HC Deb 29 September 1949 vol 468 cc309-447

Order read for resuming adjourned Debate on Amendment [28th September] to Question [27th September]: That this House approves the action taken by His Majesty's Government in relation to the exchange value of the Pound Sterling, supports the measures agreed upon at Washington by the Ministers of the United States, Canada and the United Kingdom which are designed to assist in restoring equilibrium in the sterling-dollar balance of trade for the purpose of enabling the economy of the sterling area to maintain stability independent of external aid; and calls upon the people for their full co-operation with the Government in achieving this aim, whilst maintaining full employment and safeguarding the social services."—[Sir S. Cripps]; which Amendment was: in line 1, to leave out from "House" to the end of the Question, and add: welcomes the measures agreed upon in Washington but regrets that His Majesty's Government, as a result of four years' financial mismanagement, should now be brought to a drastic devaluation of the pound sterling, contrary to all the assurances given by the Chancellor of the Exchequer, and considers that a return to national prosperity, the maintenance of full employment and the safeguarding of the social services can never be assured under the present Administration, which, instead of proposing fundamental cures for our economic ills, resorts to one temporary expedient after another."—[Mr. Churchill.]

Question again proposed, "That the words proposed to be left out stand part of the Question."

3.5 p.m.

The Minister of Health (Mr. Aneurin Bevan)

We on this side of the House welcome cordially the full-throated abandonment of the speech of the Leader of the Opposition, because it provides us with an opportunity of making a full reply. Foreigners have been very much puzzled over the last four years by one peculiar phenomenon of British public life. They could not understand at all how it came about that His Majesty's Government did not lose one single Parliamentary seat in a by-election and yet they could read in the national newspapers of this country statements by the right hon. Gentleman purporting to show that the British people were undernourished, were fatigued and were almost down and out. They could not understand how it came about that a Govern- ment which was supposed to have brought the people to such a sorry pass nevertheless could not lose a Parliamentary seat. Therefore, I welcome this opportunity of pricking the bloated bladder of lies with the poniard of truth.

Mr. Churchill (Woodford)

I think, Mr. Speaker, that the other day you gave a Ruling that the word "lie" was no more to be used about statements made in this House than was the word "liar." I endeavoured to limit my own actions by your Ruling.

Mr. Speaker

It is perfectly true, but I thought the right hon. Gentleman was making a quotation. I did not think he was applying the word "lie" to anything said by the right hon. Gentleman the Member for Woodford (Mr. Churchill).

Mr. Bevan

No, I was referring to the almost Goebbelesque system of mass suggestion which has been evolved in the course of the last four years to try and persuade the British people that they were far worse off than they really were, and secondly to try and persuade other nations of conditions in Great Britain that in fact did not exist; and indeed, I submit at once a priori in this Debate that there could not be any truth whatever in the comments made by certain national newspapers and in the propaganda of the party opposite in view of the fact that, for the first time in British political history, the Government have not yet sustained a defeat in a by-election. It would be impossible, unless the British people had become hopelessly docile, for the electorate to endorse at the ballot box the kind of situation that the Opposition has described.

Therefore, I say at once that I welcome the opportunity of confronting the right hon. Gentleman with the facts. He is known as a very great stylist, and one reads his prose with delight. A reason why he moves gracefully across the pages is because he carries a light weight of fact. He sub-edits history, and if there is any disagreeable fact, overboard it goes. This has always been characteristic of the right hon. Gentleman, and it has had a most unfortunate effect on the party opposite because now they have begun to think in phrases as well.

The first fact with which I wish to confront the right hon. Gentleman is that the last favourable balance of payment enjoyed by this country was in 1935. It is an extraordinary thing—1935. In other words, we inherited a bankrupt nation. The years 1936, 1937 and 1938 showed a deficit totalling £129 million—in three years—so that before the war when we were, to use the right hon. Gentleman's expression of yesterday, much richer than we are now, we were bankrupt. Since then we have had a war. In those years the average number of unemployed in Great Britain was two million. In other words, if those two million workers had been at work, consuming imported food and raw materials, we would have had a catastrophic financial crisis in 1936.

That is one fact: the real financial situation that the nation had reached under successive Conservative Governments was masked by the semi-starvation of millions of British people. If those of my fellow countrymen in Wales, and if the miners of Durham and of Lanarkshire, the textile workers of Lancashire and the steel workers had been at work consuming more food, more textiles and more raw materials of different kinds, the Conservative Government of that day would have been unable to live. They perpetuated themselves on the basis of keeping two million people out of work. That happens to be the first fact.

In 1945, we inherited that situation. I have not yet fully described it. I shall return to it. But we managed by the last half of 1948, for the first time since 1935, to show a favourable balance of £30 million—an overall balance of £30 million. This nation had devoted itself with such industry, persistence and skill to the task of national recovery that we had more than made up for the consequences of war. We had already brought the nation back to a more favourable situation than that it which it was left in 1945.

Mr. Selwyn Lloyd (Wirral)

With American aid.

Mr. Bevan

That excludes American aid. In the last half of 1948 we were moving in that direction. If we take the whole of 1948, if we had been enjoying the same terms of trade as hon. and right hon. Gentlemen opposite enjoyed in 1937, we would have had an overall surplus, and we were doing that at the same time as we were providing our people with full employment. Those two facts of themselves, without any support, constitute a complete rebuttal of all the flatulent generalities of yesterday's speech. But let us go on. There are more facts.

Let us take another test. These tests are not unchecked generalities and these are not produced only here. These are the reports of dispassionate authorities who are not really fundamentally concerned with our party polemics but with describing the actual objective situation. There are the indices of industrial production. This shows the recovery of the nation in terms of production and, of course, the figures are comparative. Figures do not mean a thing by themselves. They only have meaning in comparison with members of the same family. Even the effulgence of the right hon. Gentleman is not his own personal endowment: it reflects the twilight around him.

Let us take 1938 as 100. This deals with the first quarter of 1949 as a percentage of 1938. The figures are Belgium, 122; France, 124; Italy, 90; Netherlands, 122; Norway, 130—a Socialist Government; the United Kingdom, 131; Denmark, 135; Sweden—not involved in the war and under a Socialist Government—147. That is another fact. [An HON. MEMBER: "What about the United States?"] We are making comparisons between European nations. They are the only fair comparisons to make. We are trying to find out, by looking at the actual facts, which nation, faced with similar circumstances, has travelled furthest on the road to recovery. I say that those facts themselves are a complete answer to some of the statements that have been made.

Let me give another fact. The "Economist" stated the other day that in its judgment the best single test to apply would be, What nation has done its utmost in these difficult conditions to reduce its imports and to increase its exports? That is a fair test. Let us have a look at it: Belgium and Luxembourg, exports 114—imports 97; Denmark, exports 84—imports 107; France, exports 127—imports 106; Norway, exports 91—imports 109; Sweden, exports 65—imports 103; Switzerland, exports 113—imports 121; United Kingdom, exports 156—imports 82.

There is a further fact. We have already had four categories, each one a crucial test. In each one Great Britain emerges more favourably than any other European country, with the exception of countries representing a very small proportion of production. The next figure is even more interesting. What nation has done its best to reduce its dependence upon dollar countries? The only nation which is plus is Britain. Every other nation is proportionately more dependent upon dollar supplies than is Great Britain. We are plus nine; Belgium and Luxembourg are minus 16. That is a change from 1938 to 1948–49. Other countries are: Denmark, minus six; France, minus 25; Italy, minus 57; Netherlands, minus 31; Norway, minus 17; Sweden, minus 18; and Switzerland, minus 31. Great Britain is plus nine.

Do not let us stop even there. Let us have another fact. The right hon. Gentleman, so I am told, talked in a certain speech about work-shys. Some—not all—of the newspapers of Great Britain have been denigrating British productive effort and have been suggesting that virility and vitality have been undermined by State doles and State benefactions of various kinds. That ought to be reflected in the output per man. How does the output per man compare with 1938? The figures show: Austria, 55; Belgium, 97; Bulgaria, 115—it will be realised that some of these countries have very small industrial production indeed; Czechoslovakia, 99; Denmark, 98; Finland, 115; France, 99; Germany, 54; Hungary, 107; Italy, 76; Netherlands, 84; Norway, 86; Poland, 99; and the United Kingdom, 108.

I should like to ask the House to reflect that those figures in themselves are conclusive evidence that under the guidance and leadership of a Socialist administration Great Britain has advanced further on the road to recovery than any other nation in Europe involved in the war.

Mr. Spearman (Scarborough and Whitby)

Would the right hon. Gentleman comment on Table 63 of the Economic Survey for Europe which shows that to an American purchaser European exports have risen by 20 per cent. more than United Kingdom exports since 1938; and that in 1948, as compared with 1947, the price of United Kingdom exports to an American rose in price by 11 per cent.

while the price of European exports to an American fell?

Mr. Bevan

That is an entirely different matter. I shall come to some of those points. What we are dealing with at the moment is this: we have taken output per man, we have taken the exertions to relieve ourselves of dollar dependency; we have taken the total index of production; we have taken each figure in turn, and we have shown that the British people in the last four years have managed to extricate themselves from their difficulties more successfully than any other nation.

Hon. and right hon. Gentlemen opposite ought to be delighted with that. But those facts do not correspond with the right hon. Gentleman's rhetoric. What is the relationship between those facts and his statement that in every sphere of life there has been a marked deterioration in Great Britain? How does he square those facts with the statements that he has been making from time to time within the course of the last four years? I could understand him because of his bitterness, because of his thwarted ambitions in 1945, not desisting from stating the unpleasant truth, but what, frankly, I cannot understand is how it comes about that a man who has enjoyed such a high place in the affections of the British people should for narrow party purposes distort the facts of British achievement.

The right hon. Gentleman has won a very high place in the opinions of other nations. They listen to what he says with great respect. He still has great influence in the world, and therefore they believe what he says. Does not he realise the damage he is doing to Great Britain? Would it not be rather better, if he finds it impossible in his polemical diatribes against us to avoid misrepresenting the whole situation, that he should not tarnish his reputation any further, and should retire from public life?

I want now to come to another aspect of the matter. It is true to say that, although this overall picture is one which reflects great credit upon us, nevertheless we are still in the position—and this crisis is, of course, high-lighting it—of not being able to earn enough dollars in dollar countries to pay for dollar purchases. Of course we are, but is that an indictment against us? Since when have these multilateralists come to apply bilateral tests? This is a purely bilateral test. If it be an offence in the British Government to fail to balance their dollar purchases by their dollar sales, then what about Canada? Canada has never done it, neither under a Liberal nor a Conservative administration. If it be a crime to fail to do that, then every nation in Europe has sinned worse than we have sinned. If this is the indictment that the British Tory Party brings against the British administration at this time, then it is an indictment that lies against every European nation, and has lain against Canada ever since Canada has been a nation. In 1948, Canada had a deficit with the United States of $488 million, and in the same year a surplus with the United Kingdom of $401 million.

If we did—I am not suggesting for a single moment that we should—if we could, but we cannot—if we were able to refrain from buying those exports from Canada, what is a British financial crisis would become a Canadian crisis. But nobody is suggesting that we should do it, because that is a pure bilateral test. Nevertheless, it is surely exceedingly unfair, to say the least of it, to blame Great Britain because, owing to the pattern of international trade having been so badly ruptured by the war, we find ourselves unable to purchase from the dollar areas the raw material and the food we require without having assistance from them in the meantime and without this painful expedient of devaluation.

The circumstances facing us in this field were very much more difficult than they were before the war. In 1914, our net foreign investment income was £200 million and our food imports cost £250 million. Therefore, there was a visible export needed to pay for food imports of £50 million. In 1919–39, the net invisible export was £200 million and the food imports were £400 million, making an increase of visible imports necessary to finance it of £200 million. In 1949, the income from our overseas investments was negligible. Our food imports cost £800 to £900 million, needing an increase of visible exports of £800 million. In other words, the position had changed in the most revolutionary manner against us. The prices of the things we had to buy had gone up much more than the prices of the things we were selling.

Everybody in this Debate talks about the high price of our exports, but nobody says anything about the high price of other countries' exports which are our imports. In point of fact, one of our main difficulties, as I have said, has been that the terms of trade have moved very substantially against us and added to our difficulties. This has been appreciated by people outside Great Britain. The Leader of the Canadian Conservative Party, Mr. Drew, has spoken about Great Britain's plight in these circumstances very much more sympathetically than has the right hon. Gentleman. He said in their House of Commons on 19th September: To a very great extent the whole problem has resulted from the enormous sacrifices made by the people of Great Britain in two world wars. It may sometimes be forgotten that the only nation in the world outside Germany, which felt the full physical impact of those two wars was Britain, and Britain has paid an enormous price for its contribution to the survival of freedom. There is, therefore, recognition in Canada, and there is recognition in the United States, that the conditions in which we find ourselves today are not the consequence of the defects of the British administration. On the contrary, they say that they are the effects of two world wars, and that the British recovery so far has been magnificent.

The post-war trade relationships between ourselves and the New World were made much more difficult by one further factor. Before the war, and especially during the 19th century, Great Britain fertilised the world by exporting credits. We were responsible for bringing about industrial revolution after industrial revolution in country after country. We were able to do it then for reasons that are well known, and which I need not itemise here.

Mr. Oliver Lyttelton (Aldershot)


Mr. Bevan

Certainly, expansion all the time. It occurred right throughout what is known as the Liberal Era. I am coming back to that in a moment.

After the war, the United States of America found itself in a strong creditor position, but it was difficult, if not impossible, for private finance to find its way out of America into other parts of the world because the world was too disturbed, too dislocated, and because the private entrepreneur, whether he be merchant, banker or industrialist, did not have sufficient confidence in other parts of the world to export capital from the United States of America. Indeed, it is one of the most important factors in the modern world that the technique of production has changed so much, that so much capital has to be exported in modern enterprise, that it is difficult for private persons to venture their capital, and international investment has become more and more a quasi-governmental operation. In these circumstances, the result was, of course, that dollars did not find their way into the rest of the world, and indeed, as prices rose in America itself, American capital could find full employment within America's own frontiers. These are the difficulties with which we are faced.

Since 1945 His Majesty's Government have been making efforts to switch from our dependence upon the Western Hemisphere. As my right hon. Friend the Minister of Food pointed out the other day, we have enormously switched our dependence for food, and as we develop the resources of the Commonwealth and of our lands overseas, our dependence will decrease because, whilst we are anxious to enjoy a wholesome division of labour with the North American Continent, we desire—yearn for—a restoration of our economic and financial independence. America is beginning to understand more and more that there is no threat to her in a reasonable expansion of British exports. The friendship which exists between us and the United States of America cannot rest upon a trade war. There is no trade war involved in our finding sufficient foothold in the North American Continent to enable us to pay for what we need from it, nor is there any need at all to suppose that we shall meet such fierce competition as to cause America to raise barriers against us. As my hon. Friend the Member for East Coventry (Mr. Crossman) said last night, the percentage of American trade that we require to make ourselves viable is a mere fraction of American production.

Therefore, there is no need to fear that as we enter the American market we shall find political resistance. Such resistance as we shall find will be the natural resistance of attempting to undersell people who are able to produce more competitively. That is normal commercial rivalry, and we have every hope that as we establish a reasonable foothold we shall not meet in America political resistance, because America is now understanding that the developing relationships which must exist between our two nations if the world is to have peace cannot be founded upon trade wars and punitive political discrimination. So that we are, in fact, making some progress, and indeed, we have got in America the understanding of very powerful friends—not only powerful in the commercial world, not only powerful in the financial world, but powerful in the trade union world, too; and our spirits in the last two months have been refreshed and revived by the letters of sympathy and goodwill that we have received from our friends across the Atlantic.

Therefore, we have no apprehensions. We know very well that for a while there will be difficulties, but we think that we can face them and we are confident that we shall succeed. But we cannot succeed if every time hon. and right hon. Gentlemen opposite make a political speech they use it as an opportunity to denigrate the efforts of Great Britain. As a matter of fact, I do not know what my right hon. and learned Friend the Chancellor of the Exchequer thinks—[Interruption.] I do not know what he thinks of this matter, but I myself am satisfied that the campaign of denigation which went on for some months, indeed has been going on for years, made a powerful contribution to our exchange difficulties.

It was obvious that, as we were moving away from these struggles, as our industrial expansion was taking place, we were doing it on modest reserves—reserves far too modest for the purpose. Therefore, any unfavourable winds were bound to affect us materially. The slight recession that took place in America, the rise of unemployment to something in the region of four million and the under-employment of a considerable number more, necessarily affected the delicate balance of our position.

We were obviously getting into difficulties, and those difficulties were added to by the most vicious campaign of misrepresentation that British national newspapers have ever indulged in. In fact, it was so bad that it produced a reaction; it cured itself; and even the newspapers that had been indulging in it became contrite, realising the immeasurable damage that they were doing to the credit of Great Britain. I cannot understand why Tories should behave in this way. Other nationals do not denigrate their own country abroad. I have not heard Italians doing it. I have not heard the French doing it. The only people in the world who have used this present situation to undermine the credit of their own country have been the British Tories. They did not care what was the effect upon the fortunes of their country so long as they could reap some party glory.

As I said earlier, I have thought it desirable to make some comparisons. The right hon. Member for Woodford trailed his coat yesterday. He invited us to have a historical review. I am astonished that he should do so. It has been suggested, I think by the hon. Member for East Aberdeen (Mr. Boothby), that the most constructive suggestion he could make was to urge an early General Election and a return of a Tory Government in Britain. Why on earth should he want to prophesy what might result from a Tory Government when history has the record for him? Why read the crystal when he can read the book? We are furnished with all the facts that are necessary.

The right hon. Gentleman gave the nation the benefit of his wisdom and experience and inspiration in the years immediately following the 1914–18 war. It was suggested by the hon. Member for Oxford (Mr. Hogg) that what we really wanted was inspiring leadership—from the right hon. Gentleman, of course. It is astonishing what "leaderolatry" leads some hon. Members to. But the right hon. Gentleman gave us his inspiring leadership. We had it before. We had it, for example, from 1920 to 1926. They had had only one world war, but we have the results of two. They had one. What was the result? Of all the nations of Europe Great Britain—proud Great Britain—was at the bottom of the league. Every nation in Europe had increased its pro- duction better than Great Britain—except Poland, and she had a war on. But for the six years immediately following the 1914–18 war, when the nation enjoyed the benefits of a Conservative majority and the guidance of the right hon. Gentleman, they managed to bring Great Britain down in the European league. So we do not need anything at all except the facts of the case.

The right hon. Gentleman made a speech on 9th January, 1920. [Interruption.] I am pointing out, if we are to have historical reviews, then let us have them. Why on earth do we want to ask the British people to believe what they are told by their Tory spokesmen when history gives us all the evidence of what they would do in such circumstances? I do not propose to read what the right hon. Gentleman said, because I do not want to add to the length of my speech by so doing. [HON. MEMBERS: "Read it."] There are too many quotations.

Again, the right hon. Gentleman yesterday told us that he had no regrets whatsoever for his performance in 1925—the restoration of the Gold Standard. In fact, he defended it yesterday. I am bound to say that I cannot understand it. I think the hon. Member for East Aberdeen was the Parliamentary Private Secretary of the right hon. Gentleman when he was Chancellor of the Exchequer, and we all know that the right hon. Gentleman is an extrovert and a genial personality sometimes. If there is one thing that the right hon. Gentleman does not do, it is conceal his feelings. Indeed, it is one of his most endearing qualities. He need not think it is a bad thing at all because we have enjoyed it often. It is, therefore, perfectly clear that the right hon. Gentleman would not have concealed his real, dear feelings from his young friend whom he had just made his Parliamentary Private Secretary.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I do not want the right hon. Gentleman to be unfair. I should like him to get his facts quite right. The fact is that I was not Parliamentary Private Secretary to the Chancellor of the Exchequer at the time of our return to the Gold Standard.

Mr. Bevan

I did not say the hon. Member was, but I hope he will now follow this passage. He has just been delivering a lecture. It is published in the "National Review." This is what he says, reviewing the situation at that time: Worse was to come, in the shape of Great Britain's decision unilaterally"— not after consultation— to settle the American Debt, in defiance of the terms of the famous Balfour Note; and also to accept the recommendation of the Cunliffe Committee to return to an uncontrolled gold standard, at the pre-war parity of exchange. Mr. Churchill, who disliked the whole affair, reached the Treasury too late to avert it. This is said in September, 1949. I thought the hon. Member for East Aberdeen was working his passage back home. But, this is not the way to get office. He goes on: The best he can find to say about it was that we were shackled to reality. In truth we were shackled to a ghost. Then he continues: The results, for Great Britain, were catastrophic. Of course they were.

The right hon. Gentleman yesterday suggested that throughout his career he had been a friend of the British working man. He suggested to us that he and the Conservative Party would be the most effective defenders of the social services. I am a miner. I was brought up as a miner in a mining family in a mining area and a steel area. The right hon. Gentleman's name was execrated. It is not always wise to try to revive these old memories, I know, but the right hon. Gentleman himself provoked it yesterday.

Mr. Churchill

I should not have referred at all to the Gold Standard, although I do not mind discussing it, unless I had been made the object of a vicious attack by the Chancellor of the Exchequer, who had charged me, practically in so many words, with having sought to afflict the British public with large and massive unemployment as a result of my policy. That being so, I found it necessary to re-state some of the unchallengeable facts of the matter.

Mr. Bevan

What my right hon. and learned Friend did say in the course of his speech was that a severe deflationary policy would produce mass unemployment. As a matter of fact, it has produced mass unemployment. I should like to call the attention of the House to one fundamental fact. It is this. In between the war years this nation was under the guidance of the right hon. Gentleman and hon. Gentlemen opposite. They were the people who were mainly responsible for shaping policy.

Over the weekend I went to a meeting. I was taunted here with what I had said there. The right hon. Gentleman the Member for West Bristol (Mr. Stanley), in winding up his speech, referred to it. He said I had described myself as "an ordinary chap." Well, I will explain to the House why I did. [Laughter.] Let hon. Members not wince before the lash falls. I was speaking to an audience mainly composed of miners and I wanted to make it quite clear to them that what would result in this present crisis would not be what happened before, because there were ordinary chaps and not extraordinary chaps here in charge; because when the extraordinary chaps were in charge they half starved.

The right hon. Member for West Bristol was Minister of Labour in 1934 and 1935. He was the man who introduced in the House of Commons, with the assistance of the right hon. Member for Southport (Mr. R. S. Hudson), who was then his Parliamentary Secretary, the unemployment regulations which produced such a flood of protests from all over the country that there were stormy Parliamentary scenes; and the right hon. Gentleman soon after had to vacate his office.

We remember these things. There is now another financial crisis, and poor folk up and down the country, with memories of those dark days, are afraid of what may happen to them. They are afraid that the extraordinary men may come back, for they know what happened when the extraordinary men were in charge, and they do not want it to happen again. That is the reason why I wanted to reassure them. In those years the industrial fabric of Great Britain was undermined. It was easier to get British capital outside Great Britain than inside Great Britain. The three major industries upon which we depended, textiles and coal and steel, were undermined; the craft skill of our people was dissipated; and hundreds and thousands were driven abroad by despair. In fact, under Conservative Governments in those days we passed the prize to the United States of America. We passed it deliberately.

Those are the people the right hon. Gentleman would ask the country to send back. You see, Sir, they are the same ones. The right hon. Gentleman thinks that he is the Leader of the Conservative Party. He is not. He is their decoy. There is a little disturbance going on at the moment inside the Conservative Party as to whether the right hon. Gentleman is a liability or an asset. It is a very considerable disturbance. The rumbles have reached us. Now, he of all men ought not to be caught, because he has had great experience. He ought to know that the Conservative Party have always tried to find a false face. They have always tried to find people who have endeared themselves to their fellow countrymen, in order to bring the Conservative Party back once more into power.

The right hon. Gentleman should know what they did with the right hon. David Lloyd George. He should remember what they did with J. Ramsay MacDonald. If he capitalises the reputation he still has in the affections of the British people to get them, the Conservative Party, once more back to power, he will not be in office long himself. They will fling him aside like a soiled glove. When the right hon. Gentleman tells the House of Commons about his accomplishments as a Minister, does he not remember that, although he was himself one of the most brilliant Parliamentarians of the day, a crowd of mediocrities kept him out of office for nine years, and that when eventually, in the war years, it became necessary to have a leader from that side of the House—because it had to be from that side of the House—with unrivalled gifts of speech and of evoking courage, it was the Labour Party that virtually made him Prime Minister?

I do beg and pray the right hon. Gentleman to realise that. It was one of the most vivid of my Parliamentary experiences to see those two great Parliamentarians, two great men, Lloyd George and the right hon. Gentleman—sitting in the House of Commons, with unsurpassed gifts, kept out of office by a crowd of people who were doing nothing but undermining the industrial fabric of Great Britain. But I need do no other than read his own description. In 1938 the right hon. Gentleman made this speech: When I think of the fair hopes of a long peace which still lay before Europe at the beginning of 1933 when Herr Hitler first obtained power, and of all the opportunities of arresting the growth of the Nazi power which have been thrown away, when I think of the immense combinations and resources which have been neglected or squandered, I cannot believe that a parallel exists in the whole course of history. So far as this country is concerned the responsibility must rest with those who have the undisputed control of our political affairs. They neither prevented Germany from rearming, nor did they rearm ourselves in time. They quarrelled with Italy without saving Ethiopia. They exploited and discredited the vast institution of the League of Nations and they neglected to make alliances and combinations which might have repaired previous errors, and thus they left us in the hour of trial without adequate national defence for effective international security."—[OFFICIAL REPORT, 5th October, 1938; Vol. 339, c. 366–7.] But those are the people he would lead back. There they are. Those are the guilty men—all of them. They are the ones that he, day after day, was indicting in the House of Commons. Does he think the nation would be grateful to him if he could persuade the nation to put that lot of bankrupt intelligences back into office again? The right hon. Gentleman has a great historical sense. Surely he must realise what history would say about it if he succeeded in doing that. Even his great services during the war would not compensate for such a calamity.

The times immediately ahead of us are going to be extremely difficult. The Government have one very great asset in these circumstances. The Government share the confidence of the organised trade union movement. We have asked them for restraint. We have asked them in these circumstances to develop a higher sense of morality than is revealed by some elements in the City of London. We have asked the miners and the steel workers and the railwaymen and the organised workers of Great Britain not to imitate the obscene plundering that went on, on the Monday, in Throgmorton Street. We have asked them not to exploit the nation's difficulties at this moment, and we are satisfied that we shall get their response.

The General Council of the Trades Union Congress in the last two years has displayed the utmost statesmanship. Although there have been strikes they have been negligible compared with what they were before the war. The vast mass of the British people has shown a sense of responsibility and restraint. We believe—in fact, we are convinced—that it is possible for us by our own exertions to win independence. We are satisfied that there exists amongst our own people a deep consciousness of the needs of the time.

The right hon. Gentleman yesterday threw out a challenge. As far as we are concerned, we are not proposing at this moment to do anything other than give the leadership to the British people which we consider they need. Over the last 50 years the resources of our country overseas and at home has been dissipated. We have to build them up again. We shall do it because there has come to power in this country a different type of person. The right hon. Gentleman said yesterday that there was a Parliamentary democracy in Great Britain before there was a Labour Party. There was not. There was a Parliament here, but there was not democracy. His people were here. Mine were not. But in the course of the last two generations a new type has emerged in Britain, virile—

Colonel Dower (Penrith and Cockermouth)


Mr. Bevan

—yes, jobs—men who realise that they have more to lose by failure and more to gain by success than any other section of the British community. It is to these people we appeal, and we are confident that we shall not appeal in vain.

4.0 p.m.

Mr. Oliver Lyttelton (Aldershot)

When I heard that the Minister of Health was to open for the Government today, I naturally expected to hear a very statesmanlike speech in which at least the word "devaluation" might have entered. These are very grim times, and I have never heard, in my comparatively short Parliamentary life, a speech more out of tune with the gravity of our affairs. Instead of dealing with the questions which are in front of the House, the Minister of Health has treated us to an excursion into the economies of the nursery, and a rather bad-tempered and bad-mannered nursery at that. For instance, he described the Labour Party as inheriting a bankrupt Britain with a trade deficit in three years amounting to £129 million. That is taking a rather austere view of bankruptcy. According to the Minister of Health, a man who saved millions of assets and has overspent himself a little is bankrupt.

Mr. Bevan

I was quoting the right hon. Gentleman's Leader.

Mr. Lyttelton

My right hon. Friend never used such a phrase in relation to our deficit; but we are reduced very nearly to bankruptcy now—no one said we were bankrupt in 1938.

I find it extremely difficult to take the right hon. Gentleman seriously upon either economics, devaluation or exports. After all, he is the person who wrote this remarkable passage a mere four years ago: By some twist of the Tory mind it is good trade to persuade someone in a remote part of the world to buy our goods but ruinous to allow the same goods to be consumed by our own people. And that is not all; much more disagreeable things are to come: We are now told, by some people who ought to know better, that we shall have to increase our exports after the war by some 50 per cent. Why read the crystal if you can read the book?

As I have a few things to say myself which appertain to this crisis and which are not distorted history, I am not going to follow the right hon. Gentleman's philippic in all its inaccuracies. I shall take up many of his points as I proceed with my argument. I permit myself only one glittering speculation, and that is what sort of speech the right hon. Gentleman would have made if devaluation had been introduced by the Conservative Party after four and a half years of power. That would indeed have been a speech. I can see this Box starting to smoke and perhaps bursting into flames before he had finished. I am very sorry to think that this opportunity for the display of his tendentious Parliamentary gifts should should have been so inferior. I hope that on another occasion the right hon. Gentleman will have a better chance and on a subject on which he is more perfectly informed.

I want now to turn to serious subjects, and consequently away from the Minister of Health to the Chancellor of the Exchequer. I am astonished by many of the things which the Chancellor thought fit to say in his broadcast and in this House on Tuesday. I can see no reason for optimism. I think the facts are extremely grim, and that it is far better to tell the people the full sombre truth than it is to cozen and cajole them along with small doses of bad news from day to day.

