Sitting of 16 May 1934

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

PRIVATE BUSINESS.
London Midland and Scottish Railway Bill,
As amended, considered; to be read the Third time.

PRIVATE BUSINESS.
  LAND DRAINAGE PROVISIONAL ORDER (No. 1) BILL,
  "to confirm a Provisional Order made by the Minister of Agriculture and Fisheries relating to a scheme submitted by the Rother and Jury's Gut Catchment Board, under section four (1) (b) of the Land Drainage Act, 1930," presented by Mr. Elliot; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 119.]
  EDINBURGH CORPORATION ORDER CONFIRMATION (NO. 2) BILL,
  "to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Acts, 1899 and 1933, relating to Edinburgh Corporation," presented by Secretary Sir Godfrey Collins; read the First time; and ordered (under Section 9 of the Act of 1899) to be read a Second time upon Tuesday, 29th May, and to be printed. [Bill 120.]

PROTECTION OF ANIMALS BILL.
Motion made, and Question, "That the Lords Amendments be considered forthwith, put, and agreed to.—[Sir R. Cower.]
Lords Amendments considered accordingly.

PROTECTION OF ANIMALS BILL.

  CLAUSE 1.—(Prohibition of certain public contests, performances, and exhibitions with animals.)
  Lords Amendment : In page 1, line 25, at the end, to insert :
  "In proceedings under paragraph (c) of the said sub-section in respect of the use of any such appliance or treatment as is therein mentioned upon a horse before or
  1740
  during a performance, it shall be a defence for the defendant to prove that he did not know, and could not reasonably be expected to know, that the appliance or treatment was to be or was used."
  Sir ROBERT GOWER: I beg to move, "That this House doth agree with the Lords in the said Amendment."
  This is a drafting Amendment, which makes it clear that a person may not be convicted in respect of something which he did not know and could not reasonably be expected to know was to take place.
  Question put, and agreed to.
  Remaining Lords Amendments agreed to.

ORAL ANSWERS TO QUESTIONS.

  GOVERNMENT POLICY (DISARMAMENT AND LEAGUE OF NATIONS).
  Mr. GODFREY LOCKER-LAMPSONasked the Secretary of State for Foreign Affairs whether it is still the policy of His Majesty's Government that the question of disarmament should have priority over that of the reform of the League of Nations?
  The LORD PRESIDENT of the COUNCIL (Mr. Baldwin): I have nothing to add to the answer which was given to my right hon. Friend on the 29th January last.
  Mr. MANDER: Can the right hon. Gentleman confirm the statement that the President of the Disarmament Conference has resigned?
  Mr. BALDWIN: I am afraid I have not seen that statement.
  Mr. LOCKER-LAMPSON: I beg to give notice, Mr. Speaker, that, if I can catch your eye, I shall raise this question in Friday's Debate.

  LEAGUE OF NATIONS.

    CHINA.
    Mr. MANDERasked the Secretary of State for Foreign Affairs whether it is the intention of the British Government to support at the Council of the League of Nations the report of Dr. Rajchmann on his mission in China on behalf of the League?
    Mr. BALDWIN: The report is, I understand, an interim progress report, and I am not aware that it will be submitted for specific approval. The Lord Privy Seal, who is representing His Majesty's Government at the council this week, will deal with any question that arises.

    LIBERIA.
    Mr. MANDERasked the Secretary of State for Foreign Affairs whether he will consider the advisability of proposing at the council meeting of the League of Nations that an international naval force should be sent to make a demonstration off the coast of Liberia, with a view to persuading that country to recognise the obligations of humanity by the suppression of slavery?
    Mr. BALDWIN: I can assure the hon. Member that His Majesty's Government have carefully examined all aspects of the Liberian problem before instructing their representative at the present meeting of the League Council at Geneva. It will be for the council to determine what recommendations to make.
    Mr. MANDER: Does the right hon. Gentleman not think that this gross scandal ought to be brought to an end one way or another as soon as possible?
    Mr. BALDWIN: I quite agree, but I doubt whether the method proposed would have the slightest prospect of success.
    Lieut.-Commander AGNEW: Would my right hon. Friend bear in mind the claims of other countries to have an international force sent on the same grounds?

    ASSYRIAN REFUGEES.
    Mr. RHYS DAVIESasked the Secretary of State for Foreign Affairs whether the commission of inquiry into the possibility of settling Assyrian refugees in Brazil has yet reported; whether His Majesty's Government has received an appeal from the Council of the League of Nations to assist in financing the settlement of the refugees; and whether, in view of His Majesty's Government's special obligations, a favourable reply will be given to this appeal?
    Mr. BALDWIN: The Commission of Inquiry has now presented its final report which is being considered by the Assyrian Committee of the Council of the League.
    1742
    As regards the second and third parts of the question, the Council of the League at its Seventy-Eighth Session in January, 1934, adopted a resolution in which appeal was made to the generosity of Governments and private organisations to consider participating in the financing of the scheme, having regard more particularly to its humanitarian aspect. But until a concrete scheme has been worked out and agreed upon for re-settling the Assyrians. I am unable to anticipate the nature of the reply of His Majesty's Government to this appeal.
    Mr. DAVIES: May we take it for granted that when the request is put into proper form the Government will give kindly consideration to it?
    Mr. BALDWIN: I think we have always had an attitude of general sympathy towards the scheme.
    Colonel WEDGWOOD: Has any consideration been given to the alternative settlement of the Assyrians in Trans-Jordan around Jerash.

    YUGOSLAVIA (BULGARIAN MINORITY).
    Mr. RHYS DAVIESasked the Secretary of State for Foreign Affairs whether he can give any information on the petition presented to the League of Nations by M. Ivan Petroff, of Skoplye, on the moral and physical oppression of the Bulgarian minority in Yugoslavia; whether this petition has been pronounced as receivable; and whether it will be brought before the League of Nations Council?
    Mr. BALDWIN: This petition has not yet reached my right hon. Friend, nor has he received any information regarding it.

    ARMS TRAFFIC, BOLIVIA AND PARAGUAY.
    Mr. VYVYAN ADAMSasked the Secretary of State for Foreign Affairs whether he has seen the report of the League Commission with respect to the dispute in progress between Bolivia and Paraguay, and in particular the statement that the weapons employed by both sides are imported from American and European countries; whether any arms and munitions have been exported during the last 12 months from this country to the belligerents; what is their total value; and if he will now withhold licences for such exports, whatever may be the activities of alien armament factories?
    Mr. BALDWIN: My right hon. Friend has seen a copy of the report of the League Commission which has been investigating the dispute between Bolivia and Paraguay and the statement that arms are imported into Bolivia and Paraguay both from America and from Europe. A table showing the value of the munitions exported from this country is being prepared by the Board of Trade, and will be sent to my hon. Friend as soon as it is completed.
    As regards the last part of this question, I fear that no useful purpose would be served by action, on the lines suggested by my hon. Friend, since an embargo, to be effective, must be enforced at least by the principal arms manufacturing countries, several of which have not yet expressed their readiness to cooperate. As there seems to be some misapprehension on the subject I should like briefly to recapitulate the history of this particular proposal for an arms embargo :
    It was on the initiative of His Majesty's Government that an exchange of views originally took place more than a year ago between the Governments of the United Kingdom, the United States, France and Italy, with a view to an agreement between them to prohibit the export of arms to Bolivia and Paraguay. Subsequently, His Majesty's Government, with the co-operation of the French Government, submitted a memorandum to the Council of the League on the 25th February, 1933, suggesting that steps should be taken under the terms of Article XI of the Covenant to recommend Governments to impose this embargo. A draft declaration to be signed by Governments in favour of this step was considered by the Council, and was accepted by all the States Members of the Council, including the United Kingdom. A number of States made their acceptance subject to acceptance of the delaration by a specified number of other States, including the United States of America. The Government of the latter country, however, stated that they were unable to impose an embargo until the necessary legislation has been passed by Congress, and no such legislation has been passed.
    Sir PERCY HARRIS: Are we to infer from that statement that the cause of
    1744
    the failure is the refusal of the United States of America?
    Mr. BALDWIN: The House can draw its own conclusions.

    LEAGUE OF NATIONS (REFORM).
    Mr. G. LOCKER-LAMPSONasked the Prime Minister whether he will be able to give a day after Whitsuntide for the discussion of the reform of the League of Nations?
    The PRIME MINISTER (Mr. Ramsay MacDonald): I regret that I do not consider that my right hon. Friend's suggestion would serve a useful purpose at this time.

  DISARMAMENT.
  Mr. THORNEasked the Secretary of State for Foreign Affairs if he will issue a White Paper in connection with the conversations on disarmament he has recently had with General von Ribbentrop?
  Mr. BALDWIN: No, Sir. The interview with Herr von Ribbentrop did not add anything of importance to what has already been published.
  Mr. THORNE: Is the right hon. Gentleman aware that in consequence of these private negotiations and conversations which go on between different Ministers there is a good deal of suspicion aroused in other countries unless some information is published?
  Mr. BALDWIN: I am not the Secretary of State and so I can hardly say, but if every time anyone had a private conversation it was published I do not think it would do any good at all.
  Mr. THORNE: But there must be a reason for these private conversations.

  GERMANY (AEROPLANES AND MATERIEL).
  Mr. COCKSasked the Secretary of State for Foreign Affairs whether, in addition to the German order for 80 Armstrong-Siddeley aeroplane engines recently placed, he has any information as to further German orders for aeroplane engines being placed in this country; if so, whether he will give the number of engines thus ordered; whether the inquiries of the French Ambassador

  1745
  covered such additional orders; and whether His Majesty's Government proposes to take any action?
  Mr. BALDWIN: I understand that a small German order for aero engines was placed with another British firm recently. As my right hon. Friend, the Secretary of State for Foreign Affairs, stated in the course of his reply to the question put by the hon. Member on the 14th May, the placing and fulfilment of orders of this nature in no way conflicts with any treaty obligation. The answer to the third part of the question is in the negative.
  Mr. COCKS: Is the right hon. Gentleman aware that there is great public anxiety in regard to certain orders for aeroplane engines on the part of Germany, and that in the present international situation it would be madness to allow the engines to leave this country?
  Mr. PIKE: Is my right hon. Friend aware that there is great anxiety in those industrial areas that produce these aeroplanes lest the Government should interfere with ordinary commerce?
  Mr. BALDWIN: I think the question put by the hon. Member makes it all the more desirable that the matter should be discussed from all points of view on Friday, which I understand is to be the case.

  BOYAL NAVY (BUILDING PEOGBAMME).
  Miss WARDasked the First Lord of the Admiralty when tenders will be invited from shipbuilders, etc., for the 1934–35 naval programme?
  The PARLIAMENTARY SECRETARY to the ADMIRALTY (Lord Stanley): It is anticipated that the issue of invitations to tender for the vessels of this programme will in the main be spread over the period August to December next.
  Miss WARD: Would my Noble Friend bear in mind that acceleration of the placing of these orders would be of great benefit to the shipbuilders and shipyard workers?
  Lord STANLEY: We can only place the orders as we are granted money for
  1746
  that purpose, but all the orders will be placed before the end of the financial year.

  STBAITS SETTLEMENTS (CRIMINAL APPEALS).
  Captain CUNNINGHAM - REIDasked the Secretary of State for the Colonies when it is proposed that a court of criminal appeal for the Straits Settlements should be constituted?
  The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): Legislation providing for the constitution of a court of criminal appeal in the Straits Settlements has been enacted and will, it is hoped, be brought into force on 1st July next.

  COLONIES (ANTI-SEDITION LEGISLATION).
  Mr. MALLALIEUasked the Secretary of State for the Colonies in how many territories under the Colonial Office amendments (have recently been placed on the statute book designed to make more severe the sedition clauses of existing legislation; and in what territories it is proposed to take such action?
  Sir P. CUNLIFFE-LISTER: In one colony, where no such legislation previously existed, a Bill has recently been introduced to prevent the importation of seditious literature. There has been other Colonial legislation on the subject of sedition during the past three years, but its general object has been to clarify the existing law, not to increase its severity.
  Mr. MALLALIEU: Can the right hon. Gentleman inform the House whether in that particular instance there is a right of search similar to that proposed in the present Government Bill in this country dealing with sedition?
  Sir P. CUNLIFFE-LISTER: No, Sir, not without notice, but, if a question is put on the Paper, I will try to answer it.
  Mr. MALLALIEUasked the Secretary of State for the Colonies whether he is aware that the paramount chiefs in the Gold Coast Colony, the joint provincial councils, and the provincial and municipal members of the legislative council, have made representations to the Governor protesting against the passing

  1747
  of the Sedition Bill, and requesting its suspension until the provisions have been submitted to His Majesty's Government; what was the majority by which the Bill was passed in the legislative council; how many African members of the council voted in favour of passing this Measure; and what is the attitude of His Majesty's Government in this matter?
  Sir P. CUNLIFFE-LISTER: I assume that the hon. Member is referring to the Gold Coast Criminal Code Amendment Ordinance. I am aware that representations of the nature indicated by the hon. Member have been made to the Governor. I, myself, have received several telegrams protesting against the enactment of this Ordinance and I have caused the senders to be informed that any petitions or representations submitted within a reasonable time will receive careful consideration before I deside on my advice to His Majesty in respect of the Ordinance. I have not yet received any detailed representations. The Bill was passed in the Gold Coast Legislative Council by a majority of 19 to 9; none of the African members of the Council voted in favour of it.

  AVIATION.

    AIR-MAIL SERVICES.
    Captain CUNNINGHAM - REIDasked the Under-Secretary of State for Air what air-mail services between British Dominions and Colonies are at present carried either wholly or in part over foreign air lines?
    The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon): I regret that precise information is not available in regard to the extent to which air mails are carried between British Dominions and Colonies over foreign air lines. In some instances only a foreign air service exists, for example in the West Indies; in others, a British air service is also available, for instance between India and Malaya, through Burma.

    NIGHT SERVICES.
    Mr. SIMMONDSasked the Under-Secretary of State for Air if, in view of the fact that over 40 regular night air services are in operation in Germany each week and none by British aircraft in this country, he will take steps to inaugurate
    1748
    British night air services in and from the British Isles?
    Sir P. SASSOON: I would refer my hon. Friend to the reply given him on Monday last, in which I stated that there are seven German night air services, and that a considerable amount of night flying is carried out on our Imperial Air routes. As regards purely internal night services in this country, this is primarily a matter for the operating companies, and the fact that they have no so far developed such services is no doubt for the reasons already given.
    Mr. SIMMONDS: Is it not a fact that we are virtually giving a monopoly in experience in night flying to Germany; and does not my hon. Friend realise that it is placing this country in a very serious position as far as its effects are concerned?
    Sir P. SASSOON: I think it must depend on the demand.

    ACCIDENTS (INVESTIGATION).
    Mr. SIMMONDS (for Mr. TEMPLE MORRIS)asked the Under-Secretary of State for Air whether, in the case of an air disaster such as the one which happened to the French aeroplane last Wednesday, the British authorities make any investigation as to its causes, especially in view of the fact that this aeroplane was running on the normal cross-Channel service by which so many British passengers travel?
    Sir P. SASSOON: No, Sir; so far as foreign aircraft are concerned the Air Ministry is empowered to arrange such investigation only if the accident occurs in or over the British Islands.
    Mr. SIMMONDS: Does not the right hon. Gentleman think that it would be much preferable if, when British air services are available, British subjects should utilise them rather than foreign services?
    Sir P. SASSOON: I quite agree.

  PALESTINE (WOMEN'S PRISON, BETHLEHEM).
  Sir GEORGE GILLETTasked the Secretary of State for the Colonies whether his attention has been called to the overcrowded condition and the lack

  1749
  of suitable accommodation in the women's prison at Bethlehem, in Palestine, so that there are cases of women suffering from insanity living alongside the other prisoners, whom they disturb night and day with their cries; and whether he will take steps to remedy this?
  Sir P. CUNLIFFE-LISTER: I have no detailed information regarding the conditions that exist in this prison. I will bring the question to the notice of the Government of Palestine : but as they have made provision in the Estimates for the current year for additional accommodation for female prisoners, I have no doubt that they are taking steps to the end suggested by my hon. Friend.

  ROYAL AIR FORCE.

    ARMAMENT.
    Sir CHARLES CAYZERasked the Under-Secretary of State for Air whether the attention of the Air Ministry has been called to the new single-seater interceptor fighter, armed with a repeating gun firing an explosive shell, which has been produced in France; and whether, in view of the potential value of such a machine against bombing attacks, it is the intention of the Air Ministry at once to equip certain squadrons of the Royal Air Force with similar machines?
    Sir P. SASSOON: The answer to the first part of the question is in the affirmative. As regards the second part, my hon. Friend will appreciate that it would not be in the public interest to disclose details of the Air Ministry's policy in regard to the armament of the Royal Air Force, but I can assure him that the development of the gun in question is being carefully watched.

    AIR COUNCIL MEMBERS AND SENIOR OFFICERS (FLYING EXPERIENCE).
    Mr. WHITESIDEasked the Under-Secretary of State for Air whether he is aware that there is serious doubt as to the practical flying experience of service members of the Air Council; and whether he could state approximately the number of hours flown by each of the four service members during the past three years?
    Sir P. SASSOON: All three service members of the Air Council have in fact done a large amount of flying during the
    1750
    past three years when opportunity has offered in the course of tours of inspection, etc., without interference with their normal duties. In view, however, of the apparent misconception underlying this question, my Noble Friend desires to make it quite clear that such flying is in no sense obligatory upon them, and he has no intention of making it so.
    Mr. WHITESIDEasked the Under-Secretary of State for Air whether he is aware that officers above the rank of wing-commander are not required to keep any record of their flying hours either as pilots or passengers; and whether, in order to ascertain that the practical flying experience of senior officers in the Royal Air Force is not less than that of senior officers in the Air Forces of the United States of America, Belgium, Italy, and Australia, he will consider having such records kept?
    Sir P. SASSOON: A record is kept of the amount of flying performed by all officers of the general duties branch of the Royal Air Force up to and including the rank of group captain. My Noble Friend does not consider it necessary to institute a similar record in the case of air officers.
    Mr. WHITESIDE: As a log of every flight made by a machine is kept, giving the name of the pilot, is there any reason why this information should not be extracted?
    Sir P. SASSOON: My Noble Friend is perfectly satisfied about it.

  TRANSPORT.

    ROADS (RUBBER SURFACE).
    Captain CUNNINGHAM - REIDasked the Minister of Transport if he is aware of the experiments undertaken by the municipality of Singapore in the use of rubber surfaces for street paving; and, if not, whether he will inform himself of the results of these experiments and the degree of their applicability to British road conditions?
    The MINISTER of TRANSPORT (Mr. Oliver Stanley): I am aware of the experimental work on rubber paving carried out in Singapore and my technical officers keep in mind the possibility of its application to road conditions in this country.
    Mr. PIKE: Is it not a fact that this process is also being tried in certain areas of Yorkshire; and has the Minister any report as to its utility and value as a road surface?
    Mr. STANLEY: Perhaps the hon. Member would put that question down.

    ROAD SERVICE LICENCES.
    Mr. GUYasked the Minister of Transport if the present policy of his Department with reference to the operation of Section 72 of the Road Traffic Act, 1930, remains the same as expressed in the general directions issued by him to the traffic commissioners on 5th December, 1931; and if he still requires compliance by the traffic commissioners with those directions?
    Mr. STANLEY: The General Directions issued on 4th December, 1931, under Section 63 (1) of the Road Traffic Act. 1930, are still in force, and I do not doubt that the Commissioners give due weight to them when considering application" for road service licences and backings.

    TRAFFIC CONGESTION, PICCADILLY.
    Rear - Admiral Sir MURRAY SUETERasked the Minister of Transport whether he will take steps to reduce the public danger and inconvenience caused by the congestion of north and south vehicular traffic passing from Berkeley Street through Piccadilly to St. James's Street; and will he in the meantime forbid vehicles to remain stationary near the pavement at the hotels between Berkeley Street and Arlington Street except for such time as is needed for taking up or putting down passengers?
    Mr. STANLEY: I am asking the London and Home Counties Traffic Advisory Committee to consider whether any further measures can be taken to reduce the congestion of traffic in this locality.

  REGENT'S PARK.
  Lieut.-Colonel MOOREasked the Minister of Agriculture whether, in pursuance of the policy of abolishing, as far as possible, enclosures in the Royal parks, as instanced by the garden of St. John's Lodge, Regent's Park, he will restore to Regent's Park part of the gardens taken from the park near Clarence Gate and
  1752
  fenced off for making gardens to Bedford College?
  Captain Sir GEORGE BOWYER: I have been asked to reply. As indicated in the answer given by my right hon. Friend on Monday last to a question by my hon. and gallant Friend the Member for Hertford (Sir M. Sueter), no area was taken in from Regent's Park for the purposes of Bedford College.

  SHELL-FISH.
  Sir M. SUETERasked the Minister of Health whether his attention has been drawn to a recent case before the King's Bench Division, in which evidence was given that typhoid fever had been contracted as a result of eating oysters; and will he cause an inquiry to be made as to why the precautions taken under regulations of public authorities to prevent contamination in shell-fish were ineffective in the case referred to?
  The MINISTER of HEALTH (Sir Hilton Young): My attention has been drawn to the case referred to by my hon. and gallant Friend but, as he is no doubt aware, it was subsequently decided that the oysters as supplied by the Fishing Company were not shown to be contaminated. I am, however, communicating with the local authority concerned in the matter.

  HOUSING.

    CEMENT COMPOSITION BRICKS.
    Mr. WHITESIDEasked the Minister of Health whether the information at his disposal shows that the use of the recently invented special cement composition bricks would materially affect building costs; and, if so, whether he proposes to make any alteration in the subsidy grant to local authorities'?
    Sir H. YOUNG: No, Sir. I should explain that the bricks to which my hon. Friend appears to refer have not yet been manufactured in this country.

    SLUM CLEARANCE, FINSBURY.
    Sir G. GILLETTasked the Minister of Health when it is proposed to hold the inquiry into the Northampton Road area, Finsbury; and whether he is aware that the housing plans of the Finsbury Borough Council are being held up pending a decision on this question?
    Sir H. YOUNG: I am awaiting the submission of Orders by the London County Council in respect of this area. As soon as possible after the Orders have been received the inquiry will be directed.

  PUBLIC ASSISTANCE (MEDICAL SERVICES).
  Mr. T. SMITHasked the Minister of Health if he can give an estimate of the additional expenditure incurred by public assistance committees in England and Wales for the provision of medical services and treatment, including maternity services, to unemployed persons who have ceased to be eligible for medical benefits under the National Health Insurance Acts?
  Sir H. YOUNG: No, Sir. No figures are available enabling me to frame such an estimate.

  INSTITUTIONS (MEAT SUPPLIES).
  Lieut.-Colonel ACLAND-TROYTEasked the Minister of Health whether his attention has been called to the report of the Kent county analyst on the nutritive qualities of imported and home-killed meat; and whether he will bring this report to the notice of any local authorities who do not supply home-killed meat in their institutions?
  Sir H. YOUNG: The answer to the first part of the question is in the affirmative. A circular has already been issued by my Department to local authorities urging them to make use, to the utmost extent practicable, of goods of home production.
  Lieut.-Colonel ACLAND - TROYTE: Does not this report show the great superiority of home-killed meat; and will my right hon. Friend bring it to the notice of the First Lord of the Admiralty and the Secretary of State for War?
  Mr. RHYS DAVIES: Can the Minister say whether there have been any favourable results, in consequence of the circular sent out to the local authorities?
  Sir H. YOUNG: I have no doubt the circular will serve the purpose of bringing this matter to the attention of local authorities.

  TRADE AND COMMERCE.

    BRITISH PROPAGANDA FILMS.
    Sir C. CAYZERasked the Secretary to the Overseas Trade Department whether, in view of the numbers of official films now being produced to show British cities and their enterprise, his Department is able to give any assistance in helping these films to be displayed in other countries?
    Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): Assistance in the display abroad of propaganda films, including those depicting British cities and their enterprise is given by the Travel and Industrial Development Association. This body has the support of my Department and of its overseas officers in utilising any opportunities which may occur for the display of suitable films.

    COTTON INDUSTRY.
    Sir NICHOLAS GRATTAN-DOYLE (for Mr. POTTER)asked the President of the Board of Trade whether he will request the Manchester chamber of commerce to inspect the Lancashire mills before he takes further steps to protect the Lancashire cotton industry against foreign competition and report to him on the present equipment of British mills for spinning coarse and medium counts, with special reference to their capacity to compete with any of the foreign mills erected since 1919?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): I have no reason to suppose that the equipment of the Lancashire cotton spinning industry is not receiving adequate consideration by those concerned and I do not think I could properly suggest an inquiry by the Manchester Chamber of Commerce.

  BROADCASTING (CENSORSHIP).
  Mr. HALESasked the Postmaster-General if he will use his powers under the charter and licence to ensure that in talks broadcast by the British Broadcasting Corporation no bad language shall be used in future that may cause offence to listeners?
  The ASSISTANT POSTMASTER -GENERAL (Sir Ernest Bennett): The responsibility for deciding on the nature of the language used in broadcast talks

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  rests with the British Broadcasting Corporation, and my right hon. Friend does not propose to interfere with the Governors' discretion in this matter.
  Mr. HALES: Considering the many protests against the use of a certain word on a recent occasion—[HON. MEMBERS : "What is the word?"] Unfortunately, it is not a Parliamentary expression. In view of those protests, will the hon. Gentleman see that in future supervision is exercised over the language used in these widespread broadcasts?
  Mr. BURNETT: Would it not be possible to arrange for a list of forbidden expletives to be posted in the studio?
  Mr. LAWSON: As most of us, being tied to the House, did not hear this broadcast, will the hon. Gentleman tell us the word to which objection is taken?
  Captain CUNNINGHAM-REID: Is it not the case that the British Broadcasting Corporation should be congratulated on the fact that, over a very long period, this is the first occasion on which any such criticism could be made?

  POST OFFICE.

    TELEGRAPH SERVICE (INDIA).
    Mr. HALESasked the Postmaster-General what loss in revenue has taken place since the doubling of the charges for daily letter telegrams and the abolition of the weekly letter telegrams between England and India; and, having regard to the inconvenience to the mercantile community caused thereby, if he will take steps to restore at an early date the facilities previously existing between the two countries?
    Sir E. BENNETT: The telegraph service with India is conducted by a telegraph company and not by the Post Office. I am, however, making inquiry of the company concerned, and I will communicate with my hon. Friend as soon as I receive their reply.

    FACILITIES, MORDEN.
    Mr. HICKSasked the Postmaster-General if, in view of the rapid development of Morden and Merton Park, he is now prepared to provide adequate postal facilities in the shopping centre of London Road, Morden, in response to
    1756
    representations on the part of the urban district council and other associations in the area?
    Sir E. BENNETT: The provision of a Crown office to serve the Morden shopping centre has already been authorised and the office will be opened as soon as premises are available.

  BRITISH ARMY.

    TROOPSHIP "DORSETSHIRE."
    Mr. CADOGANasked the Financial Secretary to the War Office how many men the troopship "Dorsetshire" carried in the month of February on its journey from Southampton to Basra; whether they were all embarked before the inspection of the Board of Trade; how many men this vessel is constructed to carry as a troopship; what was the maximum number of men conveyed between each port on this voyage; and how many men the lifeboats of the "Dorsetshire" are capable of accommodating?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): As the answer involves a number of figures, I will with my hon. Friend's permission circulate it in the OFFICIAL REPORT.
    Following is the answer :
    The Board of Trade inspection was carried out before and after embarkation at Southampton. The transport is constructed to carry 1,404 troops, and the Board of Trade regulations permit the embarkation of 1 per cent. in excess of this number. The maximum number of troops carried between the ports was :

    Southampton to Egypt

    1,383

    Egypt to Port Sudan

    1,407

    Port Sudan to Aden

    1,322

    Aden to Basra

    1,311

    Lifeboats were provided for 1,943 passengers and crew, as against the Board of Trade's requirement of 1,874. In addition there was provision for 484 on rafts and buoyancy apparatus.

    TERRITORIAL ARMY (TRAINING PAY).
    Mr. McKIEasked the Financial Secretary to the War Office if he is willing to restore the cuts to the Territorial battalions undertaking their annual training before 1st July, so that

    1757
    they may be placed in the same position as those battalions training later in the year?
    Mr. COOPER: I would refer my hon. Friend to the answer given to the hon. Member for Argyll (Mr. Macquisten) on the 1st May, to which I have nothing to add.

  JUSTICES OF THE PEACE (APPOINTMENTS).
  Sir PARK GOFFasked the Attorney-General upon what principle selection is made from among the names submitted by advisory committees through the lord lieutenant of a county for appointments to the commission of the peace; and whether these appointments are made at regular intervals or as vacancies occur?
  The ATTORNEY-GENERAL (Sir Thomas Inskip): I would refer my hon. and learned Friend to the Report of the Royal Commission on the Selection of Justices of the Peace presided over by the late Lord James of Hereford and in particular to the reference to the evil of overladen Commissions of the Peace referred to in this Report. Advisory Committees recommend appointments at such time as they consider additional appointments to be necessary, and in considering these recommendations my Noble Friend the Lord Chancellor acts in accordance with the principles of this Report.
  Captain, CROOKSHANK: Can anything be done to remove from the Commission those who, owing to age and/or infirmity are unable to sit?
  Mr. HOLFORD KNIGHT: Has any attention been given in recent years to the composition of these advisory committees?
  The ATTORNEY-GENERAL: Frequent attention is given to that question by my Noble Friend, and he takes the opportunity from time to time of altering the composition of the committees. In reference to the question of my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank), the difficulty is one which is always in the mind of my Noble Friend, and from time to time, with the assent of those who realise what age and infirmity mean, their names are removed.

  SCOTLAND (STROND-BORRISDALE ROAD).
  Mr. THOMAS RAMSAYasked the Secretary of State for Scotland if he is aware that the construction of the Strond-Borrisdale road at a cost of £5,500 was part of a memorandum put before the Scottish Office and the Ministry of Transport by the county council of Inverness-shire on 16th April; that a man suffering from peritonitis died when being transported along the footpath serving these townships; and that men were hurriedly called away on 11th May from the graveyard, leaving the dead unburied, to carry a maternity case in labour from Strond to Rodel in order to get transport by road to the hospital at Stornoway, 60 miles distant, and that the baby was still-born; and will he state when he proposes to get the said road constructed?
  The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): The answer to the first part of the question is in the affirmative. As regard the second and third parts the only information which my right hon. Friend has, received is a telegram drawing his attention to the maternity case referred to, and he has called for a report on the subject. As regards the last part, my right hon. Friend explained to the deputation which he received on the 16th April that the initiative in the matter of providing the road in question rests with the county council. Any application which the council may make for assistance will receive careful consideration.

  KELLOGG PACT.
  Mr. BERNAYSasked the Prime Minister whether he will consider the advisability of summoning an Imperial conference to discuss ways and means of implementing the Kellogg pact for the outlawry of war?
  The PRIME MINISTER: I have noted my hon. Friend's suggestion which, I gather, is based on correspondence which recently appeared in the Press. As he is, of course, aware, both the date for an Imperial conference and the subject to be considered are matters for arrangement between all the Governments concerned.

  FASCISTS' MEETING, NEWCASTLE (DISTURBANCE).
  Mr. LAWSONasked the Secretary of State for the Home Department whether he has caused inquiries to be made into the disturbance of the peace in Newcastle on Sunday last, consequent upon a meeting of Fascists; whether he has any statement to make; and whether this House may expect an early decision as to the action to be taken with respect to the dangers arising from the wearing of political uniforms?
  The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I have obtained a report from the Chief Constable of Newcastle-upon-Tyne regarding the Fascist meeting held in that city on the 13th instant. The meeting was to have been addressed by Mr. John Beckett, former Member for Gateshead, who arrived accompanied by two members of the British Union of Fascists in uniform. The crowd was hostile and refused to allow him to speak, and he accepted the advice of the police to close the meeting owing to the threatening nature of the audience. The termination of the meeting appeared to be the signal for general disorder. The Fascists were escorted back to their headquarters by foot and mounted police. During this journey a number of stones were thrown, and the difficulties of the police were increased by the presence of a number of women and young boys. Later on, a party of about 30 men came out of the Fascist Headquarters, and there was another scrimmage during which stones were thrown. Two Fascists were arrested and are now on bail awaiting trial on charges of fighting and assaulting the police and civilians. As regards the last part of the question, I am not in a position to add anything to my recent answers on this subject.
  Mr. LAWSON: Is it not time the local police had some help from the Home Office in respect of a matter of this kind; has the right hon. Gentleman noted the experience of Denmark with regard to political uniforms; and will he not come to a decision at an early date?
  Sir J. GILMOUR: I am not aware that the police require further assistance. No requests of that kind have been made to me.
  Captain PETER MACDONALD: Would not the mounted police be better employed than trying to protect the lives of Fascists?
  Mr. LAWSON: Has the right hon. Gentleman noted the experience of Denmark with regard to political uniforms, which have been very effective; and cannot he help the local police by coming to a decision on this matter?
  Sir J. GILMOUR: I have repeatedly said that this matter is under the consideration of the Government, and I am not in a position to add anything further.
  Mr. LAWSON: When can we have a statement on the matter?
  Sir J. GILMOUR: I really cannot say.
  Mr. RHYS DAVIES: In view of the increasing number of these disturbances all over the country, will not the right hon. Gentleman hasten a decision of the Home Office on this serious problem?
  Mr. BERNAYS: Will the right hon. Gentleman bear in mind, from the example of foreign countries, the dangers of delay in dealing with this movement?
  Mr. THORNE: Is not the right hon. Gentleman aware that the man in question tried to pinch the Mace from this House for the purpose of melting it down?

  STREET EXPLOSIONS, LONDON.
  Mr. THORNEasked the Home Secretary if he has received a report as to the cause of the several street explosions that occurred on Sunday afternoon, 13th May, in Fleet Street, London?
  Sir J. GILMOUR: I have not received any report in regard to the circumstances of this accident; but inquiry in the matter will be made in consultation with any other Departments concerned.

  UNITED STATES (BRITISH DEBT).
  Mr. MANDERasked the Chancellor of the Exchequer if he will take an early opportunity to make clear to the Government of the United States, in the general interests of world prosperity, that it will not be desirable or practicable in any foreseeable future to make a payment in respect of the American Debt in excess of the recent token payments?
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): I cannot at present add anything to the reply which was given to my hon. Friend the Member for Southampton (Mr. Craven-Ellis) and my right hon. Friend the Member for South Molton (Mr. Lambert) yesterday.
  Mr. MANDER: Can the hon. Gentleman say when a statement will be made in regard to a decision?
  Mr. HORE-BELISHA: Yes, Sir, on an appropriate occasion.
  Mr. MANDER: Will the hon. Gentleman be a little more definite than that? Will it be before the Adjournment on Friday?
  Colonel WEDGWOOD: Is it a fact that it will be "in the general interests of world prosperity "that we should pay our debts?

  IRISH FREE STATE CATTLE (IMPORT DUTIES).
  Mr. ANSTRUTHER-GRAYasked the Financial Secretary to the Treasury whether the Royal Ulster Constabulary are instructed to assist the customs authorities in the prevention of cattle smuggling into Northern Ireland?
  Mr. HORE-BELISHA: Yes, Sir. By arrangement between the Imperial Government and the Government of Northern Ireland, patrols of Royal Ulster Constabulary assist in the customs work on the land boundary.

  INDIA (CONSTITUTIONAL REFORM).
  Lieut.-Commander AGNEW (for Major-General Sir ALFRED KNOX)asked the Secretary of State for India how many Indian princes have already expressed their willingness to enter the federation; and whether any decision has yet been arrived at regarding the representation of those States whose rulers may refuse to enter the federation?
  The UNDER-SECRETARY of STATE for INDIA (Mr. Butler): As regards the first part of the question, I would refer my hon. and gallant Friend to the answers given to questions by my hon. Friend the Member for West Islington
  1762
  (Mr. Donner) and by himself on the 26th June last. My hon. and gallant Friend will recognise that the occasion for definite decisions by individual princes to enter the federation cannot arise until after the passage of legislation providing for a federation. If I understand the second part of the question rightly, it refers to the suggestion that weightage should be given to the representation of acceding States in respect of States which do not accede to the federation. This is a question falling within the terms of reference of the Joint Select Committee.

  UNEMPLOYMENT (CONTRIBUTIONS AND BENEFITS).
  Mr. V. ADAMSasked the Minister of Labour what date it is anticipated that the Statutory Advisory Committee will recommend any revision of the rates of benefits and allowances to the unemployed or of contributions to the Unemployment Fund?
  The MINISTER of LABOUR (Sir Henry Betterton): I regret that I am unable to make any such forecast as that desired by my hon. Friend.

  CANADA (REFUNDING LOANS).
  Sir N. GRATTAN-DOYLE (for Mr. POTTER)asked the Secretary of State for Dominion Affairs whether his attention has been called to the desire of the Canadian provincial governments, as expressed to the Federal Government, to raise refunding loans here subject to Treasury consent; and will he, in view of the recent misunderstandings about earlier loans raised here which rest on the finances of the city of Montreal and of British Columbia, suggest to the Dominion authorities that, when the assistance of United Kingdom private investors is again invited, the Dominion Government itself should be responsible for any refunding loans raised here and re-lend the proceeds to the provincial governments and municipalities?
  The SECRETARY of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas): I have read the Press reports of the statement on this subject made recently by the Prime Minister of Canada. I will bring the hon. Member's

  1763
  suggestion to the attention of my right hon. Friend the Chancellor of the Exchequer.

  NORTHERN IRELAND (MILK INDUSTRY).
  Mr. D. D. REID (by Private Notice)asked the Home Secretary whether he can make any statement as to the possibility of similar measures being taken in Northern Ireland to those contemplated in the statement of milk policy made by the Minister of Agriculture and Fisheries on 22nd February?
  Sir J. GILMOUR: It is the intention of the Government of Northern Ireland to take measures broadly similar to those contemplated in the statement of milk policy made by my right hon. Friend the Minister of Agriculture and Fisheries on 22nd February. It has now been decided that in the Bill to be introduced in
  this House to give statutory sanction to the financial arrangements involved in these proposals, provision will be made for a sum not exceeding £200,000 this year to assist the milk industry in Northern Ireland.

  NEW MEMBER SWORN.
  Benjamin Walter Gardner, esquire, for the Borough of West Ham (Upton Division).

BUSINESS OF THE HOUSE.
Motion made, and Question put,
"That the Proceedings on Consideration of the Lords Amendments to the Water Supplies (Exceptional Shortage Orders) Bill he exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]
The House divided : Ayes, 208; Noes, 36.

Division No. 256]

AYES.

[3.24 p.m.

Acland-Troyte, Lieut.-Colonel

Culverwell, Cyril Tom

Hunter, Dr. Joseph (Dumfries)

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

Curry, A. C.

Hurst, Sir Gerald B.

Agnew, Lieut.-Com. P. G.

Dickie, John P.

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

Allen, Sir J. Sandeman (Liverp'l, W.)

Duckworth, George A. V.

James, Wing-Com. A. W. H.

Allen, Lt.-Col. Sir William (Armagh)

Dugdale, Captain Thomas Lionel

Jesson, Major Thomas E.

Anstruther-Gray, W. J.

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

Joel, Dudley J. Barnato

Apsley, Lord

Dunglass, Lord

Jones, Henry Haydn (Merioneth)

Attar, Viscountess (Plymouth, Sutton)

Emmott, Charles E. G. C.

Jones, Lewis (Swansea, West)

Baillie, Sir Adrian W. M.

Erskine, Lord (Weston-super-Mare)

Ker, J. Campbell

Baldwin, Rt. Hon. Stanley

Evans, David Owen (Cardigan)

Kerr, Hamilton W.

Banks, Sir Reginald Mitchell

Everard, W. Lindsay

Knight, Holford

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

Foot, Isaac (Cornwall, Bodmin)

Lamb, Sir Joseph Quinton

Beaumont. Hon. R. E. B. (Portsm'th. C.)

Fremantle, Sir Francis

Lambert, Rt. Hon. George

Bennett, Capt. Sir Ernest Nathaniel

Gillett, Sir George Masterman

Law Sir Alfred

Bernays, Robert

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

Leech, Dr. J. W.

Betterton, Rt. Hon. Sir Henry B.

Gledhill, Gilbert

Leighton, Major B. E. P.

Blaker, Sir Reginald

Glossop, C. W. H.

Lennox-Boyd, A. T.

Blindell, James

Gluckstein, Louis Halle

Levy, Thomas

Boulton, W. W.

Glyn, Major Sir Ralph G. C.

Lewis, Oswald

Bowyer, Capt. Sir George E. W.

Goff, Sir Park

Llddall, Walter S.

Bralthwalte, J. G. (Hillsborough)

Goodman, Colonel Albert W.

Lindsay. Noel Ker

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

Gower, Sir Robert

Lister, Rt. Hon. Sir Philip Cunliffe-

Brown, Ernest (Leith)

Granville, Edgar

Lloyd, Geoffrey

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

Grattan-Doyle, Sir Nicholas

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

Buchan-Hepburn, P. G. T.

Grimston, R. V.

Locker-Lampson, Com. O. (H'ndsw'th)

Burgin, Dr. Edward Leslie

Guinness, Thomas L. E. B.

Loder, Captain J. de Vera

Burnett, John George

Gunston, Captain D. W.

Loftus, Pierce C.

Butler, Richard Austen

Guy, J. C. Morrison

Mabane, William

Cadogan, Hon. Edward

Hacking, Rt. Hon. Douglas H.

MacAndrew, Lieut.-Col. C. G. (Partick)

Caporn, Arthur Cecil

Hales, Harold K.

MacAndrew, Capt. J. O. (Ayr)

Carver, Major William H.

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

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

Cayzer, Sir Charles (Chester, City)

Harris, Sir Percy

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

Cazalet, Thelma (Islington, E.)

Hartington, Marquess of

McEwen, Captain J. H. F.

Cazalet, Capt. V. A. (Chippenham)

Hartland, George A.

McKle, John Hamilton

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

Harvey, George (Lambeth, Kenn'gt'n)

Maclay, Hon. Joseph Paton

Chamberlain, Rt. Hon. N. (Edgbaston)

Harvey, Major S. E. (Devon, Totnes)

McLean, Major Sir Alan

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

Headlam, Lieut.-Col. Cuthbert M.

Magnay, Thomas

Chapman, Sir Samuel (Edinburgh, S.)

Hellgers, Captain F. F. A.

Makins, Brigadier-General Ernest

Cobb, Sir Cyril

Henderson, Sir Vivian L. (Chelmsford)

Malialleu, Edward Lancelot

Colville, Lieut.-Colonel J.

Heneage, Lieut.-Colonel Arthur P.

Margesson, Capt. Rt. Hon. H. D. R.

Cook, Thomas A.

Holdsworth, Herbert

Marsden, Commander Arthur

Cooper, A. Duff

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

Martin, Thomas B.

Cranborne, Viscount

Hore-Bellsha, Leslie

Mason, David M. (Edinburgh, E.)

Crooke, J. Smedley

Horsbrugh, Florence

Mayhew, Lieut.-Colonel John

Crookshank, Col. C. de Windt (Bootle)

Howltt, Dr. Alfred B.

Mitchell, Sir W. Lane (Streatham)

Crookshank, Capt. H. C. (Galnsb'ro)

Hudson, Capt. A. U. M. (Hackney N.)

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

Cruddas, Lieut.-Colonel Bernard

Hume, Sir George Hopwood

Moreing, Adrian C.

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

Ross Taylor, Walter (Woodbridge)

Sugden, Sir Wilfrid Hart

Morrison, G. A. (Scottish Univor'tles)

Runge, Norah Cecil

Thomas, Rt. Hon. J. H. (Derby)

Moss, Captain H. J.

Russell, Alexander West (Tynemouth)

Thomas, James P. L. (Hereford)

Nation, Brigadier-General J. J. H.

Rutherford, John (Edmonton)

Titchfield, Major the Marquess of

Nicholson, Godfrey (Morpeth)

Samuel, Sir Arthur Michael (F'nham)

Tufnell, Lieut.-Commander R. L.

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

Sandeman, Sir A. N. Stewart

Turton, Robert Hugh

North, Edward T.

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

Ward, Lt.-Cot. Sir A. L. (Hull)

Nunn, William

Savery, Samuel Servington

Ward, Irene Mary Bewick (Wallsend)

Oman, Sir Charles William C.

Shaw, Helen B. (Lanark, Bothwell)

Warrender, Sir Victor A. G.

Palmer, Francis Noel

Slmmonds, Oliver Edwin

Waterhouse, Captain Charles

Peat, Charles U.

Simon, Rt. Hon. Sir John

Wayland, Sir William A.

Petherick, M.

Skelton, Archibald Noel

Wedderburn, Henry James Scrymgeour

Peto, Sir Basil E. (Devon, Barnstaple)

Smiles, Lieut.-Col. Sir Walter D.

Whiteside, Borras Noel H.

Pike, Cecil F.

Somervell, Sir Donald

Williams, Charles (Devon, Torquay)

Power, Sir John Cecil

Southby, Commander Archibald R. J.

Wills, Wilfrid D.

Ramsay, Alexander (W. Bramwich)

Spears, Brigadier-General Edward L.

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

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

Spencer, Captain Richard A

Winterton, Rt. Hon. Earl

Reed, Arthur C. (Exeter)

Spender-Clay, Rt. Hon. Herbert H.

Womersley, Walter James

Reid, Capt. A. Cunningham-

Stanley, Rt. Hon. Lord (Fylde)

Wood, Sir Murdoch McKenzie (Banff)

Reid, David D. (County Down)

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

Worthington, Dr. John V.

Reid, James S. C. (Stirling)

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

Remer, John R.

Storey, Samuel

TELLERS FOR THE AYES.—

Rlckards, George William

Stuart, Lord C. Crichton-

Sir Frederick Thomson and Sir George Penny.

Roberts, Aled (Wrexham)

Sueter, Rear-Admiral Sir Murray F.

NOES.

Adams, D. M. (Poplar, South)

Gardner, Benjamin Walter

McEntee, Valentine L.

Attlee, Clement Richard

George, Megan A. Lloyd (Anglesea)

Maclean, Nell (Glasgow, Govan)

Banfield, John William

Grenfell, David Rees (Glamorgan)

Mainwaring, William Henry

Batey, Joseph

Groves, Thomas E.

Mander, Geoffrey le M.

Bevan, Aneurin (Ebbw Vale)

Hall, George H. (Merthyr Tydvil)

Smith, Tom (Normanton)

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

Hicks, Ernest George

Thorne, William James

Buchanan, George

Jenkins, Sir William

Tinker, John Joseph

Cocks, Frederick Seymour

Kirkwood, David

Wedgwood, Rt. Hon. Josiah

Cripps, Sir Stafford

Lawson, John James

West, F. R.

Dagger, George

Leonard, William

Wilmot, John

Davies, David L. (Pontypridd)

Llewellyn-Jones, Frederick

Davies, Rhys John (Westhoughton)

Logan, David Gilbert

TELLERS FOR THE NOES.

Edwards, Charles

Macdonald, Gordon (Ince)

Mr. John and Mr. D. Graham.

