a rise in price by means other than those proposed in this Bill. The Government has not only no monetary policy, but it continues to congratulate itself warmly on the fall in the price level day by day and month by month. Again in the figures for last month we see a further fall in the price level of two points, and the Government is always announcing how pleased it is that it is keeping the price level down. The Government does not touch on monetary policy in this Bill. It does not seem to realise that the fundamental fact in agriculture is the price level, and the price level, which could be dealt with by monetary policy, cannot be dealt with adequately by applying to 4 per cent. of agricultural production a policy of raising prices purely at the expense of the consumer.
I say again it would be an understandable policy if the Government would realise the purely economic position of wheat, and would see that it is impossible for wheat production in Great Britain to compete with wheat production in other parts of the world. It is impossible to compete with the fact that the yield per acre in the great prairie production of the world—in Canada, in the Argentine, the United States, in Australia and in Russia—is increasing at an incredible rate by means of the use of new machinery and by biological development. It is getting increasingly impossible for this country really to produce wheat economically. It is getting increasingly difficult for any adequate competition to exist between wheat grown in Great Britain and wheat grown in Canada. I see that the biological development of new wheats has secured within the last few years an extension of
36
the wheat belt in Canada to 100 miles further north than was possible five years ago. Similarly with the technical advance. The use of tractors and of the combined harvester-tractor is making it utterly impossible for us really to compete with other countries.
The Government might have recognised that, and have secured that the energy and skill of British farmers were directed into paths more economically useful—the production, for example, of pig and bacon foods, of potatoes, of milk, of live stock. I see that The Times in a leading article yesterday quoted Sir Arthur Hazlerigg as saying that
"….if the Cabinet were composed of vegetarians who hated meat they could not do less than they are doing for the help of the live-stock industry."
I do not know whether the Government is composed of vegetarians, but it is a fact that, as far as this Bill is concerned, it is simply an attempt to foist off skill and energy on to an uneconomic crop, at enormous cost to the people, without giving one thought to the possibility of transferring that skill and energy into more economically useful channels. The noble Earl says the Bill allows the Government three years in which to look round and decide on their policy—three years, whereas this Bill could have included definite encouragement to those farmers who are not able to produce wheat economically, whereby they would have been induced and helped to transfer their production to other and more useful channels such as pigs, potatoes, milk, and so on.
LORD BANBURY OF SOUTHAM: Would you put a duty on meat then?
LORD MARLEY: It is not for me to tell the Government how they should carry out their policy. That is for the Government to decide. But there are many ways of doing it, and the noble Lord, who has become such an extremely good and useful Socialist during the last six months when he has seen the work of the National Government, might realise that it would be easy to secure the control of the imports of meat and secure the control of the meat-producing industry in that way.
LORD BANBURY OF SOUTHAM: I am afraid I am not a Socialist yet.
LORD MARLEY: I am very sorry to hear that, but we shall hope to welcome the noble Lord on this side before very long.
THE UNDER-SECRETARY OF STATE FOR WAR (EARL STANHOPE): Lord Marley has become a Protectionist.
LORD MARLEY: It is a question of the definition of the word "Protection." We on this side mean by "Protection" tariffs. We consider that they are utterly unscientific and utterly useless in helping the reorganisation and planning of industry. What we mean is that industry has to be planned, has to be thought out, has to be definitely considered as a whole from the point of view of the needs of the consumers and the possibilities of the producers. If by that is meant Protection I am a Protectionist. If by "tariffs" is meant Protection then emphatically I am not a Protectionist, never was, and I trust never will be.
EARL DE LA WARR: Is it that the noble Lord thinks that tariffs would not raise prices as effectually as his scheme?
LORD MARLEY: My point is that the question of the price level should be one for decision by the Government, and tariffs do not carry out that in a scientific way. Tariffs merely have the effect of raising prices to the consumer without giving him increasing purchasing power with which to buy the products which he wants. They have the double effect of raising prices and preventing the purchase of further goods because they give no increased purchasing power. Surely that is obvious to the noble Earl and does not need explanation from me. The noble Lord, Lord Bledisloe, writing on this question a few years ago, said:
"From a purely economic point of view it will probably be better business for the British farmer to devote his energies as largely as possible to the live-stock industry and to aim at meeting the demands of the population for meat and milk."
Here is another case where the Government has lost an opportunity of doing something for agriculture by failing to deal with that problem. I have no doubt that the noble Viscount, Lord Astor, who has so strenuously supported something on these lines in recent communications to the Press, will deal with that in his criticism.
38
We have heard a great deal about the Labour Government from the noble Earl. He told us that this scheme grew out of the policy under discussion by the Labour Cabinet. Let us get down to the facts. I was not a member of the Labour Cabinet, thank heaven! but the Labour Cabinet had under consideration in June—and I do not think there can be any dispute about these facts; I am sorry for the noble Viscount who was in the Cabinet—
LORD PARMOOR: My noble friend need not be sorry for me, but I am one of those who think that Cabinet discussions ought not to be disclosed and I took that objection when the noble Earl, Lord De La Warr, began to speak.
LORD MARLEY: The noble Earl will bear me out when I say that it is the fact that the Labour Cabinet in 1931 had under consideration a draft agricultural policy. There surely can be no disagreement as regards that. Furthermore, that draft agricultural policy did include definite proposals to transfer agricultural effort from cereal production to other more valuable lines, including pigs, potatoes, poultry and so on, and it did include the organisation of home marketing and a consideration of the question of import boards. I am not saying that it was adopted by the Cabinet. I am saying that it was under consideration by them. The draft proposal before the Cabinet, after many previous drafts—the noble Earl knows this as well as I do; I presume he had access to the documents—did include the definite decision to help to transfer effort from cereal production to these other forms of production.
Similarly this draft proposal did include measures to restore confidence among the arable farmers in the depressed arable areas by means of a plan whereby there should be a quota payment. Of course the noble Earl knows that. It was not as much as that in the present Bill. It was less, and it included a reduction each year, and it was to come to an end in four or five years. There can be no dispute about these facts. It was to come to an end for the very reason that its coming to an end would secure that farmers engaged in cereal production should realise that they must transfer their energies to other forms of production, and that if they did not they would be in difficult waters at the end of the

39
four or five years. The proposals definitely included plans whereby the agricultural worker should share in any additional prosperity enjoyed by agriculture, by means, of course, of an increase in the powers of the Central Wages Board.
This Bill excludes each one of those factors. The Bill is nothing but a subsidy to a small section of agricultural producers and it demands nothing in return Nom cereal farmers. As The Times said in its leading article yesterday, it does not amount to very much in any case. The Conservative Party have always been in difficulties with their agricultural policy. I have been reading again their publication of 1926 called "Agricultural Policy," in which they said:
"A subsidy may sometimes be justified as a purely temporary expedient or if it is required to start a new industry like beet sugar, but any general scheme of subsidies for agriculture is open to the gravest objection. … In view of the extreme variations all over the country in the quality or productive capacity of the land, it is impossible to devise any scheme of subsidies which will not result in the payment of a bonus to the farmers who do not need it and for which no return will be received by the nation."
That is just what this Bill does. The subsidy will go equally to those who need it and to those who do not. And the subsidy will be greater to those who do not need it than to those who do. That is a peculiar fact about this Bill.
Moreover, the subsidy will undoubtedly increase the price of milling offals. I believe I am right in saying that already we are selling milling offals to Denmark at something like £2 a ton cheaper than we are selling them in this country. I see that Sir Ernest Shepperson said in another place that he was paying more for the offals sold back to him than he received for his original wheat. What is the Government doing to deal with this situation? Surely that is a way in which the live-stock industry might have been helped—by dealing with this question of milling offals. But there is not a word in this Bill dealing with that side of agriculture. The whole thing is left out and the middle men in the industry are left enthroned. The milling industry is just as honest as any other industry and probably more efficient than most, yet the milling industry have insisted that there shall be a free market
40
for English wheat and they get it, and they get the privilege of passing on to the consumer any increased cost which results.
There is no check on the spread of prices. There is no check on the price of bread and the cost of wheat. We are told in the Corn Trade News that the price of wheat up to last year was up 5½ per cent. as compared with 1914, but the price of bread is up 55 per cent. If wheat is more or less the same as it was in 1914 why should bread be 30, 40 and 50 per cent. more? We are told that it is due to the increased cost of labour. But during this period there has been an enormous improvement in the efficiency of production and the application of machinery. Bread ought to be cheaper and not more expensive as compared with 1914. I do not see why the Government have not considered this aspect of the problem. They might have secured their subsidy to the farmers and yet have secured a cheapening of bread if they had dealt with that aspect of the problem. But there is no word of this. Under this Bill the consumer's views on the Wheat Commission are voiced by just four people, or possibly five if you include a baker as a consumer, out of a total of seventeen! What voice will they have in this question of the price of bread? The Food Council has no power; and it is simply a gift to the milling industry whereby, hiding under the complications of the wording of the Bill, there will be no particular limit to the increased cost of bread and no means of securing that the public understands whether the increased cost of bread is or is not necessary in the case of each loaf.
The definition of bread, which I am sorry the noble Earl did not give us, is included on page 25 of this Bill:
"'Bread' means the article produced by baking flour together with water and salt fermented with yeast, without the addition of any other substance, so, however, that no such article shall be deemed to be bread unless it is in the form of a loaf weighing not less than fourteen ounces."
What nonsense to include that sort of definition in a Bill of this kind! It is an insult to the intelligence of the country that that kind of definition should be included. The increase in price, the noble Earl has stated, will be in the neighbourhood of one halfpenny on the 4 lb. loaf. I do not see that there is any