In July, the Chancellor of the Exchequer tried to minimise the effects of the cutting of dollar imports by £100 million, and today he is trying to minimise the extent of our national calamity. Members on all sides will find it difficult to believe that this is a national calamity after listening to the speech which we have just heard. The extent of the national calamity is minimised by the Chancellor of the Exchequer with a number of anodyne phrases. In the past, a large part of the Chancellor's arguments, in his attempts to conceal the true causes of our financial decline and fall, have been centred on what is called "the deterioration in terms of trade." On 6th April, he said: One of the factors that increased our difficulties, especially during the first half of the year, was a continuing deterioration in the terms of trade. This meant that we had to export even more goods to buy the same volume of imports."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2060.] Exactly—a deterioration in terms of trade of a country means that the costs of its imports has remained steady or gone up at a time when the price of its export goods has gone down or is going down. I ask anyone in this House whether he can think of a more effective means of turning the terms of trade against us than devaluation.

If we are to believe the Chancellor of the Exchequer, this was one of the great causes of our trouble. Can anyone think of any device which could do it more effectively than the device of devaluation? All our imports must cost us more, and all our exports, although stimulated in quantity by devaluation, must bring us less dollars per ton and per article. Indeed, it is axiomatic that devaluation means that an increased volume of exports will have to be sold to bring in the same amount of dollars. The reason is obvious. If all our dollar prices were maintained at the same figure, devaluation would give no stimulus to our export trade. The stimulus to sales comes because the dollar brings back to the exporter 7s. 2d. instead of just under 5s. per dollar before devaluation; which enables him to make drastic cuts in his prices in dollars and still earn the same amount of sterling.

In order to try to get this grave problem into perspective, I think it is necessary to examine what increases in the volume of our export trade will be necessary to bridge the gap. I was very interested to see that the "Manchester Guardian," which was quoted by my right hon. Friend the Member for West Bristol (Mr. Stanley) on Tuesday, put the amount at a £300 million increase in the sterling value of our exports. I have been examining this question myself from another angle and my conclusion is that we require the equivalent product of over 600,000 workers to bridge the gap, so I do not think that these two estimates, reached from different angles, are far out. I think it is impossible that this number of workers should be transferred from the less essential industries into the export industries, but a large number must find their way or we face failure from the very outset.

At this point I must refer to a question posed by the hon. Member for Nelson and Colne (Mr. S. Silverman) the night before last. It seems to me to be a very proper question which I am glad of the opportunity to answer. He asked what our attitude was to the White Paper on Personal Incomes. He asked if it was necessary to raise wages in the export industries and keep the total of personal income levels, how we were to avoid cuts in wages in the less essential industries. We do not like it at all, but since devaluation has been forced upon us there can as yet be no rise in wages on any large scale without endangering the stability of the pound at its new level and cancelling out many of the advantages which we expect to accrue, at least temporarily, from this measure.

The Chancellor of the Exchequer (Sir Stafford Cripps)

The right hon. Gentleman then disagrees with what the hon. Member for Chippenham (Mr. Eccles) said the other night.

Mr. Lyttelton

I am coming to that. I think the right hon. and learned Gentleman will recall that what my hon. Friend said was that the total level of personal incomes should not be allowed to rise, and with that we agree. There is, of course, the subsidiary question that if it is necessary to induce the transfer of workers from non-essential industries into export industries, how are you to do it within the present level of personal incomes without introducing cuts. It seems to me that the answer is very simple. It is by increased production in the export industries, either through an increased basic working week or increased overtime enabling the wage earner for increased production to take week by week a larger pay packet than if he remained in a non-essential industry, which the Chancellor no doubt will not keep very flush with materials.

Sir S. Cripps

As I understand it, what the hon. Member for Chippenham said was that the whole policy of the White Paper should be put aside in order to allow the free movement of wage levels. As I understand it, what the right hon. Gentleman is saying is that he does not say that, but that people working on piece rates should be able to earn more if they make more, or that incentive schemes should allow more earnings for more production.

Mr. Lyttelton

I do not think I could be more categorical. We do not believe that the total personal incomes could be allowed to rise without endangering the stability of the pound, but we do believe that we must retain flexibility by allowing greater freedom for greater production in the export industries. If this is not the way to do it, then the Government must tell us.

In regard to increased production, apart from transfers of men, which in my opinion will be quite inadequate, by itself, to gain the necessary volume, it can only come from a limited number of measures that are open to us. I am trying not to state opinions or arguments, but to state what seem to me to be the facts. The first source of this increased production might be the greater use of machines and further mechanisation of our industries. This is bound up with the availability of industrial power to our workpeople, which largely, through war causes, is still much below the per caput consumption which the worker in the United States can draw upon for his work. Second, we must look for improvement in management and the technique of production. These are the two methods which are referred to most often by the Chancellor and the President of the Board of Trade. It is because these concern other people, but both are longterm methods, although they are no less important for that.

The third method is a great reduction in restrictive practices. I am not trying to be controversial, but this lies chiefly at the moment on the labour side. I will give a most pedestrian reason why this is so: there has been no incentive to employers to restrict production in the sellers' market during the last four and a half years. Their preoccupations have been entirely to try and get production; it is in the artificial withholding of men's labour that restrictive practices are making a vicious attack on our economic recovery.

Fourth, there is the method of harder work—and I apologise for using such rough words—leading to higher output, or, to use the technical term, increased production per man hour. Fifth, there is the method of longer hours of work, which means overtime or an increased basic week, or both. Sixth, there is further reduced consumption at home and reduced capital investment at home. The last four points I have enumerated can all be put into operation as short-term measures, but that does not mean that long-term measures are not also important.

Why do not the Government give a lead in this matter? Here is the nub of the industrial problem. Do the Government believe that our uniquely skilled labour force should now be asked to work longer hours, either by way of overtime or an increased basic week? Do they agree that this is one of the ways by which we can escape from our industrial crisis? Anyone who thinks that I believe that the only way out is longer hours cannot have read what I have said in the past. When hours are increased the law of diminishing returns soon begins to operate. If there is a market for our exports on the scale necessary to bridge the gap, we shall have to draw from all these sources. Should not the Government say so? When the Chancellor announces that he intends to cut capital investment in this country still further, he is condemning industry to work with less capital, unless the cuts are entirely on Government account. His own action in devaluing the pound will mean that the demand for industrial capital will increase. We are a processing country; we have to buy our raw materials and turn them into manufactured goods, and if these materials go up in value we shall require more capital to handle the same volume of goods. All this is apart from the continuing need for most modern plant.

The Chancellor also proposes to levy another 5 per cent. on distributed profits. This is a step in the same direction and will make the accumulation of reserves more difficult and access to the capital market more difficult and slower. It will act as a deterrent to enterprise at a time when we need more; it violates one of the first principles of taxation, because its incidence is unfair. I can speak with all the more feeling on this because the concerns with which I am associated will hardly feel it. It will, however, fall much more heavily on the small developing business than it will on the large, established business. It is without any economic justification whatever, and is a nakedly political sop thrown to the T.U.C. I really do not think—and I speak with some experience—that the T.U.C. will regard this small and spiteful tax as having any particular relevance to the large and massive questions which they must now pass under review.

If devaluation leads to an all-round increase in wages, the temporary stimulus given to exports will be cancelled and the pound at the new rate will again come under fire. So the policy of the Government is openly to decrease, by indirect means, real wages. It has been an agreeable piece of political dialectic to represent—or misrepresent—to the people that the social services are in jeopardy from the Conservative Party. They are not in anything of the kind; they are in jeopardy from the continuing decrease in the purchasing power of money. The sooner the wage earner learns that after the action of last Sunday week he will have to help pay for the social services by cuts in his real wages, the sooner we shall get to a proper realisation of our true economic position.

At this point I should like to refer to a class of people to whom I do not think any reference has been made so far by any official spokesman on the Government Front Bench. I mean old people and pensioners and those living on small fixed incomes. The margin which they have to live on is often very slender, and now they will be cast by devaluation into poverty without hope of redress from increased work or the possibility of increased earnings. People are urged to save, yet those who live late in life on their savings, or on other people's which they may have inherited, are the class to which the Government generally and the Chancellor particularly pay no heed and towards which their monetary policy shows no mercy. Indeed, those who derive interest from the holding of Government bonds or securities are sometimes sneered at as rentiers. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) appears to find this a little amusing. I think that later, when it comes to the question of Government securities, he will find the subject less entertaining.

I now come to the cost-of-living index. I think I am right in saying that the official figure, given by the Chancellor, is that 84 per cent. is not affected by dollar purchases and 16 per cent. is. If we make an adjustment for the Canadian devaluation and assume that there will be no substantial fall in American prices, the cost-of-living index on dollar account must go up by 5 to 7 per cent. That is taking no account of the sharp rise in the figure owing to the increases in the sterling prices of many necessities which form part of the cost-of-living index. I think it disingenuous in the extreme that the Chancellor, in his broadcast and even on Tuesday, should have referred to a point or two rise in the cost-of-living index.

Sir S. Cripps

By the end of the year.

Mr. Lyttelton

Surely the Chancellor is looking a little further forward than the end of the year. We cannot proceed by a series of three months bills. We are entitled to hear from the right hon. and learned Gentleman his opinion as to how much the cost-of-living index will be by the middle of next year, when others probably will have to deal with the situation. I say most definitely that it is incorrect, misleading and untruthful—I am not referring to the right hon. and learned Gentleman—to suggest that the devaluation of currency can do other than drive up the prices of real things all over the economic range. This rise will begin with land and houses, and end up with works of art. It is inevitable.

I turn for a moment or two to some aspects of the present situation as it affects trade unions. I hope Members opposite will believe that what I am going to say comes from a sincere and deep-seated belief. During our discussions on the Iron and Steel Bill, I again and again said that it was my profound conviction that strong trade unions and nationalised industries could not exist side by side. I now go further than that and say that the more the State exercises central control over exchange rates, devaluation and planned capital investment, the more they are undermining the authority of the trade unions, already gravely threatened. They are imposing upon them changes of a drastic kind in the real value of wages or cost of living without even consultation, and this at a time when it is a commonplace that consultation is looked upon as one of the solvents of industrial difficulties.

Questions have been asked whether the Opposition are or are not in favour of the devaluation of the pound. We regret it deeply. My right hon. Friend the Member for Warwick and Leamington (Mr. Eden) defined the attitude of this party towards devaluation in words which could not be clearer. Speaking in the House on 18th July, my right hon. Friend said: Upon one issue I am in entire agreement with the Chancellor of the Exchequer. I have yet to see any convincing argument for unilateral devaluation of the pound sterling. The whole world has to find some means of escape from the present conditions of inconvertibility of currencies and artificially fixed rates of exchange which breed multiple currency valuations and every kind of complexity and artificiality."—[OFFICIAL REPORT, 18th July, 1949; Vol. 467, c. 986–7.] As part of an ordered and well-thought-out policy, as one of the steps to be taken, and as one of the last steps, it would have been another matter. We did everything we could to prevent it from happening, but it happened.

Mr. Sydney Silverman (Nelson and Colne)

Is the right hon. Gentleman saying for his party now that the Chancellor did the right or the wrong thing when he devalued the pound?

Mr. Lyttelton

All we are saying is that he could not do anything else. That is a quite different thing from saying whether he was right or wrong. He manœuvred himself into a position where he was forced to do it.

I want to come back to matters of monetary policy and make some observations. I am one of those who believe that when this Government came into power in 1945, Treasury policy should have pursued a course which was crystal clear. That does not mean that the coutse was easy to follow; it was very difficult. I merely say that the course was extremely clear. I would remind the House that when the American Loan was granted we possessed in this country what I have described as the largest currency reserves in the history of finance and that in addition, we enjoyed the respect and affection of every civilised nation. These material assets were tremendous, and they have all been dissipated. Day by day the policy of the Treasury should have been directed to building up international confidence in the value of the pound.

I confess straight away that such a policy is entirely incompatible with nationalisation, to which the Socialist Party are committed. It is not incompatible, in my opinion, with the establishment of social services on the present scale, to which all political parties were committed before the Election. It is impossible to have nationalisation; it is not impossible to have social services on a wide scale. It would have been necessary to have administered them very much more carefully and to have timed their introduction step by step with the utmost skill, but in my opinion, by now we could have had social services upon the present scale, and certainly upon the scale after the cuts in them announced by the Chancellor last Sunday week, without incurring anything like the waste and inflation that we have incurred.

This policy of building up international confidence in the pound was incompatible with either the outlook or temperament of either Chancellor of the Exchequer—from different reasons—who has managed our financial affairs since the Socialist Government came into power. The heady wine of inflation at home and large subsidies from abroad perverted the judgment of the right hon. Gentleman the Member for Bishop Auckland. At the time when a careful and patient management of our finance was necessary, he occupied his time grimacing at business and industry, and indulging in various statements about the state of our national credit, while it was business alone which would have helped him out of our difficulty. He it was who said that the credit of His Majesty's Government in modern times had never risen to such heights judged by the rate of interest under his management of our financial affairs. That is what the ancients would have called "hubris." It has been followed by unmistakable retribution. The very securities upon which he rested his claim and which are known in the City as "Dalton's 2½" have fallen by 30 points since they were issued, and it is an ironical coincidence that the internal value of this Government security should have gone down by a percentage almost exactly the same as the percentage by which the pound has fallen internationally under the management of his successor.

Nor is this all. The disastrous fall in Government securities was after a Savings Campaign in which the help of every right hon. Gentleman on this side of the House was enlisted and freely given—[HON. MEMBERS: "What about the Member for Southern Dorset (Viscount Hinchingbrooke)?"] I said right hon. Gentlemen. No doubt one day my hon. Friend will be a right hon. Gentleman, but at the present moment my statement is strictly accurate. In addition to that, there is the mismanagement and incompetence with which the convertibility crisis was handled. By the best computation there was a loss of no less than £300 million in our currencies and our reserves, almost exactly the sum which at the old rate, represents the reserves which we now hold as banker of the sterling area in one of our gravest economic crises.

Such a policy of patient and careful administration day by day in building up international confidence in the pound is necessary now in 1949 just as it was in 1945. Unfortunately this policy has now got to be followed in circumstances in which our resources have been dissipated and when our ability to work back to national self-sufficiency is so much worse owing to the grave mismanagement of our affairs. I cannot help saying that I regard it as a real tragedy, which I feel most acutely, that there is so much selfless devotion to duty, with so heavy a strain upon his physical resources, by the Chancellor of the Exchequer in a cause which must be abortive because his efforts are misdirected.

It is most noticeable that during the three days of this Debate no official spokesman that I can remember has mentioned the word "convertibility." But convertibility is the essence of all currency. That is what currency is for, and it shocks me profoundly to hear convertibility talked of as an adjunct, even as a desirable adjunct of currency. Yet there has been no mention of convertibility itself by any official spokesman. The main reason why Finance Ministers and Chancellors of the Exchequer consider devaluation and decontrol of currencies is because it is a step towards convertibility, and yet the subject is not even mentioned here. The Government regard it merely as a step, which may bolster them up and conceal their mismanagement for a few months while they are appealing to the people.

No country gains more from convertibility than our own. Under convertibility we can resume the financial leadership of the sterling area, and occupy a place just second to the United States in world finances. We can use the available balance of trade which we earn in some parts of the world to make up the deficit which we suffer in another. We have the tradition, the knowledge, the institutions, the confidence, and, above all, the geographical position to do it. Convertibility attracts overseas investments into our markets, and I mean by that both short-term overseas investments in the shape of the deposits in our banks made by foreigners, which enable us to finance the ebb and flow of commodities, and also overseas long-term investments. I do not mean only American capital, I mean private capital as distinct from governmental capital coming from all over the world.

I must inflict upon the House a view which frequently I have expressed before, that one of the economic fallacies by which the present Chancellor and Government have been taken in, is to imagine that this vast distortion in the balance of payments—running in the second quarter of this year at the rate of £628 million sterling—can be righted in terms of current trade. It cannot, and it is no good imagining that by forcing exports into the market we can through current trade right this vast disequilibrium. Only the most academic economist could find a word which is so wide of the truth in this connection as "disequilibrium."

I am second to none in telling the Chancellor that every effort which I personally can make in the organisation over which I preside, to force exports wherever I can will be made, but it is no good supposing that we can cure this disequilibrium in terms of current trade. All our financial policy is pursuing the idea that we can. The President of the Board of Trade sits in Millbank blowing bubbles. When they are dissipated in the sunlight, he changes his occupation and writes a homily to British industry or puts a working party into some British export industry, when the need for the working party is in the Board of Trade building in Millbank.

Sir S. Cripps

I never said it could be cured in that way. Does the right hon. Gentleman agree with the conclusions of the Washington Conference, as set out in the communiqué, as to how it should be cured?

Mr. Lyttelton

I am coming to that. I do not think the gap can be cured with current exports, and I can assure him that, though that view is held, no one is going to let up for one moment in the attempt. I am coming to his question in a moment.

The reason we have to attract overseas investments into this market is because in that way we can expand capital investment not only in our own country but in the Dominions and in the Colonies, where it is badly needed. It is said, I do not know with what truth, that the expansion of the gold mining industry in the Orange Free State in South Africa will be difficult to finance in London, and that some foreign capital has already made its way there. It is essential in a company to be able to get the shareholders to put up more capital when expansion has to be financed, and it is equally essential internationally to attract overseas investments in our present situation. It is an unobserved tragedy that, owing to the mismanagement of our affairs, the Chancellor at this time has to face facts which he has himself created, and that he has to reduce capital investment in our market when everybody sees that it is necessary to increase our industrial capital investment, unless the workers are still to remain short of the industrial power which they need to reach the quality of the less skilled labour force of America.

Sir S. Cripps

When the right hon. Gentleman is dealing with increasing capital investment, does he mean increasing it above the record of recent years?

Mr. Lyttelton

Yes, I do certainly. I do not think we can afford to let up on those figures. I should have thought that it was axiomatic to attract overseas investments into our market. What measures are necessary if investments are to come into our market both as deposits and as long-term investments from overseas? The first is truly a convertible pound with a rate of exchange which may be freely used. That is the objective to which we must work. I do not believe that we can ask that it be done in one step, but it would be far better to take the first step by using a floating rate with suitable safeguards, which is the phrase of my right hon. Friend the Member for Woodford (Mr. Churchill) than it would be to come to a fixed rate but what most people believe is an artificially, low fixed rate.

Suitable safeguards are, of course, the freezing of sterling balances and putting licensing disabilities on the export of capital. But as long as the United Kingdom bank has on its notepaper, "We ask you to make a deposit in this bank but we must warn you that never will you be able to take your money out"—as long as that is our idea of being the bankers of the sterling area, so long shall we find ourselves short of overseas investments in our undertakings, and so long shall we remain in this arthritic position.

The first requisite to introduce foreign capital here is a freely convertible rate of exchange. The second one is to cease making grimaces at capital and to free the markets. The Stock Exchange sell Government securities because they are too high and buy gold shares because they think they are too low. To the foreigner that appears to be the natural consequence of the Government's action. To the Minister of Health it appears as "obscene plundering." We can take these things in this country, but to the Latin mind this phrase appears to be just fantastic, and a sign that the Government are beginning to get into the last phase of paranoia.

My last point is that if we wish to attract overseas investments into this market the Government must abandon the policy of nationalisation. Only a Socialist thinks we can attract overseas investments into a market where there is a continual threat of taking over successful enterprises in which people have invested their money at the Government's own valuation. I am the first to admit that none of these three requisites can be built up under a Socialist Government or under the right hon. Gentlemen who occupy the Government Front Bench. I do not wish to be offensive. I only wish to state what I believe is the fact, which is that there is no possibility of national recovery without a political change, when the confidence of the world can be restored in the stability of the pound.

Before I conclude let me, in some pedestrian words of my own, express the same invincible faith in our power of recovery as, in his own eloquent words, my right hon. Friend the Member for Woodford described yesterday. I really believe profoundly that in financial and economic matters, if one or two matters were done aright, that the recuperative powers of the greatest trading and financial nation in the world could bring us back. The verdict of the country on this step which the Chancellor has announced will be that it is the defeat of planning. After all the protestations, the most drastic devaluation in the whole of our history has been imposed upon us. Gone are the phrases which now have a sort of nostalgic ring—"as safe as the Bank of England," "sterling qualities"—all those things have been dissipated by right hon. Gentlemen opposite.

I would conclude by saying that if the art of government consists in any measure, as I think it must, in anticipating, forestalling and dominating events, then the art of government is not detectable among His Majesty's present advisers. They anticipate nothing, they foresee nothing, they always start off on the wrong foot. Only a year or two ago a hard winter and a fortnight's snow sent a Secretary of State tumbling upstairs. Even the disastrous regime and administration of the Chancellor of the Duchy of Lancaster was not terminated by an act of the Prime Minister but by an indiscretion or by an act of Providence in a somewhat unusual guise. We say that we have no confidence in the history of this Government's financial record and we do not propose to place the slightest confidence in their future conduct of our affairs. We shall therefore support in the Lobby the Amendment which stands in our names.

4.48 p.m.

Mr. Pargiter (Spelthorne)

The right hon. Member for Aldershot (Mr. Lyttelton) told us of the necessity for building up international confidence. He then proceeded to do all he possibly could to destroy international confidence. He was pursuing the policy here which has been pursued by so many hon. and right hon. Gentlemen opposite of saying, "Britain is not a place in which anyone can have any confidence." He referred, first of all, to the disastrous effects on our economy of convertibility at the time of the American loan, and he went on further to say that one of the first steps towards the creation of international confidence would be a return to convertibility. First, convertibility is a disaster; secondly, it is desirable. That is an example of the type of thinking that we get from time to time from hon. Gentlemen opposite.

The right hon. Gentleman referred to the necessity for vast oversea investments here. From where are those investments to come? The whole sterling area is in need of capital investment at the present time. Is it to come from other parts of the sterling area or from the dollar area? Perhaps the right hon. Gentleman will indicate his reply. Certainly nothing he said gave the slightest indication how it was to be done. I am somewhat in a difficulty in dealing with this word which we have been using so much, not knowing whether to call it "revaluation" or "devaluation." I personally prefer the word "devaluation." It is an unpleasant word describing an unpleasant situation. I see no reason why we should call it "revaluation." We had better keep it "devaluation."

I tried to follow the speeches of hon. Gentlemen opposite and I found that there is a somewhat grudging admission that the present state of affairs has not been brought about by the present Government really, although there have been speeches which have done their best to tack it on to the Government. The admission is that the situation is due to a disequilibrium of trade. That is a nice word, and it really means that we bought more than we sold. It is a situation which has been going on for many years. It was evident in the interwar years. If the Government are to be acquitted of responsibility for that disequilibrium of trade, where must the responsibility lie? Surely with hon. Gentlemen opposite. It must lie with the beneficial effects of private enterprise, to which hon. Gentlemen opposite so often refer.

During the inter-war years in which the disequilibrium of trade was being created I think it is true to say that our visible imports were always greater in volume and in value than our visible exports.

Mr. Lyttelton

Then why do away with the Liverpool Cotton Exchange?

Mr. Pargiter

I am not speaking about that subject. I am dealing not with invisible exports but with visible trade. The great supporters of free enterprise were able to deal with any restrictive practices from the trade unions because, with the aid of the Government, they had crippled the trade union movement of this country. They were able to do just as they liked. It was during that time that the balance of trade was steadily getting worse.

What is in question is not the action of the Government in relation to that disequilibrium but the actions of the industrialists who were supposed to be responsible for maintaining our trade under the beneficial guidance of the Tory Party. They failed on all counts, so far as international trade was concerned. They failed in design, in production, in prices and in salesmanship. It should be quite clear where the fault arose. It was not in the nationalised industries. They are not responsible for the export trade, which still rested in the hands of the friends of hon. Gentlemen opposite. That responsibility must rest there today.

Mr. Lyttelton

I thought that we had done rather well. Is the hon. Gentleman saying that we have done very well in exports under private enterprise or is he saying that we have not done well?

Mr. Pargiter

I am saying that we have not done anywhere nearly as well as we ought to have done and that that is the responsibility of private enterprise. With all the help that the Government have given private enterprise it has not done as well as it ought to have done. That is exactly what I mean. It would be interesting to know where the Tories really stand. Are they interested in recovery or in the nation getting back on to its feet? Or, are they interested only in so much per cent. which means that recovery must be tied up with the percentage gain that they make? It is interesting to read what leaders of industry have sometimes had to say on these matters.

I have here a quotation from a gentleman who was speaking at a company meeting, only in August. He used these words [HON. MEMBERS: "Name?"] He said: We are adjured as a patriotic duty to assist the Government in the country's present unhappy state. Translated, that means that we are asked to help Socialists, and the Socialist policy. If, as I believe, that to support this Government with its policy means economic suicide then I for one will never be persuaded that suicide is a patriotic duty. What does that mean if we paraphrase it? It means: "If assisting the Government or the country at the present time means assisting the Government as well, then damn the country." The gentleman referred to is Mr. Gibson Jarvie, a well-known supporter of hon. Gentlemen opposite, who will find themselves very much in tune with his statement I have no doubt.

We have heard references to the scramble on the Stock Exchange. It was not a bad thing, according to the right hon. Member for Aldershot, for brokers and holders of Government stocks to sell them in order to buy gold shares. It was quite a good thing. Because the Government have been obliged to devalue the pound, thus increasing the value of gold, instead of this increased value going to the benefit of the State, the money has gone into private pockets. That is where it goes no matter which way we look at the matter. I have no doubt that those who benefited will make valuable contributions to the Tory Party's election fund.

Now I should like to deal with the subject of the Chancellor's exhortations. The reaction of hon. Gentlemen opposite to the increase by 5 per cent. of the Profits Tax is a real indication of their feelings. They do not like anything which is likely to interfere with their freedom to make profit at any price. I could have wished that the Chancellor had come forward with more positive proposals in regard to capital; for instance, that distributed profits should be pegged at something like the average over the past three years provided that they were not unreasonable and that beyond that there should be 100 per cent. E.P.T. That would be something that the workers would understand. They would realise that there would be no additional profit made out of their efforts. That is one of the things which are absolutely vital at the present time.

I have referred specifically to distributed profits, but hon. Gentlemen opposite are not worried very much about that question. They have a means of getting over the difficulty. If profits remain undistributed, subject to a tax of 10 per cent. and are issued afterwards as capital in the form of bonus shares, they have dodged the other part of the tax which falls on distributed profits. I believe that the Chancellor should tax bonus shares. Having regard to the uncertainties in the minds of small wage earners I believe that an adult male minimum wage should be established at a reasonable figure. I believe that capital profits should be taxed. If it is argued that taxation of capital profits cannot be proceeded with because there is the question of capital losses, at least the Government could stop a good deal of the movement that there is today in the share markets. I believe that would be beneficial to the country as a whole.

I believe that there is no real alternative to the policy put forward by the Chancellor. Certainly no-one on the Opposition Benches has been able to put anything forward, and not very much of what they have said has contributed to the means by which we shall get out of our present troubles. I can only express the hope that the Chancellor will give a more positive lead so far as the workers are concerned in regard to free enterprise and that profits will be more and more controlled in order that the workers may enjoy confidence. Provided that they were certain that the benefit would not lead to additional profits the workers would very willingly give for nothing for the benefit of the State an extra hour or more a week, but they will not do it if they think it will increase profits.

These are the irreconcilable things with which we have to deal. I hope that as a result of what has now happened, we shall—it will not be without difficulty—win back a place in the international world which we have not held for over 25 years, a place lost through the inefficiency of private enterprise. It will depend upon the workers and not the owners of capital in the last analysis whether we do or not and I believe there will be sufficient faith in this party and this Government to achieve it.

5.2 p.m.

Sir Hugh O'Neill (Antrim)

I do not intend to follow the hon. Member for Spelthorne (Mr. Pargiter) into the detail of his argument, but I think that a certain amount of what he said perhaps might not find very much favour among some of his leaders on the Front Bench.

I am one of those who have always thought that devaluation would come sooner or later. I remember saying so in a speech in my constituency early in 1948, and I found that I was taken to task by several newspapers for having said so. Devaluation has come after every major war, and I felt sure that it was bound to come at some time. No British Government ever likes devaluing, but in this case, as in 1931, it has been forced on the Government by the compelling influence of economic facts, some of them due in large measure to the present Government's own policies. In this kind of thing and in the sphere of Government and politics, economics always beat politics.

Mr. Norman Smith (Nottingham. South)

They will in Ireland.

Sir H. O'Neill

The circumstances now are very different from what they were in 1931. Then we had been going through a period of deflation and unemployment. Now we have some inflation and full employment. Consequently we have not now got the reserve of labour we then had to increase our production of exports, and that will prove to be a serious matter. Devaluation will obviously help our exports to dollar countries, mainly North America, provided that costs can be held. If they cannot, the advantages of devaluation will prove temporary and illusory, as the Chancellor of the Exchequer so clearly stated two days ago. He told us that unless we could hold costs and prevent increases in costs, the result would be mass unemployment. I believe that that expression, "mass unemployment," is the first expression of so serious a kind which I have heard from any Member of the Government since this Government came into office. We have never before been told that if we cannot keep down the costs of our production, it will lead to mass unemployment.

I believe that the difficulty will be to convince our people that this is true. In spite of the many economic crises which we have been through in the last few years since the war, our industries generally have not yet really felt the pinch. I was talking to a man about a year ago when we were going through one of the very many recent crises and I was saying to him how difficult the situation was and wondering what might happen and he replied, "Well, if this is a crisis I hope it will go on for another 10 years." It will be difficult to convince our people that we really are in a serious crisis unless and until the depression actually comes.

It is obvious that we must make the greatest possible effort to increase our exports to dollar countries, particularly North America. Mr. Hoffman has said that our goods in the American market amount to only one-tenth of one per cent. of the total American production and that if we could raise that to only one per cent. we should solve our problems. Put that way, it sounds an easy proposition, but I am afraid that from our end it will be a gigantic task.