WEARING OF UNIFORMS.
Commander OLIVER LOCKER -LAMPSON: I beg to move,
"That leave be given to bring in a Bill to prohibit the wearing of uniforms for political purposes."
It is imperative at the outset that one point should be made clear. There is no wish on my part to prevent the followers of any party from wearing distinctive emblems. Let people continue to wear distinctive button-holes, badges, ties and even noticeable shirts. Nor is there any wish to prevent non-partisan bodies like the Salvation Army or the Boy Scouts from continuing their admirable work in recognisable dress. Let individuals and organisations continue to wear distinctive emblems or dress which mark them off non-provocatively. This is the point : do not let them so change and adapt their dress as to convert it from something civilian into something military in character. Hitherto nobody has worn uniform in this country with military intent except those who served the King in the three Services. Lovers of democracy must deprecate the departure from that most admirable tradition. They must resent the appearance in the
1766
streets and elsewhere of politicians who put on uniforms as part and parcel of their everyday life, and who, for this very reason, seem to wish to drop the old English weapon of persuasion for something else.
The appearance of the uniform in British public life must mean the gradual extinction of government by consent, and must lead to government by coercion. It is the new spirit of foreign force in our affairs which this Bill is meant to combat, whether the spirit is indicated in the international bleatings of the would-be Soviet dictator, the hon. and learned Member for East Bristol (Sir S. Cripps), or in the spurious nationalism of Sir Oswald Mosley. Both challenge the sanctity of society as constituted by Parliament, and the success of either means death to free discussion, free institutions and free life.
If it is thought that I exaggerate, may I give some facts. The most serious clashes recently between the authorities and public people have been owing to the presence at meetings and in the streets of ominous dusky figures in garish regimentals. There were 19 Fascists who

1767
broke the law under orders in Suffolk, and were arrested on a warrant, not by a Socialist magistrate, thank God, but by a Peer of the Realm. The only case in the annals of our law courts when a man has sued another for pouring an aperient down his throat was when an ex-Fascist brought an action for assault against his former friend. If those facts do not speak for themselves, may I quote two sentences from the speeches of the Fascist leader?
In a Debate with the hon. Member for Bridgeton (Mr. Maxton), Sir Oswald Mosley said that Fascism was
"a revolutionary creed facing a revolutionary position with a revolutionary proposal."
They were prepared to meet the situation, not with words of the hon. Member for Bridgeton, but with Fascist machine guns. In an interview in the Press on 30th June, 1933, Sir Oswald Mosley was asked : "Will you use force to obtain power?" "We shall use force," was the answer, "to confer on a Fascist Government the absolute power of action." The next question was, "Will you abolish Parliament?" The answer was, "We shall abolish Parliament as it exists to-day." The third question was, "Will you abolish the House of Lords?" The answer was, "Yes. It will be replaced"—not by Socialist ex-Ministers—"but by a national corporation of industry."
These quotations show the drift of recent events, and they show why Sir Oswald Mosley wants the uniform. Some people say that this is trivial. They say "Leave Mosley alone. He can never become even the castor-oil king of England." I would say this : Violence breeds violence, and, if you want to turn England into a Communist camp, encourage Mosley to arm and dress and to break the law. Mosley breeds Bolshevism at every step, and he does it on purpose. Let his opportunities of appearing heroic be limited by a Bill like mine. In defending himself last week, he did not attack living opponents; he selected a dead statesman for abuse. He actually taunted the Unionist party with going abroad for Lord Beaconsfield. If the people of England had to make a choice between those two men as leader, I know whom they would choose; and, if they had to decide which of them was the more
1768
English, I know on which side they would vote. They would choose the Hebrew dreamer, who might have had a foreign ancestry, but who was British to the core, whose speeches in this House were in English, and unforgettable English, in which he preached a political philosophy which will live as long as the English language is talked. Whom should we regard as the more English, Disraeli or Sir Oswald Mosley—Disraeli, whose triumphs were in free debate, or Sir Oswald Mosley, who has to dress up like a Continental dancing master, who masquerades as Mussolini with his dirty shirts, who has had to go to Italy for the name of his organisation, and to Ger-many for its bullying spirit? We do not want uniforms in English public life; we do not want even uniformity. We have something deeper, nobler, truer than uniforms, and that is unity. British unity beat German uniforms in the War, and I am going to prophesy that the union of all decent democratic hearts in this country will smash alien anarchy and tyranny and wrong.
Earl WINTERTON: So far as my hon. and gallant Friend's speech and proposal are a demonstration against either Fascism or Communism, I think that we in this House should all be in favour of it, probably without exception, but I oppose it on two grounds. One is that I cannot believe that it would be possible to produce a Bill that would be workable, and, alternatively, if the Bill did succeed, I think it would do good to the very institutions which my hon. and gallant Friend seeks to harm. Perhaps I ought to say that I have not the slightest bias towards Fascism. The Fascists have a strong branch in my constituency, and have been making active attacks on me, some of them of a personal nature. By the Rules of the House, I must put my arguments in rather a tabloid form, though the subject is of great importance, and is not easily susceptible to such treatment. Therefore, I must ask the indulgence of the House if my arguments are rather compressed.
In the first place, I should have supposed that in so far as there was provocation and menace to public order from the bodies that my hon. and gallant Friend has in view, it would arise from formed and disciplined bodies of persons marching through the streets. If this Bill, or any

1769
Bill, is going to prohibit that, the result will be that all trade union marches, all marches of unemployed, all marches on such days as the 12th of July, will have to be prohibited. I may say at once that I should suppose that public opinion would not be in favour of any such prohibition. I should have supposed, unlike my hon. and gallant Friend, that, to use a legal expression, conduct likely to lead to a breach of the peace arose in such cases not so much from what happens in the streets as from what happens at meetings themselves. I do not specify any particular party or group of people—it might equally apply to all parties—but it is a fact that in this country it frequently happens at political meetings that bodies of people go there for the purpose of interrupting the speaker, of threatening the speaker, and in some cases of actually using physical violence; and if subsequently in the street, largely as a result of that, free fights start, the police, while I make no charge against them, can hardly complain if that is so.
The police could, if they chose, under the ordinary law, quite apart from the election law, deal with this action, because any conduct, in a place to which the public have access, which is likely to lead to a breach of the peace, can be dealt with. The police in this matter have to make up their minds what they are going to do. I know what the answer would be—a typical piece of British illogicality. It would be said : "Oh, no; you do not want the police to interfere; it would be interfering with political liberty." As a matter of fact, however, far greater damage is done to political liberty by people shouting down speakers at meetings than is ever done by removing the people who are the cause. I do not want to say anything in the least appreciative of the British police or their value, but I confess that, when I remember an answer given by the Home Secretary in which he spoke of certain things increasing the difficulties of the police, I feel bound to point out that there is no country in the world where the police have an easier task in preserving order than in Great Britain. The British are the most law-abiding people in the world. If anybody wants to see difficulties in preserving public order, let him go to India, to France, or to many other countries that I could mention.
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I turn to my second objection—how on earth are you going to define a political uniform? My hon. and gallant Friend said he was not opposed to people wearing badges, brassards, and things of that kind; but, if you were to succeed in defining a political uniform, and prohibited people from wearing it, they would, of course, at once put on some large-sized brassard or badge which would have exactly the same effect. My hon. and gallant Friend proposes that people should not be permitted to wear coloured shirts. I do not want to make a joke at his expense, but he himself once belonged to a blue shirt organisation, and I take it that he does not want to prohibit the wearing of shirts, whether they are blue, or red, or black, or any other colour—that, in other words, he does not wish people to go about in singlets. He used, if I may say so, a most extraordinary term. He said, "Let the uniforms be made non-provocative." It would be quite impossible to define a political uniform for the purposes of this Bill. The "Times" has some extracts from foreign newspapers to-day showing the effect in foreign countries of carrying out a proposal like that in the Bill, and I must say that I do not think they lend much support to my hon. and gallant Friend's case. In any case, I deny absolutely that there is any resemblance between the conditions in countries like the Scandinavian countries, Belgium, Denmark or Holland, which are contiguous to Germany, and conditions in this country.
My third and last objection is that I am quite sure that, if this proposal were to be adopted, it would be the greatest possible aid and advertisement for Sir Oswald Mosley's movement. I cannot imagine anything better calculated than even the introduction of this Bill to have that effect. In the first place, I do not think it would be efficacious. In the second place, if it were, think what a cheap ready-made martyrdom it would provide. I do not know what the numbers are, but I understand that their organisers claim that they have 200,000 members—probably more. All those people will go about with a grievance. Ever since he started the movement, Sir Oswald Mosley has been attacking this House as an institution. He has said it is an old and decrepit body led by elderly

1771
men who have long ceased to be in touch with public opinion. If my hon. and gallant Friend succeeds, he will say, "this old grandmother of Parliaments, stirring in its sleep, has decided to bring in a Bill to stop my movement when for years it has been permitting Communists to attack the Union Jack, to shout down the national anthem and to insult our institutions."
Commander LOCKER-LAMPSON: Not in uniform.
Earl WINTERTON: My hon. and gallant Friend ought to watch the next Communist procession. In my opinion, Fascism or Communism in this country will only succeed, if it does—I do not believe it will—on its merits. It will only succeed if the parties represented in this House fail in leadership and in policy. My hon. and gallant Friend is allowing his mind to be far too much impressed by what is happening in foreign countries. With a chivalry which we all admire, he has constituted himself the special protector of many very distinguished German Jew emigrés. We all remember the picture that appeared of him last year, obviously feeling very strongly about the matter, with a gamekeeper in the background and a slightly embarrassed look on his face, armed with a shot gun. I can assure him that Bill Smith of England is a very different man from Gustav Schmidt of Germany. Bill Smith does not allow himself to be walked over by anyone in peace or in war. He will not vote for Sir Oswald Mosley because a lot of young blackshirted men tell him to do so. He will only vote for Sir Oswald Mosley, or Mr. Pollitt or Mr. Fenner Brockway if he thinks their policies are right. The mere fact of bringing in this Bill will have a bad effect abroad, and that is why I oppose it. It will lead people in foreign countries to think that this country is menaced by the sort of movements that are going on on the Continent. It is quite untrue. My hon. and gallant Friend, although he has not meant to do so, has done great service to Sir Oswald Mosley by the mere fact that he has brought the Bill in and by the advertisement that he has given him. Although it may be an unusual thing to do, I shall, even if no one else goes into
1772
the Lobby, oppose the introduction of the Bill. I think the dignity and common sense of the House will be best served by not allowing it to be brought in and by leaving to responsible Ministers the duty that rests upon them of maintaining law and order.
Question put, and negatived.

PERSONAL EXPLANATION.
Mr. MAGNAY: I crave the indulgence of the House on a matter which to me is of importance and requires a personal explanation. To my surprise, I discovered to-day that my name is one of four attached to an Amendment to the Finance Bill. I do not suppose that anyone who knows me would think that I would have anything to do with this omnibus Amendment running—or probably it will not run—on four uneven wheels. It is a non-starter and probably a non-runner, and I do not want to be associated with it. I appeal to whoever has made the mistake to say how it happened. In the House they know me well enough to know that I would not be associated with it, but in the country ill-informed parties might think that I had taken leave of my senses.
Sir ARCHIBALD SINCLAIR: I should like to express, on behalf of my hon. Friends and myself, our regret that the hon. Member's name appears on the Paper. I also regret that he is not going to support the Amendment. I have made some inquiries about it, and I understand that the name written down was that of my hon. Friend the Member for East Edinburgh (Mr. D. Mason).
Mr. SPEAKER: This is evidently a misprint.

MESSAGE FROM THE LORDS.
That they have agreed to,—
Registration of Births, Deaths, and Marriages (Scotland) (Amendment) Bill,
Ministry of Health Provisional Order (Blackburn) Bill,
Ministry of Health Provisional Order (Shipley) Bill, without Amendment.

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."
  3.57 p.m.
  Mr. DAVID GRENFELL: I beg to move to leave out from "That" to the end of the Question, and to add instead thereof :
  "this House, realising the hardships resulting from the operation of the National Economy Act, the drastic reductions in Income Tax family allowances, and the heavy burden of indirect taxation, is of opinion that those whose need is greatest have the prior claim to benefit from any prospective Budget surplus, and this House, therefore, declines to assent to the Second Reading of a Bill which, instead of restoring in full the cuts imposed upon the unemployed and those in receipt of lower incomes, intensifies the evils of mal-distribution of purchasing power by lightening the taxation upon the rich, and, in addition, makes a further concession to priviliged interests by the repeal of the Land Value Tax with the consequent abandonment of a fruitful source of revenue."
  I move this Amendment with no hesitation but with some embarrassment, because I am to oppose a Bill with which the House is not acquainted. The Amendment states in general terms the grounds of our opposition. The House will appreciate the difficulty in which I find myself in initiating a Debate on the first appearance of an important Government Measure. My responsibility is rather more onerous because I shall be making a speech against a Bill which has not been previously explained. But I shall do what I can to justify the terms of the Amendment and the opinion behind it. The Bill is the usual annual instrument by which the Government obtains its authority to impose taxation. It is to be added to the code already existing for the purpose, which it amends in the various particulars stated herein. Parliament has a very great responsibility in this matter and one would hesitate to criticise too closely a Bill of this kind were there not involved in it and in the policy underlying it a very vital difference of principle to which the Amendment refers. The House of Commons
  1782
  itself has a very great responsibility in the matter and Members of the House have their individual responsibility, too, which they must be prepared to sustain whether they are on that side or on this.
  On this occasion we are moving a general Amendment which is not likely to find agreement on the other side. It divides the House on party lines. Amendments on later stages of the Bill will probably find support among those who in ordinary matters support the Government. The Chancellor of the Exchequer explained in his Budget statement the main reasons which induced him to bring forward the Bill in this form. He came before the House with pride, pardonable in some respects, for the successful result, from his own standpoint, of recent Budgets of his. Indeed he has preened himself with evident satisfaction on the possession of a surplus and apparently looks forward to next year with the anticipation of an equal if not a greater surplus. He is, therefore, prepared to show in the Bill some measure of generosity. It is because that generosity is not directed in the best way that we criticise the Chancellor and his Bill this afternoon.
  We would like to examine, if possible, the general lines of policy upon which this House must be divided, upon which this House has more or less always been divided, and upon which this House, until there is some drastic change of a nature which has disturbed the hon. and gallant Gentleman who has just addressed the House, will be divided on Budgets and financial statements from time to time. The Amendment refers to our dissatisfaction, and I will refer to one or two points in the Amendment without wearying the House with a full recital. We recall the hardships resulting from the National Economy Act, the drastic reductions in Income Tax family allowances and the heavy burden of indirect taxation, and then, having referred in detail to a number of other points in the Bill, we say that it makes :
  "a further concession to privileged interests by the repeal of the Land Value Tax with the consequent abandonment of a fruitful source of revenue."
  It is because the Chancellor is too generous, too sympathetic in giving concessions to those who are already well off, that we bring forward this Amendment to-day. Perhaps I may be allowed

  1783
  to make a general reference to what appears to be the task which the Chancellor has to discharge in his office. He has the responsibility of raising a large sum of money from all classes of people in this country. The only people he has to tax, the only people he can approach are the 50,000,000 people who inhabit these islands. They are divided into a variety of employments, a variety of social grades and standing, and he has to endeavour, to the best of his ability, to impose a taxable responsibility upon each and everyone, and upon the aggregate, in accordance with their individual capacity and their capacity as a whole. Our national annual income is now estimated to be in the neighbourhood of £3,500,000,000, more or less. That national income is admittedly less than it was 10 or 12 years ago, when it was said to have reached the high figure of £4,000,000,000. It is derived from people engaged in thousands of kinds of occupations, men who work with their hands, men who draw incomes from professions of all kinds, and in the aggregate have command, year by year, of a sum not very far short of £4,000,000,000. It is said that the weekly wage-earners receive of that total less than one-half. At the present time it is estimated that the aggregate wages of all workers employed in weekly wage-earning occupations in this country run to a total of about £1,300,000,000.
  The Chancellor of the Exchequer has to gauge and to assess the taxpaying capacities of all these people, and there is no one in this country immune from the responsibility of making some contribution towards the annual Budget which the Chancellor brings before the House. This, too, should be noted, that while there has been a change in the method of presenting the annual statement, certain large sources of revenue—the Post Office, for example—produced by national services are now being left out. One will find, in going back year by year over the financial statements of the last 50 years, that there has not been an addition of 5 per cent. in the extreme range of collection from the people of this country. We have spent a rough average of £800,000,000 each year. It is slightly more, I think, on an average, than 20 per cent. of the national income. Chancellors of the Exchequer, one by one, have come
  1784
  before the House and, with Parliamentary sanction, have made demands upon the people of this country to the extent, on an average, of 20 per cent. of their income. It is true that certain fortunate classes and individuals have to pay very much more than 20 per cent. of their income, but when they have made their contribution they have very much more left than is left to those people who pay a smaller proportion of their wages and salaries.
  The Amendment complains that the Bill perpetuates the unfair incidence of indirect taxation, upon which there was certainly some improvement, and from which there was some departure, in the days when Lord Snowden was Chancellor of the Exchequer, and made some concessions. They appeared to be too generous in the view of some Members who sit on the opposite side of the House. On the whole, while the proportion of the nation's income year by year has remained almost stationary, there have been deviations in the incidence of the burden upon citizens; there have been changes in the allocation of the money. The burden of £800,000,000—now reduced to just over £700,000,000, because of the change in the method of presenting the financial statement—has to be collected from a variety of sources for our various national services. The Chancellor of the Exchequer, in his Budget speech, showed manifest satisfaction with the position, but said that we were not free from future difficulties, that we were now passing through a difficult period in world trade, upon which we depend so very largely and from which our income is so very largely derived. The wages of the ironworkers, the textile workers, and others, and those who have investments in foreign countries, depend very much indeed upon the maintenance of our trade with other parts of the world. The Chancellor said that the prospects for the resumption of foreign trade were not too bright, that obstacles had been thrown into trade channels which were not as easily accessible as they were. He said that that process of putting more obstacles in the way was going on.
  We may agree with the right hon. Gentleman that both he and all those responsible for the conduct of the financial

  1785
  affairs of this country have to share the embarrassment through which the world is passing. We complain that in this Bill the right hon. Gentleman is adding to those obstacles, that he and the Government he represents are carrying forward a policy which has a provocative effect upon the conduct of other nations, as expressed in this House on more than one or two occasions—a policy of retaliation where it is not a policy of initiation. We say that that is wrong. We do not believe that our country can develop alone; we do not believe that a Finance Bill which goes in the direction of placing further obstacles in the path of trade can be good for the nation. We all remember how often it used to be said in this House, "Make the foreigner pay." It was said that the foreigner would pay for any duties we imposed, and that it was not a matter of concern to us. Nobody talks in that silly way now. No one would dare get up on the other side of the House and say it today. Indeed, they are making themselves ridiculous by going to the other extreme. They now say, "We will ourselves take steps," and, in face of our financial difficulties, we are to raise prices and compel our people to make contributions towards the raising of prices in order that we may subsidise production in other countries.
  Part of that policy, of which there is here an instalment, and there have been other instalments in previous financial statements, is a policy to raise prices of commodities outside this country. We are adopting a policy of regulation, restriction and quotas in order that the price of goods outside this country may be made higher. We are putting on some of these duties not solely with the intention of raising revenue. The Chancellor of the Exchequer himself can be quoted in confirmation of it. It is not for the purpose of raising revenue, but for the purpose of assisting those who are producers in other parts of the world, at our expense, and in order that they may become prosperous and the wave of prosperity may wash back to us. There is no indication in this Bill that there is any departure from that policy, and there is no indication that there is anything which tends towards a return of general prosperity, the kind of general prosperity for which we all hope, which
  1786
  will give increased purchasing power to our people. That is the only national prosperity of which we can take note, or of which we approve, or which will have any chance of permanent advantage for the people of this country.
  Because the Bill does not help towards the increase of purchasing power, we move its rejection in the terms of the Amendment. Those are our general principles, and we believe that the Amendment does indicate a sounder line of policy. In the miscellaneous collection of proposals in the Bill, one finds duties, taxes, drawbacks, exemptions and reliefs, but all of them are a shifting of burdens from one shoulder to another, from the shoulder of one class to the shoulder of another class, from the shoulder of one set of individuals to the shoulder of another set of individuals. There is no radical—and I make no apology for using the word—no deeply conceived plan of national reconstruction, no fundamental policy for the improvement of our trade and our financial position. This Budget, far from being a constructive Budget, is one of destruction of the foreign trade of this country by the adding to the very formidable spread of obstacles in all parts of the world to which the right hon. Gentleman has referred.
  The financial statement does make concessions, and the right hon. Gentleman claims support in this House and outside for the concessions he has made, but he will be the first to admit that the Bill adds to the volume of indirect taxation. No one will claim that there is a reduction in the amount of indirect taxation. There is a reduction in the volume of direct taxation, but indirect taxes have been put on in a hundred different ways on all classes of people in this country. The people are not yet aware of the exact incidence. I doubt whether anybody, apart from the Chancellor himself, could say at this moment what is the exact amount of new import duties and the value, year by year, of those duties which have been imposed in this country in the last two years. Nobody knows exactly where the incidence bears, but the duties have to be paid. It is an undeniable fact that somebody pays them, and it is somebody inside this country and nobody outside. Lord Snowden, who was a very great favourite on the opposite side of the House not very long ago, in the Budget of 1931 made this

  1787
  statement. We sat with him then and cheered him as he made it. I well remember it. He was quoting Mr. Pitt, a revered name in this House, as follows :
  "There is a way in which you can tax the last rag from the back, and the last bite from the mouth, without causing a murmur against heavy taxation and that is by taxing a large number of articles in general use. The tax will pass into the price of the article. The people will grumble about high prices and hard times, but they will never know that the hard times are caused by heavy taxation."—[OFFICIAL REPORT, 27th April, 1931, col. 1403, Vol. 251.]
  I am afraid that politicians know least of all about these things. Our wives and those who go to market on our behalf know most about the effects of the Import Duties, and no one can question the fact that there are very few kinds of commodities upon which the general duty is not borne at the present time. An ever-growing number of commodities are bearing the additional duty, and we find that, slipped into this House by stealth after 11 o'clock at night, almost without giving Mr. Speaker time to adjourn the House, fresh Orders are being scheduled. Nobody knows how much taxation is being imposed upon the country by this means, but it has to be paid, and the cost has to be added to the price of the article. So we have additional taxation which is not seen but which is felt, and which cannot be assessed by the average person, but some day its total will stagger the people of this country when perhaps it will be too late to reverse the process. The concession which the right hon. Gentleman is making to the Income Tax payer undeniably goes into the pockets of the people who already are fairly comfortably off. The right hon. Gentleman will argue by a process of financial reasoning, which he finds easy to adopt but which we find exceedingly difficult to follow, that the person who has more money than he usually requires is to be given more at the fiat of the Chancellor of the Exchequer because by some abstruse, occult reasoning this money, which the person does not want, is going to flow back into industry and be of some service in that indirect way. We prefer the direct way, and that concessions should be made to those in need and to those who are prepared to spend the money in their own and in the national interest.
  This money business is almost getting beyond everybody in the world at the present time, I have made modest attempts to understand why money fluctuates in value from time to time. I have spent many hours trying to understand the Gold Standard and why we remained on it for so long when we should have gone off, and why there are some ominous signs that we have not definitely forsaken the idea that we should go back to the Gold Standard again. Nobody actually understands this money business. It is the problem of the age. It is not, as imputed in a recent Debate in this House, the individual's own property. I think it was the hon. and learned Member for Argyllshire (Mr. Macquisten) who said that a man can do what he likes with his own money. What fatuous nonsense this is. What is a person's own money? What individual person can give value to his own money? What gives value to money? It is the credit of the country as a whole which gives value to money. It is the relation of this country to other countries, the stock of products found on the markets all over the world, and the political conditions in this country and all over the world. If I hear a man speaking these days of his own money and saying that he can do as he likes with it, I blush for him. It is a pity that so much elementary school education is allowed to run waste in this country. The Chancellor of the Exchequer is dealing with this question as if individuals own their own money, and we must try and follow him on those grounds. The Government are showing much too tender a regard for those who claim to possess money in their own right and the people who are deemed to be well-to-do. It is because the Government, in this Bill as in previous Bills in years past, are adding to the riches of those who already possess large bank balances that we protest against this abuse of the national surplus for which the Chancellor of the Exchequer is responsible.
  In America they are very much concerned about money. One need only read the history of America in the last 12 months to dispose of the idea that money value is something which is fixed. It has a population of two and a-half times that of our own, and the finest industrial equipment the world has even known.

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  Nothing like this has ever happened before in the history of mankind. No country in the world, no Empire of ancient days has anything like the productive capacity of America, and yet 15 months ago all their money and all their paper which represented money claims became almost valueless. Nearly all their banks have been compelled to close by reason of lack of confidence in the institutions which control money and the financial institution which has been built up in that great country. They are now carrying forward a financial policy entirely contrary to the one contained in this Bill. They are trying to assist the purchasing power of the masses of the people in America. We do not know whether they will succeed. Let us hope they will. Their chief desire at the present moment seems to be to help the "little fellow" in America, and not the great combines, trusts and financial corporations. They despise these very much in America. They are very much concerned with the small business man and the private company. They are concerned that the little chap shall be given a chance to live, work, and produce. I think that they are right; they are perfectly sound. The great corporations and amalgamations, with money in the hands of a few people, have not been an advantage to any country in the world.
  We complain that the "little fellow" here is not the concern of the Government Benches. Our little fellows have no friends over there. The interests of the "little man" should have been watched and preserved, but, instead of this, the right hon. Gentleman, loyally assisted by the Financial Secretary, makes a direct attack upon him, as he did in 1931. By the reduction of allowances on Income Tax (No. 1), by reducing his salary (No. 2), and by the addition of Import Duties (No. 3), they have lowered the standard of living of the "little man." There is not a man in this country who has less than £1,000 a year at his disposal, whether he be a small merchant in a village store or in a town, or a small professional man, whatever he does to enable him to clear an income of £1,000 a year, but who is worse off than he was before the National Government came into being. His interest has been neglected.
  Mr. EMMOTT: No.
  Mr. GRENFELL: If the hon. Member denies it, I would advise him to look up the figures. It is an undeniable fact that figures have been given in this House in a recent Debate showing that enormous additions have been made to the taxation of the small man with £200, £500, or up to £1,000 a year. I will trouble the House with one or two figures to show that that is so. Lord Snowden said in 1931 that the reduction of the allowances plus the additional Income Tax would yield him £51,500,000 in a full year. He was almost exactly right in his estimate. The Chancellor of the Exchequer this year has restored £24,000,000 a year to the small man, whose allowances and salary were reduced. The Chancellor of the Exchequer has not restored half the amount which was taken away by Lord Snowden in 1931. He has at least £25,000,000 a year in respect of the reduction of allowances. Some hon. Members behind the Chancellor of the Exchequer will say, "There are other people too. It is not the small man with £200 or £500. There are other people who had certain allowances." The proportion of the amount in respect of the man above £1,000 a year is insignificant. Ninety-five per cent. of the £51,000,000 of the incidence of the allowances falls on people with less than £1,000 a year. Therefore, it is the problem of the small man, and not of the large man.
  With regard to import duties, I make the admission at once that it is difficult to prove whether the small man pays his proportion, the working man his proportion, and the well-to-do man his proportion. That is a difficulty which will take some time to solve. It is difficult to determine exactly how these import duties affect the lives of our people. If they create more employment and wages, that fact has to be discounted against the cost of the import duties. We readily make that concession. We have to be quite fair. We have to resolve these problems even if we sit upon this side of the House and the right hon. Gentleman's supporters sit on that side of the House. But these additional duties have to be paid. In the last Financial Statement these figures are given. Custom Duties for 1933 actually reached the figure of £179,000,000, and the right hon. Gentleman has estimated for 1934–35 a sum of £183,000,000. He expects to get £4,000,000 more from import duties next

  1791
  year. Indirect taxes are rising higher and higher. Direct taxation is being reduced, and we should like to know from the right hon. Gentleman how far this is to go? Are we to carry all the ordinary taxation in vogue in this country, and bear the additional burden of the import duties as they are bearing upon the ordinary work-a-day people of this country? How far are we to go before a new determination is made which will really restore to the small man that which he has lost in the last few years.
  The hon. Gentleman said in his Budget speech that his intention was to build up a strong home market. In our Amendment we say that the way to build up a strong home market is to increase the purchasing power of the people; those people who spend their money in the shops, who receive the money to-day and spend it to-morrow, and who next week go again for another instalment of wages and spend them. They have no other use for the -money. The money is really used as money by the mass of the people, but it is often not used as money by the people who have allowed £1,800,000,000 to remain unused as bank balances in our central banks. If the Government wish to build up a strong home market they must add to the purchasing power of the people.
  The right hon. Gentleman has claimed credit for a surplus which is fairly substantial. That surplus is in part due to the conversions and a reduction of the interest on the National Debt. The right hon. Gentleman is entitled to the credit that is due to him for the confidence reposed in him by the people who were responsible for making the conversion and who have come forward at his invitation to do so. We do not deny him whatever credit is due to him, but we say that the surplus is in large part due to the immense reduction in the amount now allocated to the service of the National Debt. It has been laid down as a strong financial axiom from which we should not depart that we should pay no less than £355,000,000 a year to debt reduction—that went on in 1921, 1922, 1923—and for the American debt redemption £40,000,000. About 1926, if I remember rightly, it was intended that the figure should be fixed at £355,000,000. This year the right hon.
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  Gentleman is allowing for only £224,000,000, or £131,000,000 less than was allowed for the service of the debt a few years ago. The National Government have not done as much as hon. Members opposite assume. They have got their surplus by conversion and by cutting off the payment toward debt redemption and by making only a token payment last year in respect of the debt to America. Hon. Members who support the National Government and who believe that they do really represent the honour and dignity of this country must remember that when the country was governed by the Labour Government we paid our debts. We paid our national debts and we made a generous contribution of £40,000,000 towards relieving the weight of our national debt to America.
  The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): You received payments of your debts.
  Mr. GRENFELL: We never received as much as we paid. £131,000,000 never came from abroad. There was only part payment to us. I am not blaming the right hon. Gentleman because we are not now paying our debt. I do not want to pay it. I think that it would be folly to attempt to pay, and I think that statement should have been made long ago. I do not wish to embarrass the right hon. Gentleman in his work by using extreme words, but I do say that we have carried this debt payment on too long. The reduction of the interest on our National Debt is a vital point and one which no Government could ignore. We welcome the long-delayed reduction, which means a decrease in the national burden.
  In addition to our National Debt we have a very large municipal debt, which bears very heavly upon certain areas, those which we term necessitous, depressed, or derelict areas. The municipalities have the obligation of a floating debt of nearly £1,200,000,000, which means an annual charge of about £85,500,000. True, a large part of the assets represented by that debt are self-supporting, but there are other objects with which the debt is concerned such as health services, schools, parks, and institutions of all kinds which mean an annual charge of not less than £27,500,000. Ranging over the whole country they represent a rate of 2s. 6d. in the £, and a very much higher rate in the

  1793
  depressed areas. I think the right hon. Gentleman might take this matter into consideration and begin a policy of conversion to assist the local authorities. The Minister of Health knows how frequent are the applications from the local authorities for assistance in this regard. Of the £1,150,000 of municipal debt more than half has been incurred in connection with water supply, highways, housing and the Small Dwellings Acquisition Act. I should like the right hon. Gentleman to consider whether this year he could take some action which would enable the municipalities, the derelict and necessitous areas in particular, to convert the loans which they have contracted at 6 to 6¼ per cent. and bring them down by some process of conversion to 3 or 3½ per cent. That would be of direct assistance, because these burdens are paid by the mass of the people. In regard to housing alone there is a municipal debt of more than £400,000,000, and the loan charges fall upon the tenant. If the rate of interest could be reduced it would be a great help to the tenants, many of whom find it difficult to make both ends meet.
  I come to the most controversial part of what I have to say, namely, the proposal to repeal the land taxes. One wonders why this is to be done. One looks across the House and finds no inveterate, uncompromising enemy of land taxation in his place. The Chancellor of the Exchequer was not hostile to the principle of land taxation, if I am rightly informed. What of the Prime Minister? He happens to be the same person who was Prime Minister in the Government which passed the land taxation legislation, and he has been very definitely a champion of the taxation of land values. He has made stirring speeches on the subject. If anyone was responsible more than another for the appearance of the land taxation Clauses in the Finance Act it was the present Prime Minister. This is what he said in a chapter in "The Socialist Movement" :
  "When a London railway company laid its lines through Buckingham and opened out wide fields upon which part of the population of London might spread itself, it put fortune after fortune into the pockets of the landowners and speculators. That was not done by the expenditure of the railway company's capital, because the company might have tunnelled Bon Nevis instead of the Finchley Hills and no new values would have been created. It was
  1794
  caused by the fact that there was a community ready to use the capital in the form of a railway and put itself in the power of the landowners who lay in wait for the exodus beyond Finchley and Harrow. The only just repository for such values is the communal exchequer. They are the natural sources from which the cost of government and the development of communal action ought to be met. The community has created the values, and it needs them in order to continue its free existence. But to-day they are handed over to private individuals who are parasitical sharers in the national wealth."
  He also made a speech in this House on 24th July, 1928, when he said :
  "Come with me for a fortnight and we will start a walk across country. We will use neither high roads nor by-roads, but will make a bee-line. We will take a map in our hands and we will go straight, and we will defy every piece of landlords' legislation we come across, but we will see our own country. We will see what our country is. We will see its capacity; we will see its neglect; we will see where it is developed, and we will see the use to which thousands and thousands of acres are put. When we have beheld with our eyes, we will lay our heads together and see if there is very much disagreement between us in the proposition that our country's resources are not being properly developed and are not being used in the way that they should be used."—[OFFICIAL REPORT, 24th July, 1928; col. 1112, Vol. 220.]
  I will refrain from further quotation from the Prime Minister. The Lord President of the Council, in the laconic fashion we sometimes expect from him, said :
  "I can say one thing about it—that if we get back to power that tax will never see daylight."
  He made that statement in June, 1931, and later in that same month of 1931 he said :
  "I am not alarmed about the Land Value Tax, because I do not believe that tax will ever come into existence. If we come in, it certainly will not."
  The Chancellor of the Exchequer, speaking at Manchester on 18th October, 1927, said :
  "Everyone who has been concerned in the administration of a great town knows how, when you want to cut a little bit off the side of one of your busy streets to give a little bit of ease to your congested traffic, you have to pour out money by the thousands of pounds for every yard that you snatch for the need of the community."
  The right hon. Gentleman did not commit himself and we acknowledge his discretion, but he was certainly speaking from his great experience of municipal work. Who has won? It would appear

  1795
  that the only person who can claim to have won is the Lord President of the Council and those associated with him, the back benchers more or less, 300 of whom made the demand as published in the "Times" of Thursday of last week and who have called the tune and insisted that the repeal of the land value taxes should come as soon as it was convenient.
  I want the House to realise what it is asked to do in this proposal. There is a great deal of land the value of which has been created by the community, and the Government are making it impossible for land tax to be collected by the community. They are proposing to repeal in the present Finance Bill 25 or 26 Sections of the Act of 1931. Let me give one or two facts to show how the increment of land values at the present time is affecting the corporate life of many cities and towns in the country. I start with Swansea, where I live. A scheme of public improvement is to cost £135,000, and compensation for land is £35,000. In Liverpool the cost of a scheme is £166,697, and compensation £16,887; Hampton Court, £445,000, compensation £80,000; the Bath Road scheme £171,500, compensation for land, £42,000; the Lambeth Bridge scheme, £839,000, compensation £102,000; Manchester and Stockport Road scheme, £667,000 and compensation £117,000. On schemes which are to cost £2,424,197 landowners are to receive in compensation £393,387 in immediate payments, and also take the value of the improvements to their land.
  That is a process of fining the community; it is permitting landlords to fine the community for improving public property, and for putting unemployed men to work. And it is to be still allowed! The Chancellor of the Exchequer says, "I do not want any money from you"; the landlords are to carry on as they have in the past, the Government do not want their money. I suppose we shall be told that although landowners take a great deal of money in this way the Chancellor of the Exchequer will get it back in the way of Income Tax and later on in the form of Death Duties. I shall not be "surprised if that argument is heard from the Treasury Bench. We are simply allowing people who represent what the present Prime Minister calls a parasite class to wait until the community wants the land and then to receive large sums by way of
  1796
  compensation. The Chancellor of the Exchequer's policy is that the man who works must pay, the man who risks his capital must pay, even if he has made losses, for the maintenance of public services, but the man who owns land shall be allowed to reap the harvest for himself without sharing it with anyone. The land system of this country is utterly indefensible. The burdens imposed on local authorities should not be allowed to exist for a day longer, and we protest most strongly against the repeal of the land taxes.
  I come to what may be a small concession but one which is of great significance, the concession in regard to the duty on insulin. A large number of people in this country, perhaps a quarter of a million, will be very grateful to the Chancellor of the Exchequer for the gesture he has made, even if the actual amount of the concession is not large. I see more than a gesture or a concession in this. I see a recognition of a principle which we can apply to ourselves, and which the Chancellor on reflection will acknowledge should have a much wider bearing. There is the diabetic person with disordered circulation, who must have injected into his body, one, twice and three times a day, insulin, which is a special preparation to vitalise and improve the quality of his blood and which neutralises a diseased condition. I urge the right hon. Gentleman not to forget insulin. In this country there is undoubtedly a form of disease which is playing havoc with our aggregate and individual life and I urge the Chancellor of the Exchequer, when he is making this concession to those who are suffering, to remember also the needs of a large number of people who are suffering from a disordered economic blood stream and inject into the economic life of this country a little "insulin" which will improve the tone and financial health of the whole community.
  4.51 p.m.
  Major Sir ARCHIBALD SINCLAIR: The speech with which the Chancellor of the Exchequer opened the Budget last month has been hailed by public opinion as marking the beginning of the harvest which was sown at the cost of heavy sacrifices by the unemployed, by public servants and by the taxpayers in 1931. It was a speech of remarkable power,

  1797
  clearness and artistry. It proved to the public that their sacrifices during the past two and a-half years have not been in vain; it vindicated the financial policy of the National Government in 1931, and it justified confidence in the firm and dextrous handling by the Chancellor of the Exchequer of many problems of public finance during the past few years. On the other hand, it threw a searching and unflattering light on some of the fundamental weaknesses and inconsistencies in the Government's policy. It revealed not one single new constructive idea for the relief of the burdens on industry or for the reduction of unemployment and, now that we have before us the definite proposals of the Finance Bill, we feel bound to dissent from some of them, to indicate objectives other than—and as we think more important than—those which are aimed at in the Bill, and to offer strenuous opposition to Clause 25, which deals with the repeal of the land taxes.
  There can be no doubt in the mind of any reasonable man who studies the available evidence that a real recovery in business activity has taken place in this country during the pst two years, but what is important is that its causes and extent should, as far as possible, be accurately appreciated. The extent is not such as to justify complacency, nor indeed great optimism. There are 2,000,000 still unemployed, that is registered unemployed, and, if you take the registered and unregistered unemployed and their dependants, there are 5,000,000 people in this country still living on a subsistence level. It is no good talking as though we were out of the wood. When I hear Ministers and their supporters speaking I sometimes think that they are a little misled by conditions in London and the Home Counties, where we see most of the evidences of prosperity. Everywhere else the prevailing sentiment ranges from hopelessness in Durham and Glamorganshire, through despondency in the case of farmers, fishermen, miners, textile workers and men engaged on public works contracts, where unemployment has actually increased during the last year, to the anxiety of parents and children, especially at this time when children are coming on to the still glutted labour market in unusual numbers, and of heads of families, and young men and women leaving our schools and universities, who realise on what a slender
  1798
  thread hang their chances of regular employment.
  Looking as a politician at the results of recent by-elections, I believe the explanation of the figures very largely is this, that people are bewildered at the contrast between Ministers' acclamations of their own performances and jubilation over the prosperity Budget, the emphasis-injudicious as I believe it to be—laid by the Ministerial Press, upon the rosy aspects of employment and trade figures on the one hand, and the disagreeable facts of the actual insecurity of social and economic life in this country, and of the growing hard core, of unemployment—the growing numbers on transitional payment—on the other hand. That contrast is one which they find it difficult to understand. The extent, then of the recovery is greatly and, in my contention dangerously, exaggerated but it does exist; and I would ask, to what is it due?
  Fundamentally it is due to the confidence which the formation of the National Government gave to the country in 1931. Then came our release from the Gold Standard, to which we had prematurely been attached at the old rate of exchange in 1925. That gave an impetus to our export trade and released us from that vicious downward spiral of deflation in which we were, and other countries on the Gold Standard still seem to be, involved. Then the running sore of unsound, unemployment insurance finance was cauterised and the Budget was balanced, by which confidence was still further strengthened and the whole world convinced that we were going to pay our way and meet our obligations. Consequently the huge conversions of War Debt, to which the hon. Member for Gower (Mr. D. Grenfell) has referred, became practicable. I was a little surprised when he insisted on the value of the precedent set by the right hon. Member for Epping (Mr. Churchill) when he fixed the Debt charge as high as £355,000,000. A good many hon. Members had grave doubts then whether future Chancellors of the Exchequer would in fact hold to that figure, and our doubts have been justified by our experience. The Chancellor of the Exchequer well deserves the tribute paid to him by the hon. Member for his handling of these conversion operations, because, as a result, the inestimable boon

  1799
  of cheap money has been secured for industry, an achievement partly due to the policy of the Government and to the factors which I have already mentioned and also in no small part due to the confidence felt by the public in the banks of the country, a phenomenon which is indeed almost peculiar to this country.
  In this way national credit was restored and these developments were followed—or to some degree accompanied—by a solution—the de facto solution at any rate—of the War Debts and Reparations problem. I was a little surprised when the hon. Member for Gower declared so proudly that the Government of which he was a Member had, in contrast to the National Government, paid these debts in full, although he hastened to add that he thought it was great folly to have done so. I do not quite agree with that statement, and I do not think he would apply it quite as it stands to the action of his own Government. Still, I am indeed glad, and I am sure every hon. Member is glad, that for the time being at any rate these payments, which have placed a strain on the monetary system of the world under which it almost collapsed, have at last been stopped. The result of making these one-way payments has been greatly to multiply the economic barriers to trade in order to protect currencies and therefore to stimulate economic nationalism, and if any effort were made to restore these payments it would be quickly found that this is at least one instance where it is no more blessed to receive than it is to give.
  Lastly, of these very powerful factors making for recovery, there is the change of mood throughout the world. Everywhere throughout the world you see it, and the reports of the League of Nations Economic Committee make it plain that in nearly every country the revival is going on. During the depression everybody, under the harsh need of personal, private economy, put off expenditure of every kind. The industrialist put off the renewal of his machinery, the shipowner put off the painting of his ship, the ordinary man in the street put off buying a new suit of clothes; and one reason why they did it was that under the influence of the accumulated stocks and the falling off in demand prices were constantly spiraling
  1800
  downward, and everybody felt that they had only to put off making their purchases and they would get them cheaper a few months later. Then the time came when these accumulated stocks began at last to be be depleted, when people could no longer postpone necessary work or necessary replacements. Then prices began to rise, and everywhere the circle began to turn in the opposite direction. Everywhere the mood changed, and everywhere, in spite of all the hindrances to trade, there was the natural urge of supply to meet demand. Now that we are able to sum up these blessings, the well-designed acts of policy and the favourable tendencies which have begun to operate in the last two years, the astonishing thing is not that there has been some recovery, but that it is so slow and takes so long to reach the masses of the people.
  Why is it? What is holding it up? The Chancellor of the Exchequer supplied the answer in the opening passages of his Budget speech. It is economic nationalism, which the present Government, by their own policy, have intensified and provoked to ever more active and extreme manifestations in other countries, and is intensifying further in this Bill. "King Charles' head," exclaimed the right hon. Member for Hill-head (Sir R. Horne), when my right hon. Friend the Member for Darwen (Sir H. Samuel) raised this point; and he went on to say that exports had increased. But only if they are compared with the immediately preceding year, which was the worst year for British exports since 1905, and only then by £2,000,000, or by two-thirds of 1 per cent. "The only country," declared the right hon. Member for Hillhead, "to have increased its exports last year." How does he know? The figures of a great many countries are not out yet, and surely he must for the moment have forgotten Japan. He said that tariffs had reduced prices. It is true that the adoption of tariffs in this country gave the final downward spin to world prices in 1932, but that is what the right hon. Gentleman does not want, nor do any of us. Nevertheless, it is equally true that they have raised prices in the home market above world prices. There can be no doubt whatever about that. I am astonished that some Conservative Members of Parliament are still challenging

  1801
  that simple fact. On one day they challenge it, but on another day one after another, Members like the right hon. Member for Sparkbrook (Mr. Amery), the right hon. Member for West Birmingham (Sir A. Chamberlain), the hon. Baronet the Member for Bournemouth (Sir H. Croft), and many others, come down to this House of Commons and demand that things in which their constituents are interested, raw materials for industries in their constituencies, should be put on the Free List. Why waste their time doing that, if the effect of these duties is not to raise prices above world level?
  The right hon. Member for Hillhead twitted us with saying that we should give the world a lead, and he said that we had done it for 70 years, but that they had refused to follow. The truth is that, in the famous phrase of Sir Robert Peel, during those 70 years we have fought foreign tariffs with free imports, and fought them successfully, and we accumulated such wealth and built up such a high standard of living in this country as no other country could match; and even now, according to the contention of hon. and right hon. Members opposite, we, who only departed from Free Trade two years ago, are weathering the storm better than all the great countries which have enjoyed the alleged blessings of Protection for generations past.
  The astonishing thing, the dismal and almost incredible thing, is that the Government are uncertain whether economic nationalism is good or bad. The Chancellor of the Exchequer deplores it, but the Minister of Agriculture acclaims it and chides those who regard it as some sort of a disease. The Minister of Agriculture wants to seal us up in our tight little island. The Secretary of State for the Dominions bids us look to the Empire. The President of the Board of Trade makes little Treaties, called by some of the supporters of the Government black pacts, with foreign countries. Tariffs for revenue, tariffs for protection, tariffs for Imperial preference, tariffs for retaliation, and for entering foreign markets. The Government, as the right hon. Member for Sparkbrook said in the Debate on the Estimates for the Dominions Office the other day, have no clear, settled policy and are trying to move in four different directions simultaneously, while the leaders of commerce,
  1802
  banking, and industry in this country clamour increasingly for a policy of freer trade as the most effective contribution that could be made to the revival of our industries and the employment of our people.
  But now, if that line of advance is barred by the Protectionist prejudices of the Chancellor of the Exchequer and the bulk of his supporters, there are surely other fields of action in which he can operate to relieve the burden upon industry and stimulate employment. I would suggest three lines of progress, along any or all of which, to the limit of his disposable resources, the Chancellor might advance. In the first place, there is the policy of reducing the rate of contributions to the Unemployment Insurance Fund. Not only is the increase in the burden of contributions a heavy additional burden upon industry, but it is part of the sacrifices which were imposed at the time of the crisis in 1931. The contributions of the employers were then increased from 8d. to 10d. and of the workmen from 7d. to 10d. Therefore, that brings this concession within the range of the Chancellor's benevolence, as he defined it in his Budget speech. The hon. and gallant Member for North Leeds (Captain Peake), in a striking speech on the Unemployment Bill the other day, showed by careful calculations that the contributions of employers alone to unemployment and health insurance amounted to a tax of 86s. a year on every man employed, or, on a capitalised basis, to a fine of £100 on every employer who takes a man into his works. Only three days ago the Minister of Labour, in moving the Third Reading of the Unemployment Bill, said :
  "No one who knows anything about this matter can for a moment be oblivious of the great burden which the existing rate of contribution imposes on both industry and the contributors, and I have no doubt that the Statutory Committee, should they find themselves in the position of having to deal with a surplus, will consider the possibility of a reduction in the rate of contributions."—[OFFICIAL REPORT, 14th May, 1934; col. 1473, Vol. 289.]
  But we on these benches would urge the Chancellor of the Exchequer even now to put the matter beyond all doubt. The case for this concession has been argued in the Debates on the Budget Resolutions very largely on the basis of the report of the Royal Commission on Unemployment

  1803
  Insurance, but as that argument has already been frequently used in the House and has made no impression upon the Chancellor of the Exchequer, although I must confess it seemed a good argument to me, I will not use it again, but I will address myself to the argument which the Chancellor of the Exchequer used in opposing this proposal. It is significant that in winding up the Debate on the Budget Resolutions and opposing this proposal, he devoted himself almost entirely to dealing with that argument, which was based on the Report of the Royal Commission on Unemployment Insurance, and he rode off on it without giving more than one answer to the demand on its merits for this relief to industry. His one answer was :
  "On the other hand, do not let the Committee forget that, if you are relieving the fund at the expense of the Exchequer, you are reducing the amount that is available for the general relief of the taxpayer or for people whom you wish to relieve by the Budget next year."—[OFFICIAL REPORT, 19th April, 1934; col. 1261, Vol. 288.]
  It is very natural for the Chancellor of the Exchequer to be looking forward to giving some popular reliefs in his Budget next year, but surely the more important consideration is that this direct and valuable relief should be given to industry forthwith, and I would appeal to the right hon. Gentleman not to hesitate between relief next year to the taxpayer and the perhaps more indirect but very substantial relief which would be given to the taxpayer if this immediate stimulus could be given to employment and direct relief to industry.
  The second line of advance that I would recommend to the Chancellor of the Exchequer is in relation to the depreciation allowances. I have listened to successive Chancellors of the Exchequer promising to give consideration to this subject, and I cannot help expressing disappointment that there are not yet any definite proposals before us. Having tried, with such expert advice as is open to a private Member, to frame Amendments on this subject in past years, I know how real the difficulties are, but they cannot be incapable of solution. Now is the time for such a reform—now, when trade is beginning to improve, when foreign countries are making immense strides in the modernisation of their industrial equipment, and when it is of urgent importance
  1804
  for British industry to get a good start in the race. Employment in the modernisation of equipment would be given in this country, and the competitive power of British industry would be increased. Only a few days ago the hon. Member for Cheltenham (Sir W. Preston) made a remarkable speech, in which he said :
  "It is only because I am Chairman of Platts that I have been enabled to visit mills in Japan to see what England's rival is doing—how far she is ahead of us. And, having this knowledge, am I to be silent and see the cotton trade of England slowly perish? …. Since the War not more than £5,000,000 have been spent on textile machinery installed in this country. In the rest of the world during the same period, the expenditure on new textile machinery has been at least £95,000,000 …. Given up-to-date preparation machinery, modern high-draft ring spinning and automatic looms, Lancashire can produce grey cloth and market it at a profit in India and China at prices lower than Japan is charging. But new machinery means new capital …. If only the money can be found to enable Lancashire to re-equip its mills with the most modern kinds of machinery, such as have been supplied elsewhere, Lancashire can beat any one of its foreign rivals on price."
  Re-equipment and re-organisation, towards which some relief from Income Tax to company reserves would go some way, would in the long run be a more effective reply to Japanese competition than Colonial quotas.
  Nor should the Government continue to neglect as a means of stimulating industry and employment, that policy of national development which the Prime Minister declared a year ago should be followed. The Prime Minister's words were :
  "The development of appropriate programmes of capital expenditure is an important contribution which Governments can make to the stimulation of enterprise."
  I will not say that they are doing nothing. There are slum clearance, rural water supplies, a small scheme of land settlement in Scotland, and abroad the Government are guaranteeing a loan to Palestine. That is not nothing, but it is pitifully small and ineffective, and there is ample scope here as well as in Palestine for constructive enterprise. We still await the second instalment of the Government housing plan. We understand that there is a second instalment coming. But roads—the unfinished exits from London itself—are a reproach to the Government, and yet the Road Fund

