Sitting of 17 May 1933

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Dewsbury Corporation Bill,
St. Helens Corporation Bill,
Read the Third time, and passed.
Frimley and Farnborough District Water Bill,
As amended, considered; to be read the Third time.
Leeds Corporation Tramways Provisional Order Bill,
Read a Second time, and committed.

PRIVATE BUSINESS.
  VICTORIA INFIRMARY OF GLASGOW ACT, 1888 (AMENDMENT) ORDER CONFIRMATION BILL.
  "to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1899, relating to the Victoria Infirmary of Glasgow, "presented by Sir Godfrey Collins; and ordered (under Section 7 of the Act) to be considered To-morrow.
ORAL ANSWERS TO QUESTIONS.

  ANGLO-PERSIAN OIL COMPANY.
  Mr. LOUIS SMITHasked the Secretary of State for Foreign Affairs if he can state the chief differences which exist between the old and new agreements between the Anglo-Persian Oil Company and the Persian Government?
  The SECRETARY of STATE for FOREIGN AFFAIRS (Sir John Simon): I cannot make a comparative statement at present as the text of the new agreement between the Anglo-Persian Oil Company and the Persian Government has only just reached this country and is now being studied by the competent authorities.
  Mr. SMITH: Can my right hon. Friend say whether there are any compensatory advantages to be taken into consideration for the concessions granted?
  Sir J. SIMON: I think that it would be better to wait for the examination of the agreement. I do not think that the hon. Gentleman will have any reason to complain.

  CHINA AND JAPAN.
  Mr. MANDERasked the Secretary of State for Foreign Affairs if his attention has been called to the interview given in Canada by Sir Francis Lindley, the British Ambassador in Tokyo; and whether the views expressed represent those of the British Government?
  Mr. McENTEEasked the Secretary of State for Foreign Affairs whether his attention has been called to the interview given in Canada by the British Ambassador in Tokyo, in which sympathy with the policy of Japan in Manchuria is expressed; and whether he will suggest greater reticence on a matter on which Great Britain as a nation has taken a different attitude at Geneva?
  Mr. LUNNasked the Secretary of State for Foreign Affairs whether his attention has been drawn to an interview given by Sir Francis Lindley, His Majesty's Ambassador in Tokyo, while travelling through Canada, in which he justified Japan's seizure of Manchuria; whether His Majesty's Government propose to abide by the findings and recommendations in the unanimous Report of the Assembly of 24th February; and, if so, whether they will issue instructions to Sir Francis Lindley accordingly?
  Sir J. SIMON: I have read the press report of the alleged interview, but until I have had an opportunity of seeing Sir Francis Lindley I cannot comment on the matter beyond saying that the policy of His Majesty's Government has already been clearly defined in this House; it is, of course, one of loyalty to the Assembly Report of the 24th of February.
  Mr. LUNN: Does not the right hon. Gentleman think it would be better, if a policy is to be declared, that it should be declared by the Minister and not by a civil servant?
  Sir J. SIMON: I am sure that my hon. Friend will appreciate my reason for answering as I did. I cannot assume that a dispatch in an English paper in the form of a telegram from Ottawa about something which is supposed to have been said in Winnipeg is in all respects quite accurate.
  Sir BERTRAM FALLE: Is it not a fact that these views are held by a very large Majority of the people of this country?

  AUSTRIA (ITALIAN ARMS).
  Mr. T. WILLIAMSasked the Secretary of State for Foreign Affairs whether he has any information concerning the Hirtenberg war material which the Austrian Government undertook to send back to Italy; whether it has been returned to Italy; and, if so, whether a customs certificate was shown by the Austrian Government to French and diplomatic representatives?
  Sir J. SIMON: According to my information a considerable proportion of the original consignment of arms sent from Italy into Austria has now been reconditioned, and was recently sent from the Hirtenberg factory to the Austrian Military Arsenal at Kaiserebersdorf near Vienna. I understand that the object of the Austrian Government in deciding on this course is that the military authorities should be responsible for the proper return of the arms. When the arms have been checked by the military authorities at the arsenal they will be returned to Italy. I have no reason to doubt that the Austrian Government will implement their part of the arrangement described in my reply to the right hon. Gentleman, the Leader of the Opposition, on the 21st of February last, an arrangement which, as I informed the hon. Member and the hon. Member for the South Molton Division (Mr. Lambert) on the 22nd of February last, was accepted at the time by the Austrian Government.
  Mr. WILLIAMS: Can the right hon. Gentleman say who, if anybody, is responsible for seeing that the material reaches its proper destination?
  Sir J. SIMON: I understand that the Austrian Government is undertaking the responsibility of protecting the arms.

  DANZIG.
  Mr. MANDERasked the Secretary of State for Foreign Affairs the position with regard to recent incidents caused by Nazis in Danzig; and whether there has been any breach of neutrality or infringement of the rights of the League of Nations in this territory?
  Sir J. SIMON: I would refer my hon. Friend to the reply I gave on Monday last to the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood)

  ROYAL NAVY.

    TUBERCULOSIS.
    Sir B. FALLEasked the First Lord of the Admiralty the number of men invalided on account of tuberculosis from His Majesty's Ship "Campbell" in the past 12 months; and if the general percentage of this disease has increased or decreased with the decreased number of personnel in the Royal Navy?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Lord Stanley): The number of men invalided on account of pulmonary tuberculosis from His Majesty's Ship "Campbell" during the period 1st April, 1932, to 31st March, 1933, was one. The general percentage of this disease increased in 1929, but decreased in 1930 and 1931.
    Sir B. FALLE: Is my Noble Friend aware that three men have recently been discharged from the ship suffering from tuberculosis?
    Lord STANLEY: I am not in possession of this information.

    ALLOTMENTS OF PAY.
    Sir B. FALLEasked the First Lord of the Admiralty how many allotments, monthly or weekly, a naval rating is allowed to have in force at one time; what is the number now declared to wives, dependants, and tradesmen, respectively; and how much it is estimated to cost the country to handle these allotments?
    Lord STANLEY: Notice of this question was only given on Monday last, and therefore did not come to the notice of the Department until yesterday. To furnish replies to the second and third

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    parts, inquiries are necessary which will require at least a week, and I will furnish the information when it has been obtained. As regards the first part of the question there is no limit to the number of allotments a naval rating may have in force subject to the total not exceeding six-sevenths of his weekly rate of pay.

    FLEET AIR ARM.
    Mr. DAVID GRENFELL (for Mr. RHYS DAVIES)asked the First Lord of the Admiralty the total expense incurred for each of the financial years ended 5th April, 1930 to 1933, by the Royal Air Force naval units participating in the Royal Air Force display, naval and military tournament, Aldershot and Tidworth tattoos, and all similar exhibitions?
    Lord STANLEY: A Fleet Air Arm unit took part in the Royal Air Force display in 1929 and 1930, as a matter of Service training. It is not practicable to state the actual expenditure incurred.

    KENYA GOLDFIELD.
    Mr. T. WILLIAMSasked the Secretary of State for the Colonies whether he can make any statement as to his acceptance of Sir Albert Kitson's recommendations with regard to gold prospecting in Kenya Colony; on what grounds certain specified areas are to be opened up for general prospecting while in other areas it is contemplated to grant exclusive licences only; and what special measures have been taken to safeguard native interests in the newly opened areas and to meet their fears concerning the danger of losing their lands?
    The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): A full statement of the decisions reached in regard to Sir Albert Kitson's recommendations were published in the Press on the 1st of May, and I do not think I can usefully add anything to it. I am sending the hon. Member a copy of this statement. The reasons which led Sir Albert Kitson to recommend that certain areas should be thrown open to general prospecting and others reserved for exclusive licences were that in the two areas recommended for general prospecting gold had been proved to occur more generally and Sir Albert Kitson considered that they could be better pros-
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    pected for the value of these occurrences by individual prospectors than by a company and that more employment would be given to natives by individual prospectors than by any one company. Area No. 5 is to be opened for general prospecting on the 1st of June. But the Government is not yet able to state when Area No. 2 will be opened. No further special measures in addition to those already taken are necessary to safeguard native interests, and the local Government can be relied upon to do everything that is necessary to protect native interests and to reassure the native population as regards the land in the Native Reserves.
    Mr. WILLIAMS: Are we to understand from the right hon. Gentleman that the recommendations of Sir Albert Kitson are being carried out in full?
    Sir P. CUNLIFFE-LISTER: Yes, progressively they are. I announced them some time ago, and I am sure that Sir Albert Kitson was the best possible person to make those recommendations.
    Mr. WILLIAMS: Am I to understand that before accepting these recommendations he would receive and hear representations from the local native representatives?
    Sir P. CUNLIFFE-LISTER: I do not know what is meant by "local native representatives." Sir Albert Kitson's recommendations are being carefully considered by the Government, including the Chief Native Commissioner and other officers.
    Mr. D. GRENFELL: Does not the effect of the recommendations imply the displacement of the maximum number of natives?
    Sir P. CUNLIFFE-LISTER: Certainly not. Anybody who knows anything of Sir Albert Kitson, say, for the last 25 years in Africa, will realise that the natives could not have a wiser or more sympathetic friend and adviser.
    Mr. GRENFELL: Will not the right hon. Gentleman look into these matters?

    ROYAL AIR FORCE (DISCHARGES, WOODBRIDGE).
    Mr. T. WILLIAMSasked the Under-Secretary of State for Air the

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    reasons for discharging long-service married men from the Royal Air Force at Woodbridge, Suffolk, and replacing them by young single men; and whether steps are taken to secure employment before discharging men from the Air Force?
    The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon): Any such men have been discharged on completion of their term of service. Replacements are made in the ordinary course of posting strictly in accord with the requirements of the service. On discharge airmen are placed in benefit under the unemployment insurance scheme and registered with the appropriate Employment Exchange; if they so desire, they have the special help of the National Association for the Employment of Regular Sailors, Soldiers and Airmen.
    Mr. WILLIAMS: Does not the right hon. Gentleman believe that it is an injustice to discharge men of 17 years' service, with wives and families, without finding them some suitable employment whereby they can maintain themselves and their families?
    Sir P. SASSOON: Only a limited number of men can be re-engaged at the end of service, because it is necessary to have a regular flow of recruits into the Service. Of course, the hon. Member knows that there are a number of long-service men who continue service.
    Mr. TOM SMITH: Have any of these men been discharged on account of economy?
    Sir P. SASSOON: No.
    Mr. WILLIAMS: Before discharging men with 17 years' service, and within four years of a pension, will the right hon. Gentleman sympathetically consider whether they should be discharged unless some suitable employment is available for them?
    Sir P. SASSOON: All that is very sympathetically considered.

  TRANSPORT.

    TRAFFIC VIBRATION.
    Mr. LOVAT-FRASERasked the Minister of Transport if he is aware of the damage done to the older houses in
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    the older towns of the country by the passage and vibration of heavy motor traffic; and if he proposes to take any steps to mitigate this?
    The MINISTER of TRANSPORT (Mr. Oliver Stanley): Steps have already been taken in the direction desired by my hon. Friend. New goods vehicles are required to be fitted with pneumatic tyres and the proposals in the Budget, if approved by Parliament, will encourage the substitution of pneumatic for solid tyres on existing vehicles.
    Mr. LOVAT-FRASER: Is not the hon. Gentleman aware that pneumatic tyres are of no value at all unless there are rubber roads?
    Mr. STANLEY: I am not sure.

    TRAFFIC SIGNS (LIGHTS).
    Mr. LOVAT-FRASERasked the Minister of Transport if he is aware that at least 250,000 users of motor vehicles in England are incapable of knowing green light controls from red; and if he proposes to take any steps to deal with the resulting danger?
    Mr. STANLEY: I do not know from what source my hon. Friend has obtained his estimate of the number of drivers of motor vehicles who are partially colour-blind, but it would appear to be very exaggerated. I understand that the Departmental Committee on Traffic Signs heard evidence on this subject, and I will consider the matter in the light of their report which I hope to receive shortly.
    Mr. LOVAT-FRASER: If the hon. Gentleman would like to know, the source of my information is a very interesting and remarkable article in the "Nineteenth Century Magazine." [HON. MEMBERS: "Order!"] If I was technically inaccurate in putting it as I did, I would ask the hon. Gentleman if he has not seen—and as Minister of Transport he ought to have seen it—the remarkable article in the "Nineteenth Century" by Sir Mervyn O'Gorman?
    Sir BASIL PET0: Has the Minister any reason to believe that there are a quarter of a million motorists who cannot read the "stop" and "go" signals?

    MOTOR DRIVERS' LICENCES (PHYSICAL FITNESS).
    Sir NICHOLAS GRATTAN-DOYLEasked the Minister of Transport if he will take steps to amend the Road Traffic Act, 1930, so that when a person charged with driving a vehicle while under the influence of drink is found not guilty of this offence on grounds of suffering from a physical defect, which may make him incapable of having proper control of a motor vehicle and a danger to other users of the highway, the court may order such person to be disqualified from holding or obtaining a licence for such period as they think fit?
    Mr. STANLEY: I do not think the suggested amendment of the Road Traffic Act, 1930, is necessary in view of the provisions of Sub-section (4) of Section 5 of the Act. This Sub-section empowers the licensing authority in a case such as that mentioned by my hon. Friend to revoke the licence if their attention is drawn to it either by the magistrates, the police or anyone else.
    Sir N. GRATTAN-DOYLE: Has the Minister seen the announcement made from the bench on this question in various parts of the country?
    Mr. STANLEY: I do not know to what particular announcement the hon. Member refers. It is not the bench which has the power to withdraw a licence, but the licensing authority.

    MOTOR VEHICLES (SIDE LAMPS).
    Sir GIFFORD FOXasked the Secretary of State for the Home Department whether he has any statistics to show the number of road accidents during the past year which were due either partly or wholly to the fact that the side lamps of the motor car or motor coach involved therein were not carried on the tips of the wings or in a corresponding position?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I regret that no statistics are available.
    Sir G. FOX: Is the right hon. Gentleman aware that motor coaches in many instances carry side lamps so high that they are really useless, and will he consider the advisability of laying down a regulation that side lamps shall be carried at a uniform height?
    Sir J. GILMOUR: I think that is rather a problem for the Minister of Transport to consider.

    SEVERN BARRAGE SCHEME.
    Mr. L. SMITHasked the Minister of Transport at what date he expects to be in a position to state the policy of the Government in relation to the final report of the Severn Barrage Committee?
    Mr. STANLEY: I am not in a position to add anything to previous answers on this subject.
    Mr. SMITH: Is the Minister aware that there is strong feeling in the country that more than enough money has been spent upon this fantastic scheme?

  INDIA.

    REVENUE AND EXPENDITURE.
    Sir CHARLES OMANasked the Secretary of State for India if he can give any estimate of the amount of extra taxation in India that will be caused by the creation of the new provInces of Sind and Orissa, by the loss of the opium revenue under the arrangements with China, and by the cost of a general election for the new constituencies?
    The UNDER-SECRETARY of STATE for INDIA (Mr. Butler): The Chairman of the Sind Conference, 1932, estimated that the net additional expenditure involved by a separate ProvInce of Sind would be about Rs.12 lakhs per annum. On page 61 of Command Paper 4238 an estimate is given that the additional expenditure of a separate ProvInce of Orissa would be Rs.15 lakhs per annum. The export of opium to China ceased in 1913. The net revenue of the Central Government from the export of provision opium to other countries is expected in the current year to be about Rs.60 lakhs. This source of revenue will undergo progressive annual reduction in accordance with the policy of reduction of opium exports adopted by the Government of India in 1926, and will entirely cease in 1936–37, when export will have ceased. As will be seen from the dates these facts have no connection with the revision of the constitution. As regards the last part of the question, the only figures available are those given in Appendix VI of the Report of the Indian Franchise Committee, Command Paper 4086.
    Sir C. OMAN: Is the hon. Gentleman aware of the fact that in the last presentation of the Indian Budget the Finance Member stated that it was impossible to balance the Budget on the present revenue and that reductions would have to be followed by drastic taxation?
    Mr. BUTLER: The questions in regard to the new Constitution that the hon. Member raises, have been carefully considered by His Majesty's Government.

    FOUR PER CENT. LOAN.
    Mr. COCKS (for Mr. J. P. MORRIS)asked the Secretary of State for India if he is aware that no prospectuses for the recent India 4 per cent. loan were available on Tuesday, 11th May; that the lists remained open only for an hour and a-half on Wednesday morning; that the Bank of England refused to entertain country applications and posted allotment letters on Wednesday night, and it was therefore impossible for country subscribers to make application in time to be included in the allotment lists; and what action he proposes taking in the future to ensure equal opportunities for provincial investors?
    Mr. BUTLER: Prospectuses were despatched to all Stock Exchanges in the United Kingdom to be available at 9 a.m. on Wednesday, 10th May, that is at the same time as they were obtainable in London. Every endeavour is made by the Bank of England to afford consideration to applications received from the country, but the factor of distance cannot be completely eliminated. On this occasion, heavy over-subscription made it impracticable to keep open the lists for applications beyond a certain time, The question of the arrangements to be adopted is considered on each occasion from the standpoint of the public interest.

  TRADE AND COMMERCE.

    OTTAWA AGREEMENTS ACT (LICENCES).
    Mr. HERBERT WILLIAMSasked the President of the Board of Trade how many licences have been issued under Section 7 of the Ottawa Agreements Act; and whether it is possible for any person who has not previously imported meat to obtain a licence?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): The number of licences issued under Section 7 of the Ottawa Agreements Act, 1932, is 17. Save in exceptional circumstances the issue of licences has been confined to importers who imported meat during the basic year referred to in the Ottawa Agreements.

    GERMAN TRADE AGREEMENT (EMPLOYMENT STATISTICS).
    Sir B. PETOasked the President of the Board of Trade, in view of the fact that no record is kept of the number of persons insured and unemployed in the toy, clock, jewellery, and enamelled hollow-ware industries, which have been subjected to reductions in the import duties of foreign competing goods under the recent commercial agreement with the German Reich, what steps he proposes to take in order that the Government and the House may be able to gauge the effect of this treaty on employment?
    Dr. BURGIN: Section 9 of the Import Duties Act provides for the collection of information regarding employment and other matters in industries engaged in making goods of a kind subject to duty under that Act, and it is proposed under Clause 18 of the Finance Bill now before the House, to extend these provisions to certain other industries. After the passage of the Finance Act all the trades referred to by my hon. Friend will be covered.

    IMPORT DUTIES (FOREIGN PAPERS).
    Sir G. FOXasked the Chancellor of the Exchequer whether, in the event of the Import Duties Advisory Committee making any recommendation for the alteration of the duties upon imported foreign papers in the near future, it will be possible for such recommendation to be put into effect by the Government despite the existence of the tariff truce?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): I would refer my hon. Friend to the answer given by my right hon. Friend on 15th May to the hon. Member for the Hallam Division (Mr. L. Smith) and others on the effect of the tariff truce. The governing date for the operation of the truce is 12th May; if an application for an alteration of duties had been

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    made to the Advisory Committee before that date, and the committee make a recommendation thereon to the Government, the Government will not be precluded by the truce from dealing with the recommendation.

    WEST AFRICAN COLONIES (SOVIET COTTON GOODS).
    Brigadier-General Sir HENRYCROFTasked the Secretary of State for the Colonies whether his attention has been called to the fact that large quantities of Soviet cotton goods are being exported to the West Coast of Africa to the disadvantage of British textile industries and contrary to the policy of His Majesty's Government with regard to Soviet goods; and whether he will take action in the matter?
    Sir P. CUNLIFFE-LISTER: I have recently been in communication with certain West African Governments with regard to the development of Russian competition. The position will be carefully watched in order that the West African Colonies may be prepared to take any action which may be considered desirable in their own interests and the interests of British trade as a whole.
    Sir H. CROFT: Is my right hon. Friend aware that at the present time large imports of Soviet shirting are going into West Africa, thereby getting behind the general policy of His Majesty's Government; and is it not, therefore, a question of taking immediate action?
    Sir P. CUNLIFFE-LISTER: I think it is a question of the volume of trade and whether it is likely to increase. The matter is fully under the review of the different Governments concerned.
    Sir H. CROFT: Is my right hon. Friend aware that a large amount of material, such as I have here to-day, is going into West Africa marked "from the U.S.S.R." Am I to take it that he is really inquiring into this matter with a view to taking instant action if necessary?
    Sir P. CUNLIFFE-LISTER: I am not only inquiring into it, but I had begun to make my inquiries before my hon. and gallant Friend brought his unattractive cloth. The position is being carefully watched.
    Colonel WEDGWOOD: Ought we not to pass a law making it compulsory that these people should wear full clothes.
    Mr. THORNE: Is the right hon. Gentleman aware that if you stop goods going into these countries they only go into the international markets of the world and enter into competition with our goods?
    Sir P. CUNLIFFE-LISTER: I think it is a complete fallacy that if you stop them entering into one market they necessarily get into another.

    GREAT OUSE CATCHMENT BOARD (BY-LAWS).
    Sir ERNEST SHEPPERSONasked the Minister of Agriculture if he is aware that the Great Ouse Catchment Board is proposing to make certain by-laws against the interests of the internal drainage authorities within that catchment area, and that under these proposed bylaws the internal drainage authorities may lose the entire control of their pumping plants and main watercourses, the efficient maintenance and unfettered working of which is essential to the safety from flooding of the agricultural land within those internal drainage districts; and whether he has reached a decision as to confirming these by-laws?
    Captain Sir GEORGE BOWYER: I have been asked to reply. My right hon. Friend is aware that the Great Ouse Catchment Board are contemplating making by-laws under Section 47 of the Land Drainage Act, 1930, but they have not yet been submitted to him for confirmation, and consequently no decision has been reached?
    Sir E. SHEPPERSON: Before coming to a decision to confirm these by-laws, will the right hon. Gentleman take into consideration the undertaking given to me during the passage of that Act through the House, that in no circumstances would the catchment board interfere with the working of an efficient internal drainage district; and is he aware that that undertaking facilitated the passage of the Bill through the House of Commons?
    Sir G. BOWYER: I can only advise my hon. Friend to have a talk with my right hon. Friend, in view of those circumstances.

    AUSTRIAN LOAN.
    Mr. MANDERasked the Chancellor of the Exchequer the present position with regard to the Austrian loan, and whether it is still intended to proceed with it?
    Mr. HORE-BELISHA: As stated in the report of the League of Nations Financial Committee dated the 10th May, it has not yet been possible to float the guaranteed loan provided for in the Protocol of 15th July, 1932. I understand, however, that it is hoped that these technical difficulties will shortly be overcome. Subject to this, it is intended to proceed with the issue of the sterling portion of the loan simultaneously with the issue of the franc portion of the loan in Paris.

    UNEMPLOYMENT (RELIEF SCHEMES).
    Mr. LAWSONasked the Minister of Labour how many applications for grants have been made in aid of schemes carried out by local authorities during the past 12 months; and whether he can state the number agreed to by the Government, the amount involved, and the number of men to whom those schemes would give employment?
    Captain AUSTIN HUDSON (Lord of the Treasury): I have been asked to reply. If, as is assumed, the hon. Member is referring to schemes for the relief of unemployment, my right hon. Friend would point out that Exchequer grants in aid of such schemes have not been available during the past 12 months.
    Mr. LAWSON: My question did not imply that I was asking for schemes of relief. My question was simply with regard to any schemes which are being carried out by local authorities.
    Captain HUDSON: My right hon. Friend was not clear what information the hon. Member requires. If he will put down another question, my right hon. Friend will get the information.

    CUSTOMS AND EXCISE COLLECTORSHIP, EDINBURGH.
    Mr. GUYasked the Financial Secretary to the Treasury why it has been considered necessary to reduce the Edinburgh Customs and Excise col-
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    lection from the status of a higher collectorship to a first-class collectorship?
    Mr. HORE-BELISHA: The incidence of work in the Customs and Excise Department is continually under review, and after careful consideration of the volume and nature of the Customs and Excise work in certain collections, it has been decided that a higher collectorship is not justified in Edinburgh collection under existing conditions. I would point out, however, that the substitution of a first-class collectorship for a higher collectorship will not affect the facilities afforded to the public for the conduct of business with the Customs and Excise Department.
    Mr. GUY: Is my hon. Friend aware of the fact that at present there are only two higher collectorships for the whole of Scotland, and does he not agree that it is right and proper that one of these should be in Edinburgh?
    Mr. HORE-BELISHA: My hon. Friend has been in correspondence with me on the subject. Perhaps he will allow me to write to him persoNaily.

    AIR STRENGTH.
    Mr. BOOTHBYasked the Prime Minister whether, in view of the present situation in Europe, His Majesty's Government will take steps to increase the strength of the Air Force in order to bring us up to a one-Power standard?
    The PRIME MINISTER (Mr. Ramsay MacDonald): This question cannot be considered apart from the results of the Disarmament Conference, and I would refer my hon. Friend, therefore, to the table of strengths of aeroplanes put forward in the Draft Disarmament Convention which was submitted by the United Kingdom Delegation to the Disarmament Conference on 16th March, 1933.
    Mr. BOOTH BY: Does not the Prime Minister think that, without prejudice to any future agreements which may be arrived at, our influence on the Continent will be greatly increased if it is backed by adequate forces?
    The PRIME MINISTER: At the moment our forces are adequate, and, according to the table, there is a level of strength which is equal to our own.
    Colonel WEDGWOOD: Is the right hon. Gentleman aware that this is the type of question we shall all be asking shortly, unless we can prevent Germany re-arming?
    The PRIME MINISTER: The Government have never made any secret of the fact that a great deal depends on the attitude and influence of Germany as to whether this table can or cannot be carried out.

    CHINA (BOXER INDEMNITY).
    Mr. MORGAN JONESasked the Secretary of State for Foreign Affairs if he is aware that the American, British and French Governments have refused the Chinese Government's request to prolong for a further period the moratorium on the Boxer indemnity; and whether he will reconsider the British attitude in this matter and urge similar reconsideration by China's other creditors, seeing that most of the Governments of the world have obtained a moratorium on their in debtedness, that the Chinese Government have suffered serious loss of revenue, and have incurred great expenditure to defend China's territorial integrity and political independence?
    Sir J. SIMON: His Majesty's Government reached their decision not to agree to a further moratorium after the most careful consideration of all the factors involved, including those mentioned by the hon. Member, and I see no reason to reopen the question.

    RUSSIA (CHINESE EASTERN RAILWAY).
    Mr. MORGAN JONESasked the Secretary of State for Foreign Affairs whether his attention has been called to the proposed sale by the Soviet Union of its rights in the Chinese Eastern Railway to Japan; and whether, in view of the unanimous report of the Assembly of 24th February, he will request the Advisory Committee of the Assembly to declare that all the States which have accepted the Assembly report are bound to consider any such transaction as not valid and not affecting any Chinese or foreign interests or the legal situation that existed before 18th September, 1931?
    Sir J. SIMON: It is not clear to me that action by the Assembly Committee as suggested by the hon. Member would be appropriate in the circumstances.

    HOUSING (BUILDING MATERIALS).
    Mr. MACLAYasked the Minister of Health whether he is taking any steps to prevent an undue rise in the cost of building materials in the event of extensive schemes of slum clearance Colnciding with a large increase of private enterprise building?
    The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): My right hon. Friend is watching the position. At present there is no reason for any extraordinary action.
    Mr. MACLAY: May I ask whether publicity will be given in due course if, by any chance, an undue rise in prices takes Place?
    Sir N. GRATTAN-DOYLE: May I ask what steps it is proposed to take if there is any increase in the cost of building?
    Mr. SHAKESPEARE: The Government have no intention of allowing anyone but the slum dweller to benefit by our slum clearance. If it is alleged that unreasonable prices are charged, there is a remedy in the hands of the consumer. He can go, through his federation, to the Imports Duty Advisory Committee and make representation for placing such building materials on the Free List.

    MILITARY EXEECISES.
    Mr. D. GRENFELL (for Mr. RHYS DAVIES)asked the Home Secretary if he can give any information showing the number of organisations in this country, stating their titles, drilling adult males on semi-military lines, and the number of persons covered by each such organisation; and whether it is his intention to bring in legislation to stop all such drilling outside the officially recognised forces?
    Sir J. GILMOUR: I have no precise information as to the number of such organisations, or as to the number of persons covered. With regard to the latter part of the question, unauthorised

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    meetings of persons for the purpose of being trained or of practising military exercises are prohibited by law and I have no reason to suppose that appropriate action under the provisions of the Unlawful Drilling Act, 1819, will not be taken should occasion arise.
    Colonel WEDGWOOD: Does that mean drilling without arms or with arms?
    Sir J. GILMOUR: It is difficult to say when physical exercises are really drilling or not. The law is directed against military training.
    Mr. D. GRENFELL: Is there not a difference between physical training and military display and formation? Is there not evidence that there are organisations in this country drilling on military lines?
    Sir J. GILMOUR: No, Sir. If the hon. Member has any information, I shall be glad to receive it. When trade union demonstrations march through London they march in fours.
    Mr. GRENFELL: But do trade union demonstrations carry guns or imitation guns on their shoulders?
    Sir J. GILMOUR: If the hon. Member says that is being done I shall be glad to hear of it.
    Mr. ATTLEE: Is there any objection to marching in fours?

    COAL INDUSTRY (ACCIDENT, HEDNESFORD).
    Mrs. WARD(by Private Notice) asked the Secretary for Mines if he is in a position to report upon the grave disaster which occurred at the West Cannock No. 5 Colliery, Hednesford, on Tuesday, 16th May; if he will state how many lives have been lost, and how many men injured, and if he will institute immediate enquiries into the cause of this terrible disaster?
    The SECRETARY for MINES (Mr. Ernest Brown): I regret having to inform the House that an explosion, which occurred yesterday morning in the Shallow Seam of No. 5 Pit, West Cannock Colliery, near Hednesford, resulted in the death of three men and serious injuries to three others. Two more were less seriously burned and 13
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    were gassed. Inquires were immediately instituted by the divisional inspector, and the site of the explosion has already been located, but the cause has not yet been ascertained. When I have received the inspector's written report I will consider whether any further investigation can usefully be made.
    The House will, I am sure, wish to join me in expressing deep sympathy with the injured and with the relatives of those who have been killed in this accident, and in that which unfortunately occurred at Hamstead Colliery, near Birmingham, on Monday, when four men were killed together by a fall of roof.

    METROPOLITAN POLICE BILL,
    "to amend the enactments relating to the Metropolitan Police Force in regard to the number of assistant commissioners of police, the age of compulsory retirement, membership of the Police Federation and the appointment of constables for a fixed period of service; to adapt to the case of constables so appointed the enactments relating to police pensions and gratuities, National Health Insurance, and Widows', Orphans', and Old Age Contributory Pensions; and for purposes connected with the matters aforesaid, "presented by Sir John Gilmour; supported by the Prime Minister, Mr. Baldwin, Sir John Simon, Mr. J. H. Thomas, Sir Hilton Young, Mr. Runciman, and Mr. Hacking; to be read a Second time upon Monday next, and to be printed. [Bill 106.]

GERMAN GOODS (IMPORT PROHIBITION).
Mr. MANDER: I beg to move,
"That leave be given to bring in a Bill to authorise the prohibition of the importation of German goods as part of an international sanction under the covenant of the League of Nations."
I am moving this Bill in order to focus public attention upon this proposal as a possible method of dealing with Germany if she should decide, regardless of what anybody else may say, to re-arm. I venture to think that the feeling of the whole country, quite apart from how this situation has arisen or what steps should be taken to deal with it, will be that in no circumstances can the rearmament of

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Germany be permitted, and that that must be stated to Germany with the utmost possible firmness.
The question arises how is it possible, what practical steps can be taken, to deal with the situation when it does arise? There is, of course, the possibility of military action. That has been referred to in another place. But it is difficult to see how that arises under the Treaty of Versailles, and if there is an alternative obviously that method would be preferable. The suggestion that I make for consideration by this House and the country is the use of the economic weapon. The actual method by which the Bill would work is this: It takes the framework of the Act recently passed to deal with Russian imports, but it makes the use of the powers under that Act dependent upon multi-lateral action by all nations together as a sanction under the League of Nations. Obviously action by this country alone would be quite futile, and the proposal that is made is for joint international action, so that if a situation were to arise in which action had to be taken the Government could act forthwith without any possible delay. I am sure that that will be thought to be desirable.
In saying this I think, in common fairness to the situation, I must say another thing, and that is with regard to the responsibility for the present situation in Germany. Obviously, the Allies, and this country among others, have made mistakes in diplomacy during the last few years, and they have contributed unquestionably to the supersession of the democratic regime by the Hitler regime in Germany. Indeed, until a few months ago it was openly recognised by every one that Germany had a real grievance in the fact that the Allied nations—I am taking them as a whole, because I want to be as non-provocative as I can be— had not carried out in an adequate and complete measure their obligations under the Covenant, and in particular under Article 8, with regard to disarmament.
In connection with any action that is taken now I feel very strongly that we must deprive Germany of any sense of grievance, and I hope therefore that we shall press on with the programme of the Government, the draft treaty laid by the Prime' Minister before the Disarmament
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Conference the other day and still more with the great declaration of policy made by the President of the United States yesterday. But, whatever the responsibilities in this matter may be, we have to deal with a situation as we find it at the moment—a situation highly critical and dangerous to the whole future of civilisation. The hideous monster of militarism has once again reared its head in Germany, and we must see that steps are taken so that it shall not acquire the means to do ill deeds. I am asking leave to introduce this Measure with the support of Members in all parts of the House, and I venture to hope that it will serve a useful purpose for the House of Commons on its own responsibility, not committing the Government in any way, by firmly allowing a First Beading to the Bill to express its willingness to study this particular method of dealing with the situation that might develop, and its readiness to grant powers of this kind if the Government on their responsibility felt that they were required.
Sir AUSTEN CHAMBERLAIN: I feel that the House is asked to take not merely an unprecedented but a very grave step. I feel as seriously as the hon. Member for East Wolverhampton (Mr. Mander) can do the dangers which the spirit that has been shown in Germany in the last few months brings close before us as we meet to-day. I have already spoken on that subject. I do not think I can add much to, and I have nothing to withdraw from, what I did say. That spirit, hateful in its domestic manifestation, unchristian, uncharitable, narrow and relentless, is a danger to all the world in the implications it may have for foreign policy; and I am prepared, if the occasion arises and when the occasion arises, to support His Majesty's Government in any steps which they may think necessary to combat the danger which threatens us all. But I submit to the hon. Member that his Motion ought not to be made in advance of the emergency arising, and that it could be made and ought to be made, if necessary, at the time, by a responsible Minister of the Crown. I beg the hon. Member earnestly not to proceed with his Motion, not because I think I differ from him upon the merits of the case or should differ from him if the emergency arises, in regard to the action which we may have to take,

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but because I think it is premature to assume beforehand that the wrong will be done, and that to take a vote of the House at this moment might, for reasons wholly unconnected with the real merits of the question under consideration, give a wrong impression of the sentiments of this House, which were unanimously declared in our Debate on 13th April.
Mr. MANDER: In view of that appeal, I beg to move, "That the Debate be now adjourned."
Mr. SPEAKER: The hon. Member had better withdraw his Bill.
Mr. MANDER: If that is the proper procedure, I beg to ask leave to withdraw my Motion.
Motion, by leave, withdrawn.

BILLS REPORTED.
HOTELS AND RESTAURANTS BILL.
Reported, with Amendments, from Standing Committee B.
Report to lie upon the Table and to be printed.
Minutes of Proceedings to be printed.
Bill, as amended (in the Standing Committee), to be considered upon Friday, and to be printed. [Bill 107.]

LYME REGIS DISTEICT WATER BILL [Lords].
Reported, with Amendments; Report to lie upon the Table, and to be printed.
SOUTH SUBURBAN GAS BILL [Lords]
Reported [Parties do not proceed]; Report to lie upon the Table.
ORDERS OF THE DAY.

