§ LOUD LLOYD rose to move to resolve, That this House desires to place on record its regret that the financial proposals of the Government for the current year contain no reference to or any measures for the safeguarding of home industries or for the promotion of Empire economic unity. The noble Lord said: My Lords, the Motion that I am venturing to submit to you, to-day, invites an expression of your Lordships' "regret that the financial proposals of the Government for the current year contain no reference to or any measures for the safeguarding of home industries, or for the promotion of Empire economic unity." My Motion does not call nor would it be in order for mo on this occasion to discuss the general financial situation of the country, but it is very pertinent to my Motion to consider to what extent the industries of this country are carrying a very much heavier burden of taxation than the industries of other countries. It must be obvious that, whatever measures we may ultimately adopt in the future to give both industrial and agricultural production a fair opportunity to sustain themselves, one of the primary considerations must be a reduction of the burden of taxation which now falls so very heavily upon all British producers.
§ The latest figures that are available show that the people of this country are taxed per head at least 50 per cent. more than the citizens of the next most highly taxed country and two or three times as heavily as the people of most other countries. It is, therefore, perfectly true to say that Free Trade finance means a far greater addition to the cost of living than could possibly result from the most extreme form of Tariff Protection as represented—or as very often misrepresented—by Free Trade exponents. The Chancellor of the Exchequer, it is true, this year has added little to the burden 486 of taxation—I think some £7,500,000—and has preferred to postpone to another year a very large increase of taxation which will become inevitable as things are going to-day. The new taxation which he has imposed, the tax on petrol, while a luxury tax to some, is yet another burden on production and on transport.
§ But the greatest burden which the Chancellor has put upon industry—and this is pertinent to the Motion—is the burden of totally unnecessary unemployment. It is a burden which has involved Treasury advances to the Unemployment Fund of no less than £86,000,000 in quite a short time in the shape of what the Government, I believe, euphemistically describe as a loan, but for which, as far as I can see, the Chancellor has made no provision whatever in his Budget. And this unemployment increases day by day and week by week to proportions which are really appalling, which have no parallel largely because we are at this period continuing to import between £250,000,000 and £300,000,000 worth of foreign manufactured goods, while something like 2,500,000 British workers are standing idle to-day. So long has this continued that one doubts whether, when prosperity returns, they will have any capacity left for work.
§ It is the fashion, I know, on the Government Benches, on Socialist platforms, and in the allied, but ever thinning, ranks of the Free Trade Union, to attribute the dramatic decline of our staple industries sometimes to one cause, sometimes to another, sometimes to the War, sometimes to the "economic blizzard" which de-devastates so many countries to-day, or, more piously—and helplessly—to the act of God; whereas everyone in the whole world who is not a free trader knows to-day that the decline of our industry and agriculture is due in the main to no temporary cause, but rather to long years of mistaken policy, to a blind and blinkered belief in a system of free imports and taxed exports, a system which has been justified neither by the creed of Cobden nor by the tenets of List. No sane economist that I have ever met has ever attempted to justify the system under which we labour to-day; when the justification is attempted it is attempted in the name of that free trade which it is not at all.487
§ If the Government are right in their contention that our troubles are really the result of special causes not peculiar to this country, but common to all our neighbours, I think they would have to show, would they not, that industry, agriculture and finance are at any rate in a more flourishing condition in this country than they are in countries whose fiscal system is in their opinion less fortunate than ours. They would have to explain, as I would invite noble Lords opposite to explain, why it is, for instance, that, whereas before the War we exported nearly three times as many tons of iron and steel as we imported, we are now actually importing more iron and steel than we export—and that in the greatest country of iron masters and steel producers in the world. And, whilst this is the case under the so-called system of Free Trade our chief Protectionist rivals—all of them, too, victims of world causes, of which the Prime Minister talks so much—are exporting, in the case of America, nearly three times as much iron and steel as they import, in the case of Germany, a victim of the world War, if any there was, nearly four times as much as they import, and in the case of Belgium nearly six times as much as they import. I would invite the Governments explanation of that phenomenon. It is, I am afraid, an indisputable fact that no other country in the world, least of all a country fed by so wide a wealth of its own raw produce and fortified by so vast an area of administrative control overseas as our own, has to record so tragic a decline of its staple industries from predominance and primacy in the past down to a comparative collapse.
§ I would ask noble Lords opposite if they can tell us in what other country under Protection has agriculture declined over so long and persistent a period, or experienced such hopeless enfeeblement as in Free Trade England. There is no parallel, I believe, in any other country under Protection in the world. It is true that most other countries to-day under Protection have to record more or less serious figures of unemployment in their industries, but there is a difference between them and us, because this is the only country in the world which, over a whole decade or longer, has exhibited such deep-seated and continuous incapacity to find work for its wage- 488 earners. That is the difference. I suggest to-day that the main causes are not ephemeral, they are not cyclonic, they are endemic; they belong to something permanent in our system, they are the result, as we believe, of a long period of mistaken policy. Any policy may work well for a time, and a vast stimulus to England's export trade was given in the early days of Free Trade by the great discoveries of gold in California and Australia in 1848, by the fact that we were the inventors of the railway system and were for many years the only country equipped to produce steel rails, locomotives and all the appurtenances of a great invention—still more because the Free Trade movement in the forties was the inheritor of the results of that marvellous system of Protection, under which all our staple industries had themselves been built up, and for which Free Trade for many years got the superficial credit.
§ But in spite of every adventitious good fortune, in spite of every misrepresentation, we have known now for more than twenty years that the system of so-called Free Trade has failed utterly, and most of us believe that the failure was due to the fact in large degree that it was based on a system of purely material selfishness which, for the immediate gain of the private pocket of the individual, was willing to ignore the ultimate and corporate welfare of industry and agriculture as a whole. That is what Free Trade taught the producer of that time. Look back and see whether it is not true that the very creed of Cobden set the employer against the wage-earners, whose bodies and souls were to be bought in the cheapest market, where, you will remember, they were to be bought according to Cobden. It set industry against agriculture and was only too ready to sacrifice what to-day we realise to be the priceless bulwark of a prosperous peasantry for the more speedily won wealth of the spindle and the slum. More than either, it sought to set the interests of England against its Colonies and the interests of the Colonies against England.
§ If we are really to understand the working of the Chancellor's mind to-day and the attitude of the Government towards the Safeguarding Duties and 489 economic unity in the Empire as a, whole, we can best do so, I think, by remembering the oft-quoted remark of Mr. Cobden in 1842, when he spoke his soul out and said that the Colonial system with all its dazzling appeals to the passions of the people, could never be got rid of except by the indirect process of Free Trade, which would gradually and imperceptibly loose the bonds which united the Colonies to us. It has, indeed, been no fault of Free Traders, either then or now, if a Colonial Empire is left to us at all to-day. Like Mr. Snowden, the Chancellor of the Exchequer, and the Safeguarding Duties recently, they at that time in the heyday of their enthusiasm swept away in 1848 the whole range of duties which protected our exports to our Colonies. Encouraged by their achievement, in 1854, just as we have seen more lately, they deprived the West Indies of their Sugar Preferences. Not content with that they went on to kill the nourishing wine industry in Cape Colony with Cobden's Treaty with France of 1860. As if that was not enough, the Colonies were not now to be allowed to give a Preference to the Mother Country even if they wished to do so. We remember the Treaties of 1862 and 1865 by which we pledged ourselves to Germany and Belgium never to let our Colonies give us a Preference however much they desired to do so.
§ Do we not begin to recognise something of what is going on with the present Government to-day vis-a-vis our industries and our Colonies? This policy of selfish individualism which Cobden boasted of, finally set the remaining successful industries against the unsuccessful industries, so that the shipbuilders, for instance, were constantly encouraged by Free Traders to buy their steel and their plates abroad regardless of their brethren of the furnace and the forge in this country. The shipowner and the shipper, for the smallest gain to his private pocket, thought it no ill to ship his goods in foreign bottoms, regardless of the shipyard workers. "Each for himself and the devil take the hindmost" was the Free Trade creed.
§ The result of this teaching has been to cause the people of this country to forget how their industries were really built up—the long struggles that changed our 490 wool trade with Flanders to a strong and nourishing cloth trade in this country. The people were taught that Manchester trade was born of Free Trade. They were never taught the truth, which was that Manchester trade was built up not on Free Trade, not even only on Protection, but on actual prohibition in 1700, fostered some sixty or seventy years later by a comprehensive system of bounties, with the result that between the years 1780 and 1812 our exports of cotton goods rose under Protection from £350,000 worth to £16,500,000 in those few years under the protection of a fostering tariff. It is absolutely true to say of this great industry, or what was once a great industry, that it was created by protective and fostering legislation. It is equally true to say that of the iron and steel trade and the woollen trade and all our great staple industries.
§ So I think we begin to see as we look back over the years the spirit that animates our Government to-day; indeed, we pay a tribute to the fidelity of Socialist Ministers to their Cobdenite programme. We see how Free Traders to-day, as in past days, have kicked away the Protectionist ladder by which the industries had climbed to prosperity. So that as the result of less than a century of Cobdenism we look round and we see in Manchester to-day the fruits of the Manchester policy. Where is your piece-goods trade to-day, I ask the Government, under Free Trade, with its exports reduced by 50 per cent. since pre-War days? Where are your woollen and steel trades? Semi-crippled! And your shipbuilding, of which before the War England's proportion of world output was no less than 62 per cent., reduced to-day. I believe, to less than 40 per cent?
§ I will not refer to the financial position. There are those who will follow me who are more capable of dealing with the banking situation. We look anxiously enough at the Budget which you cannot balance to-day; at the Navy you can no longer afford to build; at the Army which you have not the men nor I sometimes think the manliness to maintain. They are all gone under Free Trade. Again, look at the Steelyard and the Hanse. Gone like all the other countries who put the wealth of their middlemen before the prosperity of their workers.
§ We can charge the Government with many failures, but he would indeed be an 491 unjust man who charged the Government with any failure to preserve all the anti-national doctrines of Cobden. Let us see what the Government have done in two short years since they have been in office to indulge their economic dogmas at the expense of the wage-earner and the taxpayer. It is obviously in strict accordance with past precept and practice that, since the Government assumed office (it seems longer than two years to many of us but it is rather less) five valuable Safeguarding Duties should have been allowed to lapse, in spite of bitter protests not only from the masters but (and chiefly) from the men. I must remind your Lordships also that the Government made a very valiant attempt (this House will remember it because they frustrated it) to wipe out the existence of the British dye industry by a refusal a little time ago to continue the Dye-stuffs Act. Yet the Government must have known perfectly well what a valuable help that Act had been and how the dye industry, under the protection of the Act, had increased its weight output in 1929 by no less than 600 per cent. over 1913, and that whereas (these figures are very striking) 80 per cent. of our home requirements in dyestuffs were supplied from abroad in 1913, in 1929 after the passing of this Act 90 per cent. of our home requirements were British produced and gave work and wages to British workpeople. We are entitled, I think, to ask the Government to tell us plainly what were the influences and what were the motives that made them so anxious to destroy this nascent industry in this country.
§ Let us look for a moment at one or two of the safeguarded industries. Take, for example, the cotton lace industry. There is no time to deal with more than one or two industries without wearying your Lordships. Here was an industry whose capacity to employ British labour had something like halved in the previous twenty years. There the decline was due, as I understand it, very largely to a question of fashion, and to the cessation of the United States of America to import that class of material, which affected both France's and England's export trade. But even so, the application of the duty at once arrested the decline, whilst in another branch—namely, silk lace and mixtures—the exports leapt up from £64,000 in 1925, to no less than 492 £225,000 in 1929. Still more remarkable—I will not quote many figures; they are wearisome; but these are so remarkable they are worth quoting—was the rise in the exports of artificial silk lace and mixtures, which was from £30,000 in 1925 to more than £500,000 in 1929. And it was the protective duty, which helped this business to increase, that the Government were so anxious should elapse and did allow to lapse. I will not detain your Lordships with the results of other safeguarded industries, except to assert the undeniable success of the duties as tested by an increase of both production and employment.