  1805
  is being raided to meet the concession that is to be made to motorists in respect of the Horse Power Tax in this Finance Bill. Then there are bridges like the Charing Cross Bridge and the Forth Bridge; transport and electrification; and land settlement.
  When land settlement is mentioned Ministerialists are apt to exclaim that without Protection it would be impossible. The truth is that land settlement forms an indispensable part of any Free Trade policy for agriculture, but unhappily for this country and for the world it is idle to discuss the policy of this Government in terms of Free Trade. The Government have a policy which they think more effective for agriculture. It has not done any good yet, and the position of the farmers to-day is as bad as it was two or three years ago. But let them use it, and if it is effective in connection with agriculture let them use it for land settlement, and let them plant out—there is an instrument rusting on the Statute Book in the Land Utilisation Act—let them plant out a thriving peasantry once more on the land of Britain.
  There is one thing in connection with those questions of public works and national development, to which I wish to refer. That is the very important question of leisure. It was referred to by the Minister of Agriculture in his remarkable broadcast speech the other day. He scoffed at those who do not approve of economic nationalism. He said it was bound to come, that it was a symptom of the state of the future, the Leisure State. What are the Government doing to prepare for the problems of the Leisure State? Here is one of their most influential Ministers speaking over the wireless to the nation on this problem and telling the nation to wake up to it. But are the Government alive to it? The fringe of the problem is being touched in the Unemployment Bill. But take education? We see that the Estimates for education are down, except for the increase in the teachers' pensions. Today we have had a Bill introduced which was aimed at the wearing of uniforms by political parties, aimed at subversive movements in this country. I am glad it was knocked out, that is not the way to tackle the problem. The way is to tackle the cause of subversive movements
  1806
  and discontent in this country. Unless work can be provided, unless facilities for sport, travel and education are planned in this country, certainly the young men and women leaving our schools and the universities will fall the more easily under the influence of violent and subversive but dynamic movements like Fascism and Communism.
  Now I have dealt with these three main proposals and a Finance Bill which makes no provision for any of these objects and which does not use every available resource for the immediate and direct relief of industry and the stimulation of employment, stands in our eyes condemned. It may be asked, where are the resources which could be applied to these purposes? I think there are three which are not being used or are being inadequately used in the Budget. In the first place there is last year's surplus. "Ah," but the Chancellor of the Exchequer says, "that is earmarked for the repayment of debt. We are going to save 12s. 6d. per cent. per annum by applying that sum to the repayment of debt. We can make many better investments than that, but that is the orthodox thing to do, it will give solid satisfaction to the city penguins and we shall be using the surplus of £30,000,000 this year to offset the deficit of £30,000,000 last year." It is our contention that the Chancellor of the Exchequer is sacrificing to financial orthodoxy and symmetry the resources which should be used constructively to help industry and employment now, and this surplus on last year's account is the first of the available resources to which I would direct attention.
  The second is a much smaller one. I am now on less well tested ground, because it is a point that has not been raised in these Debates before. The financial statement shows a remarkable short fall in revenue of nearly £8,000,000 under the heading "Miscellaneous Receipts." The Chancellor of the Exchequer skated very lightly over this surprising feature in his Budget statement. He gave to it only a sentence and a half. He said :
  "Sundry loans"—
  which incidentally were up by £885,000—
  "and Miscellaneous Receipts showed a shortage of £7,000,000. This, however, was mainly due to the fact that certain items of miscellaneous revenue for which I had estimated in the Budget did not actually

  1807
  fall into the year's receipts."—[OFFICIAL REPORT, 17th April, 1934; col. 908, Vol. 288.]
  Are we to condole with the Chancellor of the Exchequer upon an unfortunate accident as a result of which this £8,000,000 of revenue slipped through his hands into the current year, or are we witnessing a feat of financial conjuring by which the taxpayers and industry are deprived of this relief this year in order to swell next year's surplus?
  The third resource to which I would draw attention is the deliberate underestimating of the revenue for next year. This case has been cogently argued by several speakers in the Debate on the Budget resolutions, and in reply the Chancellor of the Exchequer made the very remarkable admission to the right hon. Gentleman the Member for Hillhead (Sir R. Home) that he might have underestimated by as much as £10,000,000. He said :
  "You may take the Death Duties, or the Stamp Duties, or Customs, and you may say that on any of these items you take a pessimistic view, or an optimistic view, or something between the two. … I am quite ready to believe that he might have put the figure higher than I have done, but that is where these differences of temperament come in. What I want to point out is that, even making allowance for differences of that kind, one can still hardly expect that the £29,000,000 of surplus for which I have provided could be increased to double or treble that amount. There might well be a difference of, perhaps, £10,000,000."—[OFFICIAL REPORT, 19th April, 1934; col. 1258, Vol. 288.]
  In arguing, as many speakers in all parts of the House have done, that in fact the revenue has been under-estimated, comparison has generally been made between the Estimates for the current year on the basis of last year's taxation, and those for last year, but it seems to me that the comparison is still more striking if we make it with the figures for the year 1932–33. For example, the Chancellor of the Exchequer estimated, on the basis of the existing taxation, that Income Tax this year would yield £240,000,000. The year 1932–33 was not a boom year, and the estimate for Income Tax was based on the year 1931–32, the year of crisis. Yet in that year the right hon. Gentleman anticipated £11,000,000 more from Income Tax than in the current year, or no less than a total of £251,000,000. Surtax—he
  1808
  estimated for £1,000,000 more in the year 1932–33 than in the coming year on the existing basis of taxation. Estate Duties—he estimated for £1,000,000 more in 1932–33 than in the present year. It is true that for Stamps he estimated for £8,000,000 less. But on the total of Inland Revenue he estimated for £18,000,000 more in 1932–33 than he estimates for 1933–34, the year of "great expectations." If we turn to Customs and Excise the figures are still more remarkable, because now, with higher duties and more numerous duties, he only estimates that we shall get £2,000,000 more than we got in 1932–33. With more prosperous trade he estimates for only £2,000,000 more than in that year, which was the worst of all years for British trade.
  I suggest that quite clearly there is an under estimate here. When some other speakers wre criticising the Chancellor of the Exchequer for his under estimate I heard one or two hon. Members ejaculate, "Why not?" The present condition of British industry and the appalling evils of unemployment supply the answer to that question. To lift the burdens now weighing upon industry and to stimulate employment are objectives which ought to take precedence of political expediency and the wish to prepare for a series of popular Budgets before the next General Election. I have shown three directions in which progress might be made in alleviating the burdens of industry and stimulating employment, and three instruments for those purposes which have been neglected. They are the £30,000,000 surplus, the £8,000,000 of revenue which was allowed to slip into this year, and the under budgeting which in my view is more than the £10,000,000 mentioned by the Chancellor of the Exchequer. That is a total of £30,000,000 of capital and £20,000,000 of revenue, or upwards of £50,000,000.
  As for the distribution of such relief as the Chancellor of the Exchequer has afforded, we welcome the restoration of the cuts in unemployment benefit, but deplore the right hon. Gentleman's failure to reform the means test in the direction of greater recognition of the individual rights and needs of members of the same household. Nor do we think it right that the small Income Tax payers from whom the sharpest sacrifices were exacted in 1931, should have received so trivial a relief as compared with the taxpayers

  1809
  enjoying larger incomes. It cannot be denied, however it may be explained, that this Budget accentuates the recent tendency to relieve the burdens of the wealthier taxpayer at the expense of the poorest. When we draw attention to the rising rates of indirect taxation compared with direct taxation it is irrelevant for the Financial Secretary to the Treasury to make a contrast with pre-War years. The position then was wholly different. The National Debt was less than one-tenth of its present size. The proportion of revenue now being repaid in dividends to holders of the National Debt is ten times what it was before the War. We protest strongly—and one of my hon. Friends will speak later on that point, and elaborate it—against the failure to concede the just claims of the less well-to-do who made the greatest proportionate sacrifices in 1931.
  Now I come to what is in size one of the smallest but the most remarkable feature of the Bill, Clause 25, for the repeal of the land taxes. I have already paid my humble tribute to the memorable speech in which the Chancellor of the Exchequer opened his Budget—it may not have been quite flawless—there was, for example, the failure to explain the fall in miscellaneous receipts, and the slightly confusing amalgamation of a surplus on Sundry Loans with a deficit on Miscellaneous Receipts. But the speech was a masterly achievement, clear, terse and yet quite remarkably comprehensive. Nothing was omitted. There was a little flaw in the statutory machinery for the collection of tax on mineral rents which was to be put right. There was a technical point which had arisen in connection with the Estate Duty. There was a matter which did not require a Financial Resolution, namely, a proposal to take power to guarantee new loans raised to convert existing guaranteed loans. Nothing omitted, did I say? Well, just one thing was overlooked, and that was the repeal of Sections 10 to 35, or the whole of Part III of the Finance Act, 1931—more than half of that Act of Parliament.
  Of course it is so easy to forget a point when one is speaking and no doubt the Chancellor of the Exchequer when he sat down was very vexed with himself. He may even have turned to the Financial Secretary of the Treasury and blamed himself for that omission. The astonishing thing is—so extraordinary are the
  1810
  coincidences which sometimes occur in real life—that it kept slipping from the minds of the Financial Secretary and the Chancellor of the Exchequer when they were replying to the Debates at all the subsequent stages of the discussions on the Budget. Nothing was said till it appeared in the Finance Bill. They did this deed in the dark, and they did it in the dark because they were ashamed of it. Not that the Chancellor of the Exchequer need be ashamed of his opposition to the Land Taxes which has always been an open, frank and reasoned opposition and obviously based upon sincere conviction. They were ashamed because this action exposes the sham and humbug of the National Government, and because of the humiliation which it inflicts upon the Prime Minister and those Members and supporters of the Government who have not yet formally adhered to the Conservative party.
  We shall have other opportunities of discussing the merits of land valuation and taxation and I do not wish to go deeply into them to-day in a speech which necessarily has had to cover a great deal of other ground. Nor do I think that any supporter of the principle of valuation and taxation is wedded to the particular form which it assumed in the 1931 Act. If the Government had said, "We do not altogether like these provisions; we are going to amend them," no one could have gainsaid their action, whatever opinions we might hold and express about the actual amendments when they were proposed. But repeal—this futile effort to sink them without trace, at the bidding of the landed interest in the Tory party—is an outrageous use, for party purposes, of a majority obtained on national issues.
  No one will deny that these Land Taxes were fought out as a party issue in the last Parliament, nor do I wish to disclaim the fact that the principle underlying them, that of taking taxes off improvements and putting them on site values, is one of the chief principles and aims of the Liberal party. But support for that principle comes not only from Liberals and Socialists but from large numbers of men and women in all parts of the country who on other counts would call themselves Conservatives. The principle of land values taxation has always been in this House a party issue, but

  1811
  outside the House it has received increasing support from men and women of all parties—in short national support. The editor of that great Conservative paper the "Observer" declared :
  "No one can oppose the taxation, within reason, of land values largely enhanced by improvements at the public cost."
  In the last ten years scores of municipalities have passed resolutions in favour of the principle including Glasgow when it had a non-Socialist majority, Newcastle, Sheffield, Leeds, Bradford, Manchester, Cardiff, Swansea and many other great cities as well as several county councils. During the past 12 years the Middlesex County Council has spent £5,000,000 on buying land and making arterial roads and has increased the value of adjoining land by no less than £15,000,000. The taxation of land values would put this vast increase of value created by public activity under levy for public purposes. One enters the cities of the United States through magnificent parkways, the money for which has been found by levies on the increased values made by those improvements. Here the land monopoly holds London in a ring, through which dribble little streams of houses, dangerously sited on main roads. The taxation of land values would liberate enterprise from the crushing burden of rent, rates and taxes which it now carries, and make possible sweeping measures of town and country planning and national development. Here is a powerful weapon of national recovery and the Government instead of using it are breaking it. In repealing these taxes the so-called National Government is flouting public opinion on a great national issue.
  What justification is there for this action which did not exist last year and the year before? Last year the Lord President of the Council said in reply to the agitation and to the pressure brought to bear upon him to repeal these taxes that "this, however, was a National Government." Perhaps that is the difference. At any rate then the right hon. Gentleman said that this was a National Government and that he and his Conservative colleagues felt the ungrudging loyalty with which their Labour colleagues had supported other features of the policy of the National
  1812
  Government—has there been any falling off in that ungrudging loyalty? The right hon. Gentleman said it called for mutual consideration and he laid stress on the great public advantages of retaining a National Government. That was last year. In the year before—on 26th May, 1932—the Lord President of the Council used these words :
  "Had I been a private Member I should very likely have put my name to the Amendment to which hon. Members from Devonshire have put their names but I occupy a more responsible position and I have to remember that this is a National Government.… Would any one of you who had been a member of a National Government, who had gone through the fight we went through last autumn, who had taken part in the discussions on finance, on the first construction of the National Government with men who fought during that Election, like Lord Snowden …. when they expressed to you their reluctance to see the Act finally taken off the Statute Book, do you think that I, going about the country as I did, and knowing the force of Lord Snowden's speeches and broadcasts in helping to win seats which we should never have won, was going to say to them, 'Oh, no. Now we have got a big Tory majority much bigger than I expected out you go?" Not much. That is why we stand for the Clause as it is in the Bill. We can accept neither a repeal of the Act nor the insertion of the Amendments.—[OFFICIAL REPORT, 26th May, 1932, cols. 583–5, Vol. 266.]
  The Secretary of State for War said :
  "Would it be wise for the Government to ask them to accept the humiliation, for it would be nothing else, of having this year solemnly to repeal what last year they had solemnly enacted?"
  Why is the Prime Minister now submitting and forcing his followers to submit to that humiliation? Why is he submitting his National Labour colleagues in the Government, his supporters in this House, such as the hon. and learned Member for Montgomeryshire (Mr. Clement Davies)—who played a foremost part on behalf of the Liberal party in supporting these taxes in the last Parliament—why is he submitting them to this humiliation? When does a humiliation cease to be a humiliation? How long a lapse of time is necessary. I would venture an answer. Long enough for the Tory party to make up its mind that it does not matter whether those to whom I have referred submit and stay in the Government or go. Successive by-elections have made it plain that the National Liberal and National Labour Members are not bringing them one single vote

  1813
  more than the Conservative candidates received in 1929, the year of their defeat. So now their opinions are ignored, and those speeches and broadcasts in 1931 are forgotten. Does the Prime Minister remember the message he sent to the Scottish Liberal Federation in December, 1931? Lord Stonehaven had declared that the National Government had a mandate to carry out Tory policy, and the Prime Minister replied :
  "I am the head of a Government which was elected on a national issue embodied in a national appeal, and so long as I remain in the Government that will be its policy."
  Was repeal of the land taxes embodied in that national appeal? The obligations of the Government on this issue have been defined by the Lord President of the Council and the Secretary of State for War, extracts from whose speeches I have read. Those obligations are being broken. Does the Prime Minister know? Was he consulted? Will he explain? Is he coming to the House of Commons to give to the House of Commons and to the men who were elected in considerable part by the votes of land taxers—which in some constituencies, I have no doubt, were decisive—an explanation of why he has now consented to the repeal of these enactments Why is the right hon. Gentleman not here? I hope he will be here at future stages of the discussions on this Bill. Those Members of Parliament who won seats on the basis of that national appeal, those supporters of land taxation who relied on the national appeal at the last election have the right to look to the Prime Minister to make good the assurance which he gave, through the Scottish Liberal Federation, to the country as a whole that he would see that the policy of the Government remained within the ambit of the national appeal. Therefore, because the Chancellor of the Exchequer has failed to make the best use of his financial resources to assist industry and to stimulate employment; because the tendency to shift the burden of taxation from the broader backs to those which are less able to bear it, is accentuated in this Measure; because those who made greater sacrifices in proportion to their income in 1931 have received less relief than those more fortunately situated and because the repeal of the law for the valuation and taxation of land, that great instrument of
  1814
  social reform and national development, is intended, I feel bound to oppose the passage of this Bill.
  5.43 p.m.
  Sir GEORGE GILLETT: I have listened with much interest to the criticisms which have been made from the Opposition Benches on the Budget proposals of the Chancellor of the Exchequer. I cannot help feeling that apart from the criticism dealing with the new protective tariffs there have not been any very definite suggestions or criticisms of which the Chancellor need be very much afraid. I was amazed at the statement that the Press of the Government had led the country to believe that we were enjoying a greater measure of prosperity than was actually the case. I thought it was a well-recognised fact that there was never a Government in the history of this country with such a large majority in the House of Commons as the present Government and worse supplied with a Press than the present Government. The papers with large circulations are either supporters of one or other of the two Oppositions, or offer such doubtful support to the National Government that I think the National Government would sooner dispense with that distinction than have the kind of criticism which is made of them. In the circumstances I cannot imagine how the right hon. Gentleman opposite can say that people have been deluded into believing in a non-existent prosperity by the newspaper Press, apart from the "Times" and one or two other papers which are read, if I may put it in that way, in selective circles rather than among the mass of the people.
  What amazes me on the question of tariffs, especially in regard to the leaders of the Liberal party, is the position which they really occupy to-day. The right hon. Gentleman has based much of his criticism of the Budget upon the tariffs which have been imposed by this Government. I thought I read in the papers the other day, in one of the manifestoes which his leader issues at times, that it had to be clearly understood that if the Liberal party came into office we could not expect them to reimpose Free Trade on the country at the present time. When I saw this interesting announcement I realised that Free Trade could not be re-imposed—
  Sir A. SINCLAIR: We did not say we should not begin to return to Free Trade. We should start at once.
  Sir G. GILLETT: I think the leader of the right hon Gentleman seemed to be much more definite. I should like to put it to my hon. Friend the Member for Gower (Mr. D. Grenfell), who has been talking about these protective duties, that he would not dare to repeal most of them if he were in office in the next few months. If he did, the workers in the steel industry and in the numerous industries which to-day are increasing and finding fresh occupation, would sweep him and his friends out of existence in a few months.
  Mr. ISAAC FOOT: Does not the hon. Member remember that during the Debate on the Import Duties Act we contended that if tariffs were put on they would create vested interests, and that they would sweat blood before they were removed?
  Sir G. GILLETT: I am pointing out to my hon. Friend on the Labour benches that the vested interests behind him—not those who own industries, but those who work in them—would soon object if he began to propose these duties should be removed.
  Mr. D. GRENFELL: The largest group of organised people in my division are steel and tin-plate workers and I represent them fully in this House.
  Sir G. GILLETT: When duties were given in the last Parliament under the Safeguarding Act to the lace industry, there were representatives of the workers on those benches who refused to agree to the duties being removed. At any rate, I am satisfied that to whatever certain groups of men under the leadership of my hon. Friend may agree, he would find it impossible to go back to Free Trade. For most of my life I have been a Free Trader, but I have been fully convinced that we must consider the world as it is organised to-day. We talk about economic nationalism. It is no use contending that that is not in existence, and it is no use trying to build up our industrial system and thinking that the world is going to take our manufactured goods, as it did in the last century, and that therefore we can take their food. During and since the War
  1816
  other countries have said that they wished to have their own factories and to make their own goods and export them. While that remains a great factor in the industries of the world to-day, it seems to me that the only wise policy is to adapt our system to those circumstances. Would my hon. Friend opposite throw the markets of this country open for all the goods that are coming from Japan to-day? He knows perfectly well that it is impossible.
  While the right hon. Gentleman who spoke from the Liberal benches referred to that side of the difficulties of trade to-day, he made no reference whatever to what, to my mind, are the far greater difficulties connected with the exchange conditions of these countries. The other day, when I was in the office of a gentleman who is interested in the export of tea to Europe, a telegram came in. He opened it, and said, "This is what is happening with us. Here is a perfectly good order. The purchaser in the other country is perfectly sound, but I know that if I accept this order the money will be paid into my account in some bank or Government department of that country, and I cannot get the money back because of the exchange difficulties." He said that that is happening over and over again. That is a greater problem than any of the protective tariffs we are placing on foreign imports. I do not believe that, as we are placed in this country at the present time, anything can be done except to adopt the general principle that this Government has adopted in regard to tariffs, and to follow out the policy the President of the Board of Trade has instituted in regard to negotiations between us and other countries.
  The right hon. Gentleman referred to the cotton industry and used it as an argument when urging that the Government might have done more to assist industry by making allowances for depreciation and putting money to reserve. I think the right hon. Gentleman lost the point of the quotation that he made, because it has to be borne in mind that in the early days after the War the cotton industry made an enormous fortune. If the amount that was put into new machinery was as small as was stated in the quotation, it was not because the money was lacking, but because it was expended in dividends and

  1817
  other ways instead of being wisely used for the purpose of new machinery. Now that the times of difficulty have come, I agree that the cotton industry is not making the money and is therefore unable to place money to reserve or to put it in new machinery. The reduction of the Income Tax by 6d. is one of the chief ways in which the Chancellor of the Exchequer is helping industry. In this way he is helping the very money in which the right hon. Gentleman was interested, that is to say, he is reducing the Income Tax which is charged upon reserves and depreciation.
  That is my answer to my hon. Friend on the Front Bench opposite. He and his colleagues give endless illustrations of the hardship which is imposed upon A and B. This House could spend days and weeks in discussing various oases of how a man gave up such a percentage or had to pay so much more in the way of taxation and to-day is not getting as much as another man who made a somewhat similar contribution in the hour of the nation's need. I think the main justification for the policy of the Chancellor of the Exchequer in taking off 6d. rather than in giving back what, I fully agree, are the much-needed alleviations to the smaller man, is that the right hon. Gentleman is looking at the needs of industry as we have it to-day. I was very much interested in the figures which my hon. Friend gave as to what he was informed was the national income of this country. What struck me was the large fall in the figures compared with a few years ago. He said it stood at £4,000,000,000, but I have seen it stated that it was £4,200,000,000.
  It is obvious that what is wanted in this country is an improvement in trade. My own opinion is that the ordinary man in-the-street has a fairly correct idea of exactly how far industry has improved. If we take imports or exports, especially imports, we see a certain amount of improvement. We see it also if we take the railway returns. As interesting a factor as anything else is the amount of advances which are made by the banks, and these are now beginning to increase. When there was so much frozen credit held in the banks there was no increase in these advances. It was only being gradually paid off as trade began to improve and the improvement on the stock market gave the industrialists the opportunity
  1818
  of getting money by which they could pay off these overdrafts. Until that was done there could not be this increase in the bankers' advances. That is a very important indication of an improvement in trade, especially as I have been informed that it is not simply due to lending money to the Stock Exchange or to those interested in stock transactions, but that a very considerable amount of it is advances by banks because of increased trade.
  If you take all these different points, I think they indicate correctly that this country has a trade that is improving. We have, of course, the important increase of employment. If we take the worst figures of the number of people employed, and then take the figures today, we find that in a period of 18 months 1,000,000 more persons are at work. That reminds me of an interesting reference which my hon. Friend made to the United States. He is a brave man; anyone who speaks about the United States is a brave person because it is certain that, sooner or later, he will find he has been mistaken in what he has prophesied. There is one thing that amazes me about the hon. Member's statement. It was that the United States Government are all in favour of the small man. I do not know why he argued in that way. He then said that all the large capitalist concerns were bad. I should like to take this opportunity of pointing out to him—it is a point of which he and his friends may well take note, because it is a subject in which they are interested—that in the United States large numbers of the banks were swept out of existence because they were little concerns, and that the banking system of this country, which is the finest in the world, has existed during this storm and stress because it has been amalgamated, and consists of the very large concerns of which my hon. Friend has been complaining.
  Mr. D. GRENFELL: Has the hon. Member read the account of the trial of a large American bank before a committee of inquiry, and the pronouncement in regard to banking methods?
  Sir G. GILLETT: I am not discussing the ethics of the banks in America or in this country. I am pointing out that if you have a large number of these small people, in which he said the President of the United States was so interested,

  1819
  they are not an advantage in the banking system of America, but rather the reverse. This is an indication of how a highly organised industry is better able to stand up to the stresses and storms of times like these than the small industries in which the hon. Member seems to take such a great interest. I was not quite able to adjust his speech to the usual Socialistic idea in which the party to which he belongs believes. At any rate, I throw out these suggestions to him in order that he may consider them when he is considering the whole problem.
  The point I am making is that I think the Chancellor of the Exchequer was wise, when giving relief, to apply that relief in the way which would be most likely to prove an incentive to industry. Whether a reduction of 6d. in Income Tax really has the effect that many people think it has or whether it has not, there is no doubt that in the industrial world it is implicity believed that it has that effect. It was hoped that the reduction of 6d. was coming, and one has only to think of the effect that would have been produced if 6d. had not been taken off the Income Tax to realise how much the business world gains by a relief of that kind. That, I think, is the answer to the whole of the arguments of those who are critical of the action taken by the Chancellor. I quite agree that if we gave the money to those who are more in want of it they would put it back at once into circulation, and that it can be argued that when relief is given to the taxpayer possibly the money goes into investments instead of into the consuming industries of the country, but even if we give weight to that consideration I still believe that in this case the policy of the right hon. Gentleman was a very sound one.
  I agree with the observations of the right hon. Gentleman who spoke from the Liberal benches on the action of the Chancellor in allowing the surplus to go to the redemption of debt. In normal times that custom is a very sound one, but I would remind the Chancellor that when he drew up his Budget he did not deliberately estimate for the usual Sinking Fund, because he thought it was not advisable to raise money from the people for that purpose. Fate has given him a surplus which in normal times would almost have provided for that Sinking Fund, and he has allowed it to go in
  1820
  redemption of debt. In normal times the Sinking Fund is an important part of our financial system, because it is to the advantage of Government stocks that a certain amount of money should be employed in purchasing them. It helps to hold up prices, which is an advantage to the Government if they wish to issue loans. But nothing of that kind is required at the present time. The money market is glutted with money, and the Chancellor cannot have any great desire to raise the price of Government stocks to-day. Therefore, that argument for the Sinking Fund has gone.
  It is a serious thing to take £30,000,000 from industry and the taxpayer simply for that purpose, and I agree with the right hon. Gentleman that I should like to have seen the Chancellor put that money back in some way, either by alleviating the position of the unemployed or by giving special relief to those distressed areas whose problems the Government have under consideration at the present time. They are considering schemes to deal with the problems of the distressed areas, and if the Chancellor had used the money in that direction I should have felt it was a far wiser proceeding than allowing it to go to redemption of debt. I do not know whether he will get the reports from those who have been appointed to look into the state of affairs in the distressed areas before this Bill has gone through the House, but, if so, he might see ways in which this money could be used there, and in that case I can only hope that he will not hesitate to come to the House and say that he thinks some of this money, or the whole of it, could be used at once in that way, and propose to add a new Clause to the Finance Bill.
  Apart from these consideration I cannot help feeling that this Budget is the hallmark of the success of the financial policy of the National Government. Take the financial condition of the country two years ago and take this Budget, and note what has been done. The unemployed cut has been restored, half the cuts have been given back to the teachers, police and others who had to make sacrifices. Industry is reviving; there is a better feeling and a larger hope in industry in spite of all the difficulties still facing it. I think the Government can congratulate themselves that a great work has been accomplished, and feel that the country

  1821
  is now ready for a further step forward towards some of the wider schemes which have been suggested by earlier speakers.
  6.6 p.m.
  Mr. WEST: There is no doubt on this side of the House that as a result of the action taken by the Chancellor of the Exchequer in 1931 the greatest burden had to be borne by the poorest people in this country. The increased rate of effective taxation upon the income of a man with £5,000 a year amounted to only 4 per cent., but the cut on the unemployed was a minimum of 10 per cent. In hundreds of thousands of cases married men who were unemployed and were paying a large part of their income in rent, which left them with a living allowance of only 15s., had to suffer a cut ranging from 2s. to 3s. per week. That is a cut of from 15 to 20 per cent. The cry of "equality of sacrifice" in 1931 was a hollow mockery from the point of view of most workers, and the same observation applies to the present-day restorations. Again, the richest people are given the most favourable treatment, and the poor are left with the heaviest burden. A single man with £200 a year had his tax doubled in 1931, and to-day he has been relieved only of, roughly, 12½ per cent. of that burden; but a single man with £2,000 a year, who had his Income Tax increased by 20 per cent., has been relieved of 75 per cent. of his burden. A married man with £500 a year income, who had an addition of 100 per cent. to his taxation in 1931, is relieved to-day of only 25 per cent. of his burden. A married man with £2,000 a year has been relieved of 60 per cent. of the burden he had to bear in 1931.
  The case of the unemployed and of the poor is very much worse. It is true that in a few weeks time the unemployed man will have his cut restored, but the increased insurance contributions still remain, and the poor still have to suffer the miseries and meannesses of the means test. It has been admitted in this House that the unemployed have suffered economies of more than £20,000,000 a year, and less than £8,000,000 a year is being restored to them. In other words, more than two-thirds of the additional burden imposed upon the unemployed will remain after this Budget has been carried through. The sacrifices of the rich in 1931 were fairly
  1822
  easy to bear. They did not entail any loss of health or general well-being in those days or since, but the economies suffered by the poor in 1931 generally led to increased poverty and destitution, and in very many cases to increased infantile mortality. A restoration of £5, £50 or even £500 to a well-to-do man makes very little difference to his life or to hi" general well-being, but the restoration of 5s. to an unemployed man and his family may mean the difference between health and strength and malnutrition. If the cry of "equality of sacrifice" was a mockery in 1931, the cry of "equality of restoration" in 1934 is an even more fraudulent mockery from the workers' point of view.
  I think the Chancellor of the Exchequer had an idea that this was so when he spoke a few weeks ago, because he tried to make out a special defence of what I believe to be the preferential treatment which the well-to-do have received. He said :
  "I thought I ought to consider the effect of any remission not merely upon the individual taxpayer, but upon the country as a whole. Looking at it from that point of view, I had no hesitation in coming to the conclusion that the relief which would confer most direct benefit on the country, which would have the greatest psychological effect, and which would impart the most immediate and vigorous stimulus to the expansion of trade and employment would be a reduction in the standard rate of Income Tax."—[OFFICIAL REPORT, 17th April, 1934; cols. 924–5, Vol. 288.]
  The hon. Member for Finsbury (Sir G-Gillett) has a similar philosophy, but it amounts to the old Tory argument that money spent by the rich is more beneficial to trade and employment than money spent by the poor. That is an argument which has been laughed out of every market place in Great Britain in the last 20 years. Not a single Tory orator dares to use it at the street corner, because it is laughed at by the average crowd anywhere. The hon. Member for South Salford (Mr. Stourton) went even further than the Chancellor of the Exchequer, and said this about the Death Duties :
  "Does he realise to what a vast extent these duties contribute indirectly to the unemployment problem? … The effect upon the countryside is even more devastating. Hundreds of country houses are shut throughout the country; for each one that is closed anything from 20 to 100' employês, indoor and outdoor, are thrown

  1823
  out of work, and there people flock to the towns to swell the figures at the Employment Exchanges."—[OFFICIAL REPORT, 18th April, 1934; col. 1071, Vol. 288.]
  That is the same argument. The hon. Member for Finsbury used it in a more subtle way. That argument is an elementary fallacy. Increased purchasing power in the hands of the rich may be applied to making investments abroad—in the Argentine, in India, in China or Japan—which will stimulate the employment of cheap labour there. There are few hon. Members who would claim that such investments are beneficial to employment and trade in this country, because they spend much of their time in deploring the fact that we are unable to compete with the cheap labour of foreign countries, countries to which, by the way, much of the unearned increment of this country has been sent by Members of the party opposite in days gone by. Sometimes the increased purchasing power of the rich may be used in investments at home, used to provide more working capital for productive purposes, but few would argue that what we need is more production. There is a far greater need of increased consumption than of increased production. Hon. Members opposite may say that the money may be spent directly. It is very doubtful whether the rich man whose purchasing power is increased will eat more food or wear more boots and clothing. His increased demand will probably result in an increase in the luxury trades, which are least in need of encouragement. It is not the Rolls Royce trade which is depressed, but coal, cotton and wool, and what might be termed the basic industries. Those need more encouragement.
  Increased buying power in the hands of the poorer classes would not be invested abroad, but would be spent at home directly and quickly. There would be a less demand for luxuries, but there would be an increased demand for necessities. There would be less employment for chauffeurs, game-keepers, butlers and footmen, but there would be more employment for boot-makers and textile workers. The argument that increased buying power in the hands of the rich is more beneficial than in the pockets of the poor is an absolute fallacy, and is
  1824
  groundless. The Colwyn Committee passed judgment upon this matter and, if I may quote from the Report of the Committee upon National Debt and Taxation, this is what they said :
  "For many social objects wise collective expenditure is clearly more economic than expenditure left to the individual …. The distribution of wealth in this country is very uneven, and social expenditure is not only highly necessary as a matter of humanity and social justice, but is also, up to a point, essential to the promotion of industrial efficiency. It makes for physical and mental well-being, for happiness and for energy. Moreover, it supports and steadies the purchasing power over consumption goods, which is unreservedly beneficial to industry."
  On the special point of employment, the Committee said :
  "We conclude, with regard to enterprise, that the effects of high income taxation have been almost negligible in the field of employments."
  That is the very contrary point of view to that which has been expressed by hon. Members and by the Chancellor from that side of the House.
  The Chancellor of the Exchequer was very pleased with his Budget. He was very pleased with his Government, but I am not sure that he is pleased with his Cabinet. He talked about the great change that was taking place from "Bleak House," and said :
  "We are sitting down this afternoon to enjoy the first chapters of 'Great Expectations.' "—[OFFICIAL REPORT, 17th April, 1934; col. 905, Vol. 288.]
  I am not sure who "we" are, Some, I have no doubt, are going to enjoy great expectations. The Chancellor has received congratulations from many quarters. I know of some. The hon. Member for South Kensington (Sir W. Davison) sent congratulations on behalf of the Income Taxpayers' Society. They ought to send congratulations because they always will receive sympathetic treatment and consideration from the National Government. A Noble Lord has also returned thanks, and has told the world that he sold timber for £10,000, for which he had only expected to get £3,500. He assured his audience that they would pay higher prices for houses, and that they were also going to pay his Death Duties for him.
  There are other societies and groups who ought to send congratulations to the Chancellor. Among them are the armament

  1825
  makers, whose shares are now so prosperous. They might pass a vote of thanks to the present Government. The motor manufacturers ought to send a message of congratulation to the Government for the generous treatment that has been given to them. Their shares have increased in value, and they should be very pleased. The great landlords should send a message of congratulation. They have long dodged their share of taxation, and they have now been promised a repeal of the land taxes. The brewers should send another special message of congratulation. Brewers, of course, always expect, and generally receive, most-favoured treatment from a Tory Government. The brewers in the last few years have not been very unfortunate in this respect, because they find that the Chancellor is very kindly disposed towards the brewing trade. He said that he was sanguine enough to anticipate increased consumption again this year. He had thought that if he could not increase the consumption of beer he could at any rate stop the decline, and his anticipation had been more that fulfilled. The consumption of beer had increased by about one-sixth. The mining industry may be depressed, iron and steel may not be doing very well and the textile trade may be in a very bad way, but, thank goodness, the brewers of England are doing jolly well; the crisis is now over. There used to be a slogan on the hoardings of London with which hon. Members will be familiar, "Guinness is good for you."
  Sir ARTHUR MICHAEL SAMUEL: So it is.
  Mr. WEST: I am not so sure that it is. I do not know. I am quite sure that is is good for Guinness. A new and more truthful slogan ought to be put upon the hoardings. May I suggest to the brewers, through the Chancellor of the Exchequer, that they might put on the hoardings this new slogan, "National Government is good for Guinness, and good for Bass and for Worthington, too"? The "Daily Express" has just been reporting that investment shares in this country in the last 18 months have increased in value by over £2,500,000,000, and a Sunday newspaper said recently that the country is at last being made safe for investors to live in. All those people ought to send messages of congratulation
  1826
  to the Chancellor. I would inform him that there is a great deal more joy outside the Stock Exchange over this Budget than there is outside the Employment Exchanges.
  The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) went rather too far when he said in a speech in this House the other day that the whole country was receiving this Budget with great enthusiasm. Some classes ought to be enthusiastic, but to say that the whole country is so is slightly exaggerating. The North Hammersmith by-election did not give much evidence of enthusiasm for the Government, neither did Upton or East Fulham, nor will future by-elections. The "Morning Post" said during the North Hammersmith by-election that the Budget would give the National Government candidate 6,000 more votes than he was going to get. He only got 10,000, and if that statement were true the Government stock must have been lower than it appeared before the Budget was introduced, for the National Government candidate would have lost his deposit by having only 4,000 votes but for the Budget. I believe from the evidence of recent by-elections, that the majority of thinking people regard the Budget and the National Government as antagonistic to the best interests of this nation, and that they are anxiously awaiting the opportunity of an early general election so that they may have a chance to give notice to quit to the Government. I hope that that day will not long be delayed.
  6.25 p.m.
  Mr. CHAMBERLAIN: I am inclined to agree with my hon. Friend the Member for Finsbury (Sir G. Gillett) that there has been very little in the Debate this afternoon of serious criticism for me to answer, and it is not necessary for me to take up a very great amount of time of the House. I will make a few comments upon some of the speeches to which we have been listening. The Finance Bill, to which we are asking the House to give a Second Reading, is an unusually short one. There are no more than 27 Clauses in it, and I think that one may say that of those 27 Clauses not more than half-a-dozen are of major importance; yet the Bill is regarded, and I think rightly, not only in this House but in the country, as a notable landmark,

  1827
  and as indicating that, in the opinion of the Government, the tide has turned, and that the change is in a direction as to which we need have no fear that it is going to be reversed. The moment that one alludes to any improvement in the country, there always will be somebody, like the right hon. and gallant Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair), who accuses one of complacency. The right (hon. and gallant Gentleman reserved his own complacency for one brief period of a few months when he was the most coruscating Member of the National Government. Since he left us, nothing has gone right, and it is only occasionally that he can get means of consolation from the thought that possibly the optimistic utterances of the right hon. Gentleman the Member for Hillhead (Sir ft. Home) may have been a little exaggerated.
  The Bill is, in form, so far as it changes the taxation of the country, only a remission of the Motor Licence Duty and of the Income Tax. Of course, in substance, the Bill, as has been pointed out by the hon. Member who began the discussion, raises the money which is necessary, or authorises the raising of the money, to carry out the whole scheme of proposals in the Budget, and that is recognised in the Amendment of the party opposite. They speak in it of their view that the Bill, instead of restoring in full the cuts imposed upon the unemployed and those in receipt of lower incomes, lightens the taxation upon the rich. Hon. Members know perfectly well that the restoration of the cuts in unemployment pay does not require a Clause in the Finance Bill, because they are dealt with elsewhere. Therefore, the insertion of these words in the Amendment is an indication of the recognition on the part of hon. Members opposite—and quite rightly—that the whole structure of the Budget, and the proposals which I described in my statement, are in question. Further, they know that a vote against this Bill is a vote against the restoration of the cuts in the pay of the unemployed. If you destroy the Bill, you destroy the whole basis. The principal feature of the Budget was the restoration of the cuts, and, therefore, it is perfectly true to say that what the Opposition are really doing is exploiting their own weakness, for, if
  1828
  they had had the slightest idea that an Amendment of this kind would be carried, they would never have ventured to put it on the Paper. They are relying upon their opponents "to save them from the logical consequences of their own Amendment.
  The Amendment, of course, completely and wholly ignores the two principles which I laid down in my Budget statement as those which have guided me in the distribution of the surplus, and I would like to ask the hon. Gentleman who is going to speak later on behalf of the party opposite to tell us definitely and officially whether it is the fact that the Opposition have thrown over the whole idea that the burdens imposed in 1931 were imposed for a special purpose to meet an emergency, and ought to be removed when that emergency has disappeared. I ask that we may have an official statement of the official attitude of the Opposition on that point. Of course it will be seen that, if their position is that we should pay no attention to those considerations—that we should entirely neglect the views which I expressed in laying down that principle—and should set about the redistribution of the wealth of the country through the Budget without any regard for the special circumstances of 1931, then if we had adopted that view and had been governed by the sort of considerations which the hon. Member who last addressed the House attributes to us, we should have produced a very different Budget.
  I would remind hon. Members of what they entirely forget, namely, that there are not only the remainder of the cuts to be restored, but there are other parts of the legislation of 1931 to be considered. There are the Income Tax allowances, and there is also the addition to the Surtax; and there is the question of the Entertainments Duly. In fact, there is involved in this question a whole series of the special taxes and cuts which were imposed in 1931; and, if the principle which I laid down in the Budget speech is not accepted, then, of course, those who are looking forward, when a surplus may again put into the hands of the Chancellor of the Exchequer an opportunity of distributing something, to some restoration of the remainder of the cuts or a removal of the remainder of the burden, will find their whole prospect completely and entirely altered. I certainly think we ought to have some

  1829
  definite assurance as to the position of hon. Members opposite on that point.
  If, on the other hand, the principle which I have laid down be accepted, that these particular special measures which were taken in 1931 must be dealt with first, before we consider any further redress of grievances, then the whole of the argument about whether we are or are not altering, or whether we should or should not alter, the distribution between direct and indirect taxation, is irrelevant. I do not profess that this Budget represents my final ideas of what the proportions of taxation should be as between different classes of the community. I have expressed no opinion as to whether they are right or wrong at this particular time. What I have said is that I am not now concerned to rectify any inequalities which I consider to exist in that system. I have felt it my duty to use my surplus, first of all, to make, I do not say an exact equality, but some rough equality with what was the case before the special burdens were imposed; and then, and then only, if there is something over, we can begin to consider other measures.
  I am not, therefore, going to enter into what seems to me to be an entirely academic discussion about what part of the indirect taxation is borne by this or that class in the country. But when I see this Amendment, which says that we are further lightening the taxation upon the rich, I think it is pertinent to remark that even to-day, after the remission of Income Tax embodied in the Finance Bill, the position of the Income Tax payer will still be worse than it was before 1931, and worse right throughout the scale. If I may give an example, I would point out that whereas the peak of taxation—Income Tax and Sur-tax—upon the Income Tax payer was previously 12s. in the £, it is now 12s. 9d. That is after the remission of the 6d.
  It is not true, therefore, to say that the rich are being unduly favoured by this Budget, and, indeed, I think it must be obvious on any consideration of the figures of revenue that the position of the so-called rich, of the wealthier class, has enormously deteriorated in recent years. Taking, for example, the revenue from Income Tax and Surtax, the income on which Income Tax under Schedule D is paid as compared with 1929 has
  1830
  been reduced by about £300,000,000, a reduction of 30 per cent.; while, taking the income on which Surtax is paid, that also has been reduced in the same period by £180,000,000, which again is a reduction of something like 30 per cent. I frequently hear it remarked that the poor have not only had all the burden upon them of increased taxation, but also the cuts, whereas the rich have only had the increased Income Tax, but that, again, leaves out of account altogether the fact that the enormous saving in interest, to which the hon. Member opposite alluded at the beginning of his speech, has come out of the pockets of those whom hon. Members opposite call the rich. Therefore, they have made their contribution there as well as in actual increase of taxation. When we are told, as we were told by the hon. Member who spoke last, that this Budget is a fraudulent mockery—
  Mr. WEST: I said that the slogan of equality of restoration was a fraudulent mockery, not the Budget.
  Mr. CHAMBERLAIN: We will say it is the slogan of equality of restoration. Of course, I have never pretended that there was exact equality of restoration. Everyone must recognise that you cannot possibly get nearer than a sort of rough approximation. But, when the hon. Member speaks of the slogan being a fraudulent mockery, he means, of course, a fraudulent mockery of the poorer classes. That is the whole point of his argument. But that, of course, is simply flying in the face of the facts. He entirely omitted any reference to the restoration of the cuts in the case of the unemployed, and let me tell him that, when he was giving us a long catalogue of people who might send votes of thanks or congratulations to the Government, he quite omitted one class, from whom I am glad to say we got a gracious acknowledgment through the hon. Member for Bridgeton (Mr. Maxton). I have had plenty of communications, as the hon. Member anticipated, from different parts of the country, and I can assure him that it is not only landowners, brewers, Income Tax payers and wealthy people generally who have shown gratitude for and appreciation of this Budget, but many also among the unemployed have felt that at any rate they have not merely got half the cuts back, but the

  1831
  whole of them, and in that respect are better treated than any other class.
  The Liberal party have felt it necessary to put down an Amendment of their own. I can only suppose that it must have been drafted after the departure of the right hon. Gentleman the Member for Darwen (Sir H. Samuel), for I can hardly suppose that he would have put his name to such a ridiculous—I might almost call it fatuous—collection of suggestions. We have heard another of those delightful rhetorical speeches, which seem to echo those of my right hon. Friend the Member for Epping (Mr. Churchill), but somehow do not seem to contain anything like the same variety of matter which I have always found in the speeches of my right hon. Friend. The right hon. and gallant Gentleman the Member for Caithness (Sir A. Sinclair) can never help going back again to his old story of Free Trade, but it is not the slightest use to-day to talk about the benefits of Free Trade or the disadvantages of Protection, because, for good or ill, this country has now become a protected country. Whatever the right hon. Gentleman and his friends may say, it is absolutely certain that he will never see the country go back again to the condition in which it was before. There are, of course, several reasons for that. One is that it would be necessary to find a fresh source of revenue—[HON. MEMBERS : "Land taxes!"] Another reason is that all those who have been restored to employment during the time that this Government has been in office would never for one moment tolerate the taking away of the protection which has given them back the home market and the opportunity to earn wages instead of being dependent upon unemployment relief. Therefore, so far as the right hon. Gentleman is attempting to argue that we should return to former times, he is flogging a dead horse. We shall not see any election in our time fought upon these old and, by this time, completely putrefying considerations.
  The right hon. Gentleman finds fault with the Budget because, he says, it makes no provision for a policy of national development to combat the grave evil of unemployment; but I should have thought that a policy which has succeeded in reducing the number of unemployed by 550,000 in the last year might well have
  1832
  attracted some attention from the right hon. Gentleman. The fact is that what he wants is something spectacular. He does not quite know what it is to be, but there is to be some expenditure of vast sums of money. He thinks that by spending enormous sums of money he can bring back prosperity to the country. He has learned nothing in all that painful period of years which has elapsed since the War. He has forgotten entirely our experience of public relief works—for that is really what he is after. He omits any mention of anything the Government have done to assist any sound economic proposition. Indeed, the position of the Liberal party is that, every time we do anything in the way of Government assistance for the purpose of stimulating or developing industry, they find that it is the wrong thing to do, or, if they do not go quite as far as that, at any rate they are perfectly certain that it is the right thing done in the wrong way.
  Sir A. SINCLAIR: The right hon. Gentleman forgets that in this matter of national development I stood on the declarations of his own Prime Minister.
  Mr. CHAMBERLAIN: Precisely, and we are carrying out the declarations of the Prime Minister. We are continually stimulating the development of industry in one way or another and we are delivering the goods.
  Sir A. SINCLAIR: By public works?
  Mr. CHAMBERLAIN: Have we not a large programme of telephone development and road development? Have we not done something to start a new industry in hydrogenation? There is also the merger of the North Atlantic lines and the completion of the great Cunarder. These constitute a programme of national development but I suppose, after all, the right hon. Baronet will come back to the same old story of roads, afforestation and land drainage. Although our methods may not be spectacular, at any rate they are effective. We can point to a reduction of the figures of unemployment, and the increase in the number of those who are actually at work is proof that we are on the right lines. May I remind the right hon. Baronet of the words used in the Debate on the Finance Bill last year by the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris). I

  1833
  do not always agree with him but on this particular point I think he can teach a lesson to his leader. He said :
  "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. They are just palliatives to ease the situation."
  That is precisely my position. I can claim that we have done, and are still doing, all that I believe any Government can do to assist in the stimulation of trade, and in that alone is to be found the real solution of our problem. The right hon. Baronet made several suggestions about the Budget surplus of last year. In his hands it is capable of extraordinary things. In his Amendment he takes a non-recurring asset and proposes to use it for a recurring expenditure, namely, of course, the reduction of contributions to the Unemployment Insurance Fund.
  Sir A. SINCLAIR: By reducing the debt on the fund.
  Mr. CHAMBERLAIN: I wonder how much the right hon. Baronet thinks that would help him. He wants to take this £30,000,000 off the £106,000,000. That brings it to £76,000,000. That would bring down the annuity that is necessary from £5,000,000 to £3,500,000 and that would reduce the contributions by a farthing a week all round. That would be the effect of that use of the surplus. But he is also going to use the same surplus for developing the national resources of the country. I wonder how many other uses it is to be put to.
  Sir A. SINCLAIR: I suggested two other sources.
  Mr. CHAMBERLAIN: It is like the widows' cruse which, when you empty it, fills itself up.
  Sir A. SINCLAIR: The right hon. Gentleman misunderstands me. I said two other sources from which money could be found—not two other uses.
  Mr. CHAMBERLAIN: Does the right hon. Baronet deny that he suggested that the surplus should be used to develop national resources?
  Sir A. SINCLAIR: I said there were three uses to which the money could be put and there were two sources from
  1834
  which it could be obtained. This was one and under-budgeting was a second.
  Mr. CHAMBERLAIN: The surplus 1s to be used for the specific purpose of reducing contributions. I have shown by how much it would reduce contributions. In his speech, the right hon. Baronet said it was one of various sources which could be used for a great number of other purposes. That is exactly what I said. He wants to use non-recurring assets for a great number of recurring uses. Another suggestion was that there was some financial jugglery over an amount of £8,000,000 which had passed from last year's accounts into this. There is nothing mysterious about it. I said in my speech that the reason the figure was down was that certain items which I had expected to come into last year did not actually fall into the year's receipts and, therefore, came into this year. The effect was that I had to take account of them in this year. What he does not seem to appreciate is that Miscellaneous Revenue is a dwindling item. It largely consists of arrears and, in the nature of things, must go on diminishing from year to year. There is no financial jugglery about that. As to under-budgeting, it is true that in taking an item of the revenue like Estate Duty, no one can say for certain how many people are going to die during the ensuing year or how much they will be worth when they die. It must be more or less of a guess. What I said was that, while some people might guess higher than I have guessed, in any case I do not think it would be possible for anyone with any prudence to put the estimated revenue so high that it would produce a large sum which could be used for some of the purposes that have been suggested. Apparently the right hon. Baronet does not disagree with that and, therefore, I do not quite understand to what purpose he suggested that I have under estimated the revenue in the coming year.
  May I say one word of a general character? I have given it as my view, fortified, I am glad to think, by the hon. Baronet the Member for South-West Bethnal Green, that it is in trade recovery that the greatest hope of the country lies. We have instituted a scientific system of tariffs constructed not by politicians, but under an independent and impartial committee. The result is, as