The part of the country which I represent is a great exporting area. Exports are in the blood of the people in the North of Ireland. Take the Ulster linen trade. It has a long tradition of entry into the American market. It has American houses and American selling organisations and it has always maintained the closest ties with the American market. The owners of old-established firms are accustomed to send their sons to the United States in order to study selling conditions there, and curiously enough, or perhaps naturally enough, that seems fairly often to result in their marrying American women. I can assure His Majesty's Government that they can rely on the linen trade and other exporting industries in Ulster to do their utmost to help to bridge this dollar gap.

However, in my view we shall never bridge this gap with manufactured goods. We must try to export more raw materials and encourage invisible exports to the utmost. Take coal. I am afraid that we are not exporting much coal at present, but in 1913 we exported 94 million tons of coal.

Mr. John Beattie (Belfast, West)

How much is exported from Northern Ireland?

Sir H. O'Neill

If we could reach a reasonable export figure today, it might not all go direct to the dollar areas but if it went to the sterling area, it would help other countries to earn more dollars.

Mr. John Lewis (Bolton)

The right hon. Gentleman mentioned the export of coal before the first world war, but was there not a steady decline, so that in 1938 we were only exporting about 38 million tons?

Sir H. O'Neill

Certainly. My point was that there was a time, admittedly 35 years ago, when we were exporting a large amount of coal from this country and that today we are exporting very little.

Mr. Rankin (Glasgow, Tradeston)

How much are we exporting now? When the right hon. Gentleman says we are exporting only very little he ought to say how much that "very little" is. Is it not 20 million tons?

Sir H. O'Neill

I have not the exact figure but I believe I should not be far wrong in saying that the export of coal in 1948 was something under 20 million tons.

Mr. Platts-Mills (Finsbury)

Would the right hon. Gentleman agree to remove the £15 million yearly incubus on the coal industry and therefore enable us to sell more coal abroad, because it will then be available at a lower price?

Sir H. O'Neill

I cannot quite follow the meaning of the hon. Member for Finsbury (Mr. Platts-Mills) but I am entitled to mention a fact which is well known, that today we are not exporting anything like the amount of coal we used to export. After all, coal plays a tremendous part in the costs of every industry. The costs of coal today is simply prohibitive, and unless we can reduce it, we shall have a commodity which will raise costs all round. The coal industry is now under the control of the Government and it is up to the Government to see, by instilling more discipline into the miners, by the use of more modern machinery or whatever it may be, that coal production increases and costs fall, for that will be of very great benefit to the country.

Take rubber, a raw material from the Colonial Empire. Rubber is a marvellous dollar producer, one of the best dollar producers we have, but unlike coal, it is far too cheap and we do not get enough dollars for it. It is about the only commodity whose price has not risen since the war, and many rubber estates are very nearly in a state of bankruptcy. Every possible means ought to be devised and taken to help the natural rubber industry. Is enough research being carried out? Is there enough propaganda to advertise possible new uses for rubber, of which I cannot help thinking there must be many, and the advantages of natural rubber over synthetic rubber? What about more attention to selling methods? As a dollar earner the rubber industry is so important that I would not even rule out Government subsidies if necessary. Nothing should be overlooked in our efforts to bring greater prosperity and increased prices to this great natural commodity so that we may earn more dollars from it.

As regards invisible exports, I know that the Chancellor of the Exchequer appreciates the work which the great insurance institution of Lloyds is doing and always has done in the United States. It is a very large dollar earner. In the last Budget he was able to give the Lloyds syndicates some slight measure of taxation relief which I hope will help them to earn even more dollars. Shipping, too, should be encouraged in every possible way.

As regards the tourist trade—an invisible export—devaluation surely must mean far cheaper travel for Americans in this country. I hope that every effort will be made to encourage and promote an increase in the numbers of tourists from North America who will spend dollars in travelling to this country and in that way help in a small degree—although, with properly developed schemes, this help might be considerable—in bridging the dollar gap.

I come now to the greatest of all dollar earners: gold, particularly gold from our Colonial Empire. That, of course, means mainly West Africa. Devaluation is of great help to gold producers but I cannot help feeling that the incentive to greater gold production is not being particularly encouraged by the increased tax on distributed profits which the Chancellor of the Exchequer announced yesterday. Many shareholders in West African gold mines have had no dividends for years. Now, when at last devaluation will help them, part of what they may now have in the form of dividends will be taken from them by a higher Profits Tax. I hope that any schemes—and I believe there were some—which were being considered before devaluation for helping the West African gold industry, either by means of some relief in taxes or in other ways, will not be abandoned simply because of devaluation.

Almost the greatest necessity of all to bring about the higher production required is, as the Chancellor himself admitted, economy in Government expenditure; and if it is possible to make any economies they should, in my view, be devoted to a reduction of taxation. Our taxation is now so high that there is no incentive for enterprise and initiative and a feeling of general frustration is practically universal. Above all, we must work together with the Commonwealth and Empire as one unit. This country alone is losing the commanding position it once held but the group of British nations and Colonies, united with the Mother country, is a mighty force with a potential economic strength which, if properly co-ordinated and developed, will eventually enable us to emerge from the clouds which now surround us into a new sunshine of greater prosperity and progress.

5.19 p.m.

Mr. S. N. Evans (Wednesbury)

I applaud the confident note upon which the right hon. Member for Antrim (Sir H. O'Neill) concluded. He made a very interesting speech and touched upon a number of topics, including the production of gold in the sterling area. I wish that he would induce his American friends to pay a fair price for gold, because whereas the production costs have doubled since 1940, the dollar price has remained constant. As a consequence, many producers in the sterling area have had to go out of business and the total production of gold has dropped from about 40 million fine oz. to under 30 million. The right hon. Member will be helping to solve the problem of the dollar gap if he will also induce his American friends to repeal the law which compels American tyre manufacturers to embody a certain amount of synthetic rubber in every motor tyre which they make.

It is not much use going now into the pros and cons of devaluation. The deed has been done. For myself, I would not have devalued. That we have been bludgeoned into devaluation there can be no doubt. Ever since the Anglo-Argentine Trading and Financial Agreement there has been a vicious and sustained attack on the pound which has culminated in a widening of the dollar gap and in devaluation. Up to the present, the quid pro quo for this devaluation escapes me. The Washington communiqué, of course, is rich in potentialities. Whether its terms are implemented one way or another is a matter of great importance. For instance, I would ask our representative on the Consultative Committee which is to be set up to study the terms of the communiqué to have some regard to the matters to which I am about to refer.

The first question is that of stockpiling. I agree that our short-term need is dollars. Our long-term strategy must be to emancipate ourselves from the need for dollars. Stock-piling is something which could help us in our short-term need for dollars, but I want to ask this question. Would these stock-piles of tin and rubber be frozen for, say, five years, or would they be held over our heads like the sword of Damocles, waiting to drop if we became naughty—if, for instance, we concluded a bilateral agreement with China? We should like an assurance that stock-piles will be frozen and not be held over the market like a whip. I ask that question because I do not think anyone can doubt that it was the buyers' strike in traditional sterling area primary product exports, that widened the dollar gap and forced us to devalue. I do not want to see any recurrence of this, because as between friends and allies it was a little unseemly.

The second question I should like our representative on the Consultative Committee to keep in mind is that of overseas investments. I accept that if there is to be something like equilibrium in world financial and economic affairs it can only be achieved in one of two ways: either there must be a redistribution of world trade at the expense of the United States, or there must be a rapid and substantial increase in the living standards of the 1,000 million people East of Suez. I am very anxious that the Americans should come and fertilise these backward parts of the world.

There can be no doubt of the latent wealth of Africa, but we need to be very careful about capital investment in that Continent. I set great store by Africa. In collaboration with the native populations and side by side with a progressive improvement in their standards of life we can, I think, find a solution to many of our problems in Africa. I am not prepared, therefore, to barter the title deeds of this rich Imperial heritage for a dish of dried eggs which might, in fact, prove to be California syrup of figs.

The question to be borne in mind by the British representative on the Committee is an important one: Are the Americans coming in to build the roads, bridges and railways, or have we to do that and leave them to come in later to exploit the mineral resources thus opened up? If colonial development in Africa is to be helped by the aid of American dollar loans, must the British Government guarantee those loans? If so, it must be carefully remembered that what we need is invisible exports and not invisible imports.

Next comes the question of sterling balances, a subject on which I am likely to be controversial. As the House knows, these balances are in respect of goods and services rendered to this country by sterling countries during the war. They amount to something like £3,500 million. They are a not unimportant factor in cementing together the sterling area in what is a very difficult—even if, we hope, transitional—period. I regard these sterling balances as a strategic employment reserve in the event of a serious slump striking the United States and crossing the Atlantic, as it would almost inevitably do. I should like, therefore, to see the present practice of paying out a certain amount each year continued. Our American friends might think in terms of this big sum of money being a strategic employment reserve for the United States. But we do not want them to pay our debts; we will take care of that ourselves.

Now, I come to petroleum. The Washington communiqué refers to petroleum in somewhat ambiguous terms. I take a fairly optimistic view of the future of this country, the Commonwealth and the sterling area, very largely because of the colonial developments now taking place and the strenuous efforts which are being made to insulate ourselves against the need for dollars. I do not blame the Government that we do not hear any optimistic forecasts from them. I cannot see the bend in the road before 1952, but I think I can see it in that year.

One of the reasons which give me confidence is the tremendous development now being undertaken in sterling area oil. We are at present engaged in doubling sterling area output from 54 million tons to 108 million tons per annum. We are building six new refineries in this country and into this one industry alone we are pouring £250 million worth of capital and 3,500,000 tons of steel in four years. As a result of this gigantic effort there is the possibility it seems to me that by 1952 we shall reach equilibrium in the matter of dollar-sterling oil. There will always be oil passing from the sterling area to the dollar area and from the dollar area to the sterling area, for geographical and economic reasons, but I think that by 1952, instead of petroleum products costing us something like $500 million a year, as it now will be after devaluation, there is a reasonable prospect of our being self-sufficing in the sterling area.

I would therefore regard as absolutely disastrous and catastrophic any cut back in capital investment in this industry. I would regard with dismay any cut back of capital investment that tended to retard our entry into the happy position, which we covet and are chasing, of freedom from what in the light of this devaluation I can only describe as dollar thraldom. I hope a special point will be made of the necessity for maintaining the speed at which these petroleum developments are going on in this country and throughout the sterling area.

I now come to shipping. There can be no doubt that both at building ships economically and sailing them, we can lick the pants off the Americans. This is one industry in which we can give them some start. I want to know whether we are going to be allowed to earn the rewards which our superior competitive force in this field entitles us to, or are the American Government to go on with their policy of subsidies? In particular, are they to go on with their project for building a 35,000-ton ocean greyhound to compete with the "Queen Elizabeth" and "Queen Mary"? That ship, we are told, is to cost £17,500,000 and the United States Government are to find £10,500,000. Even more important, they have promised to subsidise operation. If the richest country in the world is to act in this manner, how are poorer countries to earn dollars, which they must have to purchase dollar commodities? This is a fair question, which I hope will be put by our British representative on the Consultative Committee. If these practices are to continue, what becomes of laissez faire and the mechanism of the market, of which we hear so much?

I think we have been bounced off the $4 rate and I do not think it is much good now pursuing that. The right hon. Member for Aldershot (Mr. Lyttelton), if I may say so without patronage, put up a most gallant display, after what I suppose was one of the greatest Parliamentary performances this House has ever seen—I thought it a really magnificent effort by the Minister of Health. Of course the tone was set by the right hon. Member for Woodford (Mr. Churchill) who made of the Debate a political dog-fight, and I am bound to say that Ebbw Vale seemed to win about five-nought.

The right hon. Member for Aldershot spoke about the desirability of multilateral trade and free convertibility. As an abstract theory, I think we are all in favour of that, but the fact is that America's frequently expressed desire for multilateral trade and free convertibility is made quite impracticable by her own practices. She protects her own basic industries, such as wheat, cotton and tobacco and says the prices of those commodities must not go below so much. But she will not allow other nations to do the same in regard to their primary products. I do not think "Heads I win, tails you lose" is a good foundation for world prosperity. Our American friends will have to scratch their heads a bit if they are going to get multilateral trade.

I recognise that it is very hard to divorce politics from economics today and I have met no objection to the Americans being financial headmaster, as long as the curriculum is right and the master observes the precepts which he lays down for the scholars. That is precisely what he will not do. What worries me is that all the time, under American pressure we seem to be trying to get back to those spacious days of multi-lateral trade and free convertibility which, in my view, ended on 4th August, 1914. If America wants to convert a £6,500,000 export surplus into an import surplus, multilateral trade and free convertibility will work, but it will not work when based on the world's scarcest currency without a continuing succession of blood transfusions, call them Lend-Lease U.N.R.R.A., Marshall Aid, American Loan, or what have you.

It is really not sufficient for us to criticise American practices of which we disapprove. We in this country, and we on these benches, have to re-examine our own efforts at this very critical period in the nation's history. I would say to my friends that this Labour movement could perish of diseases contracted while celebrating victories they have yet to achieve and that would be a most invidious end. I think we Labour Members of Parliament must be prepared to ask ourselves and others some very searching and difficult questions.

I listened with great interest to my hon. Friend the Member for Oldham (Mr. Fairhurst) last night. He was talking of conditions in the cotton industry between the two wars. I spent a large part of the Recess visiting industrial installations in this country, mines, cotton mills, foundries, commercial vehicle building establishments and engineering shops generally. I was in Oldham for some time and talked there to cotton operatives and managers just as I had previously been talking to miners. I spent three days with miners, but we took a couple of days off to watch the Ryder Cup golf match.

I have been in industry for 30 years. I tried to get a picture of what the country was thinking and how productivity was developing. There are odd spots where it is very good and odd spots where it is very bad. In between, there seems a pretty dull mediocrity. The Minister of Health spoke with great pride of the overall productive effort of our people in the last four and a half years and I thoroughly endorse what he said. But, of course, our need is greater today even than the results achieved by that gigantic effort. I therefore think it necessary for us to examine this and I shall proceed to do so with great objectivity.

We shall really have to get down to the question of coal. Another 30 million tons of coal would solve a very large part of this dollar problem, because at present Canada is importing huge quantities of American coal which we could supply just as easily if we could get productivity to the figure at which it ought to be. I know this industry very well. For 30 years I have been visiting the Northumberland and Durham coalfields and my nearest and dearest political associates are from the coalfields of South Wales.

I know the history of the industry and the poison that has been put down and how difficult it is to eradicate it, but, having regard to the fact that this Government have honoured every pledge they made to the miners, we might be getting a rather better return from some elements than we are getting at the moment. The majority of the men are working like horses, but there is a minority who are acting in an anti-social manner and I think that at some time or other the mineworkers' organisation will have to ask itself this question, "If it is right and moral to pay a man six days' money for five days' work, is it not equally right and equally moral at a time like the present to pay three days' pay for four days' work?" because there can be no doubt that voluntary absenteeism is the gravest of our problems in the coalfield.

Mr. George Wigg (Dudley)

Before my hon. Friend goes on to attack the miners—

Mr. Evans

I am not attacking them.

Mr. Wigg

—he ought to get his facts right. The manpower employed in the mining industry has sunk very much in the last few months and the reason why we cannot get the coal is not because of miners slacking, but because the Minister of Fuel and Power has lowered the manpower ceiling.

Mr. Platts-Mills

Further to that question, would the hon. Member allow me—

Mr. Deputy-Speaker (Mr. Bowles)

The speech has gone on for a long time and interruptions tend to lengthen it.

Mr. Platts-Mills

Since you allowed one hon. Member to put a question, would you not allow me to put a question? Would the hon. Member for Wednesbury (Mr. S. N. Evans) concede as was conceded at the summer school in Cambridge this year, organised by the Coal Board, that the desperate fear of what the Coal Board are doing is the real flaw in the industry?

Mr. Evans

I do not think that is true. The miners now feel they have the best employers they have ever had. I talked to men in the industry—my best friends are miners now at the coal face—and they say that, having regard to the mechanism that has been poured into the mines since 1945, to boast of regaining prewar output per man-shift is like boasting that we can now travel from London to York in the time taken by the late Dick Turpin. I know some men are working like horses, but something will have to be done about this anti-social minority who are consistently practising absenteeism, which is having a great effect on others. These antisocial elements tend to become the common denominator because the good man gets a bit "browned off" of giving of his best when he sees other people not doing half as much and getting away with it.

We have had today a magnificent account of the Government's performance. I think that no Government in history have ever faced such a plethora of problems as this one, certainly in peace time. I do not think that any Government in British history has ever faced up to such problems as successfully. I think that this is far and away the best Government since that of 1906 and I, for one, am very glad indeed to be one of their back benchers.

5.46 p.m.

Mr. Lipson (Cheltenham)

I hope that my hon. Friend the Member for Wednesbury (Mr. S. N. Evans) will forgive me if I do not follow his line of argument as I promised to make a brief speech and I wish to take a somewhat different line. I have to confess that I have found this three days' Debate somewhat depressing. Like probably every other hon. Member, I agreed that it was right that Parliament should be summoned in view of the economic situation. I hoped that we should meet as a Council of State, but unfortunately I cannot help feeling that many of the speeches which have been made in this Debate, so far from helping the country out of its difficulties, which is the thing that really matters, are likely to do us harm both in this country and abroad.

This country is quite obviously facing the most serious economic crisis in its history. It is not an occasion which calls for panic, for hysteria or recriminations. We require resolution, effort and confidence, and above all national unity. Unfortunately, it has been quite clear from speeches on both sides of the House that there is very little national unity prevalent at the moment. It may be that one reason for that is the approach of a General Election, but whatever it may be it is a matter for great regret. I cannot help feeling how differently we approached the crisis of nine years ago, in 1940. Then we were a united people, we were determined, we were confident. We all love our country and want to help her out of her economic troubles. I believe that if we could recall to everybody in this country the spirit of 1940 it would give us the greatest hope of a successful issue from our present problems and difficulties.

This country has had a very hard deal since the war. I am well aware of the generous assistance—and I appreciate it—which this country has received from the United States of America. But I am also aware that if this country had not stood firm in 1940, if we had then surrendered, Hitler would have won the war and the U.S.A. today would probably have been sorry for herself and not in a position to help anyone. I hope that the people of the United States will reflect on the contribution which we made in 1940 and also bear in mind that this crisis is not only a British economic crisis, or even a European crisis, but is also an American crisis.

Our recovery since the war has been hampered by two factors in particular which we did not anticipate would occur—the international situation and the fact that the world has been divided between East and West. This has had a most important effect upon our expenditure and upon our economic recovery. Who would have anticipated in 1945 that we should be called upon in this year to spend upon defence about £800 million? I am not one of those who would say that it is wrong to do so, because I remember what happened in the interwar years and what a price we had to pay in the end for our military unpreparedness. I am also aware that although we are spending over £2 million a day on defence, we should, if there should be war, which God forbid—and the purpose of our expenditure on defence is to try to prevent war from occurring—probably be spending nearer £20 million a day, quite apart from the tragedies which the war would bring.

It is also quite clear that the lack of co-operation between East and West has prevented the free flow of trade which alone could have established economic recovery throughout the world. These circumstances should therefore be taken into consideration in trying to come to a fair judgment upon our present economic position. There is one other matter also. If it were not for the unsettled state of the world today and the lack of security, it would be possible to take advantage of the discovery of nuclear energy not to manufacture atomic bombs for military purposes, but to enable the world to recover some of the wealth which has been destroyed in two world wars. Also, so much more of our manpower would be available for productive purposes.

Given these circumstances, I believe that the devaluation of the pound was bound to happen. In my view, what- ever Government had been in power from the end of the war would probably have had to devalue the pound in the light of the circumstances to which I have drawn attention. I do not deny that this Government have made some mistakes, and I do not suppose that they would deny that themselves, but what Government which had been in power would not have also made mistakes? Where I differ from the Government's critics is that, while I believe that these mistakes may have been a contributory cause of our economic troubles, I am not convinced that they are a primary one, but rather that two wars in one generation with the circumstances that have followed those two wars are really the cause.

The Government have been blamed because their expenditure is too high. In theory we all agree that it would be a good thing if the Government were to reduce their expenditure, and of course we are all united in agreeing that an end must be put to anything in the nature of waste. But when we get away from theory and come to practice, it is extremely difficult to find agreement as to the form a cut in expenditure should take. After all, it must be a big cut if it is to make any substantial contribution, and big cuts depend not on administrative changes, but on changes of policy.

Some hon. Members opposite say cuts should come in defence. For reasons I have indicated, I am not prepared to follow them there. I believe that if hon. Members on this side were—I will not say "honest"—if they were to speak openly and frankly—[Laughter.] I do not want to be controversial or to be unfair to them, but I believe probably they would not disagree with me—let me put it that way—when I say that their chief cuts would come in food subsidies—[HON. MEMBERS: "No."] Well, if not, I have listened to most of the Debate and I have been unable yet to find any concrete proposals which would effect substantial reductions in expenditure.

People have the right to have some more definite guidance on this matter from Members of the Opposition. I have formed that conclusion, and if I am wrong it will be open to any hon. Member speaking after me to correct me, and I hope he will give some kind of authoritative reply. Personally, I should be opposed to that. I do not believe it would be practical politics at this time. There is bound to be an increase in the cost of living as a result of devaluation. The Chancellor has asked that wages should be frozen, and if at that time we increase the cost of living still further by a substantial cut in the subsidies, then the difficulties would be insuperable and people would not accept it. We cannot expect too much of them.

Mr. Wigg

If the hon. Member wishes for any suggestion or to know what the Conservative Party would cut, may I quote from a speech of the hon. Member for Stone (Mr. H. Fraser) who said that there should be a cut of wasteful Government expenditure with special emphasis on the social services. That was reported in the "Staffordshire Sentinel" last week.

Mr. Hugh Fraser (Stone)

If the hon. Member for Dudley (Mr. Wigg) is going to quote from my valuable speeches, may I say that it is perfectly true that there are cuts which could be made, and that they are extremely accurate speeches.

Mr. Lipson

I do not wish to pursue that very controversial topic. I do not think it is too much to ask of the American people that they should take the comparatively small increase of British exports for which we are asking. I agree that we are fortunate in this matter in having the powerful support of the President himself and his advisers. It cannot be to American interests that this country and other sterling countries should be placed in a position where they are unable to buy what America wants to sell. If our entry into American markets does cause concern to some people who find competition from our products, there is on the other hand the point that if we were unable to buy American goods, American production would suffer still further. If those who want to sell cotton, or tobacco, or all the other things that this country is at present buying from America, were unable to find a market here, they would bring pressure to bear on their Government to see that it was made more possible for us to do so.

If, after all, this experiment fails; if we are unable, in spite of the sacrifices we are making, to bridge the dollar gap, I am very worried about the consequent effect on our relationship with America. America must rely upon this country and the rest of Western Europe for political support and she would get very little help from a country which was financially bankrupt. Therefore I am confident that, in spite of the difficulties—and I do not want to underestimate them—the good sense of the American people will enable them to realise that it is not only in our interests that we should increase our sales in America, but also in theirs.

I am quite sure that the right thing was for the Chancellor to devalue the pound in view of the circumstances, and we can only hope and pray that he will succeed. I, personally, am very sorry 'that the Government has thought fit to put down a Motion in connection with this Debate. I would have preferred it if this matter had been discussed on an Adjournment Motion which would not have involved a Division. It would have been very much better to be able to present a more united front to the world at this time, and if a Motion had not been put down, I think that the speeches of hon. Members might have been less of a party character.

I recognise that since the Government have put down a Motion it was inevitable that the Opposition should put down an Amendment. I have to ask myself what action I shall take when the Division takes place tonight. I have to decide that for myself, because I have no Whip to whom I can appeal for guidance. I have given this matter careful thought and in my judgment, and if I may say so follow-Ng the dictates of my conscience, I believe that at this time of crisis the right thing is to do what the Government ask and give them full co-operation; and so when the Division takes place I shall vote with the Government.

6.2 p.m.

Mr. Wyatt (Birmingham, Aston)

What I have to say will bear two similarities to the remarks of the hon. Member for Cheltenham (Mr. Lipson). I also have entered into a bilateral agreement with the Chair to restrict the length of my speech, although I am not sure that I secured such favourable terms as did the hon. Member for Cheltenham. I also believe with him that this is not an occasion for panic.

After having listened to the speeches of hon. Members on both sides of the House during the last two days, I think there has been far too much pessimism. I do not think we have reached the nadir of our hopes at all. In fact, over the last four years it seems to me that the Government have been consistently and successfully pursuing a policy of switching our imports from the dollar area, as the President of the Board of Trade pointed out yesterday, with ample figures to confirm it. That is a process which takes a considerable time but it is remarkable that by this time we have already got so far in that way. It was unfortunate that devaluation had to come before the process was completed, but I believe that devaluation will assist that process now that it has come, because it will make our imports from the dollar area even more unattractive.

It is on one section of our imports to the dollar area that I wish to base my remarks, and that is our imports from Canada. I believe the time has come when we have to stop being squeamish about Canada. In fact, to a very large extent this country is carrying the dollar deficit of Canada, and that dollar deficit is reflected in our own internal crises from time to time. A short examination of the figures shows that whereas the Canadian dollar deficit with the United States now runs at around $500 million a year, so also does our deficit with Canada. In fact, Canada merely passes on her dollar deficit with the United States to the United Kingdom.

If Canada had been, say, the Argentine; if Canada had not been a Member of the British Empire and Commonwealth, when we had to come to negotiate wheat contracts and contracts for nonferrous metals we would have said what we have in fact had to say to the Argentine, which was, "You can either sell us your goods, your meat, for sterling or you need not sell us them at all. You can try to get another market." It may be that when we first made the Canadian wheat contract, this was not possible. Certainly the wheat which Canada then had available would have been bought in many other parts of the world, but ever since last June the wheat markets of the world have been entirely different.

In fact today there is no country to which Canada could sell her great surplus of wheat other than this one. It is fantastic that we should have to pay for that wheat in dollars in order to indulge Canada in a huge and mounting dollar deficit with the United States. The whole time our economic relationship with Canada worsens, because, whereas before the war we bought from Canada roughly about twice as much as we sold to her, today we buy from Canada three times as much as we sell to her. I believe that one very considerable contribution which could be made by this Government towards solving our dollar problem in the long run, is to say to the Canadians that by next year when the present wheat contract comes to an end they must face the fact that, if not all, then a very large part of this wheat will be paid for in sterling—in other words, paid for in goods from this country.

We have had to bear all the sacrifices in this country, since the end of the war, of our joint dollar problem with the United States. We have borne proportionately far more of the sacrifice than Canada. It may be that being a member of the Commonwealth carries certain advantages, but it also carries certain obligations if it is to mean anything. I hope that hon. Members opposite will support me in this matter because they are often very fond of pointing out the obligations that India and Pakistan, say, have towards the Commonwealth. I think that Canada has even as great an obligation towards the Commonwealth to bear some of the sacrifices herself.

I cannot believe, particularly now that devaluation has taken place, that it would be so great a pain and a burden to the Canadian people to switch that proportion of her imports from the United States to this country because our prices by this time must be fully competitive. There could really be no hardship at all. It merely requires a bit of governmental re-organisation and administration. If we could do that with wheat, I believe that we should have made a very great stride towards solving our ultimate dollar crisis. In one stroke we would diminish our dollar deficit by $300 million a year. We could diminish it a great deal more if we did the same with non-ferrous metals.

Apart from that reference to Canada, the only other remark I want to make is that I believe the great significance of the Washington Conference was that for the first time the United States fully realised that it would be impossible to continue to export the goods which she wants to export to us, if she does not allow us to export to her. I believe that this time there was a great deal more depth and sincerity in her statement that she is going to review her tariff structure than ever there was before, because she sees that it will be impossible to continue this unequal struggle any longer. It is of great importance that the Chancellor secured from them their agreement to do that, after they knew that we intended to devalue.

A very large part of our failure to bridge the dollar gap with the United States has been due to the deficiencies and failings of British private enterprise. I do not say that without any evidence. I should like to quote to the House from a very remarkable letter written by Mr. J. O. Hambro to the "Manchester Guardian" in August and before devaluation. Writing on the problems of selling to the United States, he said: There is no doubt that the trend of informed opinion in the United States is towards an increase in imports. In fact, the next ten years may see these jump to as high as 10 per cent. of total retail sales. Not only is the American market 'wide open' to the importer who knows how to exploit it, but the Americans know they must open it still wider if they are to continue selling the same volume of their own goods abroad. One of the answers to the problem is know how' in sales technique. Even today far too few of our manufacturers have any real idea of the potentials of the different parts of the American market, each of which has its own peculiar tastes and demands, and needs its own individual sales method. He then lists the difficulties in selling to America. The two chief ones are: Inefficient merchandising and sales methods; and faulty styling and design. This is written by a man who is the head of a vast new British trading corporation attempting to promote our exports in the United States. It is not written by some Socialist planner but by a man who is up to his ears in business and finance all the time and who presumably has some awareness of "the realities of the situation."

I consider that devaluation has taken away any further remaining excuse for lack of patriotism on the part of private enterprise manufacturers in their failure to go into a market which admittedly is difficult and which admittedly requires effort. I believe that it is not impossible to make a sufficient entry into the American market even to double or treble our exports to the United States as the President of the Board of Trade said yesterday. With that factor, combined with what I hope will be the possibility of the Government making a stern approach to Canada to stop putting her dollar deficit on our table and to put some of it on her own table, we may well get through by 1952 to a time at which we are only importing from the dollar area roughly that amount in value which we are selling back to it.

6.12 p.m.

