Yes, during 1945. If I said 1946, I was wrong. That loan, it was felt, would enable us to tide over that period which we required to get back into peacetime production. It was meant to last us until we got back to normal, which was estimated to be somewhere about 1950 or 1951. What happened? There has been a misuse of the loan and an abuse of our resources which is the main cause of our position today. Instead of devoting our attention to the making of consumption goods, the Government themselves started to embark upon a vast capital expenditure, and, what is more, they encouraged everybody else to do so, not only the local authorities, but firms, companies and so on. Instead of devoting ourselves to the making of articles for sale, we were devoting ourselves too much to the building of great machinery and matters of that kind. That is perfectly all right in its own time, and we shall have to do it some day, but at the moment we should have devoted all our attention to consumption goods.
The second cause was the failure to balance the Budget. The Chancellor of the Exchequer allowed an inflationary position to be created with an abnormal inflationary pressure which last April amounted to something like £1,000 million. I am not going into the details with regard to that, because I understand we will have an opportunity of debating it more fully when we come to the supplementary Budget. What is happening? Let ms go back to 1946. Our capital outlay for 1946 was £714 million. There was a Budget deficit of £407 million making a total of £1,121 million. We met that by savings amounting to £721 million and drawing on some foreign credits to the extent of £400 million. Thus we were travelling fairly well. Granted that in this year of 1947 the Budget deficit had been removed, and granted that we kept our capital outlay at £700 million, we might have been travelling more or less on a fairly even keel. All that the Chancellor had borrowed up to 1st January of this year out of these millions was £150 mil ion, but what happened? In the Economic White Paper issued in February the Government stated that the capital outlay which had been £700 million in 1946, which was far too much, was to be increased in the coming year by another £400 million, making a total of £1,100 million. Even if the Budget had been balanced, we should have been £400 million worse off than we were in the previous year.
Meantime, what was happening? Stocks were being used up. The pipeline was getting empty. There were shortages of stocks as well as shortages of materials and of labour. Then what happened? As I have said, down to 1st January all that the Chancellor had drawn was £150 million. By 20th August he had drawn on that fund £825 million. As far as I can see, during the first six months the adverse balance came to only £265 million. Assume that by the end of August £350 million was the adverse balance. Take that £350 million from the £825 million which he had drawn, and there remains £475 million unaccounted for. We want to know where that sum is. What has happened to it? The Chancellor makes a statement one day and then has to broadcast within a few days a statement which appears to say completely the reverse. Where has that £475 million gone?
Has it gone to pay for past debts? The Loan was meant only to meet current accounts and was not meant to be used to pay for past debts. If it was used to pay for past debts indirectly, that was a breach of the agreement made with the United. States. I have taken so much time already that I must cut these remarks very short, but I do want to know what has happened to that £475 million. I gathered from the speech of the right hon. and learned Gentleman yesterday that this was his position: he could have managed wonderfully at the head of Economic Affairs if he were not short of dollars to pay for the goods we ought to have from America, food and raw materials. If he could get over that difficulty in some way, all would be well. He hopes by the end of 1948 to get all right locally, but he will still be short in. America by £270 million. If that £475 million were here, and had not been dissipated in some way by the Bank of England and the Chancellor of the Exchequer, he would be in a better position today. Let us remember that the Bank of England has been nationalised and that the complete control of it is now in the hands of the Treasury.
I want to end upon another note. We are waiting for the answer to the questions I have put, but there is something far worse. We shall come through this economic crisis. This country has always come through. The material position does not worry me anything like so much as the spiritual. This Government instead of tackling the real causes which were over-expenditure upon capital and inflation began by cutting imports. That was wrong As was stated yesterday we ought not to restrict; we ought to expand if we possibly can. The more we can import either food or raw materials, the better is our position not only to raise our own standard of life, but for our exports. Because of the position the Government have got into, they have had to cut imports.
What is far more serious than that is that they are taking power to deal with human beings. First of all, in spite of shortage of labour, they are bringing in conscription in time of peace for the first time in the history of this country. The second thing I warned the House about when the Government made their first step towards the direction of labour. Now the Government have brought in the direction of labour. The Government are dependent for their position upon the trade unions; the whole basis of trade unionism is the right of any individual to withhold his labour. Prior to the Trade Union Act, the individual could be prosecuted, and was prosecuted, for withholding his labour. Now it has remained for hon. and right hon. Gentlemen opposite to say, "No, you shall not withhold your labour," and, what is more, to bring in conscription of labour.
Many Members on that side of the House say that unless they direct labour we shall get unemployment and starvation, but that is the wrong way. We have all condemned it. There will be no unemployment in this country so long as we get proper materials, not only for next year but for a whole generation. The Government have the right of controlling materials. Millions of men found their way back into employment after the war. They would still find their way there if the Government would release materials. This Government call themselves a progressive Government. There are two ways of compulsion; one is by starvation and the other is by legislation. The legislative way was the one which was used on the Continent, in Germany and in Italy. The governments who used it started by being Socialist, under Hitler and Mussolini and ended by being totalitarian. There is also direction of labour in Russia.
We once had direction of labour here, under an Act of Parliament which is a disgrace to our Statute Book, but we have to go back 600 years to find it. There is not a history book which any Member of this House has read which does not condemn it as a black spot. It was the Statute of Labourers in 1349. There was economic difficulty at that time. The Black Death had devastated the country Wages were rising. A House of Commons of landowners said, "Peg them in their jobs and keep them at their wages." There is not one of us who has not condemned it since. It has been left to a so-called Labour Government to come forward and reintroduce that Statute of Labourers. I wonder what would have happened if that had been introduced by hon. and right hon. Gentlemen of the Opposