World Economic Conference.

– in the House of Commons on 15th March 1933.

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3.18 p.m.

Photo of Mr Henry White Mr Henry White , Birkenhead East

I beg to move, That this House, recognising that the chief factor in producing world-wide economic distress is to be found in the financial and economic restrictions placed upon international trade, urges His Majesty's Government to prepare, and to lay before the forthcoming World Economic Conference, definite proposals for the all-round reduction of tariffs and the removal or reduction of other obstacles to trade, to take the initiative in the formation of a group of free-trade or low-tariff countries, and to make agreements for such modifications in the most-favoured-nation clauses of existing treaties as may be necessary. I hope this Motion will commend itself to the general sense of the House. It would be impossible in the time allotted to this Debate to consider the whole programme of world reconstruction which has been drawn up by the Preparatory Commission of Experts, and drawn up, I am pleased to say, with a very large measure of common agreement. It is unfortunately the case that the programme and recommendations drawn up by commissions of experts in complete agreement and with complete unanimity have not been followed by the various countries concerned. For example, we had in 1927 a similar recommendation from a body of experts representing all the countries concerned, and if those countries had carried out the advice which was then given to them the world would have been a very much happier and easier place to live in than it is at the present time. There are those who are inclined to argue that in the present state of international politics and world opinion the subject of world co-operation is one which it is perhaps hardly useful to discuss. For some years past we have been dominated by one crisis following another. Sometimes these manifestations have been political and sometimes economic, and the causes have been closely intermingled. As one crisis succeeds another they become deeper seated, and it becomes more difficult to find a solution.

In these circumstances I think that the House will consider that it is very desirable that we should discuss, not the details, but the broad outlines of the policy which should be laid before the Economic Conference, and I hope that the Government will welcome an oppor- tunity of declaring to the country, and indeed to the world, that they intend to go to that conference prepared to submit definite plans and to give an unmistakable lead to the whole world for the progressive removal of those different obstacles which are throttling all international trade. The present state of international feeling is not a reason for refraining from discussing the subject of international co-operation; indeed, it is an urgent reason why it should be discussed and followed as quickly as possible by action. It was hardly necessary for a commission of experts to meet together to draw up an agenda in order to diagnose the disease and to describe the symptoms from which the world is suffering, or to convince the people of the vital necessity that the countries of the world should reverse their policy and discuss the removal of their common difficulties rather than continue to add to them, as they have been doing steadily for years past. The whole world is familiar with the ghastly fact that there are, on a modest computation, 30,000,000 unemployed—a vast multitude which, if each man stood up and stretched his arms, would reach round the Equator.

We know that since 1929 wholesale commodity prices have fallen by one-third, that the prices of raw material have collapsed to the extent of from 50 per cent. to 60 per cent., and that, as a result of this disequilibrium in the markets of the world, in the principal producing countries, there is no relation between their international burdens and their means of carrying them. The area of default is already very wide and steadily tending to increase. The countries of the world, acting sometimes in defence and sometimes prompted merely by a spirit of economic nationalism, have developed a vast network of restrictions, financial and economic— quotas, exchange controls, prohibitions, tariffs and the like—which constitute "a state of virtual economic warfare," to quote the words of the Preparatory Commission. All countries are seeking to sell and none are willing to buy. The inevitable result of that policy, if continued, must be a world-wide collapse, in which, to quote again the words of the Preparatory Commission of Experts, "society as we know it could hardly survive." The aggravating fact in this situation is that there is no necessity for it. Every one is aware of the fact that in the last few decades mankind has succeeded in solving the age-long grim problem of how to obtain a secure and sufficient subsistence.

We have entered on a new era in the world's history, for it is a complete world in the sense that productive capacity is sufficient to supply the reasonable needs of every living man and woman. It has been an amazing triumph of engineering science and organisation. Technicians have given us a new world, a world which has become a single economic unity, in which the distance between cause and effect has been largely destroyed. What we say in this House this afternoon may be a topic of conversation to-morrow the world over, in New York, Bombay and elsewhere. The economic life of the world has been shifted from a national on to an international basis, and, if one were asked to summarise the world position to-day, it could be put in a single sentence—that all our troubles arise from the fact that we are trying to run a twentieth century world with the political ideals of the eighteenth and nineteenth centuries. Governments and statesmen the world over, sometimes with the support of their people and sometimes without it, have successfully withstood and frustrated the wonderful triumphs of science and organisation. They have stood successfully between the people and the new prospect of abundance which has been opened out to them by the triumphs of science. As far as I know, it is the only field of endeavour in which international statesmanship has been completely successful.

After the Lausanne Conference some of the nations of the world decided to summon a world conference to see how they could remove their difficulties. That decision was welcomed everywhere, and it was thought that at long last there was evidence that the nations of the world were actually willing and capable of meeting together to consider a common constructive policy. It is in the recollection of the House that no sooner was the conference decided upon than a new hope appeared. Things began to improve, markets began to rise, but that newly-born hope soon flickered out as the conference was postponed time and time again, and sinister events began to occur the world over and the atmosphere for the conference obviously became more difficult. National anxieties then centred in the conference which was called to consider disarmament, and then came events in the Far East and the economic troubles which have overcome the United States. There is nothing apparently that outsiders can do to help the United States in the task which confronts them, but this House will wish to express its sympathy and good will to President Roosevelt in the terrible and almost superhuman task that lies before him in that country. The United States is such an important factor in world economy that no sound international currency policy and no sound fiscal policy can be devised if she stands outside, and one welcomes, in particular at this time, those words which were spoken by President Roosevelt in his inaugural address. In spite of the economic difficulties of his country and its great internal domestic anxieties, he said that, in point of time —those words are significant: international trade is of necessity secondary to the establishment of a sound national economy. I think there is a particularly hopeful note and significance in the concluding phrase of that section of his address, in which he said: I shall spare no effort to restore world trade by international economic coadjustment. In the field of world policy I would dedicate the nation to the policy of the good neighbour. The policy of the good neighbour is the one which is essential and which must be held by all nations if the World Economic Conference is to succeed. I am not one of those who think that recovery must necessarily be slow and painful. One of the chief factors in recovery when it once starts will be psychological, and it will date from the day when there is unmistakeable evidence that the countries of the world are really willing to co-operate together. It is rather nicer to think of the possibilities of recovery than to dwell upon the immediate difficulties. The potential capacity for recovery is almost unlimited and the human factor enters into it. There are 30 million unemployed individuals only too anxious to be "at it." The whole forces of production are only too anxious to be liberated from the shackles which Governments and statesmen have placed upon them. There is an immense volume of deferred work to be carried out, deferred repairs, renewals and extensions, none of which will be put in hand until there is hope. There is a superabundance of raw material and food only waiting to be translated and transferred to empty cupboards and shelves. No one country can start that recovery by itself, but Great Britain, owing to the fact that our financial position, although it is not free from some anxiety is the envy of all, can do more than any other country by making it unmistakeably clear that we will enter the conference unhampered by prejudices, unbound by previous engagements and prepared with plans which will give a lead to the whole world in the progressive reduction of the shackles upon international trade. If I were to venture to give advice to those whose duty it will be to attend that conference I would advise them to sit down and to think carefully and long of the consequences of failure. They would rise from that useful exercise convinced that no obstacle of any sort should be allowed to stand in the way of success. Again I do not use my own words, but the words of the Preparatory Commission: The world is engaged to-day in eoonomic war. Therefore, the Economic Conference must be a peace conference, and it is a peace conference which will have a much more devastated area to repair than the Peace Conference at Versailles. There is one condition which is essential to success. Nations must come to that conference in a spirit of mutual accommodation. If they all come to ask for concessions, and are prepared to make none, the conference had better not be held at all.

The various problems which will arise are numerous, difficult and complex. I have already said that it would be quite useless to embark upon a discussion of them this afternoon in any detail, but there is this reassuring factor about the situation, that if they are difficult and complex they are all closely related, they are all complementary, and any successful step made in any one direction to the solution of any one of them clears the way and makes easier the approach to the next. We cannot expect to have a sound international currency policy unless we have previously secured a reasonable settlement of international debts. Equally, we cannot have a sound international monetary system unless and until we have a very much greater free- dom of trade than exists to-day. Every obstacle which can be removed from that path will simplify the solution of the other difficulties which surround it and will clear the way to ultimate recovery.

On the subject of currency it would be a great help—I see that my view is shared by other Members who have put down an Amendment—if we could have a common policy with regard to currency for the Dominions and the Empire. I have always regretted that at Ottawa they did not give more attention to that matter of currency, because since the Ottawa Conference we have had within the Empire something like a competition in depreciation of currency that has certainly not improved the atmosphere and has tended to exaggerate and aggravate the difficulties of the general trade position. I would like to ask the President of the Board of Trade, if he is going to reply, whether the Government are, in fact, considering a common policy on currency with the Dominions, and also on tariffs. It is to my mind quite clear that if any important country is going to the World Economic Conference with a rigid, unbending mind and an inflexible policy that the Conference cannot succeed. I am impressed by the fact that the attitude of Great Britain and the British Empire in this connection may very well be decisive. The Motion which I am moving therefore invites the Government to take the lead and to prepare and lay before the Conference definite proposals for the reduction of tariffs and other trade barriers.

I do not think there can be any doubt as to the attitude of mind of the Government on this particular point. We in this quarter of the House are Free Traders. Our ultimate object is the removal of all barriers and the complete restoration of Free Trade. We also hold that if in the present state of the world this idea is not immediately attainable we have got to go step by step, and therefore we should make every effort to unite in a common policy with those other countries who are impressed by and believe in the necessity for a greater freedom of trade than exists to-day, and that we should for that purpose be prepared to enter into agreements and to form low tariff groups. In that connection it is clear that we should not get very far before we came into contact with the provisions of the Most Favoured Nation Clause in many of our commercial agreements. That is an important fact which would have to be taken into account. It is recognised by the International Commission of experts, who dealt with the subject in some detail and pointed out various ways in which the difficulties which might be expected to confront the negotiators might be dealt with.

Belief in the policy of forming low tariff groups is not confined to any one quarter of this House. It quite recently received the powerful support of my right hon. Friend the Member for Tarn-worth (Sir A. Steel-Maitland), who speaking in the House recently on the subject of our attitude towards other countries, after saying that it was all humbug to suggest that any one country could contract out of the world's troubles, used these words: We should say to other countries, ' If you are willing to come down and make a low tariff group, then we are willing to try to meet you.' "—[OFFICIAL REPORT, 16th February, 1933; col. 1296, Vol. 274.] It is that policy which this Motion urges the Government to accept. I will not take up the time of the House in endeavouring to explain or to outline in detail the way in which the low tariff group might be brought about or the way in which it might function. I will refer to the suggestions of the expert Commission which I think are not only reasonable but admirable to a very great extent. I regret that hitherto, when such movements have been started simultaneously, not only in this country but outside it, the Government were not prepared to give them a very favourable reception.

I have been trying to understand the mind of the Government upon this subject. The policy which, I am suggesting, is part of our task at the World Economic Conference does not mean the abandonment of the most-favoured-nation Clause or the raising of tariffs against anybody. That is a very important point. It does not prevent us from giving free entry to goods from the Empire or from any other country. I believe that a powerful first step would be the making of economic peace. I have been trying, as I say, to understand the mind of the Government on this topic. There should be no doubt with regard to their attitude. The hon. Member for North Bristol (Mr. Bernays) a few days ago asked the Prime Minister whether it was the policy of the Government to urge at the World Economic Conference for the all-round reduction of tariffs, and was answered with an unqualified assent. The right hon. Gentleman the Member for St. Ives (Mr. Runciman) has also addressed himself in no uncertain terms with regard to these matters. Speaking at St. Ives, the right hon. Gentleman said that he wished that the German Government would do away with that insane policy of quotas which was ruining the trade of Europe. The mind of the Chancellor of the Exchequer seems to be somewhat obscure. His statements are not as lucid in this regard as they are in many others. Speaking this week at Birmingham he said that international trade was hampered to-day as it never had been before by all sorts of barriers. He added: I have no objection to those barriers provided they are reasonable, but excessive and oppressive barriers 1 complain of. Speaking a little earlier at Edinburgh, the right hon. Gentleman used this expression: If we can secure the lowering of the excessive tariffs that other nations have put round their borders, then I feel confident that trade will soon begin to revive. I must confess that I am in some difficulty in explaining when a barrier is not a barrier and when a barrier ceases to be oppressive and excessive, and when, in point of fact, it becomes an aid to the development and the transaction of business. It surely cannot be that the Chancellor of the Exchequer thinks that what is a vice when practised by other countries is a virtue when carried out by his Government. If that be the case, and if it is the view of the Government that they can go to this Economic Conference and say to Germany, "Your quota is a restraint of trade. Your tariff is oppressive and in restraint of trade. That action by America was a restraint of trade; but our quotas and tariffs are not in restraint of trade," the right hon. Gentleman had very much better stay at home, because there will be no possibility of success on those lines. The Government's policy has been the ancient and historic policy of casting out devils by Beelzebub. I would remind the Government that on that occasion the caster- out of devils was warned against trying that process, because he might become the chief of the devils. I hope that the mind of the Government is not moving in that direction.

The Chancellor of the Exchequer, speaking in this House more recently, adopted an attitude which seems rather more hopeful than his utterances outside. Speaking on the Motion of may hon. Friend the Member for Stockport (Mr. Hammersley) last week, he said: "We have got to try to persuade other countries to act with us in removing the obstacles to the restoration of international trade. I do not myself despair of obtaining a considerable measure of agreement, because I see that the more difficult the situation becomes, the more desperate the position of other countries grows, the more likely they are to be ready to consider any scheme which you may put up to them which will give some reasonable prospect of relief. Speaking of the task of raising prices he was even more definite. He said: While the Government will certainly spare no effort in doing all that it is in the power of the Government to do to stimulate trade and raise sterling prices, yet at the same time we are not going to disguise from ourselves that the greater objective which lies before us is in the direction of international co-operation. For that purpose too, we shall take every opportunity which presents itself to us to get into agreement with other nations."—[OFFICIAL REPORT, 8th March, 1933; col. 1312, Vol. 275.] I hope that the President of the Board of Trade may be able to tell us that the second thoughts of the Chancellor of the Exchequer really represent the mind of the Government in this all-important matter. I would like to ask the Government what is their idea and their ambition as to the scope of this conference and what it is that they envisage coming out of it. Is it to be another success on the same scale and of the same order as that which emerged with such pain from the Ottawa discussions? Is that the order of the thought of the Government in facing this vast international problem? In that case, merely a series of arrangements, and some small reductions of tariffs in this direction counterbalanced by additions in other directions, would be quite futile in face of the steady disintegration of the financial structure of the world.

Those who have carefully read the annotated agenda of the World Conference will be led to a more com- forting conclusion, and that is that the way out from the present troubles is not hopeless. The position is far from hopeless. There is a way out for recovery, if only the nations will unite to clear the road for prosperity. Those who study the agenda will learn and deduce from it that the greatest slump of all has been the slump in human intelligence, and that it is only by the recovery in human intelligence that the situation can be saved. The lesson of the last 10 years, if it taught the world anything, must have brought home to us that co-operation for the welfare of mankind on a friendly and international basis offers the only chance of making this world a reasonable and fit place to live in. That should be the keynote of the conference.

I would also point out that, in these days, time is of the very essence of this matter. Events will not wait. The whole financial structure of the world is being rapidly undermined. Further unnecessary delays will be fatal. I am not suggesting that this conference should be called immediately; I know that that is not a practical proposition; but at least it would help if the Governments of the world would each state what their intentions are. That would be an important step, and it is, perhaps, the only step which we can take here and now this afternoon. The conference should be brought together at the earliest possible moment, and, in the meantime, the Government should, in clear and unmistakable language, indicate that they intend to pursue, not the policy of acting each one for himself, but the only policy which can lead to the restoration of the world.

3.51 p.m.

Major LLOYD GEORGE:

I beg to second the Motion.

In doing so, I should like to congratulate the hon. Member for East Birkenhead (Mr. White) upon his admirable speech, and upon the clear way in which he has laid the facts of the situation before the House; and I should like to congratulate him still more upon having chosen this topic for discussion to-day. If any proof were needed of the serious view that Members in all quarters of the House take of the state of affairs in our own country, it is, surely, to be found in the fact that practically all the resolutions put forward on the days allotted to private Members are concerned with the situation in this country; and since, obviously, many Members will wish to take part in this discussion, I shall not detain the House for very long.