Air-Commodore Harvey (Macclesfield)

I hope that the hon. Member for Aston (Mr. Wyatt) will forgive me if I do not follow his speech. I, too, am limited for time. This afternoon we listened to a speech by the Minister of Health and no doubt hon. Gentlemen opposite were considerably cheered. I only hope that they feel just as cheerful when they next make speeches in their constituencies, because not one constructive point resulted from the speech to which I have referred. The only exception is that he did refer to the situation as a "crisis." He is the only Minister I have heard in this three-day Debate who has struck that note.

The right hon. Gentleman said that in 1938 Britain as a nation was at the bottom of the league. It did not take very long—until 1940—for Britain to be at the top of the league and hold the enemy at bay single-handed. If I may say so, it was a most remarkable recovery. It little becomes the Minister of Health, who was crying out for a second front in 1942 and criticising the leadership of the country when we were in dire straits, to speak like that. I well remember Lord Mountbatten planning a raid on a piece of territory occupied by the enemy. I was to be a member and when I met the brigadier and the naval captain concerned I had never before seen such gloomy people. That was brought about by all the propaganda for a second front two or three years before we were ready. I think that the Minister of Health was the last person to take this line—

Mr. McKinlay (Dumbartonshire)

On a point of Order. Is it right that an hon. Member should make a statement in this House which is absolutely contrary to the facts?

Mr. Deputy-Speaker (Mr. Bowles)

A main point about having Debates in this House is that statements can be contradicted if they are not true.

Air-Commodore Harvey

The facts I have given are quite true. [HON. MEMBERS: "No."] Hon. Members had bettor go to Lord Mountbatten and ask all about the operation, and then they will be told the outline as I have given it.

When the Chancellor of the Exchequer took over from his predecessor the country as a whole felt extremely sorry for him. He had a tremendous task before him. Matters could not have been worse. We had had complete mismanagement by his predecessor at the Treasury. The Chancellor has forfeited the opinion of a large proportion of the population and of Members on this side of the House, certainly myself. When he came back from the United States I felt that he was far too optimistic in his views. I thought that a man of his integrity would have given us a true picture of what he really felt himself. There was little or no achievement in New York, and we have not been told what achievement, if any, there was.

Sir S. Cripps

Is the hon. and gallant Member referring to Washington? There was no meeting in New York.

Air-Commodore Harvey

I am sorry, I meant Washington. People do not realise what the situation is, and it is the duty of all of us to approach this problem in a constructive way. During the Recess I went round mills and works in my constituency in an endeavour, for what it was worth, to inspire the people concerned to improve their businesses and also to give advice about foreign orders from countries in which I have myself travelled. As I say, the people of the country do not realise what we are up against. They are firmly of the opinion that full employment is due to the Socialist Party. [HON. MEMBERS: "Hear, hear."] I thought that would fetch a cheer, but if hon. Members opposite would only read the speeches of their own Ministers made 18 months or two years ago, they would see that they admitted that without Marshall aid, there would have been two or three million unemployed in this country. Perhaps hon. Members will now cheer.

One thing we have not been told is what are our gold reserves today. I hope that when the Prime Minister winds up the Debate tonight he will give that information to the House and to the country. After all, the social services of which we hear so much can only be maintained if we earn them. All the talk in this House is useless unless we can get everybody to realise that what is taken out must first be put in. Managements down to the lowest grade of workers must realise that. Like hon. Members opposite I think that the exhibition in Throgmorton Street was a most undignified affair, but we are told that the Government were themselves dealing in and making money out of gold shares at the same time.

Ever since this Government have been in power, their White Papers on the economic situation of the country have been wrong. They have never been able to foresee the situation for even three or four months ahead. I believe that devaluation is going to help us for a matter of a few months, but not for much longer. What is going to happen then? We cannot go on devaluing the pound, and that is why I believe the Government have under-estimated the whole situation, particularly in regard to the increased cost of living which is bound to come.

In my own constituency of Macclesfield, 80 per cent. of the industry is weaving and throwing raw silk. Raw silk is bought from Japan and paid for in dollars. What is going to happen in my constituency and others which have a silk industry?

Mr. Harrison (Nottingham, East)

Does not the silk industry depend primarily on artificial silk today?

Air-Commodore Harvey

The one product which is really selling in North America is the high quality silk product, the raw material for which is bought from Japan at something like 17s. a 1b. The price of that raw silk is now going to be increased by 6s. or 7s. a 1b. What advantage is there going to be in devaluation in those circumstances, particularly when the Italians have not devalued their currency and are strong competitors in made-up silk goods? Silk is a great dollar earner, and I would ask the President of the Board of Trade to send me a letter replying to that point so that I may inform the employers and mass of the workers in my constituency about it.

The only hope is that tariffs will be lowered in America. At the moment they are 33 per cent., but can anyone visualise the Americans lowering their tariffs in order to allow the importation of our made-up silk goods? Personally, I am not very hopeful that they will, and neither are my constituents. I must admit that up to a fortnight ago our salesmen in the United States were coming back empty handed as regards orders, whereas, I am told this morning, there is now an influx of orders, although only at the old price of the raw silk.

The other day the Government purchased from Japan 1,000 tons of pilchards at a cost of, I believe, £150,000. When I read it I thought that my hon. Friend the Member for Bodmin (Mr. D. Marshall) would go off his head. Why could not that money have been spent in purchasing raw silk which would have been converted into goods representing something like £600,000 worth of dollars with which we could have bought valuable feedingstuffs for the farmers of this country to produce more food. The hon. Member for Nelson and Colne (Mr. S. Silverman) seems to think it is a joke, but it is bad economy to buy pilchards in Japan and have them shipped 9,000 miles when they can be obtained here without much effort.

We have heard a lot from the Government to the effect that the Opposition have made no suggestions as to how we can bring about economies. I shall make one or two suggestions for what they are worth. No one is more keen than I to have efficient and strong fighting Services in this country. At the same time, I believe that if the matter were gone into in the greatest detail with the Service Chiefs and the Civil Service, economies could be effected, not so much in the actual expenditure of money as in manpower. I think that, in the main, conscription has been a complete failure, and that by having a slightly larger Regular Force, better paid and better treated, and a larger Territorial Army, we should get along better and save a lot of manpower.

My second suggestion is in regard to farming. We should make a greater effort to get people to keep pigs and poultry and to get the farmers to grow more food which could be grown quickly, thereby saving foreign currency. My third suggestion is in regard to civil aviation. At the moment, an enormous building is being erected in Holborn in which to house the Ministry of Civil Aviation. I suggest that we should abolish that particular Ministry and place its functions under the aegis of the Ministry of Transport and thus cut down the staff. A great mistake was made in spending millions of dollars on Strato-cruisers, and in years to come we shall have to spend many more dollars on spare parts for those aircraft. I know it was a difficult contract for the Government to get out of, but I understand that one American airline is trying to sell its Strato-cruisers. Had we waited another year, we should have got more suitable aircraft from our own manufacturers.

These are three points to which I hope the Government will give serious consideration in an endeavour to bring about economies. The British people are not used to living as a debtor nation, and, in the same way, the American people are not used to living as a creditor nation. We must adjust our ideas and face up to the situation, and the Americans must do the same. Nothing -will get us out of our difficulty except honesty of purpose. It means harder work for everybody. I agree, as has been said, that if hours of work are increased too much, the return tends to fall. That, of course, is undesirable, but there must be a greater effort than there has been hitherto on the part of everybody.

With regard to the social services, a great propaganda is being carried on by the Socialist Party to the effect that the Tories want to reduce them. We do not, nor do we want unemployment. What we do not want is to be faced with, say, two million unemployed, and a cut in the social services because there is no money to pay for them. It is a wicked thing to say that hon. Members on this side of the House are the ones who want to abolish the social services. All we say is that we want to bring about more efficiency, to maintain the social services, and, when possible, to improve them.

What this country needs is more confidence. It needs a real lead. The Prime Minister has bad ample opportunities in the last few weeks to give leadership to the country. We may get it from him tonight. I hope we shall, but so far it has been singularly lacking and, after all, he is the leader of the country, he is the Prime Minister of Great Britain. We want a lead given to foreign countries and, in particular, to our own great Empire. When we are told that Mr. Chiffley knew about devaluation only the day before it happened, we realise that that sort of thing does not help our friends. They were the people who came to help us in the war within a few days in 1939. They did not take weeks to make up their minds. They have helped us out with gifts and loans. I say to this House that we are the same people that won the Battle of Britain. We stood alone and we fought single-handed and if we cannot get out of our difficulties again, there is something wrong. I believe we can and I believe the thing that is required is real leadership and a new Government.

6.26 p.m.

Mrs. Braddock (Liverpool, Exchange)

I have listened to most of the Debate and heard very many reasons given for the difficulties we are in, and I do not think it will make a tremendous amount of difference if my opinion is also recorded. I believe the difficulty we are in is one of capitalist production. The difficulty is that the capitalist countries are getting into difficulties in relation to markets, and if it had not been that there was a Labour Government in control here we should have reached exactly the same stage as that we reached when this sort of situation has arisen in the past. It would not be a question of devaluation of the pound but a question of a third world war immediately to find the markets to get rid of the production. That is my opinion. I may be wrong, but my Socialist teaching for many years tells me that that is the position. I believe that is exactly the situation.

However, I did not rise to say only that. I want to draw attention to another situation. I want to know what action the Government are taking with reference to increases in salaries to high-salaried officials in local government. If the workers are asked not to seek increases in wages and a general freezing of incomes is taking place, I want to know what authority, power or control the Government have over the local authorities throughout the country who even now, are in the process of raising salaries to high-paid officials by very considerable amounts.

Let me put this in detail so that we may see the position. Exactly 14 hours after the Chancellor's speech on the wireless I attended a meeting of a Corporation committee in Liverpool to deal with the salaries of chief officials and I was amazed to discover that, in spite of the very serious statement made by the Chancellor, recommendations were made by that committee to increase salaries of two officials in Liverpool by £10 a week and to increase the salary of another official by £2 10s. a week. When I drew attention to the fact that this would be a very difficult thing to explain to railwaymen in Liverpool who had been refused a rise of 10s. a week, with a wage of £4 10s. a week, I was told that these matters had been under consideration for some time and that the local authorities intended to put these increases into operation.

We shall be faced with the position in Liverpool on 5th October that, in spite of the request of the Chancellor, two officials will have their salaries increased from £2,500 to £3,000 per annum and one salary will be raised from £2,000 to £2,250 per annum. How, in the name of Goodness, are we to persuade low-paid workers and aged pensioners that nothing must be done in relation to increases in salaries while local authorities are taking that point of view and are putting these increases into operation? That is an instance from my own local authority and I know it is going on all over the country.

I have listened to all these discussions in this House and I have not heard one suggestion in the three days that something is being done about it. It might be simply a national matter which we are discussing here and it might not affect local authorities at all, from all the statements which I have heard while I have been listening. What is happening in relation to this matter? Last Wednesday and Thursday I attended the annual conference of the Association of Municipal Corporations and I saw a copy of a negotiated increase in salary for the whole of the town clerks throughout the country. It is an increase which will mean that some local authorities will be compelled to raise the salaries of their town clerks by £500 a year. It is an agreement which has been reached which does not need sanction at all. An advisory committee has met to decide the matter, it has been decided on the basis of population and all that is necessary now is to fix the date upon which these increases shall take place.

I ask the Front Bench how they can expect us—and I am not interested in what the other side think—as solid supporters of the action they have had to take, to explain the position to people who are being refused small increases when local authorities, without any question of being held back, can increase salaries by £10 a week in many instances. It does not make sense and unless something is done about it we shall not get the backing and the confidence of those people who are doing the producing and who can make it possible to increase our exports and to alter the situation in which we are at the moment. They will not think we are sincere unless we do something about it. They cannot understand it.

I have heard statements made that the ordinary man in the street understands the whole position. He does nothing of the sort. He does not know what the dickens we are talking about here; all he understands is that he has been refused any increase in his low income while people who already are in receipt of £2,500 a year can get an increase of £500 a year without any question or hindrance at all by this Government. That is all I wanted to say. There are many other things I could mention, but I promised that I would take only 10 minutes over my speech and would draw attention to something which nobody in the previous two days' Debates has even mentioned.

Increases are bound to take place in the cost of living. They are bound to take place whatever we do. I believe the Government have done a good job. I believe they had to do what they did in order to prevent the terrible struggle which the ordinary person would have had if the Opposition had been in control in a crisis of this sort. But old-age pensioners who have to pay extra for bread, and ordinary workers on £4 10s. a week—and quite a lot of them are in receipt of less than £5 a week—cannot and will not understand that they can have no increase at all, while they are being begged and entreated by the Front Bench to produce more, when the more they produce the more profit they give to those who actually own industry. All we are taking out of the profits that industry is bound to make by extra production—because there is no profit and no wealth made of any sort except by production—is 5 per cent.; out of the extra production that will create the extra profit for those who own industry, all that is being taken is 5 per cent. of distributed profits. Let us take 100 per cent. of the profit made and use it to ease the position of the aged pensioners and the workers with low incomes.

Just because there is a crisis, and when we are begging for an increase in production, which means an increase in profits, why should those who achieve the production be refused any share in the profit at all? I believe we have to adjust that position, and that the workers have demanded an adjustment. I believe something has to be done, and that some steps must be taken by the Cabinet and those responsible to insist that the local authorities—coming back to my main point—shall not be permitted to raise salaries of £2,500 and of £2,250 to £3,000 while we are asking the workers in production not to exact or even to ask for increased pay. I want whoever replies to the Debate for the Government to give me some indication of the steps that can be taken, and of what lead is to be given. I want him also to say what steps can be taken by the Chancellor or by the Minister of Health, if the local authorities refuse to be patriotic in this regard, as the workers are being asked to be, to insist that the salaries to which I have referred shall not be increased at all while the wages of the productive workers are frozen.

6.36 p.m.

Lord William Scott (Roxburgh and Selkirk)

The primary purpose of this Debate is for us to say whether devaluation is justified or not. Devaluation has taken place and nothing we say or do can alter that fact. It appears rather a waste of time that we should now cry over spilt milk, but I think it is desirable that the House should fully understand to what extent this devaluation will affect certain branches of our export industry. It is usual, when talking about, exports from this country to America, to dwell on certain of the more important, and reference is often made to both Scotch whisky and to the very high class woollen goods produced in this country, particularly in the border burghs of Scotland, which for many years past have found a ready market in America.

The position today of those border burghs after devaluation is somewhat different from what it was a fortnight ago. I should like the House to understand what the position is today in the town of Hawick, which has two classes of textiles which for many, many years have been sold in ever-growing quantities at ever higher values in the United States. I should like to deal first with the knitwear and hosiery business. For a very long time past we have been able to sell large quantities of these rather expensive goods in America and anywhere else where there have been individuals who could afford to pay for them, and today Hawick could sell almost an unlimited quantity of this very high class knitwear in the United States, where there is a ready market for it. Today we are actually selling to capacity—to the capacity to which we are able to produce.

The trouble is—and I should like the Chancellor to bear this in mind—that, as far as one can see, it will be quite impossible for us during the course of many months, or even a year or so, to increase our output. We could have increased our output during the last year or so, when we had a ready market for it in the States, but we had a very limited labour supply on which we could draw, and these firms which make this very high class knitwear have absorbed every individual in the border burghs they could gather in to man their looms.

There is another important point I should like the Chancellor to bear in mind, and that is the fact of the size of the inflow of dollars to this country in the next few months through the knitwear industry. It has been the practice in this industry over the last 40 or 50 years—the general practice to which there have been few exceptions—to sell both to the States and Canada—and elsewhere—for sterling. The buyers worked out, according to their own tables, what was the actual price in their own currencies—for instance, in the United States in dollars—what was being demanded by the firms. The managements of the knitwear businesses are extremely efficient. They never would have reached the position in which they are today, of being able to penetrate the markets of nearly every country in the world, if they had not been efficient. Probably no general commercial concern in Scotland has more efficient management.

But they made one big blunder. Production for the next six months or more has been sold in sterling. They believed that when the Chancellor said there was going to be no devaluation that they could take him at his word. I see that the Chancellor shakes his head, but that was what they understood. Believe me, no words of mine encouraged them to believe it; but they took it that there was to be no devaluation, and, as a result of that, these firms and the country are going to be short of literally millions of dollars between now and March because we sold, not in dollars but in sterling, in the belief there would not be devaluation. It will not be until the present contracts have run out that we shall manage to increase the number of dollars from our production.

Even then there will be a considerable difficulty, because we cannot get the additional labour to man the looms. Hawick is a comparatively small town with a population of, roughly 20,000, with the two employments of making cloth and making knitwear. In that town it is fairly easy to follow the various difficulties that arise, and especially the question of manning industry. During the last eight or 10 years there has been a flow of the girls coming from school, not into the mills, not into making cloth or knitwear, but into other sorts of work. The three major directions into which the flow of girls leaving school has gone are clerical work in Government offices, clerical work in local government offices, or clerical work in general business concerns—shops and such like.

The result today is that these dollar earning industries—and knitwear is one of the best dollar earners Britain has— are being starved of opportunities because they cannot get girls for the mills. If the Chancellor, in conjunction with the President of the Board of Trade and the Minister of Labour, could do anything to discourage the girls from going into clerical work, whether for the Government or local government or ordinary businesses, and encourage them to go to the mills, we in Hawick could produce many more millions of dollars.

I warn the Chancellor that there is another difficulty—that this is not entirely a question of payment. There is also the very tiresome social side, for it is generally believed—not only there but elsewhere in Great Britain—that there is a higher social status attached to clerical work than there is to work in mills. Until we can get round that belief we shall not be in the position to produce the goods, which are very easily, very readily, sold, as compared with other products of Great Britain, in America, for they are goods the Americans want. We are not in the position to produce them in the quantities we should like.

The cloth trade will be affected very much more by the rise in prices. The rise in the price of wool already has made a very serious inroad into that little bit of help that was given by devaluation of the pound. It looks as if the increased expenses, especially the very rapid rise in the price of wool, will go a long way towards removing the benefits which the high class woollen cloth trade would otherwise have enjoyed if we are to believe a word of what we heard in the broadcast of the Chancellor of the Exchequer. It looks as if in the next few months or so there will be very little benefit from devaluation.

6.46 p.m.

Mr. Cecil Poole (Lichfield)

It is such a long time since I had the privilege of addressing the House that I almost feel like asking for the indulgence which is extended to new Members. I would not have intervened in this Debate had it not been for the speech made yesterday by the hon. Member for Edgbaston (Sir P. Bennett). It was that speech which led me to seek to catch Mr. Speaker's eye. I thought that during this Debate there was a great responsibility laid on all of us who have any influence with public opinion, and that unless we could make some very concrete contributions to the problems facing the country it was far better to keep quiet.

While I am sure the House greatly enjoyed the speech of the right hon. Gentleman the Member for Woodford (Mr. Churchill) and its counterpart today, and while many of us would feel very happy if we were able to acquit ourselves so well in this Chamber, I think all of us in our more sober moments will agree that neither speech has taken us very much further along the road to a solution.

I said that I was constrained to speak today because of the speech of the hon. Member for Edgbaston. I feel there is a public duty laid upon someone in this House to deal with the point he raised, because otherwise it may seriously affect the production position in the City of Birmingham. The hon. Member made a statement yesterday which is a very common one but which, coming from him, is a very serious one. The hon. Member is not in his place, although I did my best to advise him that I would be raising this matter. He has such a disarming manner that the House is disposed to accept from him things which sometimes would not be accepted from more controversial Members opposite. I notice that the "News Chronicle" refers to him as "Uncle Peter," and says he has such a disarming manner that Labour Members will take from him what they will not take from any other Conservative. Therein lies the danger in the statement he made.

He spoke of an organisation he knows well, the organisation being, of course, Joseph Lucas, Limited, of Birmingham, of which he is chairman and joint managing director. In his statement, he dealt with the question of the reduction in working hours in that organisation. He states that the hours were reduced by arrangement from 47 to 44, and then he went on to say how this was done. He said: The workers said: 'We do not want to come in on Saturdays. It is a waste of time as well as a bother to you and to us. If we can arrange a working week of five days instead of 5½, we can give you the same result in that period as you get now by our coming in on Saturday mornings, wasting time travelling and bothering everybody.' The fact of the matter is that we have never been able to get the same result in the five-day week as we were promised. We are that much short. It accounts for half of what we are wanting. That is a most serious charge, and it is a charge which ought not to be made unless there is substance and foundation for it. It is a charge that is far too frequently made by Members opposite. The hon. Member went on to say: I sometimes feel that if the employers' associations had made a bargain and had not kept it, they would soon have been asked: 'Do you think it is quite cricket? You have not done your share to carry out the bargain.' I am still waiting for somebody to come along from the workers' side and say: 'We know that we have not given you in the 44 hours the same amount of output that you had in the 47 hours, and that we promised you.'"—[OFFICIAL REPORT, 28th September, 1949; Vol. 468, c. 199–200.] I have risen to tell him that that statement is a complete fallacy. It is a very serious matter, because Birmingham is vitally concerned in the export drive. It is this sort of thing which puts up the backs of the workers in industry, especially when their own chairman and managing director makes a statement which has such a distant relation to the truth.

Why is it that I say the statement is so wide of the truth, and what is my authority for that statement? Those who know me in this House—and I have been here quite a long time—appreciate that I do not often make extravagant statements without having some foundation for them. Joseph Lucas, Limited, of Birmingham, have a central joint production committee, and the chairman of that committee is a gentleman by the name of Mr. A. B. Waring, who is the joint managing director with the hon. Member for Edgbaston. What does he say about the production of the workers? I suggest that he, as acting working managing director in the undertaking, knows a little more about what is happening in the undertaking than the hon. Member who says that he does not do his own work but spends his time in the House of Commons. Mr. Waring, at a recent meeting, said: Productivity is still the most important object, both nationally and to us as part of national industry. The Lucas achievement has been very considerable. In 1947 our total output was the equivalent of what we had before the war; in 1948 our weekly output was 25 per cent. more than before the war. Recently, we have been running at a still higher rate. So, as an organisation, we can consider, and quite rightly consider, that we are pulling our weight in the national drive and are all entitled to take credit for this very considerable achievement. I naturally regret that the hon. Member for Edgbaston is not in his place. I did my best to ensure that he would be in his place, because at this stage I was going to invite him to say whether his statement or the statement of Mr. Waring was true.

Air-Commodore Harvey

The hon. Member has made an accusation against my hon. Friend the Member for Edgbaston. He will recall that in his speech yesterday my hon. Friend invited any Member opposite to visit the organisation and study the graphs, and figures which are there for inspection. Would it not be a good thing for the hon. Member to take up that invitation?

Mr. Poole

That is not the answer to the point. When my hon. Friend the Member for Preston (Mr. Shackleton) challenged the hon. Member for Edgbaston on the question of the increase in the capital equipment in the factory from 100 to 150, the hon. Member for Edgbaston said: I do not do all my own work. I come here, instead."—[OFFICIAL REPORT, 28th September, 1949; Vol. 468, c. 201.] Instead of studying the figures and graphs, I have done something better. I have gone to the other horse's mouth, to the hon. Member's production manager, to see what he has to say about it.

I have great faith in the workers of this country. I believe that when they know the extent of the problem facing them in time of war or peace, they will always be prepared to play their part. They cannot be expected to play their part, however, if this sort of attack which devalues their efforts in the dollar countries is made. They cannot be expected to do their best when they are told by their own managing director that they are what the right hon. Gentleman the Member for Woodford classified as "work-shy." The British worker will always play his part, and the added incentive he receives from this Government, with the knowledge that he has a Government of his own people, helps him to do that. But, as I say, he will not be inspired to go all out to try to close the dollar gap if, when he does so, he is to be subjected to vile and untrue abuse such as that which came from the hon. Member for Edgbaston yesterday.

6.56 p.m.

Mr. Baldwin (Leominster)

I welcome the opportunity to follow the hon. Member for Lichfield (Mr. C. Poole), because I was here when the hon. Member for Edgbaston (Sir P. Bennett) made his speech yesterday and I thought it was the best speech which has so far been made in this Debate. I only wish that the Minister of Health had taken up some of my hon. Friend's points. I do not think that the hon. Member for Lichfield is comparing like with like. The co-director he quoted said that Messrs. Lucas's output was up, which may be true. But that was not the point of my hon. Friend the Member for Edgbaston. Output may be up because the machinery has been improved, and the staff may be bigger. If that co-director would say that output per man was up, it would be entirely another matter. My hon. Friend said that he was not getting the work out of a 44-hour week that he was originally getting out of a 47-hour week—and that was not contradicted by the hon. Member for Lichfield.

Mr. C. Poole

The comparison was between production in a 47-hour week which was operating in 1947 and production in a 44-hour week which was operating in 1948. The comparable figures quoted by the colleague of the hon. Member for Edgbaston showed that in 1948 there was a 25 per cent. increase over 1947.

Mr. Heathcoat Amory (Tiverton)

Surely the hon. Member is not being fair to my hon. Friend the Member for Edgbaston. The output per man in a 44-hour week was not quite as high as it was in a 47-hour week. The productivity figure which the hon. Member has just quoted is the overall production figure. The statements of the two managing directors are easily reconciled.

Mr. Baldwin

Perhaps I may give the hon. Member for Lichfield the figures. There is no mystery about them. The technological advance is 150; productivity is 135; and the labour figure, compared with pre-war days, is 90. My hon. Friend the Member for Edgbaston was speaking about output per man, and not the productivity output of the firm. I think the attack of the hon. Member for Lichfield was unjustified.

Too much time has been taken up in this important Debate in deciding whether devaluation of the pound was necessary and what the effect of that action will be. I think we agree on all sides that devaluation was forced upon us and was necessary. What the effects may be is entirely a matter of guesswork, and will be found out during the next six months. It is, therefore, hardly worth taking the time of the House in trying to show what the effects will be. What we should be doing is debating the steps which will have to be taken to ensure that we do not again have to devalue the pound. If we do not protect the English pound by more productivity, it will go down in the same way as the German mark went down after the First World War, when German 2,000,000 mark notes were sold in the streets of London for 2d.

We have been challenged to offer an alternative solution, and I am taking the opportunity of putting before the House the alternative which I consider should be used, namely, increased production from agriculture. I am well aware that we must get increased production from both industry and agriculture, but we must remember that our immediate trouble is that we are faced with the dollar shortage which has been brought about by spending several hundred million pounds a year in purchasing foodstuffs. Having diagnosed the trouble, the Government should now apply the remedy to the spot where it hurts. In the Economic Debate in August, 1947, the Prime Minister stressed the importance of increased agricultural output in closing the dollar gap which then existed and has persisted ever since. Following his speech I was called upon by the Chair and I gave the right hon. Gentleman what I thought was some very useful advice. Apparently, he did not take any notice of it because he did not act upon it, so I wish to repeat it today in the hope that he will take some notice of it now.

The right hon. Gentleman, in that Debate, said that increased agricultural output could rise by £100 million. I want to repeat today that output could be stepped up by £200 million to £300 million. To do this, however, it is essential that the Prime Minister should call his responsible Ministers together and tell them to stop playing their own games for their own Departments and to play as a team. I want to instance the President of the Board of Trade. He has an export target in his mind; he does not care two straws what exports are bringing to this country. The Minister of Food has also declared that he will purchase food in the cheapest markets in the world. The result of these actions is that the agricultural community has not the confidence which is necessary to obtain increased production. If we want to increase production there must be a longterm policy. The first thing there must be is confidence, not in guaranteed prices for a year or two, but in a policy by which our farmers can not only put their backs into improving the land but put any money still left to them by the Chancellor into new building and reconditioning. Until there is that confidence there will not be the increased production which is necessary.

Can the Prime Minister tell us what we sent to Italy in the way of export goods to bring back, in August, from £2 million to £3 million worth of pears and plums, when our own pears were unsaleable and our plums hardly worth picking? Those exports might well have been sent to places from which we could get something that we cannot produce ourselves. We have made bilateral agreements with the Continent to export coal and steel in order to bring back vast quantities of dehydrated vegetables, melons, peaches and plums, all of which we ourselves can grow. The right hon. Gentleman should tell the President of the Board of Trade to send coal and steel to Canada who require it and who will send here in exchange the raw materials the farmer wants to produce bacon, eggs and poultry. I know that the hon. Member for Thornbury (Mr. Alpass) has had his little sneer that the farmer does not pack his produce properly. To a certain extent there is something in that, but putting spit and polish on a pear does not improve its flavour.

The Minister of Food can go to the Treasury and get £24 or £25 million to grow monkey nuts in Africa, great sums of money to rear poultry in Gambia and sorghum in Australia. I wondered at first what this sorghum was, and find now that it is our old friend millet, the stuff which is in bird mixture, and which certain birds leave to the last and then will only eat if forced to do so.

We are still clinging to the economics of the 19th century. We are still preaching that it is better to export than to put men to work on the land. The hon. and learned Member for Northampton (Mr. Paget) on one occasion said that it was better to send a tractor to Poland and to bring back food to this country. When that is done the Poles have that tractor for many years to produce food, and that which we get in exchange goes down the drain in a short time. If war comes we shall be spending vast sums of money on our defence and Poland will not be sending us food. The tractor, however, will be producing food for the enemy.

It is not sufficiently realised in this country that the only real source of wealth is from the land of our country. We are too fond of sending our only raw material abroad and leaving a hole in the ground, which will never be filled up except by water, whereas the same amount of labour put into an acre of land will produce food year after year if managed properly. Increased output can be got out of the land. There are 16 million acres of rough grassland and several millions of common land which can be used for food production, and there is land which is not being farmed to the full extent. Farmers have clamoured for protection in the 1947 Act, and if the Government are going to protect a good tenant from a bad landlord it is only fair that a good landlord should be protected from a bad tenant. If a man is not fit for his job he should make way for some of the younger men who want to enter the industry.

There is another reason why we cannot get full production. We must have houses built on the land, and if we do not get the houses built in the country and filled with our own skilled labour for the job, then that job cannot be done. It is no good saying that so many houses have been built in the countryside, because that cuts no ice with those who know. The houses built in my constituency have in some cases got to the extreme rent of 31s. a week, and I wonder whether the Prime Minister thinks that an agricultural labourer can afford to pay away one-third of his wages in rent.