  FINANCE BILL.
  Order for Second Reading read.
  Motion made, and Question proposed, "That the Bill be now read a Second time."
  3.30 p.m.
  Mr. MORGAN JONES: I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words:
  "this House regrets that no provision is being made for redressing the unjust financial sacrifices imposed upon the unemployed and other sections of the community, and declines to assent to the Second Reading of a Bill which leaves the heaviest burdens upon those least able to bear them, and fails to disclose any effective policy on the part of His Majesty's Government for the restoration of trade and employment."
  I think it will be agreed by Members in all parts of the House that there is no better method of judging the attitude of a Government towards the problems which confront it than by examination of its financial proposals, as they are presented to Parliament year after year. While Members of the House of Commons, and even Ministers in charge of Departments, may propose, in the long run it is the Chancellor of the Exchequer who will dispose. Although, of course, it is the Chancellor of the Exchequer himself who presents the annual statement to the House of Commons he does so in the name of his Cabinet colleagues, speaking the corporate mind and opinion of those associated with him in the Ministry. I gladly make this concession to the right hon. Gentleman the present Chancellor of the Exchequer, that he presented his annual statement this year under the most depressing conditions. Looking out around the world I think it is true to say that rarely has a Chancellor of the Exchequer been called upon to present his Budget under more depressing conditions than was the case this year. A month has passed Since then, and I think that only the most incorrigible optimist could fail to-day to see ground for apprehension as to the future.
  Speaking, not of our own country in particular but of the world at large, it would seem as though mankind had, somehow, been bitten by a bug of in-
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  sanity and was determined willy-nilly to plunge into the gulf of destruction. These depressing conditions give us all ample reason for reflection and I doubt not that this afternoon we should all have approached this problem in an even more pessimistic mood, were it not for the remarkable message which came yesterday to the Old World from the New through the mouth of President Roosevelt. The call of the American President is a call from the New World to the Old to lay the foundations of a newer world, in which economic conditions and financial arrangements will be such as to make international relations more cordial than they have been in the past. Without committing oneself to any particular proposal embodied in President Roosevelt's address to the world, one can agree that it is a gesture in favour of co-operation among the nations and we must recognise the fact that involves the sacrifice of beliefs that have become almost traditional in America in the course of 100 years or so.
  A Finance Bill such as we are considering is not unrelated to the important international considerations which were brought forcibly before us in our morning papers to-day. The Budget is not only the mirror of our relations, one towards another, as citizens within the State, but in a degree it is also a mirror of the relations of our country towards other countries, At this moment our total national debt stands at the colossal figure of £7,645,000,000. Incidentally I have been reading some of the speeches which were delivered in the Budget Debates of 1925 and I find that almost that very figure was used on that occasion to express the measure of our total national indebtedness. We pay off certain amounts through the medium of Sinking Fund, and we pay the interest which becomes due year after year, and yet the main burden of this debt remains, apparently, almost insuperable and irremovable. I have stated that these considerations affect our relationships with our fellowmen throughout the world outside this country. It is true that on this occasion the Chancellor of the Exchequer makes no provision for the payment of Sinking Fund except the statutory amount and up to the present there has not been any settlement of the debts question. I am sure I express the general opinion when I say that we all

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  hope that this question will be speedily settled, not only for our own good but for the good of the other nations of the world. If it is not settled clearly an instalment must become due to the United States from this country next month. I do not know what is in the mind of the Chancellor of the Exchequer and I do not ask, but it seems to me that the chances are that this payment will have to be made next month.
  If that be true there is £23,000,000 more to be found somehow and the inevitable effect will be to interfere with the balance of the Budget. Not only is our total indebtedness still round about the figure of £7,600,000,000 but the interest 'on the National Debt is also a tremendous burden on the shoulders of our people. The financial statement issued on 25th April shows that interest on the National Debt compared, not with total expenditure but with ordinary expenditure leaving out self-balancing items, is in the proportion of 37.6 per cent. of that ordinary expenditure. That is roughly about 8s. in the £. I call attention to this point for this reason. I recognise of course that last year there was a substantial conversion of a block of War Loan to the tune of £2,000,000,000. There was a substantial saving in interest on that account, but there still remains a very substantial portion of War Loan still unconverted which bears a much heavier burden of interest than the converted War Loan.
  If we are going to make a demand from the United States of America that they shall make a concession to us in respect of our obligations to them—and I am all in favour of making that claim —it must be confessed frankly that our claim for relief will be reduced in strength unless we also make a demand upon those who extract a toll through the medium of War Loan within the confines of our own country. There is an overwhelming case for a conversion of the rest of the War Loan, for anyone will agree—I do not think it will be a subject of controversy at all—that with the decline in the cost of living—a fact which is constantly brought to the minds of working-men in connection with demands for wage reductions—when rates of interest upon War Loan remain untouched, those who possess it and enjoy the interest unchanged are in possession of a
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  return far greater relatively than was the case when the money was origiNaily lent by them. It is really an important question which the House must face. Can the country afford to go on indefinitely bEarlng this enormous burden without change in the incidence of the burden upon the people at large? I submit that when we pay in interest charges something like 8s. in the £ for every pound paid in Income Tax, clearly the margin that is left for reconstructional effort within our own society is limited.
  Not only is the debts question allied to that point, but it is allied to the question of armaments. I do not propose to speak at length on that question, except to say that I wish the Government well in every endeavour they may make at the approaching Disarmament Conference to secure agreement among the nations. I want to dwell for a moment upon the incidence of our armament expenditure this year and its share of our total estimated expenditure. In 1932–33 the estimated expenditure upon the Army, Navy and Air Force stood at 14 per cent. of the total ordinary expenditure. This year the percentage has risen to 15.3. There is another interesting fact which the House might keep clearly in mind. If they will look at the figures for 1923–24, exactly 10 years ago, they will find that the estimated expenditure this year upon the Army, Navy and Air Force combined will be £3,146,000 more. The Navy and Air Force expenditure alone this year is expected to be £8,796,000 more than in 1923–24. While it is true that in recent years there have been certain declines in expenditure upon some of these items, still, in point of fact, if we compare 10 years ago with the present, we shall find that the fact which I have submitted is substantially true. So much for observations of a general kind.
  My task is to move the Amendment, and I propose to address myself to it. Before I do so, may I make this observation. In the Finance Bill there are certain Clauses dealing with the Post Office Fund, and some of them are printed in italics. I gather that there will have to be later a Financial Resolution dealing with these Clauses. It is not my intention to discuss that section of the Bill, but I might indicate to the Chancellor of the Exchequer that we as a party

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  desire to express our dissatisfaction with the arrangements that are proposed in respect of the Post Office Fund. When a fuller opportunity is afforded to us I hope that my hon. Friend the Member for Limehouse (Mr. Attlee), who wae responsible for the Post Office in the last Labour Government, will express in more detail our point of view with regard to that Fund.
  Our Amendment is based on three principal grounds: First, it calls attention to the claims of the most needy among the population, namely, the unemployed and certain other sections of the community; second, it challenges the incidence of taxation imposed generally; and, third, it declares the view of the party that the Bill fails to deal with our fundamental economic and financial troubles. No one will deny that during the crisis of 1931 both before, during and after the General Election, it was a common claim by those who supported the Government that they were going to carry into effect proposals which would involve a common sacrifice upon all people. I was almost going to say that lachrymose appeals were made to people to support the suggestion that every one should make his contribution to the common pool of sacrifice, and I do not deny that as a consequence large numbers of people who ordinarily support us politically transferred their allegiance—I believe only temporarily—to hon. and right hon. Gentlemen opposite, in the belief that they would be treated fairly, that their sacrifices would not be abused, and that if and when the time came for relief to be given to any classes in the community those who had the first claim would be the most needy people in the community.
  Shall I not be well within the truth when I say that, while the unemployed were mulcted in heavy financial sacrifices, up to this moment no attempt has been made by the Government to give them any sort of relief? But while that is true it is equally true to say—and I charge the right hon. Gentleman with it this afternoon as embodying the principle in this Budget—that people who have no immediate need of relief have been able to appeal successfully to the right hon. Gentleman to the exclusion of the claims of this needy section of the population. The right hon. Gentleman proposes to make an alteration in the instalment
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  system of paying Income Tax, and tells us that it will involve the Treasury in a sacrifice of something like £12,000,000. Who will get the main benefit from that? I do not want to exaggerate my case at all. It is self-evident that the people who will get the benefit are not the most needy section of the population. The case for such a change, under other conditions, may be as good; I am not arguing that now, but as compared with the claim of the most needy, namely the unemployed, that Income Tax claim is far from being first and ought not to be put first.
  Take another instance, the reduction of the Beer Duty, which in a full year will involve something like £16.3 millions. It is quite true that in all parts of the House Members take differing views concerning the question of the consumption or non-consumption of alcoholic liquor, but the question with which I am concerned at the moment is the relative merits of the Beer Duty as a subject of sympathetic consideration from the Chancellor in comparison with the claims of the unemployed. I say quite frankly that many of my hon. Friends on this side of the House—and it is the same in all parties in the House—take differing views upon the drink question and the Chancellor of the Exchequer need not think that it is something of which we ought to be ashamed. None the less, I am sure that every one who may take a different view from myself—and I am an ardent teetotaller—would still agree that the unemployed man has a greater claim to consideration. The unemployed man has been reduced to an allowance of 15s. 3d. per week as transitional payment. Taking the number of unemployed people-to be, roughly, about 2,000,000, it would have been possible for the Chancellor to-give them an increase of about 5s. a week, and that would not have cost him less than these two concessions on Income Tax and beer will cost him.
  The Chancellor has the conviction, no doubt, that his gesture in regard to the Income Tax will ultimately be beneficial to industry. Let me concede that for the sake of argument. At the same time it cannot be denied that if 2,000,000 unemployed persons got 5s. a week extra to spend there would be a greater purchasing power in the very areas where distress is most serious. Let it be granted.

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  that all who are getting this relief in respect of Income Tax put back all the money into the industry of the country; equally, the unemployed man with 5s. extra a week would return that money into industry by purchasing goods, and that would create a demand for more goods—not for luxury goods but for necessities—and thus revive the fundamental industries of the land.
  I do not propose to argue the incidence of the Beer Duty this afternoon beyond making this final point. No one will deny that the expenditure upon beer in this country is still very high. In 1932 it was estimated that if the expenditure upon drink were spread over the whole population it would work out at about £5 3s. per head per year, and if it were distributed over the adult population of more than 20 years of age it would work out at about £7 15s. per head. As there are a good number of us who do not touch any drink at all, I can only surmise that the rest must be working a good deal of overtime.
  I turn from that side to the incidence of taxation as it bears upon Income Tax, Sur-tax and Estate Duties. Roughly speaking, this year it is estimated that the Income Tax will provide one-third of the total ordinary revenue. Sur-tax will provide about one-fourteenth, and the Estate Duties about one-ninth. Those figures indicate a change, because if you compare the proportion which receipts of Income Tax bore to the total receipts last year, you find that Income Tax in relation to total receipts was about one-third, Sur-tax about one-twelfth and Estate Duties one-ninth. It is proposed this time that Income Tax shall still bear, roughly, one-third; Sur-tax comes down from one-twelfth to one-fourteenth, and Estate Duties will remain round about one-ninth.
  It is an odd thing that whenever a Tory Government—and, of course, I regard this as a Tory Government—looks round for people to be compassionate upon, it almost invariably lights first upon the Surtax payer. Take that fact with this, that in the case of the Income Tax on poorer people, the net is spread wider so that more may be caught. If hon. Members will look at the final figure provided in the 75th report of the Commissioners of Inland Revenue, they will
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  find that the number of people who became chargeable to Income Tax mounted up in the year 1931–32 as compared with the previous year by 1,500,000. That is to say, roughly speaking, the effect of Mr. Snowden's Budget, by reducing the Income Tax limit of exemption to £100, roped in 1,500,000 new Income Tax payers. The Government are exempting in this Budget Surtax payers by reducing their proportion of the total, whereas the poorer Income Tax payer has been roped in to a greater degree, not in this Budget, of course, but in the last 18 months to a degree that he has not been roped in for a very long time, if ever. The simple fact of bringing in the single man just above the £100 limit as an Income Tax payer was estimated to yield something between £13,000,000 and £14,000,000 a year.
  The whole drift of this Budget, as I see it, is to shift the burden from those who can afford to pay on to the shoulders of those who cannot afford to pay. Let me take another proof of the same fact. Take indirect taxation. The receipts from Customs and Excise make interesting reading as compared with previous years. I think it is accepted by everybody that, broadly speaking, of the indirect taxation, four-fifths is borne by the working classes by reason of the fact that they are the larger proportion of our population, of course. Let me show the difference between the attitude of the last Labour Government and that of the present Government. In 1930–31, the percentage of Customs and Excise to the total receipts was 31.6 per cent. The proportion of the estimated receipts in the next year was 31 per cent.; so that the figure remained much the same. In 1932–33, the proportion of Customs and Excise mounted up in relation to the actual receipts from 31.6 per cent. in the year of our Government to 38.7 per cent. last year, and the proportion of the estimated receipts this year is round about 40 per cent. The burden is being steadily shifted from the shoulders of those who can afford to bear it on to the shoulders of those who are already shamefully overburdened by the depressing conditions of our country.
  Mr. HOWARD: No.
  Mr. JONES: I shall be glad to hear the hon. Gentleman challenge those

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  figures, for if they cannot be controverted his "No" is entirely meaningless. Not only is that true, but it is also true that we are putting burdens upon our people in respect of the necessities of life. It is true, as I dare say it will be argued this afternoon, that prices are still low; that is to say, they have not risen. But that is not to deny this proposition, also, that were it not for other conditions over which the Treasury has no control, the effect of these Customs and Excise Duties would have been to increase substantially the burden of the cost of living.
  To illustrate the trend of mind of the Government and their supporters, let me recall this fact. We are told in this morning's papers that the Chancellor of the Exchequer last night received a deputation from people who are anxious to make quite sure that a certain other burden does not fall upon them. It was a deputation from people interested in land taxes and land values. The deputation invited him to remove every piece of machinery whereby they might be called upon to make a sacrifice. This is different from their appeal for common sacrifices, eighteen months ago, when we were all to make a common contribution. This afternoon we are all going to make as good an effort as we can to shove it on to other people. I will not dwell upon it, but I call the attention of the House to this fact—we shall have a special day for its discussion: What is this demand for the taxation of co-operative profits but the same principle of putting it on to other people, pushing the burden of taxation upon those who can least afford to bear it?
  Mr. HOWARD: Equal sacrifice.
  Mr. JONES: I think I have adduced evidence, and, to the best of my ability, argued closely the second proposition in my mind, namely, that the incidence of taxation bears unjustly upon the poorer section of the people. Lastly, I come to a third point which we make. We find fault with the Budget because the Chancellor of the Exchequer does not indicate that the Government's mind is looking upon the problem of national reconstruction in a constructive kind of way. The Chancellor of the Exchequer twitted me the other night with having asked him to introduce some measure of Socialism. I assure the Chancellor that I shall not ask him to do that. When
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  I want Socialism I shall ask Socialists to do it; they are much more competent for the job, and much more trustworthy, too. I only expect from the Chancellor a good measure of Toryism, and I am bound to say that I have got it in this Bill.
  But, whatever our respective views and differences in politics may be, we are confronted with a distressing national situation, and it is not unfair to expect the Finance Bill to indicate to what degree the Government approach this problem in a constructive spirit and constructive mood. Of course I do not regard it as entirely their job—that they can do it without other countries. I admit the international bEarlng of this problem, but we must do something ourselves, and, in order to make sure that I am on good ground in this matter, let me read a portion of a speech delivered by a member of the Ministry—and they ought to know. The Minister of Agriculture the other night spoke in the House words which I regarded almost like balm in Gilead:
  "Each nation must bring its own contribution to this pool. These pacts are our contribution. They are planned trade, or freer trade. On a Protectionist or Free Trade platform I am prepared to justify these proposals. Without hesitation I say that planning is neither blind economic nationalism nor is it the chaos, which appears to be the desire of my two right hon. Friends."
  For the life of me I cannot remember which two right hon. Members he was looking at.
  Sir HERBERT SAMUEL: We were the right hon. Members.
  Mr. JONES: He went on to say:
  "Planned trade is the clue to the exit from this economic labyrinth in which the Economic Conference finds 60 nations of the world."—[OFFICIAL REPORT, 10th May, 1933; col. 1605, Vol. 277.]
  What indication is there in any corner of this Budget that the Government have the idea in their minds of planning at all? Their only contribution, so far as I can see, is a reliance upon the policy of tariffs. Speaking for myself—I am perfectly frank about it—I am an unrepentant Free Trader. I believe that you cannot lead this world back into ordered progress until the nations of the world come to regard each other in a more cooperative spirit than is now the

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  case. But will the right hon. Gentleman deny this proposition, that while it is true that the Government relied in the early days upon the principle of tariffism as their big plank it is also true, is it not, that they, in common with the rest of the world, are being driven backward from their main achievement within the realm of Tariff Reform?
  What is the actual effect of this tariff practice upon one of our main industries? I look for a moment at the figures concerning our exports and I read that the declared value of the exported products and manufactured goods from the United Kingdom, in the quarter ended 31st March this year, as compared with a similar quarter in 1931 and 1932, shows up in this way: in 1931, the exports to foreign countries were £58,900,000, or approximately £59,000,000. In 1932, the value was £51,000,000, and in 1933 £50,000,000. "Splendid," says the Tariff Reformer, "that is exactly what we want." If I remember rightly, the Chancellor of the Exchequer preened himself upon the fact that foreign trade was receiving a more or less deadly blow from his practices. What is the effect upon our trade with British countries in various parts of the world? In 1931, the value of exported products and manufactured goods was £44,500,000. In 1932, it was £40,500,000, and in 1931 it was £39,500,000.
  Mr. HOWARD: That is an increase.
  Mr. JONES: Is it? Well, I do not understand figures if that is an increase.
  Mr. HOWARD: That is an increase in volume. The hon. Member is quoting values.
  Mr. JONES: It is quite true. I am not trying to mislead the House I said that they were values. I was dealing with values. I do not see that there is anything for the hon. Member to complain about.
  Mr. HOWARD: Work values, we want.
  Mr. JONES: Let me show the bEarlng of this upon shipping. If hon. Gentlemen will look at page 1 of the general summary of trade and shipping, in the Trade and Navigation Accounts of April they will find that in relation to the foreign trade of British ships entered with cargoes there is a decline; in relation to foreign ships alone is an increase
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  registered. There must be a relationship between the decline in the cargoes borne by British ships and the increase in respect of foreign ships bringing cargo in on the one hand, and with the policy which the Government embarked upon some 18 months ago on the other. In our view, the Government embarked upon a hazardous experiment some 18 months ago, when it embarked upon the principle of economic Imperialism. We are all in favour of the development of the resources of the Empire, so far as is possible, but exclusiveness and building a high wall around the people of our shores and those of the Empire, saying to those inside, "We will speak to you" and declaring to those outside, "We are not disposed to speak to you," is wrong, in our judgment. That is the essence of their principle, and, in so far as the right hon. Gentleman has departed from it in his new pacts, he has departed from the essential feature of the economic nationalism of 18 months ago. We believe that the effect of it is bound to be felt in the world. We cannot afford to entertain those notions. The world is being driven, and increasingly driven, to recognise the unity of the people throughout the world. Their interests are identical, although their manner of living and their resources are different; but, their essential needs being one, we take the view that the Government cannot any longer rely upon this instrument as being of permanent value, but must have regard to the necessity for devising newer and more appropriate methods for leading this nation out of its present chaos, and into a happier condition hereafter.
  4.22 p.m.
  Sir ARTHUR MICHAEL SAMUEL: The House will agree that one whom we all regard as among the most congenial speakers in this House did not keep very closely to his Amendment, or say very much to make a strong case in support of it. If he will not take it as offensive from me, because he knows very well that I should be the last man in the House to say anything of that sort against him, I would remark that I consider his speech a very flocculent, that is to say, a woolly one. I found very little which I could get hold of. He wandered over the whole Bill, and there was no point which we could allocate to the Amendment which is on the Paper. The main portion of that Amendment is the words:

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  "fails to disclose any effective policy on the part of His Majesty's Government for the restoration of trade and employment."
  He made much upon one petty point, but why he did not carry it to its logical conclusion I do not know; that was the question of the National Debt. He pointed out that the total amount was £7,700,000,000 and that we must get a further conversion going in order to reduce the annual charge which appeared, as he said, in the financial statement at about £224,000,000. If he works that out, he will find that the Chancellor of the Exchequer has been so efficient in getting the big War Loan interest reduced that the rate of interest on our total dead-weight debt is very small. Upon the nominal amount, it is slightly under 3 per cent. interest; it should be considered alongside the interest given by the Post Office which is 2½ per cent. That 3 per cent. is subject to Income Tax at 5s. in the £, and sometimes to Sur-tax, and the Capttal sometimes to Death Duties. I cannot perceive what it is that the wicked debt-holder ought not to get in the way of interest on his savings in the National Debt, when it is all stripped down and after Income Tax, Sur-tax and Death Duties have been taken off. It does not come to a very large amount.
  When I see sitting next to the hon. Member for Caerphilly (Mr. Morgan Jones) the hon. and learned Member for East Bristol (Sir S. Cripps), I want to ask whether this Amendment is put down in a spirit of levity. I do not think that the hon. and learned Member for East Bristol is lacking in a sense of humour. I cannot think he is, and he must have been acting with his tongue in his cheek when he put his name down to an Amendment like this. I remember—I cannot quote the words, because I have not looked them up—a speech which he made some weeks ago, I think it was in the Eastern Midlands, in which he said that when the Socialist party came to power there were certain constitutional changes that would be made in the Army and Navy and in the Second Chamber that would enable him to abolish the Capttalist system. When he comes down here and thinks he can help the unemployed by this Amendment after making a speech like that, I can only ask what man who has saved a penny is going to invest any money for expanding business,
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  under such a threat. The hon. and learned Member may laugh. He thought to attract perhaps a few unthinking votes to his party, but he has become the greatest enemy of the unemployed man that there is in this country. For the purpose of getting a few votes he has injured the nation, and forgotten that fine apothegm of Rudyard Kipling:
  "The ship is more than the crew."
  We have had the taxation that was imposed by his late colleague, now Lord Snowden. It was a paralysing taxation and of such a kind that no man dare venture into business, because if he made a profit it was taken by Income Tax, Surtaxes and Death Duties, and if he suffered a loss the State gave him nothing back. The Labour party carry on a constant girding against the creditor and the rentier class, and the man who holds investments. Is that likely to induce people to lend their money to increase employment? Many Members of the Socialist party, by some perverted or distorted point of view, seem to argue their Socialist principle from three standpoints: first, that man-made laws, such as regulate Capttalism and wealth, have brought poverty and misery. They are always saying that misery and poverty are brought about by man-made laws. They forget that poverty and misery were never made by man-made laws. Poverty and misery are the first state of the human race. Man-made laws have allowed Capttal to accumulate and have enabled wealth to blunt the edge of poverty and misery. Those people who gird at the laws that have allowed Capttal and wealth to accumulate, forget that it is by the accumulation of wealth that Capttal has alleviated the poverty and misery into which man was first born by the original processes of nature.
  I have been long in this House, and I have never heard anyone from that side say a word that would help us to add to the wealth of the country. They are always proposing something to break down existing wealth. They forget that every human being born as a new addition to the population must be provided with his additional share of wealth; otherwise, the average standard of living falls. Do not let us forget that the average human being in this country should for that one reason endeavour to add to the general wealth and

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  do nothing to break it down. The hon. and learned Member for East Bristol girds at the words "credit" and "investor." Credit is essential, whether a government is a Socialist or a Capttalist one. A man uses credit from his neighbour. If he wants to borrow, the neighbour will for reward lend him money out of his saved earnings in order to enable the borrower to increase his output, to put up another bench, to employ more men. A man must possess credit in order to give his neighbour confidence that he will pay back a slightly higher sum than he borrowed. Any person who attacks credit or investment is an enemy of the working man. We should do all we can to strengthen credit and investment, and to let people believe that, if those who have saved something from their work are willing to lend it, they will get it back, and, in the meantime, will get some reward for lending it. Otherwise, men will not work to make it, and so will not be able to lend it. The whole system of credit is as essential to industry and employment as water is to human life, and, therefore, I feel very vexed when I hear people girding against men who lend their savings to others, for it is by investment that an increase of industry may be maintained.
  The Chancellor has our sympathy for his inability to reduce taxation, just as the taxpayer is entitled to sympathy also. My right hon. Friend is labouring under the curse of the type of finance which was put upon this country and upon this House by hon. Gentlemen opposite, under the leadership of Mr. Snowden, and until he found that he had made a mistake. There were two principles of the Socialist party, the one that of Mr. Snowden, and the other that of the right hon. Gentleman the Member for Wakefield (Mr. Greenwood), which brought us to disaster. Mr. Snowden's principle was the redistribution of wealth by the instrument of taxation. See where that landed us. People abroad did not trust us, and tried to take their money away from this country, and so wrecked the Gold Standard and all it stood for. The other principle, a mad principle which did a deal of harm—that of the right hon. Gentleman the Member for Wakefield—was that we could afford to have anything in reason that we want. That is impossible.
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  We are now reaping the misery which those two principles brought upon us. That is the result. Hon. Gentlemen opposite do not like Communism, and neither do we, but now we are living under a veiled Communism. What is the difference, as regards taxation, between Income Tax, Surtax and Death Duties taken by violence all at once, and Income Tax, Surtax and Death Duties taken from us at intervals with our consent, and to the same total, by the taxation principles under which we live? Anyway, the amount is pretty much the same, and we are discouraged by the excessive taxation which we are enduring. Quite apart from the world depression, taxation is one of the causes of our men being out of employment and suffering misery. Death Duties are probably one of the worst instruments for keeping down employment. I speak from experience—
  Mr. THORNE: You cannot shove that on to anyone else.
  Sir A. M. SAMUEL: I can speak from experience as a trustee. A large number of businesses in this country are not mammoth limited liability businesses like Imperial Chemical Industries. The small businesses run by families—fathers, sons, nephews, nieces, grandchildren— are the backbone of our industry. In such businesses all the Capttal of the family is invested; there is no limited liability, and there are no shares. A death occurs, a considerable amount of money is taken out of the business, and the result is that the Death Duty is very often the death knell of the business. One of the gravest blows to employment in this country is the incidence of Death Duties.
  I will now try to rebut what was said by the hon. Member for Caerphilly. He said that the Budget was not a just Budget. I say that it is an honest Budget, a balanced Budget, and, when it is suggested that our Budget should be unbalanced, I hope the House will remember that we on this side, and the Chancellor of the Exchequer himself, were elected to balance our Budget and keep it balanced. Probably no one is more disappointed than the Chancellor of the Exchequer that he is not able to give some relief to the taxpayer. I am glad that he has rebuked the too-clever-by-half economists and self-styled experts who are always lecturing, hectoring,

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  talking on the wireless and writing about how they and they alone can put the world right theoretically by methods created in their own imagination and based on non-existent conditions. What a comic collection of muddleheads they have been. Some time ago we saw a column from one collection of them in the "Times" saying that certain things should be done. Three days after we saw another column from another great collection of economists saying that the opposite should be done. On the top of that we had advice from one who was supposed to be the most efficient—or voluble—of them all, and who is certainly the greatest talker in their profession, telling us positively how we could get towards universal prosperity by launching a price raising fund of 5,000,000,000 paper dollars, based upon the gold in the various countries of the world, but forgetting the Major premise. We saw statements from him a few days later that the other countries that he was going to rope in with their gold for his paper would have nothing to do with such a scheme. I am very glad that my right hon. Friend has left such muddle-headed gentlemen alone. I heard the hon. Member for Caerphilly say something about planning, and I suppose that sooner or later we shall have some very stupid fellow calling himself an economist, or expert in national finance or posing as an adviser, telling us that we must plan on the lines of Mr. Ivan Krueger. We had very much better stick to the old, orthodox, Treasury method of paying our debts, making our Budget balance and living within our national means. Sooner or later honesty will be found to be the best policy. They will see that in America; and in other countries; we are at least sticking to our bargains at home and abroad.
  There was a very good justification for suspending the Sinking Fund. I do not see why, in troubles like those in which we are now, we should penalise ourselves in order to relieve the burden on grandchildren who are yet unborn; while, as for borrowing to pay the Sinking Fund, that, surely, is a reductio ad absurdum. A Sinking Fund can only honestly be taken out of revenue, and, if that cannot be done, the next best thing is to do exactly what the Chancellor of the Exchequer has done, namely, to say that we have not got the money and are not
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  going to borrow for maintaining a Sinking Fund.
  The hon. Member for Caerphilly talked about our having a War Debt of £7,700,000,000, but I do not think that, if he thought over the matter, he would feel justified in calling it a War Debt. Of that amount, £700,000,000 for example, was certainly contracted before the War, while a great deal of the money has also been used for purposes of a peaceful nature—for housing and so on, and also, although I do not say this now in any hostile way, for unemployment benefit and other similar peace services. It is, therefore, wrong to call all the National Debt a War Debt. Even if it were all War Debt, the amount is not to be wondered at. I looked the other day at the amount of money that the British taxpayer has paid Since the end of the War in 1918, and the sum was so stupendous that I will repeat it to the House. We have paid in taxation, Since the end of the War, £15,000,000,000 sterling. That is not loans, but taxation paid. Is it to be wondered at that we have this debt still remaining? We have done our taxation part nobly and well, and, when the hon. Gentleman talks about the £7,700,000,000 being all War Debt, he must remember that we have already paid off twice that amount Since the War, and that, as I have said, part of the amount which now remains was contracted before the War, while some of the rest of it was not used for war purposes at all.
  There was one point made by the Chancellor of the Exchequer which impressed the House very much. He told us that he had reduced the charge for debt services by £38,000,000. That is true, but, if I may say so to him without offence, he ought also to have made this point, that, owing to Mr. Snowden's Budget and Mr. Snowden's policy when he was Leader of the Socialist party, Mr. Snowden was compelled in 1931 to put upon us extra taxation in order to rehabilitate the credit of the country. That rehabilitation enabled the Chancellor of the Exchequer to make the recent conversion of War Loan. That extra annual taxation in 1931 amounted to £91,000,000, and, while we are grateful to the Chancellor of the Exchequer for having reduced the cost of the War Debt by £38,000,000 a year, we must remember

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  that we have had to pay £91,000,000 a year in extra taxation in order to get a reduction of £38,000,000. That is rather a travesty—
  The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): It was £38,000,000 last year; it is £52,000,000 altogether.
  Sir A. M. SAMUEL: Certainly that adjustment of total rather weakens my point but not the principle of my argument. While we are getting £62,000,000 off the debt charge, we are paying, on account of Mr. Snowden and as a result of the Socialist party's policy, £91,000,000 a year in extra taxation. On the top of that, there are 3,000,000 small holders of 5 per cent. War Loan, because the Chancellor of the Exchequer told us that he sent out 3,000,000 prospectuses for the conversion. Moreover, one of the great insurance companies, which is a holder of War Loan, has 21,000,000 policy holders, so that, although that company counts as one in the number of holders, it represents many millions of people who have a share in War Loan, and all those holders who are interested in the War Debt have been subjected to a cut of 30 per cent. in their income. They have borne it willingly, and that should be put to their credit when people object to the relief of Income Tax asked for by the taxpayer.
  The Chancellor also told us that the amount of debt services had come down a good deal, but I think he should bear in mind that we cannot expect that process to go on for any great time. We cannot expect that the present cheapness of money will continue indefinitely, and I would like to utter this note of warning, that we must look forward in the course of a year or so to seeing the burden of the debt services come down at a very much slower rate than it has done during the past year on account of the uncommon fall in the general market rate of interest. A reduction of expenditure is, in my opinion, the only way in which we can really get the burden taken off our shoulders. I have been in trade all my life, and I am sorry to say that I can see no particular resiliency in trade at the present time. I do not see where we are going to get any fresh or additional revenue during the coming year, nor do I see how we are going
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  to get any alleviation at the end of the next 10 months and at the same time have a balanced Budget. We can only do it by cutting down expenditure and living within our means. It is because of the heavy expenditure that we have upon our shoulders, and not for the reasons given in the Amendment, that we cannot get our men to work.
  The Committee presided over by my hon. Friend the Member for Richmond (Sir W. Ray) presented a very valuable report. Why has not some of it been acted upon? If the Chancellor challenges me to say what I would do. I am not going to run away and say it is not for me to suggest. I will suggest where we can get reductions in expenditure. I was one of the signatories of what is known as the Rentoul Report—the private Members' Economy Report—and those who threw cold water upon that report bear upon their shoulders a grave responsibility. They discouraged the Treasury from taking action upon it; they clogged the hands of the Treasury in helping the Chancellor of the Exchequer to go forward and get some further reduction of expenditure. That report contains the kernel of the matter. In it the Chancellor of the Exchequer could find many proposals showing how to alleviate the burden of taxation by reduction of expenditure.
  We are now trying to reorganise our Floating Debt. We have been for some months trying to fund some of the Floating Debt into 2½ per cent. Conversion Loan, and I notice that during the last eight or nine weeks we have issued in that form, £50,000,000 of funded debt, thereby reducing Treasury bills. Within the last two or three days we have had a Debate which enabled the Chancellor of the Exchequer to get £200,000,000 more for the Exchange Equalisation Account. That will go probably into the floating debt with the other Treasury bills, I wonder what sort of wisdom it is to fund some of the Treasury bills by the 2½ per cent. Conversion Loan and at the same time float £200,000,000 more of Treasury bills. That is not the best way to regularise the national credit, because even now there are too many Treasury bills in existence.
  The hon. Gentleman sneered at the efforts of my hon. Friends to abolish the recent Land Tax. Of course, those Land Tax proposals ought to be abolished. They

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  are a clog upon the rehousing of the people and the clEarlng away of slums. The laughs and sneers of the hon. and learned Gentleman the Member for East Bristol as he sits there carry no weight as argument. People will not invest or speculate in houses or buy land for building if they think that sooner or later these land taxes can be brought into operation. The sooner they are taken off the Statute Book the better it will be for the housing of the poor.
  I am not very pleased with the proposal in the Budget speech to reduce the Company Capttal Duty. I am not so very pleased with the cheaper flotation of companies. It was pointed out in the Section 386 of the Macmillan Report that during 1928, owing to facilities, which are now to be made greater, for the flotation of companies, two or three hundred companies were floated and that they had lost more than half their Capttal by 1931. The flotation of fresh Capttal by companies will, I think, give a greater opportunity for the scamp to injure the investor. It is true that you cannot protect the fool against his folly. But there is no reason why you should give further facilities to unscrupulous company promoters to swindle unsuspecting investors. I remember a speech by the late Sir Frederick Wise during a Debate in which Members were advocating the reduction of the Stamp Duty upon foreign bonds because, if we did not reduce it, the issuing houses, for whom I have very little sympathy, would lose the flotation business. It would go to America. They did lose the flotation profits and the bonds were floated in America. Nearly all of them are now in default. We ought to be very thankful that we did not reduce the Stamp Duty but kept it high, so as to prevent insecure foreign bonds being issued here for the benefit of the issuing houses and the company mongers. It would have been better if the League of Nations had gone there for all their loans. Instead of a loss of money by us the Americans would have lost it. I am not in favour of reducing the tax upon the issue of Capttal. People who want to borrow are eager enough to pay the Stamp Duty if they can raise the money they are asking for. It is a shortsighted policy to reduce the Stamp Duty on Capttal issues, even for home issues— certainly for issues by foreigners.
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  The hon. Member for Caerphilly raised the point about Post Office funds in Clauses 29 and 30. It is not clear to me what is aimed at. It appears to me that the Treasury may be allowed without Parliamentary control to say what is revenue and what is expenditure. In the Civil Estimates for nearly every Department a certain amount is put down and voted and provided by the taxpayer for telegrams and telephones. These amounts are forms of expenditure and they have to be collected and defrayed out of revenue derived from taxes, or by some book-keeping entry by the Treasury or the Post Office. We may get a fictitious amount of surplus. Unless we get some explanation from the Chancellor of the Exchequer perhaps about the Post Office Trading Account, we may find ourselves paying into Government offices, voted from the taxpayer's pocket, money or book credits for the telegrams and telephones that are used by these Departments and using that money as a profit contribution that is to be dealt with free of control under these Clauses 29 and 30. That is a point about which we shall have to have some more information.
  I see no hope of a reduction of taxation which is what we are looking for. Reduced expenditure is the only way in which he can reduce the burden by April, 1934. It is the only way to reduce unemployment. I ask my right hon. Friend not to be discouraged by the cold water that has been poured upon the Rentoul Report. We took a large amount of trouble in trying to find some method of reduction in expenditure by which we could bring about alleviation. The same may be said for the Ray Report. If the country is not prepared to support reduction of expenditure proposed by a Government with the immense Majority that this has now, and for the express object of getting down taxation by bringing expenditure within more reasonable limits, we shall never in our lifetime get the reduction.
  4.53 p.m.
  Sir PERCY HARRIS: We have listened to two speeches in striking contrast both in manner and in matter. I agree with the last speaker about the honesty of the Budget. There was no giving way to popular clamour. It was an honest attempt at sound finance for

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  which we ought to give the right hon. Gentleman credit. A friend of mine said to me, in the form of a compliment to the Chancellor of the Exchequer, that he is neither flighty nor imaginative, like some of his predecessors. I think the last thing he could be accused of is flightiness, nor can I think there is much imagination. It may be that in these difficult times safety is the best policy for a Chancellor of the Exchequer. I have looked through the 38 Clauses and eight Schedules of the Finance Bill and found it very difficult to discover any novelty. The only imaginative Clause, the only Clause with a new idea is Clause 12, and there is considerable difference of opinion as to the value of it. I see in it hope for the future. I agree with the opener of the discussion that it is a curious fact that the first Clause in the great Bill providing for these tremendous sums for 1933, in our serious financial position, happens to be a Clause dealing with beer. It must make an unfortunate impression on the intelligent foreigner. It may be due to an accident of drafting but there it is. The first contribution from our hardly won balance goes in that direction. I am not one of those who regret the reduction. I think the Beer Duty was on a scale that can only be described as a war scale, but we may give an unfortunate impression to the countless people who feel that they have claim on the State.
  I do not take the line of some hon. Members opposite that our expenditure is not on a serious scale. A £700,000,000 Budget is not to be scoffed at, especially when you release the Sinking Fund and there is no new contribution to the social and economic problems that are calling out for solution. The unemployed have a claim on the State for a more generous contribution. It has to be borne in mind also, when we talk about the Budget balancing, that there is no provision for the Government scheme for the ablebodied. The Government are pledged to take over responsibility for them out of national funds.
  I am approaching this question from another angle. I am a member of a local authority. The Minister of Health is conscious of his responsibilities. He feels that he must do something for the
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  distressed areas. They have waited too long. It is no secret that the Government are now going cap in hand to the local authorities asking them to foot the bill, and they are not willing to foot the bill. They are as desirous of balancing their budget as the Chancellor of the Exchequer is naturally anxious to balance his. The county councils, municipal corporations and urban district councils are not prepared to pull his chestnuts out of the fire. They say the Government have pledged themselves to deal with this problem and it is their duty to find the money. If that be the case, I am afraid that the so-called balanced Budget is very near being unbalanced.
  There is also the liability to the United States as the hon. Member opposite pointed out. I am one of those who hope that we shall not pay any more, but the liability is there, and it is a matter which we still have to take into account. Lastly, there is the undertaking of the Government to do something for the unemployed. The President of the United States has made an appeal to the countries of the world to appropriate moneys for reconstruction programmes. America has given a lead, but there is in these 38 Clauses no hint or suggestion of any idea or policy, other than allowing the unemployed to go on in the unsatisfactory way of being dependent on doles.
  I agree that the strength of the Government's position is the seriousness of our finances. As far as I can see the Chancellor of the Exchequer is right to Budget cautiously. I do not take the view that there is any immediate prospect of trade revival, improved business and increased returns from Income Tax. There is a steady decline in money values and in the national income. According to Mr. W. H. Coates, between 1924 and 1932 there has been a decline of something like 9 per cent. in the national income, a drop from £4,200,000,000 to £3,500,000,000. The results of the collection of Income Tax during the past year, and anticipations in the Finance Bill of this year, point to the fact that the Treasury take that view also. The fall is not due to any failure in the forces of nature. On the contrary according to the Macmillan Report and from data collected by the economic section of the