Some of the Motions that have been put down for discussion have dealt with the national situation here, but I am very glad that to-day we have an opportunity of discussing the international situation, because it must be obvious to all that, without international co-operation, there can be no permanent solution of our difficulties. I think it is also agreed in every part of the House that this is a situation which cannot long continue without disaster. As is stated in the report of the experts, the depression has been marked by accumulating stocks of agricultural produce and raw material, the curtailing of industrial production, and the hindering of international trade by various forms of restrictions which have in themselves intensified the very problems which they were designed to cure. Prices have fallen steadily, unemployment has risen to appalling heights throughout the world, and, as the commission of experts states, further loss of ground cannot be contemplated without the gravest foreboding.

That is the situation. There can be no dispute as to its gravity; the disagreements begin when we try to discuss causes and remedies. There is no doubt that it is desirable, as the report states, that there should be a rise in world prices, but there is disagreement as to how that is to be effected. One or two suggestions are put forward in the report. One is that there should be provision for easy money to promote the healthy expansion of trade. We have in this country to-day that easy money, but there is no healthy expansion of trade. Why? I think the Chancellor of the Exchequer gave the reason when he said that we were being prevented from using this money because the barriers to international trade were making it impossible for confidence to be restored. The Chancellor made that statement in this House. It is true. But, in passing, I would remind the Government that that does not apply to our own country. We have no tariff barriers in this country between producer and consumer, and, if it is essential that there should be a healthy expansion of business by the provision of cheap money, we certainly have in this country the cheap money, and the Government say that, thanks to their tariff proposals, they have "regained control of the home market." Having regained control of the home market, I should have thought that the best thing they could have done would have been to expand that market.

Another suggestion which the experts put forward is that prices can be raised by a policy of control and restriction, but they add that that raising of prices could not be maintained unless there were improved trade, which could only be got by the removal of restrictions. I hope that our Government is not going to the Conference prepared to put forward a policy of control and restriction. How can a policy of control or restriction be justified when the legitimate needs of consumers remain unsatisfied, when there is an army of unemployed throughout the world which, with its dependants, probably numbers 100,000,000 people? How can a policy of restriction possibly be justified until their legitimate needs are satisfied? If this or any other Government goes to the Conference and makes such a proposal, it will be not only folly, but criminal folly. If the present economic system can only survive by that means, then I doubt very much whether it can survive, and, indeed, I would say that I do not think it deserves to survive.

An outstanding feature of the report is that, no matter to what it refers—whether it be monetary policy, prices, or anything else—it always states that no lasting good can come until trade restrictions are removed. That is present in practically every one of the recommendations, and it is added that especial responsibility lies in this respect upon the great creditor nations. We are still the greatest creditor nation, though I doubt very much whether we shall remain so if these restrictions are to continue, for it is quite possible that the debts which our debtors owe us at the present time may very quickly become bad debts. There is no doubt as to our responsibility in this country; the question is, do we realise it? To judge from the speeches, some of which have been referred to by my hon. Friend, the Government do realise it. Perhaps I may quote one other by the Lord President of the Council, who put the point perfectly clearly. After referring to the fallacy of any country trying to isolate itself in prosperity, he went on to say: It is the recognition of this that compels the Government to attach so much importance to the proposed World Economic Conference, for it is only through a general movement towards prosperity, started and accelerated by the removal of the obstructions to finance and trade, that this country or any other country may hope to progress. That is perfectly plain; there is no mistaking the view of the Government; they all say that that is what they stand for. They are prepared to go to the Economic Conference and, they say, they are prepared to move for a reduction of various barriers. There is no mistaking their views, but I want to know: Are they prepared to act? Are they prepared to go to the Conference and put forward what my hon. Friend suggests in his Motion, namely, a definite proposition; or are they prepared to accept such a proposition if it came from another quarter? There is another question, which is very much more important: Are they in a position to make or to accept such a proposition?

I understand that the right hon. Gentleman is going to reply. He has had a great deal of experience. He has been negotiating, I understand, for some considerable time with foreign countries— bargaining, I suppose. Can he tell us to what extent he finds that he is hampered in his negotiations by the Ottawa Agreement? I think that we are entitled to know. We were told six months ago that foreign nations were clamouring at our door, that they were falling over each other to make agreements with us. Some of them have been falling over each other here for a considerable time, but not a single agreement has been signed, although the right hon. Gentleman is quite satisfied that progress is satisfactory. Well, it takes a long time. Six months have passed and no agreements have been come to. That fact confirms the opinion which many of us held at the time that the Ottawa Agreement is a tragic blunder, and there are indications that we are not alone in finding it out. There are indications in other parts of the Empire. They are finding out that the Ottawa Conference was not such a great success as was made out. But are the Govern- ment prepared to take the initiative in the formation of a group of Free Trade or low-tariff countries? I think we are entitled to an answer from the Government on those lines. Either you are going to have a tariff for bargaining purposes or you are going to have a tariff for protective purposes. Which is it to be?

Major LLOYD GEORGE:

Then I am not surprised that results have not been forthcoming. If the hon. Gentleman wants a tariff both for bargaining and Protection, I do not know how he is to do it. Are we to have the same humbug in economic disarmament as the right hon. Gentleman the Member for Epping (Mr. Churchill) referred to yesterday in regard to another subject? I think we ought to know what they really do mean. If the Government want a tariff for bargaining purposes, they must put forward some concrete proposal to the Economic Conference. If the tariff is for protection, they must apply their minds to another very serious problem. This country depends on international trade. The restoration of international trade is vital to our country with its densely populated areas. Surely I am not saying anything with which anybody would disagree when I say that that is impossible as long as those restrictions on trade are allowed to continue. But if the Government simply want a tariff for protective purposes, have they applied themselves to this question 1 In view of the loss of our international trade through it, are they prepared to face this question: Are the satisfied that this country can maintain 45,000,000 people in those circumstances? I would like to know whether they have ever applied their mind to it, and I would like to have their opinion upon it, because if they are not going to put forward proposals, they must answer the other question, which is of vital importance to this country. In the terrible situation in which the world finds itself, who is going to give a lead in showing the way out? Is it too much to ask that Great Britain should give the lead? [Interruption.] Never mind, we have more to gain by the lead than anybody else. Are we prepared to give that lead? It is a duty that we owe to our people, a duty that we owe to our millions of unemployed. Further than a duty, it is an opportunity to Britain to serve humanity. I beseech the Government not to lose that opportunity.

4.5 p.m.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

I beg to move, in line 1, to leave out from the second word "that" to the end of the Question, and to add instead thereof the words: one of the factors In aggravating world economic distress has been the consistent raising of tariffs by the vast majority of the countries of the world since the War and the exploiting of the free market of Great Britain, which provided the dumping ground for the surplus products of those countries, with disastrous results to British industry and workpeople; congratulates His Majesty's Government on having established a reasonable tariff policy which ends the defenceless condition of this country and renders it possible to secure trade agreements with friendly countries, and arms the Government with the power to bargain with and, if necessary, retaliate against countries with hostile tariffs; and further urges that His Majesty's Government, in considering these matters in connection with the World Economic Conference, should be ready so to modify existing treaties as to give tariff advantages to those countries which are ready to reciprocate in the promotion of freer trade and to raise tariffs against those countries which do not desire to reciprocate. The hon. Gentleman who introduced this question in a moderate speech to which, I am sure, no one in any quarter of the House could take any exception, directed our minds to one of the greatest problems which confront not only this country but all countries of the world. As usual, we heard from the hon. and gallant Gentleman who seconded the Motion a speech which caught the imagination of the House. Its keynote really was: Are we prepared to give a lead? I think that this country always appears to be giving a lead, and I am sure that some of us are beginning to hope that we will not give a lead which will make us ridiculous and which, perhaps, will be treated with scorn by other countries. In the last few days we gave a wonderful lead to the world—a lead which some of us thought was a little bit hasty in the matter of the supply of armaments to the belligerents in the East. We have given a lead on many questions, such as financing countries of Europe in a way that some of us felt was almost quixotic when one realises the condition of the countries to which we have lent money. We endeavoured to give countries a lead during the late Government's career, when our late lamented friend, Mr. William Graham, with very great ability and sincerity, endeavoured to promote the idea of a tariff truce. All these leads which we have given have not been very successful, but, for all that, I am sure the whole House will desire to stand behind His Majesty's Government in putting forward any suggestions with regard to these great problems which they think will be helpful to the world as a whole. We only beg them not too hastily to give a lead if they know pretty well that there is no indication that other countries will follow.

I will say, in passing, only one word with regard to the very great problem of currency which the hon. Member mentioned. I think that from every angle business men are hoping that there may be some getting together of the Powers of the world with regard to this question. If the world will not come together on this question of currency, I still believe it is possible to make a start within the British Empire. Whatever views there may be on this subject, no one in any quarter of the House will deny to-day that it was an extraordinary lack of foresight when the Empire gradually grew up that we allowed various currencies to arise in different countries in the Empire. I believe that even now that is, perhaps, one of the avenues which have not been fully explored, and which, I hope, may have the attention of His Majesty's Government.

There is one part of the hon. Gentleman's Motion with which I cordially agree, and that is the last few words. It is very interesting, coming from such a quarter, to be told that the most-favoured-clauses of existing treaties should be modified as may be necessary. I remember speeches to a very contrary effect from those benches in the days gone by, but I find myself in agreement because I do not believe you can ever get what the hon. Gentleman wants and what I want by a somewhat different method, that is, reciprocity between the different countries of the world, until you have dealt with that question. Obviously, it will be impossible to do what he desires, and what, from a different angle, I desire, as long as it is possible to treat your friends better than they treat you.

One other word with regard to the speech of the hon. and gallant Member for Pembroke (Major Lloyd George). He spoke, I thought, rather sweepingly of the policy of restriction. I do not know whether that included primary products, but I think he will probably agree that it may be necessary, while some two-thirds of the world is out of action, namely, those who engage in agricultural pursuits, to have something in the way of restricting production if you are ever going to restore economic prices to those agricultural producers, and thus once more give them the opportunity of purchasing the goods from the industrial nations of the world. The hon. Gentleman's ideas appear to me to be rather of a benevolent character. I think we all agree with the kind of sentiments he uttered, but I venture to submit that he somewhat disregarded the facts. There is something very similar in his Motion to a speech many of us read from the right hon. Member for Darwen (Sir H. Samuel). I think it was when he was lunching upstairs and I was lunching downstairs. There the idea was thrown out of getting together the low-tariff countries, those countries who believe in 10 per cent. or something of that kind. I think it was the occasion when some unkind person in the audience, having lunched too enthusiastically but with great sobriety, threw out the remark that the speech was the death-knell of Free Trade. I am not sure, but the right hon. Gentleman will correct me if I am wrong about that.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

The genesis of this proposal, I think, comes probably from the same source. If I may use the phrase, I think it is a case of a naughty communication corrupting good politics. If the hon. Gentleman had his way and carried this Motion to-day, in my belief it would cause utter dismay among the whole of the industrial and agricultural population of this country. It is reminiscent of the whole case of the tariff truce. I remember when we gave that lead, and caused a pause for a moment in the thoughts of the world, but the only result, I think, was that four great competitors of ours immediately raised their tariffs. If the hon. Gentleman succeeded, the result would be that those great neighbours of ours who can produce their agricultural products so cheaply would immediately commence—I will not say "commence," because they are doing it largely to-day, but would immediately increase the process of unloading their surplus agricultural produce on this country, and, as he knows, at wreckage prices with which our country cannot possibly compete, and which His Majesty's Government are doing their best to stop at the present time. You would also immediately find that cotton goods, silk, iron and steel would once more pour into this country, and your unemployment figures, which have been held—let us be fair to His Majesty's Government in this respects—would once more advance by leaps and bounds.

I know that I shall be causing offence to a school of economists in this country, and, perhaps, even to one or two who sit on the Government Front Bench, but I think it is holding out false hopes to the people of this country to suggest that if you can get any considerable reduction in tariffs throughout the world that will solve the problem. As a matter of fact, it is very doubtful whether for a considerable time there would be any increased quantity of goods produced or consumed in the world as a result of that policy. You have to remember that since the War you have this vast range of countries which were never manufacturing countries before, which have become very efficient and which still have a wage level of 50 per cent. or more, if you include Japan and others, less than ours and, if you do what the hon. Member desires and get as near an approach as possible to Free Trade, there will still be that 50 per cent. of labour costs which no efficiency of ours can now ever discount in the long run. World prices, of course, are the real cause of the world malady.

I go a long way with the hon. Member in his ideas. I have all my life held the view that you can do a great deal towards promoting international trade by reciprocity. For the first time in our history we have a little brick wall round our country. Other countries have higher barriers. For the first time we are able to say: "If you will take two bricks off your wall, we will take one off ours, and it will be easier for us both to get over them." [Interruption.] Their tariff walls are mostly twice as high. I pass that information to the hon. Member for his edification. For the first time you are able by this means to have something that you can offer to foreign countries. For the first time among all parties in the House this dread of higher prices has been removed. The leader of the party opposite on several occasions has indicated his belief, which is the belief of every sane man, that you are only going to see the world restored if wholesale prices rise. We had a most interesting speech from the tutor of the Socialist party, Mr. Lees-Smith, who delivered an oration not long ago, and he said the very first action of the next Socialist Government—he is a long-distance prophet—would be to do everything in their power to raise wholesale prices. Even to-day the hon. and gallant Gentleman the Member for Pembroke deplored the fact that prices had fallen steadily. We are getting on. We are getting that old idea out of the way now, and we are all beginning to realise that the world can only progress if there is a return to economic production. Having got rid of that idea I think, if the hon. Member who moved the Motion carries his ideas to their logical conclusion, he will see that if there is one thing that would prevent an improvement in wholesale prices, in this country at any rate, it is the unloading of all the surplus products of other countries, which would have disastrous results to our agricultural community.

May I state what I believe to be the Conservative point of view. I believe that all those who belong to the same party as myself most heartily congratulate the Government on their achievement, and not least do we congratulate those who have not always seen eye to eye with us on this question that they have put national considerations before party. So did hon. Members on those benches who now cheer till their nationalism evaporated a short time ago, and they became once more the protagonists of party. This policy was introduced only in the nick of time. I despair of one or two hon. Members opposite, but the great majority of the House realises that this policy came at the eleventh hour and stopped a rot which filled every man in the country with alarm. But for the tariff, everyone knows that there would have been 200,000 or 300,000 more unemployed to-day than there are. No one can dispute that. You only have to look at the figures of the reduction in imported manufactured goods. [An HON. MEMBER: "Increased unemployment."]

There are more people employed in the manufacturing industries than when the Government first adopted their policy. [An HON. MEMBER: "Coal and shipping."] I said the manufacturing trades —and coal and shipping are ultimately dependent on the productive industries of British manufacture. The effects of the policy that the Government have embarked upon are only just beginning to be felt in industry. I could take the right hon. Gentleman to South Wales and show him iron and steel works which have been closed for years and have now been opened. I can show him an increase of steel bars for re-rolling. [An HON. MEMBER: "Where?"] In various districts in South Wales. I received a letter yesterday from a gentleman in the trade in South Wales who invited me to go down. I cannot pronounce the name, but I will give the hon. Member the information. There are in many directions indications of a slight revival. The question of steel has had a remarkable effect also on coal. I can tell the hon. Member the amount of coal that it takes to make a ton of steel bars. Perhaps he did not know that the two things are correlated. I can assure him that they are. The hesitant policy of the Government when they were impelled in the direction of their tariff policy resulted in so great a dump of foreign iron and steel goods in the original stages that it is only today that those supplies have been worked off.

I will mention another fact in case the hon. Member really believes that we have adopted a high tariff which is having a very serious effect upon our trade. You will find that our imports of manufactures last year, very largely after the tariff was completed, were only 36 per cent. down on the previous year and only 10 per cent. on 1924, and in volume manufactured imports were the same as in 1923, when the Leader of the Conservative party decided that they were so great that he must appeal to the country. Even with all your tariff policy up to date, you are still importing as many manufactures as you were in the high year 1923. I shall never criticise the Advisory Committee. The Government's policy in appointing it was a stroke of genius, and I hope it is going to be followed in the Dominions overseas. But it always seems to me that the Advisory Committee has never been treated fairly by Parliament. It ought to have had definite advice from this House as to what the House really required in the matter of a tariff. We never gave them any indication. They do not know the very question that was asked by both the Mover and the Seconder, whether our tariffs should be protectionist or revenue or high or low. I think Parliament should consider in the not too distant future whether we could not give to the Advisory Committee the advice which up to now they are lacking. The 50 per cent. Abnormal Imports Duty was introduced admittedly to cover the crisis of the moment. I do not know whether it was Beelzebub casting out sin, but the right hon. Gentleman did not prevent, as he might have done, the rapid scaling down of this duty. I believe that the Abnormal Imports Duty while it lasted was a perfect God-send to British industry and did no harm to anyone in the country.

