Orders of the Day — Ways and Means.

Part of the debate – in the House of Commons on 9th April 1941.

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Photo of Mr Pierse Loftus Mr Pierse Loftus , Lowestoft

There must be some method. We must have some receipt.

The receipt I propose is interest-free Treasury bonds.

I am sorry I have been delayed by various interruptions. I now come to my final point. There has been a lot of talk about the period after the war. Many think it premature to discuss what will happen after the war. I think it right to do so. We have the lessons of the last war before us. I well remember coming back from France in 1919. This country was richer and had a higher prestige than ever before in its history. We had the greatest Navy, the greatest Air Force, and the finest Army in the world. We had the land of England better cultivated than it had been for two generations. We had more skilled mechanics, more skilled shipbuilders, in the country with magnificent new factories and machinery. The whole world was clamouring for our goods, and primary producers throughout the world had good incomes because prices were satisfactory, and they could pay for our goods, and they were demanding our goods. One position was of immense wealth, but financial theory said: "You are poor," and for 20 bitter heart-breaking years we laboured to make the actual facts fit financial theory. Prices of primary producers throughout the world were forced down by our financial policy of deflation, we ruined the farmers of the world and the farmers of our own country. We destroyed shipbuilding yards, pulled down factories, scrapped machinery, forced our skilled mechanics and artisans to migrate to America and the Dominions; we made the soil of England go out of cultivation and become more derelict than it had been for hundreds of years. And at the end of 20 such years of bitter and hard work, we had made the actual facts fit the financial theory, and we were poor indeed and unable to keep up adequate armaments, and our prestige sank almost as low as it had ever been. That is the lesson unless we plan for the future. Whatever the price level is at the end of the war, we must not go back to the deflationary policy; we must keep whatever price level is in existence at the end of the war stable and not go back to deflation.

Let me take another point. The Bank of England to-day is, I think, entirely controlled by the Treasury. Will that control continue after the war or will that institution, one of the most powerful institutions in the State, break free from Treasury control and become a power almost equal to the State? I pray that it does not. My hon. Friend the Member for Southampton (Dr. Russell Thomas) spoke yesterday of how under the Tonnage Act of 1694 Parliament unwillingly handed over her sovereign powers to 12 men. My hon. Friend made a most moving and eloquent speech, but I must give him a solemn warning when I read these words of his. I myself am in favour of the Bank of England becoming a public utility concern, owned and controlled by the State, with full power to regulate the volume and the price of all kinds of money, and to control the policy of the joint stock banks which would remain in private hands. I would warn my hon. Friend that he is entering upon a very dangerous course. It is quite respectable to declare that the London Passenger Transport or the Port of London should be a public utility service. You can even maintain some kind of reputation if you declare that electricity should be a public utility concern all over the country, but to advocate that the power which regulates the creation and the amount of purchasing power for the whole community which affects every home in the country should be a public utility or corporation is almost to become disreputable.

I have quoted many speakers in this House, and I will end by two quotations simply to ensure that I have a little respectable authority to support me in my views as to the Bank of England becoming a public utility corporation. First, I will quote the noble declaration of Abraham Lincoln, made shortly before he was assassinated—a declaration which may be found in the library of Congress to-day: Money is the creature of law and the creation of the original issue of money should be maintained as the exclusive monopoly of national government. The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the Government. The circulation of a medium of exchange issued and backed by the Government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by taxation by redeposit and otherwise. The privilege of creating and issuing money is not only the supreme perogative of the Government, but it is the Government's greatest creative opportunity. Money will cease to be master and become the servant of humanity. Democracy will rise superior to money power. I could quote President Wilson saying how the great monopoly of this country is the monopoly of big credits and that the growth of the nation therefore is in the hands of a few men, but I will end by quoting the present Prime Minister of Canada, Mr. Mackenzie King, and his words were spoken in 1930: Until the control and issue of money and credit is restored to the Government and recognised as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.