§ Free Traders spend a great deal of their time either in denying the success of these duties, which really on the facts is very difficult to do, or in admitting that Safeguarding can be useful to an industry but only at the expense of or damage done to another industry. I cannot prophesy on which particular leg the noble Lord is likely to stand this afternoon, if on either, but if on the latter, I should like to point out that the prices of safeguarded articles have declined, as a whole, by percentages fully as great as those which have taken place during the same period on non-protected articles. In some cases, striking cases like motor cars, silk stockings and so on, the decline in prices has actually been very much more marked than in the case of non-safeguarded manufactures. In these circumstances, it really is impossible for Free Traders to continue blandly to assert that the benefit to safeguarded industries, which can no longer be denied, is only procured at the expense either of the taxpayer or of some other industry. I would like to quote one striking case. Take the case of wrapping paper, which is an enormously important commodity in trade. It is the raw material, of course, of many other industries, and in this connection it is a fact that the wholesale people, the Paper Box Manufacturers' Association and the Wholesale Stationers' Association, who are the greatest users of wrapping paper, themselves at once expressed the view that the duty ought to have been continued, so it does not look as if they were very much harmed by it as consumers. In fact, it passes my comprehension to understand what satisfaction, still less what justification the Government can derive from or give for 493 the abandonment of duties whose effect has been quite clearly to benefit the industry concerned, and definitely to increase employment without raising prices or damaging any other British industry, and, in addition, has yielded something like £1,500,000 of badly needed revenue. Perhaps the noble Lord will let us into his mind a little later on, and explain his policy.
§ May I venture to ask the noble Lord one other question? Although full figures can obviously not be available till the end of November, I think there is no doubt he will agree with me that from statistics up to date it is abundantly clear that in 1930, for the first time since we became a manufacturing nation, we actually imported more manufactured goods than we exported. What is even more serious, we find that the five countries from which the bulk of our manufactured goods come—France, Germany, Belgium, Holland and the United States—sell us about twice the amount of the manufactured goods they buy from us, and we also find that our manufactured exports have fallen by something like 25 per cent. in the last two years. Those are very alarming figures. Or, put another way, careful analysis of our trade reveals the fact that on an average every single minute, day and night, we live, we are importing into this country about £600 worth of manufactures and foodstuffs of all kinds which we could perfectly satisfactorily produce ourselves, and if we did produce these goods here, the direct (to say nothing of the indirect) employment provided, coupled with the increased export to the Dominions that would result from Imperial Preference, would not only abate, but, I firmly believe, virtually eliminate our unemployment problem.
§ Every minute of the day and night we pay £200 to keep our workpeople in idleness, and of those £200 something like £100, I am sorry to say, we are having to borrow. It is clear we cannot compete because our rivals' costs abroad are lower than ours. What I would like to ask the noble Lord is, how does he, under Free Trade, propose to get our costs down so that we can compete? It is a very fair question I think to put to His Majesty's Government. They object to our proposals. They admit that our costs are higher. Will they please tell 494 us what is their plan? I think Mr. Sidney Webb in the old days, as a convinced Cobdenite, would have whispered at any rate, if he had not said: "Lower the wages and buy your labour in the cheapest market." The noble Lord, Lord Passfield, I do not think would dare to say that to-day, and even if he did, the trade unions would not have it. So I suspect he will go on telling the British manufacturer he must rationalise his industries. We say it is merely mischievous and irritating to go and tell the British manufacturer that he can compete if he will only rationalise his plant, when at the same moment, by penal taxation noble Lords opposite deprive him of all the reserves of capital out of which alone he can effect a rehabilitation of his industry. More than that, the Government impose upon his export trade, in the shape of Death Duties—no longer excess profits because there are not any; no doubt the tax would be there if there were any — unemployment insurance "dole" and Super-Tax what is no less than a veiled excise upon the British manufacturers' export trade and an excise which by every Free Trade maxim, should be balanced by a corresponding import duty, but it is not.
§ I shall be curious to hear the noble Lord's answer. Our position is plain, and it is this. We say there are two ways of competing with people whose costs are lower than our own. One is to lower our own costs. There is, of course, another way and that is to put up your adversaries' costs—and it is a very important way—and thus to gain competitive parity. We say you can restore employment by extending, not abolishing, the Safeguarding Duties, and with a scientific system of protective duties the resulting restoration of employment will not only reduce the incidence in the weight of taxation on our own industry, but by refusing a free market to foreign goods in this country and discontinuing to our competitors the valuable privilege of dumping, you will put up their costs, because only bulk production to-day will give low costs, or at any rate it is the main factor. We shall put up their costs and thus be enabled to compete the world over on equal or at any rate more nearly equal terms.
§ In conclusion let us look for a moment at the Imperial side of our economic 495 position. Last autumn was for all of us who have been advocating a change in our fiscal system for some thirty years a period of bitter disappointment, especially to those of us who had looked forward to the time when a real commencement might be made with the principles of economic unity. The Ministers of the Dominions, themselves faced with economic problems of varying degrees of difficulty, hoped clearly that by joint action with His Majesty's Government in this country much might be done to assist their difficulties as well as those of the home country. We know that their overtures were received with a direct negative.
§ What are really the major considerations of this great Empire economic plan to which my friends and I are so wedded? We consider that this nation is fighting for its very existence to-day. In that fight we are losing ground, for one reason—a very important reason—because foreign nations do not give us the same facilities in their markets as we give to their trade in ours. Our Empire overseas has in each of the recent years spent some £300,000,000 on foreign manufactures, at least two-thirds of which were entirely suitable for production in this country. If that share of their purchases were deflected to us it would mean the direct employment—direct employment, let alone, indirect employment—of fully 1,000,000 workers. The deflection, indeed, of half that volume of trade would provide twice as much employment as all the Socialist palliatives which have been offered to us during the last two years, and, what is more important, it would be productive work.
§ I would ask your Lordships to consider the position of some of our great Dominions and Colonies who, like ourselves, are passing through a period of grave anxiety and depression due to their inability at the present time to sell their primary products. Yet, with what seems to us—I do not want to use strong language—callous indifference to their fate and to the tragic position of our own once great agricultural industry, we continue to buy at least £200,000,000 worth of foreign products every year which might be grown under the British flag in one part of the Empire or another. I suggest that if only a part of that volume of trade now passing from British 496 to foreign countries was diverted into Empire channels thousands of producers and their employees, both agricultural and industrial, would be saved from economic extinction. This is also, in my opinion, the only cure for the distress of our shipping industry—namely, the long haul, the long return freights, between our overseas Dominions and the Mother Country.
§ Again, what would happen if the Chancellor of the Exchequer had thought fit to use the £1,500,000 which he lost when he let the Safeguarding Duties lapse? The re-establishment of the Preference on tea, which I regret so much was abandoned by my own Party at the end of their term of office, would be an encouragement to the Indian plantations. A substantial Preference on sugar would set the West Indies on their feet to-day. One of the late colleagues of the Government, Lord Olivier, spoke vibrantly on that subject the other day. A Preference on maize would get our South and East African possessions over their immediate troubles. A certain market in this, the greatest of all markets, for part of their wheat production and a Preference on fruit, for instance—a little thing it may seem to some of your Lordships, but a vast thing to the Empire—would send a message of hope and encouragement to Australia in her heroic struggle to avoid ruin and to Canada in the dark days of her depression.
§ The fact is that His Majesty s Government has no active policy for encouraging the productions of our Empire. It is only active, as far as we can see, in encouraging trade with Russia. During the six months ending May, 1931, export credits were issued in respect to trade with Russia for £2,250,000—so I am informed. Our export credits to all other countries amounted only to £1,400,000. So it is that the virtues of the Soviet system can, under a Government-controlled broadcasting association, ho broadcast and blared continuously throughout these islands: and while the Soviet Government, which foments sedition and encourages murder in many parts of our Possessions, receives this Government's assiduous help, those who gave everything to help and save us in the War are spurned and neglected.
§ My Lords, I think it is indeed a sorry and a shameful record, and I say so in 497 measured terms. Many of us who have no Party feeling in this matter and who would give the warmest support—I am certainly one and I am certain many of my friends behind me would—to any measures designed to protect and safeguard our industries and to give closer economic relations with our Dominions, from whatever Party they emanated, had cherished the hope, sincerely cherished the hope, that the Government would recognise the jeopardy in which our great industries stand and would show practical sympathy with the burden they are so bravely carrying. We hoped they would not hesitate, with their trade union following behind them—becoming more and more Protectionist every day—to jettison old dogmas and to use every modern scientific method to foster, protect and nurture both the industries of this country and the work and wages of our people. The petty and the partisan attitude which they have displayed towards these Safeguarding Duties and to the whole question of Empire economic unity has made a deep impression upon the country as a whole and, unless I am very much mistaken, will not be easily forgotten or forgiven. I beg to move.
§ Moved to resolve, That this House desires to place on record its regret that the financial proposals of the Government for the current year contain no reference to or any measures for the safeguarding of home industries or for the promotion of Empire Economic Unity.—(Lord Lloyd.)
§ THE SECRETARY OF STATE FOE THE COLONIES (LORD PASSFIELD)
My Lords, I need not say that I find myself quite unable to follow the noble Lord who has just sat down in his extremely eloquent and extremely closely prepared speech in what he calls measured language. I shall attempt to show at any rate that some of his adjectives as far as the present Government are concerned were a little unmeasured and a little unjustified. I am certainly not going to attempt without preparation to follow the noble Lord in his historical survey right back to the wool trade of Flanders and down to the present day, with special reference to the last hundred years. Will the noble Lord reflect that the indictment which he has brought against the present Government—barely two years in office—is really an indictment against all the suc- 498 cessive Governments for the last, shall we say, eighty years?
I am not concerned at the present time to defend all that has been done by the Tory Party when it came into office, as it has come into office for long intervals during that time. Nor am I prepared to defend the Liberal Party which equally came in for the blame of the noble Lord. The present Government succeeded to this heritage of ruin which has apparently been going on, the. prosperous peasantry which has been overthrown—I do not know when the noble Lord finds this prosperous peasantry; he must go a long way back before he comes to anything which can be called peasantry, let alone which can be called prosperous peasantry—this prosperous peasantry overthrown, our manufacturing industry sinking slowly into decay, or rapidly into decay, and apparently into the complete ruin that has come upon the country during the last hundred years!Well, it may be all right, but it is not the economic history that I have learnt. At any rate I am not going to take up your Lordships' time by attempting to dissect all the fallacies which, it seems to me, lie in that view of the last eighty years.
Then the noble Lord said that he and his friends had expected and hoped that the present Government, when it came into office, not merely in a minority in the House of Commons, but with a minority vote in the country, was going to undo and reverse the policy of the late Conservative Government, which had so large a majority, to undo the policy of the former Conservative Government, of successive Governments since the War, of the Liberal Government before the War and so on. He said that he expected the Labour Government was going to do that. Well, I do not think he did, if he will allow me to speak quite bluntly, but at any rate, if he did, he must have been, shall I say? not quite up to date and not quite accurate in his knowledge of English politics. If he thinks now that he expected and that his friends expected that this Government was going to undo all those things, I can only say that I did not expect it to do so, and I venture to think that he will not find any warrant in the programme of the Labour Party, or in any speeches by those who are now His Majesty's ser- 499 vants, for thinking or expecting that there was going to be this reversal of policy.
Let me tell the noble Lord why. Even if we had been inclined to embark on such a policy, to throw over all the convictions, all the practice and experience of the past, wider which, after all, this country has not done so badly, may I remind the noble Lord that we certainly could not have done it without a very decisive vote of the electorate? I want to remind your Lordships, and the noble Lord in particular, of the last time the electorate spoke. Assuming that the whole Conservative Party had then determined to throw over what he calls Free Trade and to go in for a protective policy, complete Protection ("Scientific Protection" was the phrase, I think), when the Conservative Party went to the country in 1929 intending to do that—I give the noble Lord credit for supposing that his Party were going to do it—they put it to the country; and what was the result? I would remind your Lordships that the Conservative Party received about eight million votes, the Labour Party received about eight million votes and the Liberal Party received five million votes. Consequently the votes against the reversal of policy on fiscal questions and against the adoption of Protection were at least thirteen or fourteen million to eight. I would ask the noble Lord, supposing he had been a member of the Government which by some accident of our political system had attained office with a vote of thirteen million to eight million votes against them in the country, would he have expected his colleagues in that Government to reverse the system and to carry out a system of "Scientific Protection" against which the people had emphatically voted? Of course he would not, and he could not.