I hope and pray that we shall see a more reasonable figure in some of these industries. The figures are so important that I must read them. I will give them in round figures without the hundreds. They are the monthly averages of retained imports while the Abnormal Import Duties were in operation. The first figure I will give is from 1st January to 26th April, 1932, and the second figure from May to December, when the Abnormal Import Duties were not in operation. Earthenware, under the Abnormal Import Duties, £4,000 monthly average, and in the last months, May to December, £18,000—a very great increase; glazed tiles, £1,600,000, and in the later months £10,000; domestic tiles £17,000, and in the later months £76,850; illuminated glass, £17,000 went up to £33,000; glass bottles, £9,000 went up to £22,000; tools, £15,000 went up to £25,000; cotton manufactures, £66,000 went up to £161,000; woollen manufactures, £64,000 went up to £140,000; silk hose, £13,000 went up to nearly £44,000. That is the result of Beelzebub, or whoever it was, interfering.

Photo of Mr Henry White Mr Henry White , Birkenhead East

Do I understand that the hon. Baronet's policy at the World Conference would be a general 50 per cent. tariff?

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

I can answer that at once. I think the scaling down of these duties from 50 per cent. to 20 per cent. was a most ghastly blunder. I think it was lack of experience. I want to see an average of more than 33⅓ per cent. In fact, I should like to see 33⅓ per cent. as the minimum. Since the hon. Gentleman asked me a question, I am absolutely convinced that if we could have kept this great range of goods on the 50 per cent. basis the right hon. Gentleman could then have gone to the International Conference, and he would have had a very much easier task. I believe that the vast majority of Members in this House do not agree that our tariff was introduced merely to promote Free Trade. Our tariff was introduced to give employment to our people, and we rejoice for what has been achieved. The hon. Gentleman knows that comparing this country with any other country in the world since we introduced our tariff we ought to go down on our knees and thank Heaven that the position of our country is so good compared with that of other countries.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

Have not they got tariffs?

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

When this country was still under a Free Trade system, as the right hon. Gentleman knows, it was going headlong to ruin—we even persuaded him to join up to the national forces—and nothing could have saved us. All the rest of the world, it is true, are on a higher tariff basis. We have always contended that if you give Britain the same economic advantages as other countries possess, that, not only would we hold our own, but we would certainly do better than any other country in the world. That is what is happening. Let me also tell the right hon. Gentleman that since we have introduced the tariff policy we alone in the world have maintained our export trade.

I want to put a concluding idea before the right hon. Gentleman as to what we should aim at. I suggest that some such formula as this would really be helpful to the country. Each industry should be given such security as would guarantee the highest volume of employment to the workers available or capable of their own work in the particular industry, and only after sustained trial over a period of years should an industry be deprived of the full benefit of the tariff on the ground of unsuitability or inefficiency. I believe that that really is a principle which appeals to my hon. Friends who support His Majesty's Government. I urge them to look at the question from that standpoint.

Unemployment is the cloud which hangs over the land. Every right hon. and hon. Gentleman on that bench, and in every other part of the House, feels this question more than any other. There are still coming into this country "manufactures which we can produce ourselves in sufficient quantities to give employment to thousands of our people, and I urge the Government, having regard to the fact that the protection of the Gold Standard no longer exists owing to so many countries having gone on to sterling, and so many other gold countries having adjusted their prices in order to meet the situation, to reconsider the question and to put those great industries once more in hope and heart. If we do that, we shall put a great many into employment in this country, and if we link it up with a stronger policy of Empire development and the moving of populations to where they have more chances of producing within the Empire, we shall really, and it is by that means alone that we shall make a substantial contribution to the employment of our people.

4.35 p.m.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

I beg to second the Amendment.

My hon. and gallant Friend who so eloquently moved it has made a number of interesting suggestions on tariff problems. I am sorry that the hon. and gallant Member for Pembroke (Major Lloyd George) is no longer in his place. I should like to compliment him on the way he delivered his speech, but I disagree with some of the things he said. He referred to the Ottawa Agreement as being a tragic blunder. It is very unfortunate that anybody speaking from the Front Opposition Bench should make a statement of that kind without the slightest evidence in support of it. He merely made the bald statement. I know of no evidence that it has been a tragic blunder, and no evidence has been brought either by the hon. and gallant Gentleman or anyone else to that effect. Therefore, in the strongest possible way I condemn the making of such a statement in this Chamber when it may be reproduced all over the world and create an entirely false idea, particularly having regard to the very distinguished name the hon. and gallant Member bears.

He adopted the philosophical practice of many people of saying, "That it must be this or it must be that." There are so many people who say that it must be black or it must be white, but a great many things are grey. It is the old language of having given up beating your wife. You must have tariffs either for protection or for bargaining. My hon. and gallant Friend pointed out that if we had gone into the conference with foreign nations with tariffs already a. little too high we could have negotiated very satisfactorily, and left ourselves adequately protected, and gained the concessions in return. I have often thought with regard to the Import Duties Act that if we had started off without Empire Free Trade but with Empire Preference we might have found it a little easier to negotiate at Ottawa with people who in some industries have tariffs which are obviously too high. In this world you have to be generous with your friends, but, at the same time, you have to be reasonably sensible.

The burden of the Motion which we are discussing is that Free Trade is really desirable, but there is a certain amount of reference to the World Economic Conference which is to come at some time or another. We must not over-emphasise the importance of external trade. The real truth of the matter is that we do literally earn our living, the bulk of us, by taking in each other's washing. There is such a variety of garments to be washed. There is a very large internal economic balance, and a great many people have not the faintest idea of the statistical situation. It will probably startle them to know that only 6 per cent. of the activities of the people of this country last year was devoted to supplying goods to foreigners. All the ancillary work was included in that 6 per cent. That is the relationship between the f.o.b. value of British exports, with all the services spent on them, and the material contained in them, in relation to the value of all the goods and services produced in this country in that period. You must not over-estimate the importance of export trade. There is no intrinsic merit in the export trade at all. The countries in the temperate zone cannot produce all their foodstuffs and raw materials and there are certain manufactures which they cannot produce. In order to pay for these you must have certain exports. As a result of a series of accidents in the past, some industries have been built up under artificial conditions, in that they depend in the main upon their export trade. There is no particular merit in exports.

Photo of Mr David Mason Mr David Mason , Edinburgh East

What is to happen to the shipping industry?

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

There is no particular merit in any industry, unless it is rendering an essential service. If you have two ships crossing the sea, one taking boots from this country to America, and the other bringing boots from America to this country, it is an entirely uneconomic process which ought to be washed out, and the world would gain at large if neither of those ships crossed the ocean at all. The whole purpose of industry is to produce at the maximum efficiency, and there is no justification for shipping to perform unnecessary services any more than there is for a clerk in a Government office to perform a job which need not be done. In the long run you do not create employment or prosperity for people by doing things which ought not to be done at all. It is just as well that we should recognise that this country will always import largely and export largely, but it wants to select its imports. It does not want to import those things which it can obviously produce for itself.

We have been very modest in our tariffs up to now, and I share the view of my hon. and gallant Friend that we are a little too modest. I do not think that anyone realises how modest we are. The very admirable journal produced every week by the Department of the right hon. Gentleman, The Board of Trade Journal, gave us on the 19th January a most illuminating article. It was based on the imports of 1930. That year was chosen because they had not been disturbed by the new tariffs. On the basis of that year we had total imports of £1,037,000,000. We applied duties of 10 per cent. to £204,000,000 worth of goods, 15 per cent. to £35,000,000, and 20 per cent. to £96,000,000 worth of goods. The higher duties on an ad valorem basis only covered £32,000,000 worth of goods. There was £161,000,000 worth of goods subjected to specific duties, and £322,000,000 worth of goods were left entirely on the Free List. There you have a range of tariffs lower than you will find in any other industrial country in the world. Our bargaining weapon in the Conference is to say to the other nations: "We will be willing to maintain our tariffs at the present low level, if you will reduce your already too high tariffs." That is the basis on which we should talk to those foreign nations.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

Does the £322,000,000 on the Free List include Dominion and Empire products?

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

Oh no, it is not on that basis, but on the basis irrespective of their origin. The free list is much larger than that as certain goods are on the free list because of their country of origin. It is a basis irrespective of origin. That situation represents a very high degree of moderation. Though a convinced Protectionist, I have never been a very high Protectionist, because if you carry your tariffs too high you will do harm. I thought that my right hon. Friend (Mr. Runciman) was wrong in putting the tariff at 50 per cent., but if we had started at 33⅓ and kept it at that figure we should have been in a happier position. Fifty per cent. for all time would eventually produce inefficiency on the part of our manufacturers. We have to bear in mind that our balance of trade is still adverse. From the figures produced by the Board of Trade the other day, it is difficult to see where we are at the moment, because one does not know whether to take into account or not the unexpected payment which we made to the United States. If you leave that out of account, we are still substantially on the wrong side. Therefore, our currency system is still in a measure of danger, because we have to find, or we had last year, more money than we receive from the sale of our goods. On the other hand, this year has opened well, and it is clear that there is an upward movement of exports to Empire countries. That was shown in the last three months of 1932 after the Ottawa Agreements some of which were not in operation at all and others had only been in operation for some six weeks.

I agree with the Liberal party on the subject of the Most-Favoured-Nation Clause. I think that it is impossible for us to bring about the reductions in tariffs which we desire until we are free to negotiate and either to impose excessive duties on products of an individual country, or equally to give specially favourable treatment to the goods of an individual country which we are not compelled to extend to others. We have to go back to the system pursued at one time in this country, and which certainly has been pursued to a large extent by the United States of America and is now the policy of Canada, of what is known as the conditional clause. You give an undertaking not to place a country above a certain level and you are entitled to put the country on a favoured list. If hon. Members will read the report of the committee appointed by the League of Nations they will find there set out an example of both the conditional and unconditional clauses. I would like to see His Majesty's Government take their courage in both bands and announce to the whole world simultaneously the renunciation of the Most-Favoured-Nation Clause in every treaty and offer in exchange the conditional clause, and then they would be free to enter into effective negotiations. The hon. and gallant Member for Pembroke said: If our restrictions— which have not been going on very long— continue, the time will come when our creditors will not be able to pay us. That is a statement loosely made; we so often talk about the "foreigner," as if there was one gigantic collective foreigner. [An HON. MEMBER: "Our creditors!"] I said "foreigner." As a matter of fact, there are some nations that owe us very little, at least on the commercial basis; most of them owe us a great deal on another basis which apparently they are not going to pay, and everybody seems unanimous in saying that they should not pay, provided that we are not going to pay anybody else. But so far as commercial debts are concerned, we are not large creditors of our commercial competitors, but we are creditors largely of people with whom our trade is complementary. If the hon. and gallant Member studies the trade returns for January, in which there is an analysis of trade showing the exports and imports, he will find that the new policy has had little or no effect on our imports and exports with those countries that owe us a great deal of money. His fears, therefore, concern things which have no existence.

The hon. Member who moved the Motion states that the chief factor in producing the world-wide economic depression is to be found in the financial and economic restrictions placed on international trade. That statement does not fit the facts. In 1928 the world enjoyed the next most prosperous year that it had ever known: more people were in employment throughout the world, enjoying a higher standard of living. The only year that beat it was the next year, which continued to be an extremely prosperous year until the beginning of October. There were heaps of tariffs at an abnormally high level, and we were not getting our fair share of the prosperity, though in this country in 1929 there was a larger production of goods, more people were working, and there was a higher standard of living than there had ever been before. Into this world, full of every kind of tariff restriction, which had grown prosperous despite all these tariff restrictions, came the Wall Street crash, which I have always attributed to one outstanding cause: the excessive prosperity of the United States. The Wall Street crash stands out more than any other solitary thing as a cause of the world's present distress. War debts were not the outstanding cause; they were suspended for 18 months, and the position was worse at the end of that suspension than when it took place. We must not exaggerate, or allow people to make statements without looking up the facts of the situation.

I hope that His Majesty's Ministers will be willing to accept the suggestion made by my hon. and gallant Friend that there should be some definite broad direction of policy to the Import Duties Advisory Committee. I agree with him entirely when he says that it would be deplorable if the decisions of the Advisory Committee in respect of individual industries ever became a matter of political controversy. We want to avoid that, and those of us who have sometimes been disappointed with some of the recommendations have done all we could to dissuade our friends from making them, a matter of controversy. I do think, however, that it is the duty of Parliament to say to this committee that the general sentiment of the people of the land to-day is in the neighbourhood of 33⅓ per cent.

If the time comes when we have in office in this country a Government which is predominantly Free Trade in its outlook, it is not likely to restore a policy of general Free Trade. It might give a general instruction to the Import Duties Advisory Committee in that direction, in terms of a much lower rate of duty, and within that general rate it would be the job of the Committee to make the necessary adjustments to fit every particular industry. But we should be neglecting our duty if we left to those gentlemen the sole responsibility of determining the general tariff level of our country. Naturally the recommendations they make must be conditional on the complete and absolute freedom of His Majesty's Ministers to negotiate either with Empire or with foreign countries. Subject, however, to those conditions, I think it would be an admirable thing if a kind of general instruction were given which would result in the fixing of tariffs on a rather higher level than the existing one. To do so would give a good deal of satisfaction in many industries.

4.51 p.m.

Photo of Sir James Henderson-Stewart Sir James Henderson-Stewart , Fife Eastern

In rising for the first time to address the House, I beg for the indulgence which it so generously and unfailingly accords to a new Member. May I, at the beginning, associate myself with the complimentary remarks that have been offered on the speech made by the Mover of this Motion 1 I am not sure that I agree with every word in the Motion, but with its general tenor there can be, on these benches here and, indeed, in other parts of the House, very little, if any, disagreement. The hon. Member for Rotherham (Mr. Dobbie), who showed more boldness and alacrity than I in entering the lists of this House, took the opportunity of his speech to interpret the meaning of his victory. Rotherham was lost to the National Government, and lost, as far as we could gather, on one single item of policy— namely, the means test, which was the main subject of discussion during the contest. East Fife, on the other hand, was held for the Government, but, equally with Rotherham, on one main issue. In our case the issue was the Government's handling of the international trade position. That happens to be the subject which we are discussing this afternoon, and I am grateful, therefore, for the opportunity which you, Sir, have given me of making this the subject of my first contribution to the House.

In East Fife, fortunately, we do not experience the acute and widespread distress suffered in Rotherham and industrial areas of that kind. Our people, therefore, are able to take a wider view of the problems of the country than, I am afraid, is possible in a community a considerable portion of whose people are living or expecting to live on the transitional payment. It is difficult to take the big, wide outlook in an unemployment queue. Our better fortune in the North is due in large measure to the variety of activities in the division— agriculture, fishing, mining, linen works, linoleum, jute, and even golf — a not inconsiderable industry, as many hon. Members know. Some of these industries have suffered and are suffering acutely at this time, but they have not all suffered all the time. The prosperity of the lucky ones has reacted on the others, and we have been able, therefore, to maintain a somewhat higher level of employment than other areas.

The diversity of activities— of trades— has had its effect, too, in broadening the interests of the community. Some— indeed, most— of the major trades are concerned with the export market in large or small measure, and it may be for that reason— its interest in overseas trade— that East Fife has been a traditional Liberal seat. I feel sure that my hon. Friend the Member for Dumbartonshire (Commander Cochrane), who represented the Division so ably in this House a year or two ago, will not dispute that suggestion. Indeed it may even be described as a traditionally Free Trade seat. It was represented in this House for well nigh half a century by the most brilliant and powerful advocate of Free Trade that we have ever known. In view of all these facts, it is not surprising that the electors of that division should have taken the keenest interest in international problems, and that I should have chosen as the main reason for seeking support for the National Government its handling, present and future, of the international trade problem. The result of the ballot shows that in that part of Scotland at any rate, with all its traditions, the Government policy is approved and the electors see in its continuance the best hope for the future.

For what is the position? Great Britain — as the Seconder of the Motion said, very rightly— is dependent upon her export trade. I am not sure that I can accept the figure of my hon. Friend the Member for South Croydon (Mr. H. Williams) that the export trade accounts for only 6 per cent. That figure is only, I suggest, an indication of the great fall in all export trade during the last two or three years. The truth is that two out of three of the unemployed at this time are connected, directly or indirectly, with some kind of exporting or shipping trade, and there can be no lasting relief to these men until new markets for their produce have been opened overseas. Next to the maintenance of peace in the world, there is no more urgent problem facing the National Government than that of finding new markets. Time was when the free movement of gold and exchanges, of goods and services automatically adjusted trade. We grew rich under that system. But that day has gone, and we are the poorer for its passing.