  1835
  the hon. Member for Gower so truly said, that no one has ever noticed the difference. He said over and over again that he would defy anyone to say how much tax there was upon any article or how much it had increased the price of it, although as a matter of fact there is hardly any article that is not taxed. That is absolutely true. That is what we always said would happen. Everyone knows that, when you look at the cost of living index, so far from the cost of living having risen since the duties were imposed, it has come down. So much for the home market.
  Then the right hon. Gentleman repeated what I said myself on a previous occasion, that formerly we had a very much larger export trade than we have to-day, and he and others complain that we are throwing obstruction into the channels of international trade and are, I gather, in their view responsible very largely for the difficulty of restoring the old flow. That is the sort of thing on which one might argue almost indefinitely, but I lay down this proposition, that in a world in which economic nationalism appears to be gaining force we should be committing suicide if we did not take account of that fact and protect our own home market. On the other hand, the very fact that we have a tariff has enabled us for the first time to make commercial agreements with other countries under which we have been able to induce them to lower their tariffs. That is a process of which we have not by any means yet seen the end and, so far as that process is concerned, not only are we not obstructing the flow of international trade, but we are using our own tariffs as a lever in order to free the channels. That is a doctrine which ought to have the support of hon. Members opposite, and which I imagine would have their support if it were not for the unfortunate fact that it happens to be the policy of His Majesty's Government.
  It is a very interesting and important problem for the future what is going to be the trend of international trade and how far this idea of economic nationalism is going to spread. I would point out to the right hon. Gentleman who made the point that the difficulties of exchange, from which international trade is suffering so much to-day, arise from fear of the stability of the currencies of the
  1836
  countries in which these exchange restrictions are imposed, and those, again, arise very largely from the fact that the wholesale prices of commodities, and particularly of primary commodities, have fallen so low. The result of the fall in price of those commodities has been to restrict the value of the production of agricultural countries. Those agricultural countries are the great customers of the industrialised countries and, therefore, it seems to me that any policy which has the effect, or is likely to have the effect, of raising the wholesale prices of these primary commodities is one which in the long run must be productive of the most direct benefit to a country like ourselves, which in the past lived so largely upon international trade and has done so much to develop international trade, by its financial policy, with other countries.
  It seems to me that for a long time to come we shall have to face a world in which the process of trying to develop secondary industries to replace to some extent the agricultural industries whose value has so much decreased will continue, and we shall have to adapt ourselves to new conditions and shall probably have to make up our minds to the fact that, although we can still increase our export trade, while we still hold the foremost position as an exporting country in the world, we cannot expect in any time that we can foresee at the present that international trade is going to assume the same proportions that it did only recently, and therefore we cannot assume that we shall be able to export either that quantity or that value of goods which we did only a very short time ago.
  If that be so, two alternatives are still open to us. One is the continued expansion of the home market. In my opinion, we have not by any means reached at present the limit of expansion of the home market. The other is to be found in the development of inter-Imperial trade. It is a striking fact that, while our exports to other foreign countries have decreased, our exports to the Dominions and the countries of the Empire have increased. Some people find fault with the fact that the increase of the imports from the Dominions here has been greater than the increase of our exports to them. I do not take that view. I think that the Dominions were in a worse position than we were at the

  1837
  time of the Ottawa Agreements; they are now beginning to show great improvement in their conditions, especially Australia and South Africa. The first thing they had to do was to find a better market for their own products, but the result of that is already beginning to show, and it will continue to increase as they feel more confidence and therefore a greater ability to find that market. In those two directions—in the maintenance and expansion of the home market and in the further development of those inter-Imperial agreements which were begun, and only begun, at Ottawa—I believe that this country will have to find its compensation for the loss of so much of its foreign trade, which we probably shall not be able to recover in the lifetime of many of those present.
  Towards that end the policy of His Majesty's Government is directed. It is indeed gratifying to us to think that in the short period of time that has elapsed since we came into office the results of our efforts have been such that we are able to present to the House a Finance Bill of this character, which, as I said, is the first advance towards a restoration of better times, and which we feel will only be a stepping-stone to further advances in the same direction.
  7.3 p.m.
  Mr. MALLALIEU: We have just listened to a very remarkable speech from the right hon. Member, considering the fact that the speech is made upon the Second Reading of the Finance Bill. It is remarkable for a number of reasons, but it interested me more particularly for his announcement that, whatever anyone else may do, whatever other countries of the world may do, we in this country shall remain a Protectionist country throughout the lives of all those present. I wonder if the right hon. Gentleman had been in consultation with his right hon. Friend the President of the Board of Trade before he made that statement prophecying with utter certainty—the certainty, one might almost say, of complete blindness—that an Election would never again be fought on the issues of restriction or Protection. I know that he has previously done his best to prevent any movement in the world towards freer trade. Before the World Economic Conference
  1838
  he said that, whatever all the other nations of the world did, we should remain Protectionist, and recently, when this kite was flown from New Zealand, he and his Government chose to ride away on a mere statement that what had been made by the New Zealand Government had not been an offer. What does it matter if it was an offer or not? If it were the merest inquiry, they could have gone out to meet it and say that, whatever would be done in that direction, they would do likewise and more also.
  The right hon. Gentleman ended up his speech somewhat as he began it, by saying something about this Finance Bill being a landmark on the road towards prosperity. I did not notice very loud cheers when he said that. Perhaps they will appear in brackets in the OFFICIAL REPORT. There was a mere bleat of "Hear, hear," at intervals through his speech. I venture to say that all over the country, be there never so many posters displayed by the Conservative party for the Government, people will still use their own judgment on these matters and not regard statements as absolute gospel because they come from Ministers of the Crown.
  I was interested also to hear the speech of the hon. Member for Finsbury (Sir G. Gillett). He also said something about this Budget being a hall mark, or a land mark, of the financial policy of the National Government. I wonder to which National Government he was referring. So far as the slight return towards prosperity—for which we are all extremely thankful—has been due to financial policy at all, my own humble observation would lead me to think that it was due to the financial policy adopted by the first National Government, which did all the financial dirty work for which this Government claims so much credit. I think it was perhaps the most remarkable thing of all in the speech to which we have just listened that the right hon. Gentleman again forgot to say anything at all about the land taxes. It has been pointed out by my right hon. Friend that he omitted all mention of this very important step from his Budget speech. I have no doubt that the House will be delighted to hear him make any such statement later on.
  Mr. ISAAC FOOT: Perhaps the Prime Minister will make the explanation.
  Mr. MALLALIEU: My hon. Friend reminds me that perhaps the Prime Minister will make the explanation himself. I had expected to hear something from the hon. Member for Finsbury, but we were all disappointed, because he never so much as mentioned the deep humiliation through which he has passed, though some of us thought we suspected it from his tone. I do not propose to weary the House by going over all the various details of the Finance Bill, but I do wish to say a word or two about this most important matter of the complete repeal of the Land Value Tax provisions of the Budget of 1931. I do not think that anybody will deny that the Chancellor of the Exchequer of that time, Lord Snowden, with extraordinary courage and perseverance, managed to get that provision on to the Statute Book with very great difficulty. There was not only the implacable opposition of the Conservative party to this beneficent proposal, but there was also a distinctly difficult Parliamentary situation. I do not deny for one minute that my hon. Friends who then represented my party in this House did not make things frightfully easy. That was a matter of common knowledge. All the more credit to the Chancellor of the Exchequer of that time for having achieved that remarkable result and for having put on the Statute Book that remarkable piece of legislation. Now those 30 pages on the Statute Book are to be thrown on one side by a four line Clause in this Finance Bill, which the Financial Secretary or the Chancellor of the Exchequer never so much as mentioned by a single word. That seems to be a complete surrender to the Tory land supporters of the Government at the expense of anything in it which might still be described as National.
  Not only have the actual tax provisions been repealed, but also the valuation proposals, which, of course, are the most important part. Whether or not hon. Members agree with the particular tax which was imposed in 1931, at least I think they will have to agree that any system of land value taxation would have to be based upon a valuation such as that contained in the 1931 Finance Act. Therefore
  1840
  the only possible justification for sweeping away the whole of the valuation proposals in that Act could be that you believed that any unearned increment in land, no matter how little the landlord had done to earn it, no matter how much the community had done to create it, should go straight into the landlord's pocket. Unless you are prepared to admit that, you cannot possibly justify the sweeping away of the valuation proposals of the 1931 Finance Act. That, of course, may be Tory policy, but I do not think that anyone would suggest that it is progressive policy, and I should never have thought that anyone would hace been so bold as to suggest that it was national policy. As I understand the principles of Tory taxation, one of them seems to be to tax consumable articles—indirect taxation—with the result—although I do not say the intention—that the poor man has to pay more in proportion to his income than the rich man. That policy has been carried out consistently by the National Government.
  Lieut.-Commander AGNEW: Has not the cost of living fallen?
  Mr. MALLALIEU: Of course the cost of living has fallen, but the cost of living in the whole world has fallen, and in some other countries it has fallen much more than it has done in this country. The result is that everything that the poor man or woman buys in this country is taxed up to the hilt. We have now travelled a considerable distance since the Lord President of the Council was able to make a confident prophecy like that made by the Chancellor to-day, that the Conservative party was and would continue to be pledged to resist food taxes. Of course, there was a little shouting by the millionaire Press, and the Lord President of the Council and his friends gave in. I have no doubt that it was a convenient consequence of that change of policy that large sums of money would flow automatically into the coffers of the Conservative party from interested persons who hoped to be able to exploit the situation, and be favoured in their exploitation by the Government.
  We have heard from the right hon. Member for Caithness and Sutherland (Sir A. Sinclair) and the hon. Member for Gower (Mr. D. Grenfell) that it is not

  1841
  only in these respects that the poor man has come off badly in the financial arrangements for this year. The emergency scales for the lower Income Tax payers, the allowances which were fixed in 1931, still remain, whereas the 6d. cut was returned in toto. It is not surprising, if this be a Tory Government, that they should wish to repeal the Land Tax, because almost daily they are legislating for special favours for their privileged friends, provided that these privileged friends are wealthy enough to make expensive clamour, or unscrupulous enough to hold up the Government to ransom. It is not very surprising that the Government in those circumstances should have surrendered to the land monopolists any more than it was surprising in 1923 that the Conservative party should prevent the continuation of the valuation started in 1909 by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). It is all of a piece, and true to type that this Conservative Government is now sweeping away one of the fairest methods of taxation that has yet been conceived, taxation by taking back to the community some of the wealth that has been put by the workers and the community into the land, instead of allowing the landlord to snatch the whole benefit for himself.
  I do not see what conceivable argument there can be for a repeal of the valuation. We have not heard any argument from any of the Ministers responsible for the Government. It has just been done absolutely quietly, at the behest, I suppose, of the landed interests. It would be wise for us to consider for one moment the extraordinary proportion of the expenditure which is made upon national development of all sorts which in fact goes to the landed interests. There 1s, for instance, an estimate which I have never seen questioned, about Charing Cross Bridge. The figures there are most illuminating. The total cost of the scheme was to be £16,865,000, and of that £16,865,000 no less than £11,000,000 was to go in buying out the land and all the rights necessary to erect that bridge. One would not expect that bridge building would occupy a tremendous amount of land. That was the case for Charing Cross Bridge. I agree that there were the approaches, and a great deal of work in rehousing and so forth, but a bridge
  1842
  is not the sort of thing in regard to which one would expect the immense cost of land to enter into the expenditure. In the case of another bridge I propose to inflict upon the House—the case of Lambeth Bridge—the cost of land is not so great, but still outrageous in amount. The cost of the total work was £839,000, of which over £102,000 had to be expended for the purpose of buying out the landowners and the various rights needed for the bridge. That is by no means the whole story. Not only does one compensate the landowners for certain rights one takes over from them, but one makes an absolutely gratuitous present of increased value to all the surrounding land when the work is done. In the particular case of Lambeth Bridge it was not surprising to see very shortly afterwards that the small amount of eight acres on the Grosvenor Estate was sold by the Duke of Westminster for no less than £1,000,000. Just after that sale the "Times," on 19th March, 1930, made this very true statement :
  "… it is the building of Lambeth Bridge which has stimulated this development and has so enormously increased neighbouring values."
  A tax on the value of land would have taken some of that increased value of the land back to the community which had expended the money on the works. It is rather amusing that this Government, who profess to have induced foreign industrialists to set up factories in this country, should have repealed this tax, and for this reason. I have not seen a tremendous number of foreign factories established in this country as a result of the protectionist policy of the Government, and I have noticed that those which have come here have been extraordinarily unwelcome to many of the industrialists who clamour for Protection because they are regarded as potential competitors in the home market. It is interesting to know that it was the last Conservative Government which enabled those same factories to work while paying exceedingly low rates. Now the Government are allowing "the wicked foreigner" to escape without recouping something from him in Land Value Tax.
  The Chancellor of the Exchequer poured a great deal of ridicule upon the party which occupies this bench because of its devotion to schemes of National development. We have been told again

  1843
  and again by representatives of the Government that these schemes are too expensive. Indeed they are very much more expensive than they need be. If the Government did not purposely do such things as this, if they did not repeal such a tax, it might make those schemes very much cheaper, and ensure that a large part of the benefit of the schemes would come back to the community. I am not going to weary the House any longer about the Land Tax proposals except to make my protest as to the way in which the Government have done this thing. Here is the great effort of 1931 entirely thrown away by the present Government in spite of the fact that only a year or two ago they were stating that it would be wrong, and not at all the right thing to do, to repeal that Measure.
  Mr. HENDERSON STEWART: Does the hon. Gentleman now express approval of the Land Tax in question, of its form, function and purpose?
  Mr. MALLALIEU: My hon. Friend has not caught one of the things which I think I said, namely, that it was not a question of the particular tax. I was saying that you could not justify the removal of the valuation because any system of land value taxation, whatever you may think about the particular tax of 1931, must be based on a valuation such as the one now repealed.
  Mr. STEWART: The hon. Member's last few words were about the Land Tax. I ask him, does he favour the Land Tax which Mr. Snowden introduced?
  Mr. MALLALIEU: My opinion about the Land Tax is that it is not quite the tax which I should have chosen, but I think it is very much better than none. [Laughter.] I cannot for the life of me see why it should cause merriment even on the Front Bench, when I say that this would not have been the particular tax dearest to my heart. It is a jolly sight better tax than I have seen the Government produce. It is the repeal of the provisions as to valuation which was absolutely uncalled for and indeed iniquitous.
  I wish to refer to another matter which deserves some attention. Whatever one may think about the salaries paid to teachers in this country or about their
  1844
  size—I am not one of those who think that teachers are over-paid—the teachers do exceedingly hard work very well indeed. As a result of various visits to elementary and secondary schools, I have been astonished at the way the teachers control enormous classes, when in the ordinary public schools classes of a dozen are the order. Whatever one may think about the salaries that are paid, most people will regard it as an injustice that a teacher who happens to retire in the period of years through which we are passing should permanently suffer by reason of the pension being fixed in relation to the salary paid during the emergency years. Obviously the cuts of 1931 were intended to be temporary, but here we have permanent injustice going on, and the Government should at the earliest opportunity take steps to remedy the matter. There is another effect of that same evil, teachers are at present refraining from retiring because they feel that in some way they will be kept out of the pension to which they are entitled. That has a very obvious effect on unemployment at the younger end of the profession, which, I think, everybody would prefer to have removed.
  I am going to take the risk referred to by the Chancellor of the Exchequer, namely, that anybody voting against this Bill would be considered as voting against the restoration of the cuts. I am going to take the risk. I do not think such a vote will be misconstrued. If we succeeded in defeating this Bill another Bill could be introduced without its defects. However that may be, I am going to take the risk. It is the work of a completely Conservative and Tory Government, a put-back-the-clock Government. I do not think the country will take any different view in spite of all the vast propaganda which is being put about. The Bill will have one very good effect. It will at least awaken the country to something which we on these benches have known for some time, namely, that this Government is a purely Conservative affair trying to masquerade with some sort of cloak of national well-being about it.
  7.23 p.m.
  Lieut.-Colonel Sir WILLIAM ALLEN: Ever since I have sat as a Member of this House I have always been amused more than anything else by a Member of a particular party twitting the Leaders of

  1845
  another party for having changed their political opinions, or perhaps having changed their expression of them. No party in this House has the monopoly of ability to change their political opinion, least of all the Liberals. If I started to quote changes of opinion I should not end my speech to-night. It is a political game, and very amusing. I sympathise with one thing that has been said concerning the functions of the National Government. Extraneous objects and subjects have been introduced by the National Government for which they have no mandate from the country. I hope, in passing, that the right hon. Gentleman and his friends will see that they carry out that idea with regard to the Indian question and the White Paper. I rise to say how very disappointed I am because there has been no reference to-day, and very little reference at any other time, either on the part of the Chancellor of the Exchequer or of the Financial Secretary, with regard to the poorer people. There was no mention whatever in the speech of the Chancellor of the Exchequer to-day of allowances in respect of the poorer people. I am very much disappointed. I notice that there is a reference to it in the Amendment of the Labour party. When I spoke during the Budget Debate I mentioned this subject, and said that it was very important and that I hoped the Chancellor of the Exchequer would see his way to make some concession. I have received a number of letters from people since then expressing the hope that something would be done. What kind of people are they? They cannot help themselves. They have no trade union. Very often they are people who have an unearned income and cannot do anything. This may be very surprising to the House. In Clause 17, the Income Tax is put at 4s. 6d. in the £. Do these people get the benefit of the drop of 6d. in the Income Tax? The House may be surprised to learn that they do not. A man with unearned income of £325 is allowed threepence, while the individual with £2,000 a year is allowed the full 6d. Is that fair play to those who cannot help themselves? A married man with an earned income of £400 a year is not allowed the 6d. but only threepence. Is that fair, when a man with £2,000 a year is allowed the full 6d.?
  These people have no one to fight for them. They never kick. Whenever the
  1846
  greatest sacrifices were to be made—and this ought to impress the House very seriously—they said to themselves, "It is to help the nation. A National Government has been formed in order to drag the country out of this morass of financial difficulty, and we are here to help them. We will do our bit of starvation in order that the Government may be assisted to restore the country to its original financial position." Now, when all that has been done by them, without a grumble in making sacrifices, they are not even to get the benefit of the 6d. in the £ which others with larger incomes are getting. Is that fair? Surely, the Chancellor of the Exchequer knows perfectly well that these people are not in a position to make any appeal. Then, why is there all this silence on his part? He may say to me : "I cannot do everything." I know that he cannot do everything but when in his Finance Bill he says that the Income Tax is to be reduced from 5s. to 4s. 6d. in the £, he ought to see to it that every individual who pays Income Tax gets the benefit of that sixpence reduction.
  Two years ago I put a question to Viscount Snowden when he was Chancellor of the Exchequer, asking the amount of money that was collected from Income Tax payers who were not entitled to pay Income Tax, that is, money that had been deducted at the source from little dividends of £2 and £3 which dropped in monthly. Income Tax of 4s., 4s. 6d. or 5s., as the case may be, was deducted from these little dividends of £2 and upwards. The reply that I received was that the Government had in their possession in one year a sum of £47,000,000 that did not belong to them. To whom did it belong? To these small, uncomplaining people. It had to be returned to them eventually, but it was collected from them at the source. Their small incomes were depleted to that extent, and a considerable time elapsed before the money was repaid to them. In some cases the amount was deducted from a dividend in, say, April, 1933, a claim for repayment was made and it is perhaps 15 months later before they get back the amount deducted from their little dividends. The money is held by the Government for all these months. It is returnable to these small people and not to people with huge incomes, because

  1847
  they have no title to any return of Income Tax. The £47,000,000 belongs to these poor people. In addition to holding that sum for months and months, this Government cannot see their way to ensure that these poor people get the full value of the reduction of 6d. in the Income Tax.
  There is a case for reconsideration of the restoration of, at any rate, part of the allowances. It would cost the Chancellor of the Exchequer some money, and he may not be able to see his way to do it. A great many hon. Members have said that the right hon. Gentleman has under-budgeted, and I am of the same opinion. Instead of there being a surplus next year of £30,000,000 I believe it will be nearer £50,000,000. An answer was given to a question the other day by the Chancellor of the Exchequer to the effect that it would cost the country £26,000,000 to restore the full allowances. Could we not have part of the allowances restored? Could the married man have his allowance restored, without allowance for the children, or say, where the former allowance was £160 and is now £100 for a single man, could not one-half be restored? It might cost £5,000,000 or £6,000,000, but it would be a step in the right direction and would help these poor people who have done so much for the good of the country. There was an opportunity this year to give them something and a little more next year. If the Chancellor of the Exchequer did that he would have the blessings and prayers of these poor people. It is extraordinary that they have been almost obliterated from consideration. I can only hope that the Chancellor of the Exchequer will reconsider the position and restore at least part of what has been taken from these people, and that he will see that when there is a Clause in the Finance Bill that reduces the Income Tax from 5s. to 4s. 6d. these poor people will get the same advantage as the rich.
  7.37 p.m.
  Colonel WEDGWOOD: The hon. and gallant Member has voiced what all of us are feeling. We all hold out our hands to the Chancellor of the Exchequer and say : "Give us something." The speech, which the hon. and gallant Member has just made is the sort of speech that is being made by the majority of the people in this country to-day. They want the
  1848
  allowances back. I will not, however, add to the demands. I will leave it to more eloquent tongues. I want to say that I think the Chancellor of the Exchequer is undoubtedly the ablest Chancellor of the Exchequer I have ever known. No other Chancellor of the Exchequer, no other member of this House could have been quite so sure, quite so satisfied with a Budget of his own imagination, quite so satisfied with the state of the country's finances, and quite so confident that the recovery of trade was all due to him. I am sure that he believes that, and I wish to congratulate him on the marvellous success of his being Chancellor of the Exchequer.
  I would, however, give just a hint that a Budget is not merely a question of expediency. A Budget ought to be guided by some definite purpose, and that purpose should be the revival of trade. I feel, of course I may be wrong, that all through the Chancellor of the Exchequer has not said : "How will this Budget affect trade?" but "Will it be popular?" I am certain that if he and his successor look upon the Budget as a question of "Will it be popular, how can I satisfy the loudest noise?" the revival of trade will not be permanent, and democracy itself will go under.
  Mr. CHAMBERLAIN: Did that apply to my last Budget?
  Colonel WEDGWOOD: The right hon. Gentleman's last Budget was on the same lines. It was a Budget to meet the loudest cry. There was the remission of the Beer Tax, because beer made the loudest noise. This time there is the repeal of the Land Values Tax, because the landlords make the biggest noise. I want the Chancellor of the Exchequer to realise that the country's position is not so rosy as he makes out and that it is not possible to contemplate the continuation of Budgets based upon 1,750,000 unemployed and trade as it is to-day. It is possible for the Chancellor of the Exchequer and the Government to make a change in the state of our trade by the way in which they tax or untax the various interests and the various people in the country. Take the first case. Several speeches have gone to show the Chancellor of the Exchequer that if he really wanted to help industry the best thing was to increase the amount that could be put for depreciation in business without there

  1849
  being any Income Tax upon it. The hon. Member for Finsbury (Sir G. Gillett) made an eloquent speech upon that point, as also did the right hon. Member for Caithness and Sutherland (Sir A. Sinclair).
  Mr. CHAMBERLAIN: Will the right hon. and gallant Member explain how that helps people who are not making profits?
  Colonel WEDGWOOD: It helps industry in that it tempts an industrial concern to put more money to reserve and to divide less in dividends. I did not think that it was a matter of doubt that that which has been argued in favour of by the Chancellor of the Exchequer in past years was not a definite way in which industry can be helped. To increase the amount that will be put to depreciation will allow of a greater amount of money being invested in business, and help us to get new machinery and to keep our industries up-to-date. We are told that the Chancellor of the Exchequer has done that in another way, that by taking sixpence off the Income Tax, including incomes from debenture shares and preference shares, as well as the profits of companies, he has helped industry in exactly the same way. That is not so, because the sixpence is a 10 per cent. reduction in the Income Tax, whereas what is urged is a complete remission of Income Tax in respect of the larger proportion of money laid by for the improvement of machinery and the depreciation of existing machinery. A 100 per cent. reduction there would be of infinitely greater assistance to the recovery of industry than sixpence off the Income Tax, whether it be a question of business profits or fixed incomes.
  The Chancellor of the Exchequer knows perfectly well that the tax on heavy fuel oil in exactly the same way has a deterrent effect upon the recovery of British industry, because heavy fuel oil is used as a heating agent. It is not a question of how much revenue can be brought in, but the question ought to be whether a tax is a good one or a bad one for industry. The coastwise shipping traffic managed to get rid of the heavy fuel oil tax by making the loudest noise about it last year. They said that if the tax were imposed upon them it would put them out of business. It would have
  1850
  done nothing of the sort but it would have been a very heavy charge upon them. Any charge levied upon the raw material of industry must injure industry. If the Chancellor of the Exchequer looks at it simply from the point of view of how much finance he can get in, that is not the way to look at the collecting of revenue.
  The most striking case is the question of the taxation and rating of land values. If you take the landlords' part of a value which the community not the landlords have created, you are being guided solely by justice not by expediency; you are recovering for the community part of a value which the community itself has created. The principle behind that is a principle of justice. If the Chancellor of the Exchequer takes something from me in Income Tax and Super-tax, he is not actuated by a principle of justice; he says, "The money is there and I can get it," and he goes for it. Income Tax and Super-tax may be justified on the grounds of expediency because you have to get the money from somewhere, but on grounds of justice they cannot be justified, whereas a tax on a value created by the community can be justified and ought to have the first call on the attention of the Chancellor of the Exchequer. You have only to go on a motor tour through the country to see how the value of private land is being piled up by Government expenditure. Millions of pounds have been put into the pockets of landlords, and to take that back is an act of justice, not an act of expediency. It would be worth while to pay more attention to justice and less to the question as to how we can best get the money irrespective of what the effect will be.
  The Land Taxes are to be repealed. I do not suppose it matters very much, but it is an indication that the Conservative wing of the National party has got its way, or it may be an illustration of the contaminating effect of evil surroundings on men who used to belong to the other party. The Land Taxes have gone, they have never been raised, but it is far worse than that, the possibility of ever doing it again has gone. You are destroying a valuation which might have been a basis not merely for taxation but for local rating. Our present system of rating penalises improvements, checks

  1851
  development, interferes with industry and produces slums and overcrowding. If you de-rate improvements and levy the same rates on land values it not merely makes building cheaper but makes it more difficult to hold land out of the market; it increases the amount of land available for buildings and factories and reduces the charge levied by landlords on industry.
  You are destroying the possibility of a valuation upon which any change in taxation and rating must absolutely depend. The Treasury have said, "We are sorry that the valuation which was carried by the Labour Government in 1931 is impossible, we cannot make it." I am certain that the proposal in that Act was such that no Department could possibly base a valuation upon it, and that was because it was emasculated and destroyed not only by members of the Conservative party but by some members of the Liberal party and a few members of the Labour party. That valuation was not worth much; it was not a practical valuation because it did not extend beyond the towns, it did not touch the country, and the Treasury when they came to work out a valuation on provisions which they themselves had dictated found that it could not be done. It is all very well to say that the traitors to land valuation are the Prime Minister and the Secretary of State for the Dominions, in my opinion Mr. Snowden, as he then was, destroyed land values by accepting dictation from the Treasury and permanent officials as to how the valuation of land should be worked out. It was a valuation of the land without anything underneath it. Of what value such a valuation can be I do not know. Then the machinery set up for the valuation of land not merely for taxation purposes but for Death Duties as well has been ruled out at the bidding of vested interests, and because that form of taxation is based on justice and not upon expediency.
  Let me pass to the main reason why the valuation of 1931 and the valuation provided for in the Budget of 1909, and also that in the 15th century which I recently discovered, has been revoked, repealed and expunged. The main reason is that any method for the taxation of land values must inevitably reduce the value of land—
  Mr. MACQUISTEN: Destroy it!
  Colonel WEDGWOOD: Yes, destroy it in certain cases. Speculative values certainly would be destroyed. There is a very adequate reason why land taxes have been revoked by the National party—it is criminal to destroy the value of land.
  Mr. EMMOTT: So it is.
  Colonel WEDGWOOD: Then I will explain to my hon. Friend why there is one solitary person who wishes to destroy the value of land. The real point in the question of the taxation and rating of land values comes from the inherent belief, which I think possesses everyone, that access to the land is the best and only permanent solution of the unemployment difficulty. Think what it means. What we want to increase is useful productive work. I do not want to grow tomatoes at 5s. each or bananas at 2s. 6d. each; I prefer to get them where they can be produced most economically and to pay for them with English goods. We want to increase opportunities for useful productive work. If that is so, then let hon. Members consider for a moment what is useful productive work. It is the conversion of land and raw materials into finished articles. Every piece of production you can imagine must begin by the application of labour, in the primary trades, to nature. Once these trades have a chance of getting their raw material they do their part of the job and pass it on to other trades and industries to complete the processes of manufacture. If the primary trades cannot start you dam the stream of production at the source. You stop people working in the mining, building and agricultural industries, you throw everybody else who should complete the process of manufacture out of work.
  Every barrier you put between a man and his raw material throws out of work an increasing number of people in all other trades. Everything you can do to break down barriers and make it easier for an unemployed man to get his raw material improves his chane of work and, therefore, increases work throughout the country. What is the barrier which I want to remove in the interests of trade and employment? It is the price which has still to be paid, whether in rent or

  1853
  capital sum, before an unemployed man can get at his job. That is why I want land cheap, so that land which is not being used now shall be free for anybody to use. If land is below the margin of cultivation then let the people get at it, they will make the most of it, and no longer will you be able to put up your barriers and say that nobody shall have the right to use that land without paying for it."
  Mr. McKIE: Would the right hon. and gallant Member consider 10 years' purchase too high a figure to put on land?
  Colonel WEDGWOOD: Of course I am against it. If you have a 10 years' purchase you have a barrier so high that a man cannot get the land. If he can get it for nothing he can start working, and other people will also be able to start work.
  Mr. McKIE: In other words, you would destroy any value at all.
  Colonel WEDGWOOD: I would destroy evey value in land except the competitive value between two people who want the same land. If it is land which is uncultivated let anybody use it.
  Mr. MACQUISTEN: But if two people want the same land how are you going to settle the matter?
  Colonel WEDGWOOD: Put it up for auction. That is what happens every time. When I have a farm vacant I get all the offers I can and having considered their characters I take the best offer I can get.
  Mr. CAPORN: Is not that what happens now?
  Colonel WEDGWOOD: Yes, but I want land put up for auction under different conditions. If you had to pay rates and taxes on your land whether it is used or not landlords like the hon. Member and myself would be much more ready to accept lower offers, and there would be much more land coming into the market—
  Mr. McKIE: There is plenty of land in the market now.
  Colonel WEDGWOOD: You cannot get a farm for 10 years' purchase, at any rate, certainly not for five years' purchase. If there is anybody here who wants to give
  1854
  me land I will take it, but it must not be land with a heavy tithe upon it. I must not be distracted from my main argument by these interruptions. My argument is this, that the higher the value of land, whether for buildings or agriculture, the more unemployment you create, the more difficult you make it for your primary trades to get at their raw material. Years ago after the war, as we used to call it, in South Africa, before we knew what war really was, I was the Resident Magistrate of a district with an area as large as Wales. I was absolute ruler, a Sir Oswald Mosley and everything else. I was faced with an unemployment problem just as the Chancellor of the Exchequer is faced with an unemployment problem here. Discharged men from the Army came to me wanting jobs; there is no Poor Law or dole in South Africa. If you cannot get work there, you go to gaol.
  Round their towns in South Africa they have a large area of what they call town lands, public lands, and on the town lands where I was there was a coal mine. You did not go down a shaft to get the coal, but dug it out on the surface. I said to these ex-service men, "As long as I rule here, you can have five acres of the town lands and get coal out of that seam, and nobody shall charge you any nonsense in the way of rates or royalties." They got barbed wire and put up fences, and they built themselves houses out of 40 lb. biscuit tins, with corrugated roofs on top. They borrowed pick and shovel after dark, and turned to and worked. They got over the barrier, because there was no barrier. They produced a poor crop of vegetables, it is true, and they produced coal and bricks, and all those men got themselves a full reward for their labour. If they worked hard, they got more; if they worked badly, they got less. I ask the House to observe that they were not robbed, either by landlord, by capitalist, or by the State. What they got was their own.
  There we happened, by the fortunate accident of having those public lands and that coal mine, to solve the unemployment problem. There were bitter complaints from the employers, because the price of Labour rose. Directly you solve the unemployment problem and give the unemployed man the chance of working

  1855
  for himself, then the men in this country who have got jobs need no longer be afraid of having their wages undercut by the army of unemployed, as they are today. This question of unemployment is too often regarded simply as a matter affecting the unemployed, when it affects every man in work in this country. As long as you have something like 1,500,000 unemployed, the lives and the liberties of the people who are at work will be driven down and down by the competition of those people, who must have work or else live on public assistance.
  The right hon. Gentleman the Chancellor of the Exchequer is satisfied with the country in its present condition. He hopes it will improve a little, and he believes that next year he will be able to produce a better Budget than this year—and indeed I hope he will—but he is content to go on looking at a world in which there will be an enormous army of unemployed permanently hanging round the necks of the employed people. I am not content with that, and I think that neither the Government nor, I may add, the Labour party, really consider this land question properly. It is a question, not of getting some money out of land, but of freeing the working-class from the tyranny of the competition of the unemployed. I believe that the taxation of land values has now vanished from the platforms of the Liberal party and of the Labour party, and that its place is now taken by some question of purchase, as though it were possible to purchase the land of England without a valuation, as though it were possible to purchase, not only the land, but all the buildings upon the land.
  I am confident of this, that not until either the Labour party or the Conservative party wake up to the fact that the people of England are suffering now, not merely from unemployment, but from this deadly competition of the unemployed, and realise that they have got to put an end to that and not be satisfied with what they have got—that it is not a question of knocking the means test on the head or raising the keep of a child from 2s. to 2s. 6d.—until the two parties realise that, you will have the only alternative to Parliamentary government, namely, the Fascism of people like Beckett and Mosley calling to an increasing number of people in this country who are coming
  1856
  to believe that there is no hope in either party. We shall get that increasingly by this sort of Budget, by this sort of complacency, and by a Labour policy aimed merely at giving a little bit more to those who need it. Until we have some alternative to that, we shall have the danger in England that we have seen eventuate in Germany.
  8.6 p.m.
  Sir JOHN SANDEMAN ALLEN: I have listened with considerable interest to the discussion this afternoon, which has mainly been taken up with criticising the National Government and this Budget, but I feel that one should look quietly at some of these criticisms and at what they are criticising. The arguments that have been used have been to a large extent comparisons with what happened before the crisis and what exists to-day, entirely overlooking the great crisis that occurred two-and-a-half years ago, when the National Government came into power and when the people of this country decided that the interests of the country and the nation were to be paramount to everything else. I am satisfied, after listening to this Debate, that there has been no fair statement of the true position of the National Government to-day. It is foolish for people to compare what is happening to-day with what happened three years ago. Where, in the name of Heaven, should we have been to-day if we had not had a National Government that faced the situation and dealt with it as this Government has done? I am glad to feel, in spite of what is said to the contrary, that the Government have been so successful as to have been able to produce this Budget. The achievement is so great, I feel, that people have not yet realised it. They are occupied with points, important in their own way, but quite small, which, like the trees, shut out the view of the whole wood from the people.
  If you get away, you can see it. I have just come back from the other end of the world, and I found, wherever I went in the Empire, that there was a real grasp of what the National Government have done and the immense value to this country and to the Empire as a whole of having a Government prepared to face the situation as our National Government

  1857
  have done. All the platform talk that one hears from time to time, appealing to the people's prejudices or pockets, blinds the people to the true vision that they ought to have of what the Government have done, and prevents them thinking of where this country would have been but for the National Government. We can speak of it in that way, because in spite of what people say, in spite of the empty benches opposite, the Government are still the National Government, returned by the will of the people. I heard someone say that people were returned to do this, that, and the other. I see a whole bench of hon. Members opposite who were returned to support the National Government, and their one aim in life to-day seems to be to seek to destroy it. Who are they to say anything about what they were returned for, and what mandate they had when they were elected?
  I come back to this, that if you view clearly, from a distance, the rise of this country from the state of disaster with which we were faced a little time ago, you can see how great is the advance that has been made. I have been at the other end of Europe, at international conferences, and let me say, without fear of denial, that whether in the European world or in the Empire people are filled with either admiration or envy for what our National Government have done for this country. I want to bring clearly before this House and the nation that they should look seriously at what has taken place. When we realise where we were and the disaster that was in front of us, with everything going to pieces, and remember that the Government stepped in and faced the situation, we can see what they have done. We were spending more than we were earning, in the most reckless way. We were borrowing without regard to how it could be repaid, and little chance we had of repaying at that time. We were buying more than we were selling, and our credit was falling so rapidly that the very nations which to-day are clamouring to get money from us would not lend us any.
  If we look the thing fairly and squarely in the face, we see that it was a very serious position in which this country found itself. We have never been in such a position in the lifetime of anyone here. What happened? The country
  1858
  stepped in, and the Government took charge of these things, regardless of party. Everybody had to suffer for the time being, and instead of our credit falling, instead of our currency being depreciated, we stood the test, and today the credit of this country stands higher than it has done for very many years past. It is outstandingly the one country whose credit has risen, the one country which has the confidence of the whole world; and it is a miserable, paltry business to listen to these petty speeches about a Government that has done all that for the good of the country. Let us rally together and try to do everything we can. It is human to make mistakes, and I do not say for a minute that the Chancellor of the Exchequer has been perfect in all that he has done. I am not sure he does not think himself sometimes that it is possible he might have done differently, but that is not the point.
  The point is, taking a broad view of this subject and of this Finance Bill, that we see a real recovery in the country. I agree that the country is not what it was a few years ago, but what country is? Look at the state of the world, and compare the state of this country with that of any other country in the world. I heard a very temperate speech from the hon. Member for Gower (Mr. D. Grenfell), and I was interested, among other things, in what he said about the United States of America. He said the United States were busy trying to help the little man, and he denounced our Government for doing their best to put up prices, but as far as I can understand—I am only a man of average intelligence, and I find it difficult to understand what is going on in America—one of the great aims there is to put up prices, so that I do not quite see the point of the hon. Member's argument in that connection. Be that as it may, my point is the triumph of the National Government over the obstacles that were in front of them, and that to-day we see the first fruits of their efforts. The results must be progressive, and we must have great patience, but we should remember that when the Government came in we had to face two Budgets and a deficit, roughly, of £170,000,000, we were told. What is the position to-day? We have this admirable Budget, and next year, if all goes well, we understand that all

  1859
  will be put right. Therefore, all these petty grievances that have been put forward to destroy the National Government are quite out of place.
  A good deal has been said about the rich man and the benefits that the rich man gets. Some might like to be rich and some would like to be richer than they are, but the point is that people entirely overlook the fact that the great boon of the reduction of 6d. on the Income Tax is that it gives an opportunity for improving trade and so of benefiting employment. People always talk about the man with £2,000 or £3,000 a year. What the Chancellor must have in his mind, and what we have in our minds, is the vast business throughout the country by which every man lives, without which working men and clerks and all with small incomes would not be able to live. That is where the reduction of Income Tax really helps. I ask where all those little men who made great sacrifices a little while ago would be to-day if it had not been for the steps taken by this Government. We and they would to-day be in the same state as other countries of Europe, where Heaven knows how much suffering is being borne. We have emerged from the worst part of the crisis, but things cannot be quite right until the world and world trade are different. Meanwhile, we ought to be thankful for what has been done, for the courage with which difficulties have been faced, and for the statesmanship that has been shown; and instead of grumbling we ought to take our place beside other nations which tell us that we might well be proud to belong to an Empire that has saved itself amidst a welter of trouble and distress. I support most strongly the Second Beading of this Bill, which I believe is an excellent start for the future of this country.
  8.18 p.m.
  Mr. CHARLES BROWN: It must have been indeed refreshing to the Chancellor of the Exchequer to have listened to at least one speech from an hon. Member who has retained for four weeks the enthusiasm that a lot of his colleagues shared on Budget day. The hon. Member is evidently as much elated to-day as many of his colleagues were four weeks ago. But the period which usually elapses between the Budget statement and the introduction of the Finance Bill
  1860
  does allow us to view the financial proposals of the Government with calmer judgment than we can exercise at the time of the Budget speech, because of all the expectancy and excitement that one finds on that occasion. It was difficult, at least for me, to understand the elation of the Government supporters on Budget day. For my part I do not grudge them any crumbs of comfort they found in the Chancellor's statement. Poor as the Budget was, from our point of view, it has been for supporters of the Government the only gleam of light in two and a-half years of dreary failure, consequently I can easily understand their great elation of a month ago.
  Seen in proper perspective after the lapse of a month, the Budget appears to me to be but a trivial incident in that manipulation of State income and expenditure that is necessary to keep up the illusion of how extraordinarily difficult it has been to escape from the so-called crisis of 1931, and to create the impression that the National Government is responsible. The hon. Gentleman who has just spoken made reference to the crisis of 1931. He called attention to the fact that we are in vastly different circumstances to-day from those in which we were then. But many of us have come to believe—indeed many of us thought so at the time—that the crisis of 1931 was largely a faked crisis, an unreal crisis, an engineered crisis, or at least, in the words of the right hon. Member for Epping (Mr. Churchill), an "exaggerated crisis," That is a phrase that the right hon. Gentleman used in this House, and when an ex-Chancellor of the Exchequer, with wide experience of our public finances, makes a statement of that kind, we on these benches must pay some attention to it. If the hon. Member for St. Albans (Sir F. Fremantle) takes exception to our calling it a faked crisis, perhaps he will let the expression of the right hon. Member for Epping stand and regard it as a greatly exaggerated crisis.
  Sir FRANCIS FREMANTLE: Not for one minute.
  Mr. BROWN: I am very pleased to know that the hon. Member completely repudiates the right hon. Member for Epping as to any authority which that-right hon. Gentleman may have had in the past on financial matters. I have not the slightest doubt that in days gone

  1861
  by the hon. Member has sat here and has cheered the right hon. Member for Epping when he was Chancellor of the Exchequer. In those circumstances the hon. Member undoubtedly had great admiration for his right hon. Friend. I cannot explain why he has since lost that admiration.
  Sir F. FREMANTLE: I have not in the least lost my great admiration for the right hon. Gentleman's picturesque but still exaggerated phrases.
  Mr. BROWN: I am quite prepared to accept that correction. The hon. Member the Member for West Derby (Sir J. Sandeman Allen) called attention to the fact that in the changed circumstances in which we now find ourselves we may look forward to a period of surpluses so far as Budgets are concerned, as contrasted with the situation that faced the country in 1931. I recollect very well that just before the Budget statement was made a number of newspapers called attention to the fact that in the last 10 years we had had about as many surpluses as deficits, that surpluses and deficits seemed to follow one another in fairly regular fashion. I have come to the conclusion that surpluses and deficits within limits can easily be arranged by the Government of the day. What has been the design of the budgeting of the National Government, the latest phase of which is presented to us in this Finance Bill? In the first place they have attempted to create in the public mind the impression that they are embarking on the Herculean task of lifting the nation out of a great financial morass. That is the impression they try to create.
  The Chancellor of the Exchequer said to-day that he regards it as his first duty to go back as soon as possible, if money is at his disposal, to the circumstances which prevailed before 1931. The Government supporters are trying to create the impression that they are meeting with some success, but that still the situation is difficult, that they have still to be very careful, that they have to go steady, and that there is a long uphill road ahead. "Only trust, and all will be well in the end." That is the phase which we have reached to-day. The early part of the Chancellor's speech was more or less fashioned along those lines. He made it quite clear that he regards it as one of his first obligations to get us back to the pre-1931 position before there can be any
  1862
  redress of what he called grievances. I gathered that he does not rule out the possibility at some time in the future of redressing what he calls grievances. This Finance Bill and the Budget statement with which it is associated bring up once again a matter which has occupied our attention in the past and must needs continue to do so for a considerable time in the future. There is a passage in the Amendment which deplores the proposals in the Bill, because they intensify the evil of the mal-distribution of purchasing power by lightening the taxation on the rich. We heard again to-day the argument which we have heard in the past, in support of the reduction of Income Tax, that such a reduction will give a much needed stimulus to industrial development; that it will create more work and will thus effect a further distribution of purchasing power.
  There might be something in that argument if no money were available for investment now. But, on every hand, we are told that there are practically unlimited sums which cannot at the moment find profitable investments. We know there is surplus productive capacity in many industries which cannot be utilised profitably and that there is no need for expansion in those industries because the commodities which they now produce cannot be purchased. To some of us that argument in justification of a reduction of Income Tax seems singularly unconvincing. When we examine the national income, in so far as the facts concerning it have been collected, we find that a huge proportion of the national wealth is in the hands of a few people—far too few. The report of the Commissioners of Inland Revenue for the year ended 31st March, 1933, shows that the incomes of 8,000,000 people were reviewed, for the purposes of Income Tax, but as a result of that scrutiny, it was found that 4,500,000 people had incomes which did not warrant them paying any Income Tax at all. So that out of the 8,000,000 people who came into the field of Income Tax review only 3,500,000 actually paid Income Tax. The others were exempted by reasons of various allowances and factors of that kind.
  That fact alone is a startling commentary on the maldistribution of wealth in Great Britain to-day. The actual income—not gross but actual—of Income

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  Tax payers for the year ended 31st March, 1933, was £2,725,000,000. I do not know from what source the hon. Member for Gower (Mr. D. Grenfell) got his figures, but he estimated the total national income as being in the region of £3,500,000,000. I cannot help thinking that the real figure must be higher, because if we take £2,725,000,000 from the figure which he gave, £775,000,000 is all that is left. But it is obvious from these figures that the vast proportion of the community are people with very small incomes. The vast proportion of the people of this country are taking a relatively small proportion of the total national income.
  The Chancellor of the Exchequer gave some figures which I did not quite catch in calling attention to the fact that there has been a fall in revenue from Income Tax. I was interested after the right hon. Gentleman had made those remarks, to look up the returns of Income Tax under the various schedules, contrasting the year 1925–26 with the year 1931–32. Under Schedule A which refers to the ownership of land and houses, in 1925–26 Income Tax was paid on £224,038,830 and for 1931–32 the amount was £290,484,512. Under Schedule B relating to the occupation of lands—which we are informed mainly deals with farmers' profits—for the year 1925–26 the amount was £28,178,388. It is true that in this case there has been not an increase but a tiny decrease, because in the year 1931–32 the figure is £28,098,973. I would point out, however, that immediately that section of Income Tax payers get into any sort of distress, urgent efforts are made to help them. We have the case of the assistance given to farmers by the beet-sugar subsidy, the wheat subsidy, the bacon quota and so forth. It is true the farmers' incomes fell in that year, but the Government came to their help as rapidly as possible.
  Under Schedule C which relates to business concerns and professions, there is again a fall which I suppose is a reflection of the general trade depression. In 1925–26 the income dealt with under this Schedule was £1,033,000,000 and in 1931–32 it was £922,000,000. Under Schedule D relating to British Indian Colonial and Foreign Investments in 1925–26 Income Tax was levied on £133,143,373 and in 1931–32 the figure was £160,664,508.
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  Under Schedule E referring to salaries of Government corporation and public company officials the amount in 1925–26 was £994,862,269 and in 1931–32 that had risen to £1,323,908,694. Thus it will be seen that under three of the Schedules income has considerably increased. One remains practically stationary, though, as I have pointed out, in that case speedy assistance has been given to the class concerned. In the remaining case it is suggested that by the steps which the Government are now taking there will be a considerable improvement in trade and industry and that the incomes derived from businesses and professions will consequently increase.
  I contrast that state of things with what has happened in connection with the manual workers, the great mass of the people of the country. I will give some typical wage rates as an illustration of the point I want to make. The wages of agricultural labourers were 31s. 8d. in 1927 and 30s. 11d. in 1932. It is true that the fall is not much, but it matters very much to the class of the community concerned. The wages of boot and shoe operatives were 56s. in 1927 and 54s. in 1932; bricklayers, hourly rate, 1s. 8d. and 1s. 6d.; carpenters, 73s. 10d. and 67s. 2d.; road transport, 53s. 3d. and 51s. 11d.; dock labourers, 12s. 3d. and 11s. 6d. a day. We find, therefore, that the industrial wage earners are getting poorer. Somebody has remarked that prices have fallen and that the purchasing power of these wages is consequently higher, but the fall in prices affects every section of the community and the incomes of the other classes have been increasing concurrently with the fall in prices.
  There is another way in which one can make some effective points about the maldistribution of wealth in this country. For instance, in 1932 there died in the United Kingdom 567,986 persons, and only 137,903 left any estates at all. The other 430,000 had practically no worldly possessions. Of those who left estates, a very large number left only small amounts, and I could quote figures to show how the numbers leaving large sums of money become less and less as the sums become higher. It does not need any more illustration to show that a very large proportion of the wealth of the country is concentrated in very few hands. Consequently, we are justified when we say that the way in which the