The justification for my reference to that is my next point, and that is that the noble Lord's own Government, the Government to which he was attached and which was in office from 1924 to 1929, during which all the alarming features which the noble Lord mentioned were in full operation, with agriculture declining, iron and steel going wrong, the cotton trade showing signs of falling off and unemployment—the noble Lord mentioned that a distinctive feature of British unemployment was that for a whole decade it had been going on in so serious a way 500 —during the whole of that time his friends who were then in office, with a large majority behind them in the House of Commons supported by a large majority in the country, took, I will not say no step, but certainly nothing which the noble Lord would have thought to be anything like an adequate step, or even a strong step or a bold step, towards this new policy which he is now anxious to blame the Labour Government for not having adopted, though we never pretended that we were going to adopt it, because we did not believe in it, and no one had thought that we would adopt it, because the popular verdict would have been sufficient to prevent us, and quite rightly to prevent us, from doing so.
I ask the noble Lord to turn his attention, if he can spare some of that invective with which he is so liberal, to the views of his own Party during these years of unemployment. It is quite true that we have had the Safeguarding Acts, but really if you consider what the result of the Safeguarding Acts was, if you consider that this duty on buttons, on lace, on wrapping paper, and I forget what else; yes, on gloves and so on—well, I have heard of a pill against an earthquake, but really, if that is what the noble Lord considers will cure unemployment, if he is satisfied with the work of his friends when they were in office with a majority, with a programme, apparently with a conviction that this was the right thing to do, they did not—I do not want to blame them—find it possible or desirable to undertake the policy which the noble Lord now blames this Government for not undertaking. I think the noble Lord might begin at home, might convert his own leaders, if he has leaders. Even to this day we have the vaguest of statements as to what the new Government that is going to come after us, if the noble Lord's friends have their way, is going to do. I venture to say that the noble Lord will find that he has still some conversions to effect unless he is going to be disappointed again with regard to the doings of his friends, as he was disappointed with regard to the doings of the Labour Government. Possibly he may have a little more justification for being disappointed, but I do not want to prophesy.
Let me say a word about the noble Lord's reference to Cobden. I have never been a Cobdenite myself—very 501 much the reverse, I suppose—but I am not prepared to accept or admit that the description which the noble Lord gave of Cobden's policy is anything but gross caricature. It is, of course, possible that, his particular quotations are accurate. I do not impugn that. When a man makes a great many speeches, as Cobden did, and spends a long period of years in agitation, as he did, it is possible to take out sentences which can be misrepresented; but the suggestion that Cobden was actuated by the unpatriotic sentiments that the noble Lord has ascribed to him, and the notion that Cobdenism, as preached by Cobden or his immediate followers, is represented in anything but caricature in the references that he made to it, I venture to deny very decidedly. I say I have never been a Cobdenite, for very good reasons. I do not say that my past is on record, because I do not suppose noble Lords will ever want to look at it, but at any rate noble Lords will not find in the, I am afraid, great number of volumes that I have perpetrated any adhesion to Cobdenism in any sense, or to Free Trade in any sense in which it is ordinarily used as meaning laissez faire. I suppose that, if I have stood for anything ever since I was a youth, I have stood for a more strenuous opposition to laissez faire and to interference with freedom of trade and freedom of commerce—interference that your Lordships would probably think—
§ LORD PASSFIELD
Interference which reaches far wider, and to far deeper depths and greater heights—than the noble Lord, who has made that eloquent speech; but because I believe that we ought to interfere it does not. follow that we should interfere in a foolish way. The mere fact that I am against laissez faire does not make me in favour of protective duties, because I believe it to be a silly way of doing things and injurious to the welfare of the nations who have undertaken it. They have struggled against it, and they have flourished, but not so much as we have nourished by the opposite system. The noble Lord is not justified in describing me as a Cobdenite, or in suggesting that in my earlier days I should have wished to lower wages.
§ LORD PASSFIELD
The noble Lord explicitly referred to myself, and I answer that he may be referred to his studies, in order that he may acquire a more accurate account of my personality. The noble Lord recited a very long tally of the woes of this country at the present time. I am old enough to have lived through a great many depressions of trade, and to have heard this kind of thing before. I am not going to say that the present depression is not more serious than any I remember, but it is not so different from those others in this respect, that it has been accompanied by the assertion and the promulgation of these particular views as being the panacea. There have been Protectionist agitations before, and they have even been similar to the present one in working under aliases. Just as the present Protectionist agitation calls itself in favour of Safeguarding, or of Empire Free Trade, so the agitation of thirty years ago had other aliases, and that of fifty years ago had yet other aliases. Yet there was always the same underlying policy, of getting out of our troubles by putting on Customs Duties, by which we will at the same time keep out the foreigner's goods and make the foreigner pay a contribution to our revenue, at the expense—and this is hardly denied—of raising the prices of those goods above what they would have been if the tax had not been imposed. Indeed it is in order to raise prices that the manufacturers generally and the trading interests are in favour of this policy to the extent that they are.
I am not going to waste your Lordships' time, or my own breath, in attempting to say why we think that Protection is not a good policy. I do not suppose that I should be able to convert any one of your Lordships who is protectionist by any poor argument that I might use. If you will hear not those of greater authority you will not hear me. I am not going to put up the Free Trade case against the noble Lord's case for Protection. It would be putting me to a great disadvantage, and I do not propose to do it. If the noble Lord asks me what we propose to do, I say emphatically that we do not propose to seek a remedy for the present discontents in the form of a policy of Protection, either for manufactures of foodstuffs or anything else. There may 503 be something to be done in the way of interference in one way or another, and I would not rule out the use of the Customs as one way if it can be demonstrated as being the most useful way. It may, however, be the interference which is the good thing, and it is interference which we are in favour of, but it is very difficult to find where is interference which has not very considerable drawbacks and disadvantages.
We do interfere, and we are in favour of interference, in ways which we believe to be advantageous. May I quote an instance—an instance, which the noble Lord who has spoken may have some interest in, because it is anti-Cobdenite? We believe that Free Trade in the sense of laissez faire does create very serious injury to the community, in depressing the standard of life and the conditions of living of large sections of the wage-earners, and the nation has discovered in the course of fifty or sixty years that the only way to cure those evils of laissez faire is by interference, and drastic interference, by the Factory Acts, the Mines Regulations Act, the Railway Regulations Act, and the Merchant Shipping Acts—interference in every point with free trade, in order to protect the standard of life of the weakest among the wage earners and to secure for them conditions which will lead to the prosperity of the nation and not to its continuous degradation.
That is a policy with which Cobden did not agree and which the nation has more and more adopted. We have not got to the end of that policy—of the factory legislation in which Tory Governments in the past have shared with Liberal Governments. That factory legislation has not reached its end. I am only quoting this as an instance to show that because I do not believe in protective duties it does not follow that I am necessarily a Cobdenite or in favour of free trade. I believe in interference, and that is only one way in which the country will have to have a great deal more interference. Before I die I shall look to see that that policy of interference which has been the policy of all Governments in succession is carried still further, with even more beneficent results than it has had.
§ LORD PASSFIELD
Yes, on unemployment, because I would like to remind the noble Earl that some unemployment is due to the very low standard of some of the workers. A large proportion of the workers are incapable of doing what the ordinary educated competent work-man is able to do. They are unable through lack of training and education. We shall have to have a great deal more interference in that way, and I hope that we shall have the support of the noble Lord in this interference. He said he was not wedded to any one way of doing it, and I ask him to widen his views and to consider whether in his reaction from Cobdenism he is not a little narrow. There ran through the noble Lord's speech one constant refrain, that imports were a bad thing, and not merely objectionable but ruinous. The size of our imports was cited as obvious proof.
§ LORD LLOYD
It is the character of the imports and not the amount of the imports which so much matters to us.
§ LORD PASSFIELD
Apparently it is the character and quality. Then I would point out to the noble Lord that he need not have laid so much stress upon the magnitude of the imports, or upon the relation of imports to exports, if it is only some of the imports which are objected to. It is very difficult to understand where the noble Lord and his friends draw the line between imports which are objectionable and those which are necessary. This objection to imports, this uncomfortable feeling that somehow or other we are getting in too many imports, or the wrong kind of imports is, I venture to think, what modern psychology calls a fear complex, which leads you, not to wise judgments, but to unwise ones.
The noble Lord referred particularly to his desire for the unity of the Empire and to the particular case of the Imperial Conference, and said that the overtures received from the Dominions were met with a direct negative. That was not true at all. But still we were not able to agree with their desire that we should get them out of the difficulty due to the large over-production of wheat in particular, because what they 505 asked us to do was not to give them a Preference. I would remind the noble Lord that the Government have accepted the policy of Preference. We give the Preference. We continue the Preference, we have not removed any single Preference. It was left to Mr. Winston Churchill when Chancellor of the Exchequer, to sweep away the Preference on tea.
§ EABL PEEL dissented.
§ LORD PASSFIELD
The noble Earl has put his finger on the spot. Apparently it is not a Preference, it is a duty that is wanted. Perhaps the noble Earl is going to put back the duty on tea in order to give the Preference. However, the Dominions started this question of Preferences, and they have accorded to British goods Preferences to a very large extent. I am not going to discuss whether this or that particular Preference is worth as much as it professes to be. We assert that the Dominion Preferences are of value to British trade, and we are very glad to have them. And we have reciprocated, previous Governments have reciprocated, by extending Preferences in this country to Colonial and Empire goods, and we have maintained all those Preferences, and we assert that those Preferences have been of value to Imperial trade. That is the policy of the present Government.
Nay, we went further. At the Imperial Conference we said that not only would those Preferences be maintained, but they would be maintained if the House of Commons did not interfere, for three years. We gave a guarantee that they would all be maintained for that time. I do not think the noble Lord is entitled to gird at this Government for not adopting the principle of Preference. We have adopted it, we have continued and maintained it. We have not abolished a single Preference. The noble Lord did not tell your Lordships that at the present time the amount of duties foregone by the Chancellor of the Exchequer on account of these Preferences is very nearly £6,000,000 a year—not an enormous sum, but that is the whole range of Preferences which the late Gov- 506 ernment bequeathed to us. No, not quite, because the late Government in its last Budget abolished one of those Preferences—one very interesting and, one would have thought, popular one, the Preference on tea. They swept it away with the duty. And thus the Preference which was enjoyed by the Assam and Ceylon tea planters and by the growing industry of the Kenya tea planters was abolished—not by this Government. Why does not the noble Lord pitch into his own friends on this subject?
Let us examine the position. The Dominions very rightly say that they are going to put on those Customs Duties which suit their own interests. They have declared, quite rightly, that they are governed entirely by the view they take of their own interests. They do not put on any duty to please us, they do not take off any duty to please us. But, having decided for themselves what Customs Duties are in their interests—I think very often mistakenly, but they have the right to decide—then, out of their generosity and their desire for Empire unity, they accord a Preference to the Mother Country from those duties. That is exactly the policy which has been followed in this country. The late Conservative Government put on those Customs Duties, or maintained them, which they thought to be in the interests of this country. They decided, rightly or wrongly, but they did so decide, exactly on that ground—the ground of what they thought was for the benefit of the country—and then, as a gesture to the Empire, they accorded Preferences from those duties. This Government have done exactly the same thing, except that we have not abolished any of them. It was the late Government who did that. We have continued their policy.