41
particular reason why it should not be considerably more than that. Let us take an example. He gave us, I think it was, £4,500,000 as the cost of the subsidy based on the average price to-day of 6s. a cwt. as compared with the standard price of 10 s. I would remind him that last February the price was 5s. 1d. per cwt. We know that the price level is failing month by month. Why should not the average price be 5s. per cwt., in which case the subsidy would not be £4,500,000, it would be nearly £7,000,000, and that would mean a penny on the 4 lb. loaf? There is no limit to the amount of the subsidy if the price level continues to fall. I think the noble Earl might very well deal with that point. He skated over it when he told us the subsidy would be somewhere about £4,500,000. The subsidy might very well rise to £6,000,000 or £7,000,000 or possibly even more if we reach the full amount allowed of 27,000,000 cwt. and if the price level keeps down to about 5s.
As to the way in which the money is collected, Clause 3, subsection (1) is so extraordinarily complicated and so badly worded that I venture to think no member of your Lordships' House is capable of understanding it in its present state. The noble Earl said it was a perfectly clear and simple little provision. What does it say?
"For the purpose of meeting the expenditure to be defrayed by the Wheat Commission under this Act, every miller and every importer of flour shall be liable to make to the Wheat Commission … an amount calculated and prescribed in accordance with the provisions of this section so as to represent, as nearly as may be, a sum equal to what would have been the price deficit in respect of the quota of home-grown millable wheat used in the production of that hundredweight, if the anticipated supply of such wheat for the cereal year in which that hundredweight was delivered had been used at a uniform rate per hundredweight of flour in the production of the estimated supply of flour for that year."
That is really a had piece of drafting, and I do hope that members of your Lordships' House who are interested in this question will insist that that subsection shall go back and be drafted in a way that will make it comprehensible to agriculturists and others concerned.
The effect of this Bill will be to place upon the backs of the poorest people the
42
burden of finding the whole of the subsidy. The Linlithgow Committee pointed out that any increase in the price of the loaf must gravely affect the food bill of the poorest people. Where wages are especially low, as among agricultural labourers, the result, they said, must be particularly serious. And the results will be particularly serious. I know that it does not seem much that the food bill of poor families shall be increased by a few pence. I was in Shropshire the other day and I went to see one or two big families I know. There I found that with wages of 29 s. a week the bread bill was averaging something like 10 to 12 4lb.-loaves. That means that the increased price of bread to them will be something like 6d. at one halfpenny increase in the cost of the loaf, or 1s. if the price goes up by a penny. That means less money available for spending on other goods. I can assure the noble Earl that bread is the staple article of food of many of our poorest families.
The cost of administering the scheme comes out of the money which the farmers receive. The administration will be expensive. The noble Earl gave us no estimate of the cost of administration. He gave us no idea of how much a quarter we may expect will be used for the cost of running the scheme. I see that farmers in Yorkshire have estimated it at 10 s. a quarter. That seems to be an exaggeration; nevertheless it will be interesting to have the Ministry's estimate so that we shall know what reduced share of this subsidy the farmers will actually get. I spoke of this Bill as a bad Bill. It includes no date to end the subsidy. It is a subsidy pure and simple. It encourages no change over to a more economic production. It gives no control of bread prices, and the agricultural workers get no share of such benefits as cereal farmers receive. I venture to suggest that the Bill is not worthy of the wealth of agricultural knowledge which we are told the National Government possess, and we on this side of the House shall oppose it to the extent of a Division, because we believe it is not the sort of measure that will really help agriculture.
LORD CRANWORTH: My Lords, as I come from East Anglia it will be no surprise to your Lordships to find that I

43
whole-heartedly welcome this measure, because, for the last ten years, I have seen the gradual but ever-quickening decay and ruin of the countryside in which I was born and have lived most of my life. I have watched the wages of the agricultural worker go down and down till now they stand at the pitiable figure of 28 s., and, what is worse, there are thousands and thousands of agricultural workers who do not get that 28 s. or any wage at all, because, low as that wage is, it is even now by no means an economic one. I have seen the farmers use up the capital that they themselves and their ancestors before them have built up through agriculture on their farms. And may I remind your Lordships that not the worst farmers but the best farmers are the ones who have suffered the most. It is the best farmers who are now in the worst position.
The noble Lord, Lord Marley, said that this Bill was produced in a hurry. In my constituency, which is a constituency he knows, hurry is not the word which they use in connection with this measure. The condition of the landowner may be seen on every side in the state of his own home and, still more, in the condition of the works for the maintenance of which he is responsible. His farm buildings, his gates, his field drainage, everything that he would wish to see kept as it used to be kept are no longer in the state they used to be in. And what of the land itself, the land which belongs to the nation, as noble Lords opposite say? That land is now in the same condition as the men who farm it. It is starved. For years it has been living on its capital and year by year it has lost heart. This Bill which we have now before us is, I think, the first real attempt to stop the rot that is going on there. I say to your Lordships that it is the first step because there is no easy fortune to be made in growing wheat at something under 45 s. a quarter. There may be, there are, some favoured areas where it does represent a fairly easy profit, but in by far the greater part of the country wheat can barely be grown to cover expenses at that figure. But it will do this. It will give the farmer one stable rock on which he can depend while this Bill, or this Act, as it will be, is in force, and it will enable him to turn his attention to those other lines which noble Lords opposite have so
44
often pressed upon him. This is a Bill the object of which is quite simple. I agree with the noble Lord, Lord Marley, that the complexity of the wording of the Bill fills the average reader with more awe and admiration than it does with understanding. Nevertheless, I think the working of the measure, which is much more important than the wording of it, will turn out to be an easy task.
If I may occupy the time of your Lordships for a few minutes I propose to do so in meeting some of the criticisms that have been made not only here but elsewhere in regard to this Bill. The first criticism, and I venture to think it is by far the most important criticism, is that this Bill imposes a tax on the staple food of the poorest people in these Islands. I am not going to deny that there is truth in that argument. Although probably to most of your Lordships bread is not one of the major items of weekly expenditure, I am not going to deny that it is an important item in the poorer houses of this country. But I think that that is an argument that may be, and in many cases has been, largely exaggerated. The Minister of Agriculture said in another place—I presume that he spoke advisedly—that at present prices the extra cost on a 4 lb. loaf was 61 per cent. of a halfpenny—that is to say, approximately a halfpenny more during 7½ months of the year and nothing more during the other 4½, months. I am given to understand—I do not know whether the noble Lord will agree with me—that the average consumption of bread in a household is a 4 lb. loaf per head per week. If that is the case, a man and his wife with three children will be taxed to the extent of roughly 1¾d. a week. I do not wish to say that there is no taxation in that, but I think it may very easily be exaggerated. In fact I am not certain that I have not heard a bigger figure mentioned this afternoon.
There is a further point and that is that the price of the loaf does not seem always to vary with the price of wheat. I would like to give your Lordships a few figures on that point. On May 9, 1927, wheat was 54 s. a quarter. The price of a 4 lb. loaf was 9½d. On July 29, 1929, the price of wheat was still 54 s. a quarter but the price of the loaf had gone down to 9d. Taking the other end of the scale, on July 27, 1931, the approximate price