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  Chancellor has decided to use his surplus by a reduction of the Income Tax gives considerable benefit to a relatively small proportion of the community. Sometimes we exult because there is a surplus in the Budget and sometimes we bemoan a deficit, but, surplus or deficit, the relative poverty of the masses of the people remains. I say "relative" I am not suggesting there is not, over periods of time, a considerable improvement in their conditions, but, relative to our powers to produce wealth, that poverty remains, and the gulf between the relatively few who have the great bulk of the wealth of the country and the masses of the people grows wider and deeper. I ask hon. Members to think, in view of this fact, of our amazing resources in technique, our wonderful tools and machinery, the ever-improving productive processes at our disposal, the latent powers of organisation that we have which we might utilise if we could act on entirely different lines from those we are pursuing at the moment.
  I hope that no hon. Member will dissent from the proposition that anything which occasions needless suffering of body of mind to anybody is an evil, and if it is within our power as a community or as individuals to remove or eradicate the evils of which we are aware, we ought to leave no stone unturned to eradicate them. The question to which we ought to address ourselves when we consider the Finance Bill is whether it does to any considerable extent do anything to eradicate those evils arising from poverty of one kind or another which afflict the great masses of the people of this country. I think that the answer to that is generally in the negative. It may be said that something is done for a certain section of the unemployed because those on statutory benefit will have their cuts restored. There is not, however, to be very much done for the section which is on transitional payment. Therefore, we on these benches are entirely justified in putting down our Amendment, and I am certain that none of us will have the slightest hesitation in voting for it, in spite of the dialectical skill of the Chancellor of the Exchequer in trying to persuade us that if we vote against the Finance Bill we vote against the restoration of the cuts. He has not convinced us that that will be so, and we shall all feel justified in
  1866
  going into the Lobby in favour of our Amendment.
  I am glad that the Lord President of the Council has come into the House, because I want to say a word or two about the repeal of the Land Tax and to refer to some things that he has said about it. At the moment he—I do not want to say poses, because I always feel the sincerity of the right hon. Gentleman whenever he speaks, but he is at the moment a sort of champion of our democratic institutions. No speech which he makes fails to contain some reference to the threatened dictatorship of the right or of the left, and he plods along the middle way desirous all the time of pursuing a policy which will ensure that the will of the people shall prevail. The Lord President made a speech in June, 1931. The National Government were on the horizon then and had not made their appearance, so that when the right hon. Gentleman went into the country at that time he was entitled to speak on behalf of his party and as Leader of the party. Speaking of the Land Tax at that time, he said :
  "I can say one thing about it, that if we get back to power, that tax will never see daylight."
  Later on, he said :
  "I am not alarmed by the Land Value Tax because I do not believe that tax will ever come into existence. If we come in, it certainly will not."
  When he was making those speeches he was speaking as the leader of the Conservative party and he was perfectly justified in making a statement like that, because he was appealing to the electors to return his party to power and was pledging his party, if returned, to repeal the Land Tax. He was saying, in effect, "If you give us your confidence, when we are returned to power we will see to it that this tax, which we do not like and think is unjust and inequitable, is repealed." He was quite entitled to do that as leader of the Conservative party. But the circumstances changed. We had no election in which the right hon. Gentleman could appeal to the electorate to return his party to power in order to repeal the land taxes. What we had was a financial crisis, so-called. A National Government was formed, and he became a member of it, and as a member of that Government he said in

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  the House of Commons on 26th May, 1932:
  "Had this been a Tory Government we should have repealed the Statute."
  That is, the land taxes.
  "In the National Government there are five Members who were Members of the Labour Cabinet when this Act became law.… Would any one of you who had been a member of a National Government, who had gone through the fight we went through last autumn, who had taken part in the discussions on finance on the first construction of the National Government with men who fought during that election like Lord Snowden …. and when they expressed their reluctance to see the Act finally taken off the Statute Book; do you think that I, going about the country as I did, and knowing the force of Lord Snowden's speeches and broadcasts in helping to win seats which we should never have won, was going to say to them, 'Oh, no, now we have got a big Tory majority, much bigger than I expected, out you go.' Not much. That is why we stand for the Clause as it is in the Bill. We can accept neither a repeal of the Act nor the insertion of the Amendment."—[OFFICIAL REPORT, 26th May, 1932; cols. 583–5, Vol. 266.]
  May I ask the right hon. Gentleman what has occurred to cause him to change his opinion between May, 1932, and May, 1934? What has happened inside the National Government? Why should he throw overboard now the colleagues by whose side he so loyally stood on the occasion when he made that speech? Has the Prime Minister discarded entirely his views about the value of a Land Tax? Has the Secretary of State for the Dominions also thrown overboard his views on this subject? Surely the right hon. Gentleman ought to tell us before the Debate closes why he has changed his views, and why he is now a Member of a Government which proposes to repeal this tax? Surely he will tell us before the Debate closes. He is well known for his loyalty and his faithfulness to his colleagues. Why has he deserted them? Why has he thrown them overboard? In view of the general nature of this Finance Bill, and particularly of what we regard as an iniquitous proposal to repeal the land taxes, all of us on these benches will go without any hesitation whatever into the Lobby to support the Amendment.
  8.48 p.m.
  Mr. EMMOTT: The Financial Secretary to the Treasury, whom I am delighted to see in his place, has made many apt and
  1868
  apposite comments on Debates in this House, but I think he has seldom been more happy than when he remarked, in the course of the discussion on the Financial Resolution which prepared the way for this Finance Bill, that this Budget could not give rise to genuine controversy. Since that comment was made, however, the Government have announced their intention of repealing the Land Value Tax. This, I think, I might describe as a sort of Parliamentary windfall to His Majesty's Opposition and to the Members of the Liberal party. We will not grudge them their windfall; they have made the most of it to-day, which they are entitled to do : and yet I think the Financial Secretary might make the same comment to-day that he made upon the earlier occasion. The hon. Member for Limehouse (Mr. Attlee), describing the financial proposals of His Majesty's Government on the day on which they were brought before the House, spoke of them as "an insult to the unemployed," and said that the Budget was "quite the meanest Budget on record." We may, perhaps, dismiss these as unhappy first thoughts, but the hon. Member for Ebbw Vale (Mr. A. Bevan), speaking the next day, when he had had time for reflection, went so far as to describe the Budget as "a class Budget," and "a piece of class prejudice." These, of course, are not statements which were continuous with each other in the hon. Member's speech, but I have compiled a little anthology from it. He went on to describe the Budget as "leaving the poor worse off," and as "a mean and scandalous Budget." "Unstatesmanlike" was another epithet he applied to it. "Stupid" and "silly" were yet other epithets that he lavished upon the proposals of the right hon. Gentleman. Perhaps we may write off these criticisms as the fanciful imaginations of a fervent Celtic temperament. The House, at all events, may congratulate itself that there has been no repetition of such descriptions to-day, and that this kind of intemperate criticism has been altogether abandoned. However, there is upon the Order Paper an Amendment under the names of some hon. Members of His Majesty's Opposition which invites the House to reject this Bill upon certain grounds. One of those grounds is that it

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  "intensifies the evils of maldistribution of purchasing power by lightening the taxation upon the rich."
  The principle contained in this sentence has been much relied upon in the course of these Debates. It has formed a very important ground of the argument addressed to the House by various members of His Majesty's Opposition. The hon. Member for Mansfield (Mr. C. Brown) founded certainly a part of his argument upon it, and in view of its importance I hope the House will not think I waste time if I examine it in some detail.
  The principle admits no limitation of the proportion of income which it is right for the State to take from one person and give to another. It may be that hon. Members do recognise a limit to the rate of direct taxation, but their principle does not assist anyone to discover where it is. Their whole argument depends upon the assumption that the use to which the less wealthy taxpayer puts the money available to him for spending is better, in the economic sense, than the use to which the more wealthy taxpayer will, in present circumstances, put it, and that therefore it is right to take from the second to give to the first. But why stop here? If the argument is sound, surely what the circumstances of our time require is not a diminution but an increase of direct taxation. Are they seriously prepared to argue that industry would derive benefit to-day from an increase of direct taxation? If they do, then my task in answering them is made the more easy, but if not, what becomes of the argument?
  His Majesty's Opposition are always concerned—as though it were their peculiar province, which, of course, it is not—with the maintenance of the purchasing power of the people. It has become a kind of obsession with them. Strange, surely, that they concern themselves only with one section of the people—with what they describe as the poorer section of the people. However, the financial proposals of His Majesty's Government have had the interesting effect of extending the area of the fiscal sympathy of hon. Gentlemen. I must congratulate the Chancellor of the Exchequer on discovering a method of enlisting the sympathy of the Opposition on the side of any category whatever of
  1870
  direct taxpayers, though I could almost wish that he had used the resources which were available to him not to reduce the standard rate of Income Tax but to restore the former rate of family allowances, because I have no doubt that, if that had been done, we should have witnessed the interesting spectacle of the Socialist party arguing the case for a restoration of the standard rate of Income Tax—arguing the case of the rich man. I dare say that some of those who pay direct taxes this year will with pious gratitude ejaculate, "It is an ill wind that blows nobody any good," and will accept assistance from whatever quarter it comes.
  Well what actually is this purchasing power of which we hear so much? It is money, or what passes for money—bank credit or whatever it may be. Is the problem then one of the provision of money? Of course not. You may print notes; you may create money, in that sense, to any extent you like, but can you ensure that it will be used? You may increase the means of payment, but unless you ensure the increase of goods to be exchanged therefor, all that you do is to diminish the value of your currency and consequently the purchasing power of your people.
  It is therefore plain that the analysis must be carried further. The question to which we have to address ourselves is : From what is purchasing power derived? What is the origin of purchasing power? Purchasing power is derived simply from production. Let no one think to trip me up here by reminding me that we frequently assert an excess of production of some particular commodity, and hope to find an inconsistency between that assertion and this part of my argument. There is no inconsistency. There may be from time to time, and indeed there is, production of a commodity or commodities in excess of the capacity of the market at that particular time to absorb it, but that fact is perfectly consistent with the general principle which I lay down, that purchasing power is derived from nothing else than production. A man can only obtain purchasing power by producing something that passes into exchange. Members of a community can only provide themselves with purchasing power by producing things that other members of the community, or members of other communities,

  1871
  require. It is a gross fallacy to imagine that you can maintain or increase the purchasing power of a community by taking money from some members and distributing it among other members of it. And what of the justice of such a proceeding? The hon. Member for Gower (Mr. D. Grenfell) on an earlier occasion, during the discussion upon the Financial Resolution, asserted :
  "The Chancellor of the Exchequer exercises an authority long ago given to him and to Parliament to make levy upon the incomes of individuals, with the fundamental recognition that the money of individuals belongs to the State and is made by the State—by the community."—[OFFICIAL REPORT, 19th April, 1934; col. 1134, Vol. 288.]
  To-day he mentioned that, on the occasion on which he made that statement, he was interrupted by the hon. and learned Member for Argyllshire (Mr. Macquisten) and he said that if anyone to-day ventured to controvert his assertion he would blush for such a man. I regret to inform the hon. Member for Gower that I must bring a blush to his damask cheek. I hope I shall make him blush deeply. I controvert his statement with all the force and precision at my command. Upon what principle does he think that the money of individuals belongs to the State? He repeated the assertion to-day, and sought to justify it by pointing out that certain general political and economic circumstances are necessary to the formation of wealth by the individual. That may be so and it is so, but it is not, for that reason, true to say that money made by individuals belongs to the State. To say that certain circumstances and conditions must be created by the State in order that wealth may be created by the individual, is not to alter the ownership of wealth, and it is surely a gross misuse of language to argue, because of the circumstances which the hon. Member mentioned, that that wealth therefore belongs to the State. It does not. By virtue of a right inherent in all Governments, Government taxes citizens in order to provide itself with the means necessary to the performance of its functions, but that does not establish in favour of Government any right of ownership of wealth. That wealth belongs to the individual who has made it, and to no one else.
  Let me return to the point from which I digressed in order to consider the extraordinary
  1872
  position assumed by the hon. Member for Gower. There is only one way to increase the purchasing power of a nation, and that is to strengthen its productive power. Restore industrial activity, and in that very process you have increased purchasing power. It is no paradox, but literal truth that the problem of consumption is the problem of production. The whole question of the restoration of economic activity is one of the harmonious, rational development of production. Do the proposals of His Majesty's Government further that object? That is the criterion by which they have to be judged. In particular, does the reduction of the standard rate of Income Tax contribute to this result? I submit that those two questions must be answered in the affirmative. It is not my province to-night to examine the effect of high taxation upon industry. The Chancellor of the Exchequer, in justification of the reduction of the standard rate of Income Tax, may rely upon the formal and unanimous opinion of countless individuals and associations directly concerned with industry and commerce. I content myself with this simple proposition : that the State to-day takes from the direct taxpayer by direct taxation so high a proportion of his income as to diminish, and in many cases to destroy, both his incentive to enterprise and his capacity to set apart by saving that money which is necessary to the maintenance and continuance of industry. Because that proportion is diminished by the proposals of His Majesty's Government, I urge that they deserve the support of this House.
  It is said, however, that if you follow this course all that you do is to increase the money available for investment, which is already ample and excessive. I believe that view to be profoundly mistaken. In the first place, I think it exaggerates the amount which the wealthy man of to-day does in fact save and hold off from consumption. Such a man has large commitments and responsibilities, all of which demand the continuous expenditure of money, and to-day, when the State has laid its greedy paw on his income, there is little left available to him for saving. In the second place, this view ignores the fact that variety of consumption springs largely from the use of incomes in the middle and

  1873
  higher ranges, and that that variety is of the greatest benefit to industry. In the third place, I suggest that those who hold this view are mistaken in another and even more important respect. They regard the large extent of deposits in banks, and seem to infer therefrom that there is already a superfluity of money available for capital investment, to which it is folly to make any addition. In point of fact, since last June, the deposits in the banks have shown a diminishing tendency; and the deposits in the London clearing banks last month showed a decline of about £80,000,000 from those of April, 1933. In any case, however, the only deduction proper to be drawn from these circumstances is that the financial resources of the banks to-day may be in excess of the requirements of a contracted industry. But that is not at all to say that they are excessive in relation to the requirements of industry in a period of expanding trade; and I have no doubt whatever that in such a period, upon which at last, by the grace of Providence and His Majesty's Government, we appear to have entered, the industrial demand for capital will register a great increase, and will in time fully occupy those resources which appear now to be superfluous. The cost of capital equipment is steadily increasing under technical development. The rate of obsolescence of industrial plant is increasing under invention and research. The wants of men are becoming more varied and more diverse with every passing year. Why a great cause of the present distress of agriculture is this very variety, which is in itself a good thing. Those who grow wheat are discovering that purchasing power today, even if it be increased, does not direct itself to an increased purchase of their product, but rather to new things—to the purchase of meat, or milk, or fruits, and other agricultural products. I hear an hon. Member say, "That is our case," but he does not draw from these circumstances the deduction that I draw. The same thing happens in the case of manufacturing industry. Demand to-day, both in regard to agriculture and in regard to manufacturing industry, is directing itself to an increasing variety of new things, which the beneficent system of capitalism supplies in ever-increasing quantities. Does not the satisfaction
  1874
  of these myriad, diversified wants of humankind demand an ever-increasing provision of capital? All these circumstances, I suggest, justify the policy of His Majesty's Government, a policy which is calculated to meet the requirements of expanding industry and to promote employment. I conclude, therefore, that in this matter also the criticism of the Bill by His Majesty's Opposition has neither substance nor justification. On the whole, the proposals of His Majesty's Government, cast as they are upon broad, simple lines, are calculated to make a most timely and valuable contribution to the recovery of agriculture and industry, and they deserve the approval of the House and of the country.
  9.11 p.m.
  Mr. HENDERSON STEWART: I am sure the House will have listened with much interest to the very thoughtful speech of the hon. Member for Spring-burn (Mr. Emmott). He has invited us to penetrate to the foundations of national prosperity. I would like to turn in another direction, following immediately upon some observations of the Chancellor of the Exchequer this afternoon. In the concluding part of his speech, he looked into the future with' regard to our international trade. He said that, as far as he could see with the facts at his disposal, it seemed that there would soon be a limit to the expansion of our export trade, and that that limit would be a good deal—perhaps a very great deal—lower than we were accustomed to in, say, 1929. Therefore, he said, it is necessary, if you are going to maintain your people in employment, to turn your attention either to the home market or to Empire development, or to both. I do not think that anyone will very greatly dispute that statement, but I want to put this point of difficulty which I myself feel, and I am not sure that the Chancellor himself does not occasionally experience it.
  We are taking steps now, I believe, rightly, to protect the home market and encourage home production. We are concentrating our efforts upon home production in agriculture, as the hon. Member has just mentioned. By new methods and schemes we are producing vast quantities of products that would have been produced in no other circumstances. But

  1875
  is there not a danger that we may over-concentrate upon the home market? Is there not just the possibility that we may so improve the conditions for home manufacture, particularly in agriculture, that we reduce our imports too much, and, therefore, make it too difficult for other countries to take our exports? That is a very important point. I have not time to-night to develop it, but it is a point which perhaps on another occasion might be examined more carefully. That kind of problem makes me wonder whether we ought not to have some body, outside this House if necessary, examining the trend of trade. I do not mean the Import Duties Advisory Committee, which has its own work to do. I do not know what body could do this, but the kind of trend that I have mentioned is going to affect us very seriously in perhaps 10 years' time, and I would suggest that examination and research of that kind could usefully be carried out, and should be carried out, either by the Government or by some Department acting for it.
  Last year I ventured to congratulate the Chancellor of the Exchequer upon maintaining his iron grip on the resources of the country. It was not a popular proposal at that time, but I think the result of this Budget has proved that that policy was sound, and that it was really the best policy for another year to retain taxation, to retain the cuts, and, in fact, to continue to proceed in the same rigorous fashion. There is ample justification for that, and it seems to me that this Budget is not only a justification of the Chancellor's firmness, but it is a magnificent justification of national cooperation. Part of it was due to financial measures taken while my hon. Friends opposite were in the Government and while there was the greatest possible unity, but there has followed since then the continuation, as I see it, of give and take which has made this recovery possible. A continuation of that is the best way to serve the country.
  The Debate to-day has naturally brought forth a certain amount of criticism of the question of the abolition of the land taxes. Owing to the lateness of the hour I propose to reserve my comments on that matter till the debate on the Clause, but I cannot help being surprised and a little amused to hear my hon. Friends opposite making such heavy
  1876
  weather about the repeal of this land tax. I have had a good deal to do with the framing of Liberal policy in the last ten years, and it is entirely news to me that so vital a part of Liberal policy is the taxation of land values. I invite my hon. Friends to go back on the results of their own researches. It is true that a new policy was produced the other day, but that was merely a restatement of the old researches of four or five years ago. These reports did not ask for a Land Tax. My recollection—and it is very clear—is that the present leaders of the Opposition Liberals looked upon the League for the Taxation of Land Values as a body of cranks and their policy as quite impracticable. When I look through the Green Book for instance i find that, far from suggesting the taxation of land values, they say they did not intend to deal with the question :
  "That is not because these questions are not important, but because they cannot be satisfactorily handled as long as the present system of tenure remains."
  It still remains, and, therefore, we are still in the same position as we were in then; in other words, opposed to the taxation of land values.
  I look at the report on Liberal urban policy published five or six years ago, the Brown Book, and I invite hon. Members to go from the first page to the last and see whether there is a single mention of the taxation of land values as Liberal policy. There is the rating of land values, but that is a very different thing. In the Liberal Report, page 262, you find the whole thing set out with the rating of land values coming third or fourth in the list of their proposals, the first of which was the acquisition of land, which was considered vital, and the second of which was the betterment proposal, which was considered very important. The rating of land values was third, and nowhere was the taxation of land values mentioned.
  Mr. MALLALIEU: Will the hon. Member explain how betterment or the rating of land values could be undertaken without a valuation such as is here being swept away?
  Mr. STEWART: I think it can be done on the basis of the facts already available, but I am not going to be led off on that point. Hon. Members are not, therefore, justified in attacking the

  1877
  Budget because it contains a provision repealing something which is not their policy and which they have never put in the forefront of their programme. I have certain very definite views on the insertion of this new Clause. Time is not available to develop them to-night but I want the House to be aware just exactly how much foundation of justification and truth there is in the rather challenging remarks that we have heard. I congratulated the Chancellor a year ago on maintaining the iron grip, and I congratulate him and the Government now upon the success of that policy and upon the Budget which, despite all the criticism and all the rather far-fetched stories that one has heard, is accepted by all sections of the country as a real measure of hope and encouragement for the future.
  9.23 p.m.
  Mr. GURNEY BRAITHWAITE: It happens not infrequently that, when a Budget is introduced amidst almost universal approbation, by the time the Resolutions have passed their Report stage and the Finance Bill is introduced, the ardour in favour of the proposals is somewhat cooled and the country as a whole regards them with less enthusiasm. But in this case I consider that the favourable reception which the Chancellor's proposals received when he introduced the Budget can very well stand the criticisms that have since been made and that their stolidity and stability have increased rather than declined in stature since then We have had very interesting discussions to-day of a somewhat theoretical character as to the incidence of direct taxation, of land values and kindred matters. I propose to try and put back the Finance Bill into its true perspective. Surely we must look back along the road that we have travelled since this House of Commons was brought together. If we do that we must be impressed by the roughness and the stiffness of the climb that we have made and by the amazing success of my right hon. Friend's policy at the Treasury. It is almost exactly two years ago that I made my first speech in the House in the Debate on the Budget Resolutions of 1932, and I then said it was my fervent hope, as an industrial Member, that the cuts in unemployment
  1878
  benefit would be restored before any relief was given to the Income Tax payer. Having said that, it is an even greater source of satisfaction to be able to support a Budget which does both those things.
  I am not going to re-enter upon the discussions which we have had on the Unemployment Bill as to the position of the unemployed under the Chancellor's proposals, beyond remarking that if one compares the standard, in terms of purchasing value, of the benefit drawn by the unemployed in 1924, when Mr. Tom Shaw said that the rate was sufficient to keep any self-respecting man in the country, with the standard in 1931, and that standard again with the standard of this year, it is a source of the greatest satisfaction to us that the situation of the unemployed to-day in terms of purchasing value is infinitely superior to that which they enjoyed under either of the Socialist Administrations which this country has seen.
  That brings me to a remark made by the hon. Member for Gower (Mr. D. Grenfell) in the course of this Debate. The hon. Gentleman said that political reasons very largely governed the situation of money and currency. I have not his exact words, but I think that I am quoting him more or less correctly. He said that what mattered really was national credit, which was to a very great extent a political matter. If my right hon. Friend is to be congratulated upon nothing else, surely he is to be congratulated upon the fact that our paper pound has retained its purchasing value through two and a half years of extremely rough weather. The situation of our unemployed—and, for that matter, of our employed—might have been grievous in the extreme had it not been for the insistence of my right hon. Friend upon the fact that two and two must inevitably make four, despite amendments moved from the benches opposite to the effect that they ought to make five, if not six or seven. The Chancellor has performed his greatest service for the country in retaining the purchasing value of our paper pound. The unemployed have now been extricated from the parlous position in which they were left by the Socialist party in 1931.
  It is, however, my desire in what I have to say to-night to pass as rapidly as possible from 1931, always provided

  1879
  that the lesson of 1931 is not forgotten by the people of the country. My right hon. Friend has been criticised in an Amendment moved by hon. Members on the benches below the Gangway opposite for the fact that his realised surplus has not been used for reducing the debt upon the Unemployment Fund. That is one of the chief burdens of their Amendment. There again, in my view, that is one of the most admirable features of the right hon. Gentleman's Budget : that he has not allowed himself to stray down this by-path meadow, attractive as it may have seemed, and that he has kept to the straight and narrow path; that he has used the realised surplus for the redemption of debt. Quite apart from the fact that there was a previous deficit to meet, I would commend this proposal on other grounds. Had he used it for the purpose for which he was invited to use it, of reducing the debt on the Unemployment Fund, then, quite apart from his own argument to-day, this would only have been able to reduce contributions by about a farthing a week. It is true to say and sound to put forward that when a debt of such a kind is incurred on exceptional expenditure owing to mistakes made by one Government or another, that expenditure should be met at the earliest possible moment and should be met by those who have incurred it, and if a certain fund is in debt, that fund should make good that debt.
  May I give one example of what I mean? Suppose that this debt had been transferred to the Exchequer, that it had been transferred to the taxpayer; equally true would it be that generations yet unborn would have had to carry it. I have in mind particularly in this connection—and I think it is a relevant parallel—the situation under the Irish Land Annuities, in which the provision was made for the paying off of that financial arrangement over a period of 67 years. It was felt that that was a suitable period during which to meet that liability. If, however, there had in those days been a Chancellor as rigid as my right hon. Friend, he would probably have made arrangements for that debt to be met in a period of some 30 years. If that had been done, how much trouble would have been saved to this country! Surely the present dispute with the Free State
  1880
  has arisen over that very issue of the Irish Land Annuity, which might well have been out of the way and done with before Mr. de Valera took office—although I think that that gentleman would have found other reasons for providing a dispute with this country.
  May I, in passing, express my satisfaction that the Death Duties this year, owing to the circumstances in which we find ourselves, have in fact been applied to the reduction of Debt? I hope that in future we may be able to have some system under which Death Duties which are drawn from capital are ear-marked for Sinking Fund purposes. It is a very great disadvantage that these capital sums should be taken into the income for the year and spent as if they were not capital sums. Incidentally, when my right hon. Friend is criticised by hon. Members opposite for the fact that there was a realised surplus at all and, in fact, accused of inefficient budgeting, apparently it is suggested that he should have looked into some crystal and foreseen the decease of gentlemen of large means, for we find that one-third of this realised surplus has come from one very large estate. It is at least satisfactory to note that this sum has on this occaion been placed in the Sinking Fund.
  For a minute or two I desire to say a word about the weight of the National Debt. It is a subject which hon. Members opposite have often stressed. I think they are quite right to stress it, for it is still the most formidable feature of our national expenditure. The fixed interest charges on the sinking fund arrangement for the National Debt. Hon. Members opposite even say that this is a burden which we cannot carry very much longer. I would, if I may, quote the remarks of the hon. Member for Caerphilly (Mr. Morgan Jones), when he was speaking on the Third Reading of the Finance Bill last year, for he put the case in language which I think represents the views of his party :
  "You have converted the wages of the workers of this country compulsorily; you have converted their transitional payments from one figure to a lower figure; there has been compulsory conversion during the last ten or twelve years of the income of the workers of this country, and I am not exaggerating when I say that the value of the 4½ per cent. interest which war loan now produces is greater to-day than it was when the money was lent because of the

  1881
  decline in the cost of living."—[OFFICIAL REPORT, 23rd June, 1933: col. 1080, Vol. 279.]
  This complaint was put forward by hon. Members opposite. When that speech was made there was actually no 4½ per cent. War Loan outstanding, but I take it that what the hon. Gentleman had in mind was the 4½ per cent. Conversion Loan and the 5 per cent. Conversion Loan, which still remain to be dealt with. The 4½ per cent. Conversion Loan cannot be dealt with before the year 1940; there is some £375,003,000 of it, and it was issued in April, 1924, by the first Socialist Administration. The second millstone round the neck of my right hon. Friend, who has to deal with these outstanding securities, is the 5 per cent. Conversion issue, which cannot be dealt with before 1944; it was issued in November, 1929, by the second Socialist Administration, and there is outstanding of it £323,000,000. So grievous was the situation of the country even after six months of their activities, that they thought it advisable to convert a block of 5 per cent. War Loan on the same basis—5 per cent. with a longer period to run before it could be redeemed.
  When, therefore, we are told by hon. Members opposite of the iniquity of paying those who invest their money in these safe, gilt-edged 5 per cent. securities, let them remember that there are no more difficult obstacles in the path of the Chancellor than those which have been placed there by themselves. The sound finance of my right hon. Friend, if he is allowed to continue, will enable these Socialist issues of stock to be converted or repaid when they fall due. Any return to the financial methods of the last Administration will make that process impossible and the burden even greater. Looking ahead, I agree with what was said by the hon. Gentleman opposite who has now left the House, the hon. Member for Springburn (Mr. Emmott) in his very thoughtful and interesting speech about the policy of the Government being fundamentally addressed to employment, and through employment to increased consuming power, of which an example may be given in the reduction of the horse power tax. Representing a Sheffield division, I am anxious and hopeful that another example may be given very shortly in an announcement of the extension of the duties upon steel, because imports have
  1882
  shown menacing signs of increase during the early months of this year. In Sheffield, under free imports, the skilled craftsman has had his implements snatched from his hands and the bread snatched from the mouths of his children. Hon. Members opposite, who this afternoon have been singing the virtues of unrestricted free imports, might find interesting evidence for their theories if they would address some open air meetings in the City of Sheffield. Sheffield has quite made up its mind that it is not going back to the bad old days of Free Trade, unemployment and poverty.
  The Budget is a step in the direction in which the country desires to travel. A balanced Budget has been achieved and production in this country has largely been solved. The age of plentitude is with us. Man may be said to have conquered nature, and it is the duty of this House, irrespective of party, to see what we can do to build a bridge between this production and the consumption which is required to deal with the mass production of commodities. It is a matter upon which hon. Members, whatever their views, might well cooperate. The Chancellor of the Exchequer, in his opening speech on the Budget, told us that we had finished with "Bleak House" and were now entering upon "Great Expectations." May I suggest to him that there is another volume upon which we might start at the same time, while he is still in a Dickensian vein. I would suggest that "A Tale of Two Cities" is a work upon which we should now proceed—the City of London with its accumulation of capital seeking an outlet, and the City of Sheffield with idle hands and industries requiring finance. Something should be done to construct a pipe-line between the money in the City of London and the extension of credit for a rapidly developing industry such as we have in the industrial North.
  Surely, the most significant lesson of the Bill, and, it seems to me, the fundamental point of all, is this. In other countries in which dictatorships are stalking the land, actual or potential, cuts at this moment are being compulsorily imposed by force upon the common people, but here the cuts were imposed by a popular vote under complete adult suffrage, and through that vote confidence and credit have been restored. The

  1883
  pound sterling now rests upon something far worthier than gold. It rests upon the appreciation by the world of the sterling character and courage of our British people. At a time when the people of Britain are being invited to parade in shirts of varying hues, surely they must realise at this moment of improvement and of hope that democratic government and Parliamentary institutions provide no unstable support upon which to lean in times of crisis and distress.
  9.40 p.m.
  Mr. DAVID MASON: I should like to congratulate the hon. Gentleman the Member for Hillsborough (Mr. G. Braithwaite) upon his very thoughtful and interesting address. I do not agree with many of his arguments in favour of Protection, but I entirely agree with him as to the maintenance of sound currency. The right hon. Gentleman the Chancellor of the Exchequer's Budget must be described as a financial triumph rather than a triumph of finance, though no one would be ungracious enough to forget the results attained. The many speeches made to-night surely convince us that there are a vast number of unemployed in many of our industries, while the right hon. Gentleman apparently looks forward rather with despair to the future of our export trade. He thought that our local trade and our Imperial trade might be expected to recoup us for what he regarded as, apparently, the peak of our export trade. The great triumphs in the past of this country's foreign trade, which, before the War, was second to none in the history of the world, are not likely to be again attained, and, apparently, he looked forward somewhat with despair to our ever again achieving those great triumphs.
  But are we really to imagine, or to be convinced by the statement that, for example, Canada with a population of 10,000,000 and the other Dominions with comparatively sparse populations, can recoup us for a foreign trade, say, with the United States of America with its 130,000,000 and with millions of others inhabiting the continent of Europe? We are the common carriers of the world, and, I believe, own something like one-third of the shipping and build something like one-half of the ships of the world. Are we to give up business as a
  1884
  great shipping country and as the common carriers of the world? Are we to imagine that we can recoup ourselves by protecting our local trade? I desire to see our trade with the Dominions and our local trade expand as much as possible. I am sorry that the right hon. Gentleman is not now present, but I notice that his very able representative is on the Front Bench opposite and is, I understand, to wind up the Debate. Does he imagine that the great foreign trade of this country is to be dismissed, and that we are to recoup ourselves, and make up in other directions for that immense trade by which we live, by cultivating our local trade and our trade with our Dominions, much as we desire to cultivate that trade? To imagine that this great shipping, banking, and exporting country cannot re-establish itself is, to my mind, impossible, and I dismiss it as not worthy of consideration by this House.
  I may be asked, "What suggestion can you make by which we can recover our great position as a banking, exporting, carrying, and shipping country?" To that I propose to address myself. At the-outset I wish to refer to one or two matters connected with the Bill which is now before the House. On the Report stage of the Budget Resolutions the Chancellor of the Exchequer was good enough to reply to some criticisms I made with regard to the Sinking Fund provision. I had protested against what are called the Statutory Sinking Funds, and the Chancellor of the Exchequer said that in regard to the last loan of £150,000,000 unless he had had a Sinking Fund provision he would not have been able to borrow so cheaply. He was perfectly entitled to say that the loan was popular in the City. No doubt these Sinking Fund provisions are popular, because they mean profit for brokers, bankers and others, but the right hon. Gentleman's argument was by no means convincing.
  Perhaps I might explain why I think that these Statutory Sinking Funds are illusory and unsound. They were condemned by the Report of the Colwyn Committee, which was composed of some of our most distinguished bankers and economists, arid presided over by Lord Colwyn. The Report of that admirable Committee showed that the idea that you can help or support or in any way do good through a Statutory Sinking Fund

  1885
  to the value of stock, is illusory. That was shown to be the case over 100 years ago by a man whose writings have become a classic on the subject. In connection with the 3 per cent. Funding Lean the prospectus provided that :
  "His Majesty's Government undertake to set aside at the close of each half-year a sum equal to 2 per cent. on the nominal amount of the loan originally created."
  The loan was for £150,000,000 and the amount to be set aside would be £3,000,000 each six months or £6,000,000 per annum. The House will easily understand that in a time of surplus that would not be any heavy obligation, but when you have a deficit and you are tied by a statutory liability to maintain statutory Sinking Funds, you are frequently placed in the position that you have to borrow at a high rate of interest to pay off loans bearing a low rate of interest. The only real Sinking Fund is a Sinking Fund over and above the expenditure. It is unnecessary to put these Clauses into your prospectus. They may delude some ignorant people, but when you have a deficit and you have to borrow for the purpose of your Sinking Fund it means that your stock depreciates. The net result is that you add to your expenses.
  There is one further question to which I should like to allude, and perhaps the Financial Secretary may say something about it in his reply. I refer to the position of the Exchange Equalisation Account. The Chancellor of the Exchequer told the House, and many hon. Members fell into the trap, that the Exchange Equalisation Account continued to show a profit. Many hon. Members congratulated the right hon. Gentleman upon the fact that the Exchange Equalisation Account had made a profit, but the right hon. Gentleman did not actually say that. He said that it continued to show a profit. We are continually told that this is a secret fund, which amounts to £350,000,000 of the taxpayers' money, and that we must not ask any questions about it, although the House has voted the money. When the Chancellor of the Exchequer takes credit that the fund continues to show a profit, we are entitled to ask how it is arrived at.
  I have tried to make a study of the fund and it will be admitted by anyone who gives any attention to the matter that the fund works in this way. If, for
  1886
  example, we have to-day £190,000,000 of gold bullion, a large part of which has been bought according to contract entered into between the Bank of England and the Treasury, that gold bullion goes to the Bank of England at the old Mint price of £4 5s. per fine ounce, or £3 17s. 10½d. per standard ounce but the price which the Exchange Equalisation Account has to pay is anything from £5 to £6 or £7 per fine ounce. Therefore, it is evident that it does not need a very difficult calculation to discover that the difference between the £5, the £6 or the £7 per fine ounce which has to be paid for £50,000,000 or £60,000,000 of gold bullion by the Exchange Equalisation Account and the £4 5s. per fine ounce will mean a debit to the taxpayer, and will mean a loss of anything from £20,000,000 to £30,000,000 if we return to the old parity. Therefore, when the Chancellor of the Exchequer says that the Exchange Equalisation Account continues to show a profit it is sailing rather close to the wind. What we want to know is whether it has made a profit, and the real test of that would be in the final implication.
  We are anxious to know what is the policy of His Majesty's Government with regard to monetary policy. I think we are entitled to ask that. The right hon. Member for Hillhead (Sir R. Home) in a very interesting speech on the Budget asked the Chancellor of the Exchequer if the Government would give some indication of their monetary policy. Do they intend to maintain the present position of the paper currency for ever and to reduce the purchasing power of every wage earner and of every dividend recipient? Do they intend to do that in perpetuity? We are entitled to ask for a declaration of policy from the Government in regard to that most important subject. With a view of eliciting an announcement I have consulted hon. Members from all parts of the House and I rejoice to find that I have received support from Members of all parties for a new Clause, which I propose to put on the Order Paper when the Bill receives a Second Reading, for a commission of inquiry on monetary policy, to make recommendations and to-report to this House.
  My views are well known, but there are many different opinions in regard to this most important question and it is desirable that we should have some

  1887
  responsible body set up for the purpose of crystallising the present position in regard to monetary policy, which is perhaps the most important subject to which we can address our minds if we desire to restore our trade. After the Napoleonic Wars in 1823 it was the resumption of specie payments which marked the beginning of the great recovery in our trade, and in our foreign trade. Take the question of Germany. I visited Germany a few weeks ago and had the privilege of meeting some of their most distinguished Ministers, including Dr. Schacht, President of the Reichsbank, who perhaps next to Hitler is the most important man in Germany to-day. He said that Germany could pay her debt in bonds, but she is quite unable to transfer.
  Take the question of our debt to the United States of America. We could pay, and no doubt we are willing to pay, but the difficulty is, transfer. The sooner we get rid of the debt, either by the payment of a lump sum and funding it, the better, but the question is always one of transfer. Germany cannot transfer because there is no means of exchange. Quotas, restrictions and other interferences reduce trade to a minimum both on the Continent and with the United States. Unless we can develop our foreign trade by means of an exchange of products, and create machinery by which that exchange can be carried out, it is impossible to conduct foreign trade. With a depreciated currency and an inconvertible paper money from which we are suffering we cannot build up an export trade. Our foreign trade fell by no less than £195,000,000 in 1932 as compared with the previous year, and the Chancellor of the Exchequer must not attempt to delude this nation of 49,000,000 people by pointing to a comparatively small increase last year as compared with that enormous decrease. Our ships are laid up and our tramp steamers are asking for a subsidy because trade is reduced to a minimum. We cannot live by taking in our own washing, that will not help us at all.
  I desire to see our internal trade flourishing and prosperous, but unless we can develop and increase our foreign trade we shall sink into the abyss and cease to be a first-class Power. Therefore, I hope that if I have an opportunity to put forward my proposal on a later
  1888
  stage of the Bill that hon. Members will support me. We may differ as to what is the best thing to be done, but let us at least apply our minds to the problem. Let us turn this House into a Council of State. We may attack the Government, and probably shall, but we are anxious to do the best thing for the country and, therefore, I hope that the Chancellor of the Exchequer and the Financial Secretary will consider the proposal that I hope to put forward at a later stage. Let me quote the references to one or two former committee which have been appointed for this purpose. In 1810 there was the Bullion Committee, on the findings of which Sir Robert Peel founded his policy which led to great prosperity, carried on during the latter part of the century by Mr. Gladstone. The reference to the Bullion Committee was :
  "The Select Committee appointed to inquire into the cause of the high price of gold bullion, and to take into consideration the state of the circulating medium, and of the exchanges between Great Britain and foreign parts, and to report the same with their observations thereupon, from time to time to the House, have, pursuant to the Orders of the House examined the matters to them referred, and have agreed to the following report."
  The reference to the Macmillan Committee which was appointed in 1929 was :
  "We, the undersigned members of the Committee appointed by Treasury Minute of 5th November, 1929, to inquire into banking, finance and credit, paying regard to the factors both internal and international which govern their operation, and to make recommendations calculated to enable these agencies to promote the development of trade and commerce and the employment of labour, have now the honour to submit our report."
  Mr. MAGNAY: That was before we went off the Gold Standard?
  Mr. MASON: It was in 1929, and they reported in 1931. The point I wish to drive home is that these Committees have all been of service. They have crystallised opinion, and I would ask the Chancellor of the Exchequer to be good enough to give the request I make—it is not made by myself alone but by Members in all parts of the House—his careful consideration. While we may differ as to what should be our monetary policy the appointment of a responsible committee drawn from Members in all parts of the House and outside would crystallise opinion as it exists to-day. Great Britain

  1889
  has always been a great financial Power, and it is only right that she should take the lead in this matter and try to show-how the difficulties of transfer might be overcome. The right hon. Gentleman has said that the difficulties of our export trade are not entirely due to tariffs or Free Trade but to currency and other difficulties. While we shall continue to differ on the question of Protection and Free Trade—I have never wavered in my views as to Free Trade—I recognise that this House desires to test tariffs for a period, and I have tried, therefore, to direct my mind to what I think may be useful. This seems to me to be useful work. We all believe in a sound financial system and, therefore, I appeal to the Chancellor of the Exchequer to give the plea I am making to him his most careful consideration.
  10.3 p.m.
  Sir ADRIAN BAILLIE: At this late hour the hon. Member for Edinburgh, East (Mr. D. Mason) will excuse me if I do not refer to his most forcible speech. There are one or two points in the Bill to which I desire to draw attention for a few moments, and they are sins of omission not of commission. Like other hon. Members I want to pay my tribute to the Chancellor of the Exchequer for his most successful handling of the finances of the country whereby all parties who had to endure some form of sacrifice in 1931 have been given a measure of relief. But there is one grave omission. Of all the taxes imposed in 1931 by the second Budget, relief has been granted in every case except in the case of the Entertainments Duty on the cheaper seats, 6d. and under. I know that the right hon. Gentleman will be sympathetic in this matter. When introducing the duty in 1931 the Chancellor of the Exchequer said :
  "While I am no more enamoured of this tax than in the past I feel that in the present circumstances it is a ready instrument for affording all sections of the community an opportunity of making a contribution to our needs."—[OFFICIAL REPORT, 10th September, 1931; col. 309, Vol. 256.]
  I am sure the Chancellor of the Exchequer would not have omitted a relief in this direction had it not been for present exigencies of Budget balancing. It is clear to me, from the quotation which I have just read, that that tax was designed to be an indirect tax. In
  1890
  the beginning it was an indirect tax, and in so far as it was an indirect tax, it had comparatively little effect on the higher price seats, but it had a very serious and drastic effect on the lower price seats of the poorer cinema houses in the poorer areas. That was soon apparent, because the cinema proprietor, having at first put up the price of a seat from 6d. to 7d. and from 3d. to 4d., found that he had diminished audiences and, therefore, had to reduce the price once more from 7d. to 6d. and from 4d. to 3d. In that way it may be seen that the tax is no longer an indirect, but a direct tax, especially on the poorer cinema proprietors. May I repeat that, so far as I can see, this is the only 1931 impost that has not been dealt with by way of relief? [An HON. MEMBER : "And the Surtax."] I was taking that in the same breath as Income Tax, because the Surtax payer is also an Income Tax payer. I know that the industry itself is feeling very sore about it. It feels that it has been neglected, and knowing, as we do to-day, that the cinema industry is a very powerful instrument for education, culture, and even propaganda, I would say, without, I hope, giving any indication by word or deed of intimidation, that it might not be wise entirely to neglect that great industry.
  Knowing, as we must do, that the Chancellor of the Exchequer is in entire sympathy with the complaint that I am voicing at the moment, I must believe that there is only one reason why he has omitted dealing with this tax, and that is that he could not find enough cash in the surplus to do it. I have indicated to the right hon. Gentleman and to the Financial Secretary to the Treasury a way in which I believe the Chancellor could recoup himself in regard to the Entertainments Duty, and that, without looking further than the industry itself and without putting any extra burden on any British taxpayer, but there is no occasion for me to develop that point at the moment. Perhaps I may have an opportunity later. I would merely, in conclusion, most seriously ask my right hon. Friend to reconsider this question of the Entertainments Duty, and, if he cannot do anything to-day, perhaps he can do it in October, and if he cannot do it all in October, possibly by giving half he may put the industry on the same basis as

  1891
  those who suffered in 1931. If he can do that the industry will be very grateful, and the poorer people in our distressed areas will be very grateful too.
  10.9 p.m.
  Mr. NEIL MACLEAN: The Chancellor of the Exchequer, replying earlier in the Debate to the criticisms that had been made by the speakers who had preceded him, took credit for having brought in what he said was a landmark in the way of Budgets, and he expected the House to agree with him that, in producing this Budget and in announcing a restoration of some of the cuts and the partial restoration of others, the country had at last, through the safe guidance of the National Government, turned the corner and was now on a fair way to prosperity. When you go for two years defaulting upon your American debt, declining to pay, roughly, each year a sum of £30,000,000, you can very soon be looked upon as a prosperous nation, and begin shovelling out what you have saved by your defaulting to people in your own country. You can claim to have balanced your Budget, which the previous Government, you can say, were unable to do, and you have got out of the difficulty in which the previous Government placed the country; but you forgot to remind the country that at least the previous Government had met its American obligations as they fell due, and that at no time during the life of that previous Government had America been able, either directly or indirectly, either through its politicians or in the columns of its Press, to accuse the British nation of defaulting in its payments on the American debt. Therefore, I submit that when the Chancellor of the Exchequer produces a Budget which he claims has a surplus of something like £29,000,000, and shows only a token payment of slightly over £3,000,000 on the American debt—
  Mr. CHAMBERLAIN indicated dissent.
  Mr. MACLEAN: I am open to correction if I am misstating the figures.
  Mr. CHAMBERLAIN: I do not show any token payment at all.
  Mr. MACLEAN: That makes the right hon. Gentleman's situation all the worse.
  1892
  I was giving him credit for doing something by way of token payment, but evidently he is not even doing that, and, therefore, the Chancellor of the Exchequer has now admitted that he is completely defaulting and not even—
  Mr. CHAMBERLAIN: I would remind the hon. Member—perhaps he has forgotten what I did say—that I simply said I was not making any provision for either receipts or payments on the question of war debts.
  Mr. MACLEAN: That is a very evasive phrase by the right hon. Gentleman, similar to what the hon. Member for East Edinburgh (Mr. D. Mason) pointed out, when he said the Chancellor had stated that the Equalisation Fund was "showing a profit"—something out of which hon. Members can make anything they like; and very often Members make the wrong thing out of it, until brought up with a round turn when trying to pin the Chancellor of the Exchequer down to some definite statement. On the right hon. Gentleman's own admission, his Budget is not balanced, and, therefore, the approval which it has met from Members of the Tory party, Members of the National Labour party, and, I take it also, from Members of that little group of the Liberal party which is still associated with the National Government, is not justified, and all is not well with this country yet, in spite of what the Chancellor of the Exchequer and other speakers for the Government have been saying.
  The right hon. Gentleman the Chancellor of the Exchequer, evidently slightly perturbed as to criticisms from this side, wanted to know what the Labour Government or any Labour Government in the future might be prepared to do in similar circumstances, leaving out of account any idea of a defaulting on the debt, provided they had a similar surplus, provided that it had been necessary, through some peculiar circumstances arising in the country, for cuts to be made in various services, and in the case of various classes of people who were in receipt of payments out of State funds or out of insurance funds. Surely the obvious reply to that would be that, supposing there were a surplus at a subsequent date but the surplus was insufficient to meet the whole of the cuts and restore them fully, any Government's

  1893
  duty would be to use that money in giving the largest amount of benefit to those who had suffered most by the original imposition of the cuts. We contend that that is not what the Government to-day are doing; they are not utilising the surplus which they claim to possess to the best possible advantage of those who have suffered the most. That is one of the strongest reasons for our Amendment. We object to this Bill because we consider that the Government have not used the surplus to the best advantage.
  The Chancellor of the Exchequer in his Budget speech informed the House that he was going to restore the cuts to the unemployed who were on statutory benefit. The right hon. Gentleman had no right to make any such statement. The statement ought to have come from the Minister of Labour, because the restoration of the cut to those who were on standard benefit does not come out of any Budget surplus, but comes out of the accrued balance of the Unemployment Fund over which the Minister of Labour has control. The only sum which the Chancellor of the Exchequer is finding towards unemployment payment is the £3,600,000 which he is to pay to those who are on transitional payment and are subject to the means test. But in order to provide the Chancellor with an opportunity of appearing before the House in a dramatic situation, in which he can come forward as the great hero who restores unemployment benefit to those who had been paying for unemployment insurance, the Minister of Labour was precluded from making a statement which he had the right and privilege to make in regard to something that came within the control of his own Department.
  It is the Chancellor of the Exchequer who makes the heroic pronouncement, in order to lead supporters behind him to believe that he is able to restore unemployment benefit because he has a surplus. It is a piece of what one might almost call political trickery, such as has seldom been played in this House on any body of politicians in any Parliament of which I have been a Member since 1918. It is imposing on the House by making it appear that the restored unemployment benefit is to be paid out of the surplus which the Chancellor has. In the statement
  1894
  which was posted to every Member of the House it is said that because the Unemployment Insurance Fund is now showing a balance the Chancellor is able—the right hon. Gentleman is able, not the Minister of Labour—to restore the unemployment benefit cut. As a matter of fact, it is because the workers of the country, owing to the increased contributions which they have paid, have now built up a balance in the Unemployment Insurance Fund, that the Government are able to restore the benefit which was cut down by 10 per cent. in 1931. It is playing and trifling with the House for the Chancellor to come forward and endeavour to mislead Members in the way he did in his Budget speech.
  The right hon. Gentleman then told us that anyone who voted against this Bill was voting against the restoration of the cuts. I think I have shown the House that to vote against this Bill is not to vote against the restoration of unemployment benefit. It is only to vote against the reduction of the Income Tax. Even the increase in the transitional payments which, I take it, does come out of the Chancellor's surplus, is not mentioned in the Bill at all. Therefore, when the right hon. Gentleman threatens those who might be inclined to support our Amendment, that if they dare to vote against the Bill they will be voting against the restoration of the cuts imposed in 1931, he is uttering an empty threat. Neither his Government nor his party can issue a leaflet against any Member stating that he voted against the restoration of the cuts, because the Finance Bill does not restore any one of the cuts. Again, I say that this is playing with the House. It is trying to make the House believe that something is being done in this Bill which is not being done. Consequently, if Members have the courage to vote against it, they can do so with an easy mind, knowing, as I say, that the Chancellor's threat is an empty threat.
  The Chancellor told us, in connection with certain loan conversions, that he had reduced the rate of interest on those loans and had saved money. By that saving we are told some of this surplus has been achieved. He suggested that the rich were receiving less income as a result of that reduction of interest. I have advocated a reduction of War