What Mr. Bennett of Canada came to the Imperial Conference to ask the Government to do was not that at all. He asked something entirely different—namely, that this country should deliberately put duties on things on which we had no duties, whether we thought it for our advantage or not, in order to be able to extend a new Preference to the Dominions on articles on which they wanted a Preference. No Dominion had ever been asked to do that by us. That was an entirely new departure. The 507 noble Lord spoke very lightly about this and that Preference, a Preference on fruit and a Preference on maize, as being quite a small thing. He might more accurately have said that we should put on an import duty on fruit—although we did not think an import duty on fruit was good for this country—in order to be able to allow a Preference to Colonial fruit. That is what the noble Lord meant. But it is a very different thing to have to put a Customs Duty on fruit, which you do not believe to be for the advantage of this country, in order to be able to take off a part of it for the benefit of the Dominions. That, certainly, this Government has never favoured, and I do not know whether the noble Lord really thinks that he is going to induce his colleagues on the Front Bench to favour that policy.
Similarly, you have to consider the question not merely of whether the country wants a duty, but whether the country might be injured by the duty. How about a Preference on maize for instance? I suppose some people would be injured by putting an import duty on maize. We cannot grow maize in this country—except, I suppose, in hothouses—and the noble Lord wants to give a Preference on maize. I suppose that means he wants to put a duty on maize coming into this country. I do not know what the National Farmers' Union would say to that. But it is the policy of the noble Lord to put a duty on anything where you want to give a Preference to the Colonies. Well, that is not the policy of the present Government, and I am not going to be repentant about it at all.
I do not know whether your Lordships will think I am making an extravagant claim, but I would like to remind you that this Government in its two years of office not only has done much for Empire unity, but has actually done more for Empire unity by financial means than the last Government did—I venture to say than perhaps any Government has done. Your Lordships perhaps do not remember quite how much has been done in that way. I suppose the noble Lord who spoke last would not think much of the Empire Marketing Board, but at any rate the Empire Marketing Board is expending a considerable sum of the taxpayers' money in this country 508 in actually extending and developing the exports of the Empire—the Crown Colonies and Dominions. I do not forget that the Empire Marketing Board was started under the late Government, but, while great credit may be due to them for having started it, I think equal credit is due to this Government for having continued it and pushed on with its work. There are several other things, the Shipping Committee, the Economic Committee, the Agricultural Bureau and the rest of it, which the noble Lord does not think of at all; but they cost money, and we are doing those things for Empire unity and Empire Free Trade.
I would like to remind the noble Lord that whatever glory might be got by extending a Preference to Colonial fruit or something like that if we did not have to put on a duty, there is such a thing as the Colonial Development Fund. One of the first things this Government did when it came into office was to set aside £1,000,000 a year—a solid million pounds a year, charged on the taxes of this country—for Colonial development, and that money is being expended for one thing after another, for particular pieces of development of the Colonial Empire. Is not that a manifestation of a desire to promote Empire unity, and actually a financial manifestation? I do not believe you can do very much financially at all. But if we are on the financial line and the noble Lord clings to the financial method of promoting Empire unity, I think it is worth remembering that this solid gift of £1,000,000 a year is being given to Empire development. It was after the noble Lord had prepared his speech, I admit, and therefore I am not blaming him for not having alluded to it, but how about the recent gift of £8,000,000 in one solid lump to the Dominions in respect of their War Debts? That gesture, that step in the promotion of Empire unity, for which the noble Lord might give the Chancellor of the Exchequer some credit, has been acclaimed by all Parties. I do not want to claim all the credit for this Government, but it has been acclaimed by all Parties as a very big thing.
§ VISCONT HAILSHAM
My Lords, may I ask the noble Lord, because the statement he has made is a very important one, is it the fact that the 509 Government is proposing to make a gift of this £8,000,00? Hitherto we had understood that the Government was doing just what the Hoover plan suggested, that is to say, suspending the payment for twelve months. If the proposal is to make a gift of this £8,000,000 it is very important that we should know it. That is why I venture to interrupt the noble Lord—because it is a very important statement.
§ LORD PASSFIELD
I am obliged to the noble Viscount. Let me measure my words. I do not mean to say that I was necessarily wrong, but let me measure my words. We have made part of the arrangement—not of the Hoover arrangement, but we have already foregone various things to Jamaica and so on.
§ LORD PASSFIELD
I was speaking rather too hastily. I am not going to describe exactly how far, I am not in a position to say how far—as a matter of fact, of course, it is not merely the postponement of receipt; it is a gap in the Budget that will have to be filled.
§ VISCOUNT HAILSHAM
Under the Hoover plan there is a postponement for twelve months. Necessarily, of course, that involves in the year in which there is no payment the finding of the money from other sources. There is no gift if that be so. I am anxious not to embarrass the noble Lord and I am only speaking by his courtesy, but I think it is a little important that we should know exactly whether there is a proposal other than that which the country had understood.
§ LORD PASSFIELD
I am obliged to the noble Viscount, because I am not intending to add anything to what the Chancellor of the Exchequer explained. The noble Viscount will understand that I am not adding anything, but that the transaction is not complete and we do not know at the present time exactly what form it will take. Undoubtedly, as regards Germany it will be a postponement; but how far that at the end of the time will result in a larger or a smaller amount being paid is another 510 story. At any rate I do not want to overstate it, but we are going to have to pay in this country £8,000,000 that we should not have had to pay. There will have to be a new charge on the Exchequer to the extent of that £8,000,000 somehow, and that is for the benefit—I will not call it a gift—of the Dominions in respect of their War payments. That £8,000,000, which all Parties have acclaimed (I do not know how to call it), that transaction in which we shall have to pay £8,000,000, is certainly a more striking manifestation of Empire unity than anything that I can believe could be done by an extension of Safeguarding Duties and Imperial Preference.
I must leave it at that, I think, except to say that there is a difference—I want to be quite candid with your Lordships—between the general line of policy with regard to Empire unity which this Government is pursuing, and that which the noble Lord asks the next Conservative Government to pursue. The noble Lord will notice that this last transaction of £8,000,000, which has been received with so much gratitude by Canada, Australia and New Zealand, and which the Union of South Africa very self-respectfully said they could do without (for which we thank them) will fall upon the revenue of this country. I do not know that I am putting it too high when I say that it will practically prevent at any rate any reduction of Income Tax and Super-Tax to that extent. Similarly, the Colonial Development Fund—this gift of £1,000,000 a year—is responsible, let us say, for the Income Tax being at its present height and the Super-Tax or the Death Duties, whichever you like. There is a difference between that and putting taxes on commodities in order to give some Preference to the Dominions and the Colonies.
The difference is this, that, theoretically at any rate and I believe correctly, the gifts from the Exchequer are paid for in proportion to our ability to pay. Those of us who are fortunate enough to have large incomes and large property pay at a greater rate than the people who have not those advantages. Whereas if you put a duty on commodities in common use you not only interfere with trade, as we believe, but also in so far as those duties cause a rise in the price of the commodities (we believe they emphatically always cause a rise in the 511 price of commodities or prevent a fall) you are levying something almost in the nature of a poll tax, so that everybody pays, roughly speaking, the same amount according to their consumption. If you put a duty on wheat, for instance, the rich pay no more towards it than the poor. Perhaps they consume less. We prefer our way; we think our way is economically sound; we challenge any attempt to fall back upon the doctrine of the economists; and we say that their way is not a better way than ours of making these gifts for the benefit of Empire unity. The noble Lord would rather put a duty on bananas and raise the price of bananas in order to give a Preference to Jamaica; he would rather put a. duty on Argentine wheat in order to give a Preference for Australian or Canadian wheat; he would rather put a duty on maize in order to give a Preference—
§ LORD PASSFIELD
Foreign maize, but he is putting it on anything and intending to raise the price. That is the whole point. He is going to get revenue out of it, and he cannot get revenue out of it without the money being paid by someone. Consequently, he is attempting to build up Empire unity at the expense of the masses and in proportion to their consumption, and not at the expense of people in proportion to their ability to pay. This is not the assembly in which I venture to think it is creditable to put forward a scheme of that kind. If we want Empire unity, if we believe in Empire unity, let us be prepared to pay for it, in so far as it costs money, in proportion to our means, and not attempt to get it by raising the cost of living of the great mass of the people.
My Lords, I rise to support the Motion of my noble friend in a very few words, because the debate has gone on a long time. I feel, however, that I must say a few words in general support of my noble friend, in order to emphasise some of the points which he made more in detail. I have long been amazed at the lack of discernment which has been displayed by His Majesty's Government in the treatment of all questions connected with the Dominions and the Colonies. I ask myself in all earnestness how, after the Imperial Conference which took place only last July, how, 512 after everything that has passed during the last two years, the Chancellor of the Exchequer could present his Budget proposals to the country without a single reference to the safeguarding of home industries or to the Imperial Conference. I can find no answer to that question. I listened to the speech of the noble Lord who has just replied on behalf of the Government, and I felt that he had no answer either. He seemed to me to make the case of the Government worse rather than better. He discussed at great length the question of duties and of preferences, and he went into the subject of the Imperial Economic Conference, but he did not tell us why it was that the Conference, which wag to have sat in Ottawa this autumn, has been postponed.
I believe that the abandonment of that Conference was due directly to the negative attitude of His Majesty's Government not only at the Imperial Conference itself, but since the Imperial Conference, and that it was for that reason that the Canadian Prime Minister decided that no Conference should sit in Ottawa this autumn. It has been said that it was because representatives of Australia and New Zealand could not be present owing to certain political difficulties at home, that this Conference has been abandoned, but I venture to say the real blame attaches to His Majesty's Government, and that that is well known to the noble Lord, Lord Passfield, and to the right hon. gentleman the Secretary of State for the Dominions, Mr. J. H. Thomas.
§ LORD PASSFIELD
The noble Lord must forgive me if I say there is absolutely no truth in that statement whatsoever. As a matter of fact, the Australian and New Zealand people could not possibly go, and nothing has been done from this side to prevent or discourage or dissuade the Conference from being held.
There may have been no overt action on the part of His Majesty's Government in that direction, but I still contend it is the attitude of His Majesty's Government which has prevented that Conference from sitting. I am quite prepared to give credit where credit is due. The noble Lord has cited as one of the instances of what His Majesty's Government has done in order to promote Empire unity the decision to 513 fall in with the Hoover plan and to allow a moratorium of £8,000,000 to the Dominions. I congratulate His Majesty's Government on that act, but any Government, whether it had been Labour or Conservative, would have been bound to take that action; and whilst it is one that has naturally a great soothing element in it, all the same it only just touches the fringe of the great problem of Empire economic unity which we desire to-day. That action is only an emollient. It is not a permanent euro for what we are faced with, not a permanent cure for the matters with which my noble friend has dealt to-day in his speech. It is not a panacea, it is only a temporary thing. What we are after is something that is lasting, something that will bind the Empire together for all time, something that will bring the trade of the Empire together in such a way that our interests shall be common for all time, something that will enable us to march along the same road for all time.
The fact of the matter is that this Government, so far as the Empire is concerned, has no real imagination. It is quite barren of ideas. It is steeped, as my noble friend has said, in the ancient dogmas of worn-out Cobdenism, and it is saturated with the prejudices of the so-called Socialist faith. How much longer are we going on under this Government? What have we to look forward to? We are fed by the economic policies of a past century. We are ground down by taxation, which is largely influenced by class animosity, and we are gradually being forced downhill to penury and ruin. And this can well be avoided. I am not a defeatist. The country is not beaten by any means, but what we require to-day is to be invigorated and strengthened by remedies which conform to modern conditions, and which are consonant with the changed circumstances that face us both at home and abroad. What we require, as my noble friend has stated so ably and clearly, is a change in our fiscal system which will enable us to compete with the unbridled competition that overwhelms us to-day, and a change in our fiscal system which will enable us to set up measures of economic unity within the Empire and for which all parts of the Empire are ready.
514 What is happening to-day? The Government are trusting to luck in order to get out of their difficulties. The Government are trusting to luck and to Mr. Lloyd George, and the country is trusting the Government and being very badly let down. Day by day the economic situation grows worse and worse, and all Mr. Snowden can do is to produce a Budget which imposes additional Income Tax and helps nobody, to introduce a Land Tax which is going to bring the country into even greater difficulties and even greater chaos. At a time when every penny counts, as my noble friend has said, the Government spurns a revenue from Safeguarding Duties of £6,500,000 and repeals those duties and throws industries back into unemployment.