I am entirely in agreement with the hon. Member who moved this Motion in deploring the restrictions which deface the frontiers of every country and which restrict the free flow of trade between one nation and another. These restrictions strangle business. Our domestic exports to the United States, for example, have been reduced to one-third of what they were four years ago through excessive tariffs over there. In the Argentine the effect has been in many cases to kill trade. I can offer the House a very small but typical example. Golf club shafts, hickory shafts, invoiced to Buenos Aires at 5s. 3d. each, are subjected to a tariff there of 8s. 7d. each, and the total cost to the buyer therefore amounts to 14s. The result is that the agents for that St. Andrews firm have wired St. Andrews saying: "No more supplies; trade is practically dead." The system of quotas in France has caused endless trouble. The export bounties of Germany, in which the hon. Member for East Aberdeen (Mr. Boothby) is so interested, have threatened to dislocate a great industry in which both he and I are vitally concerned. Everywhere, particularly in the Argentine, where vast sums of money are lying frozen, money belonging to exporters in this country, exchange restrictions hamper trade. Mad with an unreasoning nationalism, countries have followed each other, chased each other, in destroying the channels of trade; and the whole world suffers. In self defence— and here I find myself for the first time at variance with the hon. Member who moved the Motion — we were forced to take emergency measures to protect our standard of living: I could see no alternative. But it is wrong for this country and wrong for every nation in the world to continue these tariffs and other barriers to trade, and the sooner they are removed the better for all nations.

I agree with the Motion in urging upon the Government the earliest possible summoning of the World Economic Conference and the preparation of the British case for the removal of restrictions. But we must face the facts. Circumstances are not favourable, I am afraid, to the world conference now or in the near future. You cannot have a world conference without first having the spirit of conference. I do not see that spirit, rather do I hear the tramping of troops, and that is not the best accompaniment for a close examination of the complicated problems such as the World Economic Conference will have to tackle. What then? I do not subscribe, and I cannot subscribe, to the full policy of reciprocity which has been expounded this afternoon, but I say that it will not be enough to sit down and wait for more peaceful times. We should proceed with greater energy to arrive at agreements as the result of the negotiations which are now being carried on with individual countries. The representatives of the Argentine are in London now. No country presents a more artificial or a more harmful system of trade restrictions than the Argentine. We should strive to reach an agreement so that the products of the two nations can be freely exchanged. Negotiations are proceeding with several countries in Europe; let us expedite these negotiations.

East Fife registered a vote of confidence in the Government, but it also asked for further action. The coal trade of the East of Scotland looks to the Government to secure outlets in Scandinavia. By no other means can the unemployed miners in that part of the country find work. The herring industry looks to Russia and Germany for its markets; they are mainly closed now. I was returned to this House because the men employed in these great industries believed that this Government more than any other, through reciprocal trading agreements, can find markets for them and, therefore, work for them; outlets for their produce. No Government has ever had greater authority than the present Government. It commands still the confidence of the people as no other Administration has done since the War. It must not fail these men who are looking for export markets. The men in the fishing villages are suffering. Their weekly income is often only a few shillings, less even than the transitional benefit to which they are not entitled. Their wives and their children are suffering; families that once were proud to own their cottages are now letting off rooms and living huddled in the kitchen. Food is becoming scarce; but, worse than all, the spirit of these fishermen is breaking. They do not demonstrate. There is no Hyde Park in East Aberdeen, or in East Fife, where these men can parade their complaints. They do not show their poverty; they are too proud to admit defeat, economic or otherwise, but it is crushing them. This Government and this Parliament have a responsibility to every family in these fishing villages. A great, proud people who did magnificent work for the country in its hour of peril, they ask now only for the opportunity for further service. Surely this House will not deny them that simple right.

5.8 p.m.

Photo of Mr Charles Brown Mr Charles Brown , Mansfield

I should like to congratulate the hon. Member for East Fife (Mr. Henderson Stewart) on his very admirable speech. He comes fresh to this House from a triumph in a by-election and he concluded his speech by adding one more to those numerous descriptions which we frequently hear as to how the part of the country which he represents is experiencing, as other parts of the country are experiencing, steadily worsen- ing economic conditions. The hon. Member for South Croydon (Mr. H. Williams) always makes an interesting contribution to our discussions, but to-day he made the most amazing contribution that I have ever heard him make. He intended to convey the impression that the whole development of international trade has more or less been a tremendous blunder in the history of mankind. I could not put any other construction upon his words or upon the arguments he used. But while listening to him I felt that, after all, our social life in this country is what it is largely because in the past we have been able to draw on all the world for many of the things which we now regard as essentials of life. Why the hon. Member for South Croydon should speak in the way he did about international trade passes my comprehension. It may be due to the fact that he has to go out of his way to try and bolster up the very faulty arguments he uses in favour of tariffs.

During the Debate we have heard from the hon. and gallant Member for Bournemouth (Sir H. Croft) and the hon. Member for South Croydon two different views, which have been responsible for the policy out of which many of our difficulties have arisen. The hon. and gallant Member for Bournemouth brought before us again the idea of building the British Empire into a sort of self-contained economic unit, and the hon. Member for South Croydon preached a self-sufficient nationalism. Surely, if the world is suffering at this time from one thing more than anything else it is from this idea of a self-contained nationalism. Most of our difficulties are created by trying to call into existence economic systems founded on this principle. The hon. Member for East Fife talked about the tramping of troops. We all know that the rivalries which are engendered in one way or another by the economic policies which have been pursued in recent times are bound to lead to all kinds of friction, which in the end will find expression in the growth and development of militarism in all its forms. It is the necessary concommitant of economic friction engendered by the self-contained nationalism which is preached in these days.

Having listened to the Mover and Seconder of the Motion expounding the doctrine of Free Trade, and to the pro- tectionist arguments on the other side, I feel that the weight of argument lies entirely with those who have brought forward the Motion. Obviously, if we are going to pursue a policy of restrictions and a further building up of tariff barriers, then, inevitably, we shall get into deeper difficulties still. The House to-day has been asked to direct its attention to the forthcoming Economic Conference. So far as that conference is concerned, and the relations of His Majesty's Government to that conference, very much depends upon whether His Majesty's Government have any definite views as to what should be done. As far as I can gather their views are not very definite. I can find nothing in the speeches of their spokesmen which leads me to believe that they have formed any definite policy as to what ought to be done in existing circumstances. They are not prepared to go to the conference and advocate the policy recommended in the Motion. I do not want to discourage the hon. Member for Birkenhead (Mr. Graham White) but I do not think he will find, even after the admirable speech he has made, that he will succeed in inducing the representatives of His Majesty's Government to go to the World Economic Conference and support the policy he advocates. Nor do I think that the hon. and gallant Member who moved the Amendment or the Seconder will get out of the Economic Conference, as far as His Majesty's Government are concerned, what they are expecting, because the Government is really a nondescript Government, neither Free Trade nor Protectionist. [An HON. MEMBER: "That is quite wrong!"] Someone says that that is quite wrong. I suggest that hon. Members who are Protectionists and who feel that the Government is not Protectionist ought to do everything they can to remove it as quickly as possible. I also say to hon. Members who are Free Traders and who feel that the Government is not a Free Trade Government, that they too should do everything they can to remove the Government as quickly as possible.

Photo of Mr Charles Brown Mr Charles Brown , Mansfield

The hon. Member asks what I would put in its place. Before I address myself to that question I would comment on the respective policies which are being advocated in relation to what seems to me to be the real difficulty facing us at the moment. That difficulty surely is that the great masses of the people, not only in this country, but in other countries, are unable to obtain many of the things they greatly need. There must be something radically and fundamentally wrong with an economic system which both Free Traders and Protectionists are seeking to bolster up. The Members of the Government will only go to the World Economic Conference to do all they can to bolster up what is obviously a rapidly decaying economic system. Whatever they do will be mere patchwork, because they will not face up to the real issues which confront us in the world to-day.

Now I address myself to the hon. Member for Eastern Aberdeen (Mr. Boothby), who interrupted. In view of the fact that neither the Free Trader nor the Protectionist is likely in the long run to get us out of our difficulties, though they may temporarily alleviate them, the only hope for the country is the substitution of the Government now occupying the Treasury Bench by a definitely Socialist Government, which will direct its attention to the concrete reconstruction of the existing economic system. That is my answer to the hon. Member. Consequently, although at the World Economic Conference I would like to see the Government pressing for a policy of world co-operation, believing as I do that we shall only even alleviate our difficulties by a further integration of the world's economic life, I think that that would at any rate get us out of some of our difficulties. But I have no illusions as to what will be the ultimate outcome of the Economic Conference. It will not solve for us in any way the real economic problem which awaits solution. That can only be solved when the men who govern this country are determined completely to reconstruct a breaking and tottering economic system which, in the course of going to pieces, is inflicting almost intolerable hardship and suffering on millions of human beings.

5.20 p.m.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I would like to join the hon. Member who has just sat down in offering my very sincere congratulations to my hon. Friend the Member for East Fife (Mr. Henderson Stewart) upon what I humbly venture to suggest is one of the best maiden speeches we have listened to for many a day. Even although my hon. Friend is a Liberal I am. bound to say that I find myself in substantial agreement with almost everything that he said. [An HON. MEMBEER: "What are you?"] I am not a Liberal, whatever else I may be. This is a most extraordinarily interesting Motion, touching what I believe to be the most vital question of the hour, and I think that the House owes a debt of gratitude to the hon. Member who brought it forward. We shall probably all agree, whether Liberals or Conservatives or Socialists, that the fundamental cause of the economic crisis in which the world finds itself to-day is the fall in wholesale world commodity prices which has taken place continuously since 1921 so far as this country is concerned, and has sharpened since 1929. I have always maintained that a contributory cause to that catastrophic fall in prices was the financial policy pursued by this country during the years 1920 to 1930— the policy of deflation, which was necessitated by our going back to the Gold Standard at the pre-War parity of exchange. That was a policy which was settled as long ago as 1921 and carried through by successive Governments in this country, and I have never ceased to believe that it was a calamitous policy, not only from the point of view of the interests of this country, but from the point of view of the whole world.

There is no good crying over spilt milk, but I do think that now we are in a position of comparative freedom of action in these matters, we should consider very carefully before we commit ourselves in the immediate future to any very definite policy which might involve similar disastrous results. As a result of this fall in world prices the situation first went slowly down, and then more rapidly from bad to worse. To-day we are in a very different position from that which we occupied in 1929 or 1930. More drastic measures axe now required to get us out of the mess we are in, than would have been required a few years ago, because the whole world to-day is literally frozen with fear. Confidence has gone in almost every country. I suggest to Liberals that tariffs and exchange restrictions are not really the cause of the trouble. They are only symptoms of the real anxiety, and even the fear, of every single important Government in the world with regard to the present economic situation.

The Minister of Agriculture designated some of my Liberal friends the other day as "barrier sweepers." He referred to those hon. Members, particularly in the Liberal party, who are always talking about sweeping away the barriers which obstruct world trade. But we shall not get very much further by mere barrier-sweeping now. In my opinion we have to go deeper than that, and to seek what are the causes of the barriers which are admittedly obstructing international trade at the present time. I do not think we shall get very much further by trying to pretend that economic nationalism will be removed from the world in the immediate future. In my opinion economic nationalism has come to stay for a considerable time, and the methods employed by economic nationalists, tariffs, quotas, restrictions, controls, and even prohibitions, are also likely to remain in the world for some time to come. We must adapt ourselves to the conditions with which we are confronted, and see what we can do for our people and for the world in the existing conditions, accepting that the policy of economic nationalism, so far from dying down, shows every sign of increasing; and seeing what, in these circumstances we can do to alleviate its rigours, and trying to lead the world, as I think we can, back to some form of sanity in international economic relations.

The cause of the world economic crisis is admitted by every party— the fall, continuous and steepening, in wholesale commodity prices throughout the world. What is the remedy? Surely the remedy is to re-establish, by some means or another, the relation between prices and costs, not only in this country but in other countries as well. In order to do that we have either to raise prices or to lower costs; and in order to lower costs we have to lower wages. In my submission to lower wages is merely to aggravate the problem, still further to reduce consumption, still further to reduce expenditure, and ultimately still further to reduce prices. I am emphatically in favour of our adopting the former course, which is to raise wholesale prices by some means or another. How can we do that? How can we raise wholesale prices in this country and throughout the world? It seems to me, by any analysis, that there is only one way, and that is to increase expenditure, so that demand goes up until ultimately it begins to exceed potential supply.

I have always supported the views of those who maintain that, having got to the pitch we have reached now, the only immediate way to increase demand is to increase what the economists call loan expenditure. It is often asserted, not only in this House but outside, that rigid economy in productive expenditure is necessary to-day in order to increase savings and to make additional capital available for industry and private enterprise. But observe the double fallacy underlying that assertion in existing circumstances. First of all it is assumed that there is a fixed supply of capital. There is not. Credit is infinitely flexible, not only in this country but throughout the world. It depends primarily upon confidence, which we have to restore. Secondly, it is assumed that in existing circumstances private savings, if they were increased, would find their way into productive industry. I do not believe that they would. I believe that a great increase in private savings, if it were brought about, would find its way first into the repayment of debts, and then into Government securities, as the safest form of investment.

Nobody but a fool is going to risk private savings at the present time in industry unless he sees some chance of a reasonable return. You are not going to give the necessary impetus and restart the wheels of industry, in this or other countries by mere barren economy in productive expenditure for the purpose of increasing private savings. That might have been effective five or six years ago, but now you have to turn to more drastic measures. In this connection I do not think it is without significance to recall that, in the second half of the 19th century, the factor which was most responsible for hauling this country out of two major depressions was increased expenditure in capital development on the railways, and electricity. The factor most responsible for hauling the United States out of the depression of 1921 was the tremendous expansion of expenditure in capital development on roads and on motor transport. I believe that if the Government take their courage in their hands, the factor that will be most responsible for hauling this country out of the present depression will be expenditure in capital development upon housing construction in the next three or four years.

Look at Europe at the present time. They are far ahead of us in slum clearance, and in housing schemes. Go to Vienna, to Hamburg, to almost any German city and you will find better working-class conditions, as far as housing is concerned, than can be shown in any big industrial centre in this country. The irony of the business is that a large part of the money which went to create these new housing schemes came from the City of London. It would have been much better had that money been spent in this country, and the City of London would not have regretted it, because they would have had a safer and surer return upon their money if they had lent it in this country than they have in existing circumstances. [An HON. MEMBEE: "But they would be getting less interest."] They would be getting a lower rate of interest but for a much longer time. My argument applies not only to housing, but to electrical development. We are coming along slowly in that respect, as far as the Southern Railway is concerned. But the railways of Switzerland and Northern Italy, and even the French railways are much further on than we are in the matter of electrification. If one compares those countries with this country, if one looks at our filthy slums— a disgrace to civilisation— our declining railways, and our meagre electrical development,, one can surely say, "Here is a theme to which the Government should give very close and earnest attention.

I will only give one example, as regards the railways. The railways always complain that people are more prone to travel by road than by rail. Look at the railway stations in this metropolis. Are they inviting? Do they, by their amenities, appeal to people? What hon. Member would willingly go to Liverpool Street, for example, or King's Cross, of he could possibly help it? I ask hon. Members to compare the great termini of London with the magnificent railway station which has been erected recently at Milan largely through the drive energy and inspiration of Signor Mussolini. Apart from anything else, it is one of the finest examples of modern architecture on the Continent. I think the time has come when we ought to show a little less fear in this matter of constructive and productive expenditure, and a little more imagination than we have done in the last few years.

I was very interested, as I dare say were all hon. Members, in an article from the pen of Mr. Keynes which appeared in the "Times" this morning. I think it was the most interesting article so far of the series which he is contributing. In that article, he compared the effect of improving our foreign balance of trade, with the effect of a policy of loan expenditure in this country. He pointed out that the Labour Administration had made some halting, timorous and largely futile, attempts at a policy of loan expenditure, under admittedly difficult conditions, and had failed. He also pointed out, what I am sure we are all agreed upon, that the National Government had made some very bold, resolute, determined and largely successful experiments, in the direction of improving our foreign balance of trade. But, he said, the improvement in our foreign balance of trade had been largely off-set, as far as a revival of prosperity and a reduction of unemployment were concerned, by the reduction in loan expenditure carried out under the influence of the present Government. He said that this was the supreme moment to carry through the two policies of improving the balance of trade by wise and judicious restriction of imports, and of developing and expanding loan expenditure in this country, simultaneously. His submission, if I have read him aright, was that if the Government would pursue both lines of policy, simultaneously and resolutely, we would quickly see an appreciable result on the figures of unemployment.