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  League of Nations, a comparison with 1913 shows that while the world population had increased by 5 per cent. by 1925, the general index of production had risen by 18 per cent. Excluding cereals and foodstuffs the index of production had risen by no less than 25 per cent. In other words, the command over the sources of well-being had increased even by 1925 very much faster than the population. That increase of production is still going on.
  The failure of the peoples of the world to manage their finances, and to provide balanced Budgets and reduced taxation, is not due to the forces of nature, as my hon. Friend above the Gangway suggests, but is due to the failures of Governments and politicians. We must all assume responsibility. While wealth is increasing throughout the world, trade is steadily declining. In 1929 our exports were £729,000,000; by 1931 they had dropped to £390,000,000, and by 1932 to £365,000,000. Unfortunately, to judge from the figures of the first quarter of this year, trade is still declining. My view is that the only hope of maintaining our standard of living is in trade recovery. That is the only real way to bring back employment. Everything else is a palliative. Reconstruction schemes are not cures but just palliatives to ease the situation.
  The Government last year embarked on a great experiment. It has been a great disappointment. I have always felt that we should not be too critical in the first year, but our experience does suggest that the methods of tariffs and quotas and trade restrictions are not the way to secure that trade recovery which is the only means of bringing back prosperity. The Minister of Agriculture, I consider, is a national danger. I have not much use for Socialists, I think they are misguided, but a converted Socialist is the most dangerous form of Socialist. The Minister of Agriculture, I understand, started life as a Fabian. He has lost the ideals of Socialism, but he still retains their theories, and unfortunately, in his powerful position as Minister of Agriculture, with the whole of the Tory party behind him, he is able to put his theories into practice. They will prove disastrous to our trade and prevent that revival of industry which is the only chance—
  Sir A. M. SAMUEL: Is the hon. Member justified in making this personal
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  attack on the Minister of Agriculture, and has he given previous notice of the attack to my right hon. Friend?
  Sir P. HARRIS: It is not an attack. On the contrary, it is a compliment. I am recognising his power in the Government. When I paid him a tribute it was recognised by cheers on every side of the House. He would be the last person to object to this as a personal attack. He is going about the country boasting that his policy of trade restrictions and quotas is the way to bring prosperity to our land. Our only hope is the President of the Board of Trade. He is the one bulwark left in the Cabinet to check his onward march, and to prevent our finances being put into a state of disorder. We are are not going to save this country by looking inwards. We must look outwards. We cannot exist without world trade. This is a small island with a crowded population, and we cannot keep going without trade on a world scale. All these experiments endeavouring to divert the mind of the people from world trade to our small home industries must lead to disaster. I have been looking at the draft annotated agenda of the World Economic Conference. It might provide useful food for thought for the Minister of Agriculture. It says:
  "In the field of international trade, prohibitions, clEarlng agreements, exchange restrictions… throttle business enterprise and individual initiative. Defensively intended, and in many instances forced by unavoidable monetary and financial emergencies, these matters have developed into a state of virtual economic warfare… In essence, the necessary programme is one of economic disarmament."
  Then in conclusion it states:
  "FiNaily, there must be greater freedom of international trade. It has already been pointed out that one of the most significant features of the present crisis is the fall which has taken place not only in the value but in the quantum of world trade. This fall has been partly caused, and has certainly been intensified, by the growing network of restrictions which have been imposed on trade during recent years. Every country seeks to defend its economy by imposing restrictions on imports which, in the end, involve a contraction in its exports. All seek to sell but not to buy. Such a policy must inevitably lead to an increasing paralysis in international trade."
  We have joined in a mad battle of quotas and restrictions. Our one hope is next June. Are the Government going to enter that conference in the spirit of Clause 12,

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  with the ideals of the President of the Board of Trade, or are they going to enter the conference inspired by the theories and practice of the Minister of Agriculture. If the latter, disaster is inevitable. If the former, then there is hope for the future of our finances, for trade revival, and with it a buoyant Income Tax and revenue. I hope before these discussions end the Chancellor will come out on the side of the President of the Board of Trade. If not, I see nothing but disaster ahead for our finances. We are a nation of traders, and we can only live by trade. Without it our revenue must decrease and financial disaster be inevitable.
  5.12 p.m.
  Mr. TOM SMITH: I cannot claim to be delivering my maiden speech, because during the lifetimes of at least three Governments I had the pleasure of addressing the House on many occasions. I would remind the House that the atmosphere this afternoon, after the speeches of the hon. Member for Farnham (Sir A. M. Samuel) and the hon. Member for Bethnal Green (Sir P. Harris), is far different in tone and in outlook from what it was at the election in 1931. As one who gave the lie direct to the statement of Lord Snowden that the House that saw us then would never see us again, let me remind the House of one or two things said on the platform by supporters of the National Government when they were talking claptrap to get votes. I have with me one of the election addresses I had to meet. We were told then that if the National Government was returned we should be on the right way towards prosperity. These were some of the things put forward:
  "A word to women. Is there a woman who does not want to be out of debt, a woman who does not want to feel that she and her husband, even by stinting and scraping, are paying their way? What woman would not give her all to see her home secure, her husband in regular work, and that little each week which makes all the difference between the comfort of life and the misery of debt? For more work and more wages your duty is to vote for the National candidate."
  We have got 300,000 more people drawing poor relief now than were drawing it 18 months ago, and there are many people who had saved a few pounds who have lost it Since this Government came
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  in. The hon. Member for Farnham said the hon. Member for Caerphilly (Mr. M. Jones) had been very woolly in his statement. I will leave the House to make up its mind whether the speech we listened to had any relation to the facts of the Finance Bill. We on this side of the House have put down this Amendment which contains three propositions I can support whole-heartedly. The first proposition is that no attempt has been made to redress the unjust sacrifices made by the unemployed and other sections of the community. I wish the Prime Minister had stayed in the House a little longer, because I would prefer to say to his face a few things I have in mind with regard to some statements he made at the last election about the unemployed and equality of sacrifice. The unemployed were led to believe that, if they consented to a 10 per cent. cut in pay, and if in the future the financial position of the country warranted it, consideration would be given to them first of all. There is not an hon. Member in the House who, if his own family had to economise, would say that the weakest member of the family must go without the things he needed. The Chancellor of the Exchequer would have been wiser if he had restored the 10 per cent. cut in unemployment benefit. The hon. Gentleman the Member for Farnham spoke about the causes of poverty, and I think that even he would agree that the unemployed are not themselves responsible for being out of work. I can tell the House, speaking as one who has been attached to industry (hiring the last 18 months, that in the constituencies thousands of good men and women are being driven to despair. It is one of the hardest tasks of their life to try to eke out an existence on 15s. 3d. and 8s. a week respectively.
  I do not oppose the relief of nearly £15,000,000 given in regard to beer, because I believe that it is taxed far too much. Those who desire to drink beer have a right to be able to get it at a reasonable price, but I would say to the Chancellor of the Exchequer that I fear that the relief to beer is more in the nature of a gesture to the brewers than out of consideration for the working people and the tenants of licensed houses. If the Chancellor of the Exchequer had seen his way to have used the money given in relief of the reduction of the tax

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  on beer to help people who are unemployed, and we on these benches had had to make a choice, our vote would have gone to the assistance of the unemployed. There is a relief of £1,500,000 a year to companies, but in these days when we talk in millions that amount does not seem to be very great. But I would remind the right hon. Gentleman that the financial position of the country has been said to be such that the Government cannot even provide seeds for the unemployed. The Society of Friends are doing a magnificent work in raising money for the provision of allotments and seeds, and thousands of unemployed men are doing excellent work on allotments. The seeds provided have been a real help to them. We cannot get £300,000 for land drainage and work which needs doing urgently and which s economic. We have tried to save a few paltry thousands at the expense of the unemployed by bringing in a Bill to end Health Insurance with regard to certain persons. There are thousands of unemployed men who, unless a miracle happens, will, in the course of a few years, be deprived of their pension rights.
  We support wholeheartedly the first part of the Amendment in favour of redressing the unjust financial sacrifices upon the unemployed and other sections of the community. As to the method of raising taxation, we believe in direct taxation as against indirect taxation. We recognise that four-fifths of indirect taxation is paid by the people, and that it is tantamount to a reduction in wages. It is pettifogging in these days to talk about increasing, by a copper or two a gross, the taxation on matches, or by 1s. on a cigarette lighter. It would be a good thing if there could be the fullest publicity enabling the public to distinguish between articles made abroad and at home, and if each article was labelled so as to show what taxation the housewife was paying when making a purchase. There would then be more interest at election times than there is at present. When I am reminded that Capttal is not being remunerated, I would put the other side of the question. The wages of the workpeople during the last 10 years have been reduced by more than £550,000,000. Constituents in the division of one of my hon. Friends have had their wages reduced in the mining industry by more than half in the last six years. There
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  are thousands of men working hard in the pits for two or three days a week who take home less than 30s. at the end of the week, and out of their meagre earnings have to pay additional taxation when they purchase certain household necessities. It is pettifogging to raise revenue in this manner.
  With regard to the contention in the Amendment that no attempt is being made by the Government to restore trade and employment, I do not think that anybody in the House will claim that the tariff has been of any use to the basic industries of this country up to now. We shall be told that time will tell. I know an hon. Member who has supported the Government through thick and thin who has admitted that tariffs have worked out in exactly the opposite direction. What has happened to some of the basic industries? In the mining industry, for every three men employed in 1924 there are only two employed to-day. In Yorkshire alone there are 45,000 fewer persons employed in the mining industry than there were seven years ago, and at the present time there are at least another 2,000 men under notice. Is anybody going to say that the pact between this country and Denmark will bring any real and substantial benefit to the mining industry?
  Mr. DICKIE: Yes.
  Mr. SMITH: I hope that the hon. Gentleman is right. That is the only retort I can give, and nobody will rejoice more than I if the hon. Member is right in that connection. Time will tell. It may be said that a penny on heavy oils is a step in the right direction. I believe there is a future for the extraction of oil from coal, but I think that a good deal of confidence has been destroyed because there has been too much financial jugglery in regard to the different processes. I have visited places in England, Scotland and Wales with various Members of the House to see the different processes, and I do not think that a penny a gallon will make all the difference. While I believe that there is a future for the extraction of oil from coal, it will have to be organised on a public utility basis before it can become anything like a commercial proposition. I should have been glad if the Government had consented to the suggestion that a committee should be set up to ascertain whether or not something could be done either by

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  way of low temperature carbonisation, hydrogenation, or pulverisation, in order to increase the demand for raw coal.
  Mechanisation in some of the basic industries is bringing about problems which will have to be faced sooner or later. For instance, in 1913 out of every 100 tons of coal brought to the surface 8½ tons of it was cut by machinery, and in 1932, out of every 100 tons of coal, 33½ tons was cut by machinery. Taking Scotland as a district, out of every 100 tons of coal brought to the surface last year 70 tons had been cut by machinery. I can tell the House, as one who, during the last 18 months, has spent a considerable time both down a coal mine and on the surface, that the effect of mechanisation is throwing thousands upon thousands of men on the streets. Unless something unforeseen happens, from 250,000 to 300,000 men will never go down the pits again. There are all kinds of machinery—coal-cutting machines, conveyors, pneumatic picks, and what are known as "scraper-loaders." There are machines in pits turning out as much as 16 tons of coal per manshift. Thousands of men are being displaced in the mining industry for reasons which a tariff cannot remedy in any shape or form.
  What are we to do? The Chancellor of the Exchequer is not such a pessimistic soul as some people make him out to be, but when I read the statement he made, that for the next 10 years he could not look forward to any hope—[An HON. MEMBER: "He did not say that!"] Whether he was misrepresented or not, is not my business, but when I read the statement he certainly was not too cheerful with regard to future prospects, to put it no higher. Scarcely anything is being done in the great basic industries to deal with unemployment. Thousands of men are in despair. Why? Take the position of the man, say, of 55 years of age who is discharged from the pit. Other things being equal, when the manager of a colliery needs a man he takes the young, strong man, because with the introduction of the mechanisation underground it is all "go" from the moment you get down the pit until you get out of it again. There ought to be some kind of planning. I should like to see in all the big basic industries, and particularly in mining, an adequate pension scheme for the assistance of men who can never
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  hope to get back into the industry. I know that there is the question of finance, but these men are having to be kept now. A pension scheme could be evolved if we had the will to do it. Life in the mining industry is a hard one. Wages are very low, conditions are very bad, work is very hard, but during all this bad time the royalty owners have taken nearly £6,000,000 a year. Hon. Members may say that they are entitled to it. If they are entitled to £6,000,000 a year, through good trade and bad trade, surely the men who have spent the whole of their working lives underground have a right to a decent pension.
  Major the Marquess of TITCHFIELD: My hon. Friend ought to be perfectly fair to the royalty owners. He forgets that of that sum of £6,000,000 over £4,000,000 is taken away by taxation.
  Mr. SMITH: I understand my Noble Friend's point, but I do not forget that this £6,000,000 is a charge on the mining industry, and that when you have dealt with Mineral Rights Duty, the Welfare Levy and even Income Tax you have a jolly good share out of the earnings of the mining industry. I was not referring in any shape or form to the royalty owner except by way of contrast. I was only trying to show that if an industry can bear a burden like that, then surely the country can find for the man who has worked the whole of his life underground something like a decent pension. I could show my Noble Friend a document which was handed to me by the general manager of a colliery, showing that a certain royalty owner in 19 years had drawn £42,000, and the total value of the coal that had been got from that mine in that period was only £2,600. That was because the royalty owner insisted on a minimum rent of £3,000 a year. These contrasts provide one of the reasons why so many people in the industrial districts are supporting the party to which I have the honour to belong. The fact of my being here to-day after five strenuous fights and a walkover is rather significant of the change that has taken place.
  There are one or two other things that I would like to suggest. We have to face up in this country to the shortening of the hours of work. We wish to increase production. What we are so much disappointed about is the distribution of

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  the wealth when it is created. I honestly believe that in some of the big industries we could get a reduction in the hours of labour without increasing the cost to the consumer if we were bold enough and big enough to economise in distribution. I believe it could be done, but first of all we must have the people in power who want to do it. I should like to put a few questions to the Chancellor of the Exchequer, and we have a right to an answer. Assuming the financial position of the country was such as to allow the cuts to be restored to the unemployed, do the Government intend to do it? Is it their intention to restore the cuts? It is for the right hon. Gentleman and his friends to give an answer. Whatever the House may think in regard to the people outside, there certainly is a change in opinion and outlook, and a good many hon. Members who are here for the first time, and who were so ardent on the platform at the last election, will have a far different crowd of people to meet when they go back. I thank the House for the tolerance it has shown to one who has been absent for 18 months. In conclusion I would say that when the Bill is in Committee we shall endeavour to put our points of view on the various Clauses, but we are not very hopeful in a House so constituted that our case will meet with much consideration.
  6.35 p.m.
  Marquess of TITCHFIELD: I cannot allow this opportunity to go by without saying a few words on my right hon. Friend's new oil tax. I am one of those who believe that it is extremely unwise to tax a commodity which drives the wheels of industry round. I believe it to be extremely unwise to tax anything that produces anything else and extremely unwise to enforce a tax that will put up the cost of production. Put up, by all means, your commodity prices if you like. As regards agriculture that is the policy of the Government, and I am entirely in favour of it, but I believe it is very unwise to put up the cost of production in industry. For that reason I would ask my right hon. Friend either to abolish this particular tax or to reduce it, because I believe it will hit very hard many producers in this country. Hon. Members have already indicated to my right hon. Friend the bad effect that the tax
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  is going to have upon the shipping industry. I know nothing about the shipping industry, but I understand it is one of the most depressed industries. There are many hon. Members who are far more fitted to put the shipping case, and therefore I will not say anything in regard to it.
  I should like to make a plea for the smaller industries that will be heavily hit by the oil tax. I have a good many of them in my constituency; men who are struggling along, working on small margins and small profits. I can say without fear of contradiction that if this tax is not abolished or modified very much it will mean death and damnation to these small men. These men, owing to the fact that oil is cheaper than coal, have installed oil-burning plant and have put down considerable Capttal in installing those plants. They were wise and enterprising in doing so, and then comes the bombshell of my right hon. Friend and these men find that their endeavour and enterprise has been entirely crushed by the oil tax. I do not think that I am exaggerating when I say that there is consternation among tlhe small industries, and I can realise their reason for it.
  The more you tax the driving force of industry the more unemployment you will have. The more you lighten the burdens on the driving force of industry the less unemployment you will have. I believe this tax will fall very heavily on the driving force of industry. How the tax works out in percentages throughout the country it is rather difficult to ascertain, but I should say, ranging through the country, that the tax percentage varies somewhere between 23 up to something like 40 or 60 per cent. Productive industry cannot stand this strain, and I am afraid that by enforcing the tax my right hon. Friend will force on to the labour market many of our fellow citizens. I have heard hon. Members say that this tax will help the coal industry. I listened with great interest to the speech delivered by my hon. Friend who has just sat down. I disagreed with him from the beginning to the end of the speech with the exception of one remark, when he said that the oil tax would not help the coal industry. Like him, I represent a good many miners. If I thought that the oil tax would help by one jot or one tittle my mining consti-

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  tuents I would vote for it and fight for it tooth and nail. But it cannot help the coal industry for the very simple reason that these industrialists have got these oil engines, for good or for evil. They cannot get rid of them, they have put very considerable amounts of Capttal into their oil engines, which Capttal is frozen up, and they cannot afford to turn from oil to coal. Neither will the Oil Tax help the different hydrogenation processes, because we all know that the difference in price is much more than one penny a gallon.
  I should like to make a suggestion which might help my right hon. Friend over his difficulty. My suggestion is this, that the tax should apply only to oil-burning machinery installed in 1933. I do not know whether that is a sound suggestion. My right hon. Friend is rubbing his nose. When I see him rubbing his nose I feel that when one makes a suggestion to him he does not think very much of it. When my right hon. Friend speaks I should like him to tell me whether or not there is anything in my suggestion. The right hon. Gentleman is putting these small industrialists—if he will pardon me for saying so—between the devil and the deep sea. They cannot change their mode of production, and I am not exaggerating when I say that many of these men will have to go down. Some hon. Members may say, "If your constituents cannot convert from oil to coal, let them go to the grid." The answer is, that there is no grid near Newark, and there will not be a grid for some years to come. I do not know what is to happen between the time when the grid arrives and the time when this Oil Tax has nearly killed many of my constituents. Certainly, they will find themselves in very difficult circumstances.
  My right hon. Friend will naturally turn to me and say: "If I take off this tax"—which I understand brings in about £2,000,000—"where am I going to get my money?" That is a very reasonable question for the Chancellor of the Exchequer to put. May I very humbly make a suggestion? Why not put a tax on foreign sugar? I believe that my right hon. Friend could get more than £2,000,000 from that tax. If he did that he would earn the thanks of our Colonies. If he put a tax on foreign sugar tomorrow the people of Jamaica and
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  Mauritius would jump with joy. What about tea? The cost of living is coming down every day. Large sums could be got from tea. I know that my hon. Friends opposite will not agree to that. To them, the breakfast table is absolutely sacred. The motto of the Labour party's breakfast table is: Nemo me impune laseessit, which I understand means, for the benefit of those who know less Latin than myself, "No one touches me with impunity." That may be a very good motto for a famous marching regiment, but it is hardly a vantage ground from which the Chancellor of the Exchequer could deal with his Budget.
  I want to deal with one point made by my hon. Friend opposite, and that is in regard to mining royalties. He said that some £6,000,000 were taken in mining royalties every year. That is true. But I suggested to him that he had forgotten that £4,000,000 of that amount went in taxation. It has been, I understand, the policy of the Miners' Federation—I shall be corrected if I am wrong—to take the remainder of the royalties as pensions for miners. I understand that there is something like 1,000,000 people scheduled as miners in this country, and the Miners' Federation would like to increase the wages by £2,000,000, and to give pensions to miners over 60 years of age. I do not know how many miners there are in this country, but there must be a considerable number, and I should say that £2,000,000 would not go very far, or give a very fat pension or much of an increase in wages. Suppose the Government took over the mines, they would, no doubt, confiscate the £6,000,000 which is going to the rentier class of this country. Let them confiscate the money and give it to the miners. If they do, then the Chancellor of the Exchequer will have to get that £6,000,000 somewhere else. I did not mean to talk about royalties at all, I merely meant to ask my right hon. Friend if he could take off this oil tax, or minimise it, because I Sincerely believe it will put a burden on productive industry which, at the moment, is unbearable.
  5.46 p.m.
  Colonel WEDGWOOD: I do not mean to speak about royalties at all, especially as I am in such close agreement with the Noble Lord, except when he referred to

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  royalties or made a suggestion, or quoted a Latin grammar. This is an excellent opportunity to bring pressure to bear on the Chancellor of the Exchequer to avoid increasing unemployment in this country. The Noble Lord is right in saying that if you tax a raw material you increase the cost of production, you have to quote higher prices for the goods you produce, and thus lose trade in the neutral markets of the world. That loss of trade means more unemployment in this country. Every tax on industry has that effect, but this particular tax is, I think, worse than an ordinary tax upon industry. It is worse in this way, that it is impossible for those who are taxed to pass the tax on. They cannot get it back in higher prices. Competition is so severe to-day that we cannot possibly raise the price of articles by the increased cost of production caused by this tax. Consider what that means. It means that the tax is paid by individuals who have to use fuel oil. Where it is a shipping company it cannot raise its freights—if that was possible they would have done it long ago. Where it is glass manufacture, or metal manufacture, both productive trades, which have, after extreme difficulties, managed to get a good deal of the trade which has hitherto been done in Belgium and Germany into British hands, particularly the Diesel engine trade, they cannot raise their prices. The whole of the manufacture of Diesel engines is largely coming back to this country owing to the energy of our manufacturers. The competition is so keen that they cannot pass on this tax.
  Observe how it affects various classes of persons in this country; how this tax offends against all the principles or canons, as they are called, of sound taxation. Take an ordinary firm. There must be not dozens but hundreds to-day where the tax will amount to £l,000 a year. That sum cannot be passed on; it must be paid by the particular manufacturer or company which manufactures the particular goods. It does not fall on the debenture holders or the preference holders; it falls upon the ordinary shareholders in that company, upon the entrepreneur alone; the rentier escapes entirely. The men who are using the money, who are probably very much in debt to the bank, and with little pros-
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  pect of profits for themselves, are the very people we want to assist, but whom we are crushing by this new tax. On that ground alone this is a particularly unfair tax. I have heard the argument used that it is unfair to select particular classes of persons for taxation. It was the principal argument used against the taxation of land values; you should not pick out the red-headed man, as Mr. Harold Cox used to say, I think the redheaded man should have been picked out in that particular case, but in this case no one will agree that those who are endeavouring to maintain British trade and production and employment should be picked out.
  Take the case of the Corporation Profits Tax, which was imposed during the War. It was a tax of 10 per cent. on the profits of all public companies, and it was introduced by the right hon. Member for West Birmnigham (Sir A. Chamberlain). Between the time of the Budget Resolutions on that particular tax and the Second Beading of the Finance Bill of that year a number of persons in the country raised their voices against it. They said: "It is monstrous. It is all very well for the munition-mongers and ship-owners, and for all those companies who in these days of high prices can easily force up the price of their article and get it back from the consumer, but if you take the railway companies and public utility companies, where their prices are fixed by law, and put a tax upon them it will be most unfair, because it will be paid entirely by the ordinary shareholders; the prior charges will escape and the consumer will escape. This tax, which may be fair to the rest of the community, will obviously be unfair to us."
  So strong was the case put forward that the right hon. Gentleman the brother of the Chancellor of the Exchequer removed the tax entirely from railway companies and public utility companies. He sacrificed far more in cash than we are asking the Chancellor of the Exchequer to sacrifice to-day. He unbalanced his Budget; but he did the right thing. He saw that it was an unjust tax; and I maintain that our case against this tax to-day is as strong as was the case against the Corporations Profits Tax. Indeed, I should say that it was much stronger, because not only is this a tax upon industry and on a particular class

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  of adventurous citizens, it is a tax on progress. You cannot stem the tide of progress. Whatever Governments may do, the machine advance will go on; we shall get more and more labour-saving machinery. Progress will continue in spite of the individual. The Chancellor of the Exchequer can in his own country check the tide of mechanical invention, he can stop new inventions being of any service to his compatriots, but he cannot stop the German or the Belgian, or the Czechoslovakian, from making use of these inventions and driving his own retrograde country, where these inventions are not allowed, to ruin.
  I cannot imagine anything more unfortunate, just when we are really beginning to recover our fair share of the trade of the world, when our export trades are suffering far more than our internal trades, than we should have taken from us the advantages of experiment and of Capttal sunk in experiments, the experience of chemists and economists. Why should you take that away, and handicap us, and us alone, in our prospects of getting on? Obviously, whatever its effect may be to-day, there will be in the future thousands of people out of work in this country because more advanced methods are used abroad. Let me illustrate what it means for us and for our competitors. In Holland, one of our greatest competitors, there is no tax at all. They would not dream of putting a tax on fuel oil. In America, no tax. The raw material of industry is about the only thing untaxed in America. In France, they have put a tax on fuel oil which is about one-quarter of the tax now proposed by the Government. In Germany, you have an example of exactly what we ought to avoid. There you have a terriffic tax, far worse than we have in this country—I believe it is as much as £6 per ton—put on for the same mistaken purpose which is sometimes advocated here—in order to develop the coal trade. No sooner was it put on than the impossibility of working it became obvious, and rebates were granted right and left, to every interest which could bring sufficient pressure to bear.
  Ten years ago Germany was the country in which the manufacture of the Diesel engine was flourishing. Now British exports of Diesel oil engines have
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  taken the place of those of Germany, because Germany has this silly system of penalising inventions and the use of new methods. Up to now we have been free from this particular vice. Both from the point of view of this duty as a tax on industry, as a tax on selected persons contrary to all the canons of good taxation, and from the point of view of this as a tax upon enterprise and invention and progress, the tax is bad. It seems to me that the arguments which have induced our Admiralty throughout to refuse to consider going back to coal from oil for the Navy because they said it would make us a third-class Power to do so, are sound. We want to be a first class Power industrially as well as on the sea. Exactly the same arguments as were used conclusively by the experts of the Navy ought to be used by the experts in industry, in relation to gas and coal as well as in relation to oil. Keep the field clear for progress and allow us to have a chance of once more holding up our heads as the leading industrial nation of the world.
  6.2 p.m.
  Mr. LOVAT-FRASER: I have entered this Debate not so much to make a speech as with the object of asking certain questions. They are questions on a matter which, I think, ought to receive publicity. I wish to refer to the Salter Conference Report. That report was issued some months ago, and it contained certain recommendations which were placed before the Government with a view to adoption. One of the recommendations was with regard to taxation in connection with roads. In the past the cost of maintaining the roads had amounted to about £60,000,000. Of that £90,000,000 two-thirds was provided by the ratepayers and one-third by the motor users in the form of licence duties. I ask the House to keep that clearly in mind. Two-thirds of the money was provided by the ratepayers. The Salter Conference recommended that motor users should be required to pay the total cost of maintaining roads. They recommended that the two-thirds provided by the ratepayers should be provided by the State. They allocated to different classes of motor users the £60,000,000. At the present time the users of motor cars pay a large sum of money in Petrol Duty. Motor users who pay this Petrol Duty demand that the duty should go to filling

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  up the gaps that will be created when the ratepayers retire from the task of paying for the cost of the roads; they demand that the money which they pay in duty should go to make up the two-thirds now paid by the public.
  The definite recommendation has been made by the Salter Conference that the ratepayers should be relieved from the task of finding two-thirds of the cost of roads. The Conference recommended that that should be paid by the State. What is the Chancellor of the Exchequer going to do? Is he going to find the money that is to replace the money now paid by the ratepayers? Is the recommendation of the Salter Conference going to he ignored? There is much doubt on the matter in the country, and I therefore ask the Chancellor of the Exchequer to devote a few minutes of his speech to a reply dealing with that question. If the money is not found by the State and the recommendation of the Salter Conference is carried out, the motor users will have to find the money somehow or other, in addition to the Petrol Duty that is now paid.
  6.7 p.m.
  Mr. PALMER: The opening speech in this Debate, and that which followed, were the kind of speeches that we have had on the Budget during the last 18 months. Since the Budget of 1931 speeches from the Opposition benches have always turned on the question of salary and wage cuts, and speeches from the Government benches have usually dealt with the question of taxation. The two questions are joint questions, springing from the same crisis and arising from the same Budget. It is a great pity that we should take a one-eyed view of these two questions. It is true that the hon. Member for Caerphilly (Mr. M. Jones) said that among the blind the one-eyed man was king. I think it will be better if we take a stereoscopic view of this question, so as to obtain clear outlines and see the whole matter in better focus. The burden of taxation on our country is indeed heavy. Like Bunyan's hero we have to climb the Hill of Difficulty heavily laden. While we recognise the burden placed on those who pay taxes, we have also to remember the terrible burden placed on those who have had to face cuts in salaries or wages. Especially heavy is the burden on those people who have had
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  to bear the increased taxation and cuts as well.
  I think the House should demand that there should be no relief of taxation unless it is accompanied by a restoration of the salary cuts. We were told at the time of the crisis, and we told the electors, that the burdens both of taxation and of cuts were only temporary. Supporters of the National Government would be going back on their pledges and would be letting down the people who trusted them unless they insisted that the restoration of salary and wage cuts and relief of taxation should go hand in hand. The cuts were accepted. We had to go to the country and tell the unemployed that they had to receive the unkindest cut of all. They agreed courageously to accept a very cruel cut. As they have done so, it is our duty to see that that cut is restored as soon as the finances of the country make it at all possible.
  The unemployed accepted the cuts in their benefit. They ignored the promises made by Members of the Opposition of big bountiful benefits that we might call Bow and Bromley benefits—benefits which could never have been granted under any system of national insurance. I want to impress on the Chancellor of the Exchequer the need for carrying out a joint policy, when he has the funds to spare, for reducing taxation and restoring the cuts. The two things are complementary. The relief of taxation will mean that money will go into Capttal channels. The effect of that irrigation will not be felt by industry for some little time, but any restoration of the cuts in wages and salaries will be felt immediately, for the money will go at once into circulation.
  6.12 p.m.
  Mr. SMITHERS: The opening speech of the hon. Member for Caerphilly (Mr. M. Jones), and the opening speech from the Liberal Benches, dealt with the details of the Budget. The hon. Gentleman who spoke from the Opposition Front Bench ended by whacking the Socialist donkey, and the hon. Member who spoke for the Liberals ended by whacking the Free Trade donkey. The hon. Member for Caerphilly referred to the hardness of the Budget on the poorer classes. I make the comment in no hostile spirt to the Socialist party when I say that the necessity for hardness in

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  this Budget and the difficulties of the Chancellor of the Exchequer this year have been mainly caused by the presence for two years in this country of a Socialist Government which tried in vain to carry out a Socialist policy.
  The details of the Budget I do not propose to go into now, for I want to undertake a more general review of the situation. In discussing the Budget and the financial and economic situation of the country we must not think too much of present difficulties, but must think of what the country has been saved from by the work of the National Government during the last 18 months. I think the National Government can look back with justifiable pride to duty well and truly done. They stopped the rot and saved the country from going over the edge of the precipice. As a people we are so short-memoried that we are apt to forget the really critical position in which the country found itself 18 months ago. The National Government have made tremendous and to a great extent successful efforts to reverse that position, and have actually made some progress towards recovery. The outstanding general criticism of the Government is that, whereas for two years we were governed by theorists, the affairs of the country are now being controlled by business men, who are trying to deal with a very difficult situation, and, being only human, they are apt to make mistakes. But the situation is that the Government—to use a cricket simile— are standing up to body-line bowling, and they have to play each ball as it comes along to the best of their ability.
  I ask the House to contrast the position of the country to-day under the present proposals of the Chancellor of the Exchequer with the position 18 months ago. I do not wish to give many figures but I would point out that under the Socialist regime our ordinary expenditure was greatly increased, our taxation was increased, and our National Debt was increased. The Unemployment Insurance Fund was increased by £60,000,000. We borrowed £50,000,000 for transitional benefit and we were borrowing £1,000,000 a week for ordinary insurance payments. The Road Fund was in debt and there was a prospective Budget deficit of £74,000,000 in 1931–32 and of
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  £170,000,000 in 1932–33. In those few words one can sum up the financial position of the country at that time and it is obvious that we were indeed in a critical position. What has happened Since? The Government have saved £160,000,000 net to the taxpayer. They have done away with the deficits of £74,000,000 and £170,000,000. And, as a business man, I would say to the Chancellor of the Exchequer that one of the best things he has done in his 18 months' work has been to stop borrowing, However difficult and hard it has been, he has stopped the evil practice of borrowing to meet current expenditure and has brought us back to facing the acid test of an annual balance sheet and making the finances of each year bear the expenditure of that year.
  The country ought to congratulate the right hon. Gentleman also on his courage in carrying out the War Loan conversion. That conversion, with its consequent great saving to the taxpayer, was only made possible by the general policy of the Government and the way in which they conducted the affairs of the nation. Under the Socialist Government the average monthly increase in the number of unemployed was 63,000. The average monthly increase under this Government has been only 4,400. I do not say that the position in regard to unemployment is satisfactory, but at least by the general policy of the Government the unemployment figures have been held in check. When we compare our unemployment figures with those of the other countries of the world, which have all risen by large percentages, it is a remarkable achievement that the Government have been able to hold the fort so well for the benefit of the people of the country.
  The Government have also done much for agriculture and for other industries. In the case of iron and steel there has been a small increase of 1.8 per cent. in production whereas there have been declines in other countries, ranging from 7.2 per cent. in Luxembourg to 50 per cent. in the United States. Further, 134 new industrial undertakings have been established in this country by or with the aid of foreign money. All this should be borne in mind when we are discussing the Budget and the fact that this amount of leeway has been made up by this country ought to be put to the credit of the Chancellor of the Exchequer. The

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  House and the country ought to realise the enormously difficult task which he has had. Suppose the National Government were not in power and had not the duty of presenting this Budget to the country. Suppose the Socialist Government had continued their policy in this, the most densely populated and most heavily taxed country in the world, a country which is dependent on its imports for food and raw materials, what would be our situation? When we look round the world to-day and see the condition of other countries we must come to the conclusion that if that policy had not been arrested and if the National Government had not taken the helm, the people of this country would have been reduced to bankruptcy and starvation. Yet members of the Socialist party continue, in conferences and on the platform, to advocate the very policy which brought the country to the verge of ruin at the end of 1931.
  Our recovery has been due to sticking to principle more than to any other cause. The hon. Member for Caerphilly said that this was a Conservative Government. It is true to this extent, that the country has been saved by the application of Conservative principles. Those principles are to maintain our institutions, to preserve our Empire and to improve the conditions of the people and they must come in that order. If the policy of the Government is examined it will be seen that those principles have been followed. At home our institutions have been maintained, from the King and the Royal Family down to our Parliament and the Courts of Justice. Our Empire has been preserved. The outstanding fact of the Ottawa Conference was that the component parts of the British Empire presented a united front to the world and showed that the British Empire was the greatest bulwark of civilisation and the greatest stabilising force in the world.
  As an example of the fact that where those principles have been applied, they have brought success, I would remind the House of the visit of Sir Otto Niemeyer to Australia. He persuaded the Australian Government to apply those principles, to balance their Budget and to put their house in order, and that policy met with success. That gives one in a pocket edition, if you like to call it so, the situation in this country. It is of
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  the utmost importance that Conservative principles should be put into operation. Let there be no mistake about those principles. The object of the Conservative party, as I see it, is not to stop progress, but to guide progress along the right channels and at the right speed, avoiding both the diehards on the right and the extremists on the left.
  The World Economic Conference and the decisions arising out of it will have a great effect on the result of the Budget proposals. I hope that it will be the supreme work of the National Government under the chairmanship of the Prime Minister. The success of the Conference depends upon the leadership tact and attitude of the Government and people of this country more than upon anything else, and the best omen for its success is the urgency of the crisis and the gradual realisation of economic truths, which, although evaded by many countries for a time, have been driven home by force of circumstances. The world crisis at bottom is neither economic nor financial. It is moral and spiritual. There are things which you cannot put into Budget Estimates or Board of Trade returns. They are those things which we call credit, honour, confidence. But it is upon the maintenance of those great virtues that successful Budgets and satisfactory Board of Trade returns depend.
  Provinciality of thought and narrowness of sympathy will be disastrous to any country in the world. America and Russia cannot be in the world but not of the world, if they are to enjoy prosperity. As regards the debt payment to America which is due on 15th June, in my humble opinion it is useless to hold the World Economic Conference until the question of debts has first been settled. The insistence by America on the payment of debts is the main cause of the world crisis. America, in demanding payment of debts, has attracted into her vaults 4,500,000,000 dollars or £900,000,000 of the gold of the world and has not allowed gold to function as a basis of credit as it did when the Bank of England controlled it. There is a remarkable statement in this morning's newspapers from Mr. Owen Young in which, referring to this country, he says:
  "We asked them to sign that bond. They could only repay their debts by sending us their goods. To the extent that we would not accept sufficient of their goods, they