The noble Lord said in the course of his remarks that this Government has not repealed any Preference; but what does that mean? It means, as the noble Lord said, that the policy of the Government is negative. It is not active. They triumph in the fact that they have done nothing. The noble Lord's policy for settling all these questions is, on his own admission, a policy of drastic interference. If that is the only policy which the Government has to present to this country, then God help the country. I, for one, heartily and cordially welcome the Motion of my noble friend to-day because I believe that the more this subject is ventilated, the more it is impressed on the Government that the people of this country desire this policy of Safeguarding and Empire economic unity, the quicker it will come and the better it will be for the country. I have great pleasure in supporting my noble friend and I shall have even greater pleasure in going into the Division Lobby with him.
§ THE MARQUESS OF READING
My Lords, the noble Lord who introduced this Motion spoke with great vigour and eloquence, and I do not think that anyone could charge him with not having said everything that could possibly be said in favour of the proposition he was putting forward. I doubt whether everybody will agree with him. that he put it in measured language, although I am perfectly sure that he did not desire to go further and did not go further than perfect courtesy. But I must confess that 515 I was rather surprised at some of the observations that he made. As I listened to his historical survey over a period of years dating from 1840 I confess I was a little amazed that he could have come to the conclusions he put forward. I would quite agree with him if he said that notwithstanding all that has happened, and notwithstanding the views that were then held, and that were thought to be absolutely proof against any argument, changes have taken place in the conditions of the world and especially of trade, and that you may periodically have to re-examine the position in order to see whether the policy which you have adopted still fits the situation. But I did wonder when he told us of all the dreadful consequences that have arisen in these eighty or ninety years since we embarked upon our policy—or rather the policy as it then was—whether he had forgotten all that had happened.
I know that he is too assiduous a student of Imperial affairs to have omitted from consideration the events, say—not to go any further back—of the last twenty years. I would remind him and your Lordships, for the purpose of striving to correct a little the impression which he may have made, that this is a policy which we have all pursued, not only the Party of which he is a member but all Parties, and especially the Conservative and Liberal Governments because it is only recently that we have had a Labour Government. They are less to blame than anybody because they have had only one short period of office and another period which is as yet also comparatively short. Let us see what the effect of the policy has been. I do not intend to detain your Lordships by going at length into it, and indeed on some of the points to which the noble Lord referred I should have to refresh my memory because I can only recall some of the salient features. When we are told that all the financial difficulties of the day are due to this policy of Free Trade, that the heavy taxation from which we are now suffering is due to Free Trade and that Free Trade has produced all these terrible consequences, I would like to ask the noble Lord to recall what happened in 1914. After all, we had then been pursuing a Free Trade policy for a great number of years. Yet in 1914, we were the mainstay of the Allies until 516 America came into the War, and we were the mainstay of the War that was carried on. It really is rather remarkable, in view of all that, that we should be reproached because a policy of Free Trade has landed us in such a dreadful position.
§ LORD LLOYD
I am sure the noble and learned Marquess does not wish to misrepresent me. I was very careful to say that it was the main cause. Of course, it was not the only cause. There are many contributory causes of the present distress. I did charge it, with being, and I believe it to be, the main cause, but I did not say it was the only cause.
§ THE MARQUESS OF READING
If I said the only cause I was putting it too high and I did not intend to. I quite accept what the noble Lord has just said and I so understood him. Of course, he could not possibly touch on all the contributory causes. But let me remind him of what has happened since the War, of the enormous Debt that we incurred, the enormous assistance that we gave to other countries, the obligation that we undertook to pay to the United States of America the money that was lent to us. This Free Trade country that has suffered so terribly under this system is the only country which has come forward and paid her Debts to the full amount. Not only that, but even after the War, with all its consequences and, having used most of her available resources—having converted all the securities she then held to the amount of some £3,000,000,000 into dollars and gold for the purpose of helping in the War—this country was able even then to go on assisting and we are still the country that is taking a great deal less than is owing to it. I would remind your Lordships that we are alone in taking less in return than the contribution we made. The money we lent was the consequence of this Free Trade policy.
Finally, I would remind your Lordships that, although this policy of Free Trade is supposed to have landed us at this moment in the condition of economic depression to which the noble Lord refers, and of which we are all very conscious, we are now able to do that which the noble Lord, Lord Passfield, just mentioned—to assist by the sum of £8,000,000 the Dominions and India at a time when we are actually going to forego the pay- 517 ment of what was coining to us from Reparations and also from War Debts from the Allies. In addition, we are assisting our Dominions and India and, not content with that, we have assisted other countries. I am not going into the whole question, but very recently, and under this system, the Bank of England came forward and assisted one of the banks of a country in great difficulties. Only last week we had the Prime Minister's statement, with regard to the financial strain upon India, as to what the Government propose to do. I would ask your Lordships to bear all these conditions in mind when you come to the condemnation of Free Trade, which was denounced so freely by the noble Lord.
Having said that, I am not by any means suggesting that all is well. On the contrary, I think that what we have to do, and what we ought to do, is to try to take stock of the position and to do the utmost we can in these conditions to see how far we can improve them. I would remind your Lordships again that when we speak of the economic depression, it is not peculiar to us. It is not Free Trade countries only that suffer from it. Its peculiarity, if peculiarity is the term, is that protected countries like Germany and the United States have equally suffered. Therefore it is going a little too far, as it seems to me, to attribute all this to Free Trade. We were also told by the noble Lord of the present greatly excessive taxation being mainly due to Free Trade. I only want to make one observation on that, in addition to what I have said. I agree with him that we are very much overtaxed, and I desire very much that we should be able to find some relief from it. I go so far, speaking for myself, as to say that in these conditions it behoves us to act with strict economy and, notwithstanding that there may be many proposals that we should like to adopt and which would cost money, we must postpone them if we are not able to find the money from revenue and if it means increased taxation. But all that has very little reference if any at all, to Free Trade.
One word only upon unemployment. The noble Lord refers in scathing terms to the finance of unemployment. I am not going to attempt to repeat what he said. It is fresh in your Lordships' minds and we are all aware of it. I sympathise 518 very strongly with his observations, or at least with many of them, on this subject. All this, as I understand it, is under consideration. There are questions which will have to be determined, and the Unemployment Commission will have to report. I can only say that I hope no time will be lost in attempting to deal with some of the abuses upon which there has been an Interim Report, and with regard to which it is high time that we actually took matters in hand.
Then the noble Lord dealt with conditions of trade and commerce in this country. Let me just point out that we are, of course, suffering like everybody else; it is only elementary to state that, where it takes twice the amount of commodities to pay the same value in currency, the country that is producing the commodities must be suffering, because it has to pay the double amount, although measured by the same standard of money. The result is that the country which produces is very crippled in purchasing power. I do not know whether the noble Lord is satisfied as' to the cause of this great world-depression. I can only say for myself that I have made every attempt to ascertain it, and to find remedies such as they are, but there is great lack of agreement among all the economists and theorists, and also among the practical men, on the subject, which is one into which I cannot go any further to-day.
The noble Lord spoke of the decline in agriculture, which he took as one of the instances of an industry that had suffered under Free Trade. I again say that I am puzzled, as I always; am, when I hear that observation made by those who speak from the same Benches as the noble Lord. What is it actually that it is proposed to do for agriculture? Is it suggested that the lot of the agriculturist is to be improved by providing him means whereby he will get more money for his crops? One suggestion—I do not know whether it is the noble Lord's view or not, but from some of the observations that he made I think it was—would be that there should be a duty imposed upon all that comes in from foreign countries, with a Preference to the imports from the Dominions, and that in that way agriculture will benefit. I am never able to understand it, and I do not understand it now, because if the purpose of it, as I gather, is to enable the farmer to get more for his crop, then it must mean 519 that by imposing a duty you are going to raise prices. If you are not going to raise prices, what is the good of your duty to the farmer? I have never heard that question answered.
Nevertheless, I have frequently seen it stated, and the argument has been put forward, that the duties will not raise prices. There may be fortuitous circumstances, which may appear at any time, that may cause a further fall in prices, so that, if there had not been a duty, food would have been much cheaper than it was when the duty was imposed; but at any rate it must follow that either you benefit the farmer by raising prices and making the consumer pay more, or the prices will fall in spite of the duty, and consequently what you are proposing to him is purely illusory, and you are leading him to think that you can do something which you know is impossible. For myself I confess that I take a very strong view with regard to this matter, and I shall oppose, as long as I can, any imposition of duties upon foodstuffs brought into this country which are the food of the poorer people of the country. I see no reason to change that opinion. I have studied the problem which has been raised in recent times in all its aspects, and I have thoroughly failed to find any defence of it that can establish that an advantage would be obtained if it were possible to put forward a proposal of this kind.
If we were to put duties on foodstuffs, everyone must know that it would raise the price of food to the poor, but it is argued that they would get the benefit of it by an increase of employment, and eventually by an increase of wages. I have heard that argument put forward. If the facts support it, it is sound enough, but I have never yet been able to get such facts from any of those who are advocating tariffs or Empire economic union as would enable me to find the slightest ground for supposing it is true. If it is true, let the noble Lord explain it to me now. I have always been anxious to know what the answer to that question is. It is not enough merely to state the proposition as a proposition. We should all agree to it then, but what we want to know is whether the proposition is right, whether the facts actually show that what you would do would be to the ad- 520 vantage of the working people. I have studied every aspect of the question very completely, and it is certain that until it is proved you will not get the working people of this country, the electorate, to be content to place a duty on foodstuffs for the purpose of helping the Empire by getting the benefit of such manufactured goods as they may purchase.
In the old days, in 1903, when Mr. Chamberlain put forward his proposals, they had two limbs—one, that we should put a duty on food and that we should give a Preference; and the other, that the Colonies, as they were then termed, should take their manufactured goods from us. That met with an absolute refusal straight away from the various Colonies, and consequently it was one of the great disadvantages of those strong advocates of Tariff Reform that they had to come forward and argue their case solely on the benefit which was to come to this country. All it meant was that we had to put a tax upon food for the purpose of giving a Preference. We are in the same position at the present moment. We do not know how far it is suggested that the Dominions could go. I have never heard any statement and I long to know if there is a case. It is of no use talking of the Dominions purchasing from us a few million pounds worth of goods. The difficulty is that the Dominions are far more industrialised now than they were in 1903. They are far more dependent upon the duties that they have imposed by their Budgets, and consequently they are in a less favourable position to respond than ever before. Above all things, we of course have no right to press upon the Dominions that they should in any way impoverish their own people, and provoke unemployment in their own countries, for the sake of buying manufactures from us, any more than the Dominions would be entitled to ask us to put duties upon foodstuffs which would result in increased prices having to be paid in this country.
The noble Lord referred to some of the matters upon which he would have liked to have seen Safeguarding Duties. There is not time, because I know there are other speakers, to go into those questions now. All I would ask is what possible advantage would Manchester obtain if a 521 tariff was put upon piece-goods? He told us that the piece-goods trade had fallen by 50 per cent. within a number of years. Unfortunately, that is too true. We know the causes, but how on earth would it help us if we put a tariff upon piece-goods or other goods? How would it help Lancashire to export her goods into other countries? We have to remember also that, in the export trade which we do, two-fifths of that trade is done with the Empire and three-fifths with foreign countries; and that of the three-fifths done with foreign countries, 60 per cent. is done with Europe and 40 per cent. with the rest of the world. It is obvious that we cannot carry on our export trade, upon which we depend, unless we keep markets open, which is one of the very real difficulties with which we have to contend at this moment. Unless we do trade with those foreign countries, we cannot hope to carry on our export trade. Let us also remember that in that is involved all the advantages which we gain from our shipping industry, from banking, and from insurance, through which we get the very large returns generally referred to as invisible imports.
