The right hon. Member for Wakefield (Mr. Greenwood), who has just sat down, made, if I may say so, a very interesting and constructive speech, and I hope that my right hon. Friend the Minister of Labour will, when he comes to reply, deal with some of the points that he has raised. I do not agree with all of them, but I think the House as a whole would agree that the right hon. Gentleman was seeking to find some constructive solution, not on purely party lines, for the unemployment problem which confronts us. It is rather a relief for the House to turn from the highly emotional subjects with which we have been dealing of late to the comparative calm of economics, in which our passions need not be severely engaged. In one of his concluding sentences the right hon. Gentleman who has just sat down referred to "this so-called boom." I would rather like him to accompany me one day to the City of London and talk to the gentlemen there about a boom at the present time. I am sure they would not agree with him. In fact, it is true to say that we are at the moment passing through a rather severe, although we hope a purely temporary, economic crisis. It is a crisis of confidence; and I think, from a purely economic point of view, it is a quite unnecessary crisis, because there is no evidence to show that we are in what is called a cyclical depression. It might have been expected, I think, that there would be some kind of crisis of confidence arising out of the international situation, but I think this crisis has been aggravated, both here and in the United States, by some other factors in addition to the international situation, factors which I want to deal with for a moment or two.
It is a very dangerous thing for this country and for the democracies of the world that this confidence crisis should have come upon us at this particular moment, because, whatever anybody may say, the fundamental strength of the democratic countries of the world is their economic strength. It is their most valuable asset, and we ought never to forget it, either on this side of the Atlantic Ocean or on the other. If we undermine our economic system, we shall really be up against it. There are signs of a definite industrial recession in this country at the moment as well as a purely financial crisis. The available figures all go to prove it, and the Minister of Labour will not, I think, be able to gainsay the fact that some of the news from the industrial areas in this country, even from the iron and steel areas, is disquieting. There has been a definite falling-off of orders during the last few weeks in a very large number of industries in this country, even in the heavy industries, which one had thought were going to be immune for some considerable time to come. I do not think it does any good to say there is no recession. There is, and we must face it.
We have to do something about it, and without being unduly critical, I would like to say that I think the Government as a whole, and in particular the Chancellor of the Exchequer, have not shown any very great imagination during the last six or seven months. They have adopted a completely passive attitude in the face of this economic crisis. First of all, for a long time they said it did not exist at all. Now that it is patent to them and to everybody else that it does exist, they still produce no constructive action of any kind to deal with it; and I cannot understand such an attitude on the part of the Chancellor of the Exchequer, who is faced with steadily mounting expenditure and steadily decreasing revenue. We are all right this year. We are obviously going to have a satisfactory surplus. But it is next year and the year after, that cause very great anxiety. I am sure the right hon. Gentleman will not in future get the revenue from Stamp Duties, for example, that he has estimated. It is not the Budget of 1938–39 that gives cause for anxiety, but the Budget of 1940–41, unless there is a very considerable revival of trade and industrial activity in this country.
I would like to say again what I have said in this House before, that I think his attitude of complete passivity in the face of the wholly unnecessary gold scare which lasted for several months last year was quite inexcusable. If you undermine confidence in your currency, you undermine confidence in everything. There was a gold scare which events proved was completely unjustified, and that was the beginning of something like a panic, which has steadily increased, until now we find ourselves faced with a very unpleasant, and, as I believe, largely unnecessary economic recession. We have suffered for the last six months from steadily increasing deflation; and it has been absolutely disastrous, as deflation always is. No constructive action has so far been taken by the Chancellor of the Exchequer, except to say that there has been no deflation. The flow of investment into industry, both here and in the United States, has for the time being completely dried up, and we have to face that fact. Yet the economic system under which we live depends for its success and prosperity upon a steady flow of investment into the capital industries, stimulated by confidence and anticipated profits; and when that dries up, you are bound to get into very serious trouble. The deflation continues at the present moment, accompanied by a fall in prices, and a catastrophic fall in values. I know that hon. and right hon. Members opposite have no great sympathy for the capitalists, but no hon. Member in this House will say that it is a good thing to have the capital value of wealth in the democratic countries of the world written down by some thousands of millions of pounds over a period of about nine months. That is bound to have an effect upon trade and industry, and a most serious effect upon purchasing power all over the world.
I would like to remind hon. Members, and particularly my right hon. Friend the Minister of Labour, that the fall in security values and in commodity prices over the period of about three months between September and December last year was much steeper than the comparable fall in 1929–30. I think it is the sharpest fall ever recorded in the economic history of the world; and it is a matter now of vital urgency to check it, because if we do not succeed in doing so, and in doing so in the fairly near future, I, for one, am convinced that we shall have to face the possibility of a slump which, as the right hon. Gentleman who has just spoken has said, will far exceed in magnitude and extent the slump of 1929–31. I think that would be absolutely disastrous for the nation at the present time. I think it would do more to bring about war than all the foreign policies or absence of foreign policies that you can imagine; and I hope the Government are taking serious thought with regard to what constructive action can be taken to restore confidence and stop the deflationary spiral, as the economists call it, in which we are gripped.
It is obvious that one method which we ought to pursue and must pursue, is a measure of reflation to counteract the deflation which has taken place. And I hope the Government will not be led away into any exaggerated ideas of what this country can now bear in the way of increased taxation. I think that a year ago the country could have sustained a considerable measure of increased taxation, but now I am quite certain that we cannot bear any large measure of increased taxation, and that if it is imposed, the law of diminishing returns will apply. It is necessary—and we can afford to do it—that any further measures of rearmament, and any further capital construction, should be financed by means of loans. The Government's credit is high, the supply of gold is ample for the purpose, and we can certainly borrow at very reasonable rates for capital expenditure which will stand us in good stead for some considerable period of years to come.
I would only like to say one thing with regard to what the right hon. Member for Wakefield said about planning for schemes. It is, of course, a very important subject, and I think we in this country do lack adequate statistical information with regard to what public works schemes are being carried on. I do not think there is any proper central bureau or authority which can co-ordinate these things. No hon. Member of this House can find out what schemes are being undertaken by what local authorities in the country at any given period, or what schemes are being held up, and why. The first thing that we require, if we are to have any constructive planning with regard to public works schemes, is adequate information with regard to them, which we have not got at the present time; and I beg my right hon. Friend to look into that aspect of the situation. Apart from desirability of information, it is clearly undesirable to embark upon unnecessary schemes of capital works for the cure of unemployment so long as we have a great rearmament programme in progress. I agree with the right hon. Gentleman who has just sat down that we ought to be planning those schemes at the present time. We ought to be providing ourselves with adequate information, we ought to be requiring local authorities to furnish the central Government with information about what they can do, about what is urgent and what is less urgent, and about the money that would be required; but now, when we are still in the midst of a vast rearmament programme, is not the moment to embark upon large schemes of public works.
What we most want at present is adequate information, and I hope the right hon. Gentleman will consider this matter. I am not one of those who have ever believed that you can spend your way out of a real depression by more public works. They are only palliatives, in the end. They may help, and it is obviously silly to embark upon public works at a period of boom and to restrict those public works at a period of depression.