Orders of the Day — Defence Loans Bill.

Part of the debate – in the House of Commons on 25th February 1937.

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Photo of Mr Morgan Jones Mr Morgan Jones , Caerphilly

The fact remains that we have spent upon armaments, armed services, £1,765,000,000. Take out, if you will, what has been spent upon pay, but you must grant, none the less, that a substantial proportion of that money has been spent upon instruments of war, and am I to be told that all the money that you have spent upon these instruments has turned out to be utterly useless? Do not let us be really absurd in the claims that we make. I could, if I cared, analyse, in respect of the Army, the Navy, and the Air Force how in point of fact that money has been made up, but I will, if I may, take two periods and compare them. In 1922–23 we went upon the Army £45,000,000, and in 1932–33 we spent £35,000,000; we spent in 1922–23 on the Navy £56,000,000, and we spent in 1932–33, £50,000,000; on the Air in 1922–3 we spent £9,000,000, and in 1932–33 we spent £17,000,000. It is true that there is a difference on the decrease side in the figures for the Army and the Navy, but hon. Members will not controvert the proposition that in respect of the Army, though it has been reduced in point of numbers, you have mechanised it to such a degree that its striking power is infinitely greater than it was at the end of the War. It is not quite true, surely, to say that we are disarmed, as they seek to argue.

Of the five-year plan, I believe the idea is that some £1,100,000,000 is to be collected by revenue and £400,000,000 by way of loan. Having regard to these enormous expenditures, both past and prospective, well might the Chancellor of the Exchequer say that no one … can see this growing accumulation of burdens without a feeling of disgust and shame that civilisation is trying to break its own back."—[OFFICIAL REPORT, 17th February, 1937; col. 1219, Vol. 320.] My only comment upon it is this: The Chancellor of the Exchequer and his friends seem determined to be the last to add the biggest burden, in order to make sure that the back is broken. They must take their share of the disgust and the shame that the world feels concerning this present situation. I hope they will forgive me for saying that this expenditure is proposed by them because they are thinking in terms of inevitable war. They are blindly oblivious of their share of the responsibility for creating the situation they now envisage. What has been their record in point of fact? They helped to sabotage German democracy before Hitler arrived; they have obstructed, in large measure, substantial results accruing from the Disarmament Conference itself.

May I say in passing that many people speak too lightly of the impossibility of securing the success of important conferences like the last Disarmament Conference? The late Mr. Arthur Henderson, who was its president, gave instructions to the head office of the League of Nations at Geneva for the preparation of an unbiased and impartial report to be drafted by the officers, as though it were drafted by civil servants and could be accepted without any doubt as to its impartiality. It had to be strictly impartial and without bias of any sort. That report has now been presented, and it discloses, I say without fear of contradiction, that if you take the aggregate of the contributions made by respective Governments, our own included, if you like—the British, the French, the Italian, the Russian and the American plans—it is impossible for anyone to argue that the conference could not from that aggregate of plans, have arrived at some common method whereby disarmament could have been introduced into the world. What was lacking was the will.

I say that the Government are largely open to the charge of having obstructed some departments of the work of the Disarmament Conference. They have paid lip-service, and lip-service only, to the idea of collective security, especially when elections were on the go. The League can truly say of this Government: These people honour me with their lips, but their hearts are far from me. In Asia and in Africa, they have blindly allowed Fascist militarism to crush nations they were pledged to protect. The Home Secretary is to follow me presently, and he will know very well that in the early days of the last Parliament we oftentimes had controversies over the Manchurian affair, and he will know that it was whispered in the corridors of this House how the right hon. gentleman stood by the League and the demand for action, but that the Americans would not come up to scratch. Mr. Stimson has now published his memoirs, and I venture to say that even a cursory glance at his record of the situation hardly accords with the view that was so sedulously circulated in the corridors of this House during the last Parliament.