45
of a quarter of wheat was 22 s. 10 d., a great deal less than half, but the price of the loaf was 6½d. On February 29 of this year the approximate price of wheat per quarter was 25 s. 10 d. and the price of the loaf was then 7d. There are some further figures which I should like to give to your Lordships. In 1913 I understand that of the price of the loaf 60 per cent. went to the farmer and 40 per cent. to the baker and miller. To-day those figures are exactly reversed—40 per cent. goes to the farmer and 60 per cent. to the others. During the last two years there have been a number of changes in the price of the 4 lb. loaf. In 1930 in January it cost 9d., in August 8½d., in December 7½d. In March of 1931 it was 7d. and in December of that year it was 6¾d. Those were the average prices of the loaf in the United Kingdom as compiled by the Council of Agriculture.
The price has changed in London nine times. I venture to suggest to the noble Lord opposite that if he were to ask some of the poorer housewives in his neighbourhood, as I have asked in my neighbourhood, how often there has occurred that catastrophe which he has pointed out of a change in the price of the loaf—a catastrophe of course when it rises, but an inestimable boon when it falls—he would not, find a housewife who was able to tell him. I think her answer would probably be the same answer that I got: "Oh, it has varied several times, I think, during the last few months, but never to any appreciable extent." I may be wrong, but I think that is the answer he would probably get.
The second criticism I come to is the criticism that a subsidy of £6,000,000—it is, I admit, still a subsidy even in its present form—is too great a sum for the nation to afford for the benefit of a comparatively small part of the population. That £6,000,000 or thereabouts is a simple sum reached by multiplying the difference between the two prices by so many million quarters. But is there nothing to set on the other side? I think there is. I venture to suggest that when this Act is in full operation there will be at least 50,000 more people employed on the land, 50,000 people who with their families would have cost the State somewhere in the region of £70 each. That is apart from any indirect result such as the saving of uneconomic work that goes On
46
in every county on the roads. There will be increased employment among implement makers who are sorely in need of more employment. There will be increased work for the producers of fertilisers and increased employment of makers of binder twine. If there should turn out to be, as I venture to suggest there will be in certain places, more straw than is needed, then there seems to me to be an opening—I believe there are indications of it already—for starting a new big industry in this country in the production of straw boards of which we are importing a vast quantity into this country.
There is another feature to which I would refer. What about the loss of Income Tax and Super-Tax to the Treasury? In my part of the world, no matter how big an income a man may have from other sources, provided he farms a farm of any size the incidence of Income Tax, let alone Super-Tax, interests him no more. If all those are added together I believe you will find the balance of £6,000,000 not only no longer exists but is in fact transferred to the other side. The noble Lord asks why the people in East Anglia do not turn to other methods and I have often seen it asked how it is that land is not laid down to grass and beasts fattened thereon. All the land in East Anglia that can be profitably laid down to grass has been, and a great deal has been laid down to grass which it was not economical so to do. In my experience it costs generally £4 an acre to lay land down to grass—more if you have expensive work in fencing and laying on water. What is the use of spending £4 an acre when the land is not worth £4 after you have expended it? The soil in East Anglia is for the most part shallow, the rainfall is the smallest in the country, and there is comparatively little soil that will grow grass worth having.
LORD MARLEY: If the noble Lord will excuse me, I did not suggest as a criticism that the land should be laid down to grass. The whole of Denmark is arable and that is the greatest dairying country in the world.
LORD CRANWORTH: I thank the noble Lord, but there are plenty who have written and spoken with regard to laying down East Anglia to grass. The last criticism with which I wish to deal

47
is one which the noble Lord specifically mentioned, and that is that this measure benefits the farmer and the landowner, but that no benefit is to come to the agricultural worker. I am sorry the noble Lord introduced that argument because, when I hear it and read it, I cannot but think what a sorry thing politics are. It is not so many years ago, when the Agricultural Workers' Wages Act was introduced, that on every political platform in England the Socialist Party said what a grand measure it was—"this is the farm workers' charter." And why was it the farm workers' charter? It was because it ensures that whenever any benefit comes to agriculture, from whatever source, the agricultural worker will get his fair share of it. We have now a benefit given to agriculture and none, it is said, is to go to the agricultural worker. Has the Agricultural Wages Act failed? If you come to our part of the world you will not find an agricultural worker who does not know that but for the Agricultural Wages Act farm wages would be a great deal lower to-day.
Passing from those criticisms I have two little criticisms of my own which I think are justified and on which I think I shall have the support of the noble Lord, Lord Marley. With regard to the estimated supply of 6,000,000 quarters there is apparently no method whereby that amount can be revised and I cannot but think that that is a great pity. I do not believe there will be any great, though there will be some, extension of the area. As the noble Lord pointed out there is another method of increasing the yield. In much of East Anglia the land is played out. It wants rejuvenating and even today that is being done. The sale of fertilisers has gone up enormously this winter and it will go on going up. I think it is true that in two or three years the actual supply of wheat may exceed the estimate by some considerable figure. I can well see that the benefit to the farmer should not exceed a certain amount, but let the House imagine circumstances which I think are extremely likely. The price of wheat goes up to 35 s. or 36 s.—and I would point out that for every 4s. that the world's price goes up the price of the loaf goes up a halfpenny. If the world's price goes up to 35 s. and the actual supply goes up to 9,000,000 quarters, which to my mind is far from unlikely, the result will be that
48
the subsidy will be reduced by half, but the price the farmer gets will be in the region of 41 s. 6d. I venture to suggest that if the farmer actually gets some considerable amount less than the 45 s. which he thinks this gives him the result will be deplorable, and I hope that your Lordships will place in this Bill some machinery whereby, taking all the circumstances into account, if it prove necessary, the estimated supply may be increased, or again diminished, by the Minister.
As to the other criticism I have to make, I find myself somewhat in agreement with the noble Lord over wheat offals. I would have thought there was an opportunity in this Bill to have done something for the stock breeder by giving him cheaper offals. One of the greatest grievances in my part of the world has been that we have had to pay more for the waste products of wheat than we have received for the grain, and that is in fact the case to-day. The answer may be that there is something in our treaty obligations which prevents what I should have regarded as a happy insertion in the Bill. If so we have, I believe—and I shall hope for some reassurance from the Minister—the word of the millers, who have shown the utmost good will and cooperation in their attitude towards this Bill, we have their assurance that they will do their best to see that the price of wheat offals to the stock graziers is not seriously raised.
In conclusion I would suggest to your Lordships with regard to this Bill that money is not the only thing—that the only consideration should not be whether it is more profitable to grow pigs or poultry in some other part of the world. I think the human element must enter into this as well. I may be prejudiced, as coming from that part of the world, but I believe that the men and women of East Anglia are second to no section of the population of this country. Their record is known to many of you and it speaks for itself. Much of their land their ancestors won for them from the sea and from the swamp. A great portion of the very soil was made by generations of cultivation, and by the application of clay and farmyard manure. I venture to believe, and I think your Lordships will agree with me, that the task of succouring those men and giving them some small portion of prosperity is one which is very

49
well worth while, and I am proud and glad to think that it is a task to which this Government have in this Bill set their hands.
VISCOUNT ASTOR: My Lords, I submit that we can only discuss the merits and demerits of the Bill before the House if we examine it in the background in which it is set. The first point that one has to bear in mind is the fact that the chief thing before the country to-day is economy. Before the last Election, the then Government carried through a series of drastic cuts, which affected the pay of the police, of His Majesty's forces, of the teachers, and others, and after that there was an Election, and this Government was elected as an Economy Government. We have therefore to see that in any legislation which we discuss we do not carry through anything which brings about wasteful expenditure. I am perfectly convinced that the country to-day is prepared to spend money on the development of agriculture. How much that expenditure should be I do not know, but if I were responsible for agriculture I should have no hesitation in asking the country to spend £20,000,000 a year in developing agriculture, and I am sure that the country would agree to the expenditure of such a sum.
There are two ways in which agriculture can be helped. It can be helped either by direct subsidy out of the taxpayers' pockets, or by improving the price of agricultural products, which of course has to be paid by the consumer. Then there is a second point to bear in mind. We have now adopted Protection, and we have to see how far the Government's agricultural policy fits in with the policy of Protection. The basic elementary principle of Protection is that one should protect the finished manufactured article and not tax the raw material. Thirdly take the most important matter and that is the future prospects of agriculture. I think everybody is agreed that in the main, if we want to get the maximum development of agriculture in this country, we have to look to the development of animal products. The reasons are obvious. I think that the past has shown that the climate and soil of this country are more favourable to the production of animal products, and to-day the animal products of this
50
country are worth sixteen times as much as the wheat products of this country. Animal products are found grown by farmers all over the country, in Wales, in East Anglia, in Scotland, in the West and in the Midlands, on every type of farm, large and small.
If we look to the future expansion of agriculture, we find that if the whole of the cereal products imported into this country were grown here that would only increase our agricultural production by £30,000,000, whereas if we were to replace our imports of animal products by producing them here we should increase our production by £140,000,000 as compared with £30,000,000 of cereal products. It is quite obvious that the future of agriculture in this country must depend in the main on the development of livestock products. That does not mean at all that those who support that policy contemplate the abolition or extinction of wheat, oat and barley growing. The case of Denmark has been cited. Denmark with all her wonderful production of animal products has increased her cereal production and her arable acreage. We have in this country some of 'the best wheat land in the world and some of the best farmers. I wish to make it absolutely clear that in my opinion we have some of the best farmers, but after all successful farming is farming at a profit and that is really the test which one has to apply when examining the prospects of an industry.
Another question which one has to bear in mind is that a large amount of the grain grown in this country is fed on the farm. Sixty-eight per cent. of the oats grown in this country is fed on the farm. Twenty-two per cent. of the wheat grown in this country is fed on the farm where it is grown. A very considerable proportion of the wheat sold off the farms is sold for the feeding of live stock. Only some 60 per cent, of the total wheat production goes to milling. That is to say, wheat is important as an animal food and when we agitate for the development of the live-stock industry we do not contemplate anything which would extinguish wheat or cereal growing or arable farming. Therefore the more we are able to expand and develop our animal products the more, inevitably, we must develop cereal growing and arable farming. But it is also necessary that in