  1895
  Loan interest since 1921. I have put Amendments down to various Finance Bills to that effect. The last occasion on which I did so was in 1931, before the General Election, under the first National Government, when we had the Snowden Budget. I put an Amendment down to that Finance Bill. Every time I had the opportunity I put down Amendments for a reduction of War Loan interest. I was accused, even upon that last occasion, of seeking to repudiate the War debts of this country. Some hon. Members opposite issued a leaflet against me to that effect but a fortnight or three weeks after the issue of that leaflet denouncing me as an advocate of repudiation, their own Chancellor of the Exchequer came along with his conversion scheme and reduced the interest. They did not issue a leaflet against the right hon. Gentleman. They praised him for his sagacity in carrying out the conversion and saving the country so many millions. Apparently, it all depends upon the part of the House in which you sit as to how your proposals are dealt with by hon. Members. All that matters is the geography of the House and the place where you sit in it.
  There is one point arising on this Bill which strikes me and must have struck other hon. Members as remarkable, and that is the proposal to destroy the Land Taxes. The National Labour Members of the Government have issued this week a little booklet called, "The Home Front : an account of the domestic record of the National Government," in which they state :
  "The Members of Parliament who were returned at this election"—
  that is, the 1931 election—
  "to support the National Government contained, as was inevitable under the conditions of an election so improvised, a vast majority of Conservatives but it should be noted that in this Parliament above all Parliaments it is the Cabinet which counts. It is the Cabinet which time and again has had to make swift decisions and subsequently to ask Parliament to ratify them. This being so, it is important to remember that in the Cabinet are men drawn in much more equal proportions from different parties and from different social backgrounds. The membership of the National Government is essentially a balanced National coalition, even if the membership of the House of Commons, judged by traditional party labels, were of a strongly Conservative complexion."
  1896
  They try to make it clear that there is loyalty between the various sections. They tell us that the Cabinet take the decisions which the Members in the House ratify. I would like to ask the Chancellor of the Exchequer, as one of the Members of the Cabinet and as the Member of the Cabinet responsible for the Finance Bill, whether the Prime Minister was present at the Cabinet when it was decided to delete the Land Tax. Am I probing for a Cabinet secret to be divulged? I am merely putting a straight question. I am willing to give way if the Chancellor wishes to reply. This is what the Prime Minister said on the eve of the poll at the General Election in 1931, when it was suggested that there might be some wangling done in the Cabinet if, through the fortunes of the election, there should be a majority of Conservatives in the new Government :
  "If there is to be any partisan manoeuvring, then I am not their man."
  I want to ask the Chancellor of the Exchequer and the Lord President of the Council, Has the Prime Minister become their man now? Who is responsible for the deletion of the Land Tax? Even the Lord President of the Council made a statement that this was a Coalition Government. It was quoted by a right hon. Member below the Gangway earlier in the evening. He advised those in his party who were asking for the repeal of the Land Tax to bear in mind that it was a Coalition Government, and that they must have some consideration for those who were their colleagues in the Government and in that party who were supporting the Government. I give the Lord President of the Council credit for being honest and sincere in that statement. What has happened to change his opinion now? Has the Prime Minister climbed down? Has the Prime Minister thrown aside all the statements he made in 1931, not only about the Land Tax but about all the other taxes? Why are not he and the Secretary of State for the Dominions here? Has he ceased to be your man, and has he now—or have they now—decided to resign from the National Government? Is this a breach of faith on the part of the Tories, who have now taken possession of the National Government? Have the buccaneers, the piratical Tories, now taken possession of the Coalition barque? I see the First Lord

  1897
  of the Admiralty present. Is he sure that they have not got the Fleet? I should like to know what the Government have got to say about it now? The Prime Minister, the Secretary of State for the Dominions, the hon. Member for South Nottingham (Mr. Knight), all the Members of the National Labour party, are still retaining their membership, evidently, of this Government, after being flouted. The hon. Member for Leith (Mr. E. Brown), who is Secretary for Mines, used to be a very strong advocate of the taxation of land values.
  The SECRETARY for MINES (Mr. Ernest Brown): The hon. Member is wrong; I voted against it.
  Mr. MACLEAN: The hon. Member says that he voted against it. At any Liberal conference he was at?
  Mr. BROWN: If the hon. Member will study the brown and green books, of which I know something, he will find that he does not understand Liberal policy.
  Mr. MACLEAN: No, I admit that I do not understand Liberal policy. We have some Liberals sitting on this side and some are over there, some are in oppostion and some are supporting the Government. What is their policy? [HON. MEMBERS : "The Green Book."] Surely they do not think the electorate is so green as to accept that. The Government were elected for a specific purpose; they appealed to the electorate to elect them in order to save the country from what they claimed to be a national crisis, telling the country that no party advantage was going to be taken, but that all three parties were going to work for the common weal of the country, and that when once the country was again in safety then the three" parties could dissolve and assume their separate existences once more. Here is a particular tax which has been for many years one of the most burning questions in party politics in this country.
  In my membership of the House of Commons I have seen two Coalition Governments, and each of them has brought budgets before the House in which a land tax has been deleted from the Statute Book. History is repeating itself to-night in another Coalition Government, and the Prime Minister who was mainly responsible for
  1898
  the passage of the Land Tax in the Labour Government, as one of the planks upon which he pledged himself and upon which he placed great reliance, is assisting, as Prime Minister of this Coalition, in stripping it from the Statute Book. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was the other Prime Minister. After fighting two general elections upon the Land Tax and having had it put upon the Statute Book, he saw, in the Finance Bill introduced when he was Prime Minister of the last Coalition Government, between 1918 and 1922, the Land Tax that he had placed upon the Statute Book torn from it. Curiously enough, to complete the coincidence, the Chancellor of the Exchequer who is responsible for the present Finance Bill is the brother of the Chancellor of the Exchequer who was responsible for the Finance Bill which destroyed the first Land Tax. These coincidences are becoming overwhelming.
  In this Finance Bill hon. Members are asked to accept a national balance-sheet. Had such a balance sheet been produced before any public company in this country, and had any chairman of directors attempted to push it through a shareholders' meeting, that chairman of directors would find himself beside Hatry at the very earliest opportunity. The Chancellor of the Exchequer is attempting to pass a national balance-sheet of that character. I ask the House to reject the Finance Bill, and to turn down not only the Chancellor of the Exchequer with his Finance Bill but the Prime Minister for breaking faith with the country.
  10.38 p.m.
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): The more forceful, I will not say the more coherent, portion of the speech of the hon. Member for Govan (Mr. Maclean) seemed to me to fall into two parts; the first part was directed to proving that there was no surplus, and the second part to telling us how we ought to distribute it. As a master of lurid language, the hon. Gentleman has one serious rival in the House who has displayed his histrionic ability to admiration this afternoon. Referring to one of the Clauses in the Finance Bill, that concerned with the repeal of the Land Value Tax provisions, he said that my right hon. Friend had "done this deed in the dark." We must

  1899
  be grateful to the right hon. Gentleman for having brought it to light. Let us be clear exactly what the Finance Bill is. The Finance Bill contains the practical proposals of the Government for providing the annual revenue. As a matter of course, in its preparation, the fiscal machinery of the State is brought under review. If the machinery is to be effective, it must be kept in constant use. The Inland Revenue is not a museum in which ancient pieces are kept. All the instruments in the armoury are sharp and in order, and ready to be used with effect. The machinery for the collection of the tax on land values was put into abeyance by the decision of the National Government when the right hon. Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair) was still a member of it. I recognise, of course, the great difference in our fortunes that has occurred since his departure. That, after all, was the theme of his speech. It was not history without tears; it was history with histrionics.
  In the ordinary course of events, the Land Values Tax would have come into operation this year. As three years must elapse between the necessary preparation and the exaction of the tax, it becomes plain that the tax could not become operative in the lifetime of the present Parliament. Accordingly, the Government have decided, having examined the whole matter, that some future Parliament should not be deprived of its right to examine the whole matter Afresh, in the light of the new conditions which will then prevail, and in detail. That, I think, is a practical proposal, and I do not think it can cause any undue regret. The right hon. Gentleman the Member for Caithness and Sutherland was careful to tell us that he did not approve of the tax itself—
  Sir A. SINCLAIR: Oh, no; I said I was not wedded to it.
  Mr. HORE-BELISHA: He was not wedded to it, and, therefore, he will not experience any marital loss. He was fully expressing the attitude of all the Liberal parties when he said that he was not wedded to the tax; nor are we. It only remains to remove it. At any rate, the right hon. Gentleman will recognise this important modification in the situation, that the Labour party has since, I
  1900
  imagine, revised its opinion also, for one of the principal advocates of the tax in this House is going to Leeds at the week-end to recommend the entire confiscation of private property. It will, therefore, be a complete waste of time to go through the elaborate process of a valuation, and the machinery will cease to be of any use. It only remains to remove one misapprehension which occurs in one of these Amendments. The tax would not be a lucrative source of revenue. So much was it compromised and modified owing, not to the marriage of the Liberal party to the tax, but to the liaison of part of the Liberal party with the Government of the day, that the revenue that it could produce is infinitesimal. Therefore, no one loses anything.
  As I have said, the Finance Bill is a practical, businesslike Measure. We are concerned, though it might be difficult to appreciate it from the speech to which we have just listened, not with measures to rectify a deficit, but with proposals for distributing a prospective surplus. No sacrifice is called for from anyone, no benefit enjoyed by anyone is modified, no salary is reduced and no direct tax is increased. On the contrary, the nation, emerging at last from its long period of self-denial and self-discipline, begins to reap the rewards of its forbearance, and there is a general alleviation of burdens. The situation of those who have so loyally and so ungrudgingly contributed towards this result was not made easier by the doubts that were instilled into their minds as to the efficacy of the measures that were being taken. Their fortitude must have been strained to the utmost when they wore told, as they were told repeatedly by hon. Members opposite, that they were the victims of a cruel deception and that the cuts were to become a permanent feature of our economy. When this charge was finally disproved, as it was by my right hon. Friend's Budget statement, the Deputy-Leader of the Opposition chose that moment—a moment incidentally in which the whole world was about to hail our achievement—to denounce the Measure as the meanest Budget on record. The hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps) sitting on the Front Bench, the Members of which when the emergency was upon them questioned its existence and assured us that all would

  1901
  be safe in their hands, has issued a manifesto which says :
  "We are moving inexorably towards an ever-deepening crisis, and the appalling situation cannot be remedied unless we are prepared to change the whole economic system."
  That is the higher Socialist criticism, and it will be plain that these two leaders have set their subordinates a very difficult task in living up to it. One observes that they are not here themselves. The hon. Gentleman who described this as the meanest Budget upon record, has not ventured to try to put his case before the House of Commons.
  Mr. MORGAN JONES: Nor did the Prime Minister to-day.
  Mr. HORE-BELISHA: Those to whom has been entrusted the duty of debating this matter, torn between their loyalty to their leaders and their loyalty to the facts, have endeavoured to explain the surplus away. The hon. Gentleman the Member for Caerphilly (Mr. Morgan Jones), who interrupts me, said that it would be churlish of him to deny that the situation had improved, but, of course, the revival was enjoyed by other countries also. While that may seem to detract from the merit of those who made sacrifices, it leaves it upon the shoulders of the hon. Gentleman to show how it is that, at a time when we are remitting cuts and decreasing taxes, other nations, supposedly enjoying this revival, are increasing cuts and intensifying taxes. In Italy, for instance, they are increasing the cuts from 6 to 20 per cent., and in France, not only are they increasing the cuts, but they are diminishing the number of State employés by no less than 10 per cent., and they are actually making diminutions in war pensions. The incontrovertible fact remains that at this moment we are making a restoration, and the only difference between us can be as to the manner in which we are to make it.
  We have proceeded upon the principle that those who made the contributions have the first claim upon the surplus. The Amendment, so far as I understand it, contests this principle, which was laid down first of all by Lord Snowden, who made the cuts, and reiterated by my right hon. Friend. An acceptance of this Amendment would involve breaking faith, and that is a course which my right hon. Friend is not prepared to pursue. The money having been given on a condition,
  1902
  it would be quite wrong to make this Finance Bill a vehicle for redistributing the national wealth. It is not our concern, as it is the concern of hon. Gentlemen opposite, to inquire how people will spend the moneys which are restored to them. It may be that some people will buy consumers' goods and that some will buy capital goods. I decline to assent to the theory which is embodied in this Amendment and which has been argued in so many speeches from the opposite side, that it is the working classes who are the spenders and the capitalists who are the savers. One has only to look at the course of savings deposits over the last three years to show how unsubstantial is the case which has been made by hon. Gentlemen opposite.
  I take, at this late hour, a total of the deposits in the Post Office Savings Bank, the Trustee Savings Banks and the National Savings Certificates, and I find that these have increased from £811,000,000 in 1931–32 to £845,000,000 in 1932–33, and now stand at £900,000,000—an increase in what are mainly working-class savings of £90,000,000 in the last three years. If you add to these figures other savings which are usually considered to be working-class savings, such as the investments in railway savings banks, trade unions, industrial and provident societies, and so forth, you will find that the thrift of the people has increased from a total of £2,261,000,000 in 1930 to £2,492,000,000 on the latest available date, an increase of £231,000,000 in what are mainly working-class savings in the last three years. What then becomes of the argument that the working-classes are the spenders, and the capitalists are the savers?
  When you come to the second principle, that the cuts should be restored in roughly the same proportion as they were given, I admit that there is a genuine difference, or that there might be a genuine difference, as to the application of this principle. As regards the amounts allotted, there can be no difference. Those who suffered salary reductions contributed £11,000,000 in a full year, and they get £5,500,000 back. Those who suflered reductions in direct taxation contributed £57,500,000 in a full "year, and they get £24,000,000 back. But there may be some dispute as to whether it would be better to restore the allowances to what

  1903
  they were rather than to reduce the standard rate of tax. I note, in passing, that while hon. Gentlemen opposite allege that we have not restored the cuts to the unemployed in full, they base that charge upon the ground that we have not abolished the means test. That, of course, is, with us, a matter of principle as defined in the language of the right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury). But in this Amendment they are advocating a means test, and a means test upon a family basis in regard to the distribution of the surplus, and they ask that this surplus should be distributed according to the means of a man with a family. There is nothing particularly novel about that. There is no new discovery involved. It is a consecrated principle of the Income Tax law, and if it be true that a man of small income with family responsibility would stand to gain more by a restoration of the allowances, I would ask hon. Gentlemen to realise why that is the case The standard rate of Income Tax is 4s. 6d. in the £, but a married man with three children enjoying an income of less than £400 a year, is exempt from taxation, or virtually exempt. He pays nothing either before this Bill or after this Bill, and if he has an income of £400 he pays an effective rate of tax not of 4s. 6d. in the £, but of 2½d. in the £. Therefore, it is quite obvious that a reduction in the standard rate of Tax cannot be as great to him as it would be to a man of £4,000 a year, in similar circumstances, who pays an effective rate of 4s. 7½d. in the £.
  Mr. MORGAN JONES: Is the effective rate upon other people 4s. 6d. in the £?
  Mr. H0RE-BELISHA: In some cases it is over 12s. It depends upon the amount of income upon which you pay. I do not resent the hon. Gentleman's interruption, although my time is nearly up. The married man with £500 a year income having three children pays at the effective rate of 6½d. That is the favourite illustration of the hon. Member for East Fulham (Mr. Wilmot),
  and that is why I mention it. That is the maximum rate at which the man with an income of £500 a year pays. It takes no account of other allowances to which he is entitled. I hope the House will observe that I am not in the least destroying the hope that these allowances may be restored. I am only trying to put them in perspective. A married man with three children and an earned income of £400 a year is exempt as to one-fifth of his income in respect of earned income allowance. Therefore, he deducts £80, leaving £320. He has a personal allowance of £150, also £50 for his first child, £40 for the second child and £40 for the third, making £130 in respect of the children. Therefore, there is a further £280 to be deducted, leaving him with an effective taxable income of £40. On that £40 he pays half the standard rate of tax, namely, 2s. 3d., leaving him with a maximum tax burden of £4 10s. If he has a life insurance policy he gets relief upon it at half the standard rate of tax. Suppose he has a life insurance policy with a premium of £20 per annum, then the man with £400 a year income and three children only pays £2 5s. in tax. The man with £500 income and three children who has a life insurance policy with a premium of £30 only pays £10 per year in tax.
  I hope that these illustrations show that the burden is not unbearable and that, at any rate, the Opposition will give us credit for the fact that every direct taxpayer, except the super taxpayer, has his burden reduced by 10 per cent. That is something. The unemployed have their cuts restored in full and the State servants by one-half. That is something. If it cannot meet, for political reasons, with the gratitude of hon. Members opposite, it is some consolation to us to realise that the methods which have made this possible are the admiration of the world.
  Question put, "That the words proposed to be left out stand part of the Question."
  The House divided : Ayes, 290; Noes, 55.

  Division No. 257.]

  AYES.

  [11.5 p.m.

  Acland-Troyte, Lieut.-Colonel

  Allen, Lt.-Col. Sir William (Armagh)

  Baillie, Sir Adrian W. M.

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

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

  Baldwin, Rt. Hon. Stanley

  Agnew, Lieut.-Com. P. G.

  Anstruther-Gray, W. J.

  Baldwin-Webb, Colonel J.

  Albery, Irving James

  Astbury, Lieut.-Com. Frederick Wolle

  Balfour, George (Hampstead)

  Allen, Sir J. Sandeman (Liverp'l. W.)

  Astor, Viscountess (Plymouth, Sutton)

  Balfour, Capt. Harold (I. of Thanet)

  Banks, Sir Reginald Mitchell

  Guest, Capt. Rt. Hon. F. E.

  Moss, Captain H. J.

  Barton, Capt. Basil Kelsey

  Guinness, Thomas L. E. B.

  Mulrhead, Lieut.-Colonel A. J.

  Bateman, A. L.

  Gunston, Captain D. W.

  Munro, Patrick

  Beauchamp, Sir Brograve Campbell

  Guy, J. C. Morrison

  Nation, Brigadier-General J. J. H.

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

  Hall, Capt. W. D'Arcy (Brecon)

  Nicholson, Godfrey (Morpeth)

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

  Hamilton, Sir George (Ilford)

  North, Edward T.

  Bernays, Robert

  Hammersley, Samuel S.

  O'Donovan, Dr. William James

  Bevan, Stuart James (Holborn)

  Hannon, Patrick Joseph Henry

  Oman, Sir Charles William C.

  Bossom, A. C.

  Harbord, Arthur

  O'Neill, Rt. Hon. Sir Hugh

  Bowyer, Capt. Sir George E. W.

  Hartington, Marquess of

  Patrick, Colin M.

  Braithwaite, J. G. (Hillsborough)

  Harvey, George (Lambeth, Kenningt'n)

  Peake, Captain Osbert

  Brocklebank, C. E. R.

  Harvey, Major S. E. (Devon, Totncs)

  Pearson, William G.

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

  Haslam, Henry (Horncastle)

  Percy, Lord Eustace

  Brown, Ernest (Leith)

  Headlam, Lieut.-Col. Cuthbert M.

  Petherick, M.

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

  Hellgers, Captain F. F. A.

  Peto, Sir Basil E. (Devon, B'nstaple)

  Buchan-Hepburn, P. G. T.

  Hills, Major Rt. Hon. John Waller

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

  Burghley, Lord

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

  Pownall, Sir Assheton

  Burnett, John George

  Hore-Bellsha, Leslie

  Pybus, Sir Percy John

  Butler, Richard Austen

  Hornby, Frank

  Ralkes, Henry V. A. M.

  Cadogan, Hon. Edward

  Horsbrugh, Florence

  Ramsay, Alexander (W. Bromwich)

  Calne, G. R. Hall-

  Howard, Tom Forrest

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

  Campbell-Johnston, Malcolm

  Hudson, Capt. A. U. M. (Hackney, N.)

  Ramsbotham, Herwald

  Caporn, Arthur Cecil

  Hume, Sir George Hopwood

  Ramsden, Sir Eugene

  Carver, Major William H.

  Hunter, Dr. Joseph (Dumfries)

  Ray, Sir William

  Castlereagh, Viscount

  Hunter, Capt. M. J. (Brigg)

  Reid, Capt. A. Cunningham-

  Cayzer, Sir Charles (Chester, City)

  Hunter-Weston, Lt.-Gen. Sir Aylmer

  Reid, David D. (County Down)

  Cazalet, Thelma (Islington, E.)

  Hurst, Sir Gerald B.

  Reid, James S. C. (Stirling)

  Cazalet, Capt. V. A. (Chippenham)

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

  Reid, William Allan (Derby)

  Chamberlain, Rt. Hon. N.(Edgbaston)

  Jackson, Sir Henry (Wandsworth, C)

  Remer, John R.

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

  James, Wing-Com. A. W. H.

  Renwick, Major Gustav A.

  Cobb, Sir Cyril

  Jamieson, Douglas

  Rhys, Hon. Charles Arthur U.

  Cochrane, Commander Hon. A. D.

  Jesson, Major Thomas E.

  Rlckards, George William

  Colman, N. C. O.

  Joel, Dudley J. Barnato

  Roberts, Sir Samuel (Ecclesall)

  Colville, Lieut.-Colonel J.

  Jones, Henry Haydn (Merioneth)

  Robinson, John Roland

  Conant, R. J. E.

  Jones, Lewis (Swansea, West)

  Ropner, Colonel L.

  Cook, Thomas A.

  Ker, J. Campbell

  Ross, Ronald D.

  Cooke, Douglas

  Kerr, Lieut.-Col. Charles (Montrose)

  Ross Taylor, Walter (Woodbridge)

  Cooper, A. Duff

  Kerr, Hamilton W.

  Runge, Norah Cecil

  Copeland, Ida

  Kimball, Lawrence

  Russell, Alexander West (Tynemouth)

  Courthope, Colonel Sir George L.

  Knight, Holford

  Russell, Hamer Field (Sheffield, B'tslde)

  Craddock, Sir Reginald Henry

  Knox, Sir Alfred

  Rutherford, John (Edmonton)

  Craven-Ellis, William

  Lamb, Sir Joseph Quinton

  Rutherford, Sir John Hugo (Liverp'l)

  Croft, Brigadier-General Sir H.

  Latham, Sir Herbert Paul

  Salmon, Sir Isidore

  Crooke, J. Smedley

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

  Samuel, Sir Arthur Michael (F'nham)

  Crookshank, Capt. H. C. (Galnsb'ro)

  Leckle, J. A.

  Sandeman, Sir A. N. Stewart

  Croom-Johnson, R. P.

  Leech, Dr. J. W.

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

  Cross, R. H.

  Lees-Jones, John

  Savery, Samuel Servington

  Crossley, A. C.

  Leighton, Major B. E. P.

  Scone, Lord

  Cruddas, Lieut.-Colonel Bernard

  Lennox-Boyd, A. T.

  Selley, Harry R.

  Davison, Sir William Henry

  Llddall, Walter S.

  Shaw, Helen B. (Lanark, Bothwell)

  Dickie, John P.

  Llewellin, Major John J.

  Shaw, Captain William T. (Forfar)

  Drewe, Cedric

  Lloyd, Geoffrey

  Shepperson, Sir Ernest W.

  Duckworth, George A. V.

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

  Simmonds, Oliver Edwin

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

  Lockwood, John C. (Hackney, C.)

  Skelton, Archibald Noel

  Dunglass, Lord

  Loftus, Pierce C.

  Smiles, Lieut.-Col. Sir Walter D.

  Edmondson, Major A. J.

  Lovat-Fraser, James Alexander

  Smith, Bracewell (Dulwich)

  Elmley, Viscount

  Lyons, Abraham Montagu

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

  Emmott, Charles E. G. C.

  Mabane, William

  Smithers, Waldron

  Emrys-Evans, P. V.

  MacAndrew, Lieut.-Col. C. G. (Partick)

  Somervell, Sir Donald

  Entwistle, Cyril Fullard

  MacAndrew, Capt. J. O. (Ayr)

  Somerville, Annesley A. (Windsor)

  Everard, W. Lindsay

  McCorquodale, M. S.

  Somerville, D. G. (Willesden, East)

  Fermoy, Lord

  Mac Donald, Rt. Hon. J. R. (Seaham)

  Sotheron-Estcourt, Captain T. E.

  Fleming, Edward Lascelles

  Macdonald, Sir Murdoch (Inverness)

  Southby, Commander Archibald R. J.

  Ford, Sir Patrick J.

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

  Spears, Brigadier-General Edward L

  Fraser, Captain Ian

  McKle, John Hamilton

  Spencer, Captain Richard A.

  Fremantle, Sir Francis

  Maclay, Hon. Joseph Paton

  Spender-Clay, Rt. Hon. Herbert H.

  Fuller, Captain A. G.

  McLean, Major Sir Alan

  Spens, William Patrick

  Ganzonl, Sir John

  McLean, Dr. W. H. (Tradeston)

  Stanley, Rt. Hon. Lord (Fylde)

  Gibson, Charles Granville

  Magnay, Thomas

  Stanley, Hon. O. F. C. (Westmorland)

  Gillett, Sir George Masterman

  Makins, Brigadier-General Ernest

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

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

  Margesson, Capt. Rt. Hon. H. D. R.

  Stones, James

  Gledhill, Gilbert

  Marsden, Commander Arthur

  Storey, Samuel

  Glossop, C. W. H.

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

  Stourton, Hon. John J.

  Gluckstein, Louis Halle

  Mayhew, Lieut.-Colonel John

  Strauss, Edward A.

  Glyn, Major Sir Ralph G. C.

  Mills, Sir Frederick (Leyton, E.)

  Stuart, Hon. J. (Moray and Nairn)

  Goff, Sir Park

  Mills, Major J. D. (New Forest)

  Stuart, Lord C. Crichton-

  Goldle, Noel B.

  Milne, Charles

  Sueter, Rear-Admiral Sir Murray F.

  Goodman, Colonel Albert W.

  Mitcheson, G. G.

  Sugden, Sir Wilfrid Hart

  Gower, Sir Robert

  Monsell, Rt. Hon. Sir B. Eyres

  Tempteton, William P.

  Graham, Sir F. Fergus (C'mb'rl'd. N.)

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

  Thomas, James P. L. (Hereford)

  Granville, Edgar

  Moore-Brabazon, Lieut.-Col. J. T. C.

  Thompson, Sir Luke

  Graves, Marjorle

  Morgan, Robert H.

  Titchfield, Major the Marquess of

  Greene, William P. C.

  Morris, Owen Temple (Cardiff, E.)

  Touche, Gordon Cosmo

  Grentell, E. C. (City of London)

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

  Tree, Ronald

  Grimston, R. V.

  Morrison, William Shephard

  Tryon, Rt. Hon. George Clement

  1906

  1907

  Tufnell, Lieut.-Commander R. L.

  Wedderburn, Henry James Scrymgeour-

  Winterton, Rt. Hon. Earl

  Turton, Robert Hugh

  Wells, Sidney Richard

  Wise, Alfred R.

  Wallace, Captain D. E. (Hornsey)

  Whiteside, Borras Noel H.

  Worthington, Dr. John V.

  Wallace, John (Dunfermline)

  Whyte, Jardine Bell

  Young, Rt. Hon. Sir Hilton (S'v'oak)

  Ward, Lt.-Col. Sir A. L. (Hull)

  Williams, Herbert G. (Croydon, S.)

  Ward, Irene Mary Bewick (Wallsend)

  Wills, Wilfrid D.

  TELLERS FOR THE AYES.—

  Waterhouse, Captain Charles

  Wilson, Clyde T. (West Toxteth)

  Lord Erskine and Mr. Blindell.

  Wayland, Sir William A.

  Windsor-Clive, Lieut.-Colonel George

  NOES.

  Adams, D. M. (Poplar, South)

  Greenwood, Rt. Hon. Arthur

  Malialleu, Edward Lancelot

  Attlee, Clement Richard

  Grenfell, David Rees (Glamorgan)

  Mander, Geoffrey le M.

  Banfield, John William

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

  Mason, David M. (Edinburgh, E.)

  Batey, Joseph

  Hall, George H. (Merthyr Tydvil)

  Milner, Major James

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

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

  Nathan, Major H. L.

  Buchanan, George

  Harris, Sir Percy

  Salter, Dr. Alfred

  Cape, Thomas

  Hicks, Ernest George

  Sinclair, Maj. Rt. Hn. Sir A.(C'thness)

  Cocks, Frederick Seymour

  Jenkins, Sir William

  Smith, Tom (Normanton)

  Cove, William G.

  John, William

  Thorns, William James

  Cripps, Sir Stafford

  Jones, Morgan (Caerphilly)

  Tinker, John Joseph

  Curry, A. C.

  Kirkwood, David

  Wedgwood, Rt. Hon. Josiah

  Daggar, George

  Lawson, John James

  West, F. R.

  Davies, David L. (Pontypridd)

  Leonard, William

  Williams, David (Swansea, East)

  Davies, Rhys John (Westhoughton)

  Llewellyn-Jones, Frederick

  Williams, Edward John (Ogmore)

  Dobble, William

  Logan, David Gilbert

  Williams, Dr. John H. (Llanelly)

  Edwards, Charles

  Macdonald, Gordon (Ince)

  Wilmot, John

  Evans, R. T. (Carmarthen)

  McEntee, Valentine L.

  Wood, Sir Murdoch McKenzie (Banff)

  Foot, Dingle (Dundee)

  Maclean, Nell (Glasgow, Govan)

  Gardner, Benjamin Walter

  Mainwaring, William Henry

  TELLERS FOR THE NOES.—

  Mr. Groves and Mr. D. Graham.

  Question put, and agreed to.

WATER SUPPLIES (EXCEPTIONAL SHORTAGE ORDERS) BILL.
Order for Consideration of Lords Amendments read.
Lords Amendments considered accordingly.

WATER SUPPLIES (EXCEPTIONAL SHORTAGE ORDERS) BILL.

  CLAUSE 1.—(Power to make orders and duration, variation and revocation of orders.)
  Lords Amendment : In page 3, line 3, after "water," insert "into a canal or."
  11.14 p.m.
  The MINISTER of HEALTH (Sir Hilton Young): I beg to move, "That this House doth agree with the Lords in the said Amendment."
  The Amendments do not touch on any question of principle in the Bill. It will be seen that the words "into a canal" have been inserted in Clause 1, page 3, line 3, and also in the definition of compensation water in Clause 10, page 10, line 22. These are the only Amendments of any substance and have been inserted simply to provide for the case, a rare
  1908
  one, where compensation water is discharged direct into a canal. All the other Amendments are of a drafting nature and have been inserted to tidy up the wording.
  Subsequent Lords Amendments, to page 5, line 10, agreed to.

  CLAUSE 5.—(Penalties).
  Lords Amendment : In page 6, line 28, leave out "in respect of each offence."
  Sir H. YOUNG: I beg to move, "That this House doth agree with the Lords in the said Amendment."
  Mr. RHYS DAVIES: We discussed this point in the Standing Committee. Would the Minister now tell us whether the omission of these words means, that the person would be fined for committing one offence, and be sent to prison only for committing more than one offence?
  Sir H. YOUNG: This is a purely drafting Amendment consequential upon an Amendment moved in Committee, which provided that a person should not be liable to imprisonment for the first offence. The imprisonment is possible only in the case of a second offence.
  Remaining Lords Amendments agreed to.

PROTECTION OF ANIMALS (CRUELTY TO DOGS) (SCOTLAND) BILL.
Order [14th May] that the Bill be committed to a Standing Committee read, and discharged.
Bill committed to a Committee of the Whole House for To-morrow.—[Lieut.-Colonel Moore.]
The remaining Orders were read, and postponed.

PROTECTION OF ANIMALS (CRUELTY TO DOGS) (SCOTLAND) BILL.

  ADJOURNMENT.
  Resolved, "That this House do now adjourn."—[Captain Margesson.]
  Adjourned accordingly at Twenty - two Minutes after Eleven o'Clock.

  TELEPHONE OHARGES.
  TELEPHONE OHARGES.
  STREET COLLECTIONS.
  STREET COLLECTIONS.
  EAST AFRICA (GERMAN-JEWISH FAMILIES).
  EAST AFRICA (GERMAN-JEWISH FAMILIES).
TRADE AND COMMERCE.
  COLONIES (FOREIGN IMPORT RESTRICTIONS).
  COLONIES (FOREIGN IMPORT RESTRICTIONS).
  TANGANYIKA (JAPANESE GOODS, IMPORT).
  TANGANYIKA (JAPANESE GOODS, IMPORT).
  PALESTINE MERCHANDISE MARKS ORDINANCE.
  PALESTINE MERCHANDISE MARKS ORDINANCE.
  KABUL EXHIBITION.
  KABUL EXHIBITION.
  IMPORTED GOODS (PURCHASE, MANUFACTURERS).
  IMPORTED GOODS (PURCHASE, MANUFACTURERS).
  IRAQ (BARRAGE CONTRACT).
  IRAQ (BARRAGE CONTRACT).
  BRITISH CAPITAL INVESTMENT, INDIA AND DOMINIONS.
  BRITISH CAPITAL INVESTMENT, INDIA AND DOMINIONS.
AGRICULTURE.
  WHEAT (DEFICIENCY PAYMENTS, WALES).
  WHEAT (DEFICIENCY PAYMENTS, WALES).
  BACON PRODUCTION (DEVELOPMENT SCHEME).
  BACON PRODUCTION (DEVELOPMENT SCHEME).
  PIGS MARKETING SCHEME (WALES AND MONMOUTHSHIRE).
  PIGS MARKETING SCHEME (WALES AND MONMOUTHSHIRE).
  SUBMARINE ACCIDENTS.
  SUBMARINE ACCIDENTS.
  LONDON AND HOME COUNTIES TRAFFIC ADVISORY COMMITTEE.
  LONDON AND HOME COUNTIES TRAFFIC ADVISORY COMMITTEE.
Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
PROTECTION OF ANIMALS BILL.
Returned from the Commons, with the Amendments, agreed to.

ADMINISTRATION OF JUSTICE (APPEALS) BILL. [H.L.]
THE LORD CHANCELLOR (VISCOUNT SANKEY): My Lords, I beg leave to present a Bill to provide that no appeal shall lie from the Court of Appeal to the House of Lords except with the leave of that Court or the House of Lords, to make further provision as respects appeals from County Courts, and for purposes connected with the matters aforesaid. I move that the Bill be read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read la, and to be printed.

MINISTRY OF HEALTH PROVISIONAL ORDER (BLACKBURN) BILL.
Read 3a (according to Order), and passed.
MINISTRY OF HEALTH PROVISIONAL ORDER (SHIPLEY) BILL.
Read 3a (according to Order), and passed.

EDUCATIONAL ENDOWMENTS (SCOTLAND) COMMISSION.
THE EARL OF LEVEN AND MELVILLE THE EARL OF LEVEN AND MELVILLE had given Notice that he would thaw attention to the Educational Endowments (Scotland) Commission of 1928; and move, That His Majesty's Government do make an immediate declaration as to their intentions with regard to the continuance of the powers of this Commission beyond the end of the present year. The noble Earl said: My Lords, I rise to speak to the Motion that stands in my name on the Paper and to draw your Lordships' attention to the Educa-

425
tional Endowments (Scotland) commission of 1928. As your Lordships will remember, this House appointed the Commission to go into and, if necessary, reorganise the very large number of endowment funds which are scattered throughout the whole length and breadth of Scotland. The Commission was appointed in 1928 with a life of three years, and in 1931 was reappointed for a further like period. So that, unless further legislation is passed, the Commission comes to an end automatically at the end of the present year.
When the members of the Commission began their work all reasonable men, I think, agreed that there was a necessity for some Commission to consider and, if necessary, to reorganise many of the endowments in Scotland. Many of these endowments had been in existence for a long time, and, owing to a change of circumstances, and to legislation which from time to time has been passed, were undoubtedly, and are undoubtedly, in need of reorganisation and of bringing up to date. Everybody, I think, recognised the eaormous task which faced this Commission. Not only does it involve a very large amount of time and of hard work on the part of the Commissioners, but it is a task which demands great tact when dealing with subjects scattered all over the country, in each case of so many various details, and the whole being so close to the hearts of the people of Scotland. In the atmosphere which I have attempted shortly to describe the Commissioners began their work. Unfortunately it became apparent before very long that there was considerable opposition in various parts of Scotland to the policy, to the method of working, and to the schemes which were produced by the Commission. It is impossible for me in the short time at my disposal to go into the details of any of these schemes, for that is really more a matter, I think, for a law court than for the floor of your Lordships' House; and I propose, with your Lordships' permission, to touch very shortly on four different endowment funds. These four are chosen because each one of them brings out a very different point, and so does something to illustrate the variety of the cases which come before the Commissioners in the course of their work.
I turn first to an endowment fund applicable to the areas in and around
426
Troon in Ayrshire, which has become unfortunately unduly famous throughout Scotland under the name of the Marr bequest. This trust was a very large one, running to some hundreds of thousands of pounds. It came into operation after the death of Mr. Marr in 1919. Your Lordships will observe that under the terms of the Act if this trust had not come into operation until eighteen months, or possibly two years, later it would have been entirely outside the scope of this Commission, and they would have been unable to deal with it at all. Considering the facts that this trust was of such modern date and that the trustees appointed by Mr. Marr had only quite lately begun their scheme, and had to some extent developed on the lines which they understood Mr. Marr required, one might have thought that it would have been found possible by the Commission for them only to make some alterations perhaps in the details of the scheme, and to do this with the agreement of the local people. Unfortunately this did not prove to be the case. The strongest opposition among people of the locality has been aroused, and still exists to-day. At that I leave this bequest for the moment, though I shall refer to it shortly again.
One of the difficulties which I think the Commission have had to face has been the very vexed question of whether or not the wishes of the original testator were being, or were to be, complied with; and in the course of their work the Commission came across one endowment which I now refer to in the County of Sutherland, which was different, I think, from any others with which they have had to do. This endowment is known by the name of the Rogart Educational Association. This is different from all the other trusts dealt with, I think, owing to the fact that in this case the donor of the majority of the fund was still alive when the Commissioners instituted the inquiry. Your Lordships should know that Rogart in the County of Sutherland is a rather isolated, very thinly populated and purely rural area. In this area Mr. J.C. Mackay had for many years expended large sums of money in the most honest and undoubtedly well-meaning attempt to do something to improve the educational possibilities of the children in this area with which

427
he was connected. For twenty-eight years Mr. Mackay watched over this association and, as I understand it, organised and managed the spending of the money.
When the Commissioners held their first hearing and produced their draft scheme for the County of Sutherland, Mr. Mackay, I understand, appeared before the Commissioners and objected to the scheme. During the course of his appearance before the Commission Mr. Mackay took strong exception to the scheme as put forward by the Commission, and—I take this from the Press of the day—he is quoted as having objected strongly when the Commissioners were conducting their inquiry in Edinburgh. During the course of that inquiry Mr. Mackay said that for the last twenty-eight years he had controlled the work of the Rogart Educational Association, and had provided the entire funds for the grants given by the association until about eleven years ago, when the funds were supplemented by a legacy from his uncle, Donald Mackay.
Mr. Mackay said he did not see by what right the Commission could arrange to give the control of that money to another body and tell him, the living donor, how the money should be disposed of. Mr. Mackay later on also said:
"Altogether my family have given about£30,000 to the parish of Rogart, and this is the gratitude we get."
I have no opportunity in your Lordships' House to go into all the details of this or any other trust, but I do place this question before your Lordships as to whether it was entirely reasonable on the part of the Commission to come in in this way and to overturn the desires and intentions of a man, still alive, who appeared before the Commission, who had for so many years given generously of his means, and who had taken an infinity of trouble to help the education of the children in this lonely district.
At another time during his evidence before the Commission Mr. Mackay, I understand, remarked that he had intended to make a further bequest for the children of this area, but that, seeing that the Commission were entitled to come in and upset all his desires, he would have to reconsider that decision. Unfortunately, since those days Mr. J. C. Mackay has died. His will was published a little while ago, and
428
it was found that in the terms of that will there was included no endowment according to the lines on which he had indicated that he had intended to leave it. Am I unreasonable if I suggest that the people of Rogart are hardly likely to be pleased with the decisions of this Commission, when they have seen an old man, who for many years has been generous and has taken endless trouble on their behalf, have his wishes flouted, his desires disregarded? After all those years of work the people naturally say that they have been deprived of an endowment which they had every right, from what Mr. Mackay had said, to expect. Now that endowment is lost to them and their children for ever. I do not know that one can blame the people of the locality, but they lay much blame at the door of the Commission. They even go so far as to say Mr. Mackay has been driven into his grave by all the disturbance and the unpleasantness he has undergone at the hands of the Commission.
I turn for a moment to a trust named the Mann Bequest. Under this bequest there is a bursary of £30 a year for Edinburgh University for any boy or girl from Nairn Academy. Some time ago the University people, I understand, approached the Commissioners to reorganise the bursaries. The Commission did so. Among other bursaries this one applying to the people of Nairn was considerably altered in its terms. Nothing was heard of this at all in Nairn. A year or more after the new regulations had come into force, when the rector of Nairn Academy applied for a child to go from Nairn to Edinburgh University, he was informed the whole of the system had been altered. He then complained that nobody in Nairn had heard anything of this alteration, that nobody knew that the Commissioners had dealt with this bursary. He requested to be informed how this had been done and how it had arisen that no warning had been given to the people in Nairn.
It appears since then that the Commissioners advertised the fact that these bursaries were being altered in four daily newspapers on the same day, and inserted one advertisement or statement of some kind in the Edinburgh Gazette. The rector of Nairn Academy has since been in correspondence with the Government Department concerned, the Scottish

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Office. I understand from this correspondence that it has been put forward that it would have been very difficult to circularise everybody concerned with all these bursaries of Edinburgh University, and it has been represented that had they done so it would have involved a matter of perhaps nearly one hundred letters to circularise everybody who might have had some concern with the matters in hand. Commissioners dealing with so delicate a question of endowments would, one might have thought, have considered it their first duty to take particular care, if any alterations were to be made in any bursaries or trusts of any kind, that all the people concerned were informed before the change finally became law.
Is it to be assumed that it is difficult, even impossible, for the Commission to circularise one hundred people? The Commission are so modern, so up-to-date, in policy, that I do not know whether we are to believe that the organisation of their office is so behind hand that it cannot, without a great deal of trouble, produce one hundred circular letters to be sent out. The modern copying machine overcomes this difficulty, and every office almost in the country can send out circulars of one hundred letters without thinking anything of it. The net result of this change is that the people in Nairn consider that they have been given no reasonable chance to make their representations and to put their objections before the Commissioners. They say that they had no idea that this matter of the Edinburgh University bursaries was being taken up at all; and how were they to watch the newspapers every day to see whether some bursary of theirs was being affected when they had no reason in the world to suppose anything of the kind was being done? Here, again, it is hardly surprising if the people feel that they have not been very fairly treated, and are inclined even to think that this small matter has been overlooked in the view that their objection, even if it had been made, would have betel so small that very little attention would have been paid to it.
I turn now to a trust called the Donald Manson Bequest. This is a large fund of money left by a certain Donald Manson who, some years ago, migrated to New Zealand, there lived and died, and there
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left his money, with the result that the whole of the capital of this trust is now located in New Zealand under the care of the Public Trustee and the income from the trust is paid over to this country by the Public Trustee each year. The Public Trustee in New Zealand pays this money over year by year and requires only as a receipt a certificate from some responsible person—I think the Chairman of the County Council—which is sent to the High Commissioner for New Zealand in London, saying the money has been spent and spent in accordance with the desires of the people in the locality which Mr. Manson's bequest was intended to benefit. When the Commissioners appeared in Elgin for their first hearing the representatives of Morayshire and Ayrshire, who are largely concerned in the income from this bequest, appeared before the Commissioners. So far as I remember, the suggestion was made by the local people that here was a trust which was located entirely in New Zealand and that, therefore, it was possibly outside the scope of the Commission to deal with a trust which was not located within the borders of this country. So far as if remember the Commissioners swept that aside, publicly or privately or both, and decided that in future they were fully entitled to deal with this bequest.
The Commissioners produced their draft scheme to which the local people in those areas benefiting from the Donald Manson bequest objected. There followed a considerable argument between the local people, of whom some said the Commissioners must have communicated with the Public Trustee in New Zealand, whereas others said: "We are not quite certain of that and we are not quite clear that they have the power to deal with this bequest." As a result of this one local committee in Nairnshire and several individual residents in the parish concerned in Morayshire, wrote to the Public Trustee in New Zealand telling him what had happened and sending him a copy of the draft scheme. To the great surprise of the local people it later on became apparent that the Public Trustee in New Zealand knew nothing of the scheme, had not seen anything of it until the local people sent it to him, and was in fact entirely ignorant that this matter was being actively taken up. As a result of this

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letter from the local people the Public Trustee wrote to the Commission, and as a result of that the Commissioners, rather late in the day, as it seems to us in the locality, sent an invitation to the Public Trustee to send a representative to their next hearing, which was to be in Elgin on May 3. Time was so short that this invitation had to be sent by cablegram. For some time nothing happened until, I understand, a cablegram was received from the Public Trustee in reply saying he did not intend to be represented at this hearing. There, so far as I know, the matter stands at present. Can you blame the local people if they are frankly terrified that the end of all this will be that the Commissioners will produce some scheme of which the Public Trustee in New Zealand does not approve and that the Public Trustee will then withhold the income from the trust?
There has been recently a most unfortunate case of a bequest amounting to a sum of £25,000 which, owing to a decision in the Courts of Law in the United States, has been lost to Scotland and has gone to some descendant of the Proctor family resident in the United States. The Commissioners have taken the view, I know, that the decision of the United States Court was in no way influenced by the existence or behaviour of the Commission. On the other hand, some people have taken the opposite view. Only a short time ago in the Press there appeared a long letter over the signature of the secretary to the Commission explaining, as I imagine everybody understood and as certainly I understood, the view of the Commission on this matter. I think everybody who read this letter took up the attitude: "Now, if the other people have anything to say, there must be an answer to this letter." They had not very long to wait. About three days afterwards in the same paper appeared a long letter from Sir Andrew Grierson, the Town Clerk of Edinburgh. I am in no way concerned in this Proctor bequest but, having read these letters and having discussed them with various people, I find that the result of this correspondence has been a considerable hardening of the view that Sir Andrew Grierson's argument was better and stronger than the argument of the secretary to the Commission, and that perhaps, after all, there was some
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thing in the argument that the Proctor bequest had been lost to Edinburgh through the action or the existence of this Commission. At that I leave it. It seems to be an argument which can go on and on to the end of time.
But in view of that fact is it indeed surprising that the local people in Moray and Nairn are really frightened they may lose the income from this bequest, which means in all, I think, between £1,500 and £2,000 a year, and which has been of such enormous help in the parishes affected in the better education of their children? One would have thought that the Commissioners might from the start have taken every possible care in a matter like this to keep in close touch with the Public Trustee in New Zealand, and to inform him week by week how affairs were progressing. If it be said that the Public Trustee in New Zealand is a very long way away and that correspondence takes a long time, one might have thought that the Commissioners could have made an arrangement with the Public Trustee to nominate his representative in London to deal with this matter. I should imagine that would be the High Commissioner for New Zealand, who, after all, is close at hand and could be informed of every step as it is taken. So far as my information goes this does not seem to have been done, with the result that the local people feel that if great care is not taken in the future these funds may be lost to the parishes which they have in the past so greatly benefited.
I turn now from the quotation of individual cases to opinions which I have been able, during the course of some weeks of effort, to collect from men whose opinions I think are valued and whose names stand high in Scotland to-day. I refer, again, for a moment, to the matter of the Marr bequest. In one of the actions in the Courts which arose as a result of the matter of this bequest, Lord Sands gave a judgment, and I quote his judgment from the Scots Law Times Reports for 1934, in the case of Marr's Trust versus The Assessor for Ayrshire in the Lands Valuation Appeal Court. Lord Sands in giving judgment said:
"'Is it not a wonderful thing, said Mr. Pickwick, 'that we seemed destined to enter no man's house without involving him in some degree of trouble. Does it not, I ask, bespeak the indiscretion or, worse than that, the blackness of heart of my followers that beneath whatever roof they locate they

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disturb the peace of mind and the happiness of some confiding female?' With a few changes of expression to suit the different circumstances, this seems to suggest a lamentation which might be appropriate in the mouth of the Chairman of the Educational Endowments Commission. Far be it from me to impute any reproach to them, but it seems to be their unhappy fate that, Wherever they locate themselves, they disturb the peace of mind and happiness of the community. The case before us is an echo of one such disturbance."
The learned Judge then turned to the details of the case, with which I need not trouble your Lordships, but further on he says:
"The endowments are so ample that (it may be with certain modifications in detail and the provision of boarding house) the Marr College might have been made the greatest school in the land, eclipsing Watson's, Heriot's, Stewart's, and the Glasgow schools with which I am not familiar. The proposals of the Commission negative any such idea. They may be wise, but they are so drastic as to be absolutely negative of any prospect of the continuation in the future of those munificent educational benefactions to which Scotland owes so much."
The late Lord Sands was known, I think, throughout Scotland, and also probably to many of your Lordships here, as a man of great ability. Be was not just well-known in the Courts of Law, but known as a great authority in matters of the Church of Scotland, and as one who certainly was not ignorant in matters of education. I think I am right in stating that he was Chairman of the University Committee of the Carnegie Trust, a Committee which under his chairmanship I have always understood was run in a manner which evoked the admiration of all who knew its work.
I turn now to the opinion of Sir Robert Halt, Principal of the University of Glasgow. Sir Robert Rait writes:
"The Educational Endowments Commissioners seem to me to have made two grave errors which cannot fail to be prejudicial to education in Scotland. Their violent interference with the intentions of testators, even in dealing with benefactions which general public opinion regards as continuing to serve a useful purpose, has alarmed those who are contemplating the creation of further endowments. Their treatment of bursary foundations, both in schools and in the Universities, is an attack upon an institution which has been of incalculable benefit to Scotland. A reversal of the policy of the Commissioners seems to me to be essential for the vital interests of Scottish education."
I am quoting from a letter written to me by Sir Robert Rait with the full know-
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ledge that I was going to raise this debate in your Lordships' House this afternoon and with the knowledge that I should, if I thought fit, quote from the letter during the course of my remarks. I will not refer to the opinion of Sir George Adam Smith, the Principal of Aberdeen University, because I understand that the noble Lord, Lord Meston, as Chancellor of the University, will deal fully in the course of the debate with the matters connected with it, but I think I may say that I have been given very definitely to understand that Sir George Adam Smith, like Sir Robert Rait, is strongly opposed to this Commission, particularly with regard to the bursaries and scholarships which are connected with the University of Aberdeen.
I turn now for a moment to a letter that I have received from a man who, in the Highlands, is known to be one of very reasonable mind, one who is well looked up to in the area where he is known, and whose opinion I asked with regard to this matter. He writes:
"We have no very flagrant cases against the Endowment Commissioners in Ross and Cromarty, so I can spare you any additional grouses except the general one that this class of Commission is a grave danger."
Further on he says:
"I have not heard of any one here who is not definitely opposed to the principle—if it may be graced with this name."
That is a quotation from a letter from the Chairman of the Ross-shire County Council, Sir Robert Brooke. He is a man whose intelligence is undoubted and whose fair-mindedness is well known. He writes that there is no definite objection to the Commission, but that he has not met a single soul who is in agreement with the principles of this Commission.
I turn now to the fifth Report of these Commissioners, issued to the public only a few days ago. This Report is a fairly lengthy document which appears to be a sort of defence of the Commissioners against the criticisms which have been levelled against them from so many parts of Scotland. In its pages a good deal is made of other Commissions appointed for the same purpose in the past and particularly of that Commission appointed in 1882, which carried through its work on the same sort of lines as this Commission to-day is working, under the Chairmanship of the late Lord Balfour of Burleigh.