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  could only pay us by sending us their gold. Having refused their goods we took their gold until we had ruined the currency and banking systems of the world including our own, and until international exchanges and trade were paralysed."
  The insistence of America on payment in gold has not only done America incalculable harm, but has done harm to the world by stopping the proper flow of international trade. Gold, as I say, was not allowed to function and, because that commodity, by which all other commodities are valued, went up in price and was cornered, it followed as a natural consequence that other commodities fell in price. I hope the Government will do what they can to come to a settlement with the American Government on the payment of these debts before the conference sits. Gold has been withdrawn as a basis of international credit in most parts of the world, and the one suitable thing which remains, upon which international trade can be conducted, is sterling backed by the character, the good name and the balanced Budget of this country. England to-day is the one stable rock, and although I agree that to get back to a gold basis of exchange would be more stable, for the moment that is not possible. The gold is held by America and France, and is not there to be used. Therefore, it is of the utmost importance to this country—the one country in the world that is pursuing a world policy— that nothing should be done to interfere with its stability.
  When the 15th June comes I hope that, Unless America asks us in the interests of the world not to pay, we shall pay our debt to her. We must not repudiate. The onus of repudiation must not be on us. However difficult it will be to pay, it will be disastrous not to pay because on it depends, not a few mere bars of gold, but the maintenance of our word. An Englishman's word is his bond, and I hope that the country will not go back on her word. We do not want to be classed with other countries like America and Germany, which have both recently repudiated part of their debt in terms of gold, and I hope that for her own sake and in the interests of the world this country will keep her pledged word. In view of the continuation of the crisis and of the near approach of the Economic Conference, I make an appeal to every-
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  body to do nothing which will in any way impair the credit of this country or take away from the unity and strength of the National Government. When the representatives of the 66 nations arrive for the Conference, it is important that Members of all parties should let them get the impression that they are Colning to the most stable country in the world. We want them to come here and, so to speak, gather strength from this country.
  I would appeal to those who hold strong opinions of the kind that have lately been put forward at Socialist conferences to keep quiet for the time being. I appeal to other Members on the extreme right not to carry on the internecine strife inside the Government which makes the task of the Government more difficult. It was said the other day of a leading Member on this side of the House that he would be quite happy to see London in flames if only he could be captain of the fire brigade. Criticism has been made in some papers lately of the way in which the Prime Minister and other Ministers have been going abroad, and the Prime Minister has been called the peripatetic Prime Minister. Those visits have been some of the most useful things that could have been done. There is no standard of finance or character higher than that of this country, and they have been abroad to try to carry that standard to other parts of the world. Every one should congratulate the Under-Secretary of State for Foreign Affairs, who happens to be a friend of mine, on the splendid work he has been doing. [Laughter.] It is not a subject for laughter, because he has been through a very difficult time.
  The World Economic Conference will be faced with three sets of factors— economic, financial and political. By economic, I mean those questions belonging to trade; by financial, those questions dealing with the exchanges, the Gold Standard, and the like; and by political, all those political forces mostly arising from ignorance of these matters by the great masses of the electorate. It is no good at the Conference ignoring, for example, the fear between France and Germany, or the ignorance and parochial mindedness of the masses of the people in the middle-west of America. To get a good solution at the World Economic Conference there must be perfect equi-

  417
  librium between those three factors. If it is the policy of the World Economic Conference to try to raise commodity prices, it must first try to settle the question of War Debts, and there must be some world agreement as to how the economic policy of Russia should be treated. Russia is sending goods into the world at prices which bear no relation to the cost of production. These two factors—War Debts and the policy of Russia—are the two depressing factors on commodity prices with which the World Economic Conference must deal. I would appeal to the House within a week or two of the beginning of the Conference to carry the Second Reading of this Bill nem. con. It would give a tremendous send-off for the Conference if the delegates could arrive here knowing that our financial policy was carried by the general consent of the House.
  6.38 p.m.
  Mr. CHAMBERLAIN: Listening to the Debate that has taken place this afternoon, watching the condition of the House, and weighing up the speeches that have been made, it is difficult to realise that we are engaged in a first-class Debate upon a subject of first-class importance upon an Amendment to reject the Finance Bill of the year. No one who has been in the House for any length of time to-day can have failed to be struck by the lack of animation or conviction in the attack that has been delivered. I know that there are a number of hon. Members who must have particular points which they desire to raise in the course of the discussion, and my hon. Friend the Financial Secretary, who will be winding-up the Debate, will be able to reply to any such points.
  One point was raised by my Noble Friend the Member for Newark (Marquess of Titchfield). I am sorry that he is not here, but I should be inhuman if I were not moved by his attractive and appealing words. He has been good enough to make suggestions as to alternative sources of revenue that might make up any deficiency caused by the withdrawal of the tax on oil which he was defending. I would like to assure him that, if there is a general feeling in all parts of the House that it would be desirable to substitute a tax on sugar or tea for the tax I have proposed on oil, I shall be happy to give it my sym-
  418
  pathetic consideration. I was interested to hear my Noble Friend observe, on the other hand, that if he thought that the imposition of this tax on oil would help his mining districts by one jot or tittle, he would not have the slightest hesitation in supporting it. When we come to the subject of the tax on oil in the Committee stage, it may be possible to show him that his condition is fulfilled.
  I will turn to the speech of the hon. Member for Caerphilly (Mr. M. Jones), who opened the Debate. He always has to contend on these occasions with a certain natural geniality of temperament, which has never placed him at a greater disadvantage than to-day, when it was obvious that he was struggling all the time with the difficulty of finding anything with which to find fault. In these circumstances, it is of course disarming, and I should like to show an equal cooiness in replying to him. He made some observations of an extraordinary character, and I cannot abstain from commenting upon them. He began by representing that although some of the War Loan had been converted, there remained a great mass which had not been converted, which was responsible for a great and grievous burden upon the shoulders of the taxpayers of the country; and that until we had done something to relieve that burden, it was necessary for us to consider whether some change in the incidence of taxation was not called for. The hon. Member omitted altogether to remember, I think, what I have already called to the attention of the House, namely, that the charge for the interest service of the Debt has been reduced by the operations of this Government by no less than 20 per cent.
  When the hon. Member goes on to suggest that it was possible, if we only had the will, to go on with the process of converting, and thus bring about still greater reliefs in the burdens now imposed on the taxpayers, I would remind him—and the House, if necessary—that apart from some small short-term loans, there is nothing in the way of long-term loans that we can convert until 1940 when the 4½ per cent. Conversion Loan of £370,000,000 can be dealt with. Up to then, there are only small amounts—I think they may probably reach

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  £150,000,000 altogether—and it is obvious that when they come to be converted, the saving that can be expected from their conversion cannot be more than £2,000,000 or £3,000,000 a year. The hon. Member really has therefore no justification for suggesting either that we have not done immense work in reducing the burden of Debt interest, or that we can do anything more in that direction.
  The next point which the hon. Member made was in connection with the question of armaments, and he suggested that, although some reduction might have been made, armaments stood at too high a figure. He compared the cost of armaments to-day with the cost 10 years ago. I think that his figure was that it was something over £3,000,000 more to-day than 10 years ago. I was surprised to hear the hon. Member give those figures, and I have endeavoured to check them. I think he will find, on going further into the matter, that his figures are not correct. The actual figures are these: In 1923–24, the year which he took for comparison, the total of Army, Navy and Air Force expenditure was £110,800,000. This year the Estimates are £108,950,000, so that instead of being £3,000,000 more than they were 10 years ago, they are £2,000,000 less.
  I think the hon. Member might have gone a little further and taken a year in which he would have a greater interest, namely, 1924–25, which, of course, was a year when the Labour Government was in office. In that year the figure was £114,600,000. But although one may compare these figures and find these differences of a few millions one way or the other, the essential fact is that the strength of our armaments has not been increased, although the cost has gone up in certain respects owing to the high cost of labour and materials, and, therefore, if the hon. Member submits those figures with the intention of suggesting that we have increased our strength in armaments, I say such figures are misleading, and it is mischievous to put them forward. The real fact is that we have given a lead to the world in disarmament such as has been followed by no other country, and I go further and say that we have deliberately reduced our forces to the very extreme limit of safety in our endeavour to show our Sincerity and our desire to reduce armaments.
  Mr. MORGAN JONES: I am sorry to interrupt the right hon. Gentleman, but I find it hard to reconcile the figures he gave with those which appear in Command Paper 4233, page 134, in respect of the year 1923–24. I merely make that point. May I ask this question, also? The Chancellor of the Exchequer said prices had gone up Since 1923–24. Do I understand him to say that the prices of war materials are up now in comparison with that year?
  Mr. CHAMBERLAIN: I did not go very deeply into the details, as the hon. Member must realise, but the broad facts of what I have stated are true of the Non-effective Vote. Particularly, I think, the cost of pensions becomes a cumulative charge, increasing year by year as more men come in for pensions and allowance. In that way the cost of the Department may be increased although the actual expenditure on materials may show a decrease. I am informed that the difference between the hon. Member's figures and mine is that mine were actual expenditure and his were estimates.
  Mr. JONES: My figures were from page 134 under the heading, "Table of Exchequer Issues."
  Mr. CHAMBERLAIN: I have no doubt we could agree on the actual figures between us, although it is difficult to do so across the Table, but the point I wish to stress is not the accuracy of this figure or that, but that we have decreased, and not increased, our armaments.
  The Amendment of the Opposition falls, as has been said by hon. Members opposite, into three parts, First it attacks the Bill because insufficient provision is being made for redressing the unjust financial sacrifices imposed on the unemployed and other sections of the community; secondly, it speaks of the heaviest burdens being still left upon those least able to bear them; and, thirdly, the Government are said to have declared no effective policy for the restoration of trade and employment. The first two points are really the same point, although put in a slightly different form, but they show, as usual, how the party opposite completely ignore the realities of the case. They speak about financial sacrifices being unjust, they speak about the heaviest burdens being left upon those who are least able to

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  bear them, but they never take into account that the real value of money depends not merely upon its nominal value, but upon what it will purchase. When we consider the actual purchasing value of money, then the facts of the situation bear a very different aspect from that which the hon. Member sought to put upon them. I will come back to that point in a minute.
  I wish to mention another point which the hon. Member took. He declared that if any relief were to be given at all it should have been given to the unemployed in the first instance, and he pointed to what he called the unfair action of the Government in giving relief to the Income Tax payer and to the beer drinker instead of to the unemployed. The House will observe the delightful assumption that the whole of the unemployed are teetotallers. The hon. Member himself is a teetotaller, he told us so, but if any relief has been given to anybody by the reduction of the Beer Duty, I hope the unemployed have had their share in that relief. On the other hand, the House is well aware that the purpose of the reduction of the Beer Duty was to safeguard the revenue, and if relief has been given to people who drink beer, that is only incidental to the main purpose, which was to see that we should not have to impose further taxation in future on acoount of the contraction in the revenue from the Beer Duty. When the hon. Member adds together the cost of the reduction in the Beer Duty and the cost of the reversion to the old half-and-half instalment system of Income Tax payments, and suggests that the money from those two would have given 5s. a week extra to the unemployed, then he is adding together two things which are totally unlike one another. I really can hardly believe that his own mind is not clear enough to tell him that the loss of revenue on the Beer Duty has to be taken into account not merely in one year but in every year, but the loss of revenue which is incurred by postponing part of the payment of Income Tax during the current year is a postponement of revenue which, indeed, may lose the Exchequer £12,000,000 this year, but does not mean that next year I shall lose £12,000,000. If I were to have regarded that as a permament loss of revenue I might, indeed, produce a balanced Budget this year, but I should be un-
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  balancing the Budget next year, and perhaps in future years.
  Let me return to the question whether it is the fact that the unemployed and other sections of the community alluded to by the hon. Member are suffering unjust financial sacrifices, and whether he is able to make a case for what he, in fact, suggests, namely, that part of the burden, if not the whole of the burden, ought to be taken off their shoulders and put on to the shoulders of other classes of the community. I say that in taking account of the sacrifices we must take account of what the actual purchasing power of money is to-day. I am going to ask the House to give careful attention to these figures. What is the amount of benefit which an unemployed insured married man with two children gets to-day? Hon. Members opposite always take the case of the single man, but I think a fairer case is that of the married man with the average size family. His benefit to-day is 27s. 3d.
  Mr. McGOVERN: A tremendous sum!
  Mr. CHAMBERLAIN: I am not arguing whether it is a tremendous sum, but I want to compare that with the rate which existed in 1930, before the present Government were in power. In 1930 the rate was 28s. and it was increased by the then Government from 28s. to 30s.; but if one takes into account the difference in the cost of living the value of the 27s. 3d. to-day is equivalent to 31s. 8d. in 1930. In other words, 27s. 3d to-day is worth to the unemployed insured man with two children 1s. 8d. more than the fate which was in existence after it had been increased by the Labour Government in 1930. If we compare the 1924 figures, the difference is more marked. In 1924, after the 14th August, the rate of benefit was 27s. Taking into account the relative differences in the cost of living our 27s. 3d. to-day is equivalent to 35s. 1d. in 1924, so that, although the rate appears to have been decreased, the benefit is 8s. 1d. more in real value than it was in 1924. Let me put the case in the converse. Suppose that we wanted to give the unemployed insured married man with two children the same purchasing power for his money as he had in 1924, what would be the rate? It would be 21s. The appropriate rate would be 25s. 10d. if he were to have the same purchasing

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  power as he had in 1930—that is after the rate had been increased to 30s.
  Now let us consider the other social services—old age pensions, widows' pensions, which began in 1926, and War pensions. If we were to give to a person drawing the old age pension the same purchasing power as 10s. a week gave him in 1924, we should only have to give him 7s. 9d. If we were to give the unemployed, the aged, the widows and the disabled men, that is, the War pensioners, benefits which would ensure to them the same purchasing power as they had under the scales in force under the Labour Government in 1924—assuming that widows' pensions had then been in force, though, of course, they were not—we should save on benefits from £50,000,000 to £55,000,000 a year.
  I do not think that anybody, taking these figures into consideration, would say that, in view of the sacrifices made all round, it is true to state that the sacrifices now being endured by the unemployed, and other sections of the community, are unjust. Nor do I think it is fair to say that the burdens are unfairly distributed between them and the section which pays Income Tax and Surtax. Let me remind the House what is the position with regard to Income Tax and Surtax. If we take the incomes on which the highest rate of Surtax is payable, Income Tax and Surtax together rise to the peak of 13s. 3d. in the £. That compares with the highest rate in the time of the War of 12s. They have increased Since wartime. On a much lower national expenditure we have increased the peak rate of Income Tax and Surtax from the highest peak of 12s. to 13s. 3d. in the £.
  Mr. ATTLEE: Has the right hon. Gentleman worked that out in purchasing power?
  Mr. CHAMBERLAIN: It is more difficult to work it out in this case. As the hon. Gentleman is well aware, the cost of living index is based on working men's budgets, and, as has been frequently pointed out, it is not applicable to people whose budgets are higher. The hon. Member is, of course, right in saying that the cost of living is cheaper for them, although it cannot be comparable. I will ask the House to consider the rate of Capttal taxation, which is very much to the point in considering the relative
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  importance of the national burden. The peak rate of Estate Duty is 50 per cent. During the period of War-time finance it was 40 per cent. Thus, if you take Income Tax, Surtax and Death Duties, you will find that they are, together, very much higher now than even at the time, 15 years ago, when national expenditure was very much larger than to-day. I think that perhaps the following figures are interesting, although they have been given to the House before. The figures are of the total amount of taxation in these three forms of Income Tax, Surtax and Death Duties as expressed by the insurance necessary to provide for Death Duties. I have here figures for £5,000, £10,000, £25,000 and £50,000 a year, the latter being the income of a millionaire. In the case of an income of £5,000, the total amount required is £2,293. In the case of £10,000, it is £6,208 for that purpose. The man with £25,000 a, year has to provide £21,106, leaving less than £4,000 out of the £25,000 for himself. In the case of £50,000, no less than £53,505 is required. [Laughter.] Hon. Members think it is a joke.
  The hon. Member points out that the yield of Surtax happens to be greatly diminished, and then he argues that that means we have reduced the rate of Surtax. He said that when a Tory Government is in office—and he counted this as a Tory Government—the first people it relieved were the Surtax payers. If you tax them so highly that the yield diminishes, (he calls that relief to the Surtax payers. If you take the figures of Income Tax and Surtax for the last two years—what was the actual yield in 1931, and what I estimate to-day I may be able to get—you will find that there is a fall in Income Tax and Surtax of no less than £73,000,000. In view of that, does anyone think that this is a time to transfer some further portion to the shoulders of Income Tax and Surtax payers? That would not give you an increase. On the contrary, it. would mean that it would diminish more than it has.
  May I say a word or two upon the last part of the hon. Member's Amendment, although he said very little about it himself? He complains that the Finance Bill discloses no effective policy on the part of the Government for the restoration of trade. I agree, but that is because no

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  policy which can he effective can he embodied in this Finance Bill. It does not mean that the Government have no effective policy for the restoration of trade. As we have so often pointed out in this House, we have already carried out a, considerable part of that policy. When the hon. Member quoted with satisfaction figures which show a somewhat diminished value of exports, he passed over the difference between value and volume. He pointed to that as the effect of the Government policy. I would say that we cannot separate ourselves from the conditions of the world as a whole. When we consider the actual value of exports from year to year we have to consider the export trade of the world as a whole, if we are to judge as to whether the policy of the Government is effective or not. We cannot take these absolute figures. We have to consider whether we are increasing our share of world export trade. As a matter of fact, although the trade itself has diminished in volume and value, we can say that we, and we alone, have actually increased our export trade. That is the justification of the policy of the Government.
  Colonel WEDGWOOD: Is it the policy of the Government to send the £ down?
  Mr. CHAMBERLAIN: Since the £ is down, that no doubt has assisted our manufactures. I do not think the right hon. and gallant Gentleman is one of those who desire to take steps to put the £ up. As I have pointed out to the House before, we cannot expect that we in this country alone can be prosperous when other people are in the trough of depression. It can only be put right if the causes which affect the world are dealt with. These causes can only be 3ealt with by the co-operation of other nations. A great conference is going to take place next month. It is our hope, and the hope of most of the world, that it will be a success. That does not depend upon One nation alone; nevertheless the conference which is to be held in London, under the Presidency of my right hon. Friend the Prime Minister, gives to this country a special position and the House may rest assured that no effort will be spared from our point of view, either in giving a lead to others or in assisting in any way the efforts of others to come to a satisfactory conclu-
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  sion. No effort will be spared by us to make the conference a resounding success.
  7.12 p.m.
  Mr. TINKER: The right hon. Gentleman has said that the Debate does not show much life, but he has not helped it as far as we are concerned. There is one point I would like him to clear up. He said that the man with £50,000 income had got to pay £53,000 in taxation. Obviously, that cannot be so. Has he got to insure himself for the taxes, and to cover Death Duties, or has he got to pay every year £53,000 when he has got only £50,000?
  Mr. CHAMBERLAIN: I think I made it clear I was dealing not merely with Income Tax and Surtax but also with the insurance necessary to provide against Death Duties, which the heirs would have to pay afterwards. It was insurance plus taxes which made up the total of £53,000.
  Mr. TINKER: That is what I believed it to be, but it might get out to the public that a man had to pay £53,000 when he had only £50,000 a year. I am very glad that the right hon. Gentleman has made clear what he means. Another point in his speech is whether we are to take it that, as there has been a fall in the cost of living, it is the intention of the Government not to redeem their pledges to the unemployed. Judging by the right hon. Gentleman's statement that the unemployed man is better off now, the Government feel that they are not called upon to redeem their pledges, given when they made the cuts, that at some time or other these cuts would be restored in money. Will the right hon. Gentleman make a definite statement.
  Mr. CHAMBERLAIN: I certainly desire to do so. What I said about the cost of living, and an unemployed man being better off to-day than 10 years ago, had no relation to the cuts. I was addressing myself to the argument of the hon. Member who opened this Debate. He said that there was an unfair distribution of the burden at the present time.
  Mr. TINKER: I take it from that answer that at some time or other the unemployed can look forward to some relief. I wanted to make the point clear, because I wanted to emphasise what the Government intended to do. For the

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  moment I have finished with the Chancellor. I am speaking feelingly, because I have sat here all day waiting for a chance to speak, and human nature is very much alike, and I know that the Chancellor is in need of a cup of tea just as much as I am The right hon. Gentleman and I "got across" on the question of figures. He takes one point of view, and I take another. To-day he has been dealing with the distribution of taxes. He spoke about the Death Duties, which he said ought to be altered as being too heavy a burden and resulting in the stoppage of industry. Death Duties are one of the best things that were ever done in the way of taxation. Every time I pass the statue of Sir William Harcourt in the Lobby I pay respect to him, thinking that there was at least one wise man who looked ahead of his time in order to relieve the burdens of the State by taking some of the money that people left behind. I hope that at some time we shall have another statue to another statesman, who will take more from the people who have money to leave when they die.
  The question about putting money into industry seems to have no weight at all. There is money everywhere for industry, if industry is only allowed to take it. The question of Death Duties helping industry does not carry any weight with hon. Members on this side. We are after direct taxation. Where there is money to pay, let it come from there. Indirect taxation is an unfair method, because people do not know what they are paying. If every article in a shop were priced so as to show what the actual taxation was, the people would know where the burden was being put.
  Mr. BOOTH BY: Does the hon. Member want all the taxation to be paid by a very small minority of the nation, and to have no indirect taxation at all?
  Mr. TINKER: I think that the hon. Member has got me, in that respect. Yes, if people have the money to pay by direct taxation, those people should pay their proportion. It would be done by graduated taxation. I would first of all fix a certain amount, which I would call the basis. It might be £2 or £2 10s. for every individual, and whatever the sum might be, it would be based upon the
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  cost of living for a decent standard of life. Starting from that basis, there would be a graduated taxation to meet the needs of the community, whatever they might be. We have now to meet a Budget of £800,000,000, and the taxation would be graduated so that the greater incomes would have the greater burdens. That is the Socialist philosophy. We are anxious to do justice. I do not want to be a hypocrite by saying that I believe in the present system. My idea is that you should take from the wealthy, so long as they have the money, in order to enable the people to have a higher standard.
  Mr. LEVY: Will the hon. Member be good enough to tell me whether that is Socialism or Communism?
  Mr. TINKER: That is Socialism.
  Mr. LEVY: What is Communism?
  Mr. TINKER: I am not a Communist in the sense in which the meaning of that word is understood. If you use the term to mean the commonweal, which after all is the wealth of the community, I am one of those. As against the word "Communism" as it is now known, I believe in Socialism.
  I now want to deal with other points in the Finance Bill, and I will commence with the Entertainments Duty. I have had a petition from my constituents, signed by 8,000 people, asking that some redress might be given in the Budget in regard to the duty upon the cheaper seats. I hope that the Financial Secretary to the Treasury will pay attention to that, because an Amendment will be placed upon the Paper to get the duty taken from the cheaper seats. I want to speak about the Heavy Oils Duty. Being a miner, I know that this question touches miners closely. We are told that the Heavy Oils Duty has been put on for the purpose of providing work for miners, and, in a rough sort of way, it is, I agree, for that purpose. May I point out that when an attempt like that is made, consideration ought to be given to the people who have machinery worked by oil and who had no idea that the Government would take such a step? In my constituency there are a number of small firms using oil who will be adversely affected.
  I would ask the Financial Secretary to consider, before going further ahead with this taxation, whether the difficulty can

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  be got over to some extent. I make that suggestion, not because I approve of the principle of the duty, but in order to secure its alleviation. I do not think that the Government are following out in the right way their expressed desire to help the coal industry by this Heavy Oils Duty. Since 1925, the output per manshift at the coal face in the mines has gone up from 46 cwts. to 56 cwts. which is an increase of about 20 per cent. of the output per manshift worked at the coal face. The cost of that increased production has been hundreds of men thrown out of work. The answer to a Parliamentary question the other day showed that 237 collieries have been closed down in the last 12 months, and over 23,000 men thrown out of work. Instead of putting on a Heavy Oils Duty, this is a question for the organisation of the industry in order to try to find out, when a mine has to be closed down, where to find another mine.
  At the present time everything is indiscriminate. There is no control, and the result is that pits are closing. Then we get this penny duty upon heavy oils, which we are told will help to revive the coal industry. I do not think that it will have the result which hon. Members expect. It is stated that work will be found for 15,000 men. It might cause more overtime to be worked in the pits that are working, and I hope that it will not have that effect. This policy ought to be carried out in moderation. I want other men to be employed.
  Mr. PIKE: Has it not been for many years past the policy of the Miners' Federation of Great Britain that all generally-recognised, out-of-date and uneconomic pits should be closed down, and that the up-to-date pits should be so organised as to give the greatest output per man per shift?
  Mr. TINKER: The Miners' Federation has never been in a position to close the industry. If the Miners' Federation were allowed to take joint action with the coalowners, we could have shared responsibility. I can assure the hon. Member that, if we were allowed joint control, we should at once pay attention to seeing that if a particular locality were closed down there would be no question of hardship to the men who worked there. I do not know what the hon. Member knows about Yorkshire, but I can speak about Lancashire, and a num-
  430
  ber of men were thrown out of work in the place where I live because a pit was closed down two years ago. It was closed down within a week, and that threw out of work about 1,200 men. I am hoping that the Government will not try and get out of their responsibilities by putting a penny duty upon heavy oils and saying that they are going to help the industry. I hope that they will follow out what we have said in our Amendment in which we say that there is no
  "effective policy …for the restoration of trade and employment."
  Is there any hon. Member on that side of the House who can believe that the Government has dealt with matters effectively?
  The Government appealed to the country in 1931, saying that they wanted a doctor's mandate, which meant having the power to do anything they considered would deal with industry effectively. It was never thought, at that time, that they would put on a tariff. The latter part of our Amendment is justified by the record of the Government. They ought to reorganise industry in the way that it ought to be reorganised. Probably they cannot. It may be beyond their power. The second part of our Amendment complains that the heaviest burdens have been left upon those least able to bear them. It may be argued that all parties suffer. We have at the present time just over 2,500,000 people out of work in this country. No hon. Member could argue that their burden is not greater than the burden of the wealthy people. It was for that reason that we put down in our Amendment stating that burdens are not distributed evenly.
  Let me bring the House back to the question of taxation. Until taxation is put upon the backs of those best able to bear it, we shall always be in a position to bring forward our point of view, as expressed in the Amendment. Hon. Members on the Government Benches differ, from time to time, with their Government, with regard to tariff policy. The House has not been unanimous in that matter. The tariff policy, as outlined by the Government when they have been making trade agreements with Germany, Holland, Denmark and other countries, has aroused opposition in the House. It has been remarkable to find

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  such ardent Conservatives as the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) and the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) defying the Government upon their tariff policy because Birmingham was affected. There was a surprise last night, when a large number of Lancashire Members went into the Division Lobby because the tariff policy did not suit them. We have in this Budget a tariff policy on which, because it cannot please everyone, Members from various parts of the House are voting against the Government. If those Members can see their way to vote against the Government on matters which affect their own constituencies, I would ask them to take a broader outlook and vote against the Government for not dealing fairly with the unemployed and low-paid workers. If a National Government stands for anything, it stands for the whole of the people, and the unemployed should be among those who receive consideration from it.
  7.31 p.m.
  Colonel GOODMAN: The Chancellor of the Exchequer, in his Budget Speech, declined to make any prophecy as to the future, and I was disappointed because he was so cautious. It is the future that puzzles so many of us; it is the future about which we are worrying, and about which we desire to be reassured. Nobody can be better equipped than the Chancellor of the Exchequer with expert information for making a survey of the financial position from the point of view of the future, and I hope that he may be induced to give the House the advantage of his knowledge at some later period in the discussions on this Bill. We appreciate the soundness of his financial proposals for the coming 12 months. As he said, they are neither startling nor spectacular, and nobody expected that they would be, but he always presents things as they are, and for his directness in this respect we are very thankful.
  No one who knows the right hon. Gentleman would think for one moment that he would listen to the suggestions of those who desire him to unbalance the Budget by reducing direct taxation. He is not one who will let imagination get the better of financial realities. Nobody
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  would accuse him of being an optimist, but, at the same time, one would not say that he was a pessimist, but rather that he is one who judges by plain, blunt facts; and it is because he has this quality that I feel that a survey of the financial position beyond the limited period of 12 months with which our Budgets deal would be welcomed in the country.
  I press the desirability of such a survey because the impression that the Chancellor's speech left upon me was that, while he had dealt on sound lines with the financial position for the current year, his silence as to the future was very ominous. I do not know if such an impresison was intended: I certainly hope it was not; and, if no such impression was intended to be conveyed, a survey such as I have suggested would do a great deal to remove false impressions which may have been created. But when I, without having the chances of getting expert advice possessed by the Chancellor of the Exchequer, come to consider the financial future, there are conditions which seem to me to justify anxiety. For a long time we have been speaking about the intolerable burden of taxation, especially upon industry. Indeed, we have become so accustomed to the phrase that it has lost its force. We have come to regard the condition as one that has to be endured rather than as one that can be cured. It seems to me, therefore, desirable to know what are the chances of the burden being lightened during the next few years, and that is one point on which the Chancellor, as a plain, blunt man, could, I suggest, enlighten us. Any reduction in the burden depends in part upon expenditure, and in part upon the proceeds of existing taxation.
  In connection with expenditure we have heard a great deal about economy. I would like to pay the Chancellor a tribute by saying that he has never led anyone to believe that in his opinion the big further economies which have been suggested are really possible, unless, of course, it were to avoid the dire position of bankruptcy. Again, the Chancellor, as a realist, has declined to take the view that substantial reductions can be effected in the expenditure which influences the health and standard of life of the vast mass of the population, although

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  that is a source from which people in certain quarters believe a reduction of expenditure could be effected. Vast economies in social services are, therefore, not to be contemplated unless our financial position should become desperate. Economies have been effected Since the Budget of 1931, but they cannot by any means be considered as permanent. As we have heard in the House this afternoon, there are, quite naturally, demands for the restoration of the cuts, and, as we get further away from the crisis which brought them about, so those demands will become more and more insistent, and it will become increasingly difficult to refuse to accede to them. It seems to me that we must contemplate an increase in expenditure on account of the restoration of many of the cuts in the near future.
  But this is not the only cause of expenditure. The Chancellor of the Exchequer, in detailing, in his Budget speech, what had been accomplished in the way of economies, pointed out that £25,000,000 which had been gained in this way had been absorbed by the automatic increase in social expenditure. The Income Tax and the Surtax have been for a great many years the mainstay of Chancellors of the Exchequer. They account for one-third of the income. But last year the receipts from both these taxes were materially below the estimates, and this year the Chancellor anticipates a still further fall, so that it appears that from certain Major sources of revenue no larger proceeds are likely to arise, even if the burden of the taxes is increased. If that be so, and if expenditure does not fall—and I believe it is more likely to rise—where is the money to come from? We have heard recently a great deal about planning ahead, instead of continuing our activities from hand to mouth, settling one day's affairs and letting the next day take its chance. If planning be good, and if, as I think will be admitted, the present Government is not likely to be relieved of its conduct of affairs for some years, it seems to me that the condition of the nation's finances is such that this is an appropriate time for the Chancellor to go into the matter, to plan ahead for some time, and to take the House into his confidence.
  7.39 p.m.
  Mr. DAVID EVANS: I desire to register my protest against certain
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  features of the Budget and of the Bill which gives effect to the proposals of the Chancellor of the Exchequer. In the "Times" this morning the Budget is described as a mark-time Budget. That means, if it has any meaning at all, that it is a Budget which is not moving forward, but is a standstill Budget, and the "Times" defends it on that ground, because it is stated that this is the only kind of Budget that the Government could introduce having regard to the pending Economic Conference. I cannot, however, understand what the issues that will come before the Economic Conference have to do with certain internal financial questions appertaining to this country alone. I cannot see why it is necessary for the Government to mark time on certain questions which have been embodied in the Budget, such as the taxation of oil fuel. Indeed, in some respects, the Government have not considered it necessary to mark time, because, notwithstanding the coming Conference, we have debated from time to time in this House, as we did only a night or two ago, matters relating to tariffs, and those questions certainly, in my opinion, do not make it easier for the Government to discuss the questions which will come before the Economic Conference.
  My objection to this Budget rests on the fact that I cannot see in it any real constructive proposals which will assist the development of trade and industry in this country. The House will recollect that this Government, which prides itself on being called a National Government, was returned because it was believed at the time to be capable of saving the country from what was deemed to be a possible financial disaster. Not only, however, was the National Government expected to do that, but, surely, it was also expected to follow it up and build on the foundation which was then laid down. In this Budget, so far as it contains anything which directly or indirectly affects trade or industry, it seems to me to be bad, and to my mind the worst feature of the Budget is that it omits to do certain things which require to be and should be done.
  I do not propose to go into very great detail. I am sorry that I was not present during the Chancellor's speech, having had to be in a Committee upstairs, but I understand that he did not

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  say a word about the proposals of the Budget in regard to the Oil Duty. I desire to associate myself in the strongest possible way with the protests that have already been made in the House against the imposition of a duty on fuel oil. It is understood that the Chancellor estimates that he will receive from that duty, in a full year, about £2,300,000. That, as has been said in this House in several speeches, is obviously a direct tax on the industry of this country, and it is bound to lead to increased costs, in some cases substantial, while in other cases, where oil fuel has replaced coal, coke or some other form of fuel, to reduce efficiency if it is necessary to return to those other forms of fuel. I can hardly believe that the Chancellor has realised the great transformation which has taken place in industry, even in his own area of Birmingham and the surrounding districts. If he had thought for one moment how every progressive manufacturer had turned over from coal and other fuels to the more efficient oil fuel, he certainly would not, I think, have dreamed of attempting to impose this tax upon the industry of the area from which he comes.
  It is understood that the tax is imposed as the result of representations made to him on behalf of the coal industry, supported by the gas and electricity supply industries and the railway companies. He said in his Budget statement that it was in the interest of the British coal and allied industries that he should review what they regarded as an anomalous position. These interests have never regarded this tax as in the interest of the whole of British industry but only in the interest of one or two of their own particular industries. Moreover, the only anomalous position that I can see in the matter is not any unfair anomaly but an anomaly in this respect, that other fuels, particularly coal, coke, electricity and gas, are not to-day in a position to compete with fuel oil. I believe this is a vicious system of taxation. When we have encouraged by researches a departure from coal, and erected furnaces at considerable expense in Birmingham and elsewhere, it is to my mind disastrous that we should, by imposing a tax of this magnitude, endeavour to cripple those who have efficiently managed their operations.
  Mr. PIKE: Does the hon. Member say that they should go tax free because they have done that?
  Mr. EVANS: I do not see that there should be discrimination against them as compared with the users of other fuel. It has been stated that this tax might be of some advantage to the hydrogenation processes. If we are to have an ample supply of British manufactured oil, it is better for that industry that manufacturers should have learned to use fuel oil in order to be ready for the time, if it ever arrives, when there is an ample supply of British fuel oil at a moderate cost. I am content with registering my protest on that. I think it is a retrograde step and greatly to the disadvantage of the manufacturing industry, and particularly of the export trades.
  A similar point in the Budget is the discrimination of one particular industrial method as against another that emerges from the motor taxation. There is a conflict there again between the interests of the railway companies and of commercial road vehicles. It is time for us to look this problem squarely in the face and to realise that certain forms of railway traffic are already obsolete. It is a great disadvantage that in these discussions very little is heard of the users of transport, because it is necessary that cheap transport should be provided for British industry, especially in the export sections of industry, to enable goods to be conveyed from inland towns to the coast at as cheap a cost as possible.
  One other point. The Chancellor pointed out in his Budget speech that, with the estimate of revenue that he would receive in the coming year, he had something like £17,000,000 which he was free to dispose of in any suitable way. He has decided to dispose of £14,000,000 of it to the brewing industry. I hope the House will mark the expression that he has been searching for a suitable way to distribute £17,000,000. I can hardly conceive that, with the position the country is in to-day, if he studied and investigated the distressed areas he could not find a more suitable way of distributing £14,000,000 than by giving it to beer drinkers and the beer industry. Money can be usefully spent in the country to-day. I believe that £14,000,000 in one year would provide for toe interest and