I believe that in that submission Mr. Keynes is right; and I ask the right hon. Gentleman the President of the Board of Trade, if he is going to reply, whether the Government do not now see that, having successfully restricted the flow of imports, having to a large extent restored the balance of trade, having carried through successfully a great conversion scheme, the essential corollary to all this is a policy of expansion and productive development at home, if we are to make any serious inroads upon the increasingly alarming figures of unemployment in this country? What is the policy of the Government in this matter? That is what we want to know. Is it expansion, or still further contraction? Is it productive expenditure, or better and larger cuts all round? That is what we have a right to know; and that question brings up a vital point raised by several hon. Friends of mine recently as to foreign treaties. We were told at the General Election, and have been told since— and I for one believe it to be true— that one of the main advantages which we would derive as a country from controlling, regulating, or even prohibiting imports from abroad, would be that we should have a weapon in our hands with which to negotiate favourable foreign trade agreements with European countries.

I was glad that my hon. Friend the Member for East Fife raised that question, because the interests of his constituents in this matter are largely similar to the interests of my constituents. We have both a large number of farmers, and a large number of fishermen. Our farmers want to obtain a reasonable price for their produce and our fishermen want access to the European markets. And at the present moment neither can get either. I think the reason is that none of these treaties, about which we heard So much, those treaties which were to be based upon reciprocal advantages to the European countries and ourselves, have so far materialised. I ask the right hon. Gentleman whether he can give the House any enlightenment upon this vital question— is he taking any steps to stop the importation of subsidised goods from Europe? He himself has admitted in figures, if not in fact, that oats and oat products, deliberately subsidised by foreign governments, have smashed the market for our own producers. Is he taking any step to deal with that situation? Then, what steps is he taking— I refer to the industries with which I am more directly concerned, but the coal industry, for example, is just as important— to obtain access to European countries for the goods which we wish to export? All depends upon these commercial treaties which, we learn, he is negotiating. Some of us are beginning to think that the right hon. Gentleman has been negotiating too long, and we ask him, can he not hurry up the negotiations a little?. We also ask him whether he is entirely convinced that the most-favoured-nation clause is essential in all these treaties. Some of us are beginning to think that it might be modified.

I beg the Government to give a lead in all these matters. Money, as the right hon. Gentleman knows, was never so cheap as it is to-day in this country. No one but the most violent political partisan would deny credit to the Government for that fact. It is largely because of the confidence in this country, which was restored by the accession of the National Government, that money is so cheap. Why do the Government not use the advantages which they have created, instead of sitting down, having achieved that very remarkable feat, and doing nothing further?

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

Surely my hon. Friend will admit that cheap money is a symptom of industrial depression and is an evidence of the failure of the system, and not one of the achievements of the National Government.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I do not agree at all with my hon. Friend. During the time that the Administration which he supported was in power, money was much dearer, and industrial depression was just as bad. Cheap money, I readily admit, cannot by itself rid the country of industrial depression, but it would be a good thing to use the cheap money, and cheap materials as well, when we have the opportunity, in order that an impetus shall be given, which may haul us out of the industrial depression. As a matter of fact you will never balance your Budget unless and until you increase the national income. The only way you can hope to increase the national income is by increasing industrial prosperity; the only way you can increase industrial prosperity is by getting a rise of wholesale prices; and the only way you can raise wholesale prices is by increased loan expenditure for capital development.

Instead of bemoaning tariffs, which have come to stay throughout the world, for the time being, the House would do better to concentrate upon urging the Government, first, to adopt a vigorous constructive and imaginative policy at home— that is the first essential and the necessary condition of any recovery in the world at large— and, secondly, to concentrate upon coming to some arrangement for economic co-operation in the near future, not with the whole world, for we have had enough of world conferences since the War, and they have all been dismal failures, but with the most important country of the lot, the United States. I feel very strongly about this matter. I have not had an opportunity of addressing the House upon this subject since I returned from the United States, and my visit there in November and December last year convinced me more than ever that not only is it possible to achieve economic co-operation with that great country, but that it is the most desirable thing, from the point of view of the whole world, that could happen at the present time.

If we achieved a measure of co-operation with the United States, not only with regard to War debts, which I believe can be done, but also with regard to financial policy, and currency, there need be no fear as to the success of the World Economic Conference. Between us we can carry through anything. The right hon. Gentleman the President of the Board of Trade knows full well what could be done if we came to terms with the United States. I do not mind if those terms involve going back to the Gold Standard under a guarantee that the Federal Reserve Bank and the Treasury in Washington will co-operate with us in working that standard, and making it efficient for international purposes. If we could come to real terms, and arrive at a real economic agreement and basis of co-operation with the United States, I believe it would be a decisive step in restoring the fortunes of the world and of the capitalist system. I believe this can be done, and that never was the opportunity so great as it is at the present time.

Nobody can deny the vigour, courage and imagination which the President of the United States has shown during the last few weeks in dealing with an acute financial and economic crisis. I find myself wishing sometimes that the National Government here, with all the prestige, power and authority which they undoubtedly enjoy— no less great than that enjoyed by President Roosevelt— were now displaying an equal vigour, courage and enthusiasm in dealing with our affairs. I am sure there has never been an opportunity in the whole history of the world when economic co-operation between Great Britain and the United States could be obtained upon such beneficial terms to both, and that the Government of this country ought to address itself to that task above almost anything else. In conclusion, I would like once again to beg my right hon. Friend to urge the Chancellor of the Exchequer, when he comes to introduce his Budget, to produce something constructive, something a little imaginative; to suspend the Sinking Fund, reduce taxation, embark upon loan expenditure, and lift not only this country but the whole world out of the abyss into which we have sunk.

6.47 p.m.

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

The House has listened with great interest to-day to a series of speeches which have shown a degree of unanimity that one would scarcely have thought possible in this House. My hon. Friend who opened the discussion did so in a speech which was very quiet in tone but very forceful in argument, and I congratulate him upon the skill with which he dealt with his subject. The Motion was seconded by my hon. and gallant Friend the Member for Pembroke (Major Lloyd George), who, I was glad to find, was speaking in the presence of his father. His father must have noted with great satisfaction the advance made by my hon. and gallant Friend in his Parliamentary skill. We have bad since then a number of speeches marked with considerable ability, and I should like in particular to congratulate my hon. Friend the Member for East Fife (Mr. Henderson Stewart) on his maiden speech in this House.

Let me come now to the speech which has just been concluded. My hon. Friend the Member for East Aberdeen (Mr. Boothby) was enterprising enough in the closing months of last year to go to America. He has been back now, I think, something like three months. It is some considerable time since his return, and during the three months that he was here before the crisis in America, I do not think he told us what he anticipated. I have no doubt that my hon. Friend could see America going headlong to ruin, but he did not tell us. We only expected him to put his intelligence into the common pool and to give us the full advantage of the lessons he has received from his enterprising journey in that great country. But it is not my hon. Friend's American experience with which we are concerned to-day. He has uppermost in his mind a restoration of our prosperity here by a great increase in capital expenditure. I have no doubt that, like other people who have studied this question, he draws a distinction between different forms of capital expenditure. Capital expenditure on work which is unreproductive may give no permanent advantage to those who are engaged in it; capital expenditure which is remunerative— and there is a very large field in which it can be remunerative— may be considered under favourable conditions; and, quite frankly, I think the present is a moment when some forms of capital expenditure of that nature ought to be encouraged. There is very little doubt that at the present moment a little impetus in this direction would be beneficial.

I am not quite so certain that by dabbling in the money problem we should produce all the beneficent results prophesied by those who are so sure about the currency theory. A great many of those who are most reliable on the currency theory are least in the habit of making pronunciamientos, and the man who tells us he knows all about currency is usually a very bad guide. I do not for a moment suppose that we ought to have shut out from our consideration all questions of currency problems, of the influence of money upon trade, and so on. They react one upon the other, but we can very easily exaggerate the influence of money changes made here or abroad. There is really only one thing which will bring about a restoration in trade. I must apologise to the House for saying anything so commonplace, but it really is true that the only thing which will bring about restoration in trade is an increased demand. That demand may be stimulated, it is true, but it may be stimulated sometimes in the wrong direction. Increased demand is the only possibility, as I see it, of there being any return to prosperity in this country or in any of the industrial countries of the world.

Where is that demand most likely to come from? I think everybody deplores the course of events in the Far East. There is no doubt that just at the very time when it appeared that the Chinese markets, among the greatest markets in the world, were going to be reopened once more to Western supplies, and the development in their own borders of industry, at that very moment there came the Far Eastern crisis, and there has been grave interruption of the movement towards an increased demand from China. The House has only to be reminded of what a small amount in every Chinese household, were it asked for, of Western goods would bring about a real boom in some of our staple industries. If every Chinese, for example, were to have one shirt 'a year more than at present, the trade of Lancashire would achieve a prosperity which it has not known since the War.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

What about our own people?

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

My hon. Friend should remember that the best way to help our own people is by giving them work. What I am discussing at the present moment is the way in which, in a very much larger market than ours here at home, we might bring about a tremendous increase in the demand for British goods. My hon. Friend surely has not forgotten the fact that there are 10 Chinamen to one Englishman.

Photo of Mr Clement Attlee Mr Clement Attlee , Stepney Limehouse

What about their purchasing power?

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

It can only be increased by increased activity in their own trade, and their purchasing power is increasing year by year, and has been until quite recently. The fact is that in purchasing power China is one of the factors which might have had a great effect in restoring the trade of the world. Of course my hon. Friend opposite is entitled to say, "What about our people at home?" I do not shut out from my mind for a single moment that an increased demand here in our home markets from our own people is bound to be beneficial. These things react upon each other, but you cannot get an increased demand from our people who are living upon the dole or who have got the dole.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

You can increase it.

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

If you do that, you draw away supplies of money from other purposes, and you are really no better off; you are making a transference from one individual to another in the most unscientific way. The course of the discussion to-day has made it quite clear that the minds of Members of this House are wandering away from the World Economic Conference to problems with which we are all more familiar, but if I may be allowed to say something about the Conference and the prospects which can be drawn therefrom, I would say, in the first place, that that Conference, so far as we are concerned, cannot be held too soon. But we are not the only members of it, and it is absolutely essential that other members of the Conference should be convinced of the necessity for an early meeting if it is to assemble at an early date. We have done everything we could. Our representatives have collaborated in the preliminary discussions, and those preliminary reports convey to a very large extent the views of His Majesty's Government. We have made it clear that as soon as others are ready to meet, we are ready to meet, and we are prepared to discuss with them, with no restraint put upon the subjects to come before the Conference and, I hope, with no restraint in the expression of views of which we shall be the authors, every aspect of international trade and international finance.

I am not sure that others are as ready as we are in that matter, but because we are prepared to go into that Conference, whenever it may be held, ready to enter into discussions, we are not going to allow the time before the Conference is held to be wasted. If we had to wait until the Conference was held, we might have to wait many months. We have lost no time in getting to close quarters with the representatives of other nations whose trading relationship with us is at present under a cloud, and in other directions where we are most anxious that there should be increased traffic between us. We are carrying on at the present time conversations with the representatives of four of the nationalities of Europe and one of South America. We have had the honour of a visit from the representatives of the Republic of Argentina during the last few weeks, a visit which, I need hardly say, we very highly appreciate, and we have had the advantage of discussing at close quarters with them the trade relationships between our two countries.

We have made considerable progress in those discussions. I know my hon. and gallant Friend the Member for Pembroke was a little impatient with us because we were not going very fast. We have been, at work with them now, I think, only about two months. I would remind my hon. and gallant Friend that the Franco - German commercial treaty, which was concluded only a short time ago, took no less than three years to complete, and I hope that he will allow us, I will not say three years, but a little longer than two months to carry through a very complicated and difficult transaction with an important country like Argentina.

Photo of Mr David Mason Mr David Mason , Edinburgh East

Who is to issue the invitations to the World Economic Conference?

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

If my hon. Friend will give me notice of that subject, I shall be glad to give him a full answer, but I think we may take it that that is one of the functions of the League of Nations. The Conference has been summoned by the League of Nations, and I presume that the invitations will be issued by the League of Nations. When I was interrupted, I was making reference to the speed with which our negotions were being carried on. I can assure the House that we are losing no time, but it would be a great mistake for us to be impatient, to hurry along a path which we had not carefully surveyed, or to enter into engagements the repercussions of which we had not very carefully considered; and just as it is necessary for us to proceed with great caution, it is equally necessary for the other Governments with whom we are negotiating. A mistake made in regard to one of our great staple industries would do harm, not to the negotiators, but probably to thousands or tens of thousands of people who may be engaged in that industry. We have to safeguard their interest as well as we can.

I may tell the House quite frankly that we are attempting, as far as we can, to give a broad and general survey to the whole of our interests. We are doing what we can to get out of the habit of thinking with a one-track mind, which very naturally is a fault into which men engaged in a particular industry all their lives can very easily fall. I plead guilty to it myself. I know how easy it is to exaggerate the details with which you are in daily contact and to allow others to slip by. We have, therefore, to hold the balance as carefully as we can, to take the widest possible view of our requirements, and to appreciate to the full the difficulties of those with whom we are negotiating. It is in that spirit that we have in the last few weeks made very considerable progress, and as soon as we are able to make any announcement with regard to preliminary agreements which we have reached we shall make it first in this House.

I have been asked what effect the mostfavoured-nation clauses will have upon our negotiations, and my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) is apprehensive lest the mostfavoured-nation clause in our commercial treaties should impede our freedom of action. I would, therefore, like to say a few words about the clause, which has been such an essential part of our commercial treaties in the past. The real difficulty which arises in regard to it is that it has become the corner stone of all our commercial treaties. There are 42 of those treaties in existence which contain the most-favoured-nation clause. Although that clause does, to some extent, handicap our freedom of action, it has, on the other hand, very great advantages. If we take an evenly balanced view of it and look at it from both sides, the House will admit that for a country with such world-wide interests as we have, the mostfavoured-nation clause cannot be easily dropped. The House will observe, however, that in saying that I do not commit myself by phraseology or otherwise to adhering to the most-favoured-nation clause under all conditions and at all times.

One advantage of the most-favoured-nation clause is that it ensures a general absence of discrimination, and that in itself is a great advantage for our business men here. Furthermore, if we had not the most-favoured-nation clause in our commercial treaties, it would be necessary for us to deal with every item in our tariffs, with probably a different series of rates applicable to particular countries, and the variety of duties which would have to be considered by our business men, our contractors, our salesmen and those who are drawing up estimates, would be enormous almost beyond imagination. Every item of every country, all varying and none of them on any one settled principle and covering such a variety of conditions, make it almost impossible for the ordinary business man to know where he is. The advantage of the most-favoured-nation clause as it stands at present is that he can look at the tariffs and see what is the lowest rate, and he knows that he is entitled by commercial treaties to claim that treatment. He knows that that is an advantage which ought not to be too readily thrown away.

The most-favoured-nation treatment does not prevent countries reducing tariffs. There has been a tendency in some quarters of the House to believe that the most-favoured-nation clause is an obstacle to the reduction of tariffs. It does not prevent countries dealing with tariffs, however high or low they may be, and it in no way affects the heightening or the lowering of a tariff. This clause has become such an essential part of our commercial policy that in all the recently concluded treaties— those between France and Germany, France and Belgium, France and Czechoslovakia, Germany and Italy, Germany and Sweden, Germany and Finland, as well as a great many other minor treaties— we have had full most-favoured-nation treatment given to us without our having to go into the negotiations or to take any part in the very long adjustments, which in the case of France and Germany took three years. When they concluded that treaty, we had the full advantage which we enjoy at the present moment.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

Does not that apply to a large number of other countries at the same time?

Photo of Mr Walter Runciman Mr Walter Runciman , St Ives

That is perfectly true, but directly we come to the region of discrimination, we get a new set of difficulties which we must consider one by one. I would like to point out in passing that, although most-favoured-nation treatment plays a part in those treaties, there are some cases, such as France, where most-favoured-nation treatment is not likely to be continued to us. The quota system as it has been worked in France may become really a form of discrimination. It has been my duty to draw the attention of the French representative to the way that discrimination in other matters is operating to our detriment, and we may have to take the matter further. We cannot allow it to rest where it is. There has been discrimination with regard to the surtax in France. We are not receiving the mostfavoured-nation treatment there. France is giving Belgium advantages which are not held by the citizens of this country. Again, we have not only to draw the attention of the French to this fact, but we have to make it clear that it is a condition to which we cannot permanently be parties, and the time must arrive when action is necessary with regard to their exclusion of us from the benefits which they give to others.

My hon. Friend who opened the discussion obviously had in his mind the treaty between Holland and Belgium when he spoke of a low-tariff movement. I would like to say exactly what happened over the Belgium-Holland Treaty. When we were in Lausanne last year, the Belgian Foreign Minister came to me to tell me that Holland and Belgium were contemplating a commercial treaty which would give each other advantages which they did not at present enjoy. He told me that the parties to the treaty would make progressive reductions of their tariffs in each other's favour by five annual steps of 10 per cent., so, however, that the reductions were not to go below 4 per cent. ad valorem on semi-manufactured products, and 8 per cent. on fully manufactured products. I was then asked by him if we would be prepared to come to a similar arrangement. I had to point out to him that our commitments with practically every commercial country in the world prevented our entering into any discriminatory arrangement with either Belgium or Holland, and that so far as we were concerned we could not waive our most-favoured-nation rights in either country. In doing that I was not merely taking part in a debate between two countries; I was thinking of the interests of our own people at home. How could I possibly have been a party to entering into an arrangement between Holland and Belgium which would place Belgian steelmakers in a favoured position in Holland as against our steelmakers? I had to make quite clear to them that so far as treaties between Holland and Belgium were concerned, we could not waive our most-favoured-nation rights; we intended to adhere to them, and we have adhered to them to the present time.