51
helping the production of grain we get grain cheap. If we put up the price of oats or barley, or spend money unnecessarily on wheat we are going to prejudice the development of the corner stone of agriculture, which is animal products.
I agree that wheat growers and arable farmers have a special claim for assistance but I think the nature of that claim is apt to be exaggerated. Those who advocate special treatment for the Eastern Counties are apt to forget that coal, railways, steel and engineering have also had a very bad time and that the arable farmers of the Eastern Counties are not the only ones who have suffered. For myself I am prepared to support a subsidy to the wheat growers of the Eastern Counties only provided that it is a temporary subsidy, and that is a point on which I am not quite certain yet—whether the Bill is going to provide a. temporary or a permanent subsidy. I would support a temporary subsidy but I should not be prepared to support anything in the nature of a permanent subsidy.
Let me now examine what the Government has done in connection with agricultural policy with this setting that I have indicated. What are the prospects of the development of animal products today as compared with those of six months ago? In the opinion of many farmers interested in live stock and live-stock products (and I agree with them) their prospects to-day are worse than they were six months ago before the Government announced their policy. Worse, because the Government began by taxing imported foodstuffs. Thirty-seven per cent. of foodstuffs are being taxed and the cost of production is going up or is likely to go up. Then there is another thing. I have said that I feel convinced that the country is prepared to spend a considerable sum of money on helping agriculture, and I have indicated the sort of sum which I, and I believe the country, would be prepared to justify, but the Government up to date are spending £14,000,000 to help the purely arable farmer, and that leaves only a ridiculously small sum for helping the rest of the agricultural industry. which has not yet been helped.
A noble Lord just now interrupted Lord Marley and asked him what he would do for meat—whether he would be prepared
52
to put an import duty on meat. I do not think that Lord Marley was prepared to do that. I should be. I should be prepared to put protective duties on animal products, but I should not put protective duties on feeding stuffs. That is where I differ in the main from the policy which the Government have brought forward. I think you have to examine agriculture as a whole industry. You have to take a national view of it, and not deal with it sectionally. I have no confidence whatever in the ultimate value to agriculture of the newer forms of Protection. Quantitative control, import boards, quotas, and so forth, are, I think, more calculated to put up the price of food and the cost of living, and therefore to antagonise the majority of urban voters in this country than ordinary protective tariff duties would be.
We come next to the question of the temporary aid which many think should be given to wheat growers and to the Eastern Counties, and that brings us to the examination of this Bill. This Bill, I think, contains a very dangerous and an entirely new principle, and I am very much surprised that more of your Lordships have not commented on this new principle. This Bill guarantees an annual, permanent—because I think the Bill, as now drafted, is permanent—perpetual profit to one industry, regardless of world prices and competition. I was in Russia last summer, and many of us are apt to condemn the challenge to the ordinary economic laws and principles which are associated with the Soviet and Communist form of government; but I do venture to suggest that for Parliament to guarantee to an industry, or to a branch of an industry, an annual profit is a new and very dangerous principle, more especially when that profit is not based on the cheapest cost of production. The aim of this Bill is to give a fair profit to those farmers who are only able to produce wheat at 45 s. The result of that must inevitably be to stereotype the production of wheat at 45 s. on many farms. There are a certain number of farmers who can produce wheat at less than 45 s. They may be unenterprising, and, if so, they are not going to change their method of production in order to be able to produce it more cheaply, though in so doing they might be getting a larger profit. They are satisfied with an assured profit

53
at 45 s. To that extent we are stereotyping methods, and we are also preventing a change over.
I think the noble Earl, Lord De La Warr, indicated that he contemplated and that it was desirable to develop livestock products. In so far as we induce farmers to stick to grain by giving them a subsidy and preventing their changing over to animal products we are putting back the clock and acting contrary to the avowed policy of many members of the Government. The result which the Government wish to achieve by this Bill is to give a fair profit to those farmers who can only produce wheat at 45 s. In doing that the Government, I am afraid, are creating vested interests which are going to be very powerful politically. I am afraid that at the end of three years, when this question comes up for reconsideration, it is going to be more difficult for the Government of the day to withdraw the subsidy than it would be for the Government to-day not to start it; that is to say, assuming that world prices have not gone up very considerably. I was taking part in a discussion not long ago at the Farmers' Club, and I was very interested in a comment made by a farmer from East Anglia. He said this question of wheat growing is no longer an agricultural or economic question; it is entirely a, political question. We have to bear that in mind.
I have indicated what the desired results of the Government were by this Bill. There are also certain unwanted and undesired results which are inevitable. I indicated just now that the over-ruling consideration which we have to bear in mind to-day when discussing this or any other Bill is to see that there is no extravagant or wasteful expenditure of public money. I think everybody who has studied this matter knows that it is possible to produce wheat at a profit at 40 s., at 35 s., at 30 s., at 25 s. I hold here in my hand—I am not on a Second Reading going to go through them—reports from Leeds University, dealing with the cost of wheat-growing in Yorkshire, reports from Cambridge University, dealing with the cost of wheat-growing in the Eastern Counties, a pamphlet by Mr. Orwin, another pamphlet from the Oxford School of Agriculture, and so on. But these impartial documents, based on ascertained facts, show conclusively that it is possible to produce wheat at a profit
54
at a very much lower figure than 45 s. That is to say that one effect of this Bill is to give an unnecessary and excessively high profit to a certain number of wheat growers, and that is going to be done out of the public pocket.
Then there is another type of farmer who is now making a profit, who is going to get a second profit out of the public pocket as the result of this Bill. There are many farmers who grow wheat because they require straw—dairy farmers and many others. I am one myself. I grow wheat because I require the straw for my dairy cows. I make a profit on the sale of my milk. I am not going to pretend, as so many farmers do, that I always lose money. I have made a profit. I made a profit after paying interest on capital. I have worked out the figures for last year, and, as far as I can make out, I should under this Bill be receiving out of the public pocket an extra £170 bonus, a free gift, in addition to the profit which I have already earned. I imagine I am only typical of a large number of dairy farmers. The inevitable result of this Bill therefore is that the public will have to pay a large number of farmers a second and additional profit, which the Government do not want to give them, but which they cannot prevent giving them because of the drafting of the Bill.
Yet another section of agriculture is also going to get a second profit, the poultry keepers. There are many poultry keepers who grow wheat because they want the wheat to feed their poultry. As I understand the working of the Bill, it is perfectly possible for a poultry keeper who is making a profit to begin by selling his wheat to the miller and then buying it back again. The wheat will leave the farm, and then come back again. That poultry keeper, who is already making a profit, is going to get a second profit out of the public pocket as the result of this Bill. So there are three sections of farmers—those who grow wheat at a very much lower price than 45 s., those who grow wheat for straw, and for whom the grain is a by-product and who make their profit on dairy farming or in other ways, and those who grow wheat as a feed for poultry, who must inevitably get a second, an additional and unwanted profit. To that extent, therefore, this Bill runs counter to the mandate on which the Government was

55
elected, and which we all support—namely, absolute and rigid economy.
But there are other undesired and unwanted results which I am afraid must inevitably follow from the grain policy of which this is a part. I notice that the Minister for Agriculture, speaking in another place recently, said: "I am prepared to see mechanical development." Others have indicated that the 45 s. guarantee is going to compel a considerable number of farmers to mechanise. It is going to give them the necessary money to mechanise. The Minister of Agriculture in the same speech also said: "You are going to reduce the number of people in that industry by mechanisation." That is an inevitable consequence of mechanisation. Were it necessary I could give the sort of figures that follow from mechanisation, but I think everybody would agree that mechanisation does reduce the number of workers employed on a farm. The Government have had to hold up the Small Holdings Bill. I myself would support a policy of mechanisation, but I would couple with it the development and creation of small holdings, because I think if you have mechanisation alone there is a real danger of actually reducing the number of people living on and by the land. It is because of that that I would couple a policy such as is indicated in this Bill with a speeding up instead of a holding up of the policy of small holdings.
Then there is another inevitable result of this Bill. Noble Lords who have spoken have indicated that the Bill is likely to increase the cost of bread. I suggest that we should not ask ourselves whether it is going to mean an increase in the price of bread for six months of the year of a farthing, a halfpenny or an eighth of a penny. The point which we cannot get away from is that it is going to take something like £4,000,000 to £6,000,000 sterling out of the public pocket in increased bread prices. That £4,000,000 to £6,000,000 is not going to fall from the sky. It is coming out of the pockets of the bread eaters. At the end of the war I was Chairman of an important Inter-Departmental Agricultural Committee on which there were representatives of the Ministries of Agriculture of England, Ireland and Scotland as well as many other well-known agriculturists. We said this:
56
"If the State guarantee to farmers remunerative prices for wheat farmers will require a larger profit on milk which is more troublesome."
That is to say, that one of the effects of guaranteeing a profit to wheat growers is not only that you will put up the price of bread but there will be a tendency to put up the price of milk. We have to bear those in mind as some of the social results which may follow from this Bill.
I have one or two points in regard to criticisms made by those who oppose the grain and wheat policy. The noble Lord, Lord Cranworth, speaking on behalf of the purely arable farmer in the Eastern Counties, stressed the importance of wheat to that part of England. A very interesting report is to be published this summer—I only wish it were out to-day—of an investigation into a thousand typical farms in the Eastern Counties which is being made by the Agricultural Department of Cambridge. Obviously even if I knew the contents of that report I could not indicate its conclusions, but I can quote from an interim report which has been issued concerning this investigation into one thousand typical farms in the Eastern Counties. It is a very responsible investigation. It is pointed out in that report that good prices for animal products are more necessary for the ordinary farmer in the Eastern Counties than good prices for wheat; that 68 per cent. of the gross income of the ordinary farmer is represented by animal products, whereas wheat only represents 5.3 per cent.
Let me give your Lordships two quotations from this very interesting report. This first is:
"A 10 per cent. rise in the price of dairy produce would increase gross incomes by over 2.38 per cent., while a 10 per cent. rise in the price of wheat would increase gross incomes by only 0.53 per cent."
That is to say, for the ordinary average farmer in the Eastern Counties the success of dairying and live-stock products is more important than the successful development and cultivation of wheat. The second quotation is this:
"A 10 per cent. rise in the price of feeding stuffs would cancel the effect of a 30 per cent. rise in the price of wheat."
That is to say, the result of the Government's policy of taxing feeding stuffs and putting an import duty upon barley and oats is actually prejudicing farmers in