Then I would put this broad question. How is it suggested that to place tariffs upon goods would help our export trade? We are dependent upon our export trade in this country. I am not at all unmindful of the benefit from our home trade, but how would duties allow us to carry on our export trade? It is a favourite argument that if you have tariffs you can then talk to the countries which have tariffs. Experience has shown that that is of no advantage, and that the result of talking is usually that you get higher tariffs. I know that there is nothing which appeals so much in a discussion between men as to say: "Oh, if only we put a tariff upon American goods, America would never dare to put the tariff upon our goods which she does put." The answer is that she does it with other countries. It is a subject which was enquired into at considerable length at Geneva, by the Economic Conference in 1927, and I will just read a few words which give the effect of the Reports:High tariffs of whatever system have, in many cases, also been imposed, in the first instance at all events, for bargaining purposes. But subsequent negotiations have 522 in practice not resulted in adequate modifications, with the consequence that the Customs barriers have been left higher than before.…Then there was the Commission presided over by Sir Arthur Balfour which came to exactly the same conclusion. It reported to the same effect, in 1929. It is therefore I think idle for us to talk about the advantage of having bargaining power, when the experience of a number of countries has shown that it is useless, and is likely to leave you with still higher duties.
The only other point to which I would refer is dumping. I do not know of anything in the Free Trader's gospel which would cause him to say that he would never interfere, or will not interfere, with dumping. On the contrary, I remember quite well that Lord Oxford and Asquith, speaking in 1921, uttered some very pregnant words on this question and declined to accept the view that because a man was a Free Trader in the most dogmatic and classical sense, he would be precluded from interfering with dumping. You must, of course, not confuse clumping with the selling of goods cheaply in the market here. What we understand as dumping is that, having by large production reduced your overhead charges and enabled yourself to supply your own market at a certain price, you then take your surplus and sell it in another country at such price as it suits you to do. Mr. Lloyd George, within the last twelve months, made a speech exactly to the same effect as Lord Oxford and Asquith.
May I say one thing further? I am myself very desirous of really ascertaining the facts upon this question. The trouble is that we are in the habit of proclaiming ourselves either Protectionists or Free Traders, and unfortunately too often when we have done that we close our minds to arguments which lead to a little watering down of the full vigour of the doctrine, Free Trade or Protection. One of the difficulties that you always encounter if you discuss figures is that you find there is a denial on one side and a denial on the other. For myself I have often thought—and I am speaking only for myself, not in the slightest degree as binding my Party—that it was most unfortunate that we had not something in the nature of a, non-partisan tribunal which could give us the facts—not determine the policy, which, of course, we 523 must do for ourselves—but, at least, give us the facts upon which there could be no discussion. We could accept them, and they would not be subjected, as they always are, especially on the platform, to the criticism that they are coloured to suit the argument. If we could only get the facts determined in a judicial form, then it would be very much easier for us to arrive at conclusions and to formulate our policy.
I desire to say only one or two words on Empire Economic Union. On this part of the subject I want to emphasise—what I should hope is not necessary—that the Party to which I belong has taken no inconsiderable part in creating that Empire, and that it has much to its credit in all that it has done, either by itself when it was in power or in assisting other Parties, for the Empire. The Empire is as dear to us as it is to the noble Lord and his Party. And I think I am quite justified in saying that since this Government have been in power, although they may not always have agreed with the views presented of the way in which they should assist the Empire, they have certainly not shown themselves unmindful of the obligations of a Government to the Empire, and have taken action, of which we have only had some instances given to-day, which quite clearly shows that they are just as keen as we and the Conservatives are to bind the Empire closely together, to maintain it as it is, and to enhance the tradition which makes the Empire what it stands for in the country.
With regard to Empire economic union, I will not go at length into that, because I think Lord Passfield made some very trenchant observations on that subject. But one thing which we have to bear in mind throughout all these discussions is that you cannot discuss matters of trade without realising that in such matters all nations are inter-dependent. It is not a question of whether one country is Protectionist and another Free Trade, it is that we are dependent on each other. You cannot nowadays carry out anything in the nature of an export trade without this interdependence. We have had actual proof of it, after all, within the last few days, in the offer that has been made by the President of the United States, when it was made very apparent that, notwith- 524 standing whatever belief may have been in the minds of many Americans—I do not say of the Administration, I do not know—he has come to the conclusion that, in order to get trade going, it is necessary to do something which will bring all the various countries into the position of having the power to buy by remitting for twelve months both War Debts and Reparations, and thus enabling them to start off once more on a road which will, we hope, lead to prosperity.
I do hope that in considering this question we shall bear in mind these many difficulties. And I suggest that on the questions that have been raised it is quite wrong to say that the financial proposals put forward by the Government for taxation, either last year or this year, whatever they may be, are in any way due to the policy of Free Trade, or to the present fiscal system of this country. They have nothing whatever to do with that; that is something entirely independent. I have not even heard from the noble Lord who spoke any proposal that this should be merely a tariff for the purpose of revenue. He did not suggest that. His idea of a tariff is for quite different purposes—either for the benefit of the Empire or for the benefit of the traders and manufacturers of this country.
§ EARL PEEL
My Lords, we are all greatly indebted to my noble friend Lord Lloyd for the very forcible and eloquent speech in which he introduced this subject. I note particularly that it must have been forcible because it provoked rather animated exchanges both from the noble Lord, Lord Passfield, and from the noble and learned Marquess, who appeared to fear that Lord Lloyd was demolishing with too rude a hand some of the great structures and theories upon which their political beliefs are built. I should like to congratulate the noble and learned Marquess on coming out so strongly in favour of economy. I was, however, deeply disappointed when he told us that he was only speaking for himself. I did hope that in that respect he was expressing the deep convictions of the whole, or the united parts, of the Liberal Party.
But I always like to see unity and agreement, and, after all that has happened, it was very pleasant to know that there was agreement between the noble 525 and learned Marquess and the noble Lord on all the general matters of Free Trade. Whether they were Cobdenites, half-Cobdenites or non-Cobdenites, they all seemed to agree together that our system was the best. The noble Lord opposite told us that he is not a Cobdenite. I have followed the distinguished career of the noble Lord, and I was aware that he was not a whole Cobdenite, but only a partial Cobdenite, and I should never have charged him, from such study of his works as I have made, with being a whole-hearted supporter of Mr. Cobden. The noble Lord seemed to think my noble friend Lord Lloyd had accused him of not coming out with a great scheme of Protection. He replied, in effect: "Look what happened at the Election. We polled 8,000,000 votes and the other Parties 5,000,000. How could you have expected us to put into effect this evil policy of Protection?" Well, I am very glad when people abide by their Election pledges.
I was, on the contrary, wondering whether I could assist him to carry out his Election pledges, because we were told by that Party when they arrived in power two years ago that they had an inflallible recipe for curing unemployment in a few months. I think it is not unfair to say that in two years they have not cured unemployment; I like understatement arid, therefore, I say that they have not cured unemployment. What I was going to suggest was that if that is so they ought not rigidly to set their minds against other suggestions that might be made for curing unemployment and, whether Cobdenite or non-Cobdenite, they ought to be able to address their minds to new ideas and new considerations that are put before them.
Let me remind them that, after all, although the noble Marquess has spoken with the usual sternness of a Free Trader who cannot conceive that there can be anything true in the world of economics except his own views, there have been great changes in the views of very eminent persons, who have changed their minds on these subjects. There is an enormous mass and volume of change on all subjects among employers, among employees and even among professors. I do not necessarily follow the doctrines of professors in all practical matters, but I 526 think that the statement of Professor Keynes, the Liberal economist on the Advisory Council, is really of great moment. After all, he was a Free Trader, but the force and rush of events have converted him. He says:The unemployment of men and plant is so large and so widespread, and has lasted so long, and looks like lasting so much longer, that I should expect a tariff to increase employment now, and for some time to come; while the advantages to business confidence, the balance of trade, and the Budget are too obvious to need emphasis.You cannot prophesy about the views of great economists of that kind, but I know that he would have been quoted very much on the other side had he still retained his old views.
I am glad to see also the light breaking in even on the Bench opposite. May I quote from a statement made at Crewe in October last?We must recast our ideas and reexamine our fiscal life. Speaking as a member of a Free Trade Government, I believe that Free Trade has got to be reconsidered.…I dare say that the noble Earl, Lord De La Warr, remembers that statement which he made then. I am consoled by the fact that he is the youngest member on that Bench and, therefore, we have with us the youth on the Socialist side. I hope the noble Earl will not allow himself to be overborne by the more crusted wisdom of age, but will assert vigorously those views which he had the courage to avow publicly at Crewe some time ago.
I thought that the noble Lord, Lord Passfield, quite unintentionally no doubt, treated this subject with a certain levity and as if it were rather a matter which was closed. I regard this question as vital to the interests of our country and, therefore, whatever prepossessions we may have on the subject, I think, as the noble Marquess, Lord Reading, said, that we must address ourselves, if we can, with open minds to a consideration of the facts. I look at the matter from a double point of view. One point of view is the question of the sources of taxation and the other is the great problem of assistance to industry. During those happy times of which we have heard this evening when Free Trade, was in the ascendant and our trade was, growing, all thought that there really was no limit to the resources of direct 527 taxation. There was no shrinkage in the returns from Income Tax and so on. It was only recently, by the statement of the Socialist Chancellor of the Exchequer himself, that we were brought with a tremendous bump to realise that we had practically done what had so often been threatened before—reached the limit of taxation as regards direct taxes.
I am afraid that state of things will continue. We have been living so much on the collections of past days. Everybody knows the enormous burdens that were thrown on great fortunes by the Death Duties. You are not going to get that great source of revenue in the future because, looking at the state of trade in this country and the rate of taxation now, I do not believe it will he possible in the future to build up those enormous taxable entities upon which we have relied in the past. However prosperous trade may be, so large are the slices taken off it by direct taxation—Income Tax and Super-tax—that it would be impossible for these great accumulations of wealth to he made in the future upon which we have relied so much in the past. Therefore you are bound, I think, by the logic of events to look about for fresh sources of taxation. If you are going to have fresh sources of taxation and that revenue tariff of which I think even the noble Marquess spoke with a certain degree of sympathy, it is clear that you have to adjust that tariff. You may call it a revenue tariff but you have to adjust it to the requirements of industry. You cannot merely put duties on manufactured goods or articles of other kinds without considering what effect they will have on the trade and industry of the country. Therefore, the distinction which is so very often drawn between revenue tariffs and a tariff for the purpose of protection is to some extent illusory.
The other point—and now I am dealing, I think, with the far more important point—is assistance to industry. The noble Lord's Motion refers to the financial proposals of the Government and says that they contain no reference to any measures for the safeguarding of home industries and so on. They do not. But they do make reference to the safeguarding or protection of home industries, because the Chancellor of the Exchequer delivered, whether relevantly or 528 not I should not dare to say, of course, a very vigorous diatribe against protective duties. He quoted for that purpose from a Tory Prime Minister. I am very glad, of course, to hear a Socialist Chancellor of the Exchequer quoting with approval the words of a Tory Prime Minister, but this Prime Minister was William Pitt and the Chancellor was quoting the views expressed by him 150 years ago as to the effect of duties on the poorer classes of the population. We really have learned a great deal since that time, and greatly as I admire William Pitt, I cannot pin myself exactly to the views that he stated. He said that it was relieving the well-to-do at the expense of the poor. We have heard that argument to-night from the noble Lord, Lord Pass-field, and the noble Marquess.
I wish to call attention to this, that, after all, there are a great many other countries in the world where there are democratic governments. There are a great many other countries in the world which have manhood suffrage and in some cases also womanhood suffrage, and also duties. Is it to be supposed that the great mass of the electorate in those countries are wholly indifferent to these considerations? Is it not possible that they have weighed them up themselves? Is it not possible that on one side they have set the necessities of employment and on the other side the necessities of duties and have come to the conclusion that on the whole what their Government is doing is the wisest? What, after all, influences the decision? The tariff or protection view is a very deep economic view based on much consideration and much thought, and it cannot be dismissed by a few platitudes or phrases about making the poor people suffer. It is based on this view, that prosperity is based on production and, firstly, having regard rather to production than the question of consumption. Their view is that large production must be the aim of statesmen and, as a corollary to this, there must be a policy of selecting, restricting or, if necessary, prohibiting imports lest the unrestricted inrush of imports should set the whole of the economic machine out of gear.