There has been a suggestion that by-doing that we have stood in the way of a low-tariff movement. I do not think that we have done anything of the kind. If there were to be an extension of low-tariff arrangements on the Continent, it could be done irrespective of our mostfavoured-nation rights and in spite of them. The truth is that the Continent was not ready for any arrangement of this kind. I do not know whether it is readier to-day. I hope that it is, but I am not sure of it. I think that it is much more likely that Europe will have to pass through the experience not only of harder times, but of hard negotiations, before we shall be able to persuade the Powers of the Continent that there are great advantages to be got, not from economic warfare, but from economic agreement. It is because we are proceeding alone the line of economic agreement that I am more hopeful of the future. I do not think that we should have gained anything by going into the Holland-Belgium arrangement. We should have gained no advantage to our business men, and made no progress in our international negotiations;

If there is to be anything in the nature of a low-tariff group, we must examine how far it is likely to affect our own manufacturers and exporters and importers. That will be our first duty, when we have examined that, we shall be better able to know how to deal with proposals that are placed before us. I have no objection to belonging to a low-tariff group as long as our own rights remain intact. I should like to see all Europe going on to a lower level. My hon. and gallant Friend the Member for Bournemouth is fond of the illustration of a brick wall. I should welcome the lowering of every wall; I should like to see them all come down, but let us be quite sure that when we are talking about lowering tariffs we do not do it to our own detriment. We have to consider first what are the interests of this country.

I should like to mention four things which might be. conditions for any scheme that is likely to be made. First, it must be likely to be effective in securing really tangible reductions of excessive tariffs; second, it must command a sufficiently general measure of support, it must cover a wide enough area; third, it must not impose upon this country sacrifices disproportionate to those demanded of other countries; fourth, it must not have injurious repercussions or lead to tariff wars or other economic hostilities. Within those limits we are ready to consider any proposals that may be put forward. I have not time to deal with the negotiations with every one of the countries with whom we are in discussion, but we are using the organisation of the Government, both political and permanent, so that we can proceed with the greatest rapidity along this road. I will, in conclusion, make one practical statement with regard to our negotiations. They cannot be one-sided. If they are one-sided, neither we nor the representatives of the countries with whom we are negotiating will separate satisfied. Unless the arrangements which are made satisfy the requirements of both their countries and us, they are not likely to last.

Moreover, in negotiating, both sides must make concession. I want to make it clear that if any nation sits back in the hope that we will enter into successful negotiations with another Power and that they will be able to achieve mostfavoured-nation treatment without consideration coming from them, they will come to a deadlock. If they gain any advantage from us, they must be reciprocal in their action. They must be ready to make concessions similar to ours and to those of other countries. Unless they do that, we cannot agree to mostfavoured-nation treatment being retained as a permanent element in the conditions which control their traffic and ours. If it is used against us in any instance we will drop it at once, and we will be ready to take individual measures without regard to most-favoured-nation treatment in such cases as I have in mind. I hope those who now are doing so, after discussing it with us, will bear in mind, therefore, the fact that while this system plays such a large part in the commercial life of this country, we are not so firmly wedded to it that we can allow it to be used to our disadvantage. In the knowledge that we are proceeding along the right path, I would ask the House to be patient while our negotiations are conducted, and I hope that we shall have a happy issue out of all our afflictions.

6.16 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

The right hon. Gentleman has dwelt at considerable length upon the negotiations now proceeding with foreign countries, but he has not told us anything at all about the Government's policy for the World Economic Conference, and I was under the impression that the Motion to-day was dealing with the World Economic Conference. He told us, with the same gloom that comes now every time from the Front Bench opposite, that we have got to face harder times. I think the country is getting more and more depressed with a Government which can do nothing but reiterate the coming hard-ships and open up no prospects of their solution. The right hon. Gentleman said that he was delighted to have got out of the one-track mind. I congratulate him, but unfortunately he has got into the no-track mind, which perhaps is even worse. The one-track mind at least leads somewhere, but the no-track mind leaves you wandering about in a circle in which you inevitably lose your way. The right hon. Gentleman told us that there was only one thing to bring about a restoration of trade, and that was increased demand. I should be glad to know whether he has at last reversed his policy. Does he now believe that that belt which he advised us all to tighten ought to be loosened again? No, he does not believe it.

Mr. R UNCI MAN:

I never said anything about a belt.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

The reference was to slimming. I was referring to the wrong article of clothing. One associates with the slimming policy another article of clothing which I will not mention. The right hon. Gentleman is now, perhaps, going to put the patient upon the other diet. Are we now to understand that the only way to bring about a restoration of trade is to increase demand, that the Government are no longer favouring a policy of creating a diminution of supplies in order to raise prices, but a policy of increasing demand so as to raise prices, that is to say, that they no longer regard the problem as one of overproduction but as one of under-consumption? If the right hon. Gentleman and his colleagues have at last come to realise that, after having been told it from all sides of the House for 18 months, we must at least congratulate them upon that amount of intelligence.

Looking round the world he says, "Where can we expect this increased demand? China? Unfortunately, there is a war in China, so the coolies cannot buy any more shirts." Might I suggest to him that there are plenty of people in Great Britain who want shirts at the present time, and if he desires to put the mills of Lancashire to work upon making shirts he could do it quite easily by distributing shirts to the unemployed. He would thereby create increased demand for shirts, which is what he wants; he would produce employment in the mills of Lancashire, and he would enable some of the money and credit which are lying idle to be put into circulation by the purchase of shirts. Surely we have not yet reached the stage when, to increase the demand for commodities at home, we have to wait until the Chinese war is over. That is the only prospect the right hon. Gentleman holds out to the country, that we have to wait till China is again quiescent, till the purchasing power of the Chinese has been raised sufficiently to give an increased demand for commodities in this country. If that is all the right hon. Gentleman 'has to offer the country I am afraid they will not be very grateful to him.

This Motion, as I understand it, is to call attention to the possibilities of what might be done at the World Economic Conference, and it proceeds upon the basis that the best thing we can do is, by agreement, to get rid of tariffs and economic antagonism, what I might call the international method of procedure, and to try to bring about a reasonable frame of mind by international agreement. The Amendment, on the other 'hand, proceeds upon the basis of the old fallacy that if you want to stop war you should arm yourself strongly. It proceeds upon the basis that the best way of getting rid of economic nationalism is to be as nationalist yourself economically as you can be. We believe that to be a profound mistake. It is exactly that spirit in other people of which, we are so loudly complaining, and if we ourselves now adopt it we can hardly expect our action to help to solve the problem. But in our opinion all these views are not views which are either going to solve the problem or which can be usefully advanced to achieve anything at a World Economic Conference. These economic antagonisms which are displayed in the ultra-nationalist views now held all over the world arise, as was quite rightly said by the hon. Member for East Aberdeen (Mr. Boothby) out of the capitalist system, exactly as military nationalism and the armament problem equally arise out of the capitalist system. Neither Free Trade nor tariffs, as has been mentioned by one or two speakers, can be held to be responsible for the present circumstances of the world, nor will the abolition of the one or the other bring about any cure.

The other feature which has been spoken of to-night— international indebtedness— is just another typical example of the international capitalist burden. The discussion on the Austrian Loan which we had in this House not so long ago was very typical. The argument was put forward by the Government that we should supply Austria with money in order that she might be able to pay her debts, in order to continue this structure of international capital indebtedness which everybody admits, even capitalists, is vitally hindering the process of distribution throughout the world. It is exactly the same when one comes to look at the economic system which is causing all the difficulties to-day. It is the intense competitive antagonism between countries which lies at the root of the tariff and trading difficulties, the quotas, the exchange difficulties and everything else; and just as you cannot get rid of war until you get the spirit of disarmament among the nations, so you cannot get rid of this economic war until you get the spirit of co-operation instead of competition as the basis of national and international trade.

However difficult the problem may be internationally, surely the Government might give a lead to the world, as has been said by one or two speakers to-night, by seeing whether they could not first eliminate cut-throat competition in the industries of this country. Then, at least, they could go to the rest of the world and say, "We here have the power to control an economic unit which we can arrange with you shall fit into a world structure," because that is what, after all, the World Economic Conference is for. It is to build up a world structure of finance and trade in order that we may do away with all those vicious barriers and hindrances. Surely one of the first objects of everybody going to the Conference who wants to be able to lead it, is to be able to say, "So far as my country is concerned, we have eliminated all these vicious processes. Here we have a co-operative State run for the benefit of the community. We have eliminated competition and now we are prepared to fit into a world structure of a similar sort." If that could be put forward by His Majesty's Government at the coming Conference, there might then be some hope of world economic peace, but as long as the Governments of the world go to the World Economic Conference imbued with the theories of competitive capitalism, it is idle to talk of a world economic peace. Hon. Members who may smile at that thought will, I feel convinced, after the World Economic Conference has met and come to whatever decisions it may come to, find by experience that it has not brought about world economic peace.

6.27 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

We have had to-day, as the President of the Board of Trade has said, a most interesting Debate, and I must begin, as others have begun, by congratulating my hon. Friend the Member for East Birkenhead (Mr. White) both upon the value of the subject he has chosen for to-day's Motion and also upon the admirable and effective speech in which he moved it. We would also extend our thanks and our congratulations to the hon. and gallant Member for Pembroke (Major Lloyd George), whose speech, I think, pleased the whole House, and no less we add our congratulations to the hon. Member for East Fife (Mr. Henderson Stewart) who made a striking maiden speech this afternoon. On the whole, the Debate has not spread too wide. We were anxious in moving this Motion to concentrate the attention of the House upon the one question of the World Economic Conference and the policy to be advocated there by the Gov- ernment of Great Britain. Had we included all aspects of the economic question now occupying men's minds we should have required a Debate not of four hours but of four days, or longer, and for that reason, and not because we under-estimate their importance, nothing has been said from this quarter to-day about monetary policy, a matter upon which my hon. Friend the Member for East Aberdeen (Mr. Boothby) spoke, and which is unquestionably one of very great, and perhaps prime, importance, but is a subject for a separate discussion. So also with the question of the employment of capital in valuable enterprises in this country as a remedy for unemployment. That is a matter to which, of course, we attach the very first importance, and on which we have often spoken, but we excluded it to-day only for the reason that I have mentioned.

The question is, What should be the objective of the United Kingdom at the World Economic Conference? Should it be the openly-declared, definite and energetically pursued policy of the removal of the restrictions upon world trade, or should we, for various reasons, such as those mentioned by some hon. Members to which I shall again refer, be lukewarm or even indifferent in (pursuing that object? To restrict production is very easy; it has been done by all countries continually. To increase consumption is very difficult. The former policy is wrong and the latter policy is right. It is only by pursuing, whatever its difficulties, the latter policy that the Government at the Economic Conference can render useful service to the world. On these matters, to-day's Debate has evoked many interesting expressions of opinion, but it has not evoked, I am afraid, any very definite pronouncement from the Government. The right hon. Gentleman the President of the Board of Trade has told us very little. We did not expect him to say anything about negotiations now in progress. Necessarily, when a Government is engaged in prolonged and difficult negotiations, it must complete them before it can declare to the House and to the country what the results have been, but we did hope that the right hon. Gentleman would give a general indication of the course which the Government is pursuing, and for which he wishes the country's support when the World Economic Conference meets.

The right hon. Gentleman elsewhere has made occasionally very specific pronouncements. For instance, just over a month ago, speaking in his constituency of St. Ives, at the chamber of commerce there, he used words which already have been referred to by my hon. Friend the Member for East Birkenhead: I only wish the German Government would put a stop to that insane quota system which has become the curse of European trade. Again, in his speech he said: The French have a most difficult task before them. We wish them well, but again I would ask that they would bring to an end the quota system. Yet two days ago in this House was introduced the Agricultural Marketing Bill, which provides that the quota system shall be established here for our own agricultural products, not temporarily for the sake of any emergency, but permanently, as part of the fiscal policy of this country, and on the back of the Bill is the name of the right hon. Gentleman the President of the Board of Trade. If a quota system is insane and the curse of European trade, how can the right hon. Gentleman propose with his colleagues to establish it in this country, not for purposes of bargaining, but as a permanent part of our agricultural and commercial policy? How is it that the Free-Trade Dr. Jekyll of St. Ives, by some sinister transfiguration, turns into the ultra-Protectionist Mr. Hyde of Whitehall?

Photo of Sir Alec Douglas-Home Sir Alec Douglas-Home , Lanark

Will the right hon. Gentleman allow me to interrupt? Was not the name of the late Secretary of State for Scotland on the back of the Wheat Quota Bill?

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

The wheat quota is not an import quota. The word "quota" in that connection means an entirely different thing, and is a complete misnomer. [HON. MEMBERS: "Oh!"] Hon. Members do not seem to be aware of the distinction. It should be obvious to anyone who has studied the matter for a moment that the wheat quota is a sheer subsidy. It consists in demanding from the consumers, through the millers, a certain sum on each sack of flour, which is distributed among the wheat growers.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

Is that better than the Agricultural Marketing Bill?

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

Yes, far better than that Bill. I would be led too far away if I were to argue on the wheat quota. I would repeat with emphasis that the wheat quota is not an import quota. There is no restriction of imports of any sort or kind, and there is no attempt to raise the wheat price of Great Britain above the world price. That was the specific undertaking, given before the Bill was introduced, that no attempt would be made to raise our prices above world prices. When you have a quota, saying that you shall only have a certain amount of wheat from this or that country, and only a certain amount from another, that may be good or bad, but it is an entirely different thing. Therefore the interruption of the hon. and gallant Member applied to an entirely different set of circumstances.

One of the main questions that have emerged from the discussion is this: Are our tariffs to be used for protection or for bargaining? Hon. Members have said that they are to be used for both. They cannot be used for both. In so far as they are maintained for protection, they cannot be used for bargaining, and in so far as they are for bargaining they cannot be used for protection. The right hon. Gentleman the President of the Board of Trade said that there was a great deal of unanimity in different quarters. I beg to disagree with him. On this issue there is no unanimity. The hon. and gallant Member for Bournemouth (Sir H. Croft) said to-day, as he has said very many times before for very many years, that our tariffs must be maintained in order to give employment to our people, because other countries have sometimes 50 per cent. lower wages. There is no question of bargaining there. Whatever other countries did, if they abolished their tariffs altogether, the hon. and gallant Member would say that our tariffs must still be maintained.

Up and down the country, year after year, he has made eloquent speeches on platforms to great multitudes of people, saying that if only you shut out the importation of foreign manufactured goods, those goods would have to be made here, and that our own people would be employed. He has used a lively imagination and astronomical figures in regard to the manufactured goods concerned and to the number of people who would be brought into employment in this country. That is his policy— unless you shut goods out you do not get that employment, and in proportion as you shut goods out you do get employment.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

You must always retain freedom to lower your protective duty for a country that treats you on a friendly basis.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

That illustrates the essential inconsistency of the hon. and gallant Member. He says, at one and the same time, "You must shut out the goods of countries who have lower wages because they will compete with us unfairly, but if they are ready to abolish their tariffs, we shall be ready to abolish ours." On which leg does he stand?

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

I have no difficulty in standing on both legs.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

I should be very interested to see the hon. and gallant Gentleman stand on both legs now and tell me what he would do in circumstances in which a country with a lower standard of wages was willing to abolish its tariffs if we abolished ours.

Photo of Mr Henry Croft Mr Henry Croft , Bournemouth

Since the right hon. Gentleman is so kind as to put a question to me, I can only answer him in this way: When your tariff is a 50 per cent. tariff, you are perfectly at liberty to give protection to your people and to reduce that tariff by 20 per cent. or 30 per cent. if the other country is willing to do the same.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

And still maintain a tariff?

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

That is the admission that I wanted the hon. and gallant Member to make. No matter what other countries do, you would still maintain your tariff if their wages are lower?