57
that part of the country where cereal growing is supposed to be so vitally important.
The noble Earl, Lord De La Warr, used a phrase which is not infrequently used. He talked of a "balanced industry," and spoke of this particular proposal being required in order to maintain a balanced industry. I wish the noble Earl had gone a little more into that and had explained to us what he means exactly by a "balanced industry," and why it is that with 1,800,000 acres of wheat you will have a more balanced industry than with the 2,600,000 acres of 1918 or the 3,600,000 of 1874. He did not attempt to explain why 1,800,000 acres would give us a balanced industry, whereas if we had 1,500,000 or 2,000,000 or 2,500,000 we should not have a balanced industry. I think the mistake which the Government have made is that they have gone in for an arbitrary figure for each section and branch of the industry.
I inherited a farm which was losing money. It was a balanced farm. There was a little bit of everything grown upon it. The first thing I did was what most farmers do if they are losing money—I tried to find out where the money was being lost. It was a damp and low-lying farm and I found out that poultry was one of the sources of loss. So I gave up the poultry. I might have said: "I must have a balanced farm and a balanced farm necessitates having poultry." There are people who say that you must have some poultry and some of a number of other things on a balanced farm. I think there is a very real danger if we examine agriculture sectionally instead of examining it nationally.
Then we are told that the grain policy of the Government, the taxing of barley and oats and the help which is now being given to wheat, is merely a first step and that we are to look to the second step really to pull us through. I indicated just now that the first step the Government are taking to help agriculture is already costing us £14,000,000, and I am afraid when the time comes to take the second step and give the necessary assistance to animal products the expense will be so great that there will be a real danger that the majority of the voters,
58
the industrial workers who really are not concerned primarily with agriculture, may do what they did in 1920, when they repealed the clauses of the Corn Production Act. If we put up the price of bacon and meat and dairy produce unnecessarily—because we have begun to do so by putting up the cost of the raw material used in animal husbandry—there is a very real danger that we may put up the cost of living to such an extent that the industrial workers will ask for an increase in wages, which the industrialists may not be able to give them because of the condition of world markets to-day. There may, therefore, be a real danger of the majority of voters in this country—urban and industrial voters—turning down the help which the Government are trying to give to agriculture.
I have tried to show that the policy of the Government, so far as it has been enunciated, and of which this is a part, conflicts with the elementary principles of Protection—namely, that one should not tax the raw materials of the industry if it prejudices the maximum expansion of agriculture as a national industry. There is a real danger of the help which I think everybody would be prepared to give temporarily to arable wheat farmers becoming permanent and unnessarily extravagant and burdensome. This Bill cannot be made watertight, and, therefore, inevitably it must lead to unnecessary expenditure of public money. When we come to the Committee stage I shall propose to put two Amendments on the Paper. One is to terminate the operation of the Bill at a definite date, and, secondly, I think after the first stage is passed, it would be quite fair and reasonable, and much more defensible, to insert clauses guaranteeing wheat growers against excessive loss when wheat prices fall more than the prices of ordinary commodities. I am not going to justify or explain those Amendments now; I merely indicate the sort of amendments I think might be put in the Bill.
I hope the Government and those of your Lordships who support this Bill do not feel that anything I have said has been said in any carping or captious way, or from any desire to make trouble. I am sure you will agree that it is necessary, in a big question like this, to hear both sides. I think it is bad for any measure to go through without being

59
carefully scrutinised and examined. I am as keen as any member of your Lordships' House to develop agriculture in this country. I look upon it as one of the vital industries of the country. I have indicated the real risks which in my opinion lie before agriculture, and if, because of the policy which the Government have introduced, I have had to speak, in criticising the measure, in terms of disapproval of the Government, I do not want to put the whole of the blame upon the Government, because, after all, they have only been carrying out what I recognise has been the official policy of the agricultural community for some time past. The difficulty is that farmers have not realised that during the past fifty years the world has undergone an enormous change. We have come into a new world. We have cheap transportation, inventions, the discoveries of biologists, mechanisation, the war—all these things have given us entirely new world conditions, and, therefore, what might have been right twenty-five or fifty years ago is not, I submit, necessarily right to-day.
I am not going to indicate an alternative. There is an alternative. I have hinted at it in my speech. I hope your Lordships realise that there is very real support for the alternative which I have in mind. It would give us a bigger food production than that which is possible under the Government proposal. It would give us an increased food production at a lower expenditure of public money. It would give us increased efficiency, and it would at the same time give us an increased rural and agricultural population. I hope even at this late period the Government may be ready to modify their policy so as to help the development of live stock and live-stock products. Whatever steps they may be willing to take I hope they will agree to put a definite term to this Bill.
LORD STRACHIE: My Lords, I welcome this Bill so far as it goes, because it will increase the amount of arable land and prevent more land going out of cultivation. I cannot say that I agree with the way in which this Bill has been drafted, or with the system. It seems to me to be more or less a quack remedy. The noble Earl in his speech seemed to me to make a great many contradictions. I noticed that other noble Lords seemed
60
to have the same view. For instance, he said the object was to get a market for the wheat grower. I agree with that. Later on he said it was undesirable to have any expansion of the present amount of arable land. I suppose he meant that. I do not know what else he meant if he did not mean that.
EARL DE LA WARR: May I correct the noble Lord? I did not say it was undesirable to have any expansion.
LORD STRACHIE: I am sorry I cannot hear what the noble Earl says. Other noble Lords besides myself, I assure him, have great difficulty in hearing him when he speaks like that. I took these words down and they will be seen in the OFFICIAL REPORT to-morrow. He said it was undesirable to have more expansion. He went on to say how there were 120,000 men who had left the land, and he also said there were thousands of acres which were now derelict. We are continually being told that we ought to do something for unemployment and to get more men on the land. At the same time the noble Earl deprecates expansion. I cannot understand why. The noble Earl did in inarticulate manner deny my statement that he was contradictory in what he said. Again he referred to the 6,000,000 quarters and made another statement which seems to me rather extraordinary. He said the more corn that is grown the less will be the price. That means the less price the farmer will get. I know something about farmers, and they are very discontented with the 45 s., but according to the noble Earl when there is any expansion, and probably there will be an expansion, this price will go down perhaps to 40 s. or 35 s. That seems to me a most extraordinary and unsatisfactory state of things.
The Bill is so complicated and long I thought perhaps I might find some explanation of it in The News-Letter, the new National Labour Fortnightly, which was issued on the 16th April (last Saturday) and contained an article headed "The Government's Agricultural Policy. The Wheat Bill. By the Right Hon. Earl De La Warr (Parliamentary Secretary to the Ministry of Agriculture)." That is of course a high opinion. In that article the noble Earl, under the heading "All Parties Agreed," says:

61
"The necessity for some action to assist the farmers of arable land has been generally admitted, and all sections of the National Government have supported the Bill, including those who felt unable to support the Import Duties Act."
When I read that I thought it was the most extraordinary statement, because I remember so well reading in The Times that the Lord Privy Seal, Lord Snowden, had made a very striking speech against quotas. I read that speech and I referred to it in a letter which I sent to The Times. I am sorry the noble Viscount, Lord Snowden, is not now in his place. I told him I was going to refer to this matter, so it is not my fault that he is not here. Perhaps he did not think it worth while to remain. Probably he knew what I was going to say.
Speaking at a conference to promote Free Trade between nations, Lord Snowden made this most remarkable statement. He said he was entirely opposed to tariffs, restrictions and quotas. He said that—"entirely." The noble Earl opposite apparently had not read Viscount Snowden's speech at that conference. He looks at me as if he wants to get up and contradict me.
EARL STANHOPE: May I ask the date?
LORD STRACHIE: It was in The Times a week ago yesterday.
EARL STANHOPE: I do not mean the noble Lord's letter, but Viscount Snowden's statement.
LORD STRACHIE: That was reported in The Times on April 2. His statement was that he objected to restrictions, tariffs and quotas. He made that absolute statement, and yet the noble Earl in this News-Letter says:
"….all sections of the National Government have supported the Bill, including those who felt unable to support the Import Duties Act."
He says that "all sections support this Bill," that is the quota, although Viscount Snowden says the opposite. I do not think it fair that the noble Earl should make a statement of that kind in a paper that circulates among ignorant people who think that the National Government is absolutely agreed. I think your Lordships may also be interested in this. He said:
62
"The scheme is admittedly complicated, but so are the industries with which it has to deal. It is designed to ensure to the farmers a secure market and a standard price of 10 s. per cwt. whilst retaining the benefits of cheap imports; it will therefore he carried through at the minimum cost to consumers."
That is a most delightful state of things. I think we should all be strong Protectionists if that is what is meant by tariffs.
Then the noble Earl went on to say:
"To proceed by the direct method of the tariff would involve an increase of price in the whole of our wheat consumption, including, of course, poultry food."
I do not see how that squares with the quota scheme. He says further:
"The quota scheme is concerned with home-grown wheat only, and the liability is limited in the Bill to one-fifth of our consumption."
One-fifth of our consumption! If that is the case I cannot see that there is going to be any great advantage for these people. I suppose that is the reason why the noble Earl said that the greater the expansion the less the price would be.
Later I see a cross-heading, "The Test of Experience." Under that heading I thought the noble Earl was going to tell us what has happened in other countries. I have been told—I do not know whether it is really the case or not—that it has been tried in other countries and has not been successful. It has been entirely objectionable and not at all desirable. I notice that he says:
"Who to-day is prepared to define the word 'economic' in relation to price? Canada, the Argentine, America and Australia, are all producing wheat at a cost approximately 40 per cent. more than the price for which it sells."
That seems an extraordinary statement. If that is the case there must be subsidies or veiled bounties to enable it to be done. I am one of those who are anxious to see a great deal more land returned to arable and a lot of pastures, which are very rotten indeed, ploughed up again. Of course there is a great deal of land which it is impossible to maintain in a state of pasture.
Again, I cannot understand what the noble Earl means by millable wheat because I notice that it is said in the Bill that "'millable wheat' means wheat which conforms to the standard prescribed by regulations made by the