What is our position under devaluation with regard to feedingstuffs? Is the in- creased cost to be passed on to the farmer with the fixed prices of last February? If the increased price is to be passed on to the farmer, then I suggest to the Government that they should be prepared to permit the farmer to consume the wheat he grows instead of taking it off him at £22 to £23 per ton, putting it into a balanced ration, and selling it back to him at £30 a ton. As to our feedingstuffs, we are down on our quantity and we want to see an increase in the amount available for our farmers.

There is much more I should like to say, but I must conclude. Before I do so I want to say that there is too much talk about full employment. Full employment does not mean putting a man to dig a hole and then fill it up again. That is mis-employment. I will give an example to hon. Members opposite. An estimate of £53,000 was given and accepted for the clearing of a bing in Scotland—known as a slag heap in England—on 17¾ acres of land. The cost of the labour was £3,000 an acre. If that is full employment, then anything can be full employment. It would have been far better had those men been put to cultivate some land and produce food. That would have been useful employment.

It is regrettable that the Election is so close, because the controversy between the two sides is camouflaging the seriousness of the position. It is time that we gave the country a direct lead. The heart of the country is sound but its head is weak. The people have been accepting political humbug dished out to them over many years, and I am afraid they may accept the humbug that will be put over to them in a short time. [HON. MEMBERS: "Hear, hear."] That cheering confirms me in my view that hon. Members opposite are going to the country to give the people a little more humbug. I hope they will stay in office sufficiently long so that the people will fully realise the mess we are in. Then no doubt their heads will clear and they will vote as we think they should.

7.11 p.m.

Mrs. Leah Manning (Epping)

I regret the lugubrious speech of the hon. Member for Leominster (Mr. Baldwin). He talked about our people being weak in the head and derided the idea that it is a good thing for farmers to pack and grade their fruit. If he had been with my right hon. Friend the Minister of Agriculture and myself last week at a fruit-packing factory, opened in the County of Essex, and had seen the splendid way in which the packing was done, he would agree with me that housewives would go for that kind of fruit often in preference to imported fruit.

Mr. Baldwin

I hope the hon. Lady will not misunderstand me. I am not condemning good packing. I agree at once about it, and our union is taking steps to improve packing, but I do not like it to be over-emphasised.

Mrs. Manning

The hon. Gentleman spoke about spit and polish on pears; I obviously misunderstood him and thought he was condemning packing. The part of his speech, however, which I most regretted was his reference to the possibility of war with Poland. There is no country with whom I should hate more to go to war than Poland, but I will have a word to say about the question of war preparation later.

I have listened to most of this Debate, and, in spite of the many contradictions from the opposite side of the House, everybody is agreed that devaluation was inevitable. There have been reservations about timing, about whether unilateral action was right, about the methods by which devaluation was undertaken and about the rates; but the deep cleavages of opinion have been about the causes which lead to devaluation, the results of it, and how to overcome the difficulties of the future. We had an entertaining Debate this afternoon between the ordinary chap and the extraordinary chap—the expert who spoke out of the fullness of his knowledge of the City, business and finance, and the ordinary chap, who spoke in a way which the man and woman in the street can understand.

One of the things the expert, the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said was that the Minister of Health had given us a nursery dissertation on the causes of devaluation and on economics generally. It was a very good thing to get some nursery economics, because if there has been a dishonest thing done in the country in the past few months, and indeed in the speeches in this House during the past few days, it has been the references to the causes of devaluation. It was a very good thing that my right hon. Friend, in opening the Debate this afternoon, was once more able to bring the attention of the House and of the country to the fact that it is not something which has happened in the past few months or in the past four years that has caused devaluation; nor that we have been living beyond our means for four years, as was suggested by the hon. Gentleman the Member for East Aberdeen (Mr. Boothby); a juster estimate is 40 years. In the slow and inevitable movements of history, this country has passed into different circumstances from those it occupied at the time of the industrial revolution and during the 19th century, of which the right hon. and learned Member for Montgomery (Mr. C. Davies) spoke with such nostalgic feeling. Every economist knew that the slow, inevitable march of history would put us in a difficult situation and would eventually force us to face the difficulties with which we have to contend today.

A more generous Opposition would have given the Government some credit for facing the difficulties which the Second World War has laid bare in all their stark simplicity, and for trying to bring all the people of this country to the bountiful table which the right hon. Member the Leader of the Opposition mentioned. He mentioned it rather in the style of "Alice in Wonderland" and like the Mad Hatter shouted out "No room, no room." I, as Alice, shout out a little louder to him: "There's plenty of room." There is plenty of room but only if you plan society as we have tried to plan it during the last four and a half years.

Mr. Mott-Radclyffe (Windsor)

If the inevitable tendencies to which the hon. Lady refers were so obscure in July, why were they so obvious in September?

Mrs. Manning

Those inevitable tendencies have never been obscure. The party opposite have tried to deceive the country and have even carried on the deception in the speeches made in this House, until they were pulled up by my right hon. Friend today. The Chancellor of the Exchequer was right in saying that he had tried one expedient after the other. That was in order to buy time, time whilst we could get the countries who must work with us in these matters to realise their responsibility in the situation. This is not something which we can remedy alone. It can only be remedied in co-operation. Some think that the English-speaking countries of the world must co-operate to end the disequilibrium; others that co-operation with Western Europe is the way out. I have always been in favour of European unity myself. It has to be done in co-operation with other countries. Buying time while we get that work going is something for which the Chancellor of the Exchequer ought to be praised. Nevertheless, I would be the last to underestimate the difficulties which have now to be faced or to ask the people of this country to underestimate the fact that we are literally standing upon a razor edge at this moment. If devaluation fails, our position will be infinitely worse than it is at the present time.

I do not mind making appeals to people. The hon. and learned Gentleman the Member for North Hammersmith (Mr. Pritt) seemed to imply that we ought not to make such appeals. But they are made in the U.S.S.R. when it is necessary to bring industry to a higher state of production. Nobody who has seen the vigour and elan with which people in Soviet factories will work if incentives are put before them and the right appeals are made to them can doubt this.

Viscount Hinchingbrooke (Dorset, Southern)

Appeals are made by placing incentives before them and revolvers behind them.

Mrs. Manning

Do not talk nonsense. The noble Lord makes some of the most foolish utterances that are made in this House. One can go into a factory in the U.S.S.R. and know very well whether people are working because they believe in what they are doing, or not. I know that some hon. Members will say that it is because the Russian people do not have Throgmorton Streets to contend against. That is all the more reason why we should retain what this Government has given us and get rid of our Throgmorton Street. That is why I hope our people will realise the difficulties of the situation and will respond to the appeals that have been made to them.

A more important question which the House has discussed has been what should be done in order to make devaluation work. It has been very difficult to tie down hon. Members opposite. They all say there must be retrenchment, but what retrenchment? The hon. Member for Scarborough and Whitby (Mr. Spearman) said that £250 million could be saved in Government expenditure and £250 million in capital investment. When we asked whether that would not definitely mean cuts in the social services, his Front Bench were very much shaken and rushed to his rescue, saying that he had never mentioned the social services. What else could he possibly mean? He certainly did not mean that there should be cuts in administration. Hon. Members opposite have said that cuts in administration could not reach a maximum of more than £10 million and that would be a fleabite in the present situation. [Interruption.] Well, perhaps they said "chicken feed." The hon. Gentleman said he excluded cuts in the Armed Forces, ex-Service men's pensions and so on. Therefore he must have had cuts in the social services in mind.

I do not suppose that what I am going to say now will be popular with my Front Bench, but nevertheless I have to say it. I think there is only one place in which we could make a big enough retrenchment in this situation. Our people will not have retrenchment in the social services. They have had to fight too hard to get them. They want to continue with full employment, because they have too long and bitter a memory of what unemployment means. But they know that £800 million a year, the burden of armaments, is one which they cannot continue to bear.

It has sometimes been said that the people do not understand problems of high finance. I was doing my ironing the other day and was listening to a lowbrow programme on the wireless. Two comedians were talking. One said to the other: "This is a very poor country now, but that has got its advantages." The other asked: "What are they?" "Well," was the reply, "somebody else can pay for the next war." There was tremendous applause from his audience. How true the perception of those men was. What has put us into this difficulty is not only two world wars but further preparation for the third world war. This nation is like a strong man struggling against adverse tides for half a century. It fought against unemployment before the First World War, fought that war, from 1914–18; again from 1918 to 1938 the country suffered bitter unemployment, fought the second world war. Now, for the first time, the country finds itself under a leadership which gives it the fruits of this struggle—

Mr. Henderson Stewart (Fife, East)

Fighting against the Socialist Government.

Mrs. Manning

What a stupid interruption—marching into safety, although we are still struggling against those difficulties which trouble the whole world. We are marching, as the Minister of Health has shown us, more successfully than any other country. We cannot go on doing this if we are to be bound by enormous commitments in armaments. That expenditure is enough to wipe out the whole of our dollar gap. I cannot help feeling that the whole of our difficulty is a tie-up with the Truman doctrine enunciated in America. Our Foreign Office seem to think that we are living in the days of Palmerston and that we can go on carrying these commitments all over the world, many of them unilaterally and in spite of the fact that we are now a debtor and not a creditor nation.

Why have we conscription? Not to give our young men training as was said, but because we need "bodies" to send to Africa, India, Hong Kong, the Middle East, Greece, and other places. We need these young men here at home in industry. If production is to go up, it can only be done by getting extra workers and that is why we need these young men back. I ask the Government to end this costly failure of conscription. "Bodies!" What a word to use about these young men, as if they were already dead in the springtime of their lives! I ask the Government to give some consideration to the important question of whether we can go on spending this enormous sum of £800 million every year and whether we can do something about bringing an end to conscription. Then, indeed, we may have a chance of restoring the bountiful table which the right hon. Gentleman the Leader of the Opposition said will be spread for all. Then if we are born equal we can also all have equal opportunities, and the children in my constituency can have the same opportunity of a good schooling as the children of the U.S.A.

These are the things to which we ought to be bending our minds today, the best way of ending the difficulties which we are in and the best way of bringing an end to the disequilibrium which exists, not "our disequilibrium," but a dollar disequilibrium which covers the whole world. I ask the Government to consider these things and what is to happen about the cost of living, and I ask the Prime Minister to tell us something about it tonight.

7.26 p.m.

Lieut.-Colonel Sir Cuthbert Headlam (Newcastle-upon-Tyne, North)

In the time available I cannot deliver the speech I had intended to make and must limit myself as far as possible to a few essentials. I listened with interest to the hon. Lady the Member for Epping (Mrs. Manning). I have listened to speeches of that kind before in the years between the wars. I have heard the plea that we should discontinue armaments, and we saw the results in 1939. I fancy that the result would be much the same if we discontinued armaments today. Nevertheless, I agree with my hon. and gallant Friend the Member for Macclesfield (Air-Commodore Harvey) who suggested that the Government might design some system of service to supersede conscription in order to reduce the total expenditure on armaments without reducing the efficiency of our defence organisation. But this is a matter with which I cannot possibly deal tonight.

I believe that the general opinion in the House about this Debate is that it has not been entirely satisfactory. The suggestion is that there has been too much politics in it. There must be politics in a Debate of this kind because the two sides of the House hold diametrically opposed views about the policy adopted by the Government during their tenure of power, and in a Debate such as this it is essential to review what has been and what has not been done by the Government which may, or may not, have led to the present crisis.

We all know that in the past our economic position was very different from what it is today, and most of us who have any education know that the first signs of that change for the worse in the economic position of this country are not very recent. They were, indeed, becoming apparent before the 1914–18 war. It was quite clear that we no longer held what was almost a trade monopoly during the earlier years of the nineteenth century. I remember being told when I was a boy that all the gold of the world went through the City of London in the course of a single year. Whether that was really so or not I do not know, but it would certainly seem a better way of utilising gold than to bury it under Fort Knox.

I remember I was told at the same time that this country enjoyed a standard of living which no other country could possibly possess. All this began to change as the competition from other countries increased and we had to contend against difficulties against which our fathers had not to contend. We are a very small country, and the United States, which, when I was young, was being developed, very largely by British money, has now become a great competitor all over the world.

I suppose that, as things have gone since the war, a devaluation of the pound was necessary. Whether that devaluation has been effected at the right moment and whether it has been done in the right way only time can show, but I cannot understand how the Chancellor of the Exchequer, who had been so very much against it a few weeks ago, was instrumental in taking the course of action which was followed. I should have thought that it would be more becoming for him to resign.

I listened with interest to the speech of the Minister of Health. I only hope it satisfied his supporters. He is reported to have said a day or two ago that what he was asking for his party was "a great act of faith." Well, if they can believe that he is the man to lead them to salvation perhaps his speech satisfied them, or perhaps it did not. All I can say is that the difficulties which lie ahead of us are terrific.

When the President of the Board of Trade yesterday outlined how he intended to promote exports from this country to the United States and to the dollar area generally, I only hoped that he might prove to be right, but we have to take into consideration that practically all the goods which we send to America are also made in America and that the competi- tion will be very severe even if we can get in to the extent some Optimists imagine and the tariff walls are made lower. We must also remember that our foreign competitors who are also seeking American markets have also devalued their currencies and, therefore, the benefit of devaluation will be shared by them. I am, therefore, not as optimistic as I should like to be about the result of this expedient of devaluation, and I wish that a long-term economic policy had been devised by the Government which would hold out better prospects of success than devaluation seems to offer.

Hon. Members opposite are forever twitting the Opposition with the fact that we do not produce a policy and that we do not produce the remedies which we say should be applied in order to bring about the economic reconstruction which we desire in this country and the savings which we think are necessary. That kind of challenge is always made by the Government of the day when it has not a policy, and if the Opposition is wise, it says as little as possible about what it would do if it came into power. That is commonsense.

However, I suggest that the remedies are really plain enough. If we are to achieve success, the first thing is that the nation should pull together better than it is doing at present. This means that we should have to give up, on both sides, some of the things we like. I am not proposing a Coalition or anything of that sort. I suggest that if there is to be any united action by the whole nation we must, if we possibly can, try to restrain ourselves during the coming General Election. We must also provide incentives for the workers. We cannot expect anyone to work his best unless he has an incentive to do so. That applies equally to the lowest ranks of workers as to those at the head of big organisations.

We must also improve the quality of our goods, and make articles which people want. We have always been famed for the quality of our goods. "Made in England" used to mean a great deal at one time. It still does, but not to the extent it did when I was young. The reason is that we are trying more and more to emulate the Americans in mass production methods. I may be wrong, and I hope I am, but I do not believe that we can possibly compete with the Americans in that kind of work. Therefore, we must stick to high quality. There are enough rich Americans today to buy everything we can make which is of really high quality whatever its cost may be. But we must also be prepared to reduce our costs. We must be able to produce articles which people want and at a price which they can afford. This, however, is not as obvious to some of the people in charge of our industries as it ought to be.

I come again to the fact that we must export everything we possibly can. I was very glad that an hon. Member opposite pointed out the desirability of a higher production of coal. I believe that we should be almost back in our old economic position if we could export 30 to 40 million tons of coal each year. I believe that that could be done, and I hope that it will be done before so very long. But that can happen only if the miners really put their backs into their work. [Interruption.] It is only what one of your own Members opposite said, and when he said it no one uttered a sound.

Mr. Wigg

The right hon. and gallant Member has not been here the whole time.

Sir C. Headlam

I have been sitting here the whole time the hon. Member was speaking and I listened with great attention to what he said. He said that the great majority of miners work as hard as any one could work—I know that is true—but he said that there is a minority and that that minority brings about absenteeism, which has a bad effect on the others. I, who live in a coalmining area, know this.

Then, we must reduce taxation. We cannot afford the rate of taxation with which we are now faced. I do not believe that 40 per cent. of the nation's income should go in taxation; it is too great a burden on industry. We must restore discipline to the trade unions. The country cannot afford strikes. Everybody knows that in nine cases out of 10 strikes are wholly wrong unless they are supported by a union. If the unions cannot control their members we are bound to have unofficial strikes, such strikes ought be forbidden by law and the law should be enforced. Supporters of the Government who wish their policy to be a success should be the first to agree with this suggestion.

We have also to effect great economies. I agree with my hon. and gallant Friend the Member for Macclesfield and, in a lesser degree, with the hon. Member for Epping that economies can be effected in the Defence Services. But everyone with any knowledge of the working of our present administrative machinery is aware of the endless difficulties in this direction. I remember, when I was at the Admiralty between the wars, how difficult it was to cut down staff, and one was continually attacked for not doing so to a greater extent. I went through every branch of the Admiralty but it was very difficult to see where reductions could be made by reason of the necessity for maintaining at the centre the means of recreating and bringing into working condition when necessary the Fleet.

A deal of Government expenditure can, however, he cut down, and I am perfectly certain that if the Chancellor of the Exchequer, who presumably wishes to bring back prosperity to this country, really means business he could do so. When it comes to cutting down the social services, hon. Members know perfectly well that this side of the House is no more anxious to cut down the social services than are the present Government and their supporters. The only question about which we are anxious is whether, if the nation gets poorer and poorer, it will be possible, even with the best intentions, to maintain the social services as they are today. That is the real question facing us today. There is no greater mistake than to assert that this party has any intention whatever of cutting down the essential social services unless there is no money to pay for them. That is the outlook which we must face unless we are successful in the policy which the Government are now pursuing.

7.40 p.m.

Mr. H. D. Hughes (Wolverhampton, West)

The right hon. and gallant Member for North Newcastle-upon-Tyne (Sir C. Headlam) made a remark about the miners with which I must deal. He attacked the miners for not working harder. My right hon. Friend the Minis- ter of Health attempted today to give the House some facts. Let me give the right hon. and gallant Member just one fact. According to international statistics, not drawn up in this country, we are the only country in Europe in which the output per man-shift is higher than before the war.

Sir C. Headlam

I did not say that the miners were not working. I said that a section of the miners were not working. I made that perfectly clear, agreeing entirely with the hon. Member who spoke on the other side of the House.

Mr. Hughes

The overall figure of mining production shows that this country is well ahead of any other country in Europe in its recovery from the effects of the war.

Mr. R. S. Hudson (Southport)

It is well below pre-war.

Mr. Hughes

The Opposition so blind themselves by their inaccuracies that they will not listen to statistics.

Mr. Hudson

The hon. Member has only to look at the reports of the Ministry of his own Government to see that the output per man per year is well below what it was before the war.

Mr. Hughes

I will leave the matter there, having quoted the source of the statistics to which I have referred.

It is no part of the Government's case today that devaluation is an economic victory. We recognise that devaluation is nothing but a reflection of economic necessity. We recognise that it is bound to mean some reduction in the real standards of life of the nation; that there are still great difficulties in the way of our breaking into the American market, and that all devaluation means is a new set of circumstances in which we must continue our struggle for economic independence. We recognise, too, that devaluation in itself does not guarantee full employment, but we understand also that the alternative to devaluation, if we were to balance our dollar payments, was a cut in imports to a degree which would have entailed serious unemployment and a reduction in our food rations and social services. We have experienced the alternative policy and have no desire to do so again.

The Opposition case in this Debate has been an interesting one. They have tried to fasten responsibility for the crisis on to the Government. They have given no credit—

Mr. R. S. Hudson

Hear, hear.

Mr. Hughes

The right hon. Gentleman says, "Hear, hear." The right hon. Gentleman the Member for Woodford (Mr. Churchill) said that we were on the verge of bankruptcy and that that was the fault of the Government. But he forgets that in 1944 he said that "on the day war ended the country would be bankrupt." Why cannot the Opposition be honest and admit facts that they know are true: that the war cost this country £4,000 million in foreign assets, that in 1945 our exports were down to 50 per cent. of pre-war, and that the rest of the sterling area, which before the war had a dollar surplus of £100 to £200 million a year, now has a dollar deficit of a like amount, which this country has to try to make up rather than to rely on the dollar surplus of the past. Why cannot the Opposition recognise that the terms of trade have moved against us; that the American recession, outside the control of this country, was the final difficulty which forced us to devalue? If the Opposition were honest men they would admit these facts because they know them to be true. They would give the Government some credit for the magnificent achievements which my right hon. Friend the Minister of Health has described.

One of the points which were made in the Debate yesterday was that the Government have made no contribution to European co-operation. A month or two ago the right hon. Member for Woodford came to my constituency and attacked the Government for the fact that we had spent £900 million in gifts and loans to assist world recovery. This is what he said: What was the sense or the sanity of borrowing £1,000 million from the United States with one hand and giving £900 million away to foreigners with the other hand? And that is the party which claims to be giving a lead in the direction of European union. It is dishonesty and humbug.

I have not a great deal of time and want to confine myself to this problem of full employment. I want to ask the country and this House if the Conservative Party really believe in the maintenance of full employment. When the Chancellor of the Exchequer spoke at the beginning of this Debate and used the words "full employment," there was mocking laughter from the other side of the House. What do we find if we look at their record? The only time they have committed themselves to full employment was when they accepted the White Paper of 1944. Sir William Beveridge then said of the White Paper: its proposals are inadequate … action is inhibited by a wrong sense of values … it treats private enterprise as sacrosanct—a sovereign power independent of the State. That is the furthest the Conservative Party have ever gone in accepting full employment.

Viscount Hinchingbrooke (Dorset, Southern)

What does the hon. Member mean by "accepting full employment"? We made full employment and his party followed on—[HON. MEMBERS: "Nonsense."] We provided full employment during the war and they followed on our example.

Mr. Hughes

The noble Lord says that they made full employment, but in the period between 1918 and 1938 when, for the most part, they were in power, there were never fewer than one million standing in the dole queue. Perhaps that is what the noble Lord means by full employment. Probably he thinks of full employment in terms of at least one million unemployed. What do the party say in the programme they have prepared, "The Right Road for Britain"? We repudiate any suggestion that the deliberate creation of unemployment is necessary to maintain high production and industrial discipline. Does that mean a full employment policy, that they will not deliberately throw people out of jobs? Of course it does not. It is going to take a great deal more than that. If we are to keep full employment in this country in the difficult periods that lie ahead we have to use the whole strength of the State planning machine.

We have to have a proper plan of investment, we have to have an expansion of the public sector of our economic life over which there is direct control of investment. We have to have guaranteed prices and markets for the primary producers to whom we sell such a large proportion of our exports. We have to have location of industry and a manpower budget. None of these things is really accepted by the Opposition and in none of them does the Opposition really believe. The solution of the hon. Member for Chippenham (Mr. Eccles) is that we must unfreeze the factors of production so that they can go where they are most needed."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 133.] Is that going to guarantee full employment in the years that lie ahead? Of course it is not.

My feeling about the whole of this problem and of the struggle that lies ahead to maintain full employment, develop the social services and pay our way with the United States is that it may well be that we shall need more Government control and not less in the direction of our exports to dollar markets. What has been happening in the past is that the good, enterprising, section of private enterprise has been working hard to break into the dollar market, but too many have been defeatist and too many have relied on the soft markets in this country and in the soft currency areas. Now we are offering them an additional incentive, additional profits if they can sell to the dollar market and raise their sterling prices. If private enterprise fails to do the job of breaking into the dollar market—and in many respects it has failed to do this job—more, and not less, Government control will be needed in the future direction of our exports.

If we are to have greater production by our people we must have a guarantee that the whole resources of the State economic planning machine will be behind the maintenance of full employment and fair shares for all. The right hon. Member for Woodford showed his complete lack of belief in fair shares in his metaphor about the table. He showed much more clearly what he meant a few months ago when he talked of the folly of everyone having rations before anyone with energy or ability could earn a second helping. We believe there has to be an incentive for the people of this country in the diffi- cult period ahead and they have it in social justice, reasonable equality and a guarantee that the State machine will be used to secure full employment to the maximum possible extent.

7.50 p.m.

Mr. Maude (Exeter)

I am very much obliged to you, Sir, for calling me at this moment, because the matters which the hon. Member for West Wolverhampton (Mr. H. D. Hughes) has been speaking about are precisely those with which I wanted to deal. I wish to ask what I believe is a fair question. When he talks of full employment he does not of course mean that every man is employed. No one has ever thought that it meant that and I should like to ask him how many hundreds of thousands there would be out of work in a time in which he could say there was still full employment. Would he answer that?

Mr. H. D. Hughes

My definition of ideal full employment would be that there are more jobs available than there are men waiting to work and that might mean that at any time there would be a certain fractional amount of unemployment which I could not define.

Mr. Maude

It is not unreasonable but sensible, whatever sort of economy we have, for hon. Members on all sides to face up to this question. There must every now and then be some degree of what is called unemployment. That is absolutely inevitable. No machine, whether Socialist or capitalist, can work properly with the redeployment of labour without there being some unemployment. It has been worked out by people like Lord Beveridge what the percentage of workers should be. Therefore, I do not think it is unfair, as the hon Member is in fact a politician, to ask him whether he has come to a conclusion as to how many hundreds of thousands, roughly speaking, could still be out of employment while he could say that there was still full employment.

Mr. Hughes

As the hon. and learned Member is directing questions to me, I will say that, with the exception of the great freeze-up, I think unemployment under this Government has never run above half a million and I consider that to be a very reasonable figure.

Mr. Maude

I am much obliged and I think that an extremely fair answer, but when the hon. Member thinks it over I believe he will feel he has put it much too low and will regret it. We have had reiterated at hourly intervals in this House, and it is quite obvious that some instructions have gone out, that hon. Members opposite should keep making the point, that the Conservative Party want to bring about unemployment. I do not think I should be unfair when I suggest that that is the argument.

Mr. Wigg

Of course, the hon. and learned Member is unfair and he knows he is.

Mr. Maude

No. At regular intervals in this House and outside it is suggested, from platforms and in writings, that the Tories wish to have people out of employment. It is said again and again—[Interruption.] If that were denied strenuously, either by the Government or by the hon. Lady the Member for Epping (Mrs. Manning), we would get somewhere. Is not that the accusation which the hon. Lady herself makes?

Mrs. Manning

The hon. and learned Member has asked if an instruction has gone out that we should say the Opposition are in favour of unemployment. There is no such instruction. In the second place, we can use our intelligence in regard to what has happened in the past. In the third place, there have been many people speaking up and down the country and writing in the newspapers who have said that that is the biggest incentive to work harder.

Mr. Maude

Why not be quite frank and say that I am right? In order that this nonsense, if I may call it so without offence, can be stopped, may I suggest that the one thing the Government are afraid of, and rightly so, is unemployment. The one thing which the Government in particular and all the hon. Members behind the Government are frightened of is of course unemployment. That being so, they think that a bull point against the Tory Party is to say that they are the people who want unemployment.

If hon. Members will just stop and think for one moment, any sensible man or woman can see at once that the last thing any Administration wants to have occurring while it is in power—I am speaking of what are sometimes called the professional politicians and I am not casting any slur on them in any way—is unemployment. Putting aside considerations such as the ordinary decencies of life, the misery attached to unemployment and the incessant flood of letters which would come to them and the hateful experiences they would have in the constituencies, it is obvious that if it is true that the Tories are wicked capitalists and that they are rich, they will all be ruined if grave unemployment ever comes again, because it will mean that the manpower of this country will not be fully employed. That is apparent to anybody.

There is another matter which has been raised in the Debate and with which I wish to deal. It is not sufficient to say in argument that the output per man-hour has risen more rapidly here since the outbreak of war than it has in America. I would make the point, so that that assertion may not be made again—though other points could be made about it—that on 11th November, 1948, the Chancellor of the Exchequer, speaking at a Press conference, pointed out about output that there was: evidence for believing that after two years of peace there is an apparent flattening out of the curve of production, suggesting a slower rise in productivity per head of the population than we were entitled to expect with the growth of mechanisation. This is very important. In view of the fact that we are facing not merely a crisis—for is it not true tonight that we are facing the possibility, if the country does not pull together, of grave poverty, such as some hon. Members know more about than I do—the real truth is that output per man-hour is not adequate.

I would follow up that comment with a quotation from the Economic Survey which was published on 15th March last. It stated: Pre-war difficulties developed in some sections of British industry the habit of seeking stability and security rather than progress. It sounds, of course, like Tory propaganda. It is not, it is a statement by the Government. To continue my quotation: This has retarded the study and adoption of the best methods. In our present economic position this attitude is a real danger to the national welfare. Our recovery will never be complete unless we can develop a keen and adventurous spirit in management and a readi- ness to welcome new and improved methods by labour. Therefore, at a moment of great gravity, although it is tremendous fun having, if one likes, bitter but sparkling and brilliant political speeches, let us realise before it is too late that none of us can go about saying to the foreigner or to ourselves that output is really at its highest yet.

Those are the two points which I wish to make. [Interruption.] Oh, yes, it has been said earlier in the Debate. Someone pointed out that output per man-hour was not satisfactory. The reaction on the Government side of the House to that was that the point was immediately made that we might pride ourselves—and indeed we may, I agree—that the output per man-hour has increased at a greater rate here since 1938 than in America. If hon. Members say that in their constituencies or in their writings, I am sure that it lulls people into thinking that the output per man-hour is satisfactory, and it is not.

8.1 p.m.

Mr. George Wigg (Dudley)

Whenever I hear a Conservative talking like the hon. and learned Member for Exeter (Mr. Maude) I am always faced with a quandary. Is it possible for any human being to be quite so stupid as he would appear to be? I come to the conclusion that the answer is "No." If he is not quite so stupid as that, what is he really after? He knows very well that the policy of the Tory Government before the war, and indeed of every capitalist Government, has always been deliberately to create unemployment, not because of a desire to create human misery, but because their system will not work without it. That is the truth. I shall not pursue the hon. and learned Member's argument further because I wish to make my own speech, but if he desires a little more education I shall be only too pleased to debate the subject with him in his constituency or mine.