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  amortisation of a loan of something like £200,000,000 or £250,000,000 for reproductive purposes. The right hon. Gentleman could have utilised his estimated surplus to the greater advantage of the country than he has done in giving it to the brewing industry. He has said that he does not care for his personal reputation in the matter, and I am prepared to agree that he acts according to his own lights and that he has done what he considers to be the best thing to do, but I suggest that he should look after his reputation. Surely he would not like his reputation to go down to posterity as the one man who has expended £14,000,000 to relieve beer drinkers, when there are so many better uses to which the money could be put.
  8.64 p.m.
  Sir JOHN SANDEMAN ALLEN: We have had an interesting Debate on many aspects of the Bill and on many things which have had no particular reference to the Bill, but I suppose they are more or less covered by the Amendment. I should like, first of all, to call attention to the immense value of the financial policy of the Government in the last two years. I speak now as one who, as the result of frequent visits to the Continent and contact with the people, perhaps knows more of the opinion of the commercial world of Europe generally than some Members. It is a striking thing to see the growing appreciation of the credit of this country and the way in which it has recovered from the very nearly disastrous position of less than two years ago. This is not a question of argument, but of fact. Less than two years ago the Government found it extremely difficult to borrow any money at all, and they had to pay a very large rate of interest. To-day it is lending money to one of the very countries that hesitated to lend us money two years ago.
  The whole scene has been transformed. At that time our credit was dwindling to such an extent that we were unable to prevent the recall of that money which had been lying with us for decades in trust as being the soundest country in the world. We suddenly had to face the fact that the world had lost confidence in us and that our credit was going down. This Budget is part of the policy of the National Government, which was started when it set to work to recover the credit
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  of the country. It is the gravest mistake and the greatest folly for anyone to attack the financial methods by which the Government have tackled the situation. Our credit throughout the world is greater than it has been for many years past. I was recently in Borne at a conference of some 30 different nations, and those of us who were there from this Parliament were immensely impressed by the admiration and the confidence that everyone had. If you go into the City to-day, you will see that our whole trouble is that we do not want to have all the money that is being pushed back into the country. To suggest that the financial policy of the Government is unsound is sheer folly, and Stands self-condemned to every one who has the slightest-vision and the slightest balance in his mentality.
  It is important that the country should realise what immense strides have been made in the last two years. We stood on the verge of a precipice. We then had two anchors, the Gold Standard and the credit of the country. We had to lose the Gold Standard and we had nothing left but our credit. The National Government, backed by the country as a whole in a most remarkable and striking way, set themselves to recover our position and maintain our credit, so that to-day it stands higher than that of any other in the world. The first general criticism, therefore, of the financial policy of the Government, of which this Bill is only a part, is that the world at large considers that the National Government have reestablished the credit of the country and that their financial policy is a sound basis upon which we can progress further. It is true that we must still consider how to improve our position. Everyone has had to make sacrifices, and everyone is still suffering although, as a result of the methods of the Government, the cost of living is reduced and people are able to buy more and be more comfortable than they were two years ago. I know that we have to face difficult international questions, but if we have the courage of our convictions and if we stand together, as we have done in the last 18 months, we shall overcome them without a doubt.
  The Budget does not deal with the American Debt. It is perhaps unwise to express an opinion on that subject at the moment, but some of us consider that the contract has been to a large extent nulli-

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  fied by the actions of others than ourselves, and that calls for the gravest reconsideration. The world is suffering, as we are, from the burden of engagements which are non-self-liquidating, and which are a strain on world finance. The sooner we can get together and get rid of that burden the better. The Chancellor of the Exchequer is very wise to leave it out of his consideration for the moment. I hope very much that circumstances will be such that he will find that there is no necessity to face that liability.
  Then we come to the question of the general policy of the Government. I listened with interest to the various criticisms from the Liberal Benches opposite. We heard the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) make a violent attack on the Minister of Agriculture. The hon. Baronet said the right hon. and gallant Gentleman was a menace to the country. We all realise that the hon. Member is not a menace to this country, and never could be, and therefore I do not think we need worry about the exaggeration of his attack on the Minister. If it came from serious-minded people, we might take it very much differently. I submit that the Government have a very definite policy for recovering the trade of this country, and that policy is not merely tariffs. The complaint about tariffs would be perfectly sound if we were simply setting ourselves to pile up tariffs against everybody else. Instead, we have put ourselves in a position to be able to deal with the situation interNaily by reasonable tariffs, and to develop the trade of the country exterNaily by negotiation, having something with which we can negotiate. The very discussions that have taken place in this House during the last few weeks on the Trade Agreements show that by reducing our tariffs we have compelled others to reduce theirs considerably more.
  It is sheer nonsense to say that the Government's policy has not been a policy for developing the trade of this country. There is no question that this is the one country where trade is developing. I meet the business men of the country regularly, and they tell me that trade is turning the corner and is beginning to show distinct signs of improvement. Is there any other country
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  in the world of which that can be said? No. This country stands pre-eminent at this moment, and it is, I submit, because of the sound policy of the Government. That is the answer I think the country as a whole will give to this criticism, and to the Amendment to reject the Finance Bill.
  When you come to details, there are one or two questions that might well be discussed, and I wish to call attention to two points in the Bill, on which I feel I am speaking with full knowledge of the feeling of the business community. The first is certain taxation on motor vehicles. A point to which the Association of British Chambers of Commerce have specially directed the Government's attention is the penal tax which this Bill proposes on vehicles working in dock areas. It is a serious thing for the export trade of this country, and for the work in dock areas, that these heavy vehicles built specially for that particular trade should be subject to this tax. They use roads specially made for the purpose, and therefore all the arguments that these heavy vehicles are injuring the roads can be dismissed, because they are not. The roads and the vehicles are made for the work, and upon them and their efficacy depends the export trade in our leading ports. I think it is wiser not to particularise in matters such as this, or I could illustrate the port of Liverpool very specially in that connection. I think it only right that this House should understand better that we cannot come here and on a general Bill of this kind plead the particular needs of a particular port. But I do say that the position of Liverpool illustrates the dangers and difficulties of attempting to enforce this heavy tax in port areas which serve our shipping and our export trade. I earnestly commend the attention of the Chancellor of the Exchequer and the Financial Secretary to that point.
  There has also been a general discussion on the oil question, on the so-called penny tax. The real description of it is the 25s. or 22s. 6d. tax. I want to speak about it in one particular connection. I cannot understand why the Government should suddenly have picked out part of the British mercantile marine for a special tax. We have heard a great deal about road and rail transport, but coastal shipping has been entirely put on one side until suddenly it is brought forward

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  in connection with this tax. The only explanation I have seen is that other forms of transport are being taxed, and it is only fair therefore that it also should be taxed. Apart from the fact that they are totally different, that this country in times of war as well as in peace is dependent on the mercantile marine, which has proved itself exceedingly valuable, coastal shipping is in a very different position from inland transport. This tax is going to mean added costs from three to four times as heavy on the coastal shipping, compared with road transport. Ships that go from Liverpool to London, for instance, have not a direct road route. They have to go all round the coast and travel anything from three to six times the distance. You are putting an extraordinary and abnormal burden of 35 per cent. increase in the cost of fuel on this transport. In the last 50 years there has been no increase whatever in the amount of traffic carried coastwise, whereas there has been an enormous increase in the traffic on the roads. That alone is an argument of great strength.
  Secondly, it is going to help the competition of foreign vessels. I know the answer given to me will be that it is intended to tax the oil on the coastal voyage of any foreign ship, but that is a very small percentage of the effect of these taxes. The foreign ship, except when she has to make these coastal voyages, has a fuel cost of 50 per cent. less than our own ships. She can therefore perfectly well afford to come and make an odd coastal voyage here and there at a cheap rate. She can carry cargo for this country, and if she clears coastal for her next voyage she has no tax to pay on her oil. If she clears foreign she can call at one port and go on to another, and carry an export cargo. I have just had a report from an expert who has been visiting ports in the country. There are a large number of small ports that oannot afford the expense of keeping dredgers to deepen their channels. The one vessel that can go to some of these ports, and has given them life, has been the small light oil-driven vessel. One of the reasons for that has been that the light oil-driven vessel trims level and runs on a level keel. A coal ship goes deeper in the stern, as the coal is burnt up, and therefore she cannot enter these ports. All these things show that the
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  Government have, I am afraid, not had the full facts before them.
  As a matter of principle, there is a very strong argument that you should not tax the means of developing industry on any account. I put it forward that it is a very serious thing indeed to interfere with the British mercantile marine as the Government are doing, and to upset an old and well-established but not developing arm of service, and put out of business a large number of these ports. The service coastwise is only about one-third of the service which this coastal shipping renders. The islands round the coast can only be served by shipping. There is no question of competition. We are cutting at the root of the services to these outlying districts. I think it is a very serious matter. We are also definitely and clearly discriminating in favour of the Irish Free State as against Northern Ireland. That is a very serious matter for us to face. A vessel clEarlng from Liverpool to Belfast has to pay from 35 to 50 per cent. more for her fuel than if she cleared for Dublin. You are subsidising the Dublin route to Northern Ireland. The whole thing calls for very careful consideration. I have felt bound to lay before the House the serious character of this interference with shipping, which is on a totally different basis and cannot be discussed on the same lines as inland transport. I hope I have put it sufficiently clearly and strongly to the Government. I think the House knows that I am not given to exaggeration, or to pressing upon the House anything about which I am not satisfied from personal knowledge and close study that it is right and is important. I do not wish to assume any particular position in this matter, but I do want the House to realise that what I have put forward is a very serious consideration. I have mentioned these two points, and can feel satisfied that, after having laid them before the Chancellor and the Government, they will be given due consideration, and that I can safely feel they will be thrashed out in Committee.
  Apart from those points, and possibly others, the Chambers of Commerce and, I think, the Federation of British Industries, and business men have all taken the line that the policy of His Majesty's Government on the whole should be the

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  same for all the country. Although the Finance Bill contains things we do not like, its main principles are sound. The effect is good. Let us keep our credit up and develop our trade, and then it will only be a question of time before there will be a recovery of a kind which will enable us to meet those difficulties and to help those people, all of whom, in every class, were prepared to sacrifice themselves to save the country. They have only to be given to understand that we are not entirely out of the wood, although we can see daylight through the trees to-day. Let us all have patience, and the result will be for the good of the country. It will be a real good, not only for a few, but for the whole of the citizens of this country. They will come into benefit in time. If we try to delude ourselves to-day by spending a lot of money which we cannot afford, things will be quite different.
  It is ridiculous when people talk of subsidising the brewing industry. The Chancellor of the Exchequer has explained to us that which we all knew, namely, that he is anxious to save and to increase the yield of the duty. It is not a question of distributing £14,000,000 to the brewing trade. That is a ridiculous misrepresentation of the facts. The right hon. Gentleman is endeavouring to maintain the revenue of the country on a sound basis, and in the meantime to help British workmen who require some sustenance during the time of their leisure. The Finance Bill is a good one. It is not quite like the curate's egg, for it is more than good in parts. It is good in nearly every part. I support the Bill, and hope that the House will, with the exception of perhaps a very small minority, give it a Second Reading.
  8.18 p.m.
  Mr. BANFIELD: The hon. Gentleman the Member for West Derby (Sir J. Sandeman Allen) commenced his speech by praising the Government and declaring that the Budget was an excellent one. Everything was for the best in the best of all possible worlds. The hon. Member represents a division in the City of Liverpool, and I suggest to him that if he would look through the streets of his city, observe the thousands of unemployed, and see the poverty and misery in his own constituency, he would come to
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  the conclusion that after all things are not quite as bright as he imagines. He has put up a case from the point of view of the City, the financier, the banker, and the merchant, but he forgets altogether the place of the industrialist and the unemployed. I was surprised to hear a speech delivered by a Member of a Liverpool division which contained no reference to the question of unemployment. Only a few weeks ago deputations were coming into Whitehall and asking for help for the distressed areas, including the City of Liverpool. They pointed out the poverty, the condition of the finances of that city, and the hopelessness of the people. To-day the hon. Member has got up and declared that the Finance Bill, with the possible exception of a miserable minority of the Socialist party, will undoubtedly be carried in the House by a large Majority.
  The Chancellor of the Exchequer, in dealing with the question of the unemployed, used figures very cleverly to suggest that the unemployed man, instead of being worse off, is now considerably better off. Percentages and figures apparently can be made to prove anything. We cannot do without figures but we can do almost anything we like with them. It is all very well for the Chancellor of the Exchequer and other hon. Members to point to the drop in the cost of living and to argue that 17s. to-day is as good as 18s. 6d. or 19s. was a few years ago. They make the fundamental mistake of taking no account whatever of the fact that rents remain the same, and if anything tend to increase, and that the burden of rent upon the unemployed man is a tremendous factor in his weekly budget. Figures are all right, but one must come down to the human factor. The Chancellor of the Exchequer said that a man, with a wife and two children, to-day received somewhere round about 27s. per week if he is drawing unemployment pay.
  Colonel WEDGWOOD: If he is in benefit.
  Mr. BANFIELD: Yes, and if he is receiving transitional payment he gets considerably less. In my constituency, which is a very poor constituency with a tremendous number of people unemployed, there are four people to keep out of 27s. a week, and the rent in the

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  Majority of cases is somewhere round about 10s. and must be paid. That leaves 17s. a week upon which to keep four persons.
  Mr. J. JONES: You cannot keep a dog on it.
  Mr. BANFIELD: No one except the wife of the unfortunate unemployed man knows the difficulty of balancing the weekly budget when there is only 17s. a week with which to feed four persons, and to clothe and send the children to school with a decent pair of boots upon their feet. It is no use throwing about figures of this kind because the hard, stern facts and realities of the situation from day to day and week to week make the figures very feeble and futile indeed. On the other hand, the Chancellor of the Exchequer was very clever in pointing out the woes of the Super-tax payers. In fact, he was so clever with regard to the income of the man with £50,000 a year that not only was the £50,000 accounted for but the man was in debt to the extent of £3,000 a year. These exercises in figures are wonderful. The figures are got out by experts and mathematicians, but the man-in-the-street is not impressed by figures of that kind. The burden is still unduly placed upon those who can least afford it. Let me remind hon. Members of the position of the comparatively small wage earner, the man with £4 or £5 a week. He is saddled with a considerable amount of Income Tax. The present scale, with its reduction in the allowance for a wife, has brought in many men who have to make very big sacrifices out of their small incomes to enable them to pay their dues so far as Income Tax is concerned. While I plead for the unemployed man I also plead for the employed man, and for the lower middle-class man, who to-day is taxed more heavily than at any time in his lifetime. The lower middle-class man, the respectable person in his black coat, votes Tory because to vote Tory is to be respectable, and he refuses to vote Labour because: "Those Socialists, my dear, mean black ruin and bloodshed: therefore have nothing to do with them."
  These men, who have been the backbone of the Tory party over and over again in council elections and in Parliamentary elections, have a perfect right to come to the Government and say that
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  if they have millions to spare they should put back the limit so far as a married man and his wife are concerned in regard to Income Tax. I never tire of wondering at the patient suffering of the lower middle-class people. They think that it is not quite the right thing to make a fuss, and it is very hard to get it into their heads that until they are prepared to kick and kick hard everybody, including the Government, will take advantage of them. If I could do anything in my small way to organise some resistance by the lower middle-classes I should be only too glad to offer my services. It is very often said that we on these benches are only concerned with the manual workers, whereas we are just as much concerned with those who work by brain as those who work by hand.
  I am satisfied that this Budget will not bring any hope or joy into the homes of the lower middle classes. It certainly brings no joy to the unemployed. When the cut was made in unemployment pay, pledges were given from hundreds of platforms at the election. It was said that everybody must sacrifice because the nation's necessity demanded it, but that as soon as possible the first thing that would be done would be to restore the cuts. The policy of the Government so far as the economy cuts are concerned remains precisely where it was. All kinds of people had their wages and salaries cut and they were prepared to recognise that they were sacrificing, but the result has been that the Government, apparently, are prepared to say: "The cost of living has gone down by 10 points, You must look at the matter from a common-sense point of view, and you are a jolly sight better off than ever you were." If people will swallow that, they will swallow anything.
  The Budget holds out very little hope of any policy which is likely to better trade. The hon. Member for the West Derby Division of Liverpool spoke in that nice, cheerful, optimistic tone that we have heard in this House during the short period that I have been here, to the effect that there are signs of trade improvement and that things are likely to be better. Everyone is hoping against hope that in some way or other the Lord will open a door for this Government, and that the unemployment figures will be reduced. I can see no hope that the policy of the Government will result in

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  any increase of trade. The Budget is such that an ordinary schoolboy might have made it. A schoolboy who could make two and two into four could have balanced both sides of the ledger and presented it to the House. The Budget shows no signs of genius. Someone has said that it is a mark-time Budget. Perhaps it is a mark-time Budget. It certainly shows no signs of marching forward.
  I should like to say something about the Oil Tax. In my constituency there are 8,000 people who are engaged in the nut and bolt industry. For 30 years that trade has used oil. The position to-day is that that industry is only working up to 60 per cent. of its possible output. This great and glorious Government with a national mandate, with power to do all sorts of things, to put the country right have failed so far as my constituency is concerned. In the nut and bolt industry they are only working up to 60 per cent. of their capacity, while compared with seven years ago their export trade has dropped from £900,000 a year to only a trifle over £230,000. It is now suggested that they should bear this burden of £l 0s. 5d. per ton tax on oil. I have consulted not only the employers but the workpeople, and they say that for two years the workpeople engaged in the nut and bolt trade have suffered greatly from shortage of work. During the 18 months of this Government, with all its tariff policy, with all the prospects that were held out to the people in 1931, the average of unemployment in that industry is between 33⅓ and 40 per cent., and unemployment is considerably worse to-day than it was in 1932. They have suffered from a shortage of work and hundreds and thousands of them have been discharged. They are only working three or four days per week, and any action which would still further reduce their earning power can only be regarded as deplorable.
  I do not think the Chancellor of the Exchequer was aware of all the effects which this duty on fuel oil would have when it was proposed. He knows the Black Country as well as I do, the terrible distress, the difficulty of securing foreign trade, the competition in foreign markets which Since the introduction of tariffs has become even more keen; and he must know that this tax is about the last straw
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  to break the camel's back. How on earth can. this industry pay a tax which is computed will mean between £30,000 and £40,000 a year in this restricted area? The tube industry has been hard-hit indeed. It has lost markets which will never be recovered. It is now making a struggle; but if this tax is not modified or dropped these two industries, as far as exports are concerned, will go by the board altogether. I have made this point because the Chancellor of the Exchequer promised to look into the circumstances of any particular industry.
  On the general principle of the Bill the Amendment moved from these benches is most reasonable. We have had speeches declaring that all is for the best in the best possible world. One hon. Member said that the Government will be here for many years. I should like to give notice to many hon. Members opposite that that is an extremely unlikely occurrence. My opinion is that the policy of the Government, the growing volume of unemployment, for which they have no remedy and scarcely any policy, must result in an expression of feeling from the constituencies which will sweep them out on a tide as big as that which swept them in. People who receive mandates, who get far more power than any Government ever received, and do not use their mandate for the good of the people as a whole, but for the good of the financiers in the City and the banks, will be swept away by the electors. New policies, drastic policies, new methods, new ways and new ideas are wanted. The Government have neither new methods, new ways, nor new ideas, and will be swept into the oblivion which they deserve.
  8.39 p.m.
  Mr. WISE: I do not intend to follow the hon. Member for Wednesbury (Mr. Banfield) in his entertaining disquisition on Socialism, although it gave me pleasure to learn that in their great, generous and warm-hearted way the Socialist party have now taken the middle classes to their tender bosom. The process of education is proceeding steadily, and shortly we shall see them embracing the dukes. Their criticism of the Budget and the financial policy of the Government is vitiated by their own statements as to what they would do. I am not misrepresenting hon. Members of the Labour party when I say that their financial policy is to reduce taxation, to

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  spend a great deal more, and to balance the Budget in some curious way. I do not know if even a Socialist Chancellor of the Exchequer could balance a Budget in such circumstances. It might be possible by using the printing press to produce money for the necessary expenditure, and then repudiate the banknotes a year later. But it could not be done more than once, and we must, in general, give our approval to the Budget of the Chancellor of the Exchequer.
  I should like to make one minor criticism on behalf of a race of people, almost a tribe, who are seldom heard of in this House, who are in a certain sense nobody's constituents, and who, therefore, are rather apt to be neglected. I mean the travelling showman, who is, to my mind, a relic of an older England when we were less educated, less spoon fed, and probably happier than we are now. Although he is a relic of an older England he has had to modernise himself in his transport, because unfortunately the public taste is no longer satisfied by dancing bears but demands a steam roundabout on which to amuse itself. The steam roundabouts which one sees in fairgrounds, which have to be moved from fairground to fairground, require a great deal of heavy transport. They do not require it very often, possibly only once a week and for 30 weeks in the year. To say that a travelling fair covers more than 700 miles in a year would, I think, be an exaggeration, although they might travel much more if they took the hon. Member for Silvertown (Mr. J. Jones) as their chief attraction.
  Fortunately the Chancellor of the Exchequer has treated these people much more generously than was considered at first likely. If the Salter Report had been put into force they would have been ruined. That Report suggested a multiplication of the taxation by something like 10 times. I have figures which show that a man who was paying about £400 a year in duties would, if the full provisions suggested were put into force, have had to pay something like £4,000. His total profit did not amount to anything like a quarter of that sum and, naturally, he would have had to close his fair. Relief could be given easily in this way. The taxation on vehicles of the travelling showman is graded more highly for vehicles not travelling on pneumatic
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  tyres. That means that nearly all vehicles used by a travelling showman pay the higher tax. Pneumatic tyres are not a good form for carrying a heavy load. The solid tyre always was the better method. It carries the same load on fewer wheels. It is a great misfortune that we ever stampeded the motor industry from solid to pneumatic tyres. The showman still uses the solid tyres, and I think that the Chancellor might make the concession that the taxation on the solid tyre shall be the same as that on the pneumatic tyre in the case of these particular people. If it is possible to make an exception in this matter it would cost the Exchequer very little indeed, and it would help a particularly worthy section of men who provide a great deal of popular amusement and represent a life without which the community would be very much poorer. Showmen have not had too prosperous a time in recent years. In fact, they have probably suffered more than almost any other amusement purveyors from the general depression. Any relief which could be given, which would maintain as many as possible of these travelling fairs, which would enable us to see every now and again a village green which was what a village green was meant to be, that is a place to which people go for amusement—any concession of that kind would be very much appreciated, and would bring in its train very considerable benefits ultimately even to the Exchequer.
  8.47 p.m.
  Captain STRICKLAND: In the short time available I do not propose to indulge in any throwing of bouquets to the Chancellor of the Exchequer, because I think it would be presumption on my part. I believe that the country as a whole recognises the extraordinary difficulties under which the National Government has carried on its work at a time when other nations have not been able to hold their heads above water. Although we may be taunted by the hon. Member for Wednesbury (Mr. Banfield) with having produced a marking-time Budget, at any rate we are not moving backwards as so many other countries are doing. I believe that the country is grateful to the National Government for what it has been able to accomplish. To presume that any of us, even Cabinet Ministers themselves, would say, "We

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  have done all that we hoped to do, and there is nothing more to do or to worry about, "would be an absurd position. None of us is satisfied, and we shall not be satisfied until we have restored this country as fully as possible to the paths of prosperity.
  I do dislike to hear from the Opposition Benches the continual taunt that we who differ from hon. Members in our political views and in our approach to great matters, steel our hearts against the unemployed man and have no sympathy with him. The hon. Member for Wednesbury taunted an hon. Member from Liverpool with having spoken in optimistic tones. No one can accuse the hon. Member for Wednesbury of having been optimistic. But we do keep in mind one central fact: If we are to help the unemployed otherwise than by making them State paupers dependent on State charity, we have to do it by the building up of trade and not by pulling it down. Whether you have a Conservative Administration, a National Government or a Socialist Government in power, the main and central point is that it is only by the production of wealth that you will be able to bring any ray of hope to these unemployed people. I suggest that in the present Administration, and even in this Budget with all its hardship inflicted, we have had that point kept particularly in view. My hon. Friend the Member for Wednesbury bemoaned the condition of the nut and bolt industry. I wonder whether he would care to go to his constituents and tell them that he is in favour of a continued flood of nuts and bolts produced by underpaid labour coming into this country, to compete against the labour of those people who have unquestionably been thrown out of work by uncontrolled imports into this country.
  I want to come straight to two points of criticism. The first is with regard to the great motor industry of the country. I cannot understand why the Government seem obsessed with the idea that the motor industry and all connected with it must be singled out to be penalised by heavy taxation which the industry can ill afford to bear. In this Budget we have experience of an attack being made on the motor industry, and there is an attack on it, particularly the transport
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  side of it, in another direction by another Bill. In this Budget we have a definite penalty laid on the shoulders of this industry, and it must have its effect on the prosperity of the industry and on the lives and welfare and happiness of those who are engaged in it. There may be some sort of idea that the vehicles that are to be taxed so heavily constitute some form of expense to the country. I want to place before the House information which most hon. Members may possess but which ought to be repeated. Take the point generally raised with regard to the motor industry, that its heavy vehicles are ramping round the country, wEarlng out the roads, and not bEarlng their due proportion of the cost. Let me quote official figures which should lay that bugbear and stop the criticism.
  Under the motor taxation of 1932 there was a yield from vehicle taxation and driving licences of £28,396,725. Side by side with that there was another tax on the motor industry, and to it insufficient attention is given when dealing with the question of road costs. During the period the yield from petrol taxation came to another £34,000,000. Thus, from the motor vehicle side of the industry there came a contribution of £62,396,725. The annual cost of the roads, even in times when it was excessive, was round about £60,000,000. During more recent times the cost has come down to round about £52,000,000. So the Chancellor of the Exchequer can say that at the present time, after wiping off the whole of the costs of the roads and letting the motor people pay the cost of maintenance and upkeep of the roads, there is still a sum of about £10,000,000 that is paid by the motor industry. It may be said that the whole of this money does not find its way into the Road Fund. That is true but even if a proportion of that taxation is placed on one side for de-rating or some other purpose, yet fundamentally one reaches the same point, that the motor industry is bEarlng more than its proper proportion of the cost of the upkeep of the roads.
  The next point which I wish to emphasise is that the motor industry is an outcome of modern progress. Just as the railway superseded the stage coach, so the motor vehicle and the internal combustion engine have revolutionised

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  transport to-day. To place any additional burden on to the transport of goods is to fasten an additional cost on to every person who is supplied, directly or indirectly, through the medium of the motor industry. If taxation on the motor industry is increased, it will increase the cost of living, and it is useless for the Minister of Transport to object to the terms used by my right hon. Friend the Member for Tamworth (Sir A. Steel-Maitland) upon that subject. If you place an additional burden on the motor industry, you increase the cost of every pound of tea, every side of bacon, and every carcass of meat conveyed about the country. The tax will have to be borne by the community. When the Minister of Transport objects to certain terms being used by supporters of the Government, I respectfully submit that we should be doing less than our duty if we placed party entirely in front of our beliefs in this matter.
  The proposals in the Finance Bill suggest immediate taxation of a heavy and penalising character—penalising, not only in its amount, but in the grades or steps in which it is proposed to bring it into operation. What will be the effect if we are to have £20 a year rise in the incidence of taxation from ton to ton? Suppose you have to pay £20 a year more on an eight-ton vehicle than on a seven-ton vehicle, will it not mean that the whole effort of the designers of motor vehicles will be directed towards producing the lightest possible vehicle that can bear the heaviest possible burden? That will be most undesirable in the present state of the roads. I hope that the Chancellor will give consideration to this matter and possibly find mercy in his heart when considering it. I hope he will find it possible to grade this taxation so that there shall not be any hesitation on the part of owners in having an extra cwt. or two of unladen weight in their vehicles in order to make those vehicles more substantial. But if a vehicle, say, of 6 tons 2 cwts. unladen weight is to be charged £20 a year more tax than a vehicle just under 6 tons unladen weight, it will lead to a position in which we shall be crippling the industry.
  Another point is in relation to what is known as the articulated vehicle. I feel that a great mistake is being made in the Budget in regard to that matter, and I hope the Chancellor will also give
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  special attention to it. The articulated vehicle is one in which the motor and the propelling power is in front, with a trailer, partly superimposed on to the motor, the two forming a goods vehicle. In the past it has been deemed necessary to treat the two things separately, to get the unladen weight of the motor and to get the unladen weight of the trailer and to charge on both. The tax was not too bad in the past on these lighter vehicles, but the new proposals are most savage. You have to take the total weight first and pay a heavy additional tax on that. Then, over and above that, you have to pay tax on this so-called trailer which is not, in fact, a trailer in the ordinary sense, but is part and parcel of the vehicle. I think in the two respects I have mentioned the taxation proposals are manifestly unfair, and I hope that something will be done about them.
  It may interest the House to learn what the effect of the Budget proposals will be with regard to certain vehicles which only come into use on very infrequent occasions. I have here particulars with regard to a very heavy vehicle—42 tons unladen weight—which conveyed the rudder of the "Berengaria" in its progress through this country. That was a load which could not be taken by the railways, and therefore it is not a matter of being able to transfer it from road to rail. Nothing else but this particular type of vehicle would be capable of conveying such a load, and the same remark applies to the enormous girders which are now necessary in modern buildings and which, because of their length and width, cannot be carried by the railways. These are very occasional loads. I do not suppose they are conveyed more than twice or three times a year, but that makes no difference under our system of taxation. The particular vehicle of which I am speaking was taxed in the past at £66. The taxation in the future will be £1,367. A tax like that on a vehicle which is used only about three times a year means an additional cost of between £400 and £500 on the cost of conveyance of these loads. I suggest that that sort of thing cannot be defended on the ground that it is likely to help industry.
  With regard to fuel oil, I am at one with the hon. Member for Wednesbury as to the inadvisability of placing a tax on

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  fuel oil of the amount proposed. Why the Government wanted to bring this tax forward in the form of a penny a gallon on fuel oil I do not know, because they might just as well propose a tax of a penny per lb. on coal. Fuel oil is not the sort of thing that you buy in a pint bottle at tine corner shop. It is an essential of industry, now that we have become accustomed to its use, and this taxation will be particularly hard on certain industries. The nut and bolt industry, already mentioned, is one. There is another industry affected which is familiar to many hon. Members, namely, the aluminium casting industry. In that industry it is necessary to maintain the heat in the crucible furnaces at an even temperature right through the whole process or the casting will be no good. That can only be done by means of a constant supply of fuel which does not make necessary the reloading of the furnaces, because in that way the process would be damped down and the production would be spoiled. The process can only be carried out by oil or by gas. If gas is employed it involves paying twice or three times as much as would be paid for the use of fuel oil. The heavy drop forging industry is another case in point, and other industries are affected into which I need not go now. These are instances of how industry will have to pay for this taxation on fuel oil. It cannot turn over to coal so that there will not be any extra coal sold because the Government have placed this tax on the fuel. These are cases which I do hope will be met.
  The Budget, I think, generally commands the respect and admiration of the business men of the country, who realise that the Chancellor of the Exchequer has faced the difficulties under most trying circumstances. I submit that there should be special concessions indicated by the Chancellor of the Exchequer with regard to these particular cases. I need not mention coastal shipping, although that, of course, is a most important matter. One firm alone in Coventry is spending £3,600 per annum on fuel oil, and this tax adds £l,200 to its cost. If we are going to have a tax of something like 33⅓ per cent. imposed on industry, the call that comes insistently and repeatedly for the employ-
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  ment of British people and the rebuilding of their hope in industry will be of no avail. Those hopes will not be realised by placing these heavy burdens of taxation upon industry.
  I am one of those optimists who believe that this country is pulling through, and that we are going to see better times; but we are going to see better times more from the support of people who place country before party and can work together towards getting into harmony the various branches of industry—the black-coated worker, the mental worker and the manual worker—getting them together in the real old British spirit, rather than from those who try to secure a party advantage out of the miseries of our workers. Let us hope that the Chancellor of the Exchequer will be able to make some concession on these points. I can assure him that they are deeply felt by those who have the responsibility of organising industry, who find their own living from it, and at the same time find employment for our workpeople by the fact that they are themselves helping to create the wealth of the country.
  9.8 p.m.
  Mr. CHARLES BROWN: The hon. and gallant Member for Coventry (Captain Strickland) cannot be blamed for devoting the Major part of his speech to an industry which largely concerns the constituency which he represents. He has, from the standpoint of that industry, directed certain criticisms against the policy of His Majesty's Government in regard to motor taxation. I think that I detected, in addition to that criticism, a note of disappointment, especially in the earlier part of his speech, with the general policy of the National Government, because he began to excuse what to many of us is their complete failure by calling our attention to the extraordinary difficulties of the situation with which they had to deal. He assured us that it was some consolation to him that, although the Government were not moving forward, they were not going backward. That is apparently all the consolation that he can get out of the general policy of the Government, though he criticises them particularly in regard to industries which directly concern his own constituency. He might very well have broadened that criticism instead of

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  making it solely in connection with the industry with which his constituency is concerned.
  He chided us on these benches because he said we frequently seem to convey the impression that hon. Members on the other side are not sympathetic towards the unemployed. I am not sure that he is right about that. That is not exactly what we have to say about the attitude of hon. Members on the other side. He said that, if our policy were to be pursued, it would result in the creation of a mass of State paupers, and that the better policy was that which would result in the general improvement and development of trade, and consequently, in his view, the absorption into industry of numbers of the unemployed. He concluded by telling us that he was an optimist. If he believes that the policy which the National Government are pursuing is destined to result in a state of general prosperity, and that, through that prosperity, the great mass of the Unemployed are to be given work and wages and consequently lifted from the slough of despond in which they find themselves, then, if his optimism is well grounded on concrete and definite facts and realities, surely in the intervening period he will not grudge the unemployed generous treatment.
  I have some sympathy with him when he calls our attention to the transformation which has been wrought in regard to transport by the invention of the internal combustion engine and all that that has involved. When he made a general plea that that new form of transport should be given every opportunity to develop, I entirely agreed with him. If it is not given full opportunity, the reason will be that rival Capttalist interests prevent its development by the pressure which they are able to bring to bear against the progress that would otherwise be made. Therefore, when he calls attention to the consequences of inventions and the progress and development that may result, let him direct his attention to the fact that frequently inventions which would confer great boons on mankind are prevented from working themselves out to the logical conclusion by the rival Capttalist interests which exist in society as it is constituted. If he wants the motor industry or the industry depending upon the development
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  of the internal combustion engine to have its chance, he will have to wage a long fight against rival interests that are hostile to its development and progress. One of my hon. Friends reminds me that he will have to come to this side of the House to do that.
  During this Debate we have listened to speeches of various kinds. We had one to which I listened with great interest, which urged—and I do not particularly dissent from it, if it can be done—a further reduction in taxation and argued that that could only come about by a further reduction in expenditure. When I listened to that speech, I could not help feeling that some Member ought to have got up and pursued the matter, especially after the unseemly wrangle which we had in the House last night, and in view of what the Minister of Agriculture said last week that tariffs were now a worn-out weapon, that they did not fit the conditions of the modern world, that they were largely useless in the conditions in which we were living, and that the only thing we could do in regard to regulating imports was the adoption of what he called the method of quantitative regulation. In view of that fact, I am surprised that some economist on the Government benches has not made a speech to-day recommending the entire abolition of the Tariff Advisory Committee together with the officials who have had to he employed to work the Import Duties Act. Now that tariffs have been declared to be effete and out-of-date and useless, surely those who are so ardent in the cause of economy ought to urge the Government to effect what would be an economy desirable to everybody.
  I did not hear all the speech of the Chancellor this afternoon, but I did hear the latter part, and it interested me very much. I do not think I should have tried to take part in the Debate to-day but for that speech. He devoted a good deal of it to endeavouring to prove that the unemployed are better off now with lower rates of benefit than they were with the higher rates paid some time ago. By implication—he did not say this, but his argument surely was this—he suggested that under the conditions which exist at the moment the treatment being meted out to the unemployed is no injustice to them, that there is no social wrong in it, that they are being treated as generously

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  as the nation can afford. I think that was the implication of the argument.
  Mr. HERBERT WILLIAMS: That was not the precise implication. The Chancellor pointed out that the real value of the present rates of benefit was higher than those in 1924.
  Mr. BROWN: I think I said that he pointed out that the lower rates of benefit to-day were of greater value than the higher rates a short time ago. That s what he said, and I say that by implication he sought to convey the impression that the rates of benefit now being paid do not inflict any injustice on the unemployed and that they are suffering no social wrong. He also applied the same argument to old age pensions and to widows' pensions. Listening to him to-day I detected the origin of that line of argument. It is the familiar argument advanced in all the recent publications of the Federation of British Industry. They have brought it forward in all their publications as an argument for further reductions in taxation.
  I want to say that the Chancellor's argument made no impression at all upon me. We cannot ignore the fact that every year the productive capacity of industry increases. The general economic development points in the direction of the possibility of a raising of the standard of life both for the employed and the unemployed. Consequently, I cannot understand the argument put forward by the Chancellor this afternoon, which seemed to me to condemn the unemployed to their miserable lot for a very indefinite period. I know that he has tried to clear away the very bad impression created by that famous speech in which he said there would be no considerable improvement in things for the next 10 years by modifying somewhat the bald statement he made on that occasion, but, in view of the fact that the productive capacity of the community increases every year, and recognising that there is no fundamental economic reason why there should not be a rising standard of life both for the employed and the unemployed, we are entitled to ask how the present policy of the Government is likely to bring any improvement either to the employed or to the unemployed. In spite of the fact that the material basis for a raising of the standard of life
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  exists in our civilisation to-day I cannot see that anything which the Government are doing is likely to bring that higher standard of life within the reacn of the employed or the unemployed.
  So far as we are able to judge up to the present moment, the Government seem to be almost entirely the plaything of economic forces. They are making no real attempt to control them, and no real attempt to guide us in directions which would ensure a rise in the standard of life for the mass of the people. There is no effective Government policy for the restoration of trade. What is the explanation put forward? The Chancellor said this afternoon, "Yes, it is true we have not done what we thought we might have done"—that is what he said in effect—"but the reason for that is to be found in world conditions. They are really the excuse for our failure." In the last Parliament, anybody who attempted to account—I am not defending the last Labour Government, do not misunderstand me—for the failure of that Government on the ground that world conditions were against them was always laughed to scorn by the Members in the House at that time. Now the position is reversed, and the National Government's sole excuse for all their failures is "World conditions are against us, and until world conditions have changed, of course we cannot make any effective impression on the economic conditions which prevail."
  I am glad to be able to congratulate hon. and right hon. Members opposite on their conversion to internationalism. The only thing that disturbs me is that while they render lip service to internationalism, during the whole 14 or 15 months they have been in office they have been pursuing a narrow, nationalistic economic policy. One can only hope that in going to the World Economic Conference, on which we are told their hopes now entirely depend, they have really been converted to a sound and sensible internationalism. The Chancellor finished his speech this afternoon by calling our attention to the fact that the World Economic Conference was to take place in London and that the Prime Minister was to preside. Surely we are entitled to ask the Government what is to be their policy at the Conference. If we can trust the newspapers, we are probably familiar in broad outline and general