Take their own contribution to Germany and to disarmament. Behind the back of the League, this Government entered into a naval agreement with Germany. They now propose to extend their own Navy. If I understand the position aright, Germany, by that very agreement, is entitled to expand her Navy by reason of the expansion of ours. If Germany expands her Navy, France may do the same, and if France does so, Italy may want to do so. The result is that, instead of contributing by an instrument of that kind to disarmament, we have provided an excuse to many countries to rearm upon a larger scale than they might otherwise do. With two short breaks Toryism, in the days since the War, has been in charge of our foreign affairs, and, with the exception of approaching election times—I hope that the Prime Minister will bear this in mind—very little substantial help and assistance have been given to the League of Nations as an institution.

The Bill is, after all, the inheritance which we have to pay for the blindness of our statesmen. Hon. Gentleman will say that I am overlooking the bellicosity of Germany. I have heard some hon. Members in this Debate recall the phrase used—I think it was by Herr Goebbels, but I forget who it was—"Arms are more valuable than butter." A dreadful philosophy, and a horrible thing to say; but hon. Gentlemen have forgotten that we sent an Admiral to Geneva who, speaking on our behalf said: "Dreadnoughts are more precious than rubies." Which is the worse philosophy—the German or our own? Incidentally, the philosophy of our own Admiral was propounded years before Goebbels developed his.

Turning to the Bill, I would observe that hon. Gentlemen in various parts of the House have been speaking of the loan as though the 3 per cent. were the interest which the Government were proposing to pay for it. As a matter of fact, the Bill has nothing to do with the terms on which the Government will borrow their money. The Chancellor of the Exchequer was most explicit about that. He said: I might, perhaps, mention that neither the rate of interest of 3 per cent., which is the rate charged on the Defence Departments, nor the term of years have any relation to the term or the rate of interest at which the Treasury will raise the money. This is merely a book-keeping entry between the Departments."—[OFFICIAL REPORT, 17th February, 1937; col. 1217, Vol.320.] When hon. Gentlemen speak of paying 3 per cent. to the lenders to the Government, I can assure them, from the quotation I have read, that that is not the mind of the Chancellor of the Exchequer. When authority has been given to him to borrow this money he will get it for 2 per cent.,2½ per cent., or 3 per cent., and he may be willing to pay 3½ per cent. or 4 per cent. Nothing in this Bill governs that matter at all. All that this Bill covers is what is to be charged to the Departments as between the Departments and the Treasury.

Some five years ago we had a financial crisis which caused great political controversy in the country. In order to emerge from that crisis a good deal of money was borrowed, and the consequence was that the banking interests were in great distress, because they thought that that borrowing involved an invasion of our national credit. I do not see any sign that these lachrymose bankers are now wearing away the doorsteps of Downing Street. In 1931 they were in terror because we were borrowing, first, for public works and, secondly, for unemployment benefit. In both cases we were borrowing for life. One way was through the medium of work, and the other was in order to keep the wolf of hunger from the doors of our people. On the present occasion there is no objection from the bankers. Why? The more the Government float loans.the more loans expand, the more profiteers contract.

To meet the situation some years ago the Government embarked upon two or three major operations. One was economy. That may be done again. The second operation was an involuntary one—going off the Gold Standard. Apropos of that, it is worth while recalling what the "Times" newspaper said about our going off the Gold Standard: It is merely an insidious palliative, a dangerous intoxicant which can only lead to the general impoverishment of the economic system and to an unnecessary diminution of the standard of living of the poorer classes of the community. Within three weeks or thereabouts we were off the Gold Standard, involun- tarily, and very profitably from the point of view of the country at large. You cannot go off that again. The other major operation was tariffs. Whatever the argument for tariffs may be, you have also played that card.Although you have played your card you have still 1,600,000 unemployed. If the new factories put up as a result of your tariff policy developed to their full capacity, they will require either a home market or a market abroad or both. Your tariff policy may prevent the second, and purchasing power alone will assist you in regard to the first. But you have played your card, and you cannot play it again.