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

I have obtained that very definite statement from the hon. and gallant Member, and now I shall draw the deduction. The hon. and gallant Member said that if our Motion were carried and acted upon, it would cause dismay to the agricultural and in- dustrial interests of this country. No matter what other countries did, our Motion would abolish our Tariffs if other countries did the same. We had a discussion in the House the other night which has a bearing upon this very point. I will come back to the hon. and gallant Gentleman. A colleague of his, the hon. Baronet the Member for Barnstaple (Sir B. Peto), putting forward some fiscal views in a very small House, after 11 o'clock on the Motion for the Adjournment, stated the case of the fabric-glove makers of his constituency. He said, "Why have the Government held up the Recommendation of the Import Duties Advisory Committee in regard to fabric gloves?" The Import Duties Advisory Committee has made a Recommendation, which has not been published, and no one knows whether it is a Protectionist decision or not. The hon. Baronet said, "We are concerned with the fabric-glove industry, which is being ruined by importations from Saxony. We know that the increased Duties have already made a considerable difference over and above the advantage of the appreciation of the pound, but they want, as I want, a still higher duty in order to shut out all gloves from Saxony." The Government said, "No. We are now engaged in negotiation with Germany, and this may be a useful bargaining counter." The hon. Baronet the Member for Barnstaple said, "I do not care about your bargaining counter. Your bargaining will not benefit my constituency. I want a good stiff protective duty against fabric gloves." An hon. Member who represents a constituency in the Potteries got up and said exactly the same thing. During an agricultural Debate many agricultural hon. Members said, "Why should our constituents be subjected to a flood of imports from Denmark, or any other country, in order to get advantage in the Danish market, or in any other market, for our manufacturers?"

You cannot at one and the same time protect and bargain. You must make your choice. That is a point that I wish to emphasise most strongly to the House to-day. We are often told that this country is the greatest food market in the world, and we are told, "Let us use that great economic power to secure advantages for our export trade in other countries of the world." We are told to-day that the agriculturists say," Oh, no. We must retain our market to the utmost possible extent for our own agriculturists." What becomes of the utility in bargaining in the greatest food market in the world? At the time of the General Election, when people voted they were told that the National Government, if it adopted tariffs, would use them in order to secure freer trade throughout the world. Millions of electors voted for candidates for the National Government on the assurance that that would happen, and that tariffs would be used to get rid of tariffs. The Lord President of the Council, when he went to Ottawa, very distinctly declared that to be the objective of the Government. We even have the Chancellor of the Exchequer, who has been an arch-Protectionist all his life, using just one week ago very different language, after some experience of what Protection really has resulted in in this country. I will venture to read these words, because they are most significant of the movement of opinion which has affected even the most obdurate minds. The Chancellor of the Exchequer said: We have always to remember that in this country we have been in the past a great exporting nation. We have a large number of our people who earn their living by making goods and selling them to foreign countries. I would remind the hon. Member for South Croydon (Mr. H. Williams), who is not at this moment in his place, of this declaration by his leader, because he said that our export trade was of very small importance, and that what really mattered was the home market. The Chancellor of the Exchequer went on: In the last few years our foreign trade has shrunk until it is half of what it was. The idea "— and these are the significant words— that we can replace what we have lost in foreign trade by any artificial stimulus, applied in this country, appears to me one doomed to disappointment. I was not able to be present at that Debate, but I read those words in the OFFICIAL REPOBT. I rubbed my eyes to see that I was reading the Report of the right date and a speech by the right speaker— that I was not reading a speech of my own in answer to a speech of the. Chancellor of the Exchequer. I found that it was a speech by the Chancellor of the Exchequer answering himself— answering what he has been saying all his life long. He went on: It is a hard saying, but it is necessary to say again what I firmly believe in my own mind. You cannot expect that this country can attain prosperity while all the rest of the world is depressed."— [OFFICIAL REPORT, 8th March, 1933; cols. 1302–1304, Vol. 275.] That is the view of all the expert advisers who have been summoned by the various Governments of the world to give counsel on this difficult and complex matter. Unanimously the experts appointed to prepare for the World Economic Conference— appointed by the League of Nations, appointed by the various countries, appointed by the Bank for International Settlements— have agreed that that is vital; they placed in the very first rank the importance of getting rid of these restrictions. Therefore, I suggest that, if the Government are in any degree consistent with their own declarations, and unless they reject the considered advice of the greatest economic experts in the world, they must go to the World Economic Conference with the very firm resolve to use their bargaining power, if they can, to get rid of tariffs and other restrictions, including quotas, and to secure greater freedom of world trade. But can they do that? Will the course of events during the last 12 months permit them to do it? We have argued the Ottawa Agreements so fully that I do not propose to do more than mention them, but there was established at Ottawa a series of agreements which prohibited this bargaining so far as relates to all the duties that are imposed in order to give Imperial Preference.

The iron and steel industry here has been guaranteed for another two years the very high duty of 33œper cent., no matter what the World Economic Conference may decide, no matter what other countries may be willing to do. The Agricultural Marketing Bill which is now before the House establishes a new system of quotas with respect to a number of agricultural products— quotas which are to be retained permanently, and which cannot be bargained with. In addition to those obstacles, we have an even greater one, namely, the pressure of the whole Protectionist movement in this country— the pressure of the hon. and gallant Member for Bournemouth, the pressure of the hon. Member for Barnstaple, the pressure of the hon. Member for South Croydon, the pressure of all those who, irrespective of bargaining, are determined to maintain tariffs in this country. The Government will be in a dilemma in this matter, and the President of the Board of Trade has given us no guidance as to whether, when they go to the World Economic Conference, they will make it their prime objective to bargain and reduce, or whether they will yield to Protectionist influences and maintain. It will be a struggle— a pull between those who are in favour of maintaining restrictions for Protective purposes and those who are in favour of the free importation of flour or other commodities. It will be a question of "Pull devil, pull baker," and I am not at all sure that baker will win.

It is not to be expected that at the World Economic Conference all the high Protectionist countries will agree to an effective reduction of their tariffs. Are we, therefore, doomed to anticipate failure 1 Is any high Protectionist country, like France, or the United States if it still remains so, to be allowed to exercise a veto upon the whole Conference— a kind of liberum veto such as existed in the old days in Poland? That brings us to the proposal which has already been brought before the House, and which has been made in the country, that we should not allow ourselves to be absolutely blocked by lack of unanimity, but should endeavour to form a group of low-tariff or Free Trade countries which are impressed by the necessity of removing restrictions, and are willing to do so among themselves. The President of the Board of Trade spoke about it, but he took a very detached view. He is ready to consider what will happen. If any countries come along with a proposal of that kind, the Government will see what they think of it. We are the greatest commercial and the greatest shipping country in the world, we have a far greater interest in this matter than anyone else, and it is our business, the Conference being here in London, in our own capital, to indicate some objective to the Conference and to pursue it. It has been said that it is not for us to give a lead; but not only have we not given a lead hitherto, but we have stopped the lead given by other people— by Belgium and Holland. I agree with the right hon. Gentleman that we could not straightaway form part of the group that was then proposed, but if we had to give, for the time being, a negative answer, at all events we could have said to Belgium and Holland: "You are on right lines; we will support you in endeavouring to secure the widest possible agreement on this point," and so have given encouragement to a movement which is in itself sound. We find the world in its present condition, with 100,000,000 people, including dependants, workless in the chief countries, with deficits piled up, with taxation increasing, and extreme distress in this country and throughout the world, and yet the Government are failing to give a lead on this essential matter, but are waiting to see what other people may propose.

Lastly, there is the question of the most-favoured-nation Clause, to which also the right hon. Gentleman has referred. I have been advocating for more than a year, in private and in public, that the most-favoured-nation Clause will have to be reviewed if any progress is to be made in the reduction of tariffs. I have not, however, advocated its abolition. I agree with all that the President of the Board of Trade has said to-day as to the value of maintaining a form of most-favoured-nation Clause, but it must be a form which allows of exceptions. Hon. Members have said constantly to their constituents that they believe in treating well as regards tariffs those countries that treated us well, and in treating not so well those countries that treated us badly. But you cannot do that so long as the most-favoured-nation Clause prevails. If any country, like Sweden, or Argentina, or whatever it may be, treats us better under its tariff, and we make concessions on our part, we have to extend precisely the same concessions to all other countries, whether they treat us well or ill. That should have been obvious from the beginning, before the Government embarked upon a policy of this kind. Now, however, there is a growing volume of opinion in this country and in other countries that there must be a modification of the most-favoured-nation clause if we are to make real progress. The Association of Chambers of Commerce have approached the Government on the matter, and that is a very significant and important fact. They have as yet had no reply. Two Members of the late Conservative Government have declared in this House that they are in favour of a modification of the mostfavoured-nation clause, namely, the right hon. Gentleman the Member for Spark-brook (Mr. Amery) and the right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland), and to-day the hon. Members for Bournemouth, South Croydon and East Aberdeen have all said the same thing.

I agree with the President of the Board of Trade that whether we can agree to this modification depends upon the area of countries that agree to a low-tariff arrangement. If there were only one or two, we might lose more than we gained. But, at all events, we could make it widely known, urbi et orbi, that, if there is a tendency in the world to reduce tariff restrictions, and if a large number of important countries are prepared to agree to proceed along those lines, we are willing no longer to adopt the original position which this country has always adopted, but would be prepared to agree to an alteration of commercial treaties which would facilitate such arrangements. Political events which are now proceeding in the world have their origin very largely, if not mainly, in economic movements. It is the distress caused by the collapse of world markets, the reduction of world trade by two-thirds in three years, and the consequent unemployment, that gives rise to so much political unrest, and the working class will not endure these conditions indefinitely in silence. It is essential that we should act, and act quickly, on these matters, or we shall find in various parts of the world growing disturbance and growing political danger. We are obsessed and overmastered by these economic facts. As Emerson wrote in a very striking and famous phrase: Things are in the saddle and ride mankind. It is our business to restore human affairs to the control of human intelligence. The World Economic Conference gives an opportunity for that. I trust that our Government and other Governments will have the wisdom to seize it.

6.57 p.m.

Photo of Sir Reginald Clarry Sir Reginald Clarry , Newport (Monmouthshire/Gwent)

I wish to take up only two points which have arisen during the Debate. I should like, in the first place, to reinforce and supplement the observations which were made by my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) when he was referring to the effect of tariffs on the steel industry of South Wales. According to the official weekly out-turn figures, in October last— when the last portion of the stocks which had accumulated by dumping steel bars in this country was still in evidence— their output was 17,000 tons per week. That has been gradually going up until in January the output in South Wales was 24,000 tons per week; and the figures ascertained during the last few days for the weekly output in February amounted to 25,000 tons per week. That is an increase as compared with October of approximately 40 per cent., which is regarded as very satisfactory, and which is definitely put down, irrespective of politics, to the effect of the tariff arrangements which have been made.

My second point is this: I understood that the basis of this discussion was the question of the sweeping away of tariff barriers throughout the world. That seems to me to presuppose that the whole world is living on an equal standard, and that people require the same amount of money to keep themselves in all countries. We know that that is not the case — that there is not an equal standard of living in Europe or through out the world, therefore, if we in this country are to maintain the standard of living which we have set up for ourselves, and which is one of the highest in the world, it is essential that we should have some weapon with which to protect ourselves and to protect that standard of living. It seems to me that, in the arguments that may come before the World Economic Conference, whether dealing with currency, trade agreements or any point or problem whatsoever, the answer will always turn on this, that, if we can get together at the earliest possible moment a strong, dominant and irresistible Empire, we shall have the greatest possible safeguard both for trade revival and for world peace.

6.59 p.m.

Lieut.-Colonel KERR:

I am going to try to keep as far as possible to the idea which I believe the hon. Member who moved this Motion had in his mind, namely, that we should try to give some indication to the Government as to what we hope they will do when they go to the World Economic Conference. There is one point about which I am extremely nervous. That is the question which seems to be universal, not only here, but all over the world, of artificially, or at any rate by some means, raising prices. To me it does not really very much matter whether prices are raised or not. That is not really the point. We should, somehow or other, increase consumption. If that were accomplished, prices would rise in a perfectly natural and healthy way. It seems to me that the whole object of this World Conference should be to make the consumption and production of the world balance. That is the great point upon which we want to concentrate. If we in any way attempt to raise prices by jugglery in any shape, or in any artificial way, the result will be perfectly disastrous, and we shall suffer worse than we are doing to-day. We have got to face a completely new world. It is no use looking back on the past. Past conditions are gone, in my view, for all time. There was a time, to which I, and many Members of the House who are not so old, can look back, when the worry of everybody was to get enough to go round.

We have a totally different position to-day, and I think it requires totally different methods to deal with it. We have, I believe, got to make up our minds that some of the things which were thought madness from an economic point of view a few years ago, are now perfectly sane economics. We have got to take risks about that, and unless we do take risks I cannot see how we are to get out of the difficulties in which we are. The buying power of the people must be maintained and, if possible, increased. Our power to sell our exports against imports must be maintained. If these two conditions are not safeguarded, low price countries will defeat us and also, in the end, ruin themselves. There is one situation in this country which I have heard described as serious, but which I think is one of great strength, that is, that we are the great consuming market of the world. Because we are that, I believe we are in a position of great strength. that is, that we are the great consuming market of world. Because we are that, I belie we are in a position of great strength.

We know quite well that other countries are dependent for their prosperity upon our markets. We ought to bear that in mind very carefully in discussing this matter. I was very worried by the description of the difficulties the Minister put before us this afternoon— difficulties which he had in dealing with world affairs. It does appear that the whole world has got into a condition so complicated, and so difficult, that it seems to me a problem almost impossible to unravel. I would, therefore, ask the Minister, and the Government, to try to visualise this new world; to try to forget altogether the past, and things successful in the past, and see whether we cannot scrap a great deal of what is at present looked upon as fundamental in dealing with world affairs.

I propose very shortly to put forward two very simple suggestions. We have heard a great deal about tariffs this afternoon, and the simple proposition I wish to place before the House has relation to the one anxiety of us all— the methods by which we can put a restriction on our imports without ultimately damaging our export trade. I have studied this question with many experts and many economists, and have found no one put up any argument which shakes my belief in the proposal. It is simply that we should decide to put on a tariff of 25, or 30, or 50 per cent. I do not mind what figure it is, but I will take it as being a 30 per cent. tariff on all imports into this country. But if any country, individual, company, or corporation, anywhere outside these shores, buys anything from this country he, or they, shall have the right to import into this country an equivalent value of goods free of all duties. By that process there should be a tendency to balance our trade. The process would also have the effect of helping to lower our export prices in the markets of the world. That system if adopted would not interfere with Ottawa, for, if we wished, we could have our Preferences within that system.

Anyone, whether he is a Frenchman, Italian, or anyone else, who is going to import goods into this country would, if he did not make an equivalent purchase, have to pay the whole duty. There would be a market in these credits. Of course they would never be the value of the duty, but would vary according to demand. It seems to me that this system would encourage our exports and balance our trade. If we adopted such a system, and other countries adopted it, there would be no limit to the business which would go on internationally in the world. We would get back, as far as we could, to the old idea of barter and interchange of goods throughout the world. That is the proposition, and I do hope the House will give its consideration to that simple idea. It would get rid of the terribly complicated business to which the Minister referred this afternoon.

My second proposition is one which I almost thought the Minister was himself going to suggest when he mentioned China and Japan. There are many people to-day in favour of doing something about the currency of these countries. There is certainly, I believe, 50 per cent. of the population of the world living under a depreciated silver currency. By some stabilisation of silver, in ratio to gold, we have immediately a means of increasing our customers to a most enormous extent. These are two ideas, which I commend to the Government for consideration when they go to the World Conference. It will simplify everything if they can be brought about, and, if once instituted, they will be readily adopted by everyone. I would like to impress upon the Government that the past is gone, and I do not believe the experiences we have had in the past are any good in the present complicated world conditions. The Government, I hope, will take the risk, and try something completely new in the direction I have indicated.

7.11 p.m.

Sir JOHN SANDEMAN ALLEN:

We have had an interesting Debate, and it has travelled over a large number of subjects. I would like, for a few moments, to go back to the starting point of the Motion, namely, what should be done with regard to the World Economic Conference. I listened with interest to the suggestions made by my hon. and gallant Friend the Member for Montrose (Lieut.-Colonel Kerr). He brought forward two suggestions, regarding one of which he said he had consulted many experts and that none had found any flaw in it. As to the other one, I could make a present to him of a dozen experts who would find flaws in it at once. These matters should, however, be fully considered in connection with the World Conference. But to go back to the general discussion, there has been a tendency to treat this matter too much as if it were a question of Free Trade and Protection. There are a great many other questions, and a great many other barriers, which have to be considered.

