They are perfectly prepared to give you the broad figures, and I do not think that these could or would be challenged. They have successfully avoided a wild inflation by the imposition of various controls, most of which we would not wish to see in this country, although I think the time will come when we shall have to exercise a rather closer supervision over investment policy in this country, if our expenditure on armaments continues. The fact remains, and we cannot get away from it, that production has been maintained in Germany at the maximum level, without any unemployment at all, for the last three years, because both profits and wages, at restricted limits, have been virtually guaranteed. This has given confidence, in spite of all the loan expenditure, to the manufacturers of Germany. I would simply point out that, as against Germany, we have large reserves of materials, of productive capacity, and of labour, and there is no strain on our capital market at all. If Germany could do it in the last three years, why cannot we? I see no reason whatever.
Now for my second illustration. Compare the situation in Germany with the position of the United States of America, where up to 1937 you had recovery proceeding smoothly and steadily under the impetus of an expansionist policy and reviving confidence. Suddenly, at the very moment you were getting your vital change-over from the prosperity of the consumption industries only to the prosperity of the capital goods industries as well, you got that fatal pronouncement by President Roosevelt that commodity prices were too high when in fact they were not. Federal Government expenditure was sharply curtailed. Credit was contracted by the banks. The capital goods industries were subjected to political attacks. And last but not least, there was a "gold scare." All these things happened simultaneously. The result was that confidence was completely undermined, and the United States entered the deflationary spiral in which they are still spinning, and unfortunately we are spinning with them. Thus you have got two examples from overseas, one in Europe and the other on the other side of the Atlantic—an expansionist policy pursued, with comparatively small resources to its logical conclusion and with the utmost success in Germany; and an expansionist policy held up and reversed, for no adequate reasons but with disastrous results in the United States.
To sum up: The important factors to-day, if we are going to get through economically, are our national income and our national consumption. Unless these two can be sustained and increased, a financial crisis sooner or later in this country is inevitable. Therefore, I beg the Chancellor of the Exchequer to stick to his guns, to stick to the policy that he has laid down for the first time this afternoon, and not to impose any further taxation upon production or consumption until we have got a very much greater level of prosperity than we have at the present time. Let prices and wages move constantly but gradually up by increasing the quantity of money at a rate sufficient to maintain the rate of interest at the required level; and until the stagnant mass of unemployment has been absorbed. Then, and only then, can we afford to apply the brake, gently, by curtailing the supply of money. Finally, take deliberate steps to stimulate the export trade.
I thank the Committee for having listened to this long economic discourse, but the matter is of the greatest im- portance, not only for to-day or tomorrow but for the years that lie ahead. I cannot see any other way out. If it is any consolation to the Committee, I would say that the observations that I have ventured to offer have been the result of very prolonged study on my part during the last few months.