The question of distribution is a much easier one. When, by your careful policy of fostering production, you have got your heap of goods, then you may divide them. There might be, no doubt, in- 529 ternal discussions or even quarrels as to the extent to which that heap of goods so made should be divided, but surely this doctrine in itself is rather more intelligible than the rather mystic view that unrestricted imports are best, because that policy of unrestricted imports does surrender the initiative to the makers of other countries; in fact it allows other countries to dictate to this country, if it is a Free Trade country, what it shall manufacture and what it shall not manufacture. The country which has a policy of that kind may have certain advantages, but it does surrender the initiative of manufacture to other countries. The noble Lord, Lord Passfield, in one of those distinctions that he was drawing, told us—and I did not quite understand what lie meant till he had explained it—that he was in favour of interference. That is where he is only half a Cobdenite. He told us he wanted to have more factory legislation, more restrictions, and more limitations, I think he said; but did he consult his friend Mr. Cobden? If he does so, he will find that Mr. Cobden was against all those things. I am simply trying to put this very practical point, that. the whole situation must be altered if you are going to lay burdens—necessary burdens if you will—or handicaps on the industry in this country to which industries in other countries are not exposed, or, to put it another way, if you are going to free industries in other countries from handicaps that you put upon your own industries at home.
Nothing will persuade a man of ordinary sense that that is fair or wise for industry. When you speak of the great successes that Free Trade has had in the past, far too much attention has been directed to a particular form of Free Trade. The situation really has now been so completely altered that we are living in a new world, and von cannot apply the old principles as you did before. Again, I submit that almost every one of the pre-suppositions of Free Trade has been falsified by the course of events. The noble Marquess, Lord Reading, reminded us of the wonderful things—and they are wonderful things—that this country did in the War, in loans to other countries during the War, and in the way we are paying our Debt to the United States. Yes, but all these things have created a new situation, and have thrown 530 upon us a new burden, and it does not follow that the old measures which you took in the past will meet a situation which is wholly new and wholly unprecedented, throwing upon our industries tremendous and new burdens.
The Free Trader used to speak of that wonderful national system by which trade was to run in its own untrammelled and natural channels. What are these natural channels? Do they exist to-day? They may have existed to some extent in the past. We had our moist temperature, our proximity to our raw materials, fortunate contiguity of coal and iron, the use of the sea against land transport; but now all that is altered, and a few men sitting in laboratories have played havoc with the natural conditions and forced a new and terrible equality upon the world. We speak of our productive industry. We have heard to-night of our shipping industry and of our system of exchange and mart as a source of our prosperity and strength which might suffer from tariffs; but production, I think, will be found to be the great basis on which this immense super-structure was raised, and I do not believe that it would long survive the loss of its base. We have been confronted with the old doctrine that imports are always paid for by exports, but this is very largely a misstatement. A large amount of the imports that we receive merely come as representing in different forms interest on our foreign investments, and I suppose it is conceivable that if we had sufficient foreign investments we might live as rentiers on those investments without making anything ourselves; but capital dies, and capital must be replaced, and even if we were in that fortunate position of living upon other people we should still have to export our surplus of manufactures in order to increase our foreign investments.
We are told that after all, if we have suffered, we have not suffered so much as other countries, that other countries are suffering and have suffered from the tremendous distresses of the last few years. I cannot in these few minutes go into the causes—monetary causes, speculative causes, political disturbances and so on—but all I would say on behalf of industry in this country is that we have suffered from those general causes as much as other countries, possibly more 531 than other countries, and why should our industries have the further handicap of being exposed to the full force of foreign competition? I agree that business is a very complex matter, and that there are many causes of success or decline not due to tariffs or to Free Trade, but in order to distinguish between the causes, I think you will have to show that other countries that are tariff countries have been suffering as much as, or more than, we have done, before this economic blizzard came upon us, and that I believe it is impossible to do. I would hazard a guess that their power of recuperation will be shown to be more vigorous than ours when the time comes.
I would submit one or two reasons, briefly, to your Lordships why tariffs are specially important at the present time. We are, as everybody knows, passing through a great period of reorganisation, to which some people love to apply the name of rationalisation, and our businesses are, according to the Free Trade theory, in the position of some of those infant industries which might be protected even under the strictest theory of Free Trade. But to put it on a practical and non-theoretic basis, what is the difficulty that is now found by those businesses in reorganising themselves? It is this, that if they go to the banks and ask for the money they want, they are met with the question, "What is your security?" We are told they have to say, "We have not any security because we cannot be sure in present circumstances of selling the goods which would enable us to pay the interest upon the money you advanced to us, or repay the capital." The whole modern movement of the Government in regard to industry in this country has been to place great burdens and fresh handicaps on industry. Everyone in your Lordships' House knows that. I submit, therefore, that it is time to put some term to the interference of that kind of which the noble Lord, Lord Passfield, spoke.
Governments should address themselves to helping and assisting rather than to putting these fresh burdens on industry, and we might at last, I think, listen to the business men, to those who are handicapped in industry, and to those who are at work in industry, whether employers or employed, who, through the 532 Federation of British Industries in Manchester and elsewhere, have shown what their decisive views are going to be economically. In spite of the authority quoted by the noble Marquess from the World Economic Conference at Geneva in 1927, I find myself simply unable to believe that in a great country like this, with a great free market, with other countries putting up their tariffs, we have not got an opportunity which nobody has ever had in the world before of bargaining with other countries for some entry into their markets. If we were free to use the methods of tariffs we could offer them an opportunity which we could deny to them if they did not give us advantages in return. We have a position of great strength as regards our free market, but when we seek to rely upon the most-favoured-nation clause we find that careful and clever manoeuvring of bargainers in different countries has destroyed what is called the sheet anchor of Free Trade.
I will only say one word upon the Empire question. The noble Lord, Lord Passfield, when he was speaking, asked whether we were going to put on fresh duties in order to give a Preference. He seemed to leave out of account the reciprocity side of the question. After all, if you proceed by way of putting on duties, or taking off duties, it is part of a bargain by which you gain something solid in return. I think the people of this country understand a bargain and will look at both sides of the bargain before they condemn it in the off-hand way in which the noble Lord, Lord Passfield, does. I should very much regret if, in consequence of the rather severe treatment that has been meted out to representatives of the Dominions by the Government, there should be any restriction or even collapse in these great Conferences with the Dominions.
I do not charge the Government with having cold-shouldered the Dominions, but I do not think they have thrown themselves with all the energy they might have done into the work of strengthening our ties through mutual arrangements with the Dominions. I am sure they were civil to them personally, although one late Minister of the Crown expressed himself, I think, in a way that was a little unfortunate but I do not think that they have thrown them- 533 selves with the energy that they might have done into the cultivation and the examination of the possibility of further trade with the Dominions. I should be very sorry indeed if, when we have disposed of the main constitutional question between the Dominions, we should have no more Conferences simply because no one will come over here to discuss these economic questions. I attribute the greatest value, as I am sure your Lordships do, to these Conferences not only because they give leading statesmen in those countries the opportunity of meeting and knowing each other, but because the meeting of these Conferences every three or four or five years signalises to this country the integrity and the unity of the Empire in whose prosperity we are so deeply concerned.
§ LORD MELCHETT
My Lords, I desire to crave the indulgence of your Lordships' House, as this is the first occasion upon which I have addressed your Lordships. The topic of this Resolution is one in which my predecessor took such a part that I feel that I must, if your Lordships will allow me the privilege, submit certain aspects of the matter which have not yet been placed before the House. When I started to listen to this debate I expected to hear considerable discussion on the respective merits of Protection and Free Trade, and I have been much surprised that, while there has been some assault on the merits of Protection, no one has made the slightest attempt to make out a case for Free Trade—at least, not the sort of case for Free Trade that we have heard in the past and on which, if I may say so, I was brought up.
The noble and learned Marquess went so far as to say that if the case we submit were capable of proof he would judge it to be sound. In that respect, I would only submit this; that Free Trade is not capable of proof and that I do not suppose we shall ever be able, before we try it, to prove whether Protection will be a good or a bad thing. You can only say that a very large number of very good judges have in recent years become convinced on the subject and firmly believe that Protection will be of the greatest assistance to this country. We can only urge our argument on this ground. I am afraid it is impossible to devise any proof on this matter. Each 534 man will have to proceed on the conviction to which his own reason brings him. I think the noble and learned Marquess will readily agree that it was not Free Trade alone which made this country rich. There were many other contributory factors. This country fought many wars before Free Trade. We fought the Napoleonic Wars under a Protectionist system. Although we have built up great wealth and although we have become a very powerful and a very rich nation, although we are doing very well in paying for the great expenditure of the years between 1914 and 1918, it is not really all attributable to the benefits of Free Trade.
As regards some of the observations of the noble Lord, Lord Passfield, I was surprised to find that he really made no case for Free Trade at all. On the contrary, the whole burden and tenour of his speech was that he would like to interfere with trade in every possible respect. He showed us in the course of his speech that he was in favour of interference, that he was in favour of Preference, that he was in favour of the Empire, but that he was not in favour of doing anything to assist trade or to hold the Empire together if it should prejudice the standard of life of the masses. In that I am perfectly satisfied that my noble friends on this side of the House completely agree with him. Our contention is that the proposals we make would not prejudice the standard of life of the masses, and I do not think it is possible for him to bring forward any proof to show that the livelihood of the people of this country would be impaired under the Protectionist system we propose.
It has been shown by the noble Lord, Lord Lloyd, that our exports from this country are largely diminishing, and it is a fact which I know will not be contradicted that our export trade is constantly diminishing. What I am unable to discover, if our export trade is going and our home trade is to be done by the foreigner, is what it is suggested the workman is going to do. The answer is, as a matter of fact, very simple—he will go on the "dole" in large numbers, and that is what he has been doing during the last ten years. That is, to our mind, a great disaster, and that is why we bring forward proposals for a change in our fiscal system.
535 I was glad to hear from the noble Lord, Lord Passfield, that he is in favour of doing what he can to bring about the unity of the Empire. In fact, he spent some time in pointing out how very bold and very considerate his Government had been in dealing with Imperial matters. One would have thought from the generous terms in which he described his Government's policy that it has led with a great Imperial policy that would be an example to the whole world. But, of course, there is such a thing as a sense of proportion. We discovered, as a result of what he told us, that the Government, with almost incredible rashness, has set up three Committees to foster the Empire, that they had gone further and have actually set aside £1,000,000—in fact, he said a solid million pounds—in order to bind together the greatest Empire the world has ever seen. It is like trying to stop a leak in a battleship with a postage stamp. It is entirely out of proportion to the importance of the subject. But I do not think we ought to approach the question on this purely economic ground. Surely there is something more important, more fundamental, in our attitude to the Empire than a mere profit and loss account. Surely we cannot approach this as mere petty traders, to see whether we are going to gain a little more or a little less by this Preference, to be a little better or a little worse in our general standard of living by making a united Empire. Surely we must approach it in our belief in the Anglo-Saxon race and the British people, spread throughout the world as they are. We must believe that we are making the greatest civilisation that this world has yet seen, and that we must make every effort to bind our Empire together in order that this civilisation should have its fullest scope.
In the middle of the last century a statesman who has been upheld through generations as a noble and exemplary character, President Lincoln of the United States, fought one of the bloodiest wars in history in order to preserve the integrity of the United States of America. We are not suggesting that any war should he fought to preserve the integrity of the British Empire. We are merely suggesting that we should so arrange our affairs that we may buy our goods in the Empire instead of buying 536 them from abroad—in an Empire that is rich in all the goods that we need in this country, and that is able to supply us. It may be that in some cases there will be a difference of cost. What I maintain is that in no case will the difference in cost be such as to prohibit such a scheme being carried into effect. It might he argued that we shall lose too much of our foreign trade and that there will not be enough trade to be done within the whole Empire. I think that the figures that have been published in the last few years show that this will not be the case, but I do not propose for a moment that the Empire should have no import and export trade at all with the rest of the world. All I propose is that the exports and imports should be from the Empire as a whole, and not from each country individually.