The other thing that you have done is that you have converted War Loan. There is another block of War Loan due to fall in in 1940, to the amount of …350,000,000 at 4½ per cent. I doubt whether the Chancellor of the Exchequer would be prepared to predict that as a result of to-night's operation he will be able to convert very much of that 4½ per cent. loan. I do not like to assume the role of prophet, but I venture to say that that operation will not be possible three years from now. Every hen-roost has been raided. The Road Fund has been raided. The Sinking Fund has gone. You have used up all these resources. Now, on the top of that, you float a loan of …400,000,000. Boom conditions are beginning to manifest themselves in some parts of the country. There is competition between employers of labour for materials and the resources of labour. As long ago as last July Mr. Arthur Chamberlain and Mr. Reeve, both heads of big industrial concerns, warned the country of the invasion which this defence programme was making upon the resources of labour for the more general forms of industry. Not only is that so, but people are now discovering that it is more profitable to invest in prosperous industries than in other forms of investments, and the consequence may be that, in addition, we shall be drawing upon the resources of raw materials for the Defence programme, and thereby forcing up the cost of those commodities for other forms of industry.

We have said that there will in the end be a slump. Meanwhile, the boom will be forced along at a rapid rate. But what about three, four, or five years from now? I would ask hon. and right hon. Members opposite whether they really anticipate that this re-armament campaign will last more than four or five years. The Government may agree to some form of limitation of armaments, and, if so, then will come the slump. I am not alone in saying that. There is authority for it. In the report issued yesterday by the Unemployment Insurance Statutory Committee, on page 13, there are these words: In the light of demobilisation experience after the last War, this is an optimistic assumption, justified, we hope, by the fact that we have adopted the higher of the two figures suggested to us by the committee, that is to say, 16¾ per cent. Of what? Unemployment. In other words the Unemployment Insurance Committee warns us that in a few years there will be another slump, and when the slump comes you will have utilised all these resources, all the hen-roosts will have been raided, people will begin to find it difficult to make both ends meet, and then you will begin to call upon people to pay. The Prime Minister said last week that the time for sacrifice is now. The Chancellor of the Exchequer says it is not now, but five years from now, and five years from now it is almost inevitable that the slump will begin to manifest itself in this country. The consequence of that is quite clear. What happened in the slump in the post-war years? Hon. Gentlemen demanded a committee of inquiry. You had your Geddes Committee, and the Geddes Committee recommended cuts upon education and upon the social services. It was not the Government; they appointed a committee to do it. In 1931, the May Committee reported, and they recommended cuts. I venture to predict from this Box now that, when the slump comes five years hence or thereabouts, a committee will be appointed and will recommend that the poor should be compelled to bear the heavy burdens which this Bill must inevitably involve.

I had intended to cover another point, but I stop now, because I promised to sit down at this juncture; but I just want to say this in all seriousness, and I hope the House will forgive me for saying it; I do not say it in any threatening way at all. If I understand aright the mentality of the people of this country, they are prepared to endure sacrifices if the sacrifices are fair all round, but they are tired of being called upon to sacrifice the means whereby they can enjoy a decent livelihood while the profiteers get away unscathed. There has been no means propounded to the House whereby profiteers shall be restricted to a certain degree of interest upon their investments. A stockbroker told me the other day that his experience last year was that it was almost impossible for stockbrokers to make mistakes in their investments. Fabulous sums have been made already as a result of this rearmament campaign. I would say to right hon. Gentlemen opposite, "Have a care what you do. There may come a time when the people of this country, though they may support you now, will rise up in sheer resentment against these colossal burdens that are imposed upon their shoulders."

I close, therefore, with this appeal, if it be necessary and if it be of any use, to the Government: Is it impossible, even now, for the Government to convene once again a Disarmament Conference, so that these colossal burdens which fall upon all nations shall be speedily reduced? There is a story of an irate parent who was worried by a child, while he was doing some work, with a series of inquisitive questions. In desperation he thought of something to occupy the child's attention. He saw a jig-saw puzzle, and he said to the boy, "Put that world right." On one side of the puzzle was a picture of the world, and on the other side the picture of a man. In no time the child had finished. The parent was surprised, and asked, "How did you get that world so quickly together?" The child replied, "I got the man right, and I got the world right easily then." I would say to the Government, "Get your foreign policy right, and your armaments policy will fall into its proper and appointed place."