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  terms with some of the things they want to do. There is to be an effort to stabilise the world's currencies; there is to be an effort to raise wholesale prices throughout the world, the point of that being that if we are able to do it the primary producing countries will get more for their primary products and will be able to buy more of the manufactured goods of an industrial country like our own. That much we know, but can we be told more definitely and specifically the policy of the Government at the World Economic Conference? Can we be told what proposals they are going to put before the Conference?
  I would utter this warning. At various stages of their existence the Government have always had something just ahead to which they ask us to look forward, but when the thing which was just ahead was realised, that thing out of which was to come something of real benefit and advantage, it proved to be disappointing. We had, first of all, the system of Protection. Then we had the Ottawa Conference. Now we have had a series of trade agreements, and we are going to have the World Economic Conference. Can we be told precisely and definitely what proposals for economic recovery His Majesty's Government are going to put before the World Economic Conference?
  Even if you stabilise world currencies and make it easier to carry on international trade, even if you succeed in raising wholesale prices and make it possible for the primary producing countries to buy more of the goods of the industrial countries, even when you have done all that, then you have not touched at all what is fundamentally wrong in society as society is at present constituted. The great criticism of the Finance Bill which we on these benches make is that by implication it seeks to perpetuate the existing social order and the perpetuation of the existing social order will, of course, give infinite satisfaction to hon. and right hon. Gentlemen opposite. Every year, if we look with imagination at the Budget and the Finance Bill which is based on the Budget, we can, as it were, regard them as a mirror in which we may see reflected the condition of the nation.
  One of my hon. Friends referred this afternoon to the incidence of taxation, and to taxation falling upon the shoulders of those best able to bear it. Anyone who
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  listened to the Budget speech with imagination must feel that there is a vast discrepancy in this country between the rich and the poor, a great gulf between them. The Budget always calls our attention to the question of work and idleness. On the one hand, we have millions of unemployed, but at the other end of the social scale we have another kind of idleness to which the Budget calls our attention. The Budget calls our attention, too, to trade and commerce, to whether or not the tendencies of the time are towards war or peace, and to whether the nation is prepared to spend in order to lead the people out of darkness into knowledge. Indeed, the Budget indicates every year whether in the community in which we live there is progress or decay. From our point of view, the Budget we are discussing to-day shows signs that the economic system in which we live is in dire distress and in many ways, it seems to us, it is going to pieces.
  I would conclude by pointing out this fact. However the policies already ascribed to His Majesty's Government may be worked out, they will still leave untouched the fundamental wrongs in the existing system. Those who are engaged in doing the world's work—I care not whether it be here or in other lands— and those who are engaged in the tasks of production, always fail to receive the due reward of their labour and their efforts. Think of the agricultural labourer. I know hon. Members opposite have been telling us that this Government is doing everything it can for agriculture. That may well be so, but think of the agricultural labourer. Not only are his conditions bad, but they have been bad for many a long day. Think of the miner. His conditions are very bad to-day. Nobody here will be prepared to deny it. Think of the quarryman and of those engaged in our extractive industries, always the worst paid though the labour is the most arduous and heavy. They never get a proper reward for their labour. Let us remember that it is these people who are at the base of society, and who uphold and maintain the general social structure of which some hon. Members are so proud. The solution of the problem we have to face will never be reached until by some alteration in the general economic system you are able to give back again in ever increasing volume to those who produce the wealth, that

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  wealth which their labours call into existence.
  9.31 p.m.
  Mr. O'CONNOR: Among the most interesting features of the attendance of an hon. Member in this House is arriving at the moment when one recognises exactly what another Member is going to say and recognises the well-worn cliches of some particular doctrine. I reached that moment some 10 minutes ago when the hon. Member told us we were seeking to perpetuate the existing social order, and that the fundamental error of this country was the perpetuation of the present system of our society. I am perfectly certain that later on we shall have a similar peroration at equal length from the hon. and learned Member opposite. What we do miss sometimes is any attempt to deal with the situation on a basis of existing facts, and not on a basis of a world as some particular ideal would like it. The hon. Member for Mansfield (Mr. C. Brown) put a heavy burden on the Financial Secretary to the Treasury. He wanted him to tell the House what was going to be the policy of the Government at the World Economic Conference. I have sufficient knowledge of my (hon. Friend, and sufficient confidence in his discretion, to feel right in saying that the hon. Member will not get the answer to that question when my hon. Friend rises to reply. We heard the answer to that from the Prime Minister the other day, and there can be no doubt in the mind of any hon. Member what the main outlines of policy will be.
  I want to pass for one moment to the speech of the hon. and gallant Member for Coventry (Captain Strickland), who took a point of view of this Bill in relation to the taxation of motor vehicles which I certainly could not support. I noticed, throughout his observations, that he was compelled to speak of the motor industry and the contributions of the motor industry as though they were all one. That is a common failing of those who argue about the existing basis of taxation on motor cars. Obviously, one cannot treat the taxation of motor vehicles as being all in the same category. The taxation of private cars contains at least two elements, one element which makes some contribution for road damage, and, secondly, a sumptuary element which makes some contribution according to the
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  value of the car. It is using an unfair argument to sum up the total yields of motor vehicles of all kinds and to say that they are already contributing more than they ought to the upkeep of the roads.
  There was one instance which the hon. and gallant Gentleman gave, which seemed to me to afford the best possible justification, or an example of the best possible justification, for revision of the taxation of motor vehicles which occurs in this Debate. He gave the instance of the rudder of the "Berengaria" being taken, presumably from the place where it was made, by road. It may strike other hon. Members, as it struck me, that it was an extraordinarily srlly thing to do, and it is obviously an example of the uneconomic basis of taxation of road haulage. The normal and obvious way to take that rudder would have been by sea, but no doubt those who made the rudder found it apparently cheaper to devise a special vehicle to hammer the road to ribbons in carrying the rudder across country, and to add the extra cost of transport to the burdens of the taxpayer. It is precisely that anomalous use of the road to which has been invoked by our present system of taxation, and that is the very thing that the Salter Conference attempted to frame a method of altering. I am extremely glad that the Government have at any rate attempted to cope with that aspect of the problem, and those parts of the Finance Bill that readjust the taxation on the road haulage industry certainly have my support.
  Mr. KIRKW00D: May I ask the hon. and learned Gentleman how he expects a rudder to be taken either from Brown's of Sheffield or Pease's of Darlington, say, to the Clyde, other that by road?
  Mr. O'CONNOR: I do not know where this particular rudder was made.
  Mr. KIRKWOOD: At Sheffield.
  Mr. O'CONNOR: If it was made in Sheffield, this must have been done hundreds of times in the past. Presumably it has been taken in portions by rail and assembled at the dock. The hon. Gentleman will not suggest that we have not made rudders of similar or equal size in the past. If the present method of road haulage is encouraging people to make articles of that kind at places from which they cannot be brought, it is doing a dis-

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  service to the industrial life of the country. That rudder ought to have been made in the constituency of the hon. Member for Dumbarton Burghs (Mr. Kirkwood), not at Sheffield, and taken by sea. I gave an example to the House a year or so ago. It was that of a lifeboat which I had seen being transported from Portsmouth to London by road, with a caption on the back of the vehicle to the effect that it was cheaper to send it by road than by sea. That was a reductio ad absurdum of the whole thing. It is not cheaper; it only means that the taxpayer is paying the cost. It is only by slipping through the net of the system of taxation that that sort of anomaly is allowed to exist. The hon. and gallant Member for Coventry would have been better advised if he had devoted his observations, cogent as they were, to a suggestion that the horse-power tax should be altered. I am sure that that would have been more in the interests of the road transport industry which lies so very near his heart.
  Dealing with one or two other features of the Finance Bill, the point at which I can offer my whole-hearted support is the Beer Duty. The reduction of the Beer Duty, despite a few fanatical observations here and there, commands the support of the whole country. Beer was obviously an overtaxed commodity. It was taxed at a rate which imposed an unfair and unequal burden of tax upon one particular portion of the community, and it was destroying its own end by causing a diminishing revenue. There is one other feature of my right hon. Friend's policy which has not been sufficiently noticed, and which I think ought to have the approval of all believers, as he is, in sound finance, and that is his policy of reducing the floating debt, even at the expense of a small momentary increase in interest rates. If the assumption upon which the Government are proceeding is a right one, that there will be an improvement in trade, it is obvious that the level of interest on short-term borrowing must be a good deal higher. Even with a temporary increase of the burden of debt, I think that that policy is completely right, and I hope that the Chancellor of the Exchequer will proceed with it and push it ahead as far as he can.
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  I was a little disappointed that the Chancellor of the Exchequer did not refer this afternoon to his proposals in regard to the co-operative societies. I expected that something might have been said upon that point. The discussions which have been proceeding between the Government and those societies have been somewhat unusual, to say the least. They may be taken almost to have created a precedent in the exemption of one particularly indicated source of taxation from the Budget, continuous discussions and a supplementary Resolution embodied in an Amendment to the Finance Bill. That is a very unusual form of procedure, and I hope that the Financial Secretary to the Treasury, when he replies, will give us some indication whether the Government have any settled views on the subject now.
  When we pass from individual features of the Finance Bill to the general situation with which the Finance Bill purposed to deal, one has a good many causes for misgiving. Nobody knows the difficulties that have confronted the right hon. Gentleman. He had a very difficult task in making his Budget this year. When I heard him open his Budget, and when I looked at the Finance Bill, I found myself wondering whether he is not like Mr. Micawber, and whether his whole financial policy is not framed very much upon the idea that something may turn up. [HON. MBKBEES: "Hear, hear!"] One of my hon. Friends tells me that I know where to get my applause, which came from the other side of the House. Taking the long view, the financial policy embodied in this Finance Bill and in the Budget speech depends clearly upon a revival of trade. Suppose that that does not happen within the next two or three years; it is difficult to see how the foundation upon which this Budget rests can avoid having to be fundamentally recast next year, or the year after. It is a gamble; everything must be a gamble at the present time. I hope that the right hon. Gentleman will not become what some gamblers become when the gamble goes the wrong way. I will not use the word.
  This Government were returned, as the hon. Member for Bridgeton (Mr. Maxton) accurately said, in order to do their best to save the Capttalist system. What is this Budget doing towards that end? My

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  right hon. Friend believes in the Capttalist system just as certainly as I do. He recognises, no doubt, as I do, that the direct taxpayer and the rentier—to use one of the intelligentsia terms that are always understood by the other side—are the linch-pins of the system. Whether we like it or not, we have to make that admission, that the system depends upon this refertilisation by those who have conserved private Capttal. No alternative method of maintaining industry has yet been discovered, or even suggested. There are no hidden reserves of Governments. The attempt has been made in Russia, but it has not been made here or in any other country, even one which has had the misfortune for the time being to have a Socialist Government, to accumulate reserves which should replenish industry and enable it to compete in the markets of the world. We are still, therefore, entirely and absolutely dependent upon the functions of the private individualist system, which depends upon those who, in general terms, are the people upon whom direct taxation is now imposed.
  What is these people's present position, which is maintained and worsened in this Budget? The direct taxpayer, according to this Finance Bill, is to find no less than £390,000,000 of the total revenue that is to be raised in the country. The indirect taxpayer is to find £286,000,000. I would ask the House to examine for a moment, from whatever point of view they like—I care not whether it be the Socialist point of view or my own—the relevance of these figures in the national financial situation of the present moment. They mean that the direct taxpayer, that is to say, the Income Tax and Sur-tax and Estate Duty payer, is finding, by this £390,000,000, the whole cost of the Consolidated Fund, every penny of the current debt service and of the current flotation of debt, the whole cost of the Army, the whole cost of the Navy, the whole cost of the Air Force, and the whole cost of War pensions. That £390,000,000 just comprises the whole of these elements of our national expenditure. Including War pensions of about £45,000,000, the items I have described amount to about £388,000,000. I have checked these figures, and I think it is accurate to say that the amount contributed by the direct taxpayer is within
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  £2,000,000 of the total of the Consolidated Fund services, the whole of the Defence Services of the Crown, and the War pensions.
  That means that the remaining services—that is to say, the grant services, the pensions other than War pensions, and the cost of Unemployment Insurance—are at the present moment, so to speak, the opposite number of the yield of indirect taxation. The £286,000,000 which is raised by indirect taxation at the present moment—that is to say, £281.000,000 plus the £5,000,000 which is the Exchequer's share of the Road Fund—suffices to pay for the grant services, the pension services, and for health and unemployment insurance. This, in my submission, is a complete and dangerous unbalancing of the whole economy of the country. There is this additional fact to be noted, that the elements of expenditure which are increasing every year are the grant services, which the indirect taxation of the country at the moment is only just able to support. Even last year, allowing for the reduction of £2,000,000 due to the automatic diminution of War pensions, there was an increase in the social services, that is to say, the grant services, pensions and insurance, of £13,000,000. That process is going on year by year, nothing has been done to check it, and there seems to be no reason to expect that that automatic increase will suffer any diminution.
  What alarms me, and, I think, a good many other Members on this side of the House, is that, with growing expenditure on the social services, the process of taxation is such that, both by method and by weight, it is diminishing the return from direct taxation, and is bound to do so. The policy of the Chancellor of the Exchequer, as exposed in this Budget, is bound to make the sources of direct taxation even less able to bear their burden than they are at the3 present time. Let hon. Members think for a moment how that enormous weight of £390,000,000 is being raised. It is being raised, as my right hon. Friend pointed out this afternoon, by Surtax running up to 13s. 3d. in the £—that is to say, by depleting the reservoirs in the very areas from which the fertilising source of new Capttal is expected to come under the Capttalist system—by Death Duties up to 50 per cent., and by various other methods of raising direct revenue which are ob-

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  viously unfair, such as the aggregation of the incomes of husband and wife so as to get a higher total level than would be the case if they were taken individually, and by reducing the exemption limit below the very low figure of £2 a week in the case of single people.
  One hon. Member this afternoon made it the burden of his speech that he wanted to get all he possibly could out of the direct taxpayer. I venture to think that his hour has come; indeed, it has passed. What has my right hon. Friend done during this last year as re-regards the direct taxpayer? He has reduced his income by a conversion, and, by one and the same stroke, he has increased his Death Duties by about 30 per cent., because the effect of the diminution due to the conversion scheme which caused the diminution of income was to increase the notional Capttal value of his estate by 30 per cent., so that you knock him down during his life and kick him when he is dead, and, if that be not sufficient for hon. Gentlemen opposite, you undermine the security of his Capttal by depriving him of any Sinking Fund. Therefore, you knock him down, and hit him, and then you bite him. And yet the hon. Gentleman, opposite is not satisfied. He said that you have to do more to the rentier. I do not know what more you can do. But let let it be borne in mind that it is to the rentier at the present moment that we look for the main result of our national taxation. We look to him for £390,000,000. His Capttal is being demolished or redistributed year by year as a result of excessive duties, and he is kept on a penal level of direct taxation, while the source of his income is converted to a lower interest-bEarlng rate. The result is to progress as fast as ever it is possible towards the moment when the yield of direct taxation must be far less than it is at present.
  There is another point in this argument which I think deserves stressing. My right hon. Friend pointed out this afternoon that the yield of direct taxation was diminishing, but he did not go on to point out, as I think he might well have done, another very important feature of the situation. The yield from Income Tax has diminished notwithstanding the fact that 1,600,000 new Income Tax payers have been brought in Since 1931. Since the alteration which was made in the ex-
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  emption limit in 1931, 1,450,000 new Income Tax payers have been brought into the net, but, notwithstanding that addition, the national income assessable to Income Tax and Surtax has diminished by £37,000,000 Since the year 1929–30. Therefore, although this vast area of new Income Tax payers has been brought in, and although the rate has been increased, the assessable area, that is to say, the national income over which the tax is levied, has diminished by £37,000,000 in these two years. Is it not perfectly obvious, in that state of affairs, that we are approaching, and approaching with some rapidity, a real breakdown in our economic system as it is at present? I am anxious to hear, and I hope the hon. and learned Member for East Bristol (Sir S. Cripps) will tell us, what system the party opposite propose for dealing with that situation.
  Mr. KIRKW00D: Socialism.
  Mr. O'CONNOR: How will a Socialist Government deal with this situation? There are only two orthodox ways in which you can do it. You have a situation at present in which no Chancellor of the Exchequer, whether Conservative, Socialist, Radical, Bolshevist, Communist or Hitlerite, can balance a Budget. It is not possible on the present basis to balance a Budget at a box. You either have to increase taxation—and, if my argument has any foundation in it at all, you will not get your yield by increasing direct taxation; you will have to do it by increasing indirect taxation, and I should like to know whether the hon. and learned Gentleman is prepared to adumbrate that as the policy of the Socialist party—or you have to reduce expenditure. Where is your reduction in expenditure to be effected. It will be effected if you repudiate your debt, but for every penny of debt that you repudiate you will lose more revenue in other directions and, of course, you will disintegrate the whole credit of the country.
  If you cannot tax and will not economise, what are you going to do? That question is as pertinently addressed to anyone who criticises the Budget as to the framer of the Budget himself. In these days, when we dismiss the whole problem by saying we are going to stick to orthodox finance, it is as well to remember that we are not sticking to ortho-

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  dox finance, and that no orthodox finance will meet the situation. I think the Chancellor of the Exchequer has no alternative but to pursue a policy of controlled inflation. It has got to come. I think politics rules out the two methods of which I have been speaking. It rules out the possibility of the kind of root and branch economy which would be essential in order to balance the Budget. Politics and practicability also rule out the kind of root and branch increase of taxation which would be necessary to balance the Budget, and there seems to be only one alternative on the long view, and that is the policy of leaving your Budget unbalanced and borrowing to fill the gap, and that is a policy of inflation. The credit of the Government is sufficiently strong to enable it, subject to rigid safeguards and to the most careful supervision, to inaugurate a policy of something of that kind.
  I should like to refer to one part of the right hon. Gentleman's argument as regards the payments to the unemployed. It is clear that it is just neither to the taxpayer nor to the unemployed themselves that their actual spending value should vary in the absurd way that it does according to the figures that the right hon. Gentleman gave to-day. It is absurd that the taxpayer should be called upon to find, through a variation in policy, through a mere fall in prices, an additional amount of something like 20 per cent. in the course of a year. It is equally absurd that the unemployed man should find in the next 15 months that his purchasing power is diminished by 20 per cent. owing to a rise in prices which might follow the policy of the Government in raising the wholesale level. I suggest, very tentatively and very heretically, for the consideration of the Government whether it might not be possible to consider some scheme whereby you might have an internal currency, differing from the sterling currency, which would be utilised for the payment, broadly speaking, of the grant services—the health services, unemployment and so on—a currency fixed in terms of commodities, which should not vary in the absurd way that sterling does and should not bring about the anomalies and difficulties that I have been describing. I do not think that a system of that kind
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  is at all beyond the reach of possibility. It has been examined by economists who are not unworthy of note. I do not say that it has been found sound on every point but, where you have an enormous area of expenditure of this size, amounting to £180,000,000, it appears to me that it is an experiment which is worth examining and which would give us extremely valuable information if we came to embark upon the bigger and more difficult problem of having a purely managed external currency.
  10.1 p.m.
  Sir STAFFORD CRIPPS: Before I deal with one or two points in the hon. and learned Gentleman's speech, I should like to ask the Financial Secretary to the Treasury when he comes to reply whether he can make some statement, as asked by the hon. and learned Gentleman, about the position as regards the co-operative societies. It seems rather extraordinary that on the Second Beading of the Finance Bill we should still have no word of what is to be done as regards the cooperative societies when it was announced as part of the Chancellor's Budget, and I feel, as I am sure everyone in the House feels, that we are entitled at this stage of the proceedings to know what the Government propose to do. We all realise the difficulty that there may have been in overcoming the Prime Minister's conscience, but, no doubt, that has been done by now, and perhaps the hon. Gentleman will tell us what the proposals are, when the matter will be dealt with in Committee or by the House, and what time will be allotted to it, so that we may have an opportunity of dealing with the matter in discussion when it comes up.
  We are most grateful to the hon. and learned Gentleman. He has put forward the complete case for the breakdown of the Capttalist system. He has stated that everything that has been done by the Government, everything that has been proposed by the Chancellor of the Exchequer, is absolutely futile so far as saving the Capttalist system is concerned. We agree with him. Our only difference in view is that we believe that the Chancellor has done his best and that there is no more that can be done. To go for such ideas as the hon. and learned Gentleman has of controlled inflation will not better the position more than momen-

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  tarily and the system will come back again, as it always must, and find itself in the condition in which it now is. But he has made abundantly clear what we have been saying for years, and what so seldom is admitted so frankly by people who uphold that system, that it essentially depends upon the division of the community into two classes, the rentier class who must have the disposal and control of the wealth, and the working class, who must work under a wage system for the rentier class. It is to be left to the rentier class to refertilise industry. Those were the hon. and learned Gentleman's words if hon. Members will look it up to-morrow.
  Mr. O'CONNOR: I never said any such thing. I said the main sources of the refertilisation of industry were the savings that have been made by the rentier class.
  Sir S. CRIPPS: As I understand it, they are to have the disposal of those savings and, therefore, they are to be responsible for the refertilisation of industry. That is as I understand the argument. You must make the profit fund as big as possible so that there may be as big a sum as possible available for the revivifying and refertilising of industry. He did not tell us how it comes about, for instance, that the deposits in the bank have increased by £270,000,000 in the last 12 months and that money has not been used to refertilise industry. You have had ideal conditions —masses of cheap money in the hands of this class, which he says should have it, but nothing has happened as regards refertilising industry. [An HON. MEM-BEE: "It is not in their hands."] It certainly is in their hands and in their control at this moment. That is the very proof we say of the impossibility of the system which he believes in ever working. I want to say a word in reply to the hon. Baronet the Member for Farnham (Sir A. M. Samuel), who paid me the compliment of referring to something I had said in some other place. He suggested it was very vicious of me to go about the country calling the attention of the people to the necessity for an immediate and fundamental change. I have now been reinforced by the hon. and learned Member for Central Nottingham (Mr. O'Connor), so perhaps I am not in such bad company after all. I believe
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  the dangerous people are the people like the hon. Baronet. Those people who give unreasoning adherence to this outworn system are really the people who are going to provoke a revolution, and the hon. Baronet is typical of those who are leading this country to a revolution.
  Sir A. M. SAMUEL: If the hon. and learned Gentleman will look at the document he has on the Table beside him, I think it is Schroeder's Quarterly Review, he will find that every one of his arguments will have the bottom knocked out of it.
  Sir S. CRIPPS: I am not dealing with the people who read Schroeder's Review; I am dealing with the mass of people in this country. They are the people who will bring about a revolution if there is one, and not the Schroeders. I believe that what the right hon. Gentleman is doing is very dangerous, and he ought to be very careful. The Finance Bill of the year is supposed to be the foundation of the annual plan of the Government which discloses, or should disclose, to the country what they propose to do and the main lines of their action for the coming year. So far as the present Finance Bill is concerned, it foreshadows as far as we can see inaction and not action in the coming year. It seems to be based on a hopelessness of outlook which the hon. and learned Member for Central Nottingham agrees with us is visible both in the Budget speech and in the Finance Bill, and in order to please the hon. Baronet I will now quote from Henry Schroeder. He says:
  "Of all these proposed efforts to jerk the economic machine into a revival of activity there is no echo in Mr. Chamberlain's Budget, which seemed to assume that depression had come to stay and that patient passivity was the only policy."
  I think that is a very apt description of this very uninspiring Budget and the Bill which is based upon it. The results which the right hon. Gentleman has produced have been obtained by a process of squeezing and saving on unemployment benefits, salaries and wages, and fiNaily by unbalancing his Budget completely. He proudly points from time to time—and nearly everybody who has spoken to-night has said it—to the magnificent thing that this great National Government has managed to balance the Budget. I suggest that if anybody else had pro-

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  duced a Budget of this sort there would have been a howl of execration as to the unsound financial principles adopted in its formulation. I understand last year's deficit is to be Capttalised, and is not to be paid for out of ethe current Budget. Secondly, the Sinking Fund is to be done away with altogether, and is to be paid out of Capttal instead of, according to the law, out of revenue. Thirdly, there is no provision for the American Debt repayment at all in the Budget. That is taking a chance. Whether the throw of the dice by the Chancellor will bring him luck or not we cannot tell till 15th June, but it certainly is a contingency which must be contempated in considering whether the Budget is balanced.
  Mr. CHAMBERLAIN: I would remind the hon. and learned Gentleman that while it is a contingent liability, there is also a contingent asset in the claims we have upon our own debtors.
  Sir S. CRIPPS: I venture to think that the right hon. Gentleman would give a very much larger sum for the contingent liability than he would for the contingent asset, and I think everybody in the House would agree with him in so doing. As I say, it has not yet materialised, but by the end of the year it may well be that we shall have to meet the liability and shall not get the asset, in which case it will unbalance the Budget. Fourthly, there is a little sum of £8,000,000 taken from a Capttal reserve, which is to be used for revenue purposes. Again an unsound financial thing to do, according to the strict criteria of financial soundness. Lastly, there is no provision made for the promised assistance to the distressed areas. This is a matter to which the Government are now absolutely pledged, and it is a matter which does not take its place in the Budget at all.
  On at least four, and possible five, heads there is good reason for saying this Budget is unbalanced according to any of the ordinary tests which have been applied in the past to Budgets. There may not be any objection to that. They may be wise steps; in any case they will be good precedents in the future. But the point is this. It is hardly right for the right hon. Gentleman or the Government to place such extraordinary stress on either the necessity or the virtue of balancing a Budget when, in fact, a
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  balance has not been achieved according to ordinary understanding. With these efforts, both the economies and the financial jugglery—I do not use it in any unpleasant sense—the financial arrangements which have been made in order to give the appearance of a surplus—the right hon. Gentleman has got together some £27,000,000. He then looks round to see upon whom he can bestow a gift, or two gifts in this case. Surely everybody in this House must agree that when one is examining who is to get the first benefits of a surplus of this sort, one must see who has been most hardly hit in the past, who is suffering most at the present, and whether some alleviation of their position cannot be made.
  Nobody, I think, in this House would have any hesitation at all in answering that, at the present moment of all the people in this country those who are suffering most are the unemployed. Whether one believes that the country can afford more or not, it is an obvious fact. It is beside the point to say that they may be getting comparatively more according to the cost of living index, when you have figures ascertained by competent people as they were last year, showing that an unemployed man with a wife and three children cannot live even on the standard of workhouse food at less than 31s. 6d. a week. If one considers that, it is not a question of the comparative value of money; it is a question of the absolute condition of the people, and here is a Chancellor with £14,000,000 of permanent relief which can be given. He quite rightly pointed out that this £27,000,000 is divided into two sorts of money—one, permanent relief which can be given and has gone to the beer, and the other a more temporary and non-recurrent item of £12,000,000, which he has given to the Income Tax payer.
  I agree with the right hon. Gentleman that, considering the Budget as it is, one could not allocate that £12,000,000 to the relief of unemployment because it would not recur the year after, and you would have to put back the position where it was. On the £14,000,000, the argument does not apply. Surely, looking at it dispassionately, anybody in the House must at this moment say that if you are to judge between the beer drinker, or the beer interests, or whatever you call it, and the unemployed,

  477
  the merits must be on the side of the unemployed. There may be other reasons in the mind of the Chancellor of the Exchequer, but, if one has simply to judge of the merits as to who is to get £14,000,000 which is to spare, there can be only one answer. I am sure that the whole House will agree with me in that fact.
  This really raises another important point. The basis of the Budget is either the basis of a Budget still in crisis or of a normal Budget. We have not yet appreciated, and, no doubt, the hon. Gentleman who is to reply will tell us whether the Budget has been formed upon the basis of a continuing crisis, or whether we have now got back to the normal state of a normal Budget? It makes a very great difference as to how one considers the position. If this is a Budget of crisis, then there clearly can be no justification for reducing the Beer Duty. That is not a critical matter, or a matter which has to be dealt with as an emergency and has to be given at all costs whatever may happen. When you look round for some other means of disposing of the £14,000,000, spending it perhaps on essential social services, education and so on, if it is a normal Budget and represents a return to normality, we must understand that the cuts in salaries, wages and unemployment benefit are to be left cut. If it is a return to normality, is it to be a normal thing in the future to dispose of a Budget surplus, leaving those cuts as they are now? I hope that the hon. Member will tell us which position he is adopting; whether he is adopting the position of the continuing crisis or of the return to normality?
  The Chancellor of the Exchequer gave us some figures justifying the cuts upon the unemployed by the old story of the cost of living, a story which was marched out and did its service at the last election. I suggest that the Chancellor of the Exchequer missed the essential feature in the argument. After all, everybody in the country suffers from the rise and fall in the cost of living. It is a common factor to everybody. The Chancellor of the Exchequer suggested that those who had luxuries in their standard of living would not suffer as big a fall. I think he will find that it is the other way round, and that they have a
  478
  greater fall in the cost of living, because luxury articles on the whole have fallen more than some of the other factors which come into the ordinary cost of living figure. That is only a small matter, because the effect of cost of living on the wealthier part of the community is minute compared to what it is, in any event, upon the unemployed man. The question is not whether he was badly off, or well off in 1930 or 1924, but whether at this moment he is the person who is most deserving of consideration. It is no answer to say that he was more deserving of consideration in 1924 or 1930. He well may have been. The question is: Is he now deserving of consideration? And into that no question of the alteration of the cost of living can possibly enter.
  Is the Chancellor of the Exchequer prepared to carry this theory of the cost of living to its logical conclusion? What about the owners of interest-bEarlng securities? What about rents? What about interest on municipal bonds and Government bonds? Is he prepared to say that these people shall have their interest reduced because the cost of living has fallen? That is the only thing he can say, logically. If he is going to justify the cut in unemployment benefit or the cut in salaries or in wages because of the cost of living, he can equally well and must equally well say that there should be a cut in interest and a cut in rents. That must naturally and logically follow.
  There always seems to be some difference between breaking a contract which concerns money and breaking a contract which concerns wage or salary services. In answer to my hon. Friend the Member for Caerphilly (Mr. Morgan Jones) the right hon. Gentleman said that he could not reduce the cost of War Loan interest because it did not fall due until 1940, that is, the first big sum. The loan does not run out until 1940 and therefore he could not have a conversion scheme. I do not remember his putting forward that argument as regards the salaries of teachers and civil servants that their contracts did not expire and therefore there could not be a cut made in them. Why is there this peculiar sanctity about contracts concerning money which does not apply to contracts concerning services for the State? In our submission there is no

  479
  difference in contracts whether they concern one thing or the other.
  If the nation needs it, the Government are just as entitled to say, as from tomorrow, "We intend to cut war loan interest, whether the moment for conversion has arrived or not," as they were to cut, let me say, the judges' salaries in 1931 or the salaries of any other persons, which they could not do without an alteration of the law. It does not appeal to us as an excuse for not dealing with this large loan of money, which is necessary for the service of the National Debt, that there is some contract which makes it impossible to deal with until 1940. The right hon. Gentleman produced the old chestnut about the man who has an income of £50,000 a year and, unfortunately, has to spend £53,500 a year in order to maintain it. I make him this offer, that if he will provide me with the £50,000 a year I will see to the payment of the necessary duties, and I shall save one of his friends from a loss of £3,500 a year. I am prepared to do that if he will arrange it. Of course, it is a complete and absolute fallacy, as everyone must observe. That is the first point in the Resolution which we bring before the House as regards the rejection of the Finance Bill.
  I want to say a few words as regards the argument that it is better to allow money to remain in the hands of the Income Tax and Supertax payers than to distribute it either in unemployment benefit or in increased wages or salaries to Government employés. I never can understand, and I hope that the Financial Secretary will explain it to me, how it is that the Income Tax payer or the rentier—as the hon. and learned Member for Central Nottingham chooses to call him—is a better spender of money than an unemployed man or a wage earner. The right hon. Gentleman told us in regard to the £12,000,000 remission that it would no doubt encourage the Christmas market, because about that time these people would find themselves with an extra quarter of their ordinary annual payment of Income Tax in their pockets. Will the hon. Member tell us why these people can spend money better and to more purpose than the salary earner, the wage earner or the unemployed man? We cannot understand that position. It seems
  480
  to us that if you want to get a rapid circulation of money, which is a most vital thing, then the poorer the man to whom you give it the more rapid circulation you will get; and there is a greater certainty of it being immediately spent. Looking at it from an economic point of view if you want money to be circulated quickly give it to the wage-earner, the salary earner, or the unemployed. If the hon. Gentleman says it is wanted for Capttal, that Income Tax payers are not expected to spend it at once on commodities but to put it into the banks as deposits for the purposes of revitalising industry, then I would point out to him that there is already too much there, and it is better not to give them any more for that purpose.
  The second point of our objection is that the Budget continues a system of trying to increase the proportion of indirect taxation, and, therefore, puts a burden on people with the smallest incomes. Prices are being kept up, and sent up, by a system of quotas, licences restrictions and tariffs, but there is no corresponding forcing up of wages or salaries, in fact, they are being forced down. I do not know whether hon. Members appreciate how much indirect taxation bulks in the income of a small wage earner. If you take an income of £100 a year the indirect taxation is 11.8 per cent., worked out on the 1933–34 Budget figures. On an income of £150 it is almost precisely the same figure, whereas up to £500 it falls to only 4.5 per cent. and afterwards, of course, rapidly vanishes. This class of taxation is a heavy burden on people with smallest incomes. So long as you have an outworn Capttalist system you have to try, as best you can, to decrease indirect taxation in order that you may give the workers the biggest spending power possible. If you tax him to the extent of 11.8 per cent. you are depriving your consuming market of an important item. We believe that the worker is as good and as useful, nay, a more useful spender than any class in the community because he circulates money faster than any other class. That is a vitally important matter to the hon. and gallant Member, who requires an inflationist policy. The principle of increasing indirect taxation is the only principle at all in the Finance Bill.
  Let me say a word on the last part of our Amendment, in which we say that

  481
  the Bill fails to disclose any sort of effective policy. I understand that the Chancellor of the Exchequer agrees with this, but says that it is not the proper place for policy to be disclosed. It seems to us that it does disclose a policy, but not an effective policy. The policy that it discloses is the policy of tariffs, trade agreements and hopes from the World Economic Conference, and as far as I can understand that is the policy at the present moment of the Government, with the eventual expectation that prices may be increased, while wages may be kept down so that the profit fund which the hon. and learned Member for Central Nottingham hankers after may be made larger and larger and no doubt accumulate as deposits in the Joint Stock Bank. We have had some experience of that system.
  Of course the raising of tariffs in this country has increased the net blockage to world traffic. That is obvious to anyone. There has been a certain amount of swapping over of trade from one country to another, as you always will get it under a tariff system, but without any increase of trade as a whole in the world. In fact it is obvious that world trade is diminishing fast. Then the Government have designed this marvellous system of dealing with tariffs, by which the Tariff Advisory Committee put them on one day and the President of the Board of Trade comes down next day and takes them off. That must be a matter of great comfort, judging from the discussions we have had in the House among supporters of the Government, especially those from Birmingham, as regards the German Trade Agreement.
  But surely this dual control must hav3 proved by now to be highly unsatisfactory. If you are going to have a tariff system and controls of this kind, surely it is time that the controls were taken into a single hand, whatever that hand may be. So long as the Government want to go on using what the right hon. Gentleman the Minister of Agriculture calls "the outworn weapon of tariffs," we think that they might do it through a central controlling authority, rather than through this double system of control. Of course if you have tariffs you must have trade agreements whenever you can, and no doubt the apparent effect of those agreements is from time to time to diminish tariffs in certain localities. But
  482
  when you come to the end of it all the result of the tariffs and the agreements and everything else has been to increase the net amount of tariffs in the world. It cannot, therefore, ever be a solution of the difficulties in which the world at present finds itself, or of the difficulties in which this country finds itself. I think the figures of the last year, both as regards trade and employment, show that, any way, it has not cured this country of the evils from which it is suffering.
  Now we are asked to await, as we always are asked to await, the next event that is coming along, the World Economic Conference. So far as we are concerned we hope the Conference will do something. We hope that President Roosevelt's message may awaken some echo in the hearts of the competitive industrial magnates of the world, who are the people who will no doubt wangle the World Economic Conference. I am afraid we have not much hope. Of course if you have a mass of private competitive interests in every country, and running throughout countries in great world cartels and combines—and those interests may often run quite contrary to any interests of the nations themselves, as this country has experienced in the past—I cannot see how you are going to get any satisfactory arrangement.
  Hon. Members like the hon. and learned Gentleman the Member for Central Nottingham object to our saying that this system is no good, and that it has not succeeded in curing the evils which at the last Election we were told it would cure. We are just as profoundly disappointed as he is over that failure. But we believe that unless something better and something more imaginative and more constructive than this Finance Bill can be produced, the country is not going to wait indefinitely for that cure which is always round the next corner but is never realised. Discussions of the sort which this House has witnessed on some of these tariff items, like that on fabric gloves last night, are enough to convInce anybody who listened to them that tariffs will not cure anything. The only thing they are likely to do is to split the National party. Perhaps if they did that, it would be at least one good service to their credit. But even within the narrow limits of Capttalism and under the conditions of the time, there was one thing that the Chancellor of the Ex-

  483
  chequer might have done in this Budget. He had £12,000,000 as a sort of gift. I think he described £8,000,000 of it as "a ram caught in a thicket" and the other £4,000,000 was a saving. If the Government had been anxious to do what the Prime Minister and President Roosevelt, I understand, decided that it was necessary to do, and that is bring about some expansion of public expenditure and so place money out into constructive industry, this £12,000,000, though not a big sum would have been at least something with which an effort could have been made in that direction.
  There are many public works in the country and many schemes on which £12,000,000 would have gone a considerable way. And it would have been money which would not have increased the National Debt. There would have been none of the complaints that you were landing yourself with interest which you would have to pay for ever, because it was a revenue sum and would not attract any interest after it was expended. But apparently the policy of the Government is to give the money to the Income Tax payers and hope that they will do something useful with it. Why could not the Government make certain and do something useful with it themselves now, instead of waiting until next Christmas to see whether the Income Tax payers will buy some more of the Christmas commodities that will come in under the trade agreement with Germany? This Finance Bill seems to show a hopeless and helpless condition of things. It points to exactly what the hon. and learned Member for Nottingham said it pointed to—complete failure to cope with the situation. The hon. and learned Member said that the Chancellor of the Exchequer seemed to him to be like Mr. Micawber. Apparently that is the position that the right hon. Gentleman is taking up, and we are afraid that, like Mr. Micawber, he will be gravely disappointed.
  10.39 p.m.
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): The hon. and learned Member for East Bristol (Sir S. Cripps) began his speech by putting to me a formal question which I shall formally answer. The search for an agreed settlement with the co-opera-
  484
  tive societies has failed and His Majesty's Government are, therefore, compelled to produce their own proposals. The necessary Ways and Means Resolution will be handed in to-night, and it will appear on the Order Paper to-morrow. I understand that the Committee stage of this Resolution will be taken on Monday. I hope that the hon. and learned Gentleman will consider that to be a businesslike answer.
  My right hon. Friend the Chancellor of the Exchequer, unlike the hon. and learned Gentleman, was confronted with a businesslike task. He had to produce enough revenue to meet an expenditure of £697,486,000. That is a reduction of £36,000,000 as compared with last year, and of £113,000,000 as compared with the year before. Proper adjustments have been made, so that the figures are strictly related. My hon. Friend the Member for Farnham (Sir A. M. Samuel), and my hon. and gallant Friend the Member for North Islington (Colonel Goodman) hoped that the reductions might have been greater. These reductions have been produced as to £61,000,000 by economy, and as to £52,000,000 by saving on Debt services. It would be impossible to reproduce so large a total every year without cutting down services now considered to be essential, or without being able to make further conversions rendered possible by sound finance and a balanced Budget.
  My right hon. Friend has not abandoned his task in the pursuit of economy. In trying to make administrative reductions of expenditure, he has been assisted by the most useful suggestions made by the Economy Committee of private Members. Nor does his concern rest with the taxpayers alone. The two Committees on local expenditure—it is important to realise that they were on local expenditure—have drawn up a code for local authorities to follow, and this code has been enjoined upon them. But whatever further reductions my right hon. Friend may be able to make in future to be added to those already achieved in the past, the irrevocable and irremovable fact remains that in this Bill he has to find £697,486,000. By slight additions of taxation and by other adjustments, he has in hand, it is true, £16,000,000 more than this figure.