I wish to deal with a comment of the hon. Member for Leominster (Mr. Baldwin), who expressed profound fear lest the pound should fall to the same level as did the German mark after the First World War. He is quite right to have those fears because the reason that the German mark fell after that war was because it was attacked from within—by the great industrial magnates of the Ruhr who subsequently financed Hitler. I am convinced, as the hon. Member for East Aberdeen (Mr. Boothby) said in the course of his speech last night he was, that the Chancellor did not intend to devalue the pound but economic forces were too strong for him. I congratulate him and the Government on the fact that when they were faced with the inevitable they had the courage to cut the exchange rate of the Hound to $2.80 in order to avoid the possibility of a second cut.

I wish for a moment to dwell on the events which led up to devaluation and made it necessary. One of the things which has fascinated me during the last three days has been the absence of one smiling face from the Opposition Front Bench. I have not seen the greatest Sea Lord since Alfred or Nelson—I do not know which it is—the right hon. Gentleman the Member for Bournemouth (Mr. Bracken). Where has he been? Has he gone down in the "Skylark" or is he still stuck in Throgmorton Street? I make that comment because one of the quarters which has made a considerable contribution towards building up the atmosphere which led to the attack on the pound, resulting in devaluation, was the "Financial Times." I hold in my hand articles as far back as last May, written of course in that cautious academic language which one associates with high finance when it is doing something particularly dirty.

The fascinating thing was not only the constant discussion and cogitations about devaluation in the "Financial Times," and in the columns of its second cousin, the "Economist," but what is more interesting is to note when they got cold feet, because they did. On 30th August the "Financial Times," which had been running the devaluation line for all it was worth, wrote: For some reason, most countries have decided that there is dire need for cheaper sterling. This dictum is supported by little or no logical reasoning other than it is necessary to increase British exports to hard currency areas. It can be said at once that the great majority of financial circles in the City are still resolutely opposed to the devaluation of sterling per se. That is what they wrote on 30th August when they had turned about.

Right hon. Gentlemen should have a look at the "Economist" for 13th August, 1949. It says this: They say (the American critics in particular) that Britain's woes have a simple origin in the Socialist doctrines of the Labour Government—which is untrue. They say (the European critics in particular) that the British people are making less effort to get out of their troubles than the other people of Western Europe—which is not only untrue, but unfair and grossly insulting. Note the dates—13th August in the "Economist" and the fourth week in August in the "Financial Times." And why? What was it that made devaluation absolutely certain? Nothing other than the speech of the right hon. Member for Woodford (Mr. Churchill) at Wolverhampton. That did it. [Laughter.] Well, hon. Gentlemen opposite can laugh all right. They laugh at every difficulty in which the country finds itself. They, as every ruling class has always done, will sabotage their country in their class interest. I have no illusions about them.

The right hon. Member for Woodford is understood in this House. He is understood in the country. He went to Wolverhampton but he did not tell the truth. I understand one must now be very careful about saying that, but I will go as far as I can. In saying, the right hon. Gentleman did not tell the truth I am going to say that he knows he did not tell the truth.

Mr. Quintin Hogg (Oxford)

On a point of Order, Mr. Deputy-Speaker. The hon. and gallant Gentleman—I call him "gallant" because he held the King's Commission and a "gentleman" because he is a Member of this House—I heard him say that my right hon. Friend the Member for Woodford said at Wolverhampton that which he knew was untrue. Is that in Order?

Mr. Deputy-Speaker (Mr. Bowles)

I think it is quite in Order. To my recollection the right hon. Member for Woodford also paraphrased the word "lie" as a "terminological inexactitude."

Mr. Hogg

I always understood that where the insinuation was that somebody had said what he knew to be untrue, it did not matter what form of language one used, one was still out of Order. Do I understand from your Ruling, Mr. Deputy-Speaker, that that is not now the custom of this House?

Mr. Deputy-Speaker

I think that what I have said is quite right.

Mr. Wigg

I do not want to embarrass the hon. Member for Oxford by allowing him to describe me as "gallant." We do not claim that for N.C.O.'s. That is after all reserved for the hon. Gentleman. If calling me a gentleman strains him, as he calls himself one I prefer to be exempt. Let the House judge whether the right hon. Member for Woodford is telling the truth or not. He said: You have only to compare your bills for electricity this Easter with those of the year before to see the first fruits of running an industry of this kind from Whitehall. That has nothing to do with the truth at all. On 6th April I myself described this bad scheme as "barmy," and the Minister of Fuel and Power withdrew it. The right hon. Gentleman must have known when he ascribed the increased electricity charges to nationalisation that he was not telling the truth. As I say, the words of the right hon. Gentleman are understood in this House and in this country. But what about outside this country when, as the Minister of Health said this afternoon, we were working on a very narrow margin with reserves which were very modest indeed.

The right hon. Gentleman went to Wolverhampton and this is what he said: From her high and proud position at the end of the war, they have brought Great Britain low alike in prosperity and reputation both at home and abroad. They have squandered the reserves and resources which had been gathered in the past; they have darkened and narrowed the future of every man, woman and child in this famous island. He went on to say that: Never before in the history of human government has such great havoc been wrought by such small men. He went on to say of the Chancellor: … he is almost the only first- rate intelligence at their disposal. Who were these small men who wrought such havoc? Who were these small men who lacked intelligence? They were the men who made him Prime Minister, and by whose courage and intelligence he was assisted to bring this country to victory. That was a very mean thing for a very great man to say.

The right hon. Member for Woodford went to Wolverhampton not of course as the erstwhile leader of Britain. He went down there to speak to 20,000 supporters of the Conservative Party who had put up the money in order to bring that party back again to create unemployment, cut the social services and make the world safe for the slum landlord, as it was before the war. He had to give them something for their money. Perhaps he did not stop to think what the consequences would be. But the effects were obvious to the "Economist" and the "Financial Times." And whereas up to that date they had been driving the machine full steam ahead the order was to write down this country and create disquiet and doubt in our ability to discharge our obligations. That set it off and after that time it was impossible to hold it.

They were assisted, of course, by those financial geniuses, if that is the word to use, who I have no doubt whatever are heavy subscribers to the Conservative Party. One hears stories of the way in which they have slipped money through the controls. A week ago last Monday in Throgmorton Street, when the boys gathered to collect the spoils I went and had a look. Having seen what was happening, and realising they were taking a slice of bread out of the mouths of the lowest paid workers, the comment I have to make is this, and with it I will close. I have always thought that all the Gadarene swine perished in the Sea of Galilee. I know now I was mistaken.

Mr. Hogg

On a point of Order, Mr. Deputy-Speaker, I rise to get your Ruling on a question of uttering a deliberate falsehood. I understand your Ruling was that as long as the word "lie" was not used it was in Order in this House for one hon. Member to say of another that he uttered a deliberate falsehood. I distinctly heard the hon. and gallant Member say that my right hon. Friend had said what he knew to be untrue. I find on page 431 of Erskine May that that is out of Order. He not only said it once, but three or four times in the course of his speech, and you let him do it, Sir.

Mr. Deputy-Speaker

I seem to remember quite often during this Debate that the Chancellor of the Exchequer was accused of making a dishonest broadcast. No Opposition Member ever objected to that word. If the right hon. and learned Gentleman is accused of making a dishonest speech in a broadcast I think that is exactly the same thing.

Mr. Manningham-Buller (Daventry)

Further to that point of Order. Has it not been the custom up to now to rule that any accusation of speaking a deliberate falsehood is out of Order? I distinctly heard the hon. Member for Dudley (Mr. Wigg) three or four times say that my right hon. Friend had not only said something that was untrue, but something which he knew at the time to be untrue. Has not that always in the past been ruled to be completely out of Order?

The Lord Advocate (Mr. John Wheatley)

Is not there a difference between statements made within the precincts of this Chamber and statements made outside this Chamber and the comments made in respect of those statements?

Mr. Mitchison (Kettering)

I was under the impression that this point of Order had been raised and disposed of by you, Mr. Deputy-Speaker, about a quarter of an hour ago. How many times is it in Order to revert to a point of Order which has already been disposed of?

Mr. Deputy-Speaker

I think it is in Order. The hon. Member is quite entitled to raise the point, having, had a look at the precedents. I have now had the benefit of looking at them, too, and I think there is a classification on page 431 that charges of uttering a deliberate falsehood are out of Order. But I must say that as time goes on and as this Debate has been going on, nobody on either side has ever objected to charges against the Chancellor of the Exchequer of making a dishonest broadcast speech, and I do not know why that was not raised.

Mr. Wigg

I certainly would not like the hon. and learned Member for Daventry (Mr. Manningham-Buller) to think that I am hiding behind any marginal quibble. I said it three or four times and I fully admit what I said, but I unreservedly withdraw if I have offended against any Order of the House.

Mr. Hogg

Sir, that was a qualified withdrawal. The hon. Member said "if I have offended against any Order of the House." What I am concerned with is the Order of the House and whether it has been offended against. I obviously cannot refer to any general statements of what may or may not have been said about the Chancellor of the Exchequer because, as you pointed out, the point was not raised at the time; but it has now transpired on the admission of the hon. Gentleman that he said it three or four times. It has now been established, I hope, that that is against the Order and the Rules of the House, whatever may have been said against the Chancellor of the Exchequer. I feel that this is a matter of such great moment and such importance as a precedent that I must ask you to rule specifically whether it was against the Order of the House or whether it was not.

Mr. Deputy-Speaker

If the hon. Member for Oxford (Mr. Hogg) had listened he would know I have done so. The hon. Member for Dudley (Mr. Wigg) has withdrawn, and I think that the matter can rest there.

8.16 p.m.

Viscount Hinchingbrooke (Dorset, Southern)

My hon. Friend the Member for Oxford (Mr. Hogg) was luckier than I because the microphones are so placed that I almost entirely failed to hear the speech which has just been delivered by the hon. Member for Dudley (Mr. Wigg) particularly as he turned the whole time towards his own supporters. I gather he supported devaluation, and so I think has practically every speaker in this Debate. Therefore, there is nothing much to say upon that. For the rest, it seemed to me that he was giving a preliminary canter to the notes which he will use on his political platforms time after time and night after night in the coming months. It would require a lot of time to deal with the points he made.

We are all given about 10 minutes in which to speak in the concluding stages of this Debate, and I do not wish to exceed that time. I should like only to deal fairly briefly with two topics—the question of the dollar gap and the danger of the United States of America associating herself with powers in Western Europe rather than with ourselves. We have heard a great deal about independence. The Minister of Health in his vituperative speech said that he yearned after independence.

I want to have a definition of "independence" from the Government. What does it mean? Does it mean autarchic self-sufficiency so that we have the minimum of trading links and the minimum of commercial investments, a minimum of financial loans, if any at all, from foreign countries; or does it mean solvency and not independence at all? Does it mean that year by year we earn and produce more than we consume? If it is the latter I think it is a fine political objective: if it is the former I think that it is madness in the modern world. I should like to have the view of the Government upon that.

On the question of the dollar gap which formed the great target to which we all directed our efforts during the spring and summer, we now seem to have forgotten about it altogether. In this Debate nobody has mentioned the size of the dollar gap. Of course, it has enormously increased as a result of devaluation. Whereas the United Kingdom dollar gap at the time of the Chancellor's statement in July was running at about £360 million, over-night as a result of devaluation it has risen to £550 million, it I make the calculation aright.

Of course, there will be results to flow in from devaluation. There will be a contraction of imports and a stimulation of exports. The prospective gap of £550 million will, we hope, be reduced, but the target is far higher than before. I maintain that there is no hope at all of our filling or getting anywhere near filling the gap by the methods of concentrated sales in the United States about which we have heard in such detail from the Chancellor of the Exchequer and the President of the Board of Trade.

In this Debate we have heard too little about other methods. Only briefly, are they referred to in the White Paper on the Washington Conference. I should like to have from the Government, if not tonight then early after we resume, full details of what they intend to do to overcome the dollar gap in these other main regards. The first possibility of closing the gap is to resume convertibility at the earliest possible moment. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) said today that that is a prime political objective. What do the Government propose to do about that? Now that we have a rate which, broadly speaking, is fair, why should we not have convertibility? The black market rate is only a few cents one way or the other—I am not discussing a free or a fixed pound. This is broadly a fair rate. What is the reason why we should not have convertibility on current trading operations brought about forthwith? If we had that there is a prospect that our general overseas position, which is about par at present, may soon be able to be reflected in dollar-sterling transactions.

We had a statement today from the President of the Board of Trade. He told us that there would be open licences for the import of goods from foreign countries, but when I asked him whether convertibility would apply to the payments made for those goods he had no answer at all. It is to that precise question that the Government must direct their thoughts.

The other great question is that of United States investments. Why has there been no statement from the Government about what can be done to open our doors to United States investments—not only our doors in this country, but in the Colonial Empire as well? What is to prevent us following the course of the French who are allowing the Swiss and the Americans to invest in their country with the guarantee that their money may be taken out again at any time at a fixed rate with freedom to repatriate their interest. Why cannot we have the same policy in this country? A great deal could be done if, under suitable Treasury and United States Administration guarantees, the great commercial world of America were invited to come in here. That may come later.

What is to prevent us now, when we badly need dollars, from allowing Americans to purchase British Government securities in large quantities and commercial and other local government securities? I should like to see something of that kind done at once as it is, I understand, done in France.

My final point is that time is running out. The United States is looking for a great industrial country which, under the constant threats which are coming from the Soviet Union—and rumours of threats are again abroad today—will be in full scale alliance with her politically and commercially against the fear of a future war. If we do not constitute ourselves as that country, then my great fear is that the United States will begin to turn perhaps to France or perhaps to Western Germany as the country to supersede us. We shall begin to be by-passed by invest- ment projects and attempts to raise the standard of living either of the French, or, more likely, of Western Germany against the threat that the United States fears, and we shall be left by-passed, a little island on our own, not helped to the same extent as she has helped us in the past because, in many respects, we have gravely disappointed the United States in the last four years.

We are beginning to take the necessary steps to keep us in line with Western European trends which have all been towards the freeing of their economies. If we keep in line with that we shall secure the full scale commercial alliance with America which the world needs. If we depart from it, or hold back, then, for the reason that there is so much sympathy in the United States for postwar Germany, because of the settlement in America of Germans for several decades and for many other reasons, America will turn to that country and build her up, and not us, as a great commercial nation of the world.

8.27 p.m.

Mr. Hopkin Morris (Carmarthen)

The right hon. Gentleman the Minister of Health enjoyed a personal and Parliamentary triumph today which I am sure nobody will begrudge him, but his speech must have been an embarrassment to his right hon. and learned Friend the Chancellor of the Exchequer. [HON. MEMBERS: "Why?"] I will tell hon. Members why in a moment. First of all, the right hon. Gentleman established his case by saying—probably quite rightly—that the output per man in this country was higher than in any other corresponding country in Europe, that production was greater in this country than in any country in Europe, that our exports were higher, and our imports relatively lower. All that is very true. I am not disputing one word of it, but the fact which still remains to be explained and which was not touched upon by the right hon. Gentleman was why we had to devalue the pound. There was not one word about that.

The right hon. Gentleman attributed the relatively good position of this country to the fact that since 1945 we have had a Socialist Government. On 16th July he made a speech to a body of miners in which he said: No one can put you upon your feet except you yourselves"— that is a perfectly true statement to make— and I give you three things. First of all, work harder. If I had said that I would have been helping the opponents of the Government. Many hon. Members have been accused of making speeches which were a reflection on the working people of this country and which contributed to the depreciation of the pound. That is the first thing. The second thing the right hon. Gentleman said was that we must regain our independence, and the third—and notice this, not the first, not the second, but the third thing—Socialism. He put Socialism in the third place, and in doing so the Minister of Health was right. Had he omitted the third thing altogether, he would have been more right still.

There was a letter in "The Times" last week by Mr. Raymond who was a very distinguished Conservative Member of this House and who has been a consistent tariff reformer all his life. He said: This country has for the first time an import duty of 43 per cent. He would have been very glad to have had it at any time, but this is the first time in its history. What was his answer? Precisely the same solution as that of the Minister of Health—work harder and you will be all right. But that really leaves out the main problem. I wish to draw attention to the main problem because a Liberal is not very much here. A Liberal has been for export only in this country and in every other country in Europe for the last 30 years because Liberalism cannot live in wartime. War destroys any Liberal theory. Even Liberals in Germany, in Italy, in Spain and in Russia have been for export only. In Russia today the Liberal dare not open his mouth, and we Liberals in this country are regarded as a nuisance. However, we are allowed to say that there is some other solution. I want to tell the country that if we try to solve the problem of full employment and the problem of social services on a planned economy we shall fail. I need not go beyond the record of this Government to prove that.

Mr. Ellis Smith (Stoke)

The only hope of success.

Mr. Hopkin Morris

Can we have any better plan than there is at the moment by way of an economic system? On the one side there is a great totalitarian system closed to the outside world, and, on the other, the dollar system which can be independent and can live independently. Thirdly, there is the sterling area. Many of the things said in the speeches delivered in this House in defence of the sterling area made it appear as though it was a good thing to be defended. But what is the sterling area? It was never in existence before 1940. It was the creation of an Order in Council in 1940 under the Defence of the Realm Act. That Order in Council has been amended time and time again. The sterling area has changed; countries have been in it and out of it. Egypt has been in it and is now out of it; Palestine has been in it and is now out of it; Hong Kong has been in it and is now out of it, and so we go on.

What is the next step to which this Government have resorted? In 1947 they made permanent as part of the statutory law of this land the Exchange Control Act, making permanent in peacetime an order devised for our protection in war. It is not an accident that a Government that had instituted conscription in peacetime had also to safeguard the exchange control. The sterling area cannot maintain itself. I have just said that Liberalism cannot live except in time of peace. Can we hope for the peace of the world when we have these three divisions.

Mr. George Thomas (Cardiff, Central)

That is 19th century.

Mr. Hopkin Morris

The hon. Gentleman speaks about the 19th century. That was when, under the British flag, we freed the ports of the world. We used our Navy to free the ports, and every other nation could trade on the same basis. The 19th century was the longest period of peace this country has ever known; there were only minor wars. But in this century there have been two terrific wars. How can we hope to solve the problem of full employment and maintain our social services in that world? Why did the Chancellor of the Exchequer raise this flag in his first broadcast speech? Nobody attacked them. It was he himself who drew attention to the Health Service in his Budget speech. It was he who warned about abuses. Note this—and it is a very important fact. When we begin to mix morality with law and talk about the rights of the subject in terms of morality, we are then losing our freedom. What is the point of talking to the people of this country and saying, "Do not abuse this system"? If they have the legal right to use it, and we think they are abusing it, then there is something wrong with the law, because if there is a law-breaker he can be prosecuted. This doctrine of morality is pressing against liberty. That is what we are coming to.

When we are pegging the pound at the present level, what is the next result on the trade union? It is the freezing of wages at as fictitious a figure as that of the pound. We do not know the values of wages. We are changing the character of the trade union. Surely the object of the trade union is to find what is the level of wages in the give-and-take of the market; that must be the object of the trade union. [An HON. MEMBER: "Not necessarily."] Not necessarily? I am seeking to state the object as fairly as possible and this must surely be one of the objects—to find out what is the level of wages. If we are fixing them, without knowledge, on a pre-conceived basis we are doing precisely what we did with the pound. The character of the trade unions is then changed; from having a duty to find out what the true level of wages should be they become defenders of the arbitrary judgment of the Government.

Note the next result which follows that. We step into the sphere of law. We set up arbitration tribunals. But once the trade unions are the defenders of the arbitary standard of the Government then we mistrust the judicial machinery and no longer believe in the arbitration body or the fairness of the arbitrators at all. We are reaching that position, and we are reaching it through the planned State.

I have the greatest respect for both the intellect and integrity of the Chancellor of the Exchequer, but the Chancellor of the Exchequer made a speech in this Parliament in February, 1946, about the direction of labour. He admitted, quite fairly, "I know of no planned State that has been able to attain its end without direction of labour," and he said, "But we are not going to resort to direction of labour in this country; we are going to be the exception." He failed to hold that. He said, "I will not devalue the pound." He failed to hold it. This time he has said, "Never again." If hon. Members go on with their planned system, however well-intentioned they may be, they will again not hold it.

8.39 p.m.

Mr. Harold Davies (Leek)

I listened with interest to the speech of the hon. and learned Member for Carmarthen (Mr. Hopkin Morris) and this House pays him great respect, but it is really time that we finished with this 19th century cant. In his speech he alleged that in the 19th century we had a century of peace and prosperity. That was complete nonsense because in the hundred years up to 1914 this country was at war for 68 years. That was under laissez faire and the kind of system of society which the so-called hard-faced men opposite, under their obligarchy, inflicted upon the people of this country.

I have waited for three days in this House to give in five minutes more incisive facts than the other side have given in five hours. [Laughter.] See how they laugh, with their responsibilities to society, at this climacteric in its history. The point I want to make is that unless we completely reverse our approach to the economics of society, we never shall solve this dollar problem. Would that I had the time to quote a document produced in 1944 by the American Government's State Department—an economic analysis of the place of the United States in the world's economy and the tragedy they then saw. I hope to heaven they will realise the position. There is this statement, on page four of the report, that the United States of America never had a foreign lending policy, and the danger to the whole of Western Europe, not only to Britain, is the capriciousness of American investment over the past 20 years. If the United States of America is to accept its responsibilities in world affairs, then the famous lending houses of America must not be the sidelines that they were during the period of the Dawes Plan and the Young Plan.

Secondly, if this country needs investment in the Colonial Empire, I want to ask which taxpayers are to bear the burden? If the burden of taxation is to be borne equally, on the formula of Franklin Delano Roosevelt, I believe that a complete revision of war debts will have to take place. War debts are the power of the tomb over the living, and there are no pockets in a shroud, as has been said before. Unless both sides realise that we cannot continue ad infinitum the barren payment of war debts, then I see no possible solution to this dollar problem.

Finally, in this age of the atom bomb—and I put the point during Question Time the other day—I believe the atom bomb is now devalued in society. We no longer have the so-called security of being the only people possessing the atom bomb. [HON. MEMBERS: "We never had it."] I am told we never had it. The point I want to make is that unless we approach this problem not only on a Western European or an Eastern European but on a world basis, then the system of democracy as we understand it is finished. The competition of Japan and Germany will be upon us, and we must reorganise completely the approach to the Far Eastern problem. That cannot be done while we believe only in Western Union and the unity of America and Britain. It is essential that America, Britain and the U.S.S.R. altogether should discuss this terrific problem of the dollar and world economy. I therefore beg the Prime Minister to take the lead in inviting the three nations once again to look at this problem together, and not separately.

8.45 p.m.

Mr. Eden (Warwick and Leamington)

I can certainly congratulate the hon. Gentleman the Member for Leek (Mr. Harold Davies) on having packed a great deal of thought and analysis into a very short time indeed.

Mr. Gallacher (Fife, West)

Very good, too.

Mr. Eden

That is a matter about which there might be—though there could not be in Moscow—more than one opinion. We are now drawing to the conclusion of a three-day Debate during which at intervals—perhaps, rather rare intervals—we have had an occasional gleam of information as to the present Government's intentions and as to their future plans. We certainly had none today. The Minister of Health—[HON. MEMBERS: "Where is he?"]—in a speech which enlivened the House—

Mr. James Hudson (Ealing, West)

Enlivened the Opposition side.

Mr. Eden

—in varying degrees, according to the particular part of the House in which Members happened to sit and the particular part of the speech which was then being delivered, delved into the historic past. Well, it was, at any rate, the past; and there may be some—I am afraid I am not one of them—who would feel qualified—[HON. MEMBERS: "Here is the Minister of Health."]—to re-debate—[HON. MEMBERS: "And here comes the Leader of the Opposition."] My opening remarks are certainly not unpunctuated. I was remarking that there may be some in this House who may feel capable and qualified to re-debate the decision of the Government of 1926 to return to the Gold Standard. Of course, there may conceivably be others who would prefer to debate the action of the Socialist Party at that time in not voting against that particular proposal.

As I listened to the right hon. Gentleman's speech there came to my mind a story which I heard in the course of my recent tour of the Commonwealth—a tour, let me assure the right hon. Gentleman, in which I did not devote my time to attacking the Government. Indeed, I was sometimes extremely embarrassed at having to explain the Government—a task which, I can assure this House, was about as congenial to me as it would be to the right hon. Gentleman to make a speech to the Primrose League. However, I must come back to the story of which I was reminded by the right hon. Gentleman's observations today.

There was once an individual who was unfortunately very sick and who was in danger of losing his sight. He had to undergo a very dangerous operation. The result of the operation was that he recovered his sight, but, unfortunately, in the process he lost his memory. Two of his friends were discussing this unfortunate state of affairs, and one said to the other, "Well, that's just too bad. Bill has lost his memory." Whereupon the other said, "Well, I do not know about that. I think on the whole I would rather see where I am going than remember where I had been."

The trouble with the right hon. Gentleman's speech this afternoon was that he spent the whole of it remembering where he thought he had been, whereas what the country wants to know is where the Government are going, and on that, at the end of three days, we are left without enlightenment, unless the Prime Minister will come out of his hibernation and assist us a little.

I want to begin—[HON. MEMBERS: "Hear, hear."] At any rate I have not been an hour and 10 minutes talking off the subject. I want to begin by making some reference to the international reactions to the Chancellor's decision, or perhaps it would be rather more accurate to say to the manner and methods of the Chancellor's announcement. I want to take the Commonwealth first. Last July, we had a meeting of the Finance Ministers of the Commonwealth who were gathered here in London. They even came to listen to our debates, and they heard the Chancellor tell us for the eighth time then that we were not going to devalue.

I should like to ask the Chancellor, or rather the Prime Minister as he is to reply, whether the question of devaluation was discussed with the Finance Ministers in July. The Chancellor of the Exchequer has told us since, that he then thought the situation was grave. Was devaluation envisaged then, and if it was, was there any discussion with the Finance Ministers as to the level to which we ought to devalue, and was any plan prepared against that possible emergency? None? It seems incredible that the Ministers of the Commonwealth should be gathered here together, should have gone away assured that there would be no devaluation, and then two months later, at 48 hours' notice, told of the complete reversal of the Government's decision. Is that planning, not in the wicked 19th century but in the 20th century? If so, it is a pretty poor example.

The European reactions may seem to be a good deal more serious. I think I understand to some extent security questions. The Chancellor told us that he informed the French Government of the devaluation proposals at the earliest date compatible with security. I have no doubt that is true, but of course it is not the point. There is all the difference in the world between information and consultation, and it is on this very question of prior consultation that there is so much criticism, as the Chancellor must know, of himself in sections of the French Press which, normally, are most friendly to this country.

If European collaboration means anything at all, it means that the partners in it are fully and closely consulted before great financial decisions of this character are taken. If European co-operation means anything at all, it means consultation with our partners in Western Union and O.E.E.C. Let us see what the French Government did last year. They devalued the franc last year, and what happened then? The Chancellor of the Exchequer at that time was very fully consulted ten days before the decision was announced. The French Finance Minister had discussions with the Chancellor of the Exchequer in London.

Sir S. Cripps

indicated assent.

Mr. Eden

The Chancellor was told on 16th or 17th January, and on the 23rd—I make no complaint—he flew to Paris for further discussions, taking with him high officials of the Treasury, the Foreign Office and the Bank of England. Two days later, on 25th January, the French Government announced their devaluation and a joint Anglo-French communiqué was put out covering the discussions which took place between the Chancellor and the French Finance Minister. What happened then? The Chancellor came back to the House—and, again, I make no complaint—and gave some details of his reasons for objecting to what the French had done. He said that His Majesty's Government were concerned for the possible effect on Western European economic and political co-operation and stability that might be brought about by the proposal by the French.…"—[OFFICIAL REPORT, 26th January, 1948; Vol. 446, c. 670.] All right; that is his view. But should he not have had the same concern this time to inform and consult with the French about our proposals for devaluation? It is all very well for the right hon. and learned Gentleman to shake his head, but what is sauce for the goose is sauce for the gander when both are Allies. If we do not treat them in the same way as they treat us they are bound to resent it. If we are to co-operate with Western Europe we cannot simply co-operate on the political level and not on the economic or financial level.

I do not know how—and perhaps the Prime Minister will tell us—after this event His Majesty's Government visualise the broad future for this country, but in my view—and as Members opposite are always asking for constructive suggestions I will make one now—the objective for which we ought to be striving today is ever closer union within the British Commonwealth, together with even more intimate collaboration on political and economic issues of all kinds with the nations of Western Europe. That is what we ought to be trying to do today. That must be our aim. How else, unless we realise that aim, can we make a real contribution to peace? It is not a question of creating a bloc; it is creating unity between people who think alike, the people of our Commonwealth and those in Western Europe. If we can do that, there is no force, West or East, which can in any way challenge that way of life or bring it into doubt. If that arrangement were made, it would be as powerful and significant in the world as any other arrangement that could possibly be made.

But what happens to all that in relation to what has been going on during the last week or two? The position is chaotic. What has been going on, for instance about the mark? Only tonight, at five o'clock, do we read on the tape the rate fixed for the mark. All this time wrangling has been going on; there has been disagreement between the Allies themselves—[An HON. MEMBER: "Whose fault?"] Well, it is not always the foreigner's fault in diplomacy.

Mr. Gallacher

That is the truest thing the right hon. Gentleman has ever said.

Mr. Eden

I am now beginning to doubt if it is as true as I thought it was.

What has been happening about the mark? There has been no agreement between the Allies, until tonight, as to whether it was their responsibility or German responsibility to fix what should be the rate. I say to the Chancellor that all these arrangements should have been thought out and worked out before; at any rate, they ought to have been weighed in relation to the risk of security.

The Chancellor said in the Debate, or perhaps it was in his broadcast, that this matter of devaluation was entirely our own concern; that there was no question of consulting others, even our best friends. But an issue of this kind cannot possibly be our own concern. It is of intimate concern to the Commonwealth countries and every single country of Western Europe, and unless we get that fixed in our minds we shall go from disaster to disaster.