63
Minister." We do not know, and the noble Earl has not told us, what those regulations are going to be. It seems to me that if the definition of "millable wheat" is going to be strict the scheme will only benefit those farmers who least want it, those who are farming good land in Essex or Sussex or any of those counties where wheat even now can be grown at a profit. On the other hand, the man who wants more help, the man who has got poor land, will be ruled out.
I cannot understand why the Government have brought in such a Bill as this. Personally, I am a Free Trader, but in the present crisis I cannot see the slightest objection to a 10 per cent. duty all round for revenue purposes. We have just had a statement in another place from the Chancellor of the Exchequer showing that the country is still in a most parlous condition, that the Income Tax cannot be reduced, and that in fact there can be no reduction in taxation at all, not even as regards beer which everyone expected. That shows that it is very necessary to have more revenue and I know that there are a large number of Free Traders who, like myself, are entirely satisfied that there should be a 10 per cent. duty all round for revenue purposes without these various distinctions. The Chancellor of the Exchequer does not dare to take off any taxation at all, and it is evident there will be the greatest difficulty in keeping the Budget balanced. Therefore for revenue purposes I say, without fear of contradiction from a large number of Free Traders, that it is necessary to have a 10 per cent. duty all round and that we should not have quack remedies like these. It would be much better if the Government would take their courage in their hands, but I suppose they are afraid to do so owing to differences in the Cabinet.
LORD ARNOLD: My Lords, the time for discussion on the Second Reading of this Bill is nearly ended and it will not be very long before the measure passes on to the Statute Book. The noble Viscount, Lord Astor, spoke of moving Amendments in Committee. I shall be very much surprised if there are any Amendments accepted, and as for the Third Reading debate, if there is one, it will be in my view largely a waste of time. This Bill will pass on to the Statute
64
Book just as for hundreds of years every Bill which helped landlords—and this Bill will help landlords—has passed on to the Statute Book almost automatically. It is true that if your Lordships discharged the supposed function of a Second Chamber, which is to see that a measure is in accordance with the will of the people, this Bill would not pass. I think there can be no doubt that if this Bill were submitted to the people of the country it would be rejected by an overwhelming majority. Clearly people in the urban districts would be against it, because it is going to make bread dearer, and there are also a large number of agriculturists who are against it because it is a Bill which is going to help only a minute fraction of agriculturists. I think there is no doubt that the Bill would be heavily defeated if a referendum were taken upon it. Therefore, as I say, if your Lordships were discharging the supposed function of a Second Chamber you would reject this Bill.
As a matter of fact it will not be rejected, because this Chamber is not concerned with the will of the people. It is concerned with the will of a Tory Government. This is a Tory Government. The order has gone forth for the Bill to be passed, and passed it will be, though it may be, and has been, riddled through and through with criticisms to which there is no reply. The real reason for the Bill is that supporters of the so-called National Government are pledged to do something for agriculture. It does not really matter what it is so long as they can get up on the platform and say they have done something and that there is going to be a new era for agriculture. That is the real reason for this Bill. It is, of course, part of that manifestation of protectionist mentality which is the mind of the present Government. The position is that the Tory Party for years past has been a prey to an unlimited and unbridled lust for tariffs and Protection which has seized upon them like some malignant fever. This Bill, my Lords, is only another evidence of that. Lord Strachie says—why do not they put a 10 per cent. duty on wheat? They dare not do that yet.
LORD LOVAT: Is the noble Lord in favour of 10 per cent. all round?
LORD ARNOLD: The noble Lord knows that I am wholly and entirely

65
opposed to any such thing. I was saying that the noble Lord, Lord Strachie, had asked why they did not do it. The reason is that they dare not, and so somebody has evolved this scheme which avoids an out-and-out duty on wheat, but will nevertheless impose considerable burdens on the people.
Before I go further I would like to deal with the opening observations of the noble Earl who moved the Second Beading. The noble Earl gave what purported to be the record of the late Labour Government in regard to this quota and compared it with the record of the present Government. I have a great regard for the noble Earl and I am sure we all admire the assiduity, the efficiency and, I think I can say without exaggeration, the ability with which he discharges his task; but if he will permit me to say so he is not very well versed in certain Parliamentary proceedings—he was never in the House of Commons—and I deprecate personally a discussion on the floor of Parliament—I do not care in which House it is—of what may or may not have gone on in Government circles regarding matters which have not come to any public decision. I deprecate that just as I think it is most undesirable that the Cabinet oath should be broken, as it was several times last year. I have said and I repeat that there was not and never had been any public statement on behalf of the Labour Government that it was in favour of the wheat quota. I was not in the Cabinet and therefore I am free to speak of what I know.
The noble Earl tells us that the matter was discussed. No doubt a great many questions were discussed, but the wheat quota was never approved by the late Government and no public statement to that effect was ever made. I should have left the late Government at once if there had been anything of the sort. I did leave the Government in March of last year, and in May I introduced a Motion on the wheat quota. At that time Lord Parmoor gave no indication that the Government approved the quota and as far as I know no such statement was ever made and no such approval of the Cabinet was ever given. I hope there is no ambiguity about that. As I say I think it is much to be deprecated that statements about measures which do not
66
come to Parliament should be made on the floor of Parliament. I would further say that no resolution approving a wheat quota has ever been passed by the Labour Party Conference. The noble Earl knows that there is a very large and influential body in the Labour party which is bitterly opposed to the quota in any shape or form.
Leaving that should like to say a word or two about the position of the noble Viscount, Lord Snowden, who is not in his place. I am not altogether surprised that the noble Viscount is absent because he is in a very difficult position with regard to this wheat quota—a position absolutely unprecedented in British politics. There was what is called the go-as-you-please arrangement—your Lordships know what I mean—whereby certain members of the Government were allowed to retain their seats in the Cabinet, not their self-respect, and to oppose tariffs and Protection in any shape; but that go-as-you-please arrangement did not apply to the wheat quota. The wheat quota was first announced as a part of Government policy on November 26 last. The go-as-you-please arrangement was not evolved until the beginning of February, so that for over two months the Free Traders in the Cabinet were committed under our Constitution to the wheat quota. To do Sir Herbert Samuel justice he has said more than once since the go-as-you-please arrangement that, although he does not like the quota, he feels he must support it. But what is the position of the noble Viscount, Lord Snowden? Reference has been made by Lord Strachie to a speech by the noble Viscount at the recent International Conference dealing with Free Trade. The noble Earl, Lord Stanhope, asked the date of that speech. I will tell him. It was in the early days of April, this present month. The noble Viscount who under the Constitution is committed to the wheat quota goes to this International Conference, condemns quotas, says they are worse than Protection and is present there when actually there is a resolution passed which is to be sent to the Government of which he is a member protesting against quotas. Anything more extraordinary—anything more preposterous, using the word in its literal connotation,. I can scarcely conceive of. If anything like this had happened under the late