It will take a long time, it may be many years, to build up a system of that kind, but the first step of any real importance in this direction was the proposal made by the Prime Minister of Canada when he was over here last year. I am not going to defend that proposal, because I think it was unworkable, but it was not the last and final word of the people of Canada. Yet no counter-proposal of any merit was made which they might have taken up. Those discussions were not encouraged or brought along. On the contrary, they were damped down by the Government and referred to in very uncomplimentary terms indeed by a leading member of the present Government.
I do not propose to detain your Lordships at any length in further discussion on this matter, but I do say this. At the present time we can manage to get along in this country and the Dominions. We can manage fairly badly in the present state of affairs. But there is going to be a very large and very fundamental change in the world's economic situation which will force the people of this country and of the Empire to make up their minds on this subject once and for all. The great granaries of Russia are being opened up again, and the granaries of the Empire which took their place when Russia went for all practical purposes out of business in 1917 are going to be put into competition with the grain exports of the Soviet Government. We all know the difference 537 in the standard of living of the citizens of the Soviet and the standard of living enjoyed by the settlers in our Dominions from this country and from other countries. The British Empire will have to make up its mind whether it is going to get its grain and produce from its own Empire or from the Soviet Government. If it chooses the latter, there is no shadow of doubt that the great Dominions of which we are so justly proud will become deserts again, as they were before the hand of man cultivated them and before the great expansion took place in Australia and Canada which the last ten or fifteen years have seen. Let us prepare ourselves to meet that question when it is thrust on us. Do not let us close our eyes to the possibilities of the economic union of the Empire in promoting the standard of living. Do not let us imagine that by fiddling about with a few Committees, or by spending £1,000,000 or £10,000,000, we are really affecting one of the greatest questions which has ever troubled the human race, and which it is our responsibility to solve.
§ LORD HASTINGS
My Lords, I feel confident that your Lordships would desire to join with me in congratulating the noble Lord upon the speech with which he has introduced himself to your Lordships' House, and in expressing the hope that he will join in our debates as often as his distinguished father used to do during the time when he was in your Lordships' House. I am aware that the hour is getting late, and it would be quite futile for me to attempt to make a speech of any length; but there are one or two points on which I should like, if I may be permitted in the few moments that I have, to address the House. It has occurred to me that the only two answers, if I may call them so, to the Motion of my noble friend Lord Lloyd, those that came from the noble Lord, Lord Passfield, and the noble and learned Marquess, Lord Reading, appear, if I may so venture to put it, to miss the seriousness of the purpose of this debate. The noble Lord, Lord Passfield, made what I think I may describe without any disrespect as a Party speech. I have no fault whatever to find with it, but it seemed to me that the position is surely somewhat 538 more serious than he appears to think. The noble Marquess, with his great eloquence and powers of persuasion, spent some time in developing to the House the remarkable performances of this great country of ours under the system of Free Trade.
Admitted; but I want to know what those two speeches propose. What are we going to do? Neither speech showed any proposal for an amelioration of the present condition of affairs. Are we to continue literally to allow ourselves to drift into disruption? That is where we are going. How are we going to get out of the appalling mess into which we have got? It becomes more messy, if I may use that word, the longer we go on. Is it not an appalling fact that unemployment has already reached the figure of 2,600,000 men and women, and apparently, from all that we are able to judge, is likely to get worse? Is the noble Lord, Lord Passfield, so certain that we can meet these charges, or gifts, as he calls them, out of the taxpayer's money much longer? The less the taxpayer is able to find for this purpose, the greater the unemployment, and the greater the amount of unemployment, the less the taxpayer is able to find; and so there we are in that vicious circle. We have to get out of this some time. My noble friend, Lord Lloyd, had a concrete proposal to lay before the House, a suggestion for getting out of the trouble. I am personally in no degree a confessed or confirmed Protectionist, any more than I am a Free Trader, but surely both Protection and Free Trade are means to an end, and the end is the best for the country. We have to arrive at some means of getting ourselves out of our present trouble.
Let me, for the one or two moments that I have, endeavour to give an answer, however futile, to the direct challenge made by the noble and learned Marquess, Lord Reading, in respect of the condition of agriculture. It seems to me that many Free Traders are under the misapprehension that industry and agriculture are antagonistic one to the other. Surely that is entirely untrue. I have always held that industry cannot hope to continue and to thrive unless it is based upon a sound agriculture. Surely that is a mere platitude. Agriculture and industry are in no way antagonistic. If industry, for the sake of the cheapest 539 possible food, is intent upon smashing agriculture, the next thing that will happen is that industry itself will collapse. That is unanswerable, I think.
Why should it be thought that, for agriculture to flourish, industry and the people who live by it must be put to hardship? Nothing of the kind. I do not believe the noble Marquess—to take one small instance—can have studied the relationship between the price of bread and the price of flour to-day and the price of bread and the price of flour a year ago. If he had done so, it would tell him immediately that the price that the consumer pays is not the price that the producer gets. That is one reason why a raising of the price to the producer would not necessarily come upon the consumer. It is merely a matter of a little reasonable control. But what agriculture craves for is a certain market, and given that there is no occasion for the price of agricultural produce to be raised to the British consumer.
It may be said that it is a foolish thing to say, but I am perfectly confident that a small Commission, even of one individual, attached to the Board of Trade, with credit and power to recommend to the Government of the day what duties should or should not be put on, would in three years' time have British agriculture flourishing and every man who wished to be employed in agriculture so employed, and be able to create an enormous number of manufacturing industries out of the produce of this country, absorbing a vast number of unemployed, without any need to raise the price of foodstuffs to workers in this country. On the contrary, I believe it would be possible to absorb scores of thousands of unemployed in manufacturing agricultural produce which is now brought here in a manufactured condition from abroad. I trust that this House will never again allow itself to think that agriculture and industry are antagonistic. They are partners, and are meant to he partners by Providence, and it is possible by a little adjustment to see that each is successful in its own sphere.
It would be wiser, I think, for me not to attempt to go further with the debate. I notice that the Leader of the House desires to speak, and it is not for me to stand between him and the House. I 540 will close with these observations. Try to bear in mind that we are not really up against the theories of Protection and Free Trade, or up against what we like or dislike; we are up against the certain fact that we have got 2,600,000 persons unemployed, with no immediate prospect of getting back to work. We are up against the fact that the direct taxpayer is taxed beyond endurance, that more taxation means more unemployment, that the more unemployment there is the greater is the call upon the taxpayer, and that the greater the call upon the taxpayer, the more unemployment there must be. Something has to be done to get out of that vicious circle, and a means of doing so is suggested in the Resolution. If anyone has any better suggestion to make, for goodness sake let him make it. Let us discard altogether these predilections and centre upon a scheme which will get people back into work and make it unnecessary for us to sink, as we appear to be in danger of doing, into the position of a third or fourth-rate Power. The time has gone by for these criticisms of one another. Lord Lloyd has produced at least some proposals and if the other side have anything better to say, at least let them say it.
§ LORD PARMOOR
My Lords, I only desire to say a few words and I hope I have not curtailed the speech of the noble Lord, who has always something interesting to say, particularly on agricultural topics. May I join him in congratulations to Lord Melchett upon his speech? I am sure we shall always desire to hear him in the future, after our experience of the first time he has addressed us. There was one matter in his speech to which I would particularly like to refer. I think he said quite truly that the proposal made at the Imperial Conference was unworkable. I entirely agree with him, and I think that ought to be borne in mind when discussing this question. Where I entirely differ from him is in this: It is untrue to say that any attitude except an appreciative attitude was ever assumed by the present Government towards the Imperial Conference or the relationships between the Dominions and Colonies and ourselves. The real difficulty is this: Our Dominions have complete financial independence. They have a complete right, without any 541 interference from us, to carry out their own trade policy in their own direction and, if he asks my opinion, for what it is worth it is this: there is no more certain way of raising friction and misunderstanding between the Dominions and ourselves than by attempting in any way to force upon them a policy which they do not desire to adopt and which they think is not in their own interests.
I would just say one or two words upon other questions which have been discussed. I do not think that Lord Lloyd, or anyone who has addressed us upon Protection to-night, has brought forward any valid argument that if the Protection they suggested was adopted it would be of any advantage to the volume of our exports. Let us see how matters stand, not upon matters of theory but upon questions of fact. I do not want to go into the interesting arguments brought forward by Lord Reading. Is America better off, relying upon a system of Protection, than we, who rely upon a Free Trade system? I should not like to instance Germany, because Germany has had her own special misfortune, although I hope something may be done to relieve the pressure there. But look at Canada, Australia and all these Protectionist countries, which have gradually been putting up tariffs against imports. Is it not the fact that they have been injured much more by the general trade depression than England, with her partial Free Trade policy? I have often thought that we talk too much about theory in these matters. Why do not we look into the facts? I cannot imagine anyone looking at the facts without coming to the conclusion that they have suffered much more than we have in the present distressing world-wide depression. M. Theunis, Prime Minister of Belgium during the War, in a Report which he made at Geneva, declared that if you wanted prosperity under present conditions you must not set up international difficulties and obstructions, but must get rid of all of them as far as possible; and the most obstructive of all are of course tariffs. I often wish that that Report of his had been more largely read and digested in this country.
There is only one other point that I wish to say a word upon, and that is Lord Hastings' speech. I recollect the 542 noble Marquess opposite, Lord Londonderry, saying on the last occasion when we discussed these matters that unless you had a guaranteed price, as distinct from the market price, nothing in the nature of Protection would be of any value to improve the conditions of agriculture in this country. I think that is perfectly true, but I want to put two arguments against that. I have been a farmer myself for a. very large number of years. I say that there is not that general distress in agriculture which is suggested. It is very considerable, no doubt, where cereal cultivation is still the basis of agriculture, but in the district in which I live, and in a very large number of districts which I know progress has been made, not by a protective system of agriculture, which cannot be,: financially successful under modern conditions, but by adaptation to new conditions and the production of other products which are wanted in this country, and in which we can successfully compete with foreign countries. That is going on very largely. There has been a very large development in other systems of agriculture which present much greater possibilities of successful development to-day than the Protectionist system, which, after all, in the case of cereal cultivation, does not affect more than 4 per cent. of our agricultural output.
That is so far as industry is concerned. Now I come to the social question. Can anyone really believe that in a country like ours, with something like 90 per cent. of working population, and with a problem as regards the workers which no other country has, progress can be made by increasing the cost of living in the shape of higher prices for bread? I do not believe that anyone who really considers it would venture to support a form of taxation which increases the price of the food of the poorest of our population. That is, of course, where Mr. Chamberlain failed, and that is where the system which is advocated by Lord Lloyd would fail when it came to the test of the opinion of the people of this country.
Let me refer for a moment to Lord Lloyd's Resolution. He regretsthat the financial proposals of the Government for the current year contain no reference to any measures for the safeguarding of home industries.Of course they do not. We do not believe in tariffs as a method of improv- 543 ing the existing conditions of employment, bad as they are, in this country. Would he expect a Government which does not believe in his remedy to make reference to measures for the safeguarding of home industries? Why should he? He knows perfectly well we are opposed to that method of procedure, that we consider that the injury which would be done is far in excess of any advantage which could be gained. Then, what is the second part of his Resolution— "or for the promotion of Empire economic unity." I think we have gone a very long way towards the promotion of economic unity in the Empire. If you look at it in the wider sense we can only promote that by appealing to their generosity and our generosity, to their racial instincts and our racial instincts, to their culture and to our culture; and the notion which the noble Lord seems to have of forcing a premature unity, which everyone recognises to be impossible, is not one to which this Government can lend itself. We shall, of course, be forced to divide against this Resolution, if the noble Lord presses its acceptance upon the House.
§ Resolved in the affirmative and Motion agreed to accordingly.