  485
  Hon. Members who have spoken in this Debate, such as the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), with all his enthusiasm, and the Noble Lord the Member for Newark (Marquess of Titehfield), with all his humour, have complained of the minor additions to taxation and have drawn attention to particular industries which will suffer by reason of an imposition of a tax upon heavy oils. My right hon. Friend has already explained to the House the principles upon which such a tax is based. The first principle is that it is by mischance that heavy oils escaped from the general ad valorem duty to which all other imports are subjected. They escaped because theoretically they are subject to tax under the Finance Act. The second principle is that, if possible, competitive advantage should be given to our home-produced fuel whether coal or oil. Nevertheless, my right hon. Friend has undertaken to consider the particular grievances raised, and will upon the Committee stage make an announcement as to what concessions, if any, it is possible for him to make.
  My right hon. Friend gives £14,000,000 to a reduction of the duty upon beer. He does not do that because he is fond of beer. He does it because he is charged with the duty of conserving the revenue. Anyone who looks at the course of the revenue over the last few years is bound to admit that those who depend upon that revenue, namely, the unemployed and all salaried officials, have an interest in reducing the taxation on beer, in order that they may continue to derive what they now receive. That is literally and solemnly the reason why the beer duty has been reduced—in order to conserve a very large section of the revenue. Of this my hon. Friends opposite will not complain, because they urged this reduction upon us last year, and they have asserted in their Amendment that indirect taxation is iniquitous. Accordingly, it has been reduced. But my hon. Friends are not satisfied with the reduction of this item of indirect taxation, they wish to reduce other items, and they wish to restore the economies that were made in 1931. That would cost us £61,000,000.
  So we find in this Amendment the advocacy of additional expenditure on the one hand and of reduced taxes on
  486
  the other. To meet an expenditure of £697,000,000, and a fortiori a greater expenditure, my right hon. Friend can only rely upon a combination of the two historic methods of taxation, direct and indirect. It was admitted that during the administration of the present Opposition direct taxation had reached its limit. [HON. MEMBERS: "No !"] That was admitted well before the National Government was ever contemplated. My hon. Friends need not try to decry the Government which they supported. I am not relying on Lord Snowden alone. I rely on him in the first place for the statement made on 11th February, 1931:
  "I believe, if I may put it so bluntly as this,"
  an unnecessary apology coming from the Noble Lord,
  "that an increase of taxation in present conditions which fell on industry would be the last straw."—[OFFICIAL REPORT, 11th February, 1931; col. 447, Vol. 248.]
  He said that in February, and he said on his first Budget in April that it would be impossible to increase direct taxation. My hon. Friends, although they followed him then, wish to repudiate everything he said now. But I do not rely on him, I rely on my hon. Friend the Member for Caerphilly (Mr. Morgan Jones), who only last year reinforced the plea on behalf of the Income Tax payers. But it is unnecessary to rely even on him. I rely upon the fact that the receipts from Income Tax and Surtax in 1931–32 were £364,000,000. For the following year the estimate was £326,000,000, a sharp decline. But the receipts were actually not £326,000,000 but £312,000,000. The receipts for the next year, this current year, on the basis of existing taxation would only be £291,000,000. There has been a reduction of £73,000,000 in two years, and the decline in direction taxation is one-fifth. If this evidence does not prove that the limits of direct taxation have been reached, I do not know what will. I call the attention of the House to the fact, too, that hon. Members in this Amendment are not advocating the increase of direct taxation, and they have not advocated it in their speeches. Do they now advocate an increase in the Income Tax when they come into power? If they do, they will remain in a minority. It must be obvious from

  487
  those figures, which are indisputable and patent, that a decline in direct taxation is proceeding.
  What of indirect taxation? We have been told in this Amendment that indirect taxation falls on the shoulders of those least able to bear it. Surely that is a fallacy. The hon. and learned Gentleman who has just spoken said he supposed I would tell the old story of the cost of living. What about his own complaint about the rentier, who he says is getting much more income than he ever contracted for? If the cost of living figures mean nothing, they cannot be used against the rentier. I have made an analysis to the best of my ability as to where the incidence of indirect taxation really falls. I do not think that it will be disputed that half of the indirect taxation at least is upon luxuries. As regards the Import Duties, many of these are on articles which do not enter into daily consumption. So far as they may be said to represent an imposition on the worker in his capacity as a consumer, they are offset in his capacity as a producer. Speaking generally, it cannot be contended that indirect taxation has decreased the purchasing power of wages comparatively with what those wages would have purchased in former years. It is only necessary to use two figures to illustrate that fact. I do not want to use them unfairly, I know there are infinite variations in individual circumstances, but these are the two figures I offer to the House. Since October, 1924, the cost of living has declined by over 22 per cent., but wages have only declined by 5 per cent. Those are the two figures which show conclusively that, despite the variations in individual circumstances, the worker has not been deprived of his purchasing power.
  If you carry that analysis into individual items—and at this late hour of the night I shall take only one, Tea—to ascertain what the effect of indirect taxation is upon the commodities which enter into daily consumption, you find that in 1929–30 there was no tax upon tea and the retail price was 2s. 0¾d. a lb. There is now a tax of 2d. per lb. and the retail price is 1s. 9¼d. a lb. So it cannot seriously be complained that the worker has suffered.
  Mr. DAVID GRENFELL: Will the hon. Gentleman excuse me for interrupting him? He mentioned tea. Would he give the comparable figures for 1921 and 1931? Because the big drop in the figures took place before 1924.
  Mr. HORE-BELISHA: I could give those figures, but I have been giving the figures very shortly. It is sufficient for my purpose to say that, although there has been the imposition of a tax on tea, the price of tea has fallen. That is my proposition. I do not wish to exaggerate it in the least. It is there for anybody to make deductions from. When taxes, whether direct or indirect, are represented as an impost upon the working-class, it is relevant to ask where those taxes go. The total expenditure of this country during the current year is £697,000,000. The Consolidated Fund, being mainly the Debt services, requires £234,000,000. Short of repudiation, which has not been advocated by hon. Gentlemen opposite, there is no other way of reducing this sum except by the method adopted by my right hon. Friend, that is to say the method of sound finance and the balanced Budget, which enabled him to make the conversion. Short of repudiation, you cannot get rid of the Consolidated Fund services. There remains £463,000,000, which is spent on all the other services of this country. The bulk of that £463,000,000 is spent on wages, salaries and materials made by the working-classes, or on services established directly for their benefit. More than half of the total expenditure on Supply is required for pensions and insurance, which take up £180.000,000; housing which takes £16,000,000, and education £48,000,000; that is £244,000,000, out of £463,000,000 directly spent upon the working classes. It must be granted at once that every section of the community bears its proper share of the burden, so far as it can be adjusted. It is a little unfair that it should be suggested that the heaviest burden falls upon the shoulders of those least able to bear it, when it is the greatest advantages that fall upon those shoulders.
  If expenditure in these directions is not to be met either by an increase of direct or of indirect taxation, it can only be met by borrowing. Some of the supporters of the National Government urge

  489
  that we should borrow to reduce taxation, but this Amendment would involve borrowing to increase expenditure. Is there much distinction in principle? The hon. Member for Huddersfield (Mr. Mabane), the right hon. and gallant Member for Ripon (Major Hills) and the right hon. Gentleman the Member for Hillhead (Sir R. Home) advocate that we should borrow to reduce taxation. They must not be surprised if hon. Gentlemen opposite retort: "The villainy you teach me I shall execute. It will go hard, but I will better the example." It may be that there are circumstances in which it is permissible to take risks with the national finances, in the hope and reliance that prosperity may return, to recoup you handsomely for your speculations. The whole policy of this Government has been to conserve and strengthen the resources of the country by careful husbandry, to improve the productive capa-
  city of the country, so as to prepare for whatever contingencies an unsettled world may have in store. The hon. Member for Caerphilly (Mr. Morgan Jones), in his able and analytical speech, did not conceal from the House a fear. I took down his words with as great accuracy as my pencil would permit. He said: "Only the most incorrigible optimist could see no ground for apprehension as to the future, not because of any action of our own, but because of what is happening abroad." If better conditions come, we are well equipped to take advantage of them, but if what my hon. Friend says be correct, and if the perils should multiply, we shall not regret our prudence and our self-restraint.
  Question put, "That the words proposed to be left out stand part of the Question."
  The House divided: Ayes, 368, Noes, 48.

  Division No. 178.]

  AYES.

  [11.1 p.m.

  Adams, Samuel Vyvyan T. (Leeds, W.)

  Brown, Brig.-Gen.H.C.(Berks., Newb'y)

  Cruddas, Lieut.-Colonel Bernard

  Agnew, Lieut.-Com. P. G.

  Buchan, John

  Dalkeith, Earl of

  Ainsworth, Lieut-Colonel Charles

  Buchan-Hepburn, p. G. T.

  Davidson, Rt. Hon. J. C. C.

  Albery, Irving James

  Bullock, Captain Malcolm

  Davies, Edward C. (Montgomery)

  Alexander, Sir William

  Burghley, Lord

  Davison, Sir William Henry

  Allen, Sir J. Sandeman (L'pool, W.)

  Burgin, Dr. Edward Leslie

  Denman, Hon. R. D.

  Allen, Lt.-Col. J. Sandeman (B'k'nh'd)

  Burnett, John George

  Denville, Alfred

  Amery, Rt. Hon. Leopold C. M. S.

  Burton, Colonel Henry Walter

  Despencer-Robertson, Major J. A. F.

  Anstruthor-Gray, W. J.

  Butler, Richard Austen

  Dickie, John P.

  Apsley, Lord

  Cadogan, Hon. Edward

  Donner, P. W.

  Aske, Sir Robert William

  Campbell, Edward Taswell (Bromley)

  Dower, Captain A. V. G.

  Astbury, Lieut.-Com. Frederick Wolfe

  Campbell, Vice-Admiral G. (Burnley)

  Duckworth, George A. V.

  Astor, Maj. Hn. John J. (Kent, Dover)

  Campbell-Johnston, Malcolm

  Dugdale, Captain Thomas Lionel

  Atholl, Duches of

  Caporn, Arthur Cecil

  Duggan, Hubert John

  Balley, Eric Alfred George

  Cassels, James Dale

  Duncan, James A. L. (Kensington, N.)

  Baillie, Sir Adrian W. M

  Caetlereagh, viscount

  Eales, John Frederick

  Baldwin, Rt. Hon. Stanley

  Castle Stewart, Earl

  Eastwood, John Francis

  Baldwin-Webb, Colonel J.

  Cautley, Sir Henry S.

  Edmondson, Major A. J.

  Balfour, George (Hampstead)

  Cayzer, Sir Charles Chester, City)

  Elliot, Major Rt. Hon. Walter E.

  Balfour, Capt. Harold (I. of Thanet)

  Cayzer, Maj. Sir H. R. (Prtsmth., S.)

  Ellis, Sir R. Geoffrey

  Balniel, Lord

  Cazalet, Thelma (Islington, E.)

  Elliston, Captain George Sampson

  Banks, Sir Reginald Mitchell

  Cazalet, Capt. V. A. (Chippenham)

  Elmley, Viscount

  Barclay-Harvey, C. M.

  Cecil, Rt. Hon. Lord Hugh

  Emmott, Charlee E. G. C.

  Barrie, Sir Charles Coupar

  Chamberlain,Rt.Hn.Sir J.A.(Birm.,W.)

  Emrys-Evans, P. V.

  Barton, Capt. Bath Kelsey

  Chamberlain, Rt. Hon. N.(Edgbastpn)

  Erskine, Lord (Weston-soper-Mare)

  Beaumont, M. W. (Bucks., Aylesbury)

  Chapman,Col. R.(Houghton-le-Spring)

  Essenhigh, Reginald Clara

  Beaumont, Hon. R.E.B. (Por'tsm'th.C.)

  Christie, James Archibald

  Evans, Capt. Arthur (Cardiff, S.)

  Bennett, Capt. Sir Ernest Nathaniel

  Churchill, Rt. Hon. Winston Spencer

  Everard, W. Lindsay

  Bernays, Robert

  Clarry, Reginald George

  Fielden, Edward Brockleburst

  Betterton, Rt. Hon. Sir Henry B.

  Clayton, Dr. George C.

  Foot, Dingle (Dundee)

  Bevan, Stuart James (Holborn)

  Cobb, Sir Cyril

  Foot, Isaac (Cornwall, Bodmin)

  Birchall, Major Sir John Bearman

  Cochrane, Commander Hon. A. D.

  Ford, Sir Patrick J.

  Bird, Ernest Roy (Yorks., Skipton)

  Colfox, Major William Philip

  Fremantle, Sir Francis

  Blindell, James

  Collins, Rt. Hon. Sir Godfrey

  Galbraith, James Francis Wallace

  Boothby, Robert John Graham

  Colman, N. C. D.

  Gault, Lieut.-Col. A. Hamilton

  Boulton, W. W.

  Colville, Lteut.-Colonel J.

  Gibson, Charles Granville

  Bower, Lieut.-Com. Robert Tatton

  Conant, R. J. E.

  Gillett, Sir George Masterman

  Bowyer, Capt. Sir George E. W.

  Cook, Thomas A.

  Gilmour, Lt.-Col. Rt. Hon. Sir John

  Boyce, H. Leslie

  Cooper, A. Duff

  Gledhill, Gilbert

  Bracken, Brendan

  Courtauld, Major John Sewell

  Glossop, C. W. H.

  Braithwaite, J. G. (Hillsborough)

  Craddock, Sir Reginald Henry

  Gluckstein, Louis Halle

  Brass, Captain Sir William

  Croft, Brigadier-General Sir H.

  Glyn, Major Raiph G. C.

  Briscoe, Capt. Richard George

  Crooke, J. Smedley

  Goldie, Noel B.

  Broadbent, Colonel John

  Crookshank, Capt. H. c. (Gainsb'ro)

  Goodman, Colonel Albert W.

  Brocklebank, C. E. R.

  Croom-Johnson, R. P.

  Gower, Sir Robert

  Brown, Col. D. C. (N'th'l'd., Hexham)

  Cross, R. H.

  Graves, Marjorie

  Brown, Ernest (Leith)

  Crossley, A. C.

  Greaves-Lord, Sir Walter

  Greene, William p. C.

  MacDonald, Rt. Hon. J. R. (Seaham)

  Samuel, Sir Arthur Michael (F'nham)

  Grenfell, Edward C. (City of London)

  Macdonald, Capt. P. D. (I. of W.)

  Samuel, Samuel (W'dsworth, Putney)

  Griffith, F. Kingsley (Middlesbro', w.)

  McEwen, Captain J. H. F.

  Sandeman, Sir A. N. Stewart

  Grimston, R. V.

  McKie, John Hamilton

  Sanderson, Sir Frank Barnard

  Gritten, W. G. Howard

  Maclay, Hon. Joseph Paton

  Sassoon, Rt. Hon. Sir Philip A. G. D.

  Guinness, Thomas L. E. B.

  McLean, Major Sir Alan

  Savery, Samuel Servington

  Gunston, Captain D. W.

  McLean, Dr. W. H. (Tradoston)

  Scone, Lord

  Guy, J. C. Morrison

  Macquisten. Frederick Alexander

  Selley, Harry R.

  Hacking, Rt. Hon. Douglas H.

  Magnay, Thomas

  Shakespeare, Geoffrey H.

  Hales, Harold K.

  Maitland, Adam

  Shaw, Helen B. (Lanark, Bothwell)

  Hamilton, Sir George (Word)

  Makins, Brigadier-General Ernest

  Shaw, Captain William T. (Forfar)

  Hamilton, Sir R. W. (Orkney & Zetl'nd)

  Manningham-Buller, Lt.-Col. Sir M.

  Shepperson, Sir Ernest W.

  Hanbury, Cecil

  Marsden, Commander Arthur

  Simmonds, Oliver Edwin

  Hanley, Dennis A.

  Mason, Col. Glyn K. (Croydon, N.)

  Skelton, Archibald Noel

  Hannon, Patrick Joseph Henry

  Mayhew, Lieut.-Colonel John

  Smiles, Lieut.-Col. Sir Walter D.

  Harbord, Arthur

  Meller, Richard James

  Smith, Bracewell (Dulwich)

  Hartington, Marquess of

  Merriman, Sir F. Boyd

  Smith, Louis W. (Sheffield, Hallam)

  Hartland, George A.

  Mills, Sir Frederick (Leyton, E.)

  Smith, R. W. (Aberd'n & Kinc'dine, C.)

  Headlam, Lieut.-Cot. Cuthbert M.

  Mills, Major J. D. (New Forest)

  Smith-Carington, Neville W.

  Heilgers, Captain F. F. A.

  Milne, Charles

  Smithers, Waldron

  Henderson, Sir Vivian L. (Chelmsford)

  Mitchell, Harold P.(Br'tf'd & Chisw'k)

  Somervell, Donald Bradley

  Heneage, Lieut.-Colonel Arthur P.

  Mitchell, Sir W. Lane (Streatham)

  Somerville, Annesley A. (Windsor)

  Hepworth, Joseph

  Mitcheson, G. G.

  Somerville, D. G. (Willesden, East)

  Herbert, Capt. S. (Abbey Division)

  Molson, A. Hugh Elsdale

  Soper, Richard

  Hills, Major Rt. Hon. John Waller

  Monsell, Rt. Hon. Sir B. Eyres

  Sotheron-Estcourt, Captain T. E.

  Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.

  Moore, Lt.-Col. Thomas C. R. (Ayr)

  Southby, Commander Archibald R. J.

  Hope, Capt. Hon. A. O. J. (Aston)

  Moreing, Adrian C.

  Spencer, Captain Richard A.

  Hope, Sydney (Chester, Stalybridgo)

  Morris, Owen Temple (Cardiff, E.)

  Spender-Clay, Rt. Hon. Herbert H.

  Hore-Belisha, Leslie

  Morris-Jones, Dr. J. H. (Denbigh)

  Spens, William Patrick

  Hornby, Frank

  Morrison, William Shephard

  Stanley, Lord (Lancaster, Fylde)

  Horobin, Ian M.

  Moss, Captain H. J.

  Stanley Hon. O. F. G. (Westmorland)

  Horsbrugh, Florence

  Muirhead, Major A. J.

  Steel-Maitland, Rt. Hon. Sir Arthur

  Howard, Tom Forrest

  Munro, Patrick

  Stevenson, James

  Hume, Sir George Hopwood

  Murray-Phillpson, Hylton Raiph

  Stewart, J. H. (File, E.)

  Hunter, Dr. Joseph (Dumfries)

  Nail, Sir Joseph

  Storey, Samuel

  Hunter, Capt. M. J. (Brigg)

  Nation, Brigadier-General J. J. H.

  Strauss, Edward A.

  Hunter-Weston, Lt.-Gen. Sir Aylmer

  Newton, Sir Douglas George C.

  Strickland, Captain W. F.

  Hurst, Sir Gerald B.

  Nicholson, Rt. Hn. W. G. (Peterst'ld)

  Stuart, Hon. J. (Moray and Nairn)

  Hutchison, W. D. (Essex, Romf'd)

  Normand, Wilfrid Guild

  Stuart, Lord C. Crichton-

  Inskip, Rt. Hon. Sir Thomas W. H.

  O'Connor, Terence James

  Sueter, Rear-Admiral Murray F.

  Iveagh, Countess of

  O'Donovan, Dr. William James

  Sugden, Sir Wilfrid Hart

  Jackson, Sir Henry (Wandsworth, C.)

  Ormsby-Gore, Rt. Hon. William G. A.

  Summersby, Charles H.

  Jackson, J. c (Heywood & Radcliffe)

  Palmer, Francis Noel

  Sutcliffe, Harold

  Jamisson, Douglas

  Patrick, Colin M.

  Tate, Mavis Constance

  Jennings, Roland

  Peake, Captain Osbert

  Templeton, William P.

  Joel, Dudley J. Barnato

  Pearson, William G.

  Thomas, James P. L. (Hertford)

  Johnston, J. W. (Clackmannan)

  Peat, Charles U.

  Thompson, Luke

  Jones, Sir G. W. H. (Stoke New'gton)

  Percy, Lord Eustace

  Thorp, Linton Theodore

  Jones, Henry Haydn (Merioneth)

  Perkins, Walter R. D.

  Titchfield, Major the Marquess of

  Jones, Lewis (Swansea, West)

  Petherick, M.

  Todd, Capt. A. J. K. (B'wick-on-T.)

  Kerr, Lieut.-Col. Charles (Montrose)

  Peto, Sir Basil E. (Devon, Barnstaple)

  Touche, Gordon Cosmo

  Kimball, Lawrence

  Pickford, Hon. Mary Ada

  Tryon, Rt. Hon. George Clement

  Knox, Sir Alfred

  Potter, John

  Turton, Robert Hugh

  Lamb, Sir Joseph Quinton

  Powell, Lieut.-Col. Evelyn G. H.

  Vaughan-Morgan, Sir Kenyon

  Lambert, Rt. Hon. George

  PowNail, Sir Assheton

  Wallace, Captain D. E. (Hornsey)

  Latham, Sir Herbert Paul

  Raikes. Henry V. A. M.

  Ward, Lt.-Col. Sir A. I. (Hall)

  Law, Richard K. (Hull, S.W.)

  Ramsay, Alexander (W. Bromwich)

  Ward, Irene Mary 3ewick (Wallsend)

  Leckie, J. A.

  Ramsay, Capt. A. H. M. (Midlothian)

  Waterhouse, Captain Charles

  Lees-Jones, John

  Ramsay, T. B. W. (Western Isles)

  Watt, Captain George Steven H.

  Leighton, Major B. E. P.

  Ramsbotham, Herwald

  Wayland. Sir William A.

  Lennox-Boyd, A. T.

  Ray, Sir William

  Wedderburn, Henry James Scrymgeour

  Levy, Thomas

  Reed, Arthur C. (Exeter)

  Wells, Sydney Richard

  Liddall, Walter S.

  Reid. Capt. A. Cunningham-

  Whyte, Jardine Bell

  Lindsay, Noel Ker

  Reid, William Allan (Derby)

  Williams, Herbert G. (Croydon, S.)

  Little, Graham-, Sir Ernest

  Rentoul, Sir Gervals S.

  Wilson, G. H. A. (Cambridge U.)

  Llewellin, Major John J.

  Renwick, Major Gustay A.

  Windsor-Clive, Lieut.-Colonel George

  Lloyd, Geoffrey

  Rhys, Hon. Charles Arthur U.

  Wise, Alfred R.

  Locker-Lampson, Rt. Hn. G.(Wd.Gr'n)

  Roberts, Sir Samuel (Ecclesall)

  Wolmer, Rt. Hon. Viscount

  Locker-Lampson, com. O.(Handsw'th)

  Robinson, John Roland

  Wood, Sir Murdoch McKenzie (Banff)

  Lockwood, John C. (Hackney, C.)

  Rosbotham, Sir Samuel

  Worthington, Dr. John V.

  Loder, Captain J. de Vere

  Ross, Ronald D.

  Wragg, Herbert

  Lovat-Frissr, James Alexander

  Runge, Norah Cecil

  Young, Rt. Hon. Sir Hilton (S'V'noaks)

  Lumley, Captain Lawrence R.

  Russell, Alexander West (Tynemouth)

  Lymington, Viscount

  Russell, R. J. (Eddisbury)

  TELLERS FOR THE AYES.—

  Lyons, Abraham Montagu

  Rutherford, John (Edmonton)

  Captain Austin Hudson and Mr.

  Mabane. William

  Rutherford, Sir John Hugo (Liverp'l)

  Womersley.

  McCorquodale, M. S.

  Salt, Edward W.

  NOES.

  Attlee, Clement Richard

  Cape, Thomas

  Davies, David L. (Pontypridd)

  Banfield, John William

  Cocks, Frederick Seymour

  Davies, Rhys John (Westhoughton)

  Batey, Joseph

  Cove, William G.

  Dobbie, William

  Brown, C. W. E. (Notts., Mansfield)

  Cripps, Sir Stafford

  Edwards, Charles

  Buchanan, George

  Daggar, George

  George, Major G. Lloyd (Pembroke)

  492

  493

  Greenwood, Rt. Hon. Arthur

  Lawson, John James

  Price, Gabriel

  Grenfell, David Rees (Glamorgan)

  Logan, David Gilbert

  Salter, Dr. Alfred

  Griffiths, T. (Monmouth, Pontypool)

  Lunn, William

  Smith, Tom (Normanton)

  Grundy, Thomas W.

  Macdonald, Gordon (Ince)

  Thorne, William James

  Hall, George H. (Merthyr Tydvil)

  McEntee, Valentine L.

  Tinker, John Joseph

  Hirst, George Henry

  Maclean, Nell (Glasgow, Govan)

  Wallhead, Richard C.

  Jenkins, Sir William

  Mainwaring, William Henry

  Williams, Edward John (Ogmore)

  John, William

  Maxton, James

  Williams, Dr. John H. (Llanelly)

  Jones, J. J. (West Ham, Silvertown)

  Milner, Major James

  Williams, Thomas (York, Don Valley)

  Jones, Morgan (Caerphilly)

  Nathan, Major H. L.

  Kirkwood, David

  Owen, Major Goronwy

  TELLERS FOR THE NOES.—

  Lansbury, Rt. Hon. George

  Parkinson, John Allen

  Mr. D. Graham and Mr. Groves.

  Bill read a Second time and Committed to a Committee of the Whole House for Monday next.

  TEACHERS (SUPERANNUATION) BILL.
  Read the Third time, and passed.

  SUNDAY ENTERTAINMENTS ACT, 1932.
  Resolved,
  "That the Order made by the Secretary of State under the Sunday Entertainments Act, 1932, for extending Section one of that Act to the borough of Barking, which was presented on the 11th day of May, 1933, be approved."
  Resolved,
  "That the Order made by the Secretary of State under the Sunday Entertainments Act, 1932, for extending Section one of that Act to the urban district of Willesden, which was presented on the 11th day of May, 1933, be approved."—[Mr. Racking.]
  The remaining Orders were read, and postponed.

  ADJOURNMENT.
  Resolved, "That this House do now adjourn."—[Sir G. Bowyer.]
  Adjourned accordingly at a Quarter after Eleven o'Clock.

  CEYLON (GOVERNMENT EMPLOYES).
  CEYLON (GOVERNMENT EMPLOYES).
  NORTHERN RHODESIA (ORDINANCES).
  NORTHERN RHODESIA (ORDINANCES).
ROYAL NAVY.
  WARSHIP PRODUCTION (OVERSEERS).
  WARSHIP PRODUCTION (OVERSEERS).
  GENERAL MESSES.
  GENERAL MESSES.
  ROYAL AIR FORCE (DISPLAYS, ETC.).
  ROYAL AIR FORCE (DISPLAYS, ETC.).
  HEAVY OILS DUTY.
  HEAVY OILS DUTY.
  SMALL-POX (SCOTLAND).
  SMALL-POX (SCOTLAND).
TRADE AND COMMERCE.
  MOTOR SPIRIT.
  MOTOR SPIRIT.
  MOST-FAVOURED-NATION TREATMENT.
  MOST-FAVOURED-NATION TREATMENT.
  TERRITORIAL ARMY (STAFF INSTRUCTORS).
  TERRITORIAL ARMY (STAFF INSTRUCTORS).
  GERMANY (BUILDING WORKERS' INTERNATIONAL).
  GERMANY (BUILDING WORKERS' INTERNATIONAL).
  SEA POLLUTION.
  SEA POLLUTION.
  EUROPEAN SITUATION (CONVERSATIONS).
  EUROPEAN SITUATION (CONVERSATIONS).
  CHINA AND JAPAN.
  CHINA AND JAPAN.
Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
RENT AND MORTGAGE INTEREST RESTRICTIONS (AMENDMENT) BILL.
Brought from the Commons; read la; and to be printed.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (SOUTH SOMERSET JOINT HOSPITAL DISTRICT) BILL. [H.L.]
VISCOUNT GAGE: My Lords, I beg leave to introduce a Bill to confirm a Provisional Order of the Minister of Health relating to the South Somerset Joint Hospital District; and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(Viscount Gage.)
On Question, Bill read la; to be printed, and referred to the Examiners.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (WELLINGTON SALOP) BILL. [H.L.]
VISCOUNT GAGE: My Lords, I beg leave to introduce a Bill to confirm a Provisional Order of the Minister of Health relating to the urban district of Wellington in the County of Salop; and to move that it be read a first time.
Moved, That the Bill be now read la.—(Viscount Gage.)
On Question, Bill read la; to be printed, and referred to the Examiners.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (WATH SWINTON AND DISTRICT JOINT HOSPITAL DISTRICT) BILL. [H.L.]
VISCOUNT GAGE: My Lords, I beg leave to introduce a Bill to confirm a Provisional Order of the Minister of
926
Health relating to Wath Swinton and District Joint Hospital District; and to move that it be read a first time.
Moved, That the Bill be now read la,—(Viscount Gage.)
On Question, Bill read 1a; to be printed, and referred to the Examiners.

MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMATION (ELY, HOLLAND AND NORFOLK) BILL. [H.L.]
VISCOUNT GAGE: My Lords, I beg leave to introduce a Bill to confirm certain Provisional Orders of the Minister of Health relating to the Counties of the Isle of Ely and parts of Holland and Norfolk, and the Borough of Wisbech; and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(Viscount Gage.)
On Question, Bill read la; to be printed, and referred to the Examiners.

SWANSEA GAS ORDER, 1933.

  ILFRACOMBE GAS ORDER, 1933.
  LORD TEMPLEMORE: My Lords, I beg to move that the Special Orders, Swansea Gas Order and Ilfracombe Gas Order, be approved.
  Moved, That the Special Orders, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore).
  On Question, Motion agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932 (BOROUGH OF QUEEN BOROUGH ORDER).
THE EARL OF LUCAN: My Lords, I beg to move that the Order made by the Secretary of State for the Home Department, under the Sunday Entertainments Act, 1932, for extending Section 1 of the Act to the Borough of Queenborough, be approved.
Moved, That the Order made by the Secretary of State for the Home Department under the Act for extending Section 1 of that Act to the Borough of Queenborough, and laid before this House on the 2nd instant, be approved.—(The Earl of Lucan).
On Question, Motion agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932 (URBAN DISTRICT OF WEMBLEY ORDER).
THE EARL OF LUCAN: My Lords, I beg to move that a similar Order with respect to the urban district of Wembley be approved.
Moved, That the Order made by the Secretary of State for the Home Department under the Act for extending Section 1 of that Act to the urban district of Wembley, and laid before this House on the 2nd instant, be approved.—(The Earl of Lucan).
On Question, Motion agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932 (BOROUGH OF ROCHESTER ORDER).
THE EARL OF LUCAN: My Lords, I beg to move that a similar Order with respect to the Borough of Rochester be approved.
Moved, That the Order made by the Secretary of State for the Home Department under the Act for extending Section 1 of that Act to the Borough of Rochester, and laid before this House on the 2nd instant, be approved.—(The Earl of Lucan).
On Question, Motion agreed to.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (WREXHAM AND EAST DEN BIGHSHIRE WATER) BILL [H.L.]
Read 2a(according to Order).
MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (LUTON WATER) BILL [H.L.]
Read 2a(according to Order).
MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (MID-GLAMORGAN WATER BOARD) BILL [H.L.]
Read 2a(according to Order).
MINISTRY OF HEALTH PRO VISIONAL ORDERS CONFIRMA TION (MAIDSTONE AND STOCK TON-ON-TEES) BILL. [H.L.]
Read 2a(according to Order).
MINISTRY OF HEALTH PRO VISIONAL ORDER CONFIRMA- TION (CHEPPING WYCOMBE) BILL [H.L.]
Read 2a(according to Order).