67
Government the noble Lord opposite (Lord Banbury) would have been speechless, if one can imagine him ever being speechless.
VISCOUNT ELIBANK: May I ask whether that is an argument against the Bill?
LORD ARNOLD: I am taking the opportunity, as the noble Viscount, Lord Snowden, has already intervened, of exposing—I consider it to be a public duty—what I feel should be made plain in the interests of the proprieties of public life. The noble Viscount is trying to have things both to be and not be at the same time. Why is he not here to vote? According to what was done by Sir Archibald Sinclair in the House of Commons he should vote for this Bill, and then you would get the spectacle of the man who would rather go to the stake than tax the bread of the poor voting for a Bill which will make the food of the poor dearer. The truth is that the noble Viscount has not the courage of his convictions, nor of his embarrassments. If he had the courage of his convictions he would resign from the Government instead of going up and down the country as if nothing had happened, and as if he were perfectly free, when he is as a matter of fact under the Constitution committed to the quota.
I leave the noble Viscount and come back to the Bill. I am not going to analyse the Bill in detail. The hour is late and I do not think it serves any useful purpose. A very great deal can be said against the Bill. I would like to point out that the explanatory Memorandum attached to the Bill in the Commons conveys an entirely wrong and, as I hold, a wholly unjustifiable implication. It says that "No charge upon the Exchequer or local rates will be created by the Bill." Technically that is true, but the implication there, that this Bill does not make a public charge, is entirely false. If that was in a company prospectus I think that very serious notice might be taken of it. It is utterly false. Technically it is true, but in essence it is false. This Bill will create a charge upon the public. It will create a charge particularly upon the poor, who will have to pay more for their bread. Lord Cranworth gave certain statistics about loaf consumption which may apply in certain
68
parts of the country but does not apply in others. Dr. Salter, a very experienced man, gave statistics about social matters which have not been challenged. In moving the rejection of the Bill in another place he said that there are districts where this Bill will impose upon families as much as an additional charge of 1s. 3d. per week for bread, and in extreme cases would amount to the equivalent of about 1s. in the pound Income Tax.
This Bill breaks every canon of taxation. It is not very productive; it is economically unsound; it will affect the health of the people, and from the point of view of the principles of taxation it is open to the gravest possible objection. It is admitted that it does really amount to as much as a 10 per cent. tariff. The statement has been made that it is as much as a 15 per cent. tariff, but 10 per cent. is enough. We have in this country for nearly a century enjoyed the blessing of the best and cheapest bread in the world, and this Bill, coming on top of other protectionist measures of the Government, will jeopardise that supreme blessing, and those who are responsible for doing so are taking a very grave responsibility upon their shoulders.
The Bill only helps a very minute proportion of agriculture. Only about two and a half per cent. of the total agricultural production will be helped by this Bill. I suppose the value of the total agricultural production of this country is still between £200,000,000 and £250,000,000 per annum. This Bill applies to only about £5,000,000, and so it applies to only a minute proportion of agriculture. It is not going to put agriculture on its feet, and, as Lord Astor has pointed out, it definitely injures certain branches of the industry. Certainly it injures the poultry industry, which will have to pay more for its feeding stuffs, and the poultry industry is the most promising branch of agriculture to-day. Then there is no prospect whatever of wheat rising permanently to the guaranteed price in this Bill. Not the slightest. There is no prospect of wheat ever again being permanently 45 s. per quarter. Indeed it may well go below the present price, even to 18 s. or 16 s. per quarter. I think the noble Earl will agree that there is not the remotest chance under the Bill of wheat remaining permanently at 45 s.

69
per quarter, and the reply to Lord Astor, I think, is that the Ministry of Agriculture has admitted that the Bill is likely to be a permanent one. There is not the slightest chance of his time-limit Amendment being acceded to.
The noble Earl who introduced the Bill says that at the present time Canada and Australia are not producing wheat at a profit. How can we here, with our small farms, produce wheat at a profit when Canada and Australia, with their large farms and mechanised farming, cannot do so? The truth is that the market is running against us the whole time. There is another point. If you are to proceed upon this wholesale system of subsidies I do not see why oats and barley should be left out, because if wheat is to have this assistance there is also a strong case for giving it to oats and barley. The noble Earl, Lord De La Warr, made a speech the other day which amused me very much. He said he had been at a meeting of bulb growers, who, although they have a tariff, are still not satisfied and want more. He said candidly that he came away from the meeting with feelings of absolute disgust. He is somewhat inexperienced, certainly in regard to Protection, but if he remains with his present friends he will have to get over that disgust. I can tell him that that is Protection. They always want more, and there is no limit to the greed of those who support the present Government.
The position is that the whole Bill is thoroughly unsound. I will deal with one other point before I summarise my conclusions. This Bill is not necessary from the point of view of what is called the rotation of crops. Naturally enough those who support the Bill have tried to make the most of that point, but I am advised that a very large proportion, probably five-sixths, of agricultural land could by degrees be turned over to something else, and that in the end it would be a more profitable thing to do than to bolster up something which cannot be bolstered up. As to the remaining one-sixth, it would not become useless, but even so it would be far cheaper to pay a subsidy to the remaining one-sixth. With regard to the five-sixths, everything should be done to encourage changing over to more remunerative forms of agricultural production.
70
I have read the debates on the Bill through and through, and listened to speakers here, and I say this Bill rests upon a series of quite unproved assumptions. It has not been proved that this Bill will be of any real use to agriculture. It has not been proved that there is any possibility of wheat rising to a permanent 45 s. per quarter. It has not been proved that the Bill is of any real value in the matter of rotation crops. It has not been proved that it is worth while from the point of view of national defence. It has not been proved why it is right to single out wheat and leave other cereals. It has not been proved that it will be of value in increasing agricultural employment. What has been proved is that the Bill is put forward on a dishonest prospectus and will lead to an increase in the price of bread. It has been proved that it will only apply to a very minute proportion of agriculture. It has been proved that the Bill lees absolutely nothing to effect that change over to better and more remunerative forms of agriculture, so much to be desired. That, being the case, I do not think anything remains which can be said for it.
I cannot conceive of any measure for which less can be said and against which more can be said. Nevertheless it will pass through this House by a big majority. However, the time will come when the people will find this protectionist Government out, and they will experience the follies and the futilities and the failures of Protection, and we shall see a different state of things. We Free Traders console ourselves with that. As regards the majority in your Lordships' House, we do not worry very much about that. I remember the words of Lord Morley—"The greater the majority, the greater the scandal."
EARL STANHOPE: My Lords, I cannot hope that any words of mine are likely to diminish the gloom of the noble Lord opposite. The task of a Jeremiah is never a very happy one, but the noble Lord put forward so many arguments against the Bill that I cannot help feeling that he rather rejoiced in the number of faults that he found in it. Certainly I am not going to make any defence of the Lord Privy Seal. He is quite capable of looking after himself.
LORD ARNOLD: Why is he not here?
EARL STANHOPE: I have no doubt that on a suitable occasion he will deal with the noble Lord quite adequately. This I can say, that I agree with the noble Lord, Lord Marley, when he said that, thank heaven, he was not a member of the Labour Government.
Certain arguments have been put forward against the Bill. The noble Lord opposite said that it would affect the health of the people. I puzzled my head as to what lie meant, and I came to the conclusion that he meant it might possibly lead to some slight increase in the cost of flour. I was rather astonished at that statement when I recalled the prices of wheat that prevailed when the noble Lord was to some extent responsible for the government of the country; because, whereas at the present moment the price of wheat is somewhere round about 26 s., when he was responsible for the government of the country in 1930 and 1929 the price was 36 s. in 1930 and 44 s. 3d. in 1929. Therefore, if this is going to harm the health of the people, heaven knows what must have been the result of the noble Lord being responsible for the government. He challenged me to say that there was no possibility whatever of wheat ever again rising to 45 s. One thing I shall never claim is that I have any gift of prophecy, and therefore I am not going to accept his challenge on that point. But I would remind him that people are not in the habit of producing any kind of goods at a loss, and, if it goes on for any length of time, they give up producing that article altogether. When the noble Lord knows that every country in the world is now producing wheat at a loss he must realise that that is either going to come to an end and prices will go up, or those people are going to go out of cultivating wheat altogether. Once you get a shortage the law of supply and demand will operate, and up will go the price of wheat, heaven knows to what figure.
The noble Lord, Lord Strachie, has left the House and therefore I do not think I need deal at length with his remarks, but he appeared to be strongly in favour of a 10 per cent. duty all round, although he called himself a Free Trader. That is rather typical of the policy of noble Lords who call themselves Free Traders, because I found Lord Marley anxious that we should have control of prices and
72
that we should take such measures economically, dealing with the monetary policy of this country and of other countries, so that there should be a general rise in prices all round.
LORD MARLEY: I do not call myself a Free Trader.
EARL STANHOPE: I beg the noble Lord's pardon but I thought he belonged to the same Party as Lord Arnold, and I am rather puzzled as to what Party Lord Arnold belongs if he is not a member of the same Party as the noble Lord. I must leave the solution of the Labour Party's difficulties to themselves, because we have no time to deal with that to-night.
A complaint was made, I think by Lord Arnold, that if this Bill were ever put before the country it would undoubtedly be turned down. I am not going to quote a Labour Minister, because I know how much the rest of the Party dislike it, but I will quote a resolution passed by the National Union of Agricultural Workers and, still more remarkable, by the Transport and General Workers' Union, 93 per cent. of whom are urban members. This is what they resolved in 1931 before the noble Lord left office:
"That the Government be called upon to implement its promise to the agricultural industry by bringing in immediately its proposals for the establishment of a wheat quota, with a guaranteed price to the producers and a living wage to the workers."
That is what is included in this Bill. The noble Lord shakes his head; I have no doubt he does not like it.
LORD ARNOLD: Not at all. There is nothing in it. You can always produce resolutions.
EARL STANHOPE: I am content to leave it at that. An argument was put forward, I think by my noble friend Lord Astor, in which he said that we give a guarantee of an annual profit on wheat. We give no such guarantee. There is a standard price of 45 s. and that price is limited to 6,000,000 quarters. If the number of quarters is exceeded, then the total sum payable is divisible by the increased number of quarters, and the effect is that the standard price will go down. If the output of this country rises to 6,500,000 quarters the standard price would in effect be just under 44 s., if