Let me give one other observation on the subject. I want to quote one passage from the most Anglophil of our French friends, one who is a personal friend of my own and of the Chancellor of the Exchequer and of most Members of this House, M. Leon Blum. No one can say that this elder statesman wishes anything but well to both our countries. This is what he wrote, On the morrow of Strasbourg, when European solidarity was beginning to take shape, we must recognise that an unexpected and formidable argument has been handed to the sceptics. I must confess to some bitter regret. I can sympathise with the mood in which M. Leon Blum wrote those words. What are we going to do about it, which is more important than reviewing what happened? I beg the Government and the Prime Minister to consider whether there is not something which can be done even now to patch up the crockery. We have been very busy here with our own Parliamentary meetings and preoccupations, and I do not suppose hon. Members have had time to read the European Press in recent days. It has been pretty tough, and not all friendly these last few days.

I want to make a suggestion. I am not asking the Government to call again so soon a meeting of the Finance Ministers of the Commonwealth or of Western Europe either, but I suggest that this devaluation situation has created entirely new trading conditions. We have all been devalued to some extent. We are all going to try to increase our sales in the American market. That is what the French Finance Minister meant when he talked about a trade rate war. That is not very agreeable between us and the French, and it is a pretty serious statement. It is not only that, but we are going to try to sell in competition in America at the same time, The Chancellor knows that problems are also going to arise in our mutual trade on account of the change which is going to take place in the price level not only of the dollar commodities but of the whole range of commodities. Would it not be wise, therefore, to go to the Commonwealth countries and to the countries of Western Europe about this prospective trade situation? Would it not be for our good to have a meeting about it now?

I will suggest to the Government what the agenda might be. There should be just two items. The first would be to see that as little confusion as possible is created by the new range of prices with which the world has now got to deal. And there will be plenty of confusion. The second is to try to make use of this opportunity to improve mutual trade relations between ourselves, the Commonwealth nations and Western Europe. With respect, I do not think that O.E.E.C. is enough, because this concerns the Commonwealth as well as Western European countries, and I suggest that if there could be such a meeting it might be possible as the result of it to create new stability and give a greater freedom of movement to trade from each area than exists now.

Whether that can be done or not depends entirely on the leadership given by His Majesty's Government, because no one else can do this particular job. We are not going to be able to restore either our national or our world trading position by a series of successive expedients, nor are we going to build a prosperous Europe, which is capable of providing a convincing alternative to Communism by methods like that. We have got to reach out much further and much wider. We have got to show ourselves more imaginative, and much as we dislike this devaluation proposal, it seems to me that it has in it the germ of a possibility that we might on this new basis try to rally the free parts of Europe and the Commonwealth, on which 'the future of the world still depends. That is what I should like to see the Government do.

Now I come to the actual devaluation issue. May I first of all correct, if I understood rightly what he said, one statement made by the Minister of Health this afternoon. If I heard him aright, he said that we bankrupted the country—my right hon. Friend has dealt with that point—and created dollar domination of Britain, during the period between the wars when the party here had responsibility.

Mr. Bevan

I said that they had handed the prize to America.

Mr. Eden

I assume that that means that we had placed them in a stronger financial position than they were in before.

Mr. Bevan

I am sure that the right hon. Gentleman does not wish to misrepresent what I said, which was that we had neglected our industrial equipment and had handed the prize of industrial supremacy to America.

Mr. Eden

The increasing supremacy of America here, and the increasingly strong position of America in relation to us, would probably be expressed in some form in our relative exchange rates. The right hon. Gentleman agrees that that is right. I think it is worth while looking at those exchange rates, which are a reflection of the respective relationship of the two countries in trade, commerce and stability. In 1931, the year when that particular Socialist Government left office, the exchange rate of the pound with the dollar was 3.57. In 1939, after all the wickednesses of which we were told this afternoon, the pound was worth 4.86. Perhaps the rhetoric of the right hon. Gentleman does not fit that particular series of facts.

My own views about devaluation have been expressed to the House and I am not going to re-state them, particularly because my right hon. Friend the Member for Aldershot (Mr. Lyttelton) quoted them this afternoon. My view has not changed from that which I expressed to the House last July. Devaluation is a very disagreeable business. I do not think that anybody—and I say this with all apologies to the many learned people who have addressed us—can hope to foresee its final outcome. What has been happening has been unilateral devaluation. The fact that other countries have scrambled after us in various degrees of order and approval does not alter the essentials of the situation at all. We are not in the presence of a great Empire and international plan to devalue.

I should like to tell the House in a few simple sentences why I was against devaluation in July. I can see its immediate, and I personally think very specious, attractions. I can see that it can be a stimulant and something in the nature of a "shot in the arm." While the increased costs of devaluation are certain, in respect of imports from dollar countries, and probably from elsewhere too, I have been extremely impressed with the very formidable difficulties which will confront us in increasing our imports to the United States quickly—please note the word "quickly"—by anything in the region of 40 per cent. as we have to do. Even if we reach 40 per cent. we may find ourselves only where we were before devaluation.

I give the Chancellor one point: there are a number of orders for this country which have been kept waiting with the object of seeing whether we were going to devalue or not. That is quite correct, and for a time there will be an increase, I do not say a flood, while those orders are executed. They are not new business. They are simply deferred business which will come along now. What I have always found so hard to believe—I hope the Prime Minister can help us here—is that new markets can quickly be found on the scale that is required. I found it quite impossible to endorse the optimism of the President of the Board of Trade yesterday.

The President of the Board of Trade (Mr. Harold Wilson)


Mr. Eden

The President of the Board of Trade is in a hurry. I have not said what the optimism was. He said that within a short period we could treble our rate of export of consumer goods to America. I should very much like to believe that, but frankly I do not.

Mr. Wilson

The right hon. Gentleman will remember that I quoted the view of Mr. Paul Hoffman on the amount of goods that the American economy can import and our manufacturers can sell, and expressed our agreement with it. Does the right hon. Gentleman disagree with Mr. Paul Hoffman's view or not?

Mr. Eden

It is not really a question of agreeing or disagreeing. We have to make our estimates. I should very much like to feel that that is possible. I wish I could. I must give the House one or two reasons why I think we should be wrong if we founded all those hopes on that. Mr. Hoffman is human, like me, and like the President of the Board of Trade.

Mr. W. R. Williams (Heston and Isle-worth)

Then the right hon. Gentleman's quarrel is not with the President of the Board of Trade but with Mr. Hoffman.

Mr. Eden

One happens to be in the House and the other is not. I am not really quarrelling with either. I am merely trying to put to the House very important issues about as important a subject as we can possibly discuss. What I cannot accept—I do not know whether Mr. Hoffman said this, and this is the point—is that it could be done quickly. Did Mr. Hoffman say "quickly"? That is the adverb which counts. I agree that over a period of years we might hope to achieve that. What I have so far been unable to convince myself about is that it can be done quickly. If it can, nobody will rejoice more than we shall. [HON. MEMBERS: "Oh."] Of course we shall rejoice. Why do hon. Gentlemen think we should not?

Who will have to do this business? Free enterprise—the whole lot of it. [An HON. MEMBER: "The men in the mines."] I wish it were the men in the mines, but that is not true. We cannot send coal to the United States. I wish we could, but they have plenty there. It will be the 80 per cent. which the gracious permission of the Lord President of the Council has allowed to remain under the control of free enterprise. There is nothing to argue about in that. I very much hope that it will succeed. When the Chancellor of the Exchequer and others tell us that this is the only alternative to unemployment, I am afraid that it is not by any means true or certain that the course the Government have taken will prevent unemployment. It all depends how it will work out in the following respect, of which we have heard too little.

What will be the effect on our gold reserves? I suppose that the reason the Chancellor had to change his mind in August was because the gold reserves had fallen to so low a figure, though he has not told us what the figure is. How- ever, I do not complain; it will be told in due course. When he returned to this country after the Washington consultations, he told us that our reserves had been brought into a manageable position. I suppose he was taking devaluation into account when he said that, because he had decided upon it, but he himself admitted that the outcome of the talks in Washington were largely long-range proposals and that there had been a friendly atmosphere. A friendly atmosphere by itself will not get any gold reserves to this country.

What the Chancellor has not told us and what to my mind is the most alarming feature of a very serious situation is how the drain upon our few remaining reserves will be held in check during the months which must be spent before we can achieve any large or permanent increase in our exports to dollar countries. That is why I press the President of the Board of Trade on the word "quickly." I hope the Prime Minister will be able to explain that to us, because the whole success of devaluation, if it has a chance of success, depends on our ability to hold this position in the short term. That will be a very formidable task. Can the Prime Minister tell us how it is to be done and how, in that short time, we are going to earn proportionately more dollars, as we have got to do, to obtain even the results we have had so far?

This brings me to the Government's part in the whole situation. The Chancellor is the most generous man in the world when it comes to exhortation. Everybody is exhorted to do something. Industry has got to do something; it has got to get its costs down. He told us how wicked any manufacturer or trader would be if he did not get his costs down to the lowest figure. He said that if a manufacturer or trader did not do so he was helping to put up the cost of living for all of us, to put some of us on the dole, and so on. It was a pretty grim lecture. But it would encourage industry quite a bit if they could be informed a little more of what the Government are doing to get their own expenses down. Industry can be quite inquisitive about that. The Chancellor told us that there are to be substantial economies. That is very good; we should like to know what they are, and, when we know what they are, perhaps we can oblige some hon. Members opposite who have been so extremely inquisitive by adding just a few suggestions of our own to make them a little bigger, and then they will all be happy.

The whole business was quite well put by the hon. Member for East Coventry (Mr. Crossman) last night. He said that the remarkable aspect of this Debate was that we were all discussing not whether there should be retrenchment, but what retrenchment we should have. But this time the Chancellor has gone a bit further than admitting the necessity for substantial economies, and I want to ask the Prime Minister about a sentence of the Chancellor's speech which did not attract much attention at the time: In other fields of Government expenditure, we are making a fresh investigation—as of course we do annually in connection with the Estimates"— if it is annual, it is not very fresh— to see whether we can cut out, curtail or retard any services not essential to major Government policy. …"—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 29.] We would very much like to know what that sentence means. Can we be told what those particular services may be which are to be retarded or curtailed? It is really a little strange that it should not be until after the devaluation that the Government begin to make this examination. Those remarks of the Chancellor may represent a very important declaration. I hope that the Prime Minister will elucidate them a little. I think that we ought to know their full meaning.

Both those remarks and the remarks about substantial economies raise the question: why were they not being made before? In particular, why were they not made in July, when the Chancellor now says that the situation was so very grave? Had they been made then, does the Chancellor think that this present situation need not have arisen? If they are made now, it may be that they will save the further situation which otherwise, I fear, will loom up in respect of our remaining reserves.

That brings me to one other aspect of our situation which gives me the greatest concern and which, I think, has not been sufficiently dealt with in this Debate. What is the position now about the re-equipment of British industry? There is no more important single issue for our industrial life. During the war years there had to be a practical cessation, and since the war industries have been handicapped in getting their own equipment by the priorities the Government have given. I make this quotation from "The Times" of last July, with which, I think, the Government will not disagree: Many would-be exporters have wanted to improve their plant over the last three years and have been held back because the interests of basic industries and development areas have been put first. I am not arguing whether that is right or wrong, but what I am saying—the fact is beyond dispute—is that, as a result of all this, our industries have met with delay in obtaining their new equipment. Moreover, there has been a very large export of important capital equipment. Last July we had the 25 per cent. cut in our dollar imports—of which food is to bear a very small part—under which, I fear, new capital equipment from America may have to bear a very considerable part. Finally, on top of all this, comes a new factor—devaluation—which means that all our industries have to pay so much more for any equipment they are still able to obtain from the dollar countries.

All this adds up to a pretty formidable total. Unless we can modernise our equipment, despite all those difficulties, how can we hope to force our way for any length of time into the American markets, or even to compete with other countries of Europe in that market? I do not think anyone is disputing that, but I think it is an issue which ought to be examined and on which the House ought to be informed as we should also be informed on what in relation to it, is the position of the capital equipment programme. We who have been in Governments know exactly what happens when someone says that something has to be cut—"Yes, but not me; take someone else." Whatever else is done, I hope that the main burden of these reductions is not going to fall on the 80 per cent. of free enterprise industry which the Lord President of the Council has left to perform the task of carrying through the export drive. Surely, whatever other priorities the Government make, the first priority ought to be to enable our industry to modernise itself so that our national life can continue.

I must say a word about agriculture, although I shall have to cut it short, as my time is running out. Can the Prime Minister give a reply to my right hon. Friend the President of the Board of Trade—[Laughter.]—my right hon. Friend the Member for West Bristol (Mr. Stanley)?

Mr. Gallacher

Looking into the crystal?

Mr. Eden

In 1947 the Government set a number of targets and if the livestock position is not what we would like to see it, that is because the Government failed to import the necessary feedingstuffs. My right hon. Friend asked the Government: What is the likely position with regard to the price level of coarse grains which we have to import largely from countries which have not yet followed our devaluation? Some of these grains are imported from America, from the Argentine and from Russia."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 44.] An answer should really be given to the farming community on that point if they are to get on with their job.

The extraordinary thing about the Chancellor's speech in this House was that he was vague about economies, vague about capital expenditure and vague—it may not have been entirely his own fault—about what the Washington agreement really meant—but the one thing he was absolutely definite about was to clap on an increased Profits Tax on British industry. That is clear, easy, punitive and popular, but I do not know what sort of incentive it is meant to be to anyone in any rank of British industry. [Interruption.] If the hon. Member feels better after taxation, I am glad, but I would judge this on the consequences to the export drive, and I wonder if the workers feel better. Everyone in this country must want the export drive to succeed. Hon. Members opposite are always taunting us with not doing or saying what they think we should do, but they are the first to put on a punitive tax which must hit the very companies to which they are appealing.

This Debate has put the Chancellor's broadcast into a better perspective. I must tell him that was one of the most extraordinary and, I think for his reputation, the most deplorable utterances he has ever made. It is quite true that he began with a statement of the gravity of the situation. I listened to that full of expectancy as to what was to follow, but the tone of the whole of the rest of the broadcast was just like that of a conjurer who has just brought off a very clever trick and expects everyone to join rapturously in the applause. That was the impression it gave me, and I do not think I was the only one in the country to gain that impression. The worst of it was that what the Chancellor said in his broadcast was listened to by millions, but what he said in this House would be read by only hundreds of thousands.

He gave a false impression about our price levels. I am sure that prices of raw materials will go up to a greater extent than the Chancellor forecast. I will say why. Everybody knows that dollar prices must go up to the extent of the devaluation, but the prices of other commodities will go up—commodities which we produce in the Commonwealth, such as rubber. Of course they will. In a sense we hope that they will, because the Americans will pay more for them in devalued sterling. I cannot see how this can do other than affect the cost of living. I have tried to make calculations as no doubt other hon. Members have done, but it is very difficult to do so. However, I would guess that in time devaluation will probably affect the cost of living by anything from 5 to 10 per cent. I hope I am wrong. I would like to know whether the Prime Minister can deny that, and whether he can give us any reassurance on that tonight.

This Motion of the Government is one of confidence. I do not suppose that the Prime Minister himself really expected that we would approve this Motion without any Amendment of any kind. Many of its sentiments are impeccable, but that is not all. Successive Chancellors of the Exchequer—and not only Chancellors—have shaken our confidence in them. The Minister of Health, who is fascinated by historical parallels, might find a close correspondence between this dollar crisis and the fuel crisis of the former Minister of Fuel and Power. That Minister's attitude was exactly the same, in the face of the developing danger and the warnings he got up to the very last moment, as the Chancellor's in the face of warnings until the last reserves began to disappear.

During the period of the American Loan we went through exactly the same cycle. We had every sort of assurances and disappointments. The then Chancellor of the Exchequer told us that convertibility had been largely discounted. What happened? Under the American Loan Agreement sterling became convertible on 15th July, 1947. On 20th August, six weeks afterwards, the then Chancellor announced that the strain on our resources had proved too great. Convertibility was ended and a series of cuts was imposed. We have had this thing over and over again. The former Chancellor completely underestimated the rate at which the American Loan would run out, just as the present Chancellor completely wrongly estimated the rate at which our gold reserves would be reduced. So we have had crisis after crisis, or if the House prefers the words of the Oracle: We have tried ever since the war to overcome our difficulties by a series of expedients, which led to a series of crises as each expedient became exhausted. I could not hope to put it better myself.

But there is one final issue which divides us, that is, nationalisation. We believe that the experience of nationalisation so far has been to increase costs. I would ask even the most enthusiastic nationaliser on the benches opposite whether he does not think that there is at any rate a case for having a "look-see" how it is working out. [An HON. MEMBER: "Read 'The Economist.'"] I intend to read a passage which appeared in "The Times" on Monday—we can still choose our literature—which said that railway operating conditions: are probably affected most by the quality of coal, which is worse than before the war, but it is worth noting that the annual coal bill of the railways today is about £24 million more than the pre-war figure of about £12.500,000. Does that not contrast rather remarkably with the comparatively small increase in our steel prices which are still the cheapest in America or Europe? Hon. Members may think that is an accident, but it does not so appear to us. Yet we are to have more nationalisation. Not only iron and steel, but a new list is being fabricated which includes our greatest dollar earner, except whisky, which is the insurance industry. All these things are to be done for the encouragement of our trade.

For all these reasons we have no confidence in the Government's ability to lead this nation in times of even greater stress and strain than confront us now. We ask the House to support our Amendment in the confident knowledge that, though they may not do so tonight, the country will when the time comes.

9.30 p.m.

The Prime Minister (Mr. Attlee)

Before dealing with the subject matter of this Debate, I think it would be convenient for me to answer the Question put to me this afternoon—perhaps somewhat irregularly—by the Leader of the Opposition with regard to a report that an ultimatum had been delivered to the Government of Yugoslavia by the Government of the U.S.S.R. It appears in fact that there was no ultimatum, but that a note from Mr. Gromyko was given to the Yugoslav chargé d'affaires in Moscow denouncing the Soviet-Yugoslav Treaty of Friendship of 1945.

As the right hon. Gentleman said, we are now coming to the end of a three-day Debate, and there have been a number of well-informed and interesting speeches. There have been speeches that were on the point and some speeches that were largely off the point. The intervention of the Leader of the Opposition diverted the Debate from its real purpose. Most of what he said was very little to do with the Motion on the Paper. It was frankly electioneering. My right hon. Friend the Minister of Health in his brilliant reply—[Interruption]—which I noticed earned the appreciation of both sides of the House—while keeping all the time right on the point, dealt very faithfully with the right hon. Gentleman.

I desire to refer to only three points in his speech. First of all, the Leader of the Opposition made a very bitter personal attack on my right hon. Friend the Chancellor of the Exchequer. He chose to question his honesty and to impugn his integrity. I resent this, and I think most decent people in the country will resent it. The Chancellor was speaking the exact truth when he informed the House—[Interruption]—perhaps I may be allowed to make the statement before hon. Members want to contradict it. I was saying that the Chancellor spoke the exact truth—

Colonel Stoddart-Scott (Pudsey and Otley)


The Prime Minister

—wait a minute—when he informed the House in July that the Government had no intention of changing the exchange rate of the pound sterling.

No one has ever claimed that devaluation was a desirable thing on its own account, and no one has ever claimed that it is a complete remedy for the economic disequilibrium from which the world is suffering. Whether or not it would be a necessary operation depended on events, and the train of events rendered it necessary; and the Chancellor and the Government took the action necessary in the circumstances. The right hon. Gentleman the Leader of the Opposition can be a very big man or a very small man. I am always sorry, as one who has seen him in great and generous moods, when he descends to that kind of pettiness and meanness which he displayed yesterday. It did not injure my right hon. and learned Friend the Chancellor of the Exchequer, but it will devalue the right hon. Gentleman.

The next point to which I should like to refer was the right hon. Gentleman's paean in praise of Liberalism. I was sorry that he was not able to see the faces of his supporters. It was a most interesting study. I was not quite sure whether in this excursion he was trying to convince those who sit around him that Conservatism was so hopelessly unpopular that they must change their name when they come to the next election and call themselves Liberals or Liberal Conservatives. That has been done in other countries, though with no marked success.

Alternatively, I thought that perhaps he was trying to coax the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) and his friends to come inside— Walk into my parlour,' said the spider to the fly. The hon. Gentlemen on that bench have only got to look one bench behind them to see the dead flies—dead flies caught in the Tory web.

The third point was that running through all his excursions into history was just one thread. That was that whenever there was a good Government it was a Government of which he was a member. It was a rather complacent recital. This, of course, was strictly relevant to his Amendment, because his Amendment and his speech were alike destitute of any constructive policy at all. His only suggestion is, "Vote for me." It is 1945 all over again. It is the same appeal that failed so decisively then. It is the same appeal which has failed at every by-election even when the circus went round. That is why we get no constructive suggestions from the Opposition.

I know that there is a document. We do not seem to hear very much about, "The Right Road …" and so on. I notice that it is rather frowned upon by supporters in another place. It is a document that suggested, as far as I could see on reading it, on almost every page, increases of expenditure coupled with reductions of taxation. It seems to cut across all the kind of speeches that we have from the benches opposite, but I do not think that it will have any effect at the next election. I think what is likely is that the right hon. Gentleman will ask for a blank cheque from the electorate. People can guess pretty well what will be filled in if they give it him.

I noticed, by the way, one other point, and that was a very peculiar one. The right hon. Gentleman was dealing with the 1906 Election. He said that the majority in this present House was the same slice of the population that voted for the Liberals in 1906. Well, it was not quite, because there has been a very big extension of the franchise since then. What I would ask, if that is so, is, what of the slice which he is now leading? Is not that the same slice that in 1906 tried to block every single Liberal measure that was brought forward? In fact he is now with the representatives of the other slice, and what he thought of that slice has been recorded for all time in imperishable vituperative phraseology of which the right hon. Gentleman is a master. The right hon. Gentleman has put forward no policy, but I quite agree that the right hon. Member for West Bristol (Mr. Stanley) spoke on the subject, as did the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden).

I should like to deal with one or two points which have arisen in the Debate. I am going to deal now with points which arose in the Debate and which were actually relevant to the subject matter. It is, of course, vitally important that we should do our utmost to get this country independent and on its own feet, but we must have in mind that this is not just our problem; it is an international problem. I thought that too little reference was made to that.

Very little has been said in this Debate, except by the right hon. Member for Warwick and Leamington, of the discussions which took place in Washington between my right hon. Friends and the Ministers of the Governments of the United States and Canada. I think they were extremely valuable discussions, and there was an extremely important communiqué issued after that. That pointed out in the clearest way that this was not a problem just due to Britain or just relating to Britain's relations with the United States of America; it involved the whole relationship of the sterling area and was a world problem. That alone should refute the attempts that have been made today to try and lay all the responsibility for this position on to the Labour Government in this country. [An HON. MEMBER: "Was it discussed with France?"] If the hon. Member will wait a little, I will take up that point in due course.

It is clearly recognised that this is a problem that cannot be solved by one country, but must be solved by other countries in co-operation, and it was the endeavour of my right hon. Friend in those talks to prevent the divergence between the Western and the Eastern hemispheres, and the splitting of the world, not only into two worlds—that has already been done, unfortunately, by the attitude of the U.S.S.R.—but into three worlds. We are seeking for the widest extension of international trade both with the Commonwealth, the United States of America and with the Continent of Europe, and all other countries. There is no reason why attempts should be made to set one against the other.

There has been a certain amount of loose talk in this Debate about our being indifferent to Europe. Some right hon. Members have suggested that the manner in which the decision to devalue was announced showed a lack of regard for the interests of our European partners, and marked a departure from the co-operation in economic affairs with Western countries which we have been pursuing in the past. I cannot find anybody who is acquainted with these affairs who suggests that a change in the exchange rate can be discussed in a kind of mass meeting long ahead. That has never been suggested.

As a matter of fact, an attempt has been made to create friction between this Government and other Governments. We have had no complaint on that score from the Commonwealth. When New Zealand revalued they informed us at the time and we made no complaint. They did not inform us beforehand; they just did it. In the same way, when the foreign representatives were told of this by my right hon. Friend the Foreign Secretary and by the Chancellor of the Exchequer in Washington there was no complaint. Every responsible Finance Minister and every responsible business man and man of finance knows that a thing like this cannot be done by a whole mass of international talks and the rest of it. On these matters we take the best advice of people who know in the City of London, and not one of them would have suggested that this was a possible method.

Mr. Eden

If the right hon. Gentleman will permit me to intervene, I will try to be very short. I never suggested anything in the nature of a mass meeting. All I ever suggested was the same consultation with the French as the French have given to us.

The Prime Minister

We could not have this consultation all the way round without first of all taking a very great deal of time. Secondly, the wider the area of consultation the greater the danger. I am quite sure that if the right hon. Gentleman had been in our place he would have taken the advice of those who know. I also think that there has been a vast exaggeration about the disturbance caused by this. I know various reports were put out, but the whole thing was perfectly well understood.

As for our being indifferent to European trade, by our participation and by our initiative in O.E.E.C., in the Brussels Treaty and in the Council of Europe we have given and are giving abundant proof of our desire to strive for the utmost co-operation in Europe. There has been no weakening on our part in our desire to play our full part in these consultations and our loyalty is not in question to our French and other allies. Surely the statement made today by the President of the Board of Trade is a sufficient answer to this suggestion that somehow or other we are trying to cut ourselves off from European trade. The fact is that those allegations would never have been made if my right hon. Friend had been able to make that statement a little earlier.

The right hon. Member for Aldershot (Mr. Lyttelton) and the noble Lord the Member for South Dorset (Viscount Hinchingbrooke) asked a good deal about American investment. If hon. Members look at the terms of the communiqué they will see that a working group was set up to study the question of overseas investments and it is stated there that the President's Committee for Financing Foreign Trade is exploring possible lines of action with British and Canadian finance and business representatives. We look forward to very good results from that. We never suggested, or put obstacles in, the way to suggest, that we did not want American investment. There are vast areas in the world in great need of capital equipment and we desire the Americans to play their full part. I do not know where the noble Lord got the idea that we were discouraging it. That was a point which came up once or twice.

I must confess that I was a little puzzled by what the right hon. Member for Aldershot said about capital investment. As a matter or fact, the amount put to capital investment of our total production last year was 22½ per cent. That is more than we have put to it in any previous year. I think that has to be recognised, and it is part of the remarkable efforts of this country that there should have been such a vast amount put in. But, of course, the needs are enormous. There was the destruction of the war; there was the lag of the war; there was a great deal of lag owing to slackness in pre-war times; and the amount of investment to be caught up is, of course, tremendous. Therefore, I do not think there need be any fear on that. On the other hand, one has to be careful to have a priority in investments. We cannot afford to put everything at once into all that is desirable. These things are very carefully reviewed by an expert committee who can advise on exactly what is the right priority in these matters. One has, therefore, to have economy in that.

Several points were raised with regard to Government expenditure. The right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) discussed that. I must confess that I was a little surprised when he said he had not enough figures to make any suggestion at all as to where it should go. I should have thought there were abundant figures. I was asked why this had not been done before. There has been a constant review. [Laughter.] Oh, yes. [An HON. MEMBER: "What is the result?"] The results are in economies, and the review is to continue, and one has to press on with it. The suggestion that this was undertaken only after devaluation is nonsense. It was put in hand long before.

But we do not believe in a slashing of the social services. We do not believe in the kind of thing done so disastrously under the "Geddes' Axe," and we believe that we can preserve the social services. Our appeal to the country is this, that they have got the finest social services that any country has ever had. There is in the maintenance and preservation of these a great incentive to our people. In the Motion before the House we have put forward a call for the co-operation of all the people. We have not failed to tell the people of this country's difficulties. [HON. MEMBERS: "Oh."] Oh, yes, we have told them—over and over again. You know, Sir, hon. Gentlemen on the other side are always asking for expenditure. Sometimes it is in the agricultural interest, and sometimes for something else. There is never clamour for economy on that side.

During the last four years the Leader of the Opposition has rung the changes alternately on the shocking lavishness of the Government and on the austerity of the Chancellor of the Exchequer. He was wrong if he was austere; he was wrong if he was lavish. He was always wrong. [HON. MEMBERS: "Hear, hear."] The Chancellor of the Exchequer is always wrong, in the view of hon. Gentlemen opposite, unless they are on this side of the House.

We have never for a moment suggested that to get through these difficulties we shall not need hard work, hard thinking, from management and from workers alike. Out-of-date methods, restrictive practices, whether by employers or by employed, must go. We are asking for restraint in wage and salary demands and on profits, and that restraint is needed all the way round. I sometimes seem to hear from the other side that all expenditure by the community is waste, though the expenditure of individuals is not. It is not use restraining on one if we are to throw loose and increase purchasing power on the other. Let me say how much I agree with what was said by the hon. Member for the Exchange Division of Liverpool (Mrs. Braddock) about the need for the exercise of this restraint by local authorities.

The great mass of the people of this country know very well the great benefits they have received under four years of the Labour Government. They know better than Members opposite the full value of the Social Services and of security of employment, and the fact that adverse circumstances will mean some rise in the cost of living. I cannot attempt to say "Yes" or "No" to the right hon. Gentleman's prophecy. I agree with him that it is very rash of anyone to prophesy on these things. There will be some adverse effect, but they will not forget how very much different and better their life is today than anything they had under previous Governments.

Every man and woman employed on useful work in the country today is not working just for himself or herself but for the nation. Surely there is an incentive here. I really do not think so meanly of our people that employers will not do their best unless they have the incentive of some large added profits. I do not think so meanly of the workers that they will not work because they know part of their wages is going to be taken in taxation.

Mr. Osborne (Louth)

What about the strikers?

The Prime Minister

I could easily retort in regard to some people in the employing classes, but I am dealing with the majority of the people. I am rather surprised that the right hon. Gentleman did not seem to realise, although it is quite true, as he says, the workers are being taxed, that they never had the incomes before upon which to be taxed. [An HON. MEMBER: "You tax them and you take it away."] They were not given it individually then and they were not given it collectively. Today they are given it collectively through the social services.