ARGENTINE AND DANISH TRADE AGREEMENTS.
LORD STRACHIE LORD STRACHIE rose to ask the Parliamentary Secretary of the Ministry of Agriculture whether the alarming figures given in the Daily Express of the 24th April under the headings "Great Meat Muddle" and "Betrayal of the home farmer" are correct, and whether he will explain how agriculture is benefited by the Argentine and Danish Agreements; and to move for Papers.
The noble Lord said: My Lords, this Question of mine really divides into two portions. The first part is to ask the Parliamentary Secretary of the Ministry of Agriculture "whether the alarming figures given in the Daily Express of the 24th April under the headings 'Great Meat Muddle' and 'Betrayal of the home farmer' are correct." I do not intend to deal with that question at any length, but I think the noble Earl who represents the Ministry of Agriculture in this House will agree that those statements were very alarming indeed, and I thought it well to give him an opportunity, if they were not correct, of saying that they were not correct, and of assuring your Lordships that everything had been done for the benefit of British agriculture. After I had put this Question on the Paper the two Agreements with the Argentine and Denmark were laid before both Houses of Parliament, and I mean rather to deal with those Agreements, leaving it to the noble Earl to give an explanation of the Daily Express statements, and I hope he will be able to relieve our anxieties on that point.
I will deal first with the question of Denmark—with what is generally called the Agreement or Pact—and I would like to know what it is that Denmark gains. It seems to me from a statement made in another place that Danish agriculture is dependent upon us for the export of bacon and hams of the value of over

929
£43,000,000. I suppose that that is the whole export front Denmark, and no doubt we are a very valuable market for her. I notice from the Second Schedule of that Agreement that for three years no duty is to be placed upon bacon and, warns, and, with regard to butter, only a duty of 15s. per cwt. I would like to draw your Lordships' attention to the fact that when the Milk Commission referred to butter it said that the lowest tax should be 20s., and so for three years we shall be tieing our hands, and not able to increase that duty from 15s. to the 20s. recommended by the Milk Commission as the minimum impost that ought to be imposed.
Then, again, what happens in return? The importation of coal into Denmark is raised from 58 per cent. to 80 per cent. I rather wonder why, when that was being raised, the Government did not ask for Denmark to go back to the 1925 figure, when it was 85 per cent. I notice that in another place it was contended by the President of the Board of Trade that this was a very valuable export, because it was equal to 1,300,000 tons being exported to Denmark, and represented employment for something like 5,300 miners here. I wonder whether the noble Earl will be able to tell us that these proposals are going to relieve unemployment from the agricultural point of view. He is no doubt well aware that there is a great deal of distress in agriculture in this country, especially in East Anglia. There may be reduction, but there is no increase of duties by the Schedules of the Agreement, on cotton goods, hats, carpets, steel and iron. Now that seems to be very valuable indeed from the Danish point of view, but I do not see where this country comes in from the agricultural point of view. On the other hand, I think the President of the Board of Trade, who has been very clever in making this bargain, also said that you cannot make a bargain without asking people to give up something. I am afraid that what has been given up has been against the interest of agriculture in this country.
Now I will turn to the Argentine Agreement. It is rather interesting that Mt. Runciman said that he would not have anything to do with the agricultural effect, but would only deal with how industry was affected. I am not surprised that in another place he left it to the
930
Ministry of Agriculture, for this very good reason, that for some years Mr. Runciman was President of the Board of Agriculture, now called the Ministry of Agriculture, and thoroughly understands the question, and, no doubt, he did not want to be laid open to attack on the ground that agriculture was going to suffer from these two Agreements. What has happened with regard to the Argentine Agreement? I notice that it is estimated that our capital invested in the Argentine is over £500,000,000. Then the debenture interest on railways is lying frozen in the Argentine banks, and some £6,000,000 of British money are held up in Argentina. We are led to believe that by this Agreement money will be unfrozen and that we shall obtain a great commercial advantage, and that Mr. Runciman has made a very good bargain with the Argentine by releasing this money which was tied up. I have always heard before this Agreement was made that it was the banks which were most anxious that something should be done to release this money—no doubt very properly from their point of view. But I wonder what we are going to get out of this Agreement?
I am very doubtful myself whether we are going to get any advantage at all, but if there is any advantage it will be from quotas. The Minister of Agriculture seems to rely entirely upon the quotas which he has got from the two countries. I wish he would explain why he relies upon quotas and entirely dismisses tariffs. No doubt the noble Earl who will speak for the Government will be able to tell us why the Minister prefers quotas. The Danish quota is 62 per cent. for bacon and ham, and the butter quota is 2,300,000 cwts. which may be increased if the total imports exceed 8,100,000 cwts. What is the result of that quota for Denmark? It is very difficult to go by figures, but I see it estimated that the Government are actually giving a present to the Danish farmers of something like £8,000,000. I do not think it is our business to give £8,000,000 a year to Danish farmers. I would much rather have seen a good strong tariff put on, which would give £8,000,000 to this country, instead of conferring a. benefit on the Danish farmers.
As to the Argentine Agreement, I should like first to read what the

931
Minister of Agriculture said in the House of Commons. He did not read out the whole of the Agreement, and I should like to show afterwards that he left out some important points. What Major Elliot read was this:
"The Government of the United Kingdom … will not impose any restriction on the imports of chilled beef into the United Kingdom from Argentina … unless and then only in so far as it appears to the Government of the United Kingdom, after consulting and exchanging all relevant information with the Argentine Government, to be necessary in order to secure a remunerative level of prices in the United Kingdom market. …"
But the Agreement itself is much more favourable to Argentina than what was read out by the Minister in the House of Commons.
This is Article 1 of the Agreement:
"The Government of the United Kingdom, fully recognising the importance of the chilled beef industry to the economic life of Argentina "—
I wish the Government would recognise the detriment caused to the economic life of British agriculture by the Agreement. They seem very anxious to do something to please Argentina. There I think I see the hand of the President of the Board of Trade. Article 1 of the Agreement goes on:
"will not impose any restriction on the imports of chilled beef into the United Kingdom from Argentina"—
then these words which follow were left out by the Minister—
"in any quarter of a year below the quantity imported in the corresponding quarter of the year ended the 30th June, 1932 "—
so that when the figure goes below that enormous importation into this country we are not to make any cut at all in the importation of Argentine chilled beef. Before those large imports in the year ended June 30, 1932, we were equally suffering from the competition of Argentine chilled beef, so I am not surprised that those words were carefully left out by Major Elliot. The Article goes on:
"unless and then only in so far as it appears to the Government of the United Kingdom, after consulting and exchanging relevant information with the Argentine Government, to be necessary in order to secure a remunerative level of prices in the United Kingdom market"…
932
But there is a great deal more left out by Major Elliot. I should like to know why he left out these words:
"and no such restriction will be maintained if it appears that the imports so excluded are being replaced by increased imports into the United Kingdom of other kinds of meat (other than experimental shipments of chilled beef from other parts of the British Commonwealth of Nations) with the result of neutralising the desired effect on prices."
The meaning of that to me is this. Supposing our Dominions increase their very large export of chilled beef to us—and, as we all know, experiments are being made by Australia and other countries, including, I believe, South Africa, and we should get a large extra amount coming in—apparently under that Agreement, which ought to have been quoted fully in the House of Commons, the effect will be that we can no longer make any cut in the imports of chilled beef into this country. Does this not give Argentina the benefit of Dominion status? It seems to me that this Agreement by a side wind gives the same advantage to Argentina in certain conditions as one of our Dominions would enjoy. I -should like to ask what advantage the English farmer derives from the quota when it has resulted in the price of English seasoned cattle being driven down to a figure which is the lowest known for five years. Cattle which have cost the British farmer 50s. per cwt. to buy and fatten during the winter are now being sold at 40s. a cwt. whilst in some markets the figure is as low as 31s. per cwt. Five years ago the same animals would have fetched 55s. per cwt. Apparently the quota, so far as it is in force at the present moment, is of no advantage to the British farmer with regard to his live stock.
I have taken certain figures from the Argentine Customs, which show that in February, 1932, when there were no restrictions, 374,475 cwts. of chilled beef were imported and that when the restrictions were in force, in February, 1933, 387,675 cwts. were imported, an increase of 13,200 cwts., so I cannot see what advantage the quotas have been to the British farmer up to the present seeing that there has been an increase instead of a decrease of imports. I said that I cannot understand why the Minister for Agriculture pins his faith to quotas. Perhaps the noble Earl will be able to

933
convince the House that quotas are much better than tariffs, but why tie your hands for three years and say that there are to be no tariffs during that time? Tariffs are good in. a way because they not only raise the prices but they also raise revenue. Would it not be a great advantage to this country if we could increase the revenue now? If the revenue were increased by tariffs there would probably be a reduction of the Income Tax or reduction in other ways and that would assist us in finding money for the unemployed.
I think very strong arguments were put forward the other day by Mr. Amery, who is a great authority on this question. He said:
"As regards agriculture, the main point that I should like to make is to ask why we should have precluded ourselves, quite unnecessarily, from making use of the weapon of a duty to protect our agriculture, in regard to some of the most important articles which affect the life of our agriculture. We have not yet heard a single intelligible reason why the Government are not prepared to impose a duty upon bacon or other agricultural products."
I think some explanation is required from the Government as to why they have bunt their boats as regard to tariffs, which are very flexible and can be used with great advantage even when quotas are in force. I cannot understand why the Government are so afraid of tariffs. It has always seemed to me, although I have been a Free Trader all my life, that from the very moment that all Parties agreed that there should be a Wages Board for agricultural labourers it was impossible not to have agricultural tariffs.
What is the effect of that Wages Board? What the Act did was this. It said that the wages of agricultural labourers should net be subject to the question of supply and demand. The result is that agricultural wages have been doubled since the War. I am very glad they have been doubled, but on the other hand it is very well known to many members of your Lordships' House that, especially in East Anglia, it is perfectly impossible for the farmers to pay these very high wages, and great unemployment has, in consequence, occurred. I will put it to the Government, as I have put it to myself, how can you protect the wages of agricultural labourers and refuse to protect the goods which they produce? It seems to me perfectl illogical to say
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it is right to protect the labourer but quite wrong to protect the goods. We all know the effect in East Anglia and in the West of England. I see that the noble Earl and the Leader of the House are amused. The Leader of the House does not care a bit, but if he were one of those unfortunate landowners who are dependent for their bread and butter on what they get from the land he would know it is no laughing matter.
THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM): As the noble Lord has twice mentioned me by name I may say that I was not in the least amused at the statement, but amused to find it came from a life-long Free Trader.
LORD STRACRIE: The noble Viscount has no reason to be amused, because I state definitely that, although I was a Free Trader, it is illogical to say you are to protect the wages of those who produce the goods while the goods themselves are not to be protected. I cannot see anything laughable in that. I am not a fanatic about quotas or about other questions, but when I see a thing ought to be done I am quite ready to say a change should be made; and I contend that it is illogical to say that the wages of the labourers should be protected if at the same time you do not equally protect the goods which they produce, as otherwise those goods cannot be produced at prices which can compete with foreign imports. That is why I cannot understand the interruption of the noble Viscount. I imagine he interrupted because he knows he has no case. I hope he will show us how it can be right for the wages of the labourers to be protected and for the goods which they produce not to be protected. No doubt the noble and learned Viscount will be able to produce a legal argument in that regard which a lay member of the House could not do.
It seems to me that really why Major Elliot is so anxious to have quotas is because he has got undoubtedly the support of the National Farmers' Union as far as headquarters in Bedford Square are concerned. Undoubtedly these headquarters have approved of quotas and approved of the attitude of the Minister of Agriculture. When this question was raised in another place, and when some member ventured to quote what had been

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said by the Lancashire County Agricultural Society, Major Elliot said it was the only body opposing the Pacts. I do not blame Major Elliot, as a Scottish representative, for knowing nothing about the Lancashire County Agricultural Society, but I do happen to know that it is a very important body indeed, and leads a very large body of agricultural opinion. It is a body which is as well qualified to express its opinion in this matter as the three or four gentlemen sitting at the headquarters of the National Farmers' Union in Bedford Square. The National Farmers' Union so far have only supported the policy by their president and one or two other officers. Their Council have not met, and have not yet expressed any opinion as to whether the quota is desirable or whether they would not have tariffs instead. This, which has only taken place lately, may perhaps appeal to the Minister of Agriculture as a Scottish representative for Glasgow. I see the other day that the National Farmers' Union of Scotland at Glasgow supported the contention of the Lockerbie branch that quotas on imported meat had not served the purpose for which they were imposed. That is a very strong declaration indeed, and I expect we shall hear a great deal more about it in other parts of the country.
I notice also that the Minister of Agriculture said the Government were calling people into consultation immediately after the debate on Wednesday—next day —regarding the country's supply of manufactured milk. It has been reported that the Minister has met the foreign importers of manufactured milk, but nothing has been decided. They are going to have further consultations. It is also stated that he is going to ask the Dominions to come into consultation with him, but I wonder what is the use of asking the Dominions to come into consultation and cut their supplies. It is rather curious what the Minister said in reply to an interruption by Mr. Rothschild. Asked the question: "What about the Dominions?" the Minister replied: "The Dominions have free access to our markets. What they do is no affair of ours." I should have thought it was very much our affair. But he is going to consult the Dominions to see whether they would be willing to restrict their supplies of manufactured milk. I do not know that that will be an advantage. He
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actually approached the Dominions, New Zealand and Australia, and they would not agree to cut their imports by 10 per cent. so far as cheese and butter were concerned. It seems to me that the Minister of Agriculture is always taking the line: "I can do nothing to-day, but I shall do it to-morrow."
The Ottawa Agreements have tied the hands of the Government very much. It seems to me we are going to have our hands tied in exactly the same way by these Danish and Argentine Agreements. It seems to me that these Agreements are like the Ottawa Agreements, and to them can well be applied the statement by Sir Arthur Hazelrigg, an ex-President of the Royal Agricultural Society and Chairman of the Council of Agriculture for England, who represented agriculture at Ottawa. He said that agriculture at Ottawa, had been sacrificed to the supposed needs of industry, shipping and vested interests; and that is exactly what is being done in these new Agreements. I beg to move for Papers.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (EARL DE LA WARR): My Lords, I think we are all very pleased that the noble Lord has raised this most important subject in our House in order that we may have an opportunity of discussing it. We are all very interested, as the noble and learned Viscount the Leader of the House has already said, to see the source from which the last speech has come. I think there is a real hope of the policy of this Government receiving complete national assent if the noble Lord, Lord Strachie, in truth represents, as we have no doubt he does, those noble Lords who sit with him on the Benches opposite. In addition to the specific Questions to which he has addressed himself, he has raised the general topic of what I may call tariff versus quota. I am very glad that he has done so because it is very difficult to answer the particular Questions that he has put, or discuss the particular matter which he has laid before us, without first applying oneself to the general lines of policy on which the Government are attempting to proceed.
He has asked why we have totally rejected the whole idea of advancing on this problem by means of a tariff. We have done nothing of the kind. No single

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duty on agricultural produce—and there are a great number in existence to-day—has been lowered as the result of the Agreements we are discussing. There are high duties to-day on horticultural produce, duties on potatoes, duties even on commodities that come into the Danish Agreement itself, such as eggs and poultry. Not one of those duties has been in any way affected by the discussions or the Agreements arrived at as a result of those discussions. But we very early 3acne to the conclusion that, while a tariff might well have its uses in certain cases, if we were to tackle the problem of raising the wholesale prices of agricultural produce in this country—and raising them as quickly as could be done, because that was necessary—we should have to have a very much more effective and drastic weapon in our hands than the tariff. To my mind a tariff may well be a brake, and frequently a useful brake, on the wheels of Free Trade, but in itself it is not a challenge to the system itself, arid, having imposed your tariff you still have left that chaotic state of the market which may, as the Minister said in another place, be very dear to the hearts of the members of the Liberal Party, but, I venture to say, has very little support from either that side of the House or this side of the House.
We had to choose the most effective instrument for dealing with the problem. The noble Lord has asked: Why choose? Well, as the President of the Board of Trade said, when you are making an Agreement you have to be prepared to give something. We were I prepared to give up the least effective instrument for dealing with the problem with which we were faced, and were, therefore, prepared, in relation to the particular commodities that are mentioned in the Agreement, not to impose or increase tariffs on those commodities. Why is it that we say the quota is the more effective means of dealing with the problem? The reason is this. What is wrong with the markets with which we haw to deal today is that they are glutted with more produce than can be consumed, and our problem, therefore, is to decrease supplies and regularise supplies to the market. How can you do that by means of a tariff when, with a stroke of the pen, a foreign Government can undertake to subsidise exports in an exporting country, as, indeed, is being done in
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some form or other in almost every exporting country to-day How is a tariff going to deal with a sudden fall in the exchange of an exporting country? You can impose a 20 per cent. or 30 per cent. tariff at night and you can wake up next morning to find it has been swept aside by an alteration in exchange values.
Then for the great mass of these commodities with which we are dealing we are virtually the only market to which they can be sent. Thus 85 per cent. of the meat exports from Argentina come to this country, and well over 99 per cent. of their chilled beef comes to this country. However high a tariff you place on Argentine imports, where is that meat going if it is not coming to this country? It has got to come here. You may say that by imposing a tariff you can ruin the Argentine producers, and then they will not breed the cattle to send, but your Lordships will realise that that means a very long process. For another two years the castle are coming on, and if we were to wait for two years I do not think the noble Lord who has just spoken, or any other person in this country, would be satisfied that we were seriously attempting to deal with the situation that has been confronting us. Lastly, what does the farmer in this country or any other country want? The farmer in this country is not a greedy man. It is not high prices he is after; he wants stable prices. He wants to know what he is going to get, and the only possible manner in which you can stabilise prices is by stabilising quantity. A tariff does not stabilise quantity.
Let me turn to figures in order to attempt to demonstrate the general points which I would venture to lay before your Lordships. For this purpose I would like to compare the situation as regards meat from South America, which has been regulated on a quantitative or quota basis, and meat which is being sent to us from Southern Ireland, which is being regulated by means of a tariff. The noble Lord, Lord Strachie, has already quoted to your Lordships certain figures from that great agricultural organ the Daily Express, with regard to imports of meat into this country from the Argentine, and he referred to the official figures for the River Plate. We turn to the quotation to which he was referring, and we see that, according to

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these official figures, the imports of chilled beef to this country were 13,000 quarters higher than the figure for February of last year, that the imports in February this year have increased by 13,000 quarters. I have searched through various sources of figures in order to try to find out where this particular figure was discovered. I find that the figures for the River Plate show that in last February just under 448,000 quarters of chilled beef were shipped to this country, and that this February the figure was 429,000 odd, a decrease of about 19,000 quarters.
As to frozen beef, the figures to which the noble Lord has referred state that there was an increase of 11,000 quarters. The actual figures for the River Plate were, in January last year, 11,250 quarters, and in January this year, 9,500 quarters. For February last year the figures were 5,300 quarters and for February this year 9,000 quarters, an increase of 4,000 quarters, or, taking the two months together, a decrease of 2,000 quarters. Where does the Daily Express, I wonder, get the figure of an increase of 11,000 quarters? I was a little bit surprised to notice that in spite of the reference to the Daily Express in the Motion of the noble Lord, then is no one here from the Daily Express to defend these misrepresentations. I should have thought this would have been a very good opportunity to come here and either justify the figures or else make a public apology for putting before the farming community at this terrible time so gross a misrepresentation of the actual situation.
I have also figures prepared by His Majesty's Government. Your Lordships need not be alarmed that I am going to read them all to you. I have summarised them for the three months from January to March. Taking the figures for the whole of the meat supplies from South America generally, I find that, for the first quarter of 1932, the imports into this country were 3,079,000 cwts., and for the first quarter of 1933, 2,833,000 cwts., a reduction of well over 200,000 cwts. or 8 per cent. of the total imports into this country taking the one year as compared with the other. If that is the "great meat muddle" of which the Government are accused, I am very proud to be a member of that Government.
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There is one point I should mention, and that is that we had hoped that the last figure I have given would have been nearer 10 per cent., but in the first arrangement that we made with the South American importers there were certain classes of meat which did not come into the arrangement. There was an increase of imports in those particular classes. In frozen boned beef there was an increase. I have included those increases in the total figure which gives a decrease of 8 per cent. in the whole supplies.
Let me turn now to Ireland. There you will find that in spite of there being, first, a 20 per cent. tariff, which was raised to 40 per cent., the figures since January have steadily increased. In January the imports were 36,000 head, in March 63,000 head and in the last week of April, the week ending April 29, the figures were 1,867 head last year and 3,553 head in the corresponding week of this year. There was an increase, therefore, of nearly 100 per cent., and that with a 40 per cent. tariff. Your Lordships will see that our preference for what we call quantitative regulation is not based on mere theory.
There is one final result of our policy to which I would venture to refer. That is the question of the prices that are being realised to-day by the British farmer. I notice that in the Daily Express of April 24 it was said:
"Not only is the Argentine importer capturing the market"—
we have already examined that statement—
"he is also getting between¾d. and½a lb. more for his beef than before the quota was established."
The quota was established on November 7. He was then getting 3s. ld. a stone of 8 lbs. for his beef. On April 21 he was getting 2s. 11¾d., that is 1¼d. less. On May 15, a few days ago, he was getting 3s. 0¼d., that is ¾d. less than or November 7 when the embargo was imposed. I want to be quite frank with your Lordships and I think that those figures giving the prices on those particular days are slightly favourable to our case. Probably it would be fair to say that, taking April as a whole, the Argentine importer was getting something like½d more in April than last

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November. But your Lordships will realise that there is a very substantial difference between½d. and the figure given in the Daily Express of "between¾d. and 1½d." It has been implied that the Argentine importer was getting much more for his meat than the British farmer. The fact is that as against those two figures of 3s. ld. and 3s. 0¼d. for the Argentine, the price of English long-sides was 4s. on November 7 and 4s. 6d. on May 15. 1933. That has been reflected in actual live-stock prices to the extent of about 6d. to 4s. a cwt. Admittedly the increase is not as much as we should have liked to see, but nevertheless it means On an average beast between 35s. and £2. In the case of mutton we have a figure of 4s. ld. a stone in November and Gs. 3d.a stone on May 15, 1933. Your Lordships will see, therefore, that while the British farmer has had a very large increase in prices for his meat, the Argentine has had a comparatively negligible increase.
I have tried to demonstrate that not only is the quota the most effective means but the only means of dealing with the immediate situation, and I hope also to be able to persuade your Lordships that the quota is by far the best method of laying permanent foundations for agriculture in this country. The noble Lord, Lord Strachie, seems very keen about the tariff to-day, but he has changed his mind once on this matter and I am not sure he has yet persuaded his friends and colleagues, Mr. Lloyd George and Sir Herbert Samuel, to go quite as far as he would go. It would be quite easy if the Government of this country changes for a Liberal Free Trade Government to bring in a Budget which would sweep aside tariffs and leave the farmer with no. Protection whatsoever, but it is not going to be very easy to sweep aside a great scheme such as has been devised for us by the Lane-Fox Commission for the reorganisation of the pig and bacon industry in which the whole structure of the industry is re-organised. It will take a very strong Government indeed to decide to smash up such a great scheme. By putting the industry into a position in which it will be able to deliver the goods to the public, and in which it will also be able to regulate its own glut in a short time, we are producing a scheme that is sound and one that it will be difficult to destroy.
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In the scheme we are putting forward there are safeguards to the consumer and other sections of the industry—safeguards, incidentally, which were considered sufficient at the time of the passing of the Agricultural Marketing Act, 1931, by a Labour Government.
Lastly, the noble Lord seems to be distressed by the fact that the people of Denmark and of the Argentine feel that they, too, have gained something from these Agreements. Such a fact most certainly does not distress His Majesty's Government. The reason we feel we have been able to give them something without hurting the British farmer is that by this system of quota regulation, though we limit the quantity for import, we give them a defined quantity to which they know they can work and an opportunity of escaping from the price level of glut which they have been receiving. The noble Lord mentioned that possibly Denmark and the Argentine were going to get as much for the decreased quantity as they were when sending larger quantities. But we cannot attack Protection from both sides. If the Liberals want to attack Protection from the point of view that it destroys foreign purchasing powers, they should not turn round when we devise a method by which foreign countries can go on buying things in this country. That is another reason why this policy can be more permanent than a policy of tariffs. It is because our policy is designed upon these lines that we are able to carry on with it in spite of the World Economic Conference and the tariff truce.
The Minister quoted the following in another place the other day from the recommendations of the experts for the Agenda of the World Economic Conference on the question of high price levels:
"The Commission thinks that the question requires to be considered whether, in the case of certain primary commodities where large stocks are overhanging the, markets, a better level of prices could not be obtained by the regulation of exports or production. Such an arrangement would be of special importance in the case of wheat."
That shows we have managed by our policy to take the protection of agriculture out of the sphere of international controversy. I have dealt at length with this question of tie factors which enable this policy of ours to be permanent because the problem of the farmer is a long-

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term problem. It is no good offering an emergency policy. He must be able to look ahead with some confidence as well as feel he is being saved from destruction at the moment. I contend that this policy stands whether it is argued in theory or examined in terms of facts and figures, or whether it is argued in terms of short-or long-term policy.
As I have gone on longer than I intended I will deal quickly with the terms of the Question, and the points to which the noble Lord particularly applied himself. We come first to the Danish Agreement. The noble Lord is concerned about our undertaking in Article 4. We have said that we will not
"regulate the quantity of the imports of bacon and hams., butter, eggs or cream from Denmark, except in so far as may be necessary to secure the effective operation of a scheme or schemes for the regulation of the marketing of domestic supplies of these products."
That has been right through the policy of the Government and why should we not state it in the Trade Agreement? Then on the question of the specific figures which have been referred to. It has been suggested in an article on the "Three Black Pacts" that actually we are going to have a greater importation of food into this country from Denmark than if these articles had not been agreed to and signed. Let me read the particular words. Take bacon and hams. What is said in the Agreement? On page 4 you will find that:
"For bacon and hams the Danish allocation shall not be less than 62 per cent. of the total permitted imports from foreign countries."
How is the British farmer sold there? All we say to the Dane is: "Whatever we do in regard to restricting the supplies of bacon into this country, we shall see that you get 62 per cent. of whatever is to be imported." How does that sell the British farmer?
Then we come to the question of eggs, and here I find in the Daily Express—I apologise for continually mentioning this newspaper, but unfortunately it is a paper very much read by a number of members of the farming community, and therefore it is necessary to use every opportunity of correcting the false impressions created by it—this statement:
"Denmark is to be allowed to send us 38 per cent, of the egg imports, which on
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last year's basis will mean 6,840,000 great hundreds a year. But last year she sent us 6,392,000 great hundreds. Thus, the Agreement will mean the dumping of an extra. 450,000 great hundreds of Danish eggs."
What does the Agreement really say? It says that the Dane will have the right to send 38 per cent. of whatever quantity of eggs is imported into this country. There is nothing about the figures for last year. We do not say 38 per cent. of last year's imports, but 38 per cent. of whatever is imported in the future. None of us anticipate such a world disaster in trade as will necessitate our having to cut off all imports of eggs into this country, but if it did happen then 38 per cent. of nothing is exactly nothing, and how can that hurt the British farmer? We say in the Agreement that the Danish allocation shall not be less than 5½million great hundreds in any year,
"subject, however, to the understanding that if some greater reduction in the total imports from all foreign countries than is compatible with this quantity should be essential to secure the maintenance of a remunerative level of prices,"
then we shall have the right to impose yet further reductions, according to the will of the British Government, but that in any event the Danes shall have 38 per cent. of whatever is imported.
Then, lastly, the question of butter. Last year the Danes exported 2,584,000 cwts. to this country. We are limiting them to 2,300,000 cwts., a reduction of 13 or 14 per cent. Is that selling the British farmer? It is true, with regard to butter, that we have given a figure below which we cannot reduce, but again I defend that simply on the ground that you have got to give something in an Agreement, and it is considered that butter is a commodity in which British farmers are less interested than in a great number of other commodities. At any rate we have got that possible reduction of between 13 and 14 per cent.
Now let us turn to the Argentine Agreement. The noble Lord finds fault with Article 1 of that Agreement, and complains that the Minister did not quote it completely. He quoted all the relevant passages. The noble Lord complains that he did not quote the last sentence:

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"and no such restriction will be maintained if it appears that the imports so excluded are being replaced by increased imports into the United Kingdom of other kinds of meat (other than experimental shipments of chilled beef from other parts of the British Commonwealth of Nations) with the result of neutralisin4 the desired effect on prices."
The only possible reason that we can have for keeping out imports is that of improving prices for the home producer, and what use is it to us to limit imports from the Argentine, and destroy our trade there, and then have some other section of the world sending in more meat and making it impossible for the home producer to benefit from the increase of prices? Of course, that is a policy which 3.s absolutely and entirely out of the question.
What we have done, maintaining the spirit of the Ottawa Agreements—and that spirit was Great Britain first, the Empire second, and the foreigner third—is that we have taken the right to continue the 10 per cent. reduction on Argentine importations below what we call the Ottawa year, which is from July, 1931, to June, 1932. Then we say that if we want to make any further reduction we shall only do it by having an equivalent reduction from the Dominions, which means that having reduced the Argentine importations by 10 per cent., if there is any further reduction the Dominions will have to accept A also. When I say "have to accept" I mean if we carry out the scheme. How then, on the question of meat, has the British farmer been sold? We have got the right to reduce below the Ottawa year by 10 per cent., and to go further than that providing we are in a position to persuade the Dominions to join with us in the further reduction.
The noble Lord says that that is out of the question, and that of course the Dominions will not, but the Dominions did meet us before when we had the negotiations in November, prior to the original meat restrictions. Those restrictions were of a purely voluntary character, and the Dominions met us most generously, but also on the basis of their own self interest, which, indeed, they must consider. They saw a market in meat crashing, just as we to-day are seeing a market in butter crashing, and they realised that it would pay them to
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stabilise their imports of meat into this country in order to stop the bottom going out of the market. That is exactly the situation that we are contemplating in this Agreement.
I must apologise to your Lordships for detaining you at such length, but at the present moment very serious things are occurring in the farming industry. We are attempting, in conjunction with the leaders of that industry, to whose assistance and co-operation I should like to take this opportunity of testifying, to put through great schemes of organisation of the home market in this country, coupled with organisation of imports, and there are a large number, I am afraid. of interested parties, and also of those who have so far as one can see little but political and personal reasons for opposing, who are endeavouring to do everything in their power to persuade the farmer on whose consent the operation of schemes must ultimately depend, to prepare himself to vote against their being put into force. I venture to say that misrepresentations such as I have mentioned to your Lordships to-day will make it very much harder for us to persuade the farmer that it is going to be to his interest to put through these schemes. These misrepresentations are put out with the object of prejudicing the farmer against a policy that we are endeavouring to develop. It is a very grave responsibility that these men are taking upon themselves.
I want to appeal to your Lordships—to all of you, who have great influence in your own particular spheres—to realise that every scrap of wise leadership which can be given to the farmer to-day is needed. The farmer is an isolated man, living out in the country, possibly miles from the nearest village. He is struggling against a wave of world depression. Can we blame him if he clutches at any straw that is held out to him? His only hope is a rigid control of the quantities that are coming on to glutted markets, and neither tariffs nor chaotic marketing methods are going to supply him with a solution to that problem. I venture to appeal, therefore, to all those who have the welfare of the farmer at heart to rally behind the Minister, to rally behind the Government, to rally behind the National Farmers' Union in their struggle to pro-

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vide agriculture with that permanent programme and policy which alone can give it a permanent place in the national economy which it is essential for the whole nation that it should possess.
LORD SANDERSON: My Lords, the noble Lord, Lord Strachie, said that if you protect the wages of the labourer it is illogical not also to protect the goods which he produces. That is a very old story and it is an old Protectionist argument, but I do certainly agree with the noble and learned Viscount the Leader of the House that it is u surprising argument to hear from a lifelong Free Trader. But, after all, every man has a right to change his opinions. But is it illogical not to protect goods because you protect labour? I do not think that, follows at all. It surely depends a good deal from whose point of view you look at the question. The farmer might naturally argue that if you compel him to pay higher wages you ought to raise the prices of the commodities which he produces. That would be logical from his point of view, though I should not myself be convinced by his logic, I am afraid, because I am still a Free Trader. I have the greatest sympathy with the farmers at the present time, but I think there are other and better ways of helping them than by resorting to tariffs and quotas and other devices of that kind.
EARL DE LA WARR: May I ask the noble Lord a question? How does he reconcile the import board policy of his Party with Free Trade?
LORD SANDERSON: The import board policy of our Party has not been definitely formulated yet, I think.
EARL DE LA WARR: The noble Lord will excuse me. I officially on behalf of the Party, when I was a member of it, always supported that policy.
LORD SANDERSON: I shall not bother about these inconsistencies. I am still a Free Trader. I was saying that the noble Lord's point of view might be logical if looked at from the point of view of the farmer. But if you look at it from the point of view of the labourer it is surely very different. What does the protection of the labourer's wages mean? It means giving him a better standard of living.
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The object of protecting agricultural produce is to raise the prices of these things. It is bound to have that effect, and that is also the object of it. Is it logical to increase a man's money wages with one hand and to reduce his real wages with the other? Is it logical to give him more money with one hand and make him pay more for his food with the other? I think the labourer would regard that proceeding as the reverse of logical. I was very much interested to hear the noble Lord, Lord Strachie, say that he was in favour of tariffs with the object of obtaining a reduction of the Income Tax. I suppose he was speaking on behalf of his Party, the Liberal Party, and it is extremely interesting to know at last where the Liberal Party stands on this question of Free Trade and Protection.
THE MARQUESS OF LOTHIAN: May I be allowed to demur to the last statement of the noble Lord?
LORD PHILLIMORE: My Lords, I am sure we are all grateful to the noble Earl who represents the Ministry of Agriculture in this House for having calmed our fears, unduly raised by the daily Press, and I think it has been of advantage to us to have the (government's theory and defence of what they call quantitative restriction put so clearly before us. I only rise to say that, whilst, as it seems to me, the case for these restrictions with regard to the outsider is so formidable as to be hardly contestable, the further use of that theory at home to which the noble Earl made some slight reference does present a vast danger to which I should like to call his attention before it is too late. Quantitative restriction at home, after all, must mean restriction of employment. The great overwhelming fact that we have to face is that agriculture must provide greatly increased employment in this country, otherwise there is but little hope for the unemployed. I would urge upon the noble Earl and upon his colleagues in the Cabinet, therefore, that they should think once, twice, and three times before they commit themselves to any policy of quantitative restriction of production in the home country.
Whilst I welcome on the whole the type of Agreement which has been lately entered into—and I trust that we shall shortly come to an Agreement with our

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old friends in Norway and Sweden just as satisfactory, or perhaps even more satisfactory—still I would urge upon the Government that in all these Agreements room must be left for the unlimited expansion of the home agricultural industry. When I use the words "unlimited expansion" I am not, of course, referring to expansion that can be realised within the next six months or the next year or the-next two or three years, but, as the noble Earl so wisely said, it is a longterm policy you want in agriculture, and that long-term policy should, I venture to submit, leave room for unlimited expansion of production.
LORD ST RACHIE: My Lords, I imagine that the noble Earl has no Papers which he can lay, but before withdrawing my Motion I should just like to refer very briefly to what the noble Earl said. He said this country was glutted. He asked how tariffs can help since there would be bounties. No doubt there would be bounties, but the only way to challenge bounties is to put on a heavier tariff. I do not see that there is any argument in that. Then he made the remarkable statement that farmers only want stabilised prices. They certainly do not want the stabilised prices of the present moment. They want stabilised prices which will enable them to get a fair remuneration for their labour; but stabilised prices of the present time they do not want.
EARL DE LA WARR: If the noble Lord will allow me, it is most undesirable that the impression should go out to the farmers that any one connected with the Ministry is anxious to stabilise prices as they are to-day. I was only defending the farmer. I said I did not think that he is a greedy man, and that he is more interested in stable prices than in a very high price.
LORD STR ACHIE: What the farmers are continually saying everywhere is that they want to increase the present prices, and that the whole depression depends on the question of prices. Then as regards the noble Earl's figures. I took figures, for instance, as regards the present prices of live stock, from the Farmer and Stock Breeder. The noble Earl took his figures from somewhere else. You can argue in any way from figures, and it must be left to outside
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people to judge whether the noble Earl's figures are right or whether mine are right. It can only be left in that way. The noble Earl depreciated the value of tariffs, but I would point out that they are still maintained in the Danish Agreement. I refer to the tariff of 15s. a cwt. on butter. If tariffs are no use, why did not they simply say: "We will have a quota for Danish butter," and take off the duty? No doubt the Danes would have been very pleased. Also, the noble Earl asked the question: What would the Liberal Party do? I should be very much more interested to hear what the Labour Party would do, to which Party the noble Earl belongs and of which he is a brilliant member. He knows very well that at the next Election we shall get a Labour Government or—which I hope—we shall get a Conservative Government. That would be a great misfortune for the noble Earl who will not sit on that Front Bench any longer.
The noble Earl also rather intimated that we might have quotas in this country. I am not surprised at that, because under the Agricultural Marketing Act passed by the Labour Government there are clauses to restrict production and regulate supplies in this country. I quite understand the noble Earl, as a member of the Labour Party, wishing to control distribution and production. I was rather surprised that my noble friend behind me, when speaking about agricultural wages, did not say: "It will be all right when the Labour Party come in, because when we are in power we shall confiscate all the land of the country and we shall be able to rent it at low prices." That is part of the policy of the Labour Party—the confiscation of land. The noble Earl also said that the Dominions must accept a reduction. I do not think the Dominions would approve of what the noble Earl said.
EARL DE LA WARR: I must correct the noble Lord, who is making a most mischievous statement. I never said that on behalf of the Government, and I am content to leave it to the OFFICIAL REPORT to bear me out. I cannot accept the noble Lord's version.
LORD STRACHIE: I accept the noble Earl's explanation that he did not mean that. Then there is another point. He talked about a long-term policy. We

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heard about a long-term policy from Sir John Gilmour when he was Minister of Agriculture. He was always telling farmers about a long-term policy. That is exactly what farmers do not want. They want immediate relief from the present depression. I was very much amused by the noble Marquess who got up and said that I did not speak for the Liberal Party. I never said I did. But the noble Marquess, Lord Lothian, tried to intimate that he spoke for the Liberal Party, which amused me very much. He is a newcomer in this House, and he has not worked in politics all his life, as I have, fighting for the Liberal cause. As a matter of fact there is no Leader of the
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Liberal Party in this House at the present time. After Lord Beauchamp's departure the Liberal Peers were not called together. There is no Leader actually though Lord Reading is accepted by tacit agreement. Therefore Lord Lothian had not the slightest right to speak as if he were the Leader of the Liberal Party in this House. I am surprised he has run away and prevented me from replying to him. I beg leave to ask to withdraw my Motion, as the noble Lord said there are no Papers he can lay.
Motion for Papers, by leave, withdrawn.
House adjourned at twenty-five minutes past five o'clock.