73
to 7,000,000 quarters, just under 43 s., if to 8,000,000 quarters, just under 41 s. 3d. The reason for the steady reduction in the payment per grower is that we are anxious to avoid what the noble Lord on the Cross Benches fears—that farmers should be encouraged to grow wheat on uneconomic land. By "uneconomic land" I mean land where, although wheat can be grown, it can only be grown at a high cost, either because the output per acre is low, or because it requires very heavy manuring and further expenditure, making it uneconomic. Therefore we took the figure of 6,000,000 quarters.
We did so for a further reason. We did so because we were anxious not to put too heavy a burden on the people of this country, and we thought 6,000,000 quarters was a fair figure to take. Some noble Lords have said that it will give no increase in the output of wheat. That is entirely wrong. It will give an increase of something like 40 to 50 per cent., and we estimate—and I have worked out the figure myself and it came to rather more than the Minister himself gave—that there will be an increase of over 500,000 acres in the land put back to wheat. I am not going to pretend that wheat is a very large part of the agricultural output of this country, but I think no one will deny that wheat has been hit harder than anything else, that the fall in prices has been far heavier, and that, as has been said by Lord Cranworth, farmers have neither the heart nor the capital nor the energy under present conditions to turn over to any other form of agriculture. Until they have some chance of making a profit on their wheat that hope of further initiative and change is gone. And, at the moment, what can farmers turn over to? Are they making a profit on meat? Are they making a profit on pigs? Are they making a profit on milk? The noble Viscount (Lord Astor) is fortunate in making a profit on milk. I can only tell him that I am unfortunate enough to make a loss. Perhaps I am incompetent, but at any rate I share that same disability with a very large number of other farmers in my county, who also produce milk, and, I am afraid, do not make it pay.
The truth of the matter is this. Everybody agrees that ploughed land has had more difficulty than any other kind of land. Everybody will agree that any
74
encouragement given to ploughed land has a more immediate response than encouragement given to any other kind of farming because it employs more labour and you get the result straight away. There is no hope for the wheat farmer in saying: "When these Commissions have reported on the potato industry, on milk production, and so on, and when we have been able to produce legislation and passed it, then we will help you." In this case the wheat farmer says he is already on his beam ends, and he cannot afford to wait. Therefore this Bill has been produced as a real help to the arable farmer, who, as everybody agrees, is the greatest sufferer.
It has been said by the noble Earl, Lord De La Warr, that this is only the first step in the rehabilitation of British agriculture. That is perfectly true. It definitely discourages the production of wheat on unsuitable soil by its limitation to 6,000,000 quarters. It also does so by its limitation of price to a maximum of 45 s. standard price. When I say a maximum of 45 s., that is, of course, for average wheat. The noble Viscount said that it would not encourage farmers to grow better wheat or make a bigger profit. Farmers have refused many things, but I have never discovered them to be unwilling to make a profit where it is possible. If a farmer is able to grow really first-class wheat and to use his gifts of salesmanship to sell it at the right moment at a price, we will say, of 35 s. when the average price is 30 s. then he will get—
VISCOUNT ASTOR: I am sure that the noble Earl does not wish to misrepresent me. I did not say that. I merely indicated that certain farmers would be ready to go on farming on their present methods and making small profits. I did not say anything about a farmer growing wheat rather than turning over to other methods to produce wheat more cheaply.
EARL STANHOPE: I see the noble Viscount's point. But he has missed my point, which is that the farmer who at present is growing wheat by uneconomic methods, as he would describe them, is probably a man who has not the capital to enable him to get the equipment necessary to turn over to other methods. That, of course, will have to come. Meanwhile you cannot afford to allow

75
farmers and their men to go to ruin by simply saying that you must wait until they can afford to buy equipment.
At this late hour I must not deal further with the Bill beyond saying that if it is to work with its utmost efficiency it is absolutely vital that farmers shall get together and shall organise themselves and get into touch with the millers and the corn merchants. Too often in the past producers and distributors have been inclined to look upon each other as opponents and in a thoroughly unfriendly light. That must come to an end. It is a very happy augury that in connection with this Bill the farmers and millers, the corn importers and the corn merchants have all come together to help in drafting it and have agreed to work together and try to do so with the utmost efficiency. If this Bill lays the foundation for getting producers and distributors
Resolved in the affirmative: Bill read 2a accordingly, and committed to a Committee of the Whole House.
to work together it will be one of the best things that have been done for British agriculture over a very long period of years. In my view it is the one chance which British agriculture has of restoring itself to a condition of prosperity. It is vital that farmers should organise and get into touch with the distributors. This does lead the farmer to register with the Wheat Commission. It also compels the miller to set up his milling corporation. We hope and believe that those central organisations will lead to local organisations, and that the seed which is planted by this Bill will spread to other forms of agriculture to the great benefit not only of farmers and distributors but of the nation as a whole.
On Question, Whether the Bill shall be now read 2a?
Their Lordships divided:—Contents, 53; Not-Contents, 4.

CONTENTS.

Sankey, V. (L. Chancellor.)

Elibank, V.

Howard of Glossop, L.

FitzAlan of Derwent, V.

Jessel, L.

Somerset, D.

Hailsham, V.

Lawrence, L.

Wellington, D.

Hereford, V.

Lovat, L.

Hood, V.

Marks, L.

Bath, M.

Mount Temple, L.

Bristol, M.

Aberdare, L.

O'Hagan, L.

Addington, L.

Phillimore, L.

Cawdor, E.

Alvingham, L.

Russell of Liverpool, L.

De La Warr, E.

Banbury of Southam, L.

Saltoun, L.

Iveagh, E.

Bayford, L.

Somerleyton, L.

Leven and Melville, E.

Clanwilliam, L. (E. Clanwilliam)

Southampton, L.

Lucan, E. [Teller.]

Stonehaven, L.

Morton, E.

Conway of Allington, L.

Strathcona and Mount Royal, L.

Onslow, E.

Cottesloe, L.

Plymouth, E.

Cranworth, L.

Templemore, L. [Teller.]

Radnor, E.

Dickinson, L.

Teynham, L.

Stanhope, E.

Dynevor, L.

Treowen, L.

Fairfax of Cameron, L.

Wharton, L.

Churchill, V.

Hawke, L.

Wigan, L. (E. Crawford.)

NOT-CONTENTS.

Arnold, L.

Hay, L. (E. Kinnoull.)[Teller.]

Marley, L. [Teller.]

Snell, L.

House adjourned at half-past seven o'clock.

EDINBURGH CORPORATION ORDER CONFIRMATION BILL. [H.L.]
Returned from the Commons, agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, that the Clerk of the Parliaments had laid upon the Table the Certificates from the Examiners that the further Standing Orders applicable to the following Bills have been complied with:

Bury Corporation,

York Waterworks,

South Staffordshire Water.

And also the Certificate that no Standing Orders are applicable to the following Bill:
Ministry of Health Provisional Orders (Margate and Yeovil).
The same were ordered to lie on the Table.

BRIDGWATER CORPORATION BILL. [H.L.]
The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn: The Orders made on the 16th of February and the 16th of March last discharged, and Bill committed for Thursday next.
DAGENHAM TRADING ESTATE BILL. [H.L.] WELWYN GARDEN CITY URBAN DISTRICT COUNCIL BILL. [H.L.] SIDMOUTH WATER BILL. [H.L.] NORTH METROPOLITAN ELECTRIC POWER SUPPLY BILL. [H.L.]
Report from the Committee of Selection, That the Lord Darcy (de Knayth) be proposed to the House as a member of the Select Committee on the said Bills in the place of the Lord Sandys: Read, and agreed to.
PRIVATE LEGISLATION PRO- CEDURE (SCOTLAND) ACT, 1899.
Report from the Committee of Selection, That the Lord Abinger be proposed to the House as a member of the Panel of Lords to act as Commissioners under the Act: Agreed to, and the said Lord appointed accordingly.
STANDING ORDERS COMMITTEE.
Report from, That the Standing Orders not complied with in respect of the Petition for additional provision in the South Wales Electric Power Bill ought to be dispensed with: Read, and agreed to.
ROCHDALE CORPORATION BILL.
  SOUTH WALES ELECTRIC POWER BILL.
  Reported, with Amendments.
KIDDERMINSTER GAS ORDER, 1932.
  TOTTENHAM AND DISTRICT GAS ORDER, 1932.
  Report from the Special Orders Committee, That no Petition has been presented praying to be heard against the Special Orders, and that there is nothing in these Orders to which they think it necessary to call the attention of the House: Read, and ordered to lie on the Table.
CHATHAM AND DISTRICT TRAC- TION ACT, 1929, MODIFICATION ORDER, 1932.
Report from the Special Orders Committee, That no Petition has been presented praying to be heard against the Special Order, that they have received and considered a Report from the Minister of Transport upon the Order, and that there is nothing in this Order to which they think it necessary to call the attention of the House: Read, and ordered to lie on the Table.