The life of this country depends on this effort being forthcoming, and that is why we make this appeal. It is up to everyone to realise that there is something more in this than attempts to snatch party advantages by running down the Government. There is no doubt whatever that the kind of attacks that were made on the people of this country did us harm abroad. They were definitely unpatriotic actions, and I hope that from this day on they are going to stop. No one minds attacks on the Government here—

Mr. Churchill

What about calling them "vermin"?

The Prime Minister

I am dealing with attacks made on the people of this

country. I hope these attacks will stop. We have a great civilisation here built up through the years. During these four years we have done an immense amount to make the British heritage, that used to be confined so largely for the benefit of one class, extend to all, and in doing this we have raised the prestige of this country. There is confidence in this country abroad and at home, and the right hon. Gentleman has found out on 32 occasions that there is no confidence in him.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 350; Noes, 212.

Division No. 247.] AYES 10.1 p.m.
Acland, Sir Richard Collins, V. J. Gibson, C. W.
Adams, Richard (Balham) Colman, Miss G. M. Gilzean, A.
Albu, A. H. Comyns, Dr. L. Glanville, J. E. (Consett)
Allen, A. C. (Bosworth) Cook, T. F. Gooch, E. G.
Allen, Scholefield (Crewe) Cooper, G. Gordon-Walker, P. C.
Alpass, J. H. Corbet, Mrs. F. K. (Camb'well, N. W.) Greenwood, Rt. Hon. A. (Wakefield)
Anderson, A. (Motherwell) Corlett, Dr. J. Greenwood, A. W. J. (Heywood)
Attewell, H. C. Cove, W. G. Grenfell, D. R.
Attlee, Rt. Hon. C. R. Crawley, A. Grey, C. F.
Austin, H. Lewis Cripps, Rt. Hon. Sir S. Grierson, E.
Awbery, S. S. Crossman, R. H. S. Griffiths, D. (Rother Valley)
Ayles, W. H. Cullen, Mrs. Griffiths, Rt. Hon. J. (Llanelly)
Ayrton Gould, Mrs. B. Daggar, G. Griffiths, W. D. (Moss Side)
Bacon, Miss A. Daines, P. Guest, Dr. L. Haden
Baird, J. Gallon, Rt. Hon. H. Gunter, R. J.
Balfour, A. Davies, Edward (Burslem) Guy, W. H.
Barnes, Rt. Hon. A. J. Davies, Harold (Leek) Haire, John E. (Wycombe)
Barstow, P. G. Davies, Haydn (St. Pancras, S. W.) Hamilton, Lieut.-Col. R.
Battley, J. R. Davies, R. J. (Westhoughton) Hannan, W. (Maryhill)
Bechervaise, A. E. Davies, S. O. (Merthyr) Hardy, E. A.
Benson, G. Deer, G. Harrison, J.
Berry, H. Delargy, H. J. Hastings, Dr. Somerville.
Beswick, F. Diamond, J. Haworth, J.
Bevan, Rt. Hon. A. (Ebbw Vale) Dobbie, W. Henderson, Joseph (Ardwick)
Bing, C. H. C. Dodds, N. N. Herbison, Miss M.
Binns, J. Donovan, T. Hewitson, Capt. M.
Blackburn, A. R. Driberg, T. E. N. Hobson, C. R.
Blenkinsop, A. Dugdale, J. (W. Bromwich) Holman, P.
Blyton, W. R. Dumpleton, C. W. Holmes, H. E. (Hemsworth)
Boardman, H. Dye, S. Horabin, T. L.
Bottomley, A. G. Ede, Rt. Hon. J. C. Houghton, Douglas
Bowden, H. W. Edelman, M. Hoy, J.
Braddock, Mrs. E. M. (L'pl. Exch'ge) Edwards, Rt. Hon. Sir C. (Bedwellty) Hubbard, T.
Bramall, E. A. Edwards, John (Blackburn) Hudson, J. H. (Ealing, W.)
Brook, D. (Halifax) Edwards, Rt. Hon. N. (Caerphilly) Hughes, Emrys (S. Ayr)
Brooks, T. J. (Rothwell) Evans, Albert (Islington, W.) Hughes, Hector (Aberdeen, N.)
Broughton, Dr. A. D. D. Evans, E. (Lowestoft) Hughes, H. D. (W'lverh'pton, W.)
Brown, George (Belper) Evans, John (Ogmore) Hynd, H. (Hackney, C.)
Brown, T. J. (Ince) Evans, S. N. (Wednesbury) Hynd, J. B. (Attercliffe)
Bruce, Maj. D. W. T. Ewart, R. Irvine, A. J. (Liverpool)
Burden, T. W. Fairhurst, F. Irving, W. J. (Tottenham, N.)
Burke, W. A. Farthing, W. J. Isaacs, Rt. Hon. G. A.
Butler, H. W. (Hackney, S.) Fernyhough, E. Janner, B.
Callaghan, James Field, Capt. W. J. Jay, D. P. T.
Chamberlain, R. A. Fletcher, E. G. M. (Islington, E.) Jeger, G. (Winchester)
Champion, A. J. Follick, M. Jeger, Dr. S. W. (St. Pancras, S. E.)
Chater, D. Forman, J. C. Jenkins, R. H.
Chetwynd, G. R. Fraser, T. (Hamilton) John, W.
Cluse, W. S. Freeman, J. (Watford) Johnston, Douglas
Cobb, F. A. Freeman, Peter (Newport) Jones, Rt. Hon. A. C. (Shipley)
Cocks, F. S. Gaitskell, Rt. Hon. H. T. N. Jones, D. T. (Hartlepool)
Coldrick, W. Ganley, Mrs. C. S. Jones, Elwyn (Plaistow)
Collindridge, F. Gibbins, J. Jones, J. H. (Bolton)
Jones, P. Asterley (Hitchin) Moyle, A. Snow, J. W.
Keenan, W. Murray, J. D. Sorensen, R. W.
Kenyon, C. Nally, W. Soskice, Rt. Hon. Sir Frank
Key, Rt. Hon. C. W. Naylor, T. E. Sparks, J. A.
King, E. M. Neal, H. (Claycross) Steele, T.
Kinghorn, Sqn.-Ldr. E. Nichol, Mrs. M. E. (Bradford, N.) Stewart, Michael (Fulham, E.)
Kinley, J. Nicholls, H. R. (Stratford) Stokes, R. R.
Kirby, B. V. Noel-Buxton, Lady Strachey, Rt. Hon. J.
Kirkwood, Rt. Hon. D. O'Brien, T. Strauss, Rt. Hon. G. R. (Lambeth)
Lang, G. Oldfield, W. H. Stross, Dr. B.
Lavers, S. Oliver, G. H. Stubbs, A. E.
Lawson, Rt. Hon. J. J. Orbach, M. Summerskill, Rt. Hon. Edith
Lee, Miss J. (Cannock) Paling, Rt. Hon. Wilfred (Wentworth) Swingler, S.
Leonard, W. Paling, Will T. (Dewsbury) Sylvester, G. O.
Leslie, J. R. Palmer, A. M. F. Symonds, A. L.
Lever, N. H. Pannell, T. C. Taylor, H. B. (Mansfield)
Levy, B. W. Pargiter, G. A. Taylor, Dr. S. (Barnet)
Lewis, A. W. J. (Upton) Parkin, B. T. Thomas, D. E. (Aberdare)
Lewis, J. (Bolton) Paton, Mrs. F. (Rushcliffe) Thomas, George (Cardiff)
Lewis, T. (Southampton) Paton, J. (Norwich) Thomas, Ivor Owen (Wrekin)
Lindgren, G. S. Pearson, A. Thomas, John R. (Dover)
Lindsay, K. M. (Comb'd Eng. Univ) Peart, T. F. Thorneycroft, Harry (Clayton)
Lipson, D. L. Perrins, W. Thurtle, Ernest
Lipton, Lt.-Col. M. Poole, Cecil (Lichfield) Tiffany, S.
Logan, D. G. Popplewell, E. Timmons, J.
Longden, F. Porter, E. (Warrington) Tolley, L.
Lyne, A. W. Porter, G. (Leeds) Tomlinson, Rt. Hon. G.
McAdam, W. Proctor, W. T. Turner-Samuels, M.
McEntee, V. La T. Pryde, D. J. Ungoed-Thomas, L.
McGhee, H. G. Pursey, Comdr. H. Usborne, Henry
McGovern, J. Randall, H. E. Vernon, Maj. W. F.
Mack, J. D. Ranger, J. Viant, S. P.
McKay, J. (Wallsend) Rankin, J. Wallace, G. D. (Chislehurst)
Mackay, R. W. G. (Hull, N. W.) Rees-Williams, D. R. Wallace, H. W. (Walthamstow, E.)
McKinlay, A. S. Reeves, J. Watkins, T. E.
Maclean, N. (Govan) Reid, T. (Swindon) Weitzman, D.
McLeavy, F. Rhodes, H. Wells, P. L. (Faversham)
MacMillan, M. K. (Western Isles) Richards, R. Wells, W. T. (Walsall)
MacPherson, Malcolm (Stirling) Ridealgh, Mrs. M. West, D. G.
Macpherson, T. (Romford) Robens, A. Wheatley, Rt. Hn. John (Edinb'gh, E.)
Mainwaring, W. H. Robertson, J. J. (Berwick) White, H. (Derbyshire, N. E.)
Mallalieu, E. L. (Brigg) Robinson, Kenneth (St. Pancras, N.) Wigg, George
Mallalieu, J. P. W. (Huddersfield) Rogers, G. H. R. Wilcock, Group-Capt. C. A. B.
Mann, Mrs. J. Ross, William (Kilmarnock) Wilkes, L.
Manning, C. (Camberwell, N.) Royle, C. Wilkins, W. A.
Manning, Mrs. L. (Epping) Sargood, R. Willey, F. T. (Sunderland)
Marquand, Rt. Hon. H. A. Scollan, T. Willey, O. G. (Cleveland)
Marshall, F. (Brightside) Scott-Elliot, W. Williams, D. J. (Neath)
Mathers, Rt. Hon. George Segal, Dr. S. Williams, J. L. (Kelvingrove)
Mayhew, C. P. Shackleton, E. A. A. Williams, Ronald (Wigan)
Medland, H. M. Sharp, Granville Williams, W. T. (Hammersmith, S.)
Mellish, R. J. Shawcross, C. N. (Widnes) Williams, W. R. (Heston)
Messer, F. Shinwell, Rt. Hon. E. Willis, E.
Middleton, Mrs. L. Shurmer, P. Wills, Mrs. E. A.
Mikardo, Ian Silkin, Rt. Hon. L. Wilmot, Rt. Hon. J.
Millington, Wing-Comdr. E. R. Silverman, J. (Erdington) Wilson, Rt. Hon. J. H.
Mitchison, G. R. Silverman, S. S. (Nelson) Wise, Major F. J.
Monslow, W. Simmons, C. J. Woods, G. S.
Moody, A. S. Skeffington, A. M. Wyatt, W.
Morgan, Dr. H. B. Skeffington-Lodge, T. C. Yates, V. F.
Morley, R. Skinnard, F. W. Younger, Hon. Kenneth
Morris, Lt.-Col. H. (Sheffield, C.) Smith, C. (Colchester)
Morris, P. (Swansea, W.) Smith, Ellis (Stoke) TELLERS FOR THE AYES:
Morrison, Rt. Hon. H. (Lewisham, E.) Smith, H. N. (Nottingham, S.) Mr. Whiteley and Mr. R. J. Taylor
Mort, D. L. Smith, S. H. (Hull, S. W.)
Agnew, Cmdr P. G. Bracken, Rt. Hon. Brendan Cooper-Key, E. M.
Aitken, Hon. Max Braithwaite, Lt.-Cmdr. J. G. Corbett, Lieut.-Col. U. (Ludlow)
Amory, D. Heathcoat Bromley-Davenport, Lt.-Col. W. Crookshank, Capt. Rt. Hon. H. F. C.
Assheton, Rt. Hon. R. Brown, W. J. (Rugby) Crowder, Capt. John E.
Astor, Hon. M. Bullock, Capt. M. Cuthbert, W. N.
Baldwin, A. E. Butcher, H. W. Darling, Sir W. Y.
Barlow, Sir J. Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n) Davidson, Viscountess
Beamish, Maj. T. V. H. Byers, Frank Davies, Rt. Hn. Clement (Montgomery)
Beechman, N. A. Carson, E. De la Bère, R.
Bennett, Sir P. Challen, C. Digby, Simon Wingfield
Boles, Lt.-Col. D. C. (Wells) Channon, H. Dodds-Parker, A. D.
Boothby, R. Churchill, Rt. Hon. W. S. Donner, P. W.
Bossom, A. G. Clarke, Col. R. S. Dower, Col. A. V. G. (Penrith)
Bowen, R. Clifton-Brown, Lt.-Col. G. Dower, E. L. G. (Caithness)
Bower, N. Cole, T. L. Drayson, G. B.
Boyd-Carpenter, J. A. Conant, Maj. R. J. E. Dugdale, Maj. Sir T. (Richmond)
Duncan, Rt. Hn. Sir A. (City of Lond.) Lindsay, M. (Solihull) Ramsay, Maj. S.
Duthie, W. S. Linstead, H. N. Rayner, Brig. R.
Eccles, D. M. Lloyd, Maj. Guy (Renfrew, E.) Reed, Sir S. (Aylesbury)
Eden, Rt. Hon. A. Lloyd, Selwyn (Wirral) Renton, D.
Elliot, Lieut.-Col. Rt. Hon. Walter Low, A. R. W. Roberts, Emrys (Merioneth)
Erroll, F. J. Lucas, Major Sir J. Roberts, H. (Handsworth)
Fleming, Sqn.-Ldr. E. L. Lucas-Tooth, Sir H. Roberts, P. G. (Ecclesall)
Fletcher, W. (Bury) Lyttelton, Rt. Hon. O. Roberts, W. (Cumberland, N.)
Foster, J. G. (Northwich) MacAndrew, Col. Sir C. Robertson, Sir D. (Streatham)
Fox, Sir G. McCallum, Maj. D. Robinson, Roland (Blackpool, S.)
Fraser, H. C. P. (Stone) McCorquodale, Rt. Hon. M. S. Ross, Sir R. D. (Londonderry)
Fraser, Sir I. (Lonsdale) MacDonald, Sir M. (Inverness) Sanderson, Sir F.
Fyfe, Rt. Hon. Sir D. P. M. Macdonald, Sir P. (I. of Wight) Scott, Lord W.
Gage, C. McFarlane, C. S. Shephard, S. (Newark)
Galbraith, Cmdr. T. D. (Pollok) Mackeson, Brig. H. R. Shepherd, W. S. (Bucklow)
Galbraith, T. G. D. (Hillhead) McKie, J. H. (Galloway) Smiles, Lt.-Col. Sir W.
Gammans, L. D. Maclay, Hon. J. S. Smith, E. P. (Ashford)
Gates, Maj. E. E. Maclean, F. H. R. (Lancaster) Smithers, Sir W.
George, Lady M. Lloyd (Anglesey) MacLeod, J. Snadden, W. M.
Glyn, Sir R. Macmillan, Rt. Hon. Harold (Bromley) Spearman, A. C. M.
Gomme-Duncan, Col. A. Macpherson, N. (Dumfries) Spence, H. R.
Granville, E. (Eye) Maitland, Comdr. J. W. Stanley, Rt. Hon. O.
Gridley, Sir A. Manningham-Buller, R. E. Stewart, J. Henderson (Fife, E.)
Grimston, R. V. Marlowe, A. A. H. Stoddart-Scott, Col. M.
Gruffydd, Prof. W. J. Marples, A. E. Strauss, Henry (English Universities)
Hannon, Sir P. (Moseley) Marsden, Capt. A. Stuart, Rt. Hon. J. (Moray)
Harden, J. R. E. Marshall, D. (Bodmin) Sutcliffe, H.
Harris, H. Wilson (Cambridge Univ.) Marshall, S. H. (Sutton) Taylor, C. S. (Eastbourne)
Harvey, Air-Comdre. A. V. Maude, J. C. Taylor, Vice-Adm. E. A. (P'dd't'n, S.)
Haughton, S. G. Medlicott, Brigadier F. Teeling, William
Head, Brig. A. H. Mellor, Sir J. Thomas, Ivor (Keighley)
Headlam, Lieut.-Col. Rt. Hon. Sir C. Molson, A. H. E. Thomas, J. P. L. (Hereford)
Henderson, John (Cathcart) Moore, Lt.-Col. Sir T. Thorneycroft, G. E. P. (Monmouth)
Herbert, Sir A. P. Morris, Hopkin (Carmarthen) Thornton-Kemsley, C. N.
Hinchingbrooke, Viscount Morris-Jones, Sir H. Thorp, Brigadier R. A. F.
Hogg, Hon. Q. Morrison, Maj. J. G. (Salisbury) Touche, G. C.
Hollis, M. C. Morrison, Rt. Hon. W. S. (Cirencester) Turton, R. H.
Holmes, Sir J. Stanley (Harwich) Mott-Radclyffe, C. E. Tweedsmuir, Lady
Hope, Lord J. Mullan, Lt. C. H. Vane, W. M. F.
Howard, Hon. A. Nicholson, G. Wadsworth, G.
Hudson, Rt. Hon. R. S. (Southport) Nield, B. (Chester) Walkden, E.
Hulbert, Wing-Cdr N. J. Noble, Comdr. A. H. P. Walker-Smith, D.
Hurd, A. Nutting, Anthony Ward, Hon. G. R.
Hutchinson, H. L. (Rusholme) Odey, G. W. Watt, Sir G. S. Harvie
Hutchison, Lt.-Cm. Clark (E'b'rgh, W.) O'Neill, Rt. Hon. Sir H. Webbe, Sir H. (Abbey)
Jeffreys, General Sir G. Orr-Ewing, I. L. Wheatley, Colonel M. J. (Dorset, E.)
Jennings, R. Osborne, C. White, Sir D. (Fareham)
Joynson-Hicks, Hon. L. W. Peake, Rt. Hon. O. Williams, Gerald (Tonbridge)
Keeling, E. H. Peto, Brig. C. H. M. Willoughby de Eresby, Lord
Kerr, Sir J. Graham Pickthorn, K. Winterton, Rt. Hon. Earl
Kingsmill, Lt.-Col. W. H. Pitman, I. J. York, C.
Lambert, Hon. G. Ponsonby, Col. C. E. Young, Sir A. S. L. (Partick)
Lancaster, Col. C. G. Prescott, Stanley
Langford-Holt, J. Price-White, D. TELLERS FOR THE NOES:
Law, Rt. Hon. R. K. Prior-Palmer, Brig. O. Mr. Buchan-Hepburn and
Legge-Bourke, Maj. E. A. H. Raikes, H. V. Mr. Drewe.

Main Question put.

The House divided: Ayes, 342; Noes, 5.

Division No. 248.] AYES [10.15 p.m.
Acland, Sir Richard Berry,[...] Butler, H. W. (Hackney, S.)
Adams, Richard (Balham) Beswick, F. Callaghan, James
Albu, A. H. Bevan, Rt. Hon. A (Ebbw Vale) Chamberlain, R. A.
Allen, A. C. (Bosworth) Bing, G. H. C. Champion, A. J.
Allen, Scholefield (Crewe) Binns, J. Chater, D.
Alpass, J. H. Blackburn, A. R. Chetwynd, G. R.
Anderson, A. (Motherwell) Blenkinsop, A. Cluse, W. S.
Attewell, H. C. Blyton, W. R. Cobb, F. A.
Attlee, Rt. Hon. C. R. Boardman, H. Cocks, F. S.
Austin, H. Lewis Bottomley, A. G. Coldrick, W.
Awbery, S. S. Bowden, H. W. Collindridge, F.
Ayles, W. H. Braddock, Mrs. E. M. (L'pl. Exch'ge) Collins, V. J.
Ayrton Gould, Mrs. B. Bramall, E. A. Colman, Miss G. M.
Bacon, Miss A. Brook, D. (Halifax) Comyns, Dr. L.
Baird, J. Brooks, T. J. (Rothwell) Cook, T. F.
Balfour, A. Broughton, Dr. A. D. D. Cooper, G.
Barnes, Rt. Hon. A. J. Brown, George (Belper) Corbet, Mrs. F. K. (Camb'well, N. W.)
Barstow, P. G. Brown, T. J. (Ince) Corlett, Dr. J.
Battley, J. R. Brace, Maj. D. W. T. Cove, W. G.
Bechervaise, A. E. Burden, T. W. Crawley, A.
Benson, G. Burke, W. A. Cripps, Rt. Hon Sir S.
Crossman, R. H. S. Jay, D. P. T. Palmer, A. M. F.
Culien, Mrs. Jeger, G. (Winchester) Panned, T. C.
Daggar, G. Jeger, Dr. S. W. (St. Pancras, S. E.) Pargiter, G. A.
Daines, P. Jenkins, R. H. Parkin, B. T.
Dalton, Rt. Hon. H. John, W. Paton, Mrs. F. (Rushcliffe)
Davies, Edward (Burslem) Johnston, Douglas Paton, J. (Norwich)
Davits, Harold (Leek) Jones, Rt. Hon. A. C. (Shipley) Pearson, A.
Davies, Haydn (St. Pancras, S.W.) Jones, D. T. (Hartlepool) Peart, T. F.
Davies, R. J. (Westhoughton) Jones, Elwyn (Plaistow) Perrins, W.
Davies, S. O. (Merthyr) Jones, J. H. (Balton) Poole, Cecil (Lichfield)
Deer, G. Jones, P. Asterley (Hitchin) Porter, E. (Warrington)
Delargy, H. J. Keenan, W. Porter, G. (Leeds)
Diamond, J. Kenyon, C. Proctor, W. T.
Dobbie, W. Key, Rt. Hon. C. W. Pryde, D. J.
Dodds, N. N. Kinghorn, Sqn.-Ldr. E. Pursey, Comdr. H.
Donovan, T. Kinley, J. Randall, H. E.
Driberg, T. E. N. Kirby, B. V. Ranger, J.
Dugdale, J. (W. Bromwich) Kirk wood, Rt. Hon. D. Rankin, J.
Dumpleton, C. W. Lang, G. Rees-Williams, D. R.
Dye, S. Lavers, S. Reeves, J.
Ede, Rt. Hon. J. C. Lawson, Rt. Hon. J. J. Reid, T. (Swindon)
Edelman, M. Lee, Miss J. (Cannock) Rhodes, H.
Edwards, Rt. Hon. Sir C. (Bedwellty) Leonard, W. Richards, R.
Edwards, John (Blackburn) Leslie, J. R. Ridealgh, Mrs. M.
Edwards, Rt. Hon. N. (Caerphilly) Lever, N. H. Robens, A.
Evans, Albert (Islington, W.) Levy, B. W. Robertson, J. J. (Berwick)
Evans, E. (Lowestoft) Lewis, A. W. J. (Upton) Robinson, Kenneth (St. Pancras, N.)
Evans, John (Ogmore) Lewis, J. (Bolton) Rogers, G. H. R.
Evans, S. N. (Wednesbury) Lewis, T. (Southampton) Ross, William (Kilmarnock)
Ewart, R. Lindgren, G. S. Royle, C.
Fairhurst, F. Lipson, D. L. Sargood, R.
Farthing, W. J. Lipton, Lt.-Col. M. Scott-Elliot, W.
Fernyhough, E. Logan, D. G. Segal, Dr. S.
Field, Capt. W. J. Longden, F. Shackleton, E. A. A.
Fletcher, E. G. M. {Islington, E.) Lyne, A. W. Sharp, Granville
Follick, M. McAdam, W. Shawcross, C. N. (Widnes)
Forman, J. C. McEntee, V. La T. Shinwell, Rt. Hon. E.
Fraser, T. (Hamilton) McGhee, H. G. Shurmer, P.
Freeman, J. (Watford) McGovern, J. Silkin, Rt. Hon. L.
Freeman, Peter (Newport) Mack, J. D. Silverman, J. (Erdington)
Gaitskell, Rt. Hon. H. T. N. McKay, J. (Wallsend) Silverman, S. S. (Nelson)
Ganley, Mrs. C. S. Mackay, R. W. G. (Hull, N. W.) Simmons, C. J.
Gibbins, J. McKinlay, A. S. Skeffington, A. M.
Gibson, C. W. McLeavy, F. Skeffington-Lodge, T. C.
Gilzean, A. MacMillan, M. K. (Western Ides) Skinnard, F. W.
Glanville, J. E. (Consett) MacPherson, Malcolm (Stirling) Smith, C. (Colchester)
Gooch, E. G. Macpherson, T. (Romford) Smith, S. H. (Hull, S. W.)
Gordon-Walker, P. C. Mallalieu, E. L. (Brigg) Snow, J. W.
Greenwood, Rt. Hon. A. (Wakefield) Mallalieu, J. P. W. (Huddersfield) Sorensen, R. W.
Greenwood, A. W. J. (Heywood) Mann, Mrs. J. Soskice, Rt. Hon. Sir Frank
Grenfell, D. R. Manning, C. {Camberwell, N.) Sparks, J. A.
Grey, C. F. Manning, Mrs. L. (Epping) Steele, T.
Grierson, E. Marquand, Rt. Hon. H. A. Stewart, Michael (Fulham, E.)
Griffiths, D. (Rother Valley) Marshall, F. (Brightside) Stokes, R. R.
Griffiths, Rt. Hon. J. (Llanelly) Mathers, Rt. Hon. George Strachey, Rt. Hon. J.
Griffiths, W. D. (Moss Side) Mayhew, C. P. Strauss, Rt. Hon. G. R. (Lambeth)
Guest, Dr. L. Haden Medland, H. M. Stross, Dr. B.
Gunter, R. J. Mellish, R. J. Stubbs, A. E.
Guy, W. H. Messer, F. Summerskill, Rt. Hon. Edith
Hairs, John E. (Wycombe) Middleton, Mrs. L. Swingler, S.
Hamilton, Lieut.-Col. R. Mikardo, Ian Sylvester, G. O.
Hannan, W. (Maryhill) Millington, Wing-Comdr. E. R. Symonds, A. L.
Hardy, E. A. Mitchison, G. R. Taylor, H. B. (Mansfield)
Harrison, J. Monslow, W. Taylor, R. J. (Morpeth)
Hastings, Dr. Somerville. Moody, A. S. Taylor, Dr. S. (Barnet)
Haworth, J. Morgan, Dr. H. B. Thomas, D. E. (Aberdare)
Henderson, Joseph (Ardwick) Morlay, R. Thomas, George (Cardiff)
Herbison, Miss M. Morris, Lt.-Col. H. (Sheffield, C.) Thomas, Ivor Owen (Wrekin)
Hewitson, Capt. M. Morris, P. (Swansea, W.) Thomas, John R. {Dover)
Hobson, C. R. Morrison, Rt. Hon. H. (Lewisham, E.) Thorneycroft, Harry (Clayton)
Holman, p. Mort, D. L. Thurtle, Ernest
Holmes, H. E. (Hemsworth) Moyle, A. Tiffany, S.
Horabin, T. L. Murray, J. D. Timmons, J.
Houghton, Douglas Nally, W. Tolley, L.
Hoy, J. Naylor, T. E. Tomlinson, Rt. Hon. G.
Hubbard, T. Neal, H. (Claycross) Turner-Samuels, M.
Hudson, J. H. (Ealing, W.) Nichol, Mrs. M. E. (Bradford, N.) Ungoed-Thomas, L.
Hughes, Hector (Aberdeen, N.) Nicholls, H. R. (Stratford) Usborne, Henry
Hughes, H. D. (W'lverh'pton, W.) Noel-Buxton, Lady Vernon, Maj. W. F.
Hynd, H. (Hackney, C.) O'Brien, T. Viant, S. P.
Hynd, J. B. (Attercliffe) Oldfield, W. H. Wallace, H. W. (Walthamstow, E.)
Irvine, A. J. (Liverpool) Oliver, G. H. Watkins, T. E.
Irving, W. J. (Tottenham, N.) Orbach, M. Weitzman, D.
Isaacs, Rt. Hon. G. A. Paling, Rt. Hon. Wilfred (Wentworth) Wells, P. L. (Faversham)
Janner, B. Paling, Will T. (Dewsbury) Wells, W. T. (Walsall)
West, D. G. Willey, O. G. (Cleveland) Wilson, Rt. Hon. J. H.
Wheatley, Rt. Hn. John (Edinb'gh, E.) Williams, D. J. (Neath) Wise, Major F. J.
White, H. (Derbyshire, N. E.) Williams, J. L. (Kelvingrove) Woods, G. S.
Whiteley, Rt. Hon. W. Williams, Ronald (Wigan) Wyatt, W.
Wigg, George Williams, W. T. (Hammersmith, S.) Yates, V. F.
Wilcock, Group-Capt. C. A. B. Williams, W. R. (Heston) Younger, Hon. Kenneth
Wilkes, L. Willis, E.
Wilkins, W. A. Wills, Mrs. E. A. TELLERS FOR THE AYES:
Willey, F. T. (Sunderland) Wilmot, Rt. Hon. J. Mr. Popplewell and
Mr. George Wallace.
Gallacher, W. Solley, L. J. TELLERS FOR THE NOES:
Hutchinson, H. L. (Rusholme) Zilliacus, K. Mr. Platts-Mills and Mr. Piratin.
Pritt, D. N.

Question put, and agreed to.

Resolved: That this House approves the action taken by His Majesty's Government in relation to the exchange value of the pound sterling, supports the measures agreed upon at Washington by the Ministers of the United States, Canada and the United Kingdom which are designed to assist in restoring equilibrium in the sterling-dollar balance of trade for the purpose of enabling the economy of the sterling area to maintain stability independent of external aid; and calls upon the people for their full co-operation with the Government in achieving this aim, whilst maintaining full employment and safeguarding the social services.