Some people argue that it is the Gold Standard which has caused all our trouble. Others say that trade barriers are the cause of our trouble. As to the Gold Standard, the bulk of our business people are thankful to know our Government take the line that before this question is considered we must have the other difficulties, which make it impossible to work the ordinary trade and finance of the country in a normal manner, out of the way. We had an interesting suggestion also from the hon. Member for South Croydon (Mr. H. Williams), but I think that if we look at the present position of affairs we shall find that one of the great troubles is the enormous amount of indebtedness, and the incapacity to meet that indebtedness. That is a matter which the World Conference will have to consider. That Conference will have to consider how far it can bring creditors and debtors more closely together. If a creditor country is to be sure of getting its money, it must take care that it can receive the payment in goods or services. It has got to take care it does not shut out that means of payment. That has been the trouble in a great many quarters.

I do not agree with the right hon. -Gentleman the Member for Darwen (Sir H. Samuel) that you cannot protect and bargain at the same time. I think it all depends on how you work. I submit that the two legs can be stood upon, if it is done wisely. There are certain limits which must be insisted on to prevent the swamping of the country in an improper manner, and the rest can be used for bargaining. It is not a question of Free Trade or Protection. It is a business transaction. I cannot help feeling that we must get closer together in all these questions. It is a primary point that creditor nations should get in touch with debtors, because sanctity of contract is a very vital matter. I feel that all these points have to be dealt with in connection with the conference.

There is another matter which has not been referred to, though I cannot help feeling that the hon. Member for Birkenhead (Mr. White) had it in his mind. I think that he has in mind, as I and many others have, the serious impediment to the shipping of the country caused by the subsidies that other countries are giving. The United States shut out our goods by an impossibly high tariff and kill our services by a subsidised mercantile fleet, which costs more in subsidies than it earns in freights. We ought to stop that system, and I hope the Government will go to the conference determined to tackle this very vital and serious point. I want to refer to another point which has been mentioned in another way in the Motion. We cannot hope to break down tariffs and to get a low tariff movement in a moment. We have put our tariffs on in order to bring tariffs down ultimately. We shall never get every nation to agree at once to make these alterations, but surely we can in the meantime find quite a number who are prepared to work with us on reasonable grounds. If you cannot get it by universal agreement, you can by bi-lateral and multi-lateral agreements secure a good deal in the direction that we all want, and, if so, why not come to terms with those who are sensible; in other words, with people who are not going in for excessively high tariffs?

Many of us were pleased to hear what the President of the Board of Trade said about the most-favoured-nation clause. We want to make reasonable arrangements with different countries, and we must make it a condition that, if they do not give us reciprocity, we must put them in a different category from those who do. In other words, we have to divide the nations of the world into those who are friends and those who are not, those who are willing to lead a family life together on the principle of give and take, and those who are not. All these points have to be considered very carefully. I am confident, in spite of the suggestion that the Government have no scheme and no ideas, that the Government have already formed very definite ideas and will continue to do so and, while they may not agree with extreme Free Trade views on the one side or extreme Protectionist views on the other, they will be in harmony with the general views of business men, who are quite satisfied that the Government have done an enormous amount by balancing our trade and establishing our credit.

After all, it is confidence that counts for so much and, when we look back two years, we know the confidence that the country has inspired and the credit, which goes hand in hand with confidence, is to-day better than it has been before, and I am sure that at the Conference we shall help to move towards better days. We have to clear away not only high tariffs but exchange restrictions and maritime subsidies. I intensely dislike quotas, and I am very much inclined to agree with what has been said on the point, but there may be reasons and excuses for that, as for many things that are done, particularly if they are only little ones. At the same time, there are all these difficulties in the way which we must set ourselves gradually to clear up. Let us deal with the whole question as a big commercial nation out not for theories but for practical results. We want trade improved in this country and in the world. We cannot improve our own trade if we do not improve the trade of the world. While we cannot accept the Motion, I am sure the discussion has been of great value.

7.22 p.m.

Photo of Mr James Reid Mr James Reid , Stirling and Falkirk District of Burghs

I think it has been assumed rather widely, particularly by those who sit below me, that the most important, indeed the only important, thing that the World Economic Conference has to deal with is the reduction of tariffs. It appears to me that tariffs are only one and not the most important element that the Conference has to deal with. It has been suggested that it is not possible at the same time to protect your own market and to bargain successfully with the foreigner, but, surely, the matter is very simple. Let us take, for instance, the case of agriculture. I have not the exact figures in my head, but let us assume that the utmost proportion of our foodstuffs that the British producer can produce is 50 per cent. You protected the British producer, that is, you insist that 50 per cent. shall be grown in this country, and you still have the other 50 per cent. to bargain with. It is the simplest thing in the world to protect your own producer, who cannot fill the whole demand, and go to your various suppliers and say: "You may have a half, or a third, or two-thirds, of the foreign quota on condition that you give this, that or the other." I can see no inconsistency whatever between the fullest protection of our own market and the fullest use of our bargaining power in respect of the other 50 per cent.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

What would the Dominions say?

Photo of Mr James Reid Mr James Reid , Stirling and Falkirk District of Burghs

I was including the Dominions in the figure of 50 per cent. I do not think the home market can produce 50 per cent. of our foodstuffs. We have a very large surplus percentage to bargain with after having satisfied the immediate possibility of production in this country and the Dominions.

May I make one suggestion about the Economic Conference? It seems to me that, since the War, we have failed time and time again at these conferences because we have tried to do too much. We failed to a large extent in the Peace Conferences, in setting up the League of Nations and in the conferences that have followed because we have tried to abolish war altogether. We have set up something which is going beyond what the nations of the world will support. It was no use starting "No More War" and setting up a League of Nations which was going further than the then state of public opinion would warrant. Do not let us have an economic League of Nations. Do not let us try to work out the World Economic Conference within the limits of the present system. Let us rather try to make the present system work than to invent some new system on the spur of the moment. It is by no means impossible within the sphere of economic nationalism to make things work and, if you go to the World Economic Conference thinking you are going to abolish economic nationalism and substitute an internationalism which only hon. Members opposite can see, even on the furthest horizon, I think you are giving away all the chance that you have of securing very substantial results.

The problem is set forth in the agenda plainly for everyone to read. It is: How are we going to get the mechanism of distribution working again? It is true that the main obstacle is the lack of freedom of exchange. There are two ways of tackling that question. The simplest way is to consider how it grew up. These restrictions have grown up in the last few years because prices fell away to such an extent that countries could not afford to go on without imposing restrictions. Surely, rather than try to break the ice with a sledge hammer, it would be very much better to direct your policy so as to get such a rise in prices as will render the restrictions unnecessary. The restrictions were caused by falling prices. As soon as you get rising prices, countries will be able to take off the restrictions which they were forced to put on by falling prices. I agree with those who put in the forefront of what they think should be the main objective of the Conference financial and currency problems rather than problems purely of tariffs and restrictions of that kind. I believe the currency and financial

problem is the more fundamental. If you tackle that satisfactorily, the other problem will to a very great extent solve itself.

Mr. ENTWISTLE rose

Mr. WHITErose in his place, and claimed to move "That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.

7.29 p.m.

Photo of Sir Cyril Entwistle Sir Cyril Entwistle , Bolton

The Motion emphasises one aspect of what will come before the World Economic Conference.

Mr. WHITErose in his place, and claimed to move "That the Question be now put."

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

The House divided: Ayes, 58; Noes, 203.

Division No. 83.]AYES.[7.30 p.m.
Acland, Rt. Hon. Sir Francis DykeGriffith, F. Kingsley (Middlesbro'.W.)Maclay, Hon. Joseph Paton
Attlee, Clement RichardGroves, Thomas E.Mallalieu, Edward Lancelot
Banfield, John WilliamGrundy, Thomas W.Mander, Geoffrey le M.
Bernays, RobertHall, F. (York, W.R., Normanton)Mason, David M. (Edinburgh, E.)
Bevan, Aneurin (Ebbw Vale)Hall, George H. (Merthyr Tydvil)Maxton, James
Brown, C. W. E. (Notts., Mansfleld)Hamilton, Sir R. W.(Orkney & Zetl'nd)Molson, A. Hugh Elsdale
Buchanan, GeorgeHarris, Sir PercyParkinson, John Allen
Cape, ThomasHirst, George HenryRathbone, Eleanor
Cocks, Frederick SeymourHoldsworth, HerbertSamuel, Rt. Hon. Sir H. (Darwen)
Cove, William G.Janner, BarnettThorne, William James
Cripps, Sir StaffordJohn, WilliamTinker, John Joseph
Daggar, GeorgeJohnstone, Harcourt (S. Shields)Wedgwood, Rt. Hon. Joslah
Davies, David L. (Pontypridd)Jones, Henry Haydn (Merioneth)White, Henry Graham
Dobble, WilliamJones, Morgan (Caerphitly)Williams, David (Swansea, East)
Edwards, CharlesLansbury, Rt. Hon. GeorgeWilliams, Edward John (Ogmore)
Evans, Capt. Ernest (Welsh Univ.)Liewellyn-Jones, FrederickWilliams, Thomas (York, Do Valley)
Evans, R. T. (Carmarthen)Logan, David Gilbert
Foot, Dingle (Dundee)Lunn, WilliamTELLERS FOR THE AYES.—
George, Major G. Lloyd (Pembroke)Macdonald, Gordon (Ince)Mr. Walter Rea and Sir Murdoch
Greenwood, Rt. Hon. ArthurMcEntee, Valentine L.McKenzie Wood.
Grenfell, David Rees (Glamorgan)McGovern, John
NOES.
Acland-Troyte, Lieut-ColonelBuchan-Hepburn, P. G. T.Croom-Johnson, R. P.
Agnew, Lieut.-Com. P. G.Burnett, John GeorgeCross, R. H.
Albery, Irving JamesCampbell, Edward Taswell (Bromley)Crossley, A. C.
Allen, Sir J. Sandeman (Liverp'l, W.)Campbell, Vice-Admrial G. (Burnley)Cruddas, Lieut.-Colonel Bernard
Aske, Sir Robert WilliamCampbell-Johnston, MalcolmDavies, Maj. Geo. F.(Somerset,Yeovil)
Atkinson, CyrilCaporn, Arthur CecilDenman, Hon. R. D.
Baillie, Sir Adrian W. M.Carver, Major William H.Dickle, John P.
Barclay-Harvey, C. M.Cazalet, Thelma (Islington, E.)Donner, P. W.
Beaumont, Hon. R.E.B. (Portsm'th.C.)Churchill, Rt. Hon. Winston SpencerDoran, Edward
Bl'ndell, JamasCochrane, Commander Hon. A. D.Duggan, Hubert John
Borodale, ViscountColfox, Major William PhilipDuncan, James A. L. (Kensington, N.)
Boulton, W. W.Colville, Lieut.-Colonel J.Eady, George H.
Bower, Lieut.-Com. Robert TattonCook, Thomas A.Eastwood, John Francis
Bowyer, Capt. Sir George E. W.Cooke, DouglasEdmondson, Major A. J.
Briscoe, Capt. Richard GeorgeCooper, A. DuffEllis, Sir R. Geoffrey
Broadbent, Colonel JohnCopeland, IdaElmley, Viscount
Brocklebank, C. E. R.Craddock, Sir Reginald HenryEmrys-Evans, P. V.
Brown, Col. D. C. (N'th'l'd, Hexham)Craven-Ellis, WilliamEntwistle, Cyril Fullard
Brown, Brig.-Gen. H.C.(Berks., Newb'y)Crookshank, Col. C. de Windt (Bootle)Erskine, Lord (Weston-super-Mare)
Essenhigh, Reginald ClareLovat-Fraser, James AlexanderRutherford, Sir John Hugo (Liverp'l)
Evans, Capt. Arthur (Cardiff, S.)McCorquodale, M. S.Salmon, Sir Isidore
Everard, W. LindsayMcKie, John HamiltonSamuel, Sir Arthur Michael (F'nham)
Ford, Sir Patrick J.McLean, Major Sir AlanSamuel, Samuel (W'dsworth, Putney)
Ganzonl, Sir JohnMcLean, Dr. W. H. (Tradeston)Sandeman, Sir A. N. Stewart
Gault, Lieut.-Col. A. HamiltonMacmillan, Maurice HaroldSavery, Samuel Servington
Glossop, C. W. H.Manningham-Buller, Lt.-Col. Sir M.Shakespeare, Geoffrey H.
Goldie, Noel B.Margesson, Capt. Rt. Hon. H. D. R.Shaw, Helen B. (Lanark, Bothwell)
Goodman, Colonel Albert WMarsden, Commander ArthurShute, Colonel J. J.
Gower, Sir RobertMartin, Thomas B.Skelton, Archibald Noel
Graham, Sir F. Fergus (C'mb'rl'd, N.)Mayhew, Lieut.-Colonel JohnSmiles, Lieut.-Col. Sir Walter D.
Grattan-Doyle, Sir NicholasMeller, Richard JamesSmith, Sir Jonah W. (Barrow-in-F.)
Greene, William P. C,Merrlman, Sir F. BoydSmith, Louis W. (Sheffield, Hallam)
Gretton, Colonel Rt. Hon. JohnMoreing, Adrian C.Smith-Carington, Neville W.
Grimston, R. V.Morgan, Robert H.Somerville, Annesley A (Windsor)
Guinness, Thomas L. E. B.Morris, Owen Temple (Cardiff, E.)Sotheron-Estcourt, Captain T, E.
Guy, J. C. MorrisonMorrison, William ShepherdSouthby, Commander Archibald R. J
Hacking, Rt. Hon. Douglas H.Munro, PatrickSpears, Brigadier-General Edward L.
Hales, Harold K.Nation, Brigadier-General J. J. H.Spender-Clay, Rt. Hon. Herbert H.
Hanley, Dennis A.Nicholson, Godfrey (Morpeth)Stanley, Lord (Lancaster, Fylde)
Harbord, ArthurNormand, Wilfrid GuildStanley, Hon. O. F. G. (Westmorland)
Hartland, George A.Nunn, WilliamStewart, J. H. (Fife, E.)
Harvey, Major S. E. (Devon, Totnes)O'Connor, Terence JamesStones, James
Hellgers, Captain F. F. A.O'Donovan, Dr. William JamesStorey, Samuel
Hepworth, JosephOrmsby-Gore, Rt. Hon. William G.A.Strauss, Edward A.
Herbert, Capt. S. (Abbey Division)Pearson, William G.Strickland, Captain W. F.
Hore-Bellsha, LesliePenny, sir GeorgeSummersby, Charles H.
Hornby, FrankPerkins, Walter R. D.Thomas, James P. L. (Hereford)
Horobin, Ian M.Peters, Dr. Sidney JohnThompson, Luke
Horsbrugh, FlorencePetherick, M.Thomson, Sir Frederick Charles
Howard, Tom ForrestPeto, Geoffrey K.(W'verh'pt'n,Bliston)Thorp, Linton Theodora
Howitt, Dr. Alfred B.Potter, JohnVaughan-Morgan, Sir Kenyon
Hudson, Capt. A. U. M. (Hackney, N.)Ralkes, Henry V. A. M.Wallace, Captain D. E. (Hornsey)
Hurst, Sir Gerald B.Ramsay, Capt. A. H. M. (Midlothian)Ward, Lt.-Col. Sir A. L. (Hull)
Jennings, RolandRamsay, T. B. W. (Western Isles)Ward, Irene Mary Bewick (Wallsend)
Joel, Dudley J. BarnatoRamsden, Sir EugeneWard, Sarah Adelaide (Cannock)
Ker, J. CampbellRay, Sir WilliamWardlaw-Milne, Sir John S.
Kerr, Lieut.-Col. Charles (Montrose)Reed, Arthur C. (Exeter)Warrender, Sir Victor A. G.
Kerr, Hamilton W.Reid, David D. (County Down)Wells, Sydney Richard
Kimball, LawrenceRaid, James S. C. (Stirling)Whiteside, Borras Noel H.
Lamb, Sir Joseph QuintonRemer, John Ft.Whyte, Jardine Bell
Lambert, Rt. Hon. GeorgeRentoul, Sir Gervals S.Williams, Charles (Devon, Torquay)
Law, Sir AlfredRhys, Hon. Charles Arthur U.Wilson, Clyde T. (West Toxteth)
Lees-Jones, JohnRoberts, Sir Samuel (Ecclesall)Windsor-Clive, Lieut.-Colonel Georgs
Leighton, Major B. E. P.Ropner, Colonel L.Wise, Alfred R.
Lennox-Boyd, A. T.Ross Taylor, Walter (Woodbridge)Womersley, Walter James
Liddall, Walter S.Runge, Norah Cecil
Liewellin, Major John J.Russell, Alexander West (Tynemouth)TELLERS FOR THE NOES—
Locker-Lampson, Rt. Hn. G.(Wd. Gr'n)Russell, Richard John (Eddisbury)Sir Henry Croft and Mr.Clarry.
Lockwood, Capt. J. H. (Shipley)Rutherford, John (Edmonton)

Question put, and agreed to.

Question proposed, "That those words be there added."

Mr. MANDERrose

It being after half-past Seven of the Clock, the Debate stood adjourned.