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It is quite true that that Commission's work produced objections from various quarters. No reasonable man would assume that this very difficult question could be tackled in every corner of Scotland, as it must be, without objections being raised from some parts. But, nevertheless, the late Lord Balfour of Burleigh was able to carry his Commission's work to a successful conclusion, and, as the present Commissioners quite rightly point out, the results of that Commission's work did not in any way dry up the flow of endowments which has continually strengthened since that day.
Many of your Lordships will have known the late Lord Balfour of Burleigh. All of you will know that in his day he stood very high indeed in the eyes of the people of Scotland, not only because of his ability and his hard work and his devotion to public duty, but also because of his whole character and kindly nature. I think it is no exaggeration to say that in his day the late Lord Balfour of Burleigh stood as almost the personification in Scotland of the well-known saying that in this world it does not matter so much what you do, what matters is the way in which you do it. The late Lord Balfour of Burleigh was able, with his unrivalled tact, with his extreme ability, to get agreement among various parties and among various types of men, and to carry through his work without any undue amount of objection. His Commission worked some years ago and it is difficult to trace how much objection was raised years ago as compared with the objections of the present day, but so far as I am able to judge the Commission under the chairmanship of the late Lord Balfour of Burleigh caused nothing like the feeling that now exists in Scotland against the Commission of 1928. I have met men who are old enough to remember very clearly the period when the Commission was in action and the period of time shortly after it ceased work. They say there is no doubt in their minds that no undue ill-feeling was caused by the late Lord Balfour of Burleigh's Commission, and that the feeling that existed as the result of that Commission was as nothing compared with the feeling aroused by the Commission presided over by the noble Earl, Lord Elgin, at the present day.
I turn now for one moment to page 38 of the Commissioners' Report in order to
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quote from a letter which the Commissioners say the late Mr. Andrew Carnegie wrote to his trustees in 1903. I need not quote all the advice which this admirable man gave to his trustees. I will read only three lines:
"Try many things freely, but discard just as freely. As it is the masses you are to benefit, it follows you have to keep in touch with them and must carry them with you."
The accusation against this Commission is that they have so largely failed to carry out this advice which Mr. Carnegie apparently gave his trustees. The Commission, instead of treating the people in a kindly manner and making every endeavour to give them all possible opportunity to come to agreement, have given the impression, intentionally or unintentionally, that they are over-riding the people, and that their attitude is dictatorial. In the case of their hearings they adopt a position which is not considered pleasing by those who appear before them.
I understand that in various instances during hearings before these Commissioners representatives of local endowments have felt very strongly indeed the manner in which they have been treated by individual Commissioners. They have given their views of the trusts with which they are connected and then have found themselves submitted to cross-examination on every point which they mentioned. This procedure savoured more to them of the atmosphere of a criminal court than of discussion between a Parliamentary Commission, such as this is, and perfectly honest men who, for many years, have done public work in regard to local endowments. The result is that local people have gone away sore with the feeling that they had had treatment which was less than fair, that they had been deliberately cross-examined and that attempts had been made to trip them up by the individual members of this Commission.
I turn for one moment to the wording of my Motion on the Paper. It reads:
"To move that His Majesty's Government do make an immediate declaration as to their intentions with regard to the continuance of the powers of this Commission beyond the end of the present year."
I have purposely worded my Motion in this way. I have no wish in any way to embarrass His Majesty's Government when they are carrying out the arduous

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duties which fall upon them in these difficult times. But I have to say that there are in Scotland to-day many of the schemes initiated by this Commission, some of them newly-born, some getting close to maturity, to which local objections are being raised. The local people say: "Why should we not be informed of what is the intention of the Government with regard to the future of the Commission?" They add: "We have no funds, except these funds which were left in our care for the purpose of education, to spend on litigation, and we think that it would be monstrous that we should spend this money on litigation which, as has been proved in the past, must almost inevitably be useless because the powers of the Commission are above the powers of the courts of law". They say: "If we know that this Commission is not to be continued beyond the end of the current year, then we are given the opportunity, by all the delaying action which is available to us under the terms of the Act, to hold this matter over until the life of the Commission ends, and so prevent this guillotine knife of which we are afraid from falling upon our necks".
I understand that the Commissioners themselves take the view that if their work is not to be continued beyond the end of the current year they might just as well be told so, because why should they continue their very arduous work if all this is in the end to come to nothing? I do not press that point, because the noble Earl, the Chairman of the Commission, who I understand will speak before the end of this debate, will speak with much more authority upon that question than I can do. I fear that I have taken up over-much of your Lordships' time with this matter, but it is so complicated and so widely spread, from north to south and from east to west of Scotland, that I have thought it necessary, at the expense of taking up too much of your Lordships' time, to skate quickly over the various points which have arisen and to endeavour to make a situation admittedly complicated a little clear in your Lordships' minds. During the course of my remarks I have tried to speak moderately in this matter. If I have succeeded, then have I in inverse ratio failed to represent the feelings in Scotland as I understand them, which
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are so strong against this unfortunate Commission. I beg to move.
Moved, That His Majesty's Government do make an immediate declaration As to their intentions with regard to the continuance of the powers of the Educational Endowment (Scotland) Commission of 1928 beyond the end of the present year.—(The Earl of Leven, and Melville.)
THE DUKE OF SUTHERLAND: My Lords, I am certain, after very careful inquiry and investigation, that there is a good deal of uneasiness and disquiet in Scotland in regard to the work of the Educational Endowment Commission. I agree with every word uttered by the noble Earl who has just spoken, and I hope His Majesty's Government will consider very carefully how they can avoid the damage that, is undoubtedly being done by some of the work of this Commission. Scottish Endowments made by rich philanthropists and others have in the past been to Scotland a source of pride and congratulation. Now I have heard of case after case where rich people have said: "I intended to endow this or that charity, but owing to the actions of this Commission it is no use. The endowment which I leave for certain purposes will be diverted by this Commission to some other cause in which I have no interest whatsoever." In other words, the fountain of charity is drying up, and drying up entirely owing to the suspicions being engendered in the minds of possible endowers by the actions of this Commission.
This feeling exists not only in the minds of rich philanthropists, but is very widely felt throughout the length and breadth of Scotland. Pick up any big well-known newspaper devoted to Scottish interests, and your Lordships will observe this feeling. The Scotsman and the Glasgow Herald, the two most important newspapers in Scotland, have both had more than one leading article totally opposed to the work of this Commission. And it is not only dissatisfaction in the Press; the Edinburgh education committee have urged the Corporation of Edinburgh to renew their objections to the Commissioners' schemes. The special objection of the education committee is that the Endowments Commission are diverting funds left for educational purposes, especially bursaries, to purposes of

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secondary importance, and in some cases of doubtful educational value.
I am not going to weary your Lordships at any great length or to generalise much further in this direction, but I should like to draw the attention of your Lordships to a matter that concerns my own County. The Sutherland technical school was started by my mother, who raised an endowment fund of :20,000 for it. Without going into details at too great a length, the effect of the proposed scheme of the Commission so far as that technical school is concerned is simply to wipe out all power vested in the trustees to hold the funds, and the transfer to the County Council of these funds, without any check on the Council whatsoever. The arrangement whereby the funds were held in trust by independent trustees was very carefully considered and resolved upon in consequence of the provision that if the County Council did not carry on the boarding side of the school, then the funds could be dealt with by the trustees and the original intention fulfilled. That is only to give your Lordships one instance. There are many other instances, as the noble Earl, Lord Leven and Melville, has so clearly explained to your Lordships, and much more glaring instances than this one, of diverting funds from the objects for which they were given to new and totally unauthorised schemes, that is to say, unauthorised by the persons who made the endowment.
The Educational Endowments Commissioners are creating wide discontent throughout Scotland with their proposals, and it is fully time that some Parliamentary check was placed upon their power to do harm. I understand that at the end of each year their powers lapse unless restored by Parliament. No doubt some of the work they do is necessary and useful, and I claim that His Majesty's Government should see that their work is limited to that which is necessary and useful and not extended to that which is harmful and dangerous to Scottish endowments as a whole. Rich men cannot he expected to endow a County Council. They must be given a sense of security in the perpetuation of their names, or the great beneficiaries of the past will be wholly lost to Scotland. I hope that His Majesty's Government will not lose sight of that fact when they come to consider
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the renewal of the very wide powers given to this Commission.
THE EARL OF AIRLIE: My Lords, I rise to support the noble Earl who has initiated the discussion of this question in your Lordships' House. He has already dealt very fully, broadly and efficiently with the case. I would like to say that we fully realise the difficulties which the Commissioners have had in carrying out their duties, and we must also realise how almost impossible it must have been for them to do what was set for them without treading on some people's corns. But there are three or four points—and I should like to bring them before your Lordships to-day—which are of importance from the local point of view.
I noticed that the noble Earl who initiated the discussion of this question suggested that this was not the place to which to bring details, but I beg to differ from him, for this reason. People in my area have already placed their representations before the Commission, and, to put it vulgarly, they have received very little jam to their bread. When I speak of my area, I refer more particularly to the five burghs in that area, Arbroath, Montrose, Forfar, Kirrie and Brechin. The reason I refer to them is that those burghs have administered about three-quarters of the trust schemes in their area, and therefore it affects them a great deal, almost more than anyone else. If the Commission are to have a new lease of life at the end of this year, we hope very much that there will be some heed paid to their plea. They, and I with them—and I have done my best to go into the question as carefully as is in my power, for I have the honour to be on the Angus education committee, and have taken steps to find out—are entirely unconvinced that the working of these trusts is in any way to be bettered by proposals under the Angus Educational Trust Scheme of 1933–34. In fact we maintain, and maintain strongly, that they constitute a grave departure from the spirit of the intentions of the founders, and that therefore they are hound to cause, and do cause, a good deal of what might be termed injustice to the peoples of those burghs for whose benefit the trusts were originally created.
That brings me to my first point. The first point they object to is the question

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of representation on the governing body. They maintain that the governing body is too large, and that the representation should be more towards the interests involved. There are three bases on which a reasonable claim can be made for representation. The first is that of the contributions to the funds of the pool. These burghs contribute three-fourths of the whole fund. If you take the basis of population these burghs are about 50 per cent. of the whole population of the county burghs, and if you take the third basis, that of qualification, I do not think it is unreasonable to claim that the people most qualified to carry out these schemes are the people with local knowledge and large experience of this work. These burghs have administered three-fourths of these schemes for two generations. They have done it efficiently and justly, and it is admitted that they have done so to the general benefit of the communities involved for whom these trusts were originally started. They hold larger interests than any other bodies and they are extremely conversant with local needs. They therefore feel bound, in the interests of the people they represent, to protest.
The second point on which they disagree, and disagree very strongly, is that they wish that the local committees should have powers and full administration of the area funds, so that to them will fall the awards of grants to bursars and the withdrawal of the same. Section 29 of the scheme institutes six local committees. These committees are to act in an advisory capacity only. Their argument here is that if you are to have committees acting only in this capacity then it would be extremely difficult, if not impossible, to attract the right type of member to sit on these committees. The Angus education authority had instances, and give them, of what has happened and will happen again in the future. At the last election of district councillors in that area no nominees were forthcoming in three constituencies and in only one out of fifty-three was there any contest at all. Your Lordships will, I am sure, agree with me that that is not sound.
Then I come to the question of bursaries. No part of the scheme has given more deep concern and misgiving than this part. It is admitted that the
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Commissioners have added bursaries for training colleges and school of economics, and commercial bursaries, but it is deplored, and roost heartily, that the omission still continues of bursaries for secondary and senior schools. This is a point on which they lay great stress. They are convinced that these secondary school bursaries should take precedence, and if that is not possible that they should rank equally with those I have mentioned and should take precedence of those under Sections 37 to 46, mentioned by the noble Duke, which were entirely social. The reason for this is that in none of the trusts so far as is known does the original deed make provision for education other than for juveniles and adolescents. The Education Endowment Act of 1928, Section 3, lays down most particularly that special regard shall be paid to the spirit of the intention of the founders. How is that possible? How can they stick to the original intention of the founders when secondary school bursaries are to be left entirely out of the scheme? Our people consider that they are almost a first charge on the whole scheme.
There is a view held that secondary school bursaries are unnecessary to-day in view of what is done for adolescents by the Education Act. We believe this to be a fallacy and it is in direct opposition to our experience and information. The education authority is always being limited by the means test which often rules out the most necessitous cases. Take, for instance, children of the manse and of the school houses who are debarred. Their maintenance is often a serious problem. As your Lordships know, the scholars of secondary schools are from fifteen to eighteen years of age, and their maintenance is often a great problem to their families, the calls upon their purses being extremely heavy. Yet these are the people that the trusts were originally formed to help. Assistance at this stage we feel is probably more important than at any other time and although the education authority may do a great deal they cannot do enough. It is these small bursaries of £2, £3 and £4, applied to the right cases by people who know the right cases, that bring the supply of the right kind of students to all the higher courses. That is what these trusts were originally for. Now it is proposed under this scheme that these

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moneys should be diverted to other sources and we submit that in our humble opinion it is robbery—that you might just as well go and rob the grave.
That brings me to my last point and that is the destination, use and control of the funds. As has been already stated, Section 3 of the Act lays down that special regard shall be had to the spirit of the intention of the founders. The founders of these trusts left these moneys for certain purposes in specified areas, the areas probably being those within which they were born, had their homes, made money and were successful, and they wished as a token of generosity to leave these trusts that the people in those areas might benefit in the same way as they had. We submit that unless the destination adheres to the locality of origin it is not a reorganisation of our funds but a subversion. In conclusion, and I apologise for taking up so much of your Lordships' time, but this matter is one of grave urgency for the people up North, if these Commissioners are to continue, I trust pressure will be brought to bear upon them to pay strong heed to the pleas which I have placed before your Lordships.
LORD MESTON: My Lords, like the noble Earl who initiated this discussion I am sure that we all very clearly appreciate the difficulty and delicacy of the task which the Commission are called upon to perform, but I think we ought also to acknowledge the devotion with which they have applied themselves to the very complicated questions upon which they are asked to advise. The sort of work which they are asked to do inevitably exposes them to very considerable controversy, opposition and criticism, and obviously from what we have heard this afternoon, they have had their full share. But I am sure that they give to their critics credit for the same anxiety for fair play and fair treatment as animates the Commissioners themselves.
Now the points which I wish to submit to your Lordships are not raised in any spirit of captious criticism. They are directed against certain specific proposals in schemes or recommendations which the Commission have recently prepared, and which it is hoped that they on fuller consideration, or His Majesty's Government on fuller consideration, will be prepared in all the circumstances to abandon or to
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modify. The particular points to which I venture to ask your Lordships' attention concern the University of Aberdeen, and it is in the capacity of Chancellor of that University that I bring them forward. The gravamen of our charge is that it is now proposed that the funds of certain bursaries or scholarships which were the gifts of pious donors of the past, and which have either through the specific direction of the founders or by prescription, or by the direction of competent Courts in the interval, been enjoyed by the students of Aberdeen University, should be taken away from this purpose and handed over to other public authorities, chiefly the County Council, and diverted to other purposes than those for which they were bequeathed. In fairness to the Commission I should like to say to other educational purposes; but so remote are the uses to which it will now be possible to put those funds from the uses for which they were originally given that it would be in the nature of an abuse of language to put them in the same category.
I must admit at once that certain of the Commissioners' proposals which have aroused the strongest resentment in my University have been dropped, and for that we are grateful to the Commission. But there still remain a considerable number of proposals to which not only the University but, as has been pointed out in the course of this debate, public opinion up and down the whole area is very strongly opposed. I am going to add only one example to those which were given by the noble Earl who initiated the discussion, that is, what is known as the Milne Bequest. Nearly a hundred years ago an old official of the East India Company, Colonel Milne, left a large sum of money—it was a very large sum for those days—which on the recent average has been allowing the University of Aberdeen to dispose of something like £1,000 a year in bursaries and in supplementary bursaries to poor and deserving students. The scheme under which that power is given was one which was established by the Court of Session not so very many years ago, and, in spite of that, the Commission now propose to sweep away the whole of these arrangements, to throw the capital of this benefaction into a central pool along with certain other definite University bursaries, and then

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to hand the whole of the assets over to the. County Council.
The County Council under the same scheme will then be allowed—not obliged, but allowed—to award three bursaries of £40 a year each, to be held at any of the Universities in Scotland—not exclusively the University which serves our County, but any University in Scotland. Here is the result. At present the University of Aberdeen is able to help poor and deserving students by distributing something in the neighbourhood of £1,000 a year. If the Commissioners' scheme goes through, all that will be stopped, and, instead of it, in the first place the County Council will have liberty to award no bursaries at all. In the second place, if it does award bursaries they need not necessarily, any of them, go to the University of Aberdeen. The consequence is that our students will be in the position, at the worst, of getting nothing, and, at the best, of not being able to get more than £360 a year, instead of over £1,000.
Your Lordships may ask what happens to the rest of the money. Some of it is going to be made available under the scheme for what we must all acknowledge to be most excellent purposes—the training of young people in the rural and domestic arts and crafts, the providing of apprentices with nooks and tools, the provision of playing fields and free meals for school children. Now, we are not cavilling at these, although they are not directly in accord with the intentions of the original testator; but the diversion of poor old Colonel Milne's benefaction does not stop there. His money is under the same scheme available at the wish of the County Council for school picnics, for visits to zoos and for the attendance of children at concerts.
This would be almost ludicrous if it were not so serious, and it is very serious for various reasons. First of all, if I may say so, because our University of Aberdeen does provide for quite the poorest student community in the Kingdom. There is still many a Highland home from which, thanks to heroic sacrifices of parents, a clever lad is sent up to Aberdeen University to lay the foundation of an honourable and probably a distinguished career. And it does seem to us to be a thousand pities if that fine tradition is now to be done away with.
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In the second place, I submit to your Lordships that the University authorities are able, with the special knowledge which they possess—knowledge which the County Council does not necessarily possess—to choose the students who are most likely to benefit by these privileges and to choke off undesirable applications. In the third place, a point of detail but not altogether trivial, the University can administer these benefactions very much more cheaply than any other authority. According to the latest statistics, the educational authorities of Scotland pay about :3 15s, per cent. in the cost of administering the endowments under their charge. According to the same statistics Aberdeen University does the same work for its benefactions at a, cost of :1 17s. 7d. per cent.—almost exactly half of what the County Councils do.
In the last place—a point which has already been taken by previous speakers—what is going to happen to those charitable people in the future who otherwise would have given as their forefathers have given in the past? Are they going to leave bequests for University education when there is a possibility of the money being diverted, even before their death, to the provision of cricket pitches or sending small children to, concerts? I hope I am not unnecessarily exaggerating the grievances, which are very keenly felt by my University. Certainly I think it would be difficult to exaggerate the unrest and resentment entertained in almost all educational circles whether inside or outside the University. There are other features of the schemes which I need not waste your Lordships' time by enlarging upon. I would conclude as I began by begging that further consideration may yet be given to the strong local feelings which your Lordships I am sure have been convinced by this afternoon's discussion, have been aroused up and down the country against certain features of the published schemes. In particular I would emphasise, as far as the University of Aberdeen is concerned, that funds which are now actually being administered by them in the way of bursaries or supplementary bursaries should be left inviolate for this purpose, and if for any reason it is considered desirable to change the management of these funds, it shall be transferred not to any other authority but to the University,

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which is by far the most competent body to administer them.
LORD BALFOUR OF BURLEIGH: My Lords, I am quite prepared to agree with the noble Lords who have already spoken that there is no doubt whatever that the measure of opposition which is being experienced to the schemes of the Commission throughout Scotland or in many parts of Scotland is very strong. I am going to suggest to your Lordships that if there had not been a very large measure of opposition it would have been an irresistible conclusion that the Commission were not doing their job. I was very much interested in the reference which my noble friend Lord Leven made to the Commission of 1882 presided over by my father. If I may say so, I was very much touched by the tribute which my noble friend paid to the character and qualities of the Chairman of that Commission, and, very great as undoubtedly his abilities were, he was only at the comparatively early age of thirty-two when he was appointed Chairman of the Commission. I am not in any way derogating from the tribute which my noble friend paid him, but I am going to suggest to your Lordships that there was a circumstance attendant on the conditions of 1882 which, I think, it is unfortunate has not been reproduced td-day, and it is this.
The evidence given before the 1882 Commission was published verbatim, and I think it is extremely unfortunate that publication is not taking place of the evidence which is being given to-day, because then, I think, it would have been very much easier for both sides of this question to be heard. What happens now when this Endowments Commission have to look into any particular endowment? The first step, I understand, is that a letter is written to the governors or to the trustees to ask them what in their opinion is the change which is required in the conditions of their benefactions, and your Lordships will not be surprised to hear that the almost invariable reply is that no change at all is necessary. It is only to be expected that the people who are administering these trusts may not be alive to all the changes which are taking place, and to the very large additions that there are, especially to education, out of the public funds and in other ways. It is undeniable that in many cases very large
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changes are necessary. You get circumstances, such as endowments intended for the poor which are diverted to public competition, and it is evident that very keen opposition may be aroused by suggestions to make changes under conditions of that sort.
Under the present conditions the whole local sentiment—I am not aware that local patriotism is any weaker in Scotland than it is anywhere else—is aroused and armed in favour of local sentiment and local arrangements as they are. The local Press naturally supports the local people, and in the absence of publication of the evidence we get an accusation by my noble friend Lord Leven that the Commissioners are tactless. Sometimes, if the governors of a local trust say that no change is required, searching questions have to be asked, and it is rather difficult to ask these questions without sometimes appearing to be tactless. Again, you get intense opposition aroused by the combination of benefactions under a county education authority. I do not propose to argue in detail about that, because my noble friend Lord Elgin is much better qualified than I am to do so. It must be evident that economies can be secured, and at the same time you get that feeling of opposition by people who do not want to give up the patronage which they have and to hand over the work they have been doing which, quite rightly, they regard as good work.
My noble friend Lord Leven quoted the late Lord Sands. In his quotation from Lord Sands he suggested that this Commission wherever it went disturbed the peace of mind. I submit, my Lords, that if it had not done that it would not have been doing its job. Let me say this. I have the greatest respect for the memory of Lord Sands. But in dealing with these matters the point before the Court was the question whether the scheme was ultra vires or not, a legal matter entirely, and if any Judge did pronounce on the merits of a scheme, that opinion could only be formed on an ex parte statement of the facts, because nothing was before that Judge except the legal question of whether or not the scheme was ultra vires.
I do not intend to refer in detail to specific questions, except one. My noble friend Lord Leven referred to the Marr Bequest, which dated from 1919, and suggested the Commission might well

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have left that alone because, if the testator had died a couple of years later, it would have been outside their programme. What occurs to me is that the date of 1920 was specifically given to the operations of this Commission so as to bring that bequest within their purview. I think that is at least as likely as the hypothesis suggested by my noble friend. With regard to the Commission of 1882, that has been held up to us as a model by my noble friend. I have in my hand the Report of that Commission, and it is very evident that it was very far from having been a peaceful affair or free from criticism.
In one case I notice, the case of Greenock, the Court were of opinion that the Commissioners had erred in including in the scheme a certain endowment—a fate that has not overtaken this Commission. In another case—the report is made to the Lords of the Committee of the Privy Council—they turned the scheme down altogether. In another case the scheme for Philps of Kirkcaldy, after discussion in the House of Commons, was withdrawn. That is a fate which has not happened to this Commission. So that in all three cases this Commission has fared better than the Commission of 1882. I venture to suggest that a great deal of this opposition, if both sides of the question were known, would rapidly die down. I am going to suggest to your Lordships when the next Educational Endowment Commission sits in about the year 1982, the operations of this Commission will be looked back to and referred to as having been carried out with an admirable skill by that tactful Chairman the noble Earl, Lord Elgin.
LORD FAIRFAX OF CAMERON: My Lords, I desire to support my noble friend Lord Leven and Melville in the Motion which appears on the Notice Paper to-day in his name. I would go so far as to say that the Commission, in my opinion, ought to be brought to an end this year, as it appears to be doing far more injury than good throughout Scotland, as I shall endeavour to prove. It can be said with every confidence that the proposals of the Educational Endowments Commission have met with universal disapproval and opposition throughout the country, and there have been many protests against the Commis-
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sion's treatment of University bursaries. The opposition to the Commissioners is in no small measure due to the fact that they have been endeavouring in many cases to interfere with all kinds of educational bequests, and have gone so far as to intervene in the spending of income of a trust when there is quite sufficient money there to carry out the wishes of the testator.
The Commissioners in many cases have been attempting to divert the funds of various trusts to purposes quite alien to those of the wishes of the benefactors. One can easily understand that in the case of some very old trusts the time may have arrived when it is very difficult, if not practically impossible, to give effect to the trusts' intentions, but these cases can nearly always be circumvented by appealing to the Court of Session to execise its mobil officium. There have been numerous instances where the Court have been appealed to by trustees, and in such eases the Court have altered the provisions of the trust, but they have always endeavoured so far as possible to comply with and carry out the original plan or idea.
In no part of Scotland have the Commissioners more flagrantly flouted public opinion than in the north and north-east, and there has been an increasing wave of dissatisfaction with their decisions in nearly every part of the country. Their practical confiscation of the bursaries of many Universities strikes a serious blow at these seats of learning. As an example, I understand that the County of Banff bursary governors had under their control the Redhyth, Stuart, and Smith bursaries, from which an annual sum of :400 was available, and as many as sixteen bursaries of :25 each were held at Aberdeen University, of which we have just heard from the noble Lord, Lord Meston. These bursaries were allocated by open and public competition. For generations numerous poor boys and girls from the fishing villages and valleys, through these bursaries, have been able to obtain the benefits of a University education, which has opened up to them far wider fields of usefulness and opportunities to get on. Poverty was not the only badge of qualification for a Redhyth bursary, for the candidate had to face the severe test of a bursary competition in order to prove his merit and capabili

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ties. The giving of non-competitive bursaries by local authorities has led to a lower standard of education in many Universities, and incidentally it has increased the rates, which is contrary to the views of all who desire national recovery.
The psychological effect of gaining a bursary is quite different from that of receiving an allowance from the rates. If the Commissioners are permitted to continue their existence they may succeed in increasing the rates, but at the same time they will do so at the sacrifice of a great Scottish tradition, and they will render it practically impossible for many deserving and necessitous students to enjoy what has, for many years, been considered the birthright of a Scotsman. The Act which brought the Commissioners into existence enjoined them to consider the intention of the founder in the interests of the locality, and his wishes as regards the administration of the trust. In many cases there has not been the slightest necessity or reason for the Commissioners to intervene or interfere, as most of these bursaries have been administered with the greatest care and sympathy and with a strict observance of the wishes of the founders and regard to the best interests of the locality.
It must be obvious that if there is any infringement of such a principle it will go a long way to influence those who are considering the giving of an endowment or bequeathing of funds to their native place, to hesitate in doing so when they realise that their intentions may be entirely thwarted and their money diverted to purposes with which they are not in sympathy and have no interest. Many testators, in view of the prevailing conditions, are now altering their original intentions and are being advised, quite rightly, by their legal advisers to do so, for they point out the futility of leaving money for bursaries or other educational purposes when the donors' intentions may be swept aside by the arbitrary decision of the Commissioners. The Educational Endowments Commissioners were armed with extraordinary powers to overhaul educational endowments, and they have not hesitated to exercise these powers in a manner which has aroused resentment throughout the land. They apparently have set about their work with certain preconceived ideas as to what constitutes education.
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Such views they are perfectly entitled to hold as individuals, but they are not entitled to press them upon an unwilling community or bolster them up with money that was left for altogether different purposes. In view of what I have said I hope that the Government will take such steps as may be necessary to discontinue the Commissioners at the termination of their present period of authority, which I believe will be in the autumn, for there is machinery which can carry on the work which they are supposed to do far more effectively and without such a storm of protest and opposition as the Commissioners have created.
THE MARQUESS OF LOTHIAN: My Lords, I hesitate to intervene in this debate because I have nothing like the same intimate knowledge of the detailed criticisms made as is possessed by many of the noble Lords who have spoken this afternoon. I have, however, had some experience of administering educational endowments. One thing that has been brought home to me by that experience is the necessity to reconsider from time to time the terms of the endowment especially in the matter of education. While to-night we have heard speech after speech showing objections to the particular schemes put forward by the Commissioners, I do not think there has been serious opposition to the principle of the Commission, and I earnestly hope that the Government will not yield to arguments which seem to me to be very dangerous.
Although it may be that the Commissioners in certain cases have acted with a little precipitancy, the principle has been affirmed and reaffirmed again and again in Scottish history that endowments sometimes want revision and reconsideration especially in the field of education. That principle should not be lost sight of, and I would earnestly plead that although you may find objections, and I dare say strong objections in this case, to proposals of the Commission, there are also grave evils in allowing endowments to remain too long without revision. I would urge the Government to consider that aspect of the question very carefully. Although criticisms made in individual cases may be very proper, we should not lose sight of the main purpose which underlies the appointment of the Commission.
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, I cannot help expressing great regret at the speech which we have just heard—unrepentant, in not the slightest degree sorry that people have been put to inconvenience, disappointment and expense. I suggest that no Commission is doing its duty in accordance with modern procedure—that is serving the public—which arouses such a storm as this Commission has aroused. Then we hear it defended without a word of regret being expressed. I think that in Scotland there will be very great disappointment, and after that speech there will be a still more urgent demand for the speedy extinction of the present Commission. The Commission was appointed to enquire into and rearrange endowments, including educational endowments, which may be out of date. It was not set up to raise a whole lot of disappointment. Notwithstanding what was said by my noble friend behind me regarding the 1882 Commission, that Commission has not gone down to history in the way that this Commission will go down.
I have had a good deal of experience in England of what is done when endowments are revised. I think people sometimes forget that Scottish education is on a very high level, and until recently it had not been thought wise to impose what I may call English methods on education in Scotland. That was not necessary, and it is not necessary, although attempts have been made recently to Anglicise Scottish education. This Commission has hardly left a single endowment alone. It has interfered with those who are carrying out trusts with perfect satisfaction to those concerned. Parochial trusts should take into account parochial needs. It is for that that they are appointed. We do not want a Fifeshire endowment to go to Aberdeenshire, and I am certain that Aberdeenshire would not let an endowment go to Fifeshire. Although this Commission has not quite done that it has varied the grants that come out of funds which the Commissioners know nothing about and which the trustees do know about. If trustees had been found to fall short of their duties, then I think the Commission would be quite right in taking the trust away from them, but until it is found that trustees have misbehaved or have betrayed the trust placed upon them,
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surely the Commission should show a little more regard not only for the trustees but also for the people on whose behalf they administer the trust.
It is rather a serious matter, I think, to vitiate a founder's intention. In quite a number of trusts the funds would be administered, if the Commission's recommendations are carried out, in a very different way from the founder's intention. It is true, of course, that an old foundation will in time become somewhat out of date and may require re-allocation to a certain extent, but we have heard of that being done in such recent cases as 1919 foundations. One can hardly say that a trust founded in 1919 is out of date in 1934. If so, nothing is safe. I would remind your Lordships again of that very large sum lost to Edinburgh simply because of the proceeding of this Commission. I feel that if the Government desire to continue a Commission it should not be this Commission, but one more in accord with the feelings of the people and of the trustees and of the beneficiaries. Therefore, if a Commission is to be continued I hope it will have a very different personnel or be given very different instructions, and that those instructions will be carried out in accord with the original trusts of the various foundations.
LORD HUTCHISON OF MONTROSE: My Lords, I had not intended to speak in this debate but I would like to refer to one or two matters that are within my knowledge. One matter has been raised by the noble Earl who knows my countryside so well and also the various burghs which are represented in another place. I remember well the passing of this Act in 1928. At that time fears were expressed that a good many people would be upset by the workings of the Commission. It was promised at that time that every consideration and every regard would be paid to the feelings of the trustees of the various funds with which the Commission would have to deal. One complaint I would like to make is that, although this Commission came into existence as the result of an Act of Parliament, its Report cannot be found in the Vote Office. It seems to me rather strange that a Report which comes before the Lord Commissioner of Education in Scotland should not he in the hands of your Lordships when you are debating this question.

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I think there is a great deal to be said on both sides. This Commission has now been working for a good many years. It has a most difficult task to deal with, and undoubtedly there have been cases—otherwise the Bill would never have been passed in 1928—which do want examination and adjustment. But if I may venture to suggest it to your Lordships, there are cases where endowments have existed, some of them large endowments—and I know specially endowments of an educational character in Arbroath—which have been most efficiently administered. There is no administration that I have ever come across in either trustee or local matters which has approached the efficiency and cheapness of the administration in that particular Royal Burgh. There was a case mentioned by the noble Lord, Lord Balfour of Burleigh, which occurred in 1882, when his illustrious father was the Chairman of the Commission. I well remember it being reported that an attempt was made then to alter the conditions of the Philps Trust in Kirkcaldy. As your Lordships know, that scheme was dropped, and it went on happily under its own trustees. This Commission has now been working for four or five years, and has had a look round the endowments of Scotland. I think perhaps it has got to the end of its usefulness, and possibly after redding up some of the older forms of endowment which have been made we might return to the normal. But I am open to hear information and argument upon that particular aspect of the problem.
There is a point upon which I do not agree with much that has been said in, favour of the Commission, and that is as to the raising of the endowments from the secondary school endowments up to the Universities. I think it was the noble Earl, Lord Airlie, who pointed out that the very kind of person whom you want to continue in education, especially in our country of Scotland, is the boy of fifteen or sixteen years to eighteen years old. If you do not educate him, then he undoubtedly goes into industry; and it is very natural that he should go into industry. We in Scotland are a very hard people; we are very poor, and we—in certain families at least—cannot afford to allow our boys to continue with education unless we have this assistance. The assistance is small, but I believe the return given for this extra education is
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wonderful. That is shown by our past experience of education—by the fact that we in Scotland, under our old school boards and so on, have produced such wonderful pioneers who have gone all over the world. I suggest that the idea of lifting that type of endowment into University endowment is not altogether well founded. Even so, much more has been done from the point of view of the Education Acts, and allowances which have been made in our education system in Scotland. Still, the actual fact is that if you do not help these young people to stay at school, the tendency of the parents is to take them away, and for that reason I think there is good deal to he said for continuing that type of endowment.
I think there is a certain amount to be said for the Commissioners. They have undoubtedly been set the task of enquiring into the question whether really good value is obtained within the terms of the bequests. Perhaps if another system were adopted whereby we could get a more amicable feeling in relation to the actions of the Commission amongst what one might call public opinion in the various trusts which exist in Scotland, we should not hear so many complaints as we do; but undoubtedly there is a very strong public opinion in Scotland that the Commissioners are treading too hard on the toes of a good many of these trusts. I do not know what my noble friend Lord Elgin is going to tell us, but I am sure that he, who has a wonderful flair for judging public opinion, will indeed realise the state of opinion in Scotland, and I feel inclined to leave it in his very able hands to say when the Commission can usefully lay down their work.
THE EARL OF ELGIN AND KINCARDINE: My Lords, I have some real diffidence in taking any part in this debate this afternoon, even in spite of the very kind words with which the noble Lord who has just sat down completed his speech. Listening to the debate and the expressions of opinion which have come from your Lordships, I have felt that my position could be compared perhaps rather with that of the accused at the bar, or, listening to some of your Lordships, almost with that of the prisoner in the dock. But in spite of my diffidence in taking part in the debate, I feel that I might be accused of

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being lacking in loyalty both to my colleagues and to your Lordships' House if I remained completely silent.
I am not in the least minimising what the noble Earl who instituted the discussion said with regard to the feeling in different parts of Scotland, but without disregarding that in any way I do feel that in order to get a proper perspective and a proper understanding of the position we must go a little deeper into past history. I shall try to be as brief as possible in dealing with this, and I am enabled to be briefer than I might otherwise have been because within the past few days there has been published and laid on the Table of your Lordships' House the fifth Annual Report of the Commission, and I think I should be right to assume that those of your Lordships who have been sufficiently interested in the subject to raise their voices in support of or against the actions of the Commission have at any rate made themselves aware of what appears in the Report which was published last week.
The first point which I feel must be, fully understood is what is the purpose of an endowment. It is rather difficult to lay down a general term which will describe all the intentions which may be at the back of the minds of different donors of endowments, but generally speaking I think we may take it that those pious donors who set aside of their money for the benefit of education intended that the recipients of the benefaction should get something supplemental to or in advance of what could normally be obtained by right. That is a definition which has been accepted by various bodies in the examination of this problem, and it has been accepted by various Commissions which have had the duty of looking into the possibilities and the requirements of education. I think I may take it that your Lordships will accept that as a general description of what an endowment should be. Further, it has been generally acknowledged—and several of your Lordships have already referred to this point this evening—that where there are endowments to help in education it is necessary to have a periodical review of these endowments in order to ensure that they are not only serving a useful purpose but doing benefaction to those whom it was intended to benefit.
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From time to time the Government of this country have for that reason appointed Commissions to review the situation. I shall refer only to two of them. They have both been referred to this evening. The first was the Commission of 1882, presided over by the late Lord Balfour of Burleigh, and the other the present Commission, over which I have the honour to preside. When the Commission of 1882 was appointed the great need of the day was secondary education; in other words, the provision of advanced education for the general public, and by public I mean the boys and girls of Scotland. That was put in the forefront of the charge to the Endowments Commission of 1882—that in making their review of the situation, and in making provision as they thought necessary, they should have special regard to making an adequate portion of the endowments available for boys and girls of promise to obtain this advanced education. I have mentioned this point because what they did was to look through various endowments which existed in that day and in many cases—case after case—they diverted an endowment from what it had originally been intended by the testator to be into a bursary for school or secondary education. It is from the date of the schemes of the 1882 Commission that a very large proportion of the bursaries which now exist date; but circumstances have completely changed since the date of the appointment of the 1882 Commission.
In 1889 elementary education was freed, and in 1908, under the Education Act of that year, secondary education committees were formed and district bursary schemes were inaugurated. In 1918 powers were transferred from these secondary education committees to educational authorities, and under Section 6 of that Act every authority was required (and I emphasise that word "required") to prepare and submit a scheme for the adequate provision (and I emphasise again that word "adequate") throughout its area of all forms of primary, intermediate and secondary education. That was an obligation on the education authority. By a further clause of that Act it was made lawful, that is permissive, to make grants in aid of children of promise who might be debarred from profiting by this education by reason of the expense involved.

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That then was the situation as made by the Act of 1918, a completely different situation from that which confronted the Educational Endowments Commission of 1882. In 1927, in view of the difficulties and anomalies which had arisen, a Departmental Committee was appointed under the Chairmanship of Lord Mackenzie, to look into the whole question and advise the Department. On the Report of that Committee, and homologating the recommendations of the Report, the Government of that day, 1928, brought in the Act under which the present Commission was appointed. This Commission was appointed with very wide powers—powers to review the whole situation in view of the changes which had taken place; powers of amalgamating endowments, and powers of altering their purposes. The widest possible powers were given. These Commissioners were appointed, as I have said, under an Act of Parliament, and I submit that it is futile to argue that Parliament did not expect those powers to be used. You have before you not only the precedent of 1882, a Commission which was set up with the widest powers and used those powers, but you have following upon that a Departmental Committee enquiring into the whole situation and making recommendations, you have the Government accepting those recommendations and bringing in an Act of Parliament based on those recommendations, and appointing with their eyes open a Commission with wide powers to deal with the whole situation.
Lord Balfour of Burleigh has already referred to the criticism which was levelled at the Commission of 1882. It provoked a great deal of hostile criticism, but, as has already been acknowledged by more than one of your Lordships in this House this afternoon, the verdict of history has been one of satisfaction with the work of that Commission, and I am sanguine enough, in spite of what the Marquess of Aberdeen has said, to believe that history will repeat itself. Our task has been to review a great many more endowments than fell beneath the review of the 1882 Commission, and to ensure that those endowments are used to the fullest possible advantage, consequent upon the changes which have taken place under legislation since 1889. In our task, which has been an immense task, one very great
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factor has come forward emphatically before us over and over again, and that is that a large proportion of these endowments were dedicated by the wish of the testator to "the benefit of the poor," to "the assistance of those who required aid in order to get education," to "destitute children," and other phrases of a like equivalent; and I must remind your Lordships that in spite of the very wide powers given to the Commission under the Act we have a very express and emphatic injunction in Section 3 (2) of our Act to ensure that where endowments have been left for the poor they are so retained.
This point is one which has created a great deal of difficulty. It has caused a considerable amount of cross-questioning and heart-searching. It is very difficult to lay down a hard and fast line of poverty. We have had brought before us, over and over again, by trustees of various endowments, the argument that it is impossible to consider a hard and fast line which is to he taken by the education authority of the county council of so many pounds income as the only criterion of poverty. That is so. It is very difficult to arrive at a hard and fast line of criterion of poverty. But I am sure your Lordships will agree that we should be failing in our duty if, through carelessness in not asking questions, in not probing deep into what actions the various trustees have taken, into the means test which they considered qualified the beneficiaries for the benefaction, whether they were really in need or not—we should have been failing in our duty if, through carelessness, through neglect, or insufficient evidence we had disregarded not only the spirit of the intention of the donor but also the letter of the instructions of our Act.
I mention this fact as explaining the reason for certain rather meticulous cross-questioning which was referred to, I think, by the noble Earl, Lord Leven and Melville, and by some other noble Lords. It is a very difficult situation; and if you find, on asking trustees whether they have, in view of the altered circumstances, deliberately and collectively set their minds to consider whether or not that makes any alteration in their adjudication of their trust, that you are met by the blank statement that it has never been considered—my Lords, I think you will agree that, in spite of the

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difficulty of the situation, in spite of the disagreeableness of the situation, it was our duty to probe these things, even if it caused a certain amount of discontent. I am fully alive, as a trustee myself of charitable funds, to the good work done by those trustees,to the time given up by them, and I should not like it to go from this House, or as from me, that I do not appreciate the good work which those trustees have done. But it is a fact that over and over again when we have asked: "Have you or have you not considered this?" we have been told: "No, it has never been before us."
In order to focus this point I think I must draw your Lordships' attention to Schedule 9 attached to our fifth Report. In that schedule you will find the amounts available under the schemes dealt with in this Report for various forms of benefactions. You will find these divided under the different headings according to the purposes for which they have been given, and you will find under these subdivisions a figure in brackets, which refers to the proportion of that amount which, by the wish of the testator, was to be given to aid the poor. The summary of those figures is that in these twenty-seven schemes we have, for the poor £28,546, and, open, £4,952. Is it right that, in view of the spirit of the intention of the donors thus expressed, and the specific injunctions of our Act, we should tolerate diversion of funds given for the poor to open merit bursaries? That is one of the crucial points which I think is before, not only us, but the whole of Scotland to-day.
We have been attacked for what is called a wholesale smashing of the bursary system, a system on which has been built up a great tradition of education in Scotland. That is completely untrue. We have to admit and provide for changed conditions, the changed conditions which I have already explained to your Lordships; and we have also to admit that in consequence of the powers given under the Acts to which I have referred the public authorities—the education authorities and the county councils—have devoted a large part of their funds to the provision of these bursaries. This is referred to on page 60 of our Report, but in order to bring it forcibly before your Lordships I may give the summary. Before 1908 there was no provision under this heading. It was not admissible. In
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the year ending May 15, 1910, £43,906 were dedicated by education authorities for this purpose. In 1919 this had risers to £48,838. In 1920 it had risen again to £57,863. In 1930 it had bounded up. to £142,720; and in 1933, owing to the stringent conditions, it had been reduced slightly, but was still at the large provision of £125,179. Can we say, in view of these facts, that there is still the same need for the provision for bursaries from educational endowments?
THE EARL OF AIRLIE: Is the noble Earl referring to secondary school bursaries?
THE EARL OF ELGIN AND KINCARDINE: Yes. A criticism has further been made that we have disregarded local opinion and individuality and tradition, that we have substituted new governing bodies composed largely of publicly elected representatives for bodies of individuals personally interested. I have already given, and I would repeat, a tribute to those governing bodies in the past who have given so liberally of their time and of their attention to the governing of these endowments; but we cannot overlook that in many cases the administration of an endowment, for instance, which may be simply a holding endowment, simply to hold the money and pass it on to somebody else, is a wasteful administration; and for that reason among others we have thought it wise to combine a number of endowments and to put them either in charge of the publicly elected body, or of a body specially composed of representatives and others interested, for administration.
I have said that I felt some diffidence in entering upon this debate at all. My diffidence in doing so was that, as you are aware, I have the honour of being Chairman of this Commission. Under the Act appointing that Commission an elaborate procedure is laid down in order to ensure that no act of ours is made secure until everyone interested has had an opportunity of making objection and of being heard. It therefore seemed to me that it was doubtful how far I could enter into an answer of any detailed questions which your Lordships might wish to put this afternoon. I must ask your Lordships to accept that fact. These schemes must, broadly, be divided into two headings. Those that have passed through every

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stage have been submitted to the Department and have received the approval of the Department, and gone beyond that stage and have received the Royal assent. Those schemes must be answered for by the responsible officer of the Department. As regards questions on draft schemes, schemes which are still sub judice, there is this difficulty, they are sub judice. There are powers open for objectors to come to the Commission to lay their objections before the Commission, and it would be improper for me as an individual, even as Chairman of the Commission, to enter into a discussion with your Lordships across the floor of this House when there is a provision laid down under the Act of Parliament for the adjustment of these difficulties.
But I think that on certain points which have been raised by your Lordships this afternoon I can clear the air. The noble Earl, Lord Leven, in opening the discussion, referred to the Marr endowment and to the fact that this was a very recent endowment. He suggested that, while everything was going very nicely and smoothly, the Commission had suddenly pounced upon the endowment and stirred up the mud. That is not exactly the position. The Commission were invited to look into this endowment by the Town Council of Troon. I think that materially alters the question. Having been invited, it was their duty to look into it. But I wish only to say this further about the Marr endowment. The matter is still sub judice and, within the last few days, it has become known through the public Press that certain further representations on completely different lines have been made. For that reason I think it would be improper for me at this stage to say anything further about the Marr endowment.
As regards the Mann endowment, to which Lord Leven also referred, every stage which was laid down for us was duly carried out. This was an endowment specifically under the jurisdiction of Edinburgh University. We were invited by Edinburgh University to look into the question of their endowments, and to frame a scheme for their better administration. We did so. It was advertised by the Commission; it was advertised twice by the Department. We had representations from other bodies as regards this scheme, and I can only wonder, knowing what I do of the Counties of
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Moray and Nairn, that they did not get on to it as quickly as some other parts of Scotland; but I assure your Lordships that the Commission took every step that was possible to make known not only the invitation by Edinburgh but the fact that a scheme had been made.
The noble Earl, Lord Airlie, dealt with the question of the want of representation of the local bodies, particuarly the burghs, and he referred to the fact that in our scheme for the County of Angus local committees had been inserted but that they had no real powers. Is that really a full statement of the facts? I have not the scheme with me, but my remembrance of the clause of that scheme is that these local committees were not only advisory but could perform any duties that the governing body cared to delegate.
THE EARL OF AIRLIE: May be delegated, not will. It is permissive.
THE EARL OF ELGIN AND KINCARDINE: Yes, it is permissive for the governing body.
THE EARL OF AIRLIE: It does not say they will.
THE EARL OF ELGIN AND KINCARDINE: That is for your own local governing body; it is not for my Commission.
THE EARL OF AIRLIE: But they formed the governing body; they made the form of it.
THE EARL OF ELGIN AND KINCARDINE: The noble Lord, Lord Meston, Chancellor of Aberdeen University, admitted, and I should like to thank him for the admission, that the Endowments Commission had a difficult task. He admitted, I think, that we had done what we could to solve that difficulty by the way, at any rate, of hard work, but he went on to say that as the result of some of that hard work an injustice had been done to the University of Aberdeen. He referred to the taking away of certain bursaries from Aberdeen University which had come to Aberdeen University under the benefaction of the Milne Bequest, but the curious part of the statement from the Chancellor of Aberdeen University was that he omitted entirely to make any reference to the original benefaction. If I may deal with this point, I think it will explain

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to your Lordships that the action of the Commission in this respect has not been so detrimental or of so filching a nature as was indicated.
The founder of this endowment intended the money to be used to supplement the salaries of parochial schoolmasters, the recipients of the supplements being bound to give further education to a certain number of poor children. Under a scheme of the 1882 Commission the purpose was altered to school bursaries. When the Act of 1905 was passed advantage was taken of the power conferred by Section 30, and it was agreed that in future post-school bursaries should be awarded. In 1924 the scheme was amended by the Court of Session—this is where Lord Meston came in. It was amended again by the Court of Session, and the governors were authorised to award bursaries at Robert Cordon technical school, the North of Scotland Agricultural College or other central institution, or at the University of Aberdeen, or at a training centre. The governors were given complete discretion as to the allocation of the bursaries as between the different institutions, but it may be agreed that the greater part of the money has gone in University bursaries. It is claimed that the average for the last few years—and I think this is what Lord Meston claimed—was about £600.
But that does net end the story. In 1928 the governors of the trust, under the powers conferred by Section 30 of the 1908 Act, resolved that the University bursaries might be held at any Scottish University. It is, therefore, untrue to say that the Commissioners' scheme will result in depriving Aberdeen University of bursaries. The actual fact is that power is given under the scheme to award three University bursaries, which, as the result of representations that have been made to the Commissioners, has been increased to four, and if these powers are exercised the sum expended on university bursaries may amount to as much as :800 a year.
I now pass from that, to the very violent attack made upon the Commission by Lord Fairfax. I will only say this, that I am afraid Lord Fairfax's attack was made without a full knowledge of the facts, even without a full knowledge of what has passed within the last few days. It is a reflection rather of the kind of
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attack to which the Commissioners have been subjected—that is, without knowing the full facts, persons have come and made statements. I hesitate almost to repeat the noble Lord's language, but I think he used the word "filch" and various other words of that kind. He stated that the Commission had filched from Aberdeen University bursaries to which they had a right, and he referred specifically to the case of the Redhyth and Smith bursaries. These bursaries were originally included in the scheme prepared for the County of Banff, but on representations being made to the Commission the Commissioners considered the whole question and decided to withdraw these bursaries from the operation of the scheme. This notification was sent to Aberdeen University, to the County Council, and to all authorities interested on April 3. All the bodies referred to—the County Council, the Court, and the other bodies interested—acknowledged the letter.
On April 13 Aberdeen University expressed its gratification at the Commissioners' decision, but in spite of that on April 21 an attack was made on the Commissioners in the General Council of Aberdeen University, and the spearhead of that attack was the filching of the Smith and Redhyth bursaries from the University of Aberdeen. The mover of the resolution was a member of the General Council, a member of the governing body, and a member of the County Council, and that attack has been repeated to-day.
I repeat that when this Commission was appointed in 1928 Parliament deliberately gave it wide powers. I have endeavoured to show that these powers were in accordance with precedent and that they were necessary, and I submit further that they were expected to be used. A certain amount of criticism has been made about the personnel of this Commission as compared with the personnel of the 1882 Commission. I should like, as strongly as I can, to second and homologate in every term the tribute paid by Lord Leven to the late Lord Balfour of Burleigh. It is not for me to compare with him and with his great abilities the abilities and qualifications of the individual selected by the Government of the clay in 1928 to preside over the Commission of but I do say this, that I yield to none of your Lord

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ships in my interest in, and my determination to work for, the best interests of Scotland.
I wish to make clear first of all that this Commission was selected and appointed on the recommendation of a Conservative Government, and further I wish to go through in detail the personnel of this Commission. First of my colleagues on the list is Lady Hope. Lady Hope has made a name for herself justly as one who has a keen interest in the welfare of the young, particularly of girls and young women. She has served on a number of committees, and has thrown her whole heart into work of this nature. Further she comes with the tradition, which your Lordships will admit is no mean tradition, of being the daughter of the late Lord Balfour of Burleigh.
Second on my list is Mr. Bertram Talbot, convenor of the County of Roxburgh. He has devoted the whole of his life to public work, especially in the field of education, as chairman of various committees of education and particularly recognised as chairman of the Joint Committee of Education Committees which existed before the new Local Government Act. He has also devoted a large part of his time to adult education work and the furtherance of that subject. The next member, Sheriff Fenton, is a prominent member of the Bar and Sheriff of one of the largest counties in Scotland. Sir Arthur Rose is chairman of the Board of Control and one of the Special Commissioners recently appointed to look into the needs of the distressed areas. He has proved himself in every walk of life as one whom Scotland recognises is to be trusted.
Mr.Joseph Duncan is secretary of the Scottish Farm Servants' Union and one of the most striking figures in Scotland at the present moment; one who has devoted his whole attention to working on behalf, particularly, of the rural community and one whose opinion is never given haphazard but with full and fair judgment. Dr. Smith, as you will recognise, comes with a long history of work for education. He has been associated with education, particularly in the area where, as your Lordships have mentioned, there has been a considerable amount of criticism of our work, Aberdeenshire. Dr. Macgillivray comes to the Commission not only with the prestige of one who has devoted his
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whole life to teaching, but with the naive character of the West Highlands and does not always agree with his colleagues on the Commission. Then you have, finally, Mr. Joseph Westwood, who was for several years a Member of Parliament, and has shown himself in local government, as a member of the education authority of Fife, as a member of the County Council of Fife, and as a member of the Town Council of Kirkcaldy, fully conversant with the needs of the various localities which he represents. I say without any hesitation that not one of your Lordships in this House has such an intimate knowledge of educational legislation as Mr. Joseph Westwood.
I have given you the detailed personnel of the Commission for this purpose, that I think you will admit that all of these people were selected and appointed because of their fitness for the job. Further, I feel quite certain that not one of those individuals and not one of your Lordships would have accepted office on a Commission such as has been suggested by, I think, the noble Lord, Lord Fairfax, and the noble Marquess, Lord Aberdeen, which was intended simply to tidy up a few dead endowments. That was not the intention and it would not have been accepted by any of those individuals. Those individuals accepted the job. They knew there was work to do. They knew it would probably be difficult. They knew it would certainly be irksome. But because they felt confident that the result might be useful they accepted the invitation and they tackled the job.
We knew we should have to face criticism and we welcomed constructive criticism. On more than one occasion I have taken the opportunity of saying: "We welcome your co-operation and criticism". I repeat it here to-day. We have shown, as I have already indicated to your Lordships in one or two schemes to which I have specially referred, that we were prepared to meet sympathetically the representations made to us from localities, and to adjust difficulties. But the adjustment of difficulties does not supply spicy headlines for newspapers. For that reason I think possibly there has been an inclination for it to become more publicly known that there have been difficulties than that those difficulties have been overcome.

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Reference has already been made to the opinion of Lord Sands. I have a great reverence for Lord Sands. Very few Scotsmen can, at the present day, look back on a life so devoted to public service. Therefore his opinion is well worthy of careful consideration and even of reverence. But in the particular instance which was quoted by the noble Earl, Lord Leven, Lord Sands, I think, went out of his way to criticise. He went out of his way also to make a further accusation which has been made against the Commission elsewhere—it has been referred to by some of your Lordships this afternoon—namely, that our action will dry up benefactions. I do not believe, in view of what happened after the 1882 Commission and in view of my knowledge of actual facts, that that will be the case.
It is easy to as some of your Lordships have done, that it will be the case. It is easy to say that certain legal advisers have advised their clients in view of our action not to make available for education funds under their wills. I know that in two eases that was done. I know that in those two cases it was done under a complete misrepresentation of what was intended by the scheme of the Commission. I know further that when the provisions of that scheme were explained to those two particular individuals, the matter was put right. Further, my Lords, and you may think this rather striking in view of some statements that have been made to-day, a certain individual who intended to leave his money for the benefit of education came to me only a few months ago and asked for my advice as to how it should be done. I am not entitled to give you further information because it would be a breach of confidence, but I treasure that fact and it is a concrete case which should answer a certain number of allegations.
May I now say something in reference to one scheme which has not been referred to to-day, in regard to which the Commissioners were more fiercely attacked than in any other case, that is the scheme for the orphanage of Aberlour? In that scheme we provided for what we intended to be a strengthening of the constitution of the orphanage. As I have said, I think this scheme was attacked more violently than any other scheme promoted by the Endowments
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Commission, in spite of the fact that it passed through all the various stages where opportunity was given to make representations. It had arrived at the stage where the Commission had given their final word and passed it on to the Department. Then the storm arose. I took then a course which was not strictly in accordance with the procedure of the Act, and I personally invited the objectors to meet a sub-committee of the Commission. The result was that complete agreement was reached.
When that scheme was submitted to the representative church council at the beginning of May by Sir William Johnston, he, and the member of the representative church council who seconded its adoption, put it forward as not only a scheme which they could accept, but as one which they could welcome. May I quote to your Lordships one or two passages from a report of their speeches? The report of Sir William Johnston's speech says:
"He mentioned these facts because he had heard it said by people who had not followed the course of events very carefully that the Church was going to lose its influence in the orphanage and that the Commission would look after it. This, he explained, was a complete misrepresentation…. After explanations given by representatives of the representative church council the Commissioners at once agreed to modify the clause, and the objectionable provision was withdrawn."
Dealing with another clause, he said:
"As drafted, it did confer somewhat alarming looking powers on the Department, who could call upon the governors to give effect to any proposal suggested by an inspector and approved by the Department. The subsection had been deleted, but, of course, the right of inspection remained."
Then from the speech of the Dean of Moray I wish to make two quotations:
"He did not see why they should blame the Endowments Commissioners for not putting something in their scheme which was not to be found in the original scheme."
And finally:
"He had been told that if Canon Jupp"—
he was the originator of the orphanage—
"knew the details of this scheme he would turn in his grave. Frankly, he did not think so in the least. True, Canon Jupp was a pioneer who was 25 years ahead of his time in all matters of social reform. He would have recognised fully the spirit of the age in which he lived and would have looked at the present scheme with a wise vision. …. Frankly, he fully believed that Canon Jupp would have welcomed the scheme."

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My last quotation will be this, again from Sir William Johnston, and the paper from which I quote puts in a little parenthesis, "Sir William further stated impressively":
"The time seems now to have come to cease criticism and cordially to welcome the scheme, so that we may work together for the good of the orphanage."
I am afraid, my Lords, I have detained you at some length, but I have thought it right to put before you in general outline the lines on which the Commission have felt it necessary to work. I have given you some indication of the way in which the Commission arrived at those lines. I have tried to meet, so far as I justifiably can, some of the objections which your Lordships have made. I have referred to the fact that many of these cases are still sub judice, and that the Commissioners will hear and will carefully consider the representations which will be made to them. I have shown that the Commissioners have sympathetically considered a number of these. I conclude by appealing to your Lordships in the same words as were used by Sir William Johnston in recommending the acceptance of the Aberlour scheme; I appeal to your Lordships, not for the sake of the Commission but for the sake of Scotland, to cease criticism based on misrepresentation, and to co-operate with the Commission in its very difficult work for the good, for the welfare, and for the benefit of Scotland.
THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL): My Lords, we have had a long and very useful discussion to-day, and those of us whose interests or connections lie within the sphere of Scotland have cause to congratulate ourselves that we have, for one afternoon of the year, absorbed most of your Lordships' time in this House, to the total exclusion of the interests of the rest of Great Britain. My first task must be to compliment the noble Earl, Lord Leven and Melville, who introduced this Motion, on the extremely able and clear way in which he stated his case. For my own part I wish to thank him for the consideration he has shown me and the consultations which I had with him previous to this debate, in which he was able to indicate to me the line which he proposed to adopt and on which he wanted a reply. The main and really the only task which lies before
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me is to answer the Question on the Paper.
The noble Lord moves:
"That His Majesty's Government do make an immediate declaration as to their intentions with regard to the continuance of the powers of this Commission beyond the end of the present year."
So far as that goes I can only at the moment say this, that the question is receiving the earnest consideration of the Government, and when the Government knew that this debate was going to take place in this House they were extremely glad to think that they would have this opportunity of getting some data for their decision. I have been empowered to say on behalf of the Government that they hope to give that decision before the Summer Recess, and in view of the fact that we are now within a few days of Whitsuntide and that there are practically only the two Parliamentary months of June and July before us, I think it is not an unreasonable period to ask your Lordships to wait before that decision is given.
The noble Earl, Lord Elgin, has spoken to your Lordships of the work of the Commission from first-hand knowledge and experience. I would like first of all to compliment him on the courage which induced and enabled him to come here this afternoon and make a defence of his own Commission in your Lordships' House. That is a privilege which your Lordships' House enjoys which is not enjoyed elsewhere, and I should like to say to him on behalf of the Government—and indeed I am sure on behalf of all the members of your Lordships' House—that we appreciate his coming here this afternoon and speaking as he has done. We realise the extremely difficult task which lies before him and his fellow Commissioners, and we appreciate the zeal and devotion with which those Commissioners have approached their task. They are all busy men—or in the case of the lady an equally busy person—and that they should give up their time and face the criticism and the (I believe only temporary) unpopularity which they are meeting is a great tribute to their affection for and their belief in their own country.
I think there is some misconception about the division of responsibility in this case. The attack in this debate has all been against the Commission, which

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has been so nobly defended by their Chairman, but as far as Parliamentary procedure goes I must remind your Lordships that the attack should really be upon the Department for which I am speaking here this afternoon. The Commission is but the child of Parliament. As has already been pointed out, the Commission was set up as the result of an Act of Parliament, and on the recommendation of a Committee (to which reference has already been made) presided over by Lord Mackenzie, and it has therefore to be borne in mind that where schemes have not yet reached the Department an attack on the Commission itself is really futile, because, as the noble Earl, Lord Elgin, has pointed out, those schemes are for the present sub judice. Where and when the schemes have reached the Department, criticism of those schemes should be addressed to it, and not to the Commissioners.
There is thus this clear division of responsibility, which I want to emphasise, between the Commission and the Department. The former does the exploring work and bakes responsibility for that. The latter, that is to say, the Department, takes the final decision, subject to review in Parliament, if demanded, and approval by His Majesty in Council. In fact, the Department is a sort of court of appeal against the proposals of the Commission in those cases. At this late hour I will not, as I had intended to do, detail all the stages which have to be gone through before a scheme reaches Parliament or is set up. Details of that are given with great clarity in the fifth Report of the Commissioners which was issued last week. I think that in itself shows that every precaution has been taken by Parliament to see that every opportunity which can possibly be taken is taken to advertise and to give people the opportunity of objecting to these schemes. when and if they wish to do so. Nor will I at this late hour enter into any details of individual schemes. As I have already said, where and if they have not reached the Department it would be improper for me to do so, and in the other case there is no point in doing so.
I would conclude by reminding your Lordships of the real value of this discussion, the first real discussion which has taken place in Parliament on this subject, and also by again reminding
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you, should further discussion take place, that in fairness to the Commission it must be remembered, as I said just now, that the real target for attack must be the Scottish Education Department. With the assurance which I gave to your Lordships that a decision would be taken at the earliest possible moment, as to the future of the Commission, I will sit down, at the same time expressing a hope that the noble Earl who moved this Motion will be satisfied with the answer he has received, and will see his way not to press his Motion.
THE EARL OF LEVEN AND MELVILLE: My Lords, as the hour is getting very late I have no desire to detain you longer than I must, but I think, with your Lordships' permission, I must reply to one or two of the points raised by the noble Earl, Lord Elgin, the Chairman of the Commission. I will reply first to the two matters of bequests Which I raised in my opening remarks. With regard to the Marr Trust, the noble Earl says that the Troon people originally invited the Commission to come and help them reorganise their trust, and he seemed to think that it made all the difference. I am not clear that it makes any difference, excepting that, so far as I have read and heard, it makes this difference, that the people of Troon to-day must bitterly regret that invitation.
I turn again to the Mann Bequest. The noble Earl says that his Commission made every effort to ensure that the people should know who were affected by the alterations. It is true, as I said in my opening remarks, that the Commission made every effort which was necessary, and as I understand laid down by law, but many of the people in other localities think that the Commission might sometimes go a little beyond the minimum amount required, in order to see that people get every chance of knowing when a, case affecting them is coming on and every opportunity of making representations. May I say again how much I appreciate, as does every other member of your Lordships' House, the public spirit which has induced the members of this Commission to give up so much of their time in order to fulfil the work of this Commission? Nobody appreciates that more than I do, nor do I fail to under

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stand the great difficulty and delicacy of the task which they undertook.
The noble Earl's remarks were somewhat lengthy, and although I had numerous notes on them I cannot now refer to them in detail; but may I be permitted to refer to several of them together? The accusation against this Commission in so many parts of Scotland is that they never see anyone else's point of view. The noble Earl said that there has been talk that this Commission has had something to do with the smashing up of bursaries throughout the country, and he says that this is completely untrue. I understand that at least in the opinion of the noble Earl it is completely untrue, but surely other people may hold their own opinions. With regard to the remarks of the noble Earl on the observations of Lord Fairfax, the noble Earl suggested that Lord Fairfax had spoken with no knowledge of his subject and had made a strong attack on the Commission. I suppose that Lord Fairfax, like other people, is entitled to have his own opinion, and because it differs from the opinion of the Commission it does not follow that Lord Fairfax knows nothing of the subject.
In exactly the same way there have been complaints against the Commission as to the manner in which their hearings have been carried on. The noble Earl says that it is very difficult to do these things. Nobody agrees with him more than I do. Perhaps I am alone among members of your Lordships' House in having been present at one of these hearings, and I can only say that I found the atmosphere at that hearing more upsetting than I thought necessary, or I for one moment expected. The noble Earl has paid a tribute this evening to the work done by the men who have looked after these local endowments for so many years without compensation or reward. I welcome his statement, because I think that if the noble Earl and his Commission had made some such statement more often, and more clearly to the local people, there would possibly have been a little less opposition than there has been in the past.
Everything depends upon how you look at a thing, and it seems to me that the Commission have made their vital mistake in an inability to see the other person's point of view. The local people
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also perhaps have not been quite able to see other people's points of view. They have taken the view: "Here is a Commission armed with the widest powers, they can have, above the Courts of Law, which we very much regret in many ways, and they come here and listen to our objections, but do not give us the impression that they are really paying any attention. We do not think they see our point of view at all." These people then go away with the impression that the Commission are riding rough-shod over them, ignoring their local wishes and customs, and disregarding the wishes of the original testator. It has been most unfortunate, and it is for that reason that I laid so much stress in my earlier remarks on the difference between this Commission and the Commission of 1882.
I do not desire to keep your Lordships longer, but I would like to turn to the remarks of Lord Strathcona for the Government. He pointed out, as I think has been pointed out on a previous occasion in another place, that the real target for attack is the Government. I cannot agree on that point. I think the real target is the Commission who produced the scheme, and it is not very sound argument to reply that the Government have a chance of altering schemes before they become law. During the course of the operations of this Commission, I admit, the officials in the Government Department concerned have had my sympathy, because I believe in more than one case they have had what I regard as an almost impossible task in producing a good scheme. The way to produce a good scheme is by producing a good one and then by advice making it better. The unfortunate officials in the Government Department concerned have been faced with the difficulty of having had put before them by the Commission a scheme which is far from good and of being expected to make that a good scheme. When that happens, unless the people who do the work are super-men, the tendency will be to produce not a good scheme, or a more or less good scheme, but a bad scheme, or a more or less bad scheme.
That is the complaint that is heard in Scotland to-day. There is no doubt about it. The Government are not getting a fair chance, because the schemes

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which are so apt to come before them are in the first place not sound, and therefore are schemes which it is almost impossible to turn into really good schemes. With regard to the declaration made in answer to my Motion, it certainly comes to me and, I think, to many of my noble friends as a very bitter disappointment. We had hoped that His Majesty's Government would have found it possible to declare their intentions with regard to this Commission at a very early date, if not this evening. The noble Lord now tells me that no declaration perhaps will be made before the end of this Session.
LORD STRATHCONA AND MOUNT ROYAL: I said before the Summer Recess.
THE EARL OF LEVEN AND MELVILLE: Before the Summer Recess. I have to remind your Lordships that that gives no opportunity to me or to other noble Lords or to anyone in another place to raise this matter again before about October, when Parliament meets again, and some of us consider that that will be very late. I am convinced that there is a very urgent demand in Scotland to-day for a declaration with regard to the future of this Commission. I can only say how disappointed I am that the declaration is not to be made earlier than that. I trust very much that the noble Lord may find it possible to put rather earlier anyhow than the end of this Session the date on which he will be able to make a declaration on this subject. If the noble Lord would give me some assurance that the Government would make an effort to put this date forward as early as they possibly can I should be pleased to ask leave to withdraw my Motion.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, all I can do for the noble Earl is to assure him that I will pass on his representations to the Ministers concerned, and see, if it possibly can be done, whether a statement can be made earlier than before the Summer Recess. I should also like to point out that if that statement involves the prolongation of the Commission that entails the production of a Bill in Parliament, which will give an opportunity for discussion, and, if it does not, I take it that the noble Earl will derive a certain measure of satisfaction.
THE EARL OF LEVEN AND MELVILLE: In view of what the noble Earl has now said I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

FORTY-HOUR WORKING WEEK.
LORD STRABOLGIrose to ask His Majesty's Government what is their present attitude towards the proposal now before the International Labour Office for a forty-hour working week in industry; and to move for Papers. The noble Lord said: My Lords, I should not have proceeded at this late hour with the Motion that stands on the Paper except for its very great importance, also because this is the last opportunity that presents itself before the meeting of the International Labour Office Conference in Geneva early in June—I believe on June 4. That the matter is important I think will be generally accepted. As the noble Lord, Lord Rochester, who I believe is answering for the Government, is aware, my Motion was on the Paper a good many days ago, and the White Paper issued last night, although it only partially answers the questions that I intended to put, will nevertheless have a tremendous effect in all industrial countries, and on all those who have been working for some amelioration of the condition of the mass of the workers and for the mitigation of unemployment caused in part by the great increase in the efficiency of machinery.
The White Paper, if it is adhered to, and if certain ambiguities are not cleared up in a favourable way, ranges His Majesty's Government on the side of one other Government of a principal industrial nation in opposing the proposal for a forty-hour week in certain industries, first put forward in December, 1931, by the Unemployment Committee of the International Labour Office. That other Government with which His Majesty's Government is ranged is the Government of His Imperial Majesty the Emperor of Japan. The White Paper is a remarkable document. We enjoy in this country the advantage of an admirable Civil Service, but it is never so efficient as when it is set the task of finding reasons why nothing can be done, and in this case it has succeeded admirably. The facts, however, as I hope to show, are against

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them. Anyone reading this White Paper would think that this was some revolutionary proposal brought forward by cranks and visionaries, and that it would ruin industry in this country.
Before I remind your Lordships of the actual facts, may I put two specific questions to the noble Lord, the Paymaster-General? In the White Paper it is declared that it had not been possible to consult all the interests concerned with a view to reaching a sound judgment on the main issue set forth in the Questionnaire. Your Lordships will be aware that a Questionnaire has been sent out, following the three or four years of intensive study of this problem by the staff of the International Labour Office and the Governments concerned, principally under the stimulus of the efforts of the Italian Government, who, with the French and the Poles, and now the Germans, have been pressing for this great measure of human reform. It is said that the interests most directly concerned have been consulted. May I ask whether the trade unions were consulted? It may be that, as it is stated in the next paragraph that the inquiries and consultations referred to have not been concluded, they have not yet all been consulted. I imagine that the trade unions have been consulted, but I think we ought to be reassured on that point.
The second question I want to ask—and it is the most important of all—is as follows. In paragraph 4 (and this is the main conclusion, which is described as His Majesty's Government's opinion) these words occur:
"His Majesty's Government does not take the view that weekly hours of work are immutably fixed at their present levels."
That, at any rate, is something. It goes on:
"A continuous review of the problem industry by industry will, in the opinion of His Majesty's Government, reveal the scope for useful action as and where this exists and it is contended that the question of the limitation of hours can only be dealt with, either nationally or internationally, industry by industry in the light of the special characteristics of each industry."
Now, what does that mean? And, secondly, may I ask the noble Lord what is going to be done? Does that mean that we are really going to tackle the question through the International Labour Office at Geneva, industry by industry?
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Are you, for example, going to start with the textile and rayon industry, where a great deal of progress has been made, and are you going to do it immediately, or is His Majesty's Government going to continue to block all efforts to reach international agreement to reduce the hours of labour? On the 8th May the International Congress of Textile Workers met at Lucerne. There was general agreement as to the desirability of reducing hours of labour by international agreement, but Mr. Naesmith, the representative of Lancashire, drew attention to two points. He said this could only be done internationally. My noble friends agree entirely with that, and our friends in another place who represent the great unions agree also that it can best be done internationally. Secondly—this is very important—Mr. Naesmith hinted at the necessity of some form of sanctions for nations who, having signed a Convention, would not keep it, or did not keep it, or would not come into line when the other nations were in agreement. The sanction he suggested was a prohibition of imports from countries where labour was sweated, abnormal hours of labour were worked, and abnormally low wages paid.
Now if His Majesty's Government from the beginning—not only the present Government but their predecessors—had proceeded along those lines, we should not be entering singly into a trade war with Japan without allies, without the support of the organisations in the other countries in which the standards of living of the work people are threatened. I consider that this action of His Majesty's Government in challenging the Japanese to a trade war at the present time without any co-operation with America, or with Germany or with Italy or France, all of whom are directly menaced by unfair labour conditions in Japan and the dumping of Japanese goods, and in entering into this trade war single handed, is the height of folly. It may have results that no man can foretell.
Yet we had this machinery ready to be used. We could have pursued a steady policy of raising the standards of all labour, including Asiatic labour, and if we were frustrated by the Governments of the Asiatic countries, then we could have called upon the Western countries and upon America to have joined with us

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in prohibiting the import of goods made under these inhuman conditions. That would be statesmanship, that would show vision. I regret to say His Majesty's Government have shown neither statesmanship nor vision in this matter. I am not going to attempt to apologise for the action of the last Government, the Labour Government, which I had the privilege of supporting in most things in another place. They did not ratify the fortyeight-hour Washington Convention, and I make a, present to the Paymaster-General of that fact. But I believe it would have been done. It is no secret I am now giving to your Lordships when I say it was a cause of great criticism In the Parliamentary Labour Party that that had not been done. I believe it would have been done if we had remained longer in office. The reason it was not done was that we were led by the gentlemen who lead His Majesty's Government to-day. They blocked and frustrated this great reform, and industrial Britain has not led the way, as it should have done, in using the great machinery for raising international wage standards and conditions through the International labour Office, as should have been expected from so progressive a nation.
The actual proposals at Geneva on June 4 which will be debated and which, I suppose, unless there is a rapid change of opinion in the Cabinet, will be blocked and frustrated by Es Majesty's Government, are not for an all round forty-hour week at all. The proposal is that where there is factory work there should be an average working week of forty hours calculated over an average of four weeks. Where there is continual process work it is to be forty-two hours, and in transport undertakings forty-eight hours. I believe I am correct in that statement, though I have only had access to what has appeared in the Press. And, most important of all, the wages of the workers where the reduced hours are agreed to are not to be reduced. That is, of course, of the utmost importance, and, as the White Paper is fair enough to say, the Trades Union Congress of this country has laid that down very clearly indeed. In these days of under-consumption, where the purchasing power of the people requires to be raised rather than lowered, it is absolutely essential that this great reform should be accompanied by stringent
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regulations to prevent wages being reduced.
I said that this was no revolutionary proposal of a number of idealists and cranks and visionaries. In 1926, Mr. Ford, in the United States of America, in his great motor car factories, reduced the hours of labour to forty per week, and that same working week was introduced, or is being introduced, into all his European factories as well. Just after the War the great confectionery firm of Rowntree reduced their working week to a five-day week of forty-four hours. At Billingham to-day, in certain departments of the Imperial Chemical Industry, a forty-hour week is being worked, and in all these cases the wages have not been reduced. Manders of Wolverhampton, the great firm of paint and colour manufacturers, have adopted the forty-hour week. All these are highly successful firms. I could mention others. To-day in the United States 270 firms employing over a million workpeople are working the five-day week without reduction of wages.
What are the objections? I cull from the White Paper the objections put forward by engineering employers and other employers of labour who have resisted demands from their unions. It is said foreign countries will come into a Convention with us but will not keep their bond. I do not think that is a just argument to use, but if they do break their word there must be some system of sanctions. The great safeguard against foreign nations doing that is the trade unions in the foreign countries who want their working hours reduced. Even the Indian trade unions are demanding the forty-hour week as part of their programme. It is said that this will raise prices. Incidentally, there is a great deal of exaggeration about that because with greater efficiency it does not necessarily follow that prices will be raised to a very great extent.
To-day The Times newspaper devotes its first leading article to this question of the forty-hour week and I am sorry to say supports His Majesty's Government's attitude. They use a very misleading series of sentences when they say that the reduction from forty-eight hours to forty hours will add 20 per cent. or one-fifth to the wage costs. Reading that one might be led to suppose that that meant there would be a 20 per cent. in-

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crease of price. That is not so. What happens is this. When we have calculated the overheads and the on costs whereas the wage rates may represent a 20 per cent. increase—that is of course keeping the same rate of wages for the shorter working hours—actually the total cost increase is only 6 per cent. That is a calculation of the engineering unions and is to be found in the very interesting report of the proceedings of the engineering and allied employers in their National Federation and of the engineering trade unions. Time will not permit me to analyse this interesting calculation. It is of course traversed by the employers, nevertheless it is traversed only in detail, not in principle. It is a fact that taking into consideration all the other costs that enter into the price of the article that leaves the factory the reduction from forty-eight to forty hours does not represent a 20 per cent. increase but only represents a little over 6 per cent.
But in any case the problem is not only one of selling as cheaply as possible, no matter at what cost in unemployment and human misery and degradation. His Majesty's Government at the World Economic Conference said that the object of this country was to raise prices which were too low, to raise, at any rate, the price of wholesale goods, and if by international agreement prices all round can be raised to a moderate extent it would be of great benefit to the whole industrial world. I agree that the most serious objection is that the gap may be widened between industrial and agricultural prices, and if I were devil's advocate I would fasten on that particular argument. But agricultural prices represent a separate and gigantic problem that is not going to be settled by reducing the price of manufactured goods or by artificially raising the cost and the price of agricultural products or by destroying God's bounty of the fields.
It is a much larger problem than that. We hear complaints to-day in rather picturesque language of man being the slave of the machine. I do not want to exaggerate, but I would remind your Lordships that long hours were bearable when a man was working on his own initiative, when he set his own pace, when one day, feeling fit and vigorous, he could work at a fast pace, and
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another, feeling off colour and not so fit, he could slow down; but now it is the machine that sets the pace. The belt goes on unrelentingly and the man has to adjust himself to every phase of the time machine that is driving him on. It is perhaps necessary to adopt these mass production methods but they are very detrimental in their effect on human mentality. That is one main argument with those who urge the necessity of reducing hours of labour—the monotony and the strain and the stress of modern industrial methods. This is a huge subject. I believe it will be admitted to be one of the greatest importance. I apologise for keeping your Lordships on it to-night at this late hour, but it concerns the welfare and happiness of millions of people in our own and other countries. I hope that the White Paper is not His Majesty's Government's last word and that the International Labour Office is going to be supported instead of, as in the past, thwarted and hampered. I beg to move for Papers.
THE PAYMASTER-GENERAL (LORD ROCHESTER): My Lords, in rising to reply on behalf of His Majesty's Government I am sure your Lordships will permit me first of all to say that those interested in the immediate adoption of a forty-hour week have been very fortunate in the advocate they have secured in your Lordships' House in the person of the noble Lord opposite. Nobody could have put the case more forcibly or with greater cogency. I am only sorry that the Ministry of Labour is not directly represented in your Lordships' House, for thus it falls to my lot to speak for a Department other than my own. The subject raised by the noble Lord is really, if he will forgive my saying so, not quite so simple as he would make it appear. In fact it is really both complex and difficult. It is, however, one to which His Majesty's Ministers have given, and are continuing to give, much thought. The noble Lord has referred to the fact that his Motion had been upon the Order Paper for some two or three weeks. With that courtesy we have already come to associate with the noble Lord, although he has been so short a time a member of your Lordships' House, he gave your Lordships ample notice of his intention to raise this matter, but in the interim,

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as he pointed out, the Government's White Paper, Command No. 4584, has been issued which goes far to meet the interrogation the noble Lord has addressed to the Government.
The position is that next month when the International Labour Conference meets at Geneva consideration will be given to two draft International Conventions which are designed to reduce hours of work to forty a week throughout a wide range of industry and commerce, the principal exceptions being those of mining, maritime, and agricultural workers. They are, of course, excluded from the field of consideration. The general attitude of His Majesty's Government to the Geneva proposals is, as the noble Lord has pointed out, set out fully in the letter and accompanying statement which were sent to the International Labour Office on the 14th of March this year and which have been published in the White Paper to which the noble Lord referred. The White Paper is, I think, explicit and self-explanatory. It is widely discussed in today's Press. The noble Lord has referred to the very able leading article in The Times of to-day and I, too, will revert to that, if I may, in a moment, but it is, I agree, appropriate that some further observations on the subject from the Government's point of view should now be made with reference to the Question put by the noble Lord.
Up till recent times the question of reducing hours of work has been approached primarily from the point of view of ensuring that the health and wellbeing of the worker were not impaired by excessive hours of toil. Latterly, however, owing to the wide incidence of unemployment, the movement for reducing hours of work has had for its main incentive the sharing of work so as to reduce the number of workers wholly unemployed. Recent discussions at Geneva have, in general, been conducted on the latter basis, and the proposals now made must be considered in flat light. There is, of course—and I am sure the noble Lord would himself concede the point—no sanctity in the number of forty in regard to the weekly hours of work, and it is not a figure scientifically related either to current methods of organisation or to the social and industrial habits of the people. The number of forty is in the nature of a
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slogan designed to promote the movement towards shortening hours of work with a view to relieving the unemployment position. A slogan of this kind, even if its underlying significance were acceptable, does need careful consideration before there is any question of adopting it as the pivotal point of an administrative code of wide industrial application. No two industries are alike, and no two countries have the same social and industrial history.
Hours of work and wage rates differ widely from industry to industry and from country to country, and with every sympathy for the idea of improving the position of the workers, whether by reducing hours of work or otherwise, it does seem to His Majesty's Government that at the present time a general limitation of hours of work to forty a week is not going to be accepted internationally as meeting the varying circumstances of wage-earners in the multifarious occupations which they follow in the world of industry and commerce. For instance, there is a great difference of conditions as between the operative engaged on manufacture indoors in a factory and an operative in the building trade subject to the state of the weather and the duration of light; but a general Convention containing limitations of hours to forty would be in the nature of a steam-roller designed to obliterate the natural divergencies of conditions in the various occupations and in the circumstances of the various industries.
It is not unreasonable to argue that the increasing efficiency of machinery should lighten the burden of labour falling upon the workers; nor does it seem equitable that some workers should have to work overtime while others are idle. Accepting these conditions as valid, it is for all interests concerned to embrace any opportunity of shortening hours of work provided that this can be done without serious detriment to the prosperity of industry and the development of trade. There have, in fact, been recent examples of firms which have found it possible to reduce hours in departments of their undertakings. The noble Lord referred to one or two specific cases. It is indeed the case that experiments of this kind have been made in certain undertakings. Those experiments have differed from

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one another in their underlying basis and the experience so far gained shows that the principle of the Government's reply to Geneva as set out in the White Paper is sound. By that I mean that the fact that each experiment has differed shows that it is impracticable to draw up a satisfactory Convention which endeavours to apply the same system to every undertaking and to every country.
The noble Lord referred to Imperial Chemical Industries. As he has done that, I think I cannot do better than quote from a letter issued by Imperial Chemical Industries, Limited, with regard to the four eight-hour shift experiment which they have instituted at their works at Billingham. The letter reads:
"I should explain that the introduction of the scheme was rendered possible solely because it became necessary to put certain departments, which had been working a 47-week on daywork, on continuous shift-work. This change in the method of working naturally yielded an increase in weekly earnings over the daywork wages formerly paid.
"Instead, however, of adopting the usual three eight-hour continuous shift system, a four eight-hour shift system was introduced by taking on an extra man as relief; consequently, instead of working on the average 56 hours over the the three weeks' shift cycle, the average hours worked per week are 39.375. The wages that would have been distributed amongst three men under the three eight-hour shift system are distrbuted amongst four men.
"The experiment cannot of course be compared with the conversion of any existing 47-hour week into a 40-hour week on daywork, and therefore does not represent the adoption of the 40-hour week in the sense in which that phrase is generally accepted. Further, it would not have been practicable had the men concerned been already working on the usual three eight-hour continuous shift system, owing to the reduction in individual weekly earnings that would have resulted."
I have read that extract from that letter because the noble Lord instanced this actual case. He will have noticed that the writer said: "therefore [it] does not represent the adoption of the forty-hour week in the sense in which that phrase is generally accepted."
Other experiments, as the noble Lord has pointed out, have been based on a five-day week, on speeding up the work, on periodical closing down and on various other bases. I can only say that the Government will continue to watch the results of these experiments with the greatest interest, but it is unable to find
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in them justification for supporting an attempt to compel a reduction of hours to forty per week or to establish internationally a rigid system applicable to the whole of industry and commerce. The noble Lord referred to other cases. He will not expect me to deal with them, but he mentioned the firm of Rowntree. Only the day before yesterday I was myself in York in the immediate vicinity of the Rowntree works. I do not think the noble Lord himself claimed that as an instance of a forty-hour week.
LORD STRABOLGI: Forty-two.
LORD ROCHESTER: I think probably the facts would show that it is forty-four, but I am not going to split that difference with the noble Lord. I want to make the point that it is only an instance and cannot be claimed as supporting his contention of a full forty-hour week.
LORD STRABOLGI: I am sorry. I did quote that wrongly. It is a five-day week of forty-four hours.
LORD ROCHESTER: That was my information. I am obliged to the noble Lord, but I was not trying to make a debating point of that. I was only trying to show that we cannot argue from the specific to the general. The Government have at no time taken up the attitude that hours of work should remain immutably at their present level. They have at all times welcomed any movement for shortening hours which did not suggest disadvantages of a major character. The proposals framed at Geneva, however, appear to the Government to be such as would be unlikely to fit the picture of industry as we know it in present circumstances. Rough and ready attempts at uniformity in plan may well bring disaster in industry where the elements of diversity and complexity are increasingly apparent. In fact, the instrument of a general forty-hour Convention is, in the view of the Goverment, too crude and unscientific in character to admit of its general acceptance and its effective application throughout the countries of the world.
To turn to another aspect of the problem, that of international trade and competition in world markets, Great Britain has a very special interest in international trade and the element of costs of production, including labour costs, is one to which we must pay great

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attention in so far as we hope to sell our products in world markets. In the matter of labour costs, hours of work and wage rates must obviously be considered together. Shorter hours, related as they are to wage rates, naturally affect labour costs and they may also raise overhead charges by way of increased expenditure on supervision, social expenses and the like. Moreover, shorter hours may mean expensive machinery lying idle through more hours of the day unless double or multiple shift systems are employed. In the world markets of to-day this country has to meet intensive competition from countries which work longer hours and pay lower wages than are the general rule here. Many of those countries show little or no disposition to approach our standards and this is a grave difficulty in the way of our making a general forward movement.
It is true that one of the aims of the International Labour Organisation is to raise low standards of working conditions wherever these are to be found, and with this aim His Majesty's Government are in full accord. But it is obviously difficult for the Government to agree to tie this country down to reduce hours of work arbitrarily to forty, while a number of important competing countries have already intimated their unwillingness to agree to international regulations of this kind. I submit that the noble Lord is not entitled—he will forgive my saying so—to hold up this country as the black sheep among the nations in this respect, because I think that is what he really did. I took down his words. He instanced cases of Italians and French and Poles. He stated that we were associated with Japan in his opinion amongst, the black sheep.
Of course it is very clear that the Japanese are not prepared to concede this contention of the International Labour Organisation. They said in their reply:
"… the prescription by legislation of compulsory reduction of hours of work which could be effective in alleviating unemployment would be difficult from the economic and technical points of view under the existing conditions in Japan. Further, in such a case it would also be difficult in practice to ensure the maintenance of wages by legislation. Consequently, the Government is not in a position to agree, for the time being, to an international regulation on this subject."
That is Japan. The noble Lord said that we were hanging behind France, Italy
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and Poland. I think that he will concede as a premiss that it is no use having a Convention unless it is going to be put into force. It, is very easy for countries to say that they are prepared to be parties to a Convention and then to attach to that statement conditions which make it for all practical purposes more or less valueless. We in this country are accustomed to state quite frankly our decision when we have come to it and to accept responsibility for it.
I agree that the Italians, the French and the Poles, as the noble Lord said—and I am only confirming his contention—were agreeable to the admission of the forty-hour question in the Questionnaire, but the noble Lord, if he will forgive my saying so, handled the truth rather carelessly, because he did not inform your Lordships of the conditions which they attached to their answers to that question, and I feel that it is so important that I want to read to your Lordships of the conditions attached by all three of those Governments to which the noble Lord referred. I have here the replies of all the Governments. I think he first of all instanced the Italians. Tt is stated with regard to Italy:
"The Italian Government proposes that the group should include the States of chief industrial importance, including the extra-European States."
That includes Japan. Therefore Italy says, for one: "We will adhere to a Convention if Japan adheres to it"; but Japan have already made it abundantly clear that they are not prepared to adhere to it. I ask the noble Lord therefore whether he is entitled to hold us up as black sheep in comparison with a country who say that if the impossible can be done, they will fall into line?
Then he instanced the case of the French. Now what is the French condition?
"The French Government considers that the Convention should provide a procedure for ensuring its simultaneous ratification and putting into force by the Governments of States which are in economic competition with one another."
Clearly that includes Japan and Germany. Japan again! The same point can be made there as I made in the case of Italy. The other case which the noble Lord instanced was that of Poland. Now what is the Polish reply?

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>"The Polish Government names ten States for this purpose…."
that is, should ratify the Convention—and amongst them Germany, the Netherlands and Japan. In the case of Germany, as they have left the International Labour Office the noble Lord will realise that they cannot have their adhesion, and in the case of Japan he is already aware of their answer. What is the answer of the Netherlands? The Netherlands say:
"that this matter cannot he considered as being yet ripe for international regulation."
I do suggest to the noble Lord that in view of those conditions attached to their adhesion, the relationship betwen his statement and the truth is so distant as to be scarcely recognisable, and I feel that he will not press that element of his argument in the circumstances.
The protagonists of the forty-hour week in the British trade union movement postulate that no reduction of wages should accompany a reduction in hours, but, considered internationally, no feasible plan for carrying this into effect has yet been devised. The noble Lord asks, and as I understood him it was one of his specific queries, whether the workers had been called into consultation.
LORD STRABOLGI: The trade unions.
LORD ROCHESTER: Quite so—whether the trade unions had been called into consultation. I can only answer that by saying that to my own knowledge the General Council of the Trades Union Congress have been consulted, both orally and in writing, by the Minister of Labour on the forty-hour week question. I have not the data with me at the moment, but speaking from memory I am almost sure that I am correct in saying that in fact only last week—certainly quite recently—a deputation was received by the Minister of Labour and had the opportunity of laying their views before him. The Geneva proposals include a recommendation concerning the maintenance of the standard of living of the workers, in the event of a reduction in the hours of work, but such a recommendation, as distinct from a Convention, can have no binding validity, and I should be surprised if it satisfied British trade unionists as giving them the safeguards for which they have asked.
The industrial policy of the United States of America, to which the noble
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Lord has referred, is frequently quoted as showing what can be done in the way of reducing hours of work and increasing the leisure of the workers without reducing their standard of living. It is, I suggest, too early yet to form a clear view as to the results of this policy, but the position of the United States is different from our own in many important respects. Within the borders of its immense territory the United States has natural resources and economic potentialities which make an approach to national self-sufficiency less difficult than is the case in this country, where we are more dependent upon international trade. We hope that the social experiments of the United States will succeed, but it is relevant to point out that, even in that country, the industrial codes which have laid down hours of work in the various industries have not proceeded on the proposed Geneva model of a universal limitation to forty hours, but have fixed a variety of hours for the different industries in accordance with their varying circumstances and requirements. Incidentally, I would mention that the United States of America are not members of the International Labour Organisation, although I am glad to learn that the United States Minister of Labour is likely to attend the forthcoming International Labour Conference as an observer.
Without wishing to touch more than briefly upon the matter, I might mention the recent statements of my right honourable friend the President of the Board of Trade, to which the noble Lord has referred, with regard to the competition of the Japanese manufacturers with the Lancashire cotton manufacturers in supplying cotton goods to various parts of the world, and more particularly to our own Colonies. I am sure that in considering this matter my right honourable friend has had in mind the desirability of obviating any worsening of the conditions of work of Lancashire operatives for the purpose of maintaining our hold on markets in which we have to meet Japanese competition based, as it is, on hours of labour which are longer and rates of wages whicih are lower than in the Lancashire cotton mills. To reduce hours of work in the Lancashire cotton mills from the present agreed number of forty-eight to the forty proposed by Geneva would certainly further load the dice against Lancashire, particularly as I

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understand that the Operative Weavers' Association are strongly opposed to the two-shift system and have never, to my knowledge, been parties to an application for permission to work two shifts.
In this connection I gather from the Press—a matter to which the noble Lord also referred—that the International Congress of Textile Workers, meeting in Lucerne last week, had the question of Japanese competition before them. The noble Lord has given us an extract of what was said by Mr. Naesmith, the secretary of the Lancashire Weavers. I would like to mention that he is reported to have pointed out that one of the difficulties of the situation was that Japanese weaving machines were worked 120 hours a week as against the normal 48 hours in Lancashire. The proposed Convention does not deal in any way with this most important difference in working conditions. To ignore this is to ignore one of the most important questions affecting the maintenance of the employment and Standard of life of the Lancashire operatives.
I am sure the noble Lord will concede that if our machines are to be operated for 40 hours a week only, against 120 hours a week worked by Japanese machines on the shift system, then a fortiori we should require for the same production three times the number of machines, with their attendant overhead charges, and additional electrical energy and other power, that the Japanese require, making competition in neutral markets increasingly difficult, if not impossible. I also gather from the Press that Mr. Naesmith indicated the possibility of the forty-hour week proposal being approached, not from the standpoint of reaching a general international convention, but by way of considering the application of reduced hours of work to separate industries where agreement to that end could be reached.
Whatever may have been said at Lucerne, however, I am brought back at this point to the letter to which I have already referred as having been sent to Geneva on behalf of His Majesty's Government, on March 14 of this year, and of which the final paragraph reads as follows:
"In conclusion, … His Majesty's Government does not take the view that weekly hours of work are immutably fixed
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at their present level. A continuous review of the problem, industry by industry, will, in the opinion of His Majesty's Government, reveal the scope for useful action as and where this exists, and it is contended that the question of the limitation of hours can only be dealt with, either nationally or internationally, industry by industry, in the light of the special characteristics of each industry."
I suggest that this conclusion represents a realistic approach to the hours problem, and I commend it to the consideration of this House.
The noble Lord referred just now to the leading article in The Times of to-day, and I said that I would refer to it. I want to complete the paragraph that he quoted from because I do not think he did complete justice to the point they make in that article. It reads:
"To pay for forty hours' work the amount now paid for forty-eight hours' work will increase the wages costs of production by one-fifth unless the output of the shorter working period is proportionately greater than that of the longer period."
I think the noble Lord will allow me to say he did not emphasise the point that they were speaking of the wages costs. I should like, if I might, to commend this leading article to noble Lords in all parts of the House. I would also like, greatly daring, to read the final paragraph of the same article, which says:
"The more the forty-hour week proposal is examined the more specious it is seen to be as a remedy for unemployment, and it involves hazards which no Government of this country dare take. Less spectacular but more sure is the suggestion which the Government have made to the I.L.O. Progress to a shorter working week should he made, not by a daring and dangerous leap, but gradually, industry by industry, as the way opens."
In this world of infinite variety and complexity it is scarcely to be expected that easy solutions of major difficulties will present themselves, and on the hours question I feel it is wise to realise this, and to approach it in a scientific spirit by examining the facts, industry by industry, so that wherever progress may be found possible it may be secured on a sound and constructive basis. That progress may be secured on such a basis is not only the wish of His Majesty's Government but is, I am confident, equally the desire of the noble Lord who moved this Motion, and of his friends and mine associated with him. I hope that with this explanation my noble friend will

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see his way to withdraw his Motion for Papers, for the very good reason that since his Motion was put on the Paper this White Paper has been presented to Parliament, and there are no additional Papers.
There is only one further matter, and that is the reference to the Washington Hours Convention. May I just emphasise that that rather strengthens the position taken up by His Majesty's Government? The Washington Convention was drawn up in 1919, and was based upon a working week of forty-eight hours. Its history, I suggest, bears out the truth of what I have said about the impracticability of applying a single rigid standard to all industries and all countries. The Labour Party when in Office in 1924, and again in 1930, made efforts to prepare legislation upon which a ratification of the Convention by this country could be based. I submit that it was the inflexibility of some of the provisions of the Convention, and doubts as to the precise meaning of other parts, which raised difficulties which it proved impossible to overcome. In consquence neither of the Bills reached a Second Reading in another place, and therefore never reached your Lordships' House at all.
That the experience here was not unique is shown by the fact that the great majority of countries of industrial importance have not found it possible to ratify the Washington Convention. I therefore take the view, that so far from the Washington Convention providing an argument for the adoption of a Convention on the forty-hour week, it provides a lesson as to the impossibility of framing satisfactory Conventions on hours of labour of wide application. As I have already said, I would ask the noble Lord not to press his Motion for Papers. If there were any that could be laid I should be only too glad on behalf of the Minister of Labour to lay them, but I think he will appreciate that the matter
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has been brought right up to date by the White Paper issued yesterday, and if I have not answered all his questions I think he will admit that I have at least attempted to meet all the points he has raised.
LORD STRABOLGI: My Lords, the noble Lord has answered the points which I put forward in a most satisfactory way. I thank him for the very full answer which he has given, and the frank way in which he has laid the Government's case. He has not convinced me, and I have not convinced him, but nevertheless I will accede to his request and withdraw my Motion for Papers. My complaint is not that this country is a black sheep, but that it is not leading the flock.
Motion for Papers, by leave, withdrawn.

LAW REFORM (MISCELLANEOUS PROVISIONS) BILL [H.L.]
Amendments reported (according to Order).
REGISTRATION OF BIRTHS, DEATHS AND MARRIAGES (SCOTLAND) (AMENDMENT) BILL.
Read 3a (according to Order), and passed.
RAMSGATE CORPORATION BILL. [H.L.]
Report from His Majesty's Attorney-General received and ordered to lie on the Table.

MARRIAGES PROVISIONAL ORDERS BILL.
Referred to the Examiners.
House adjourned at two minutes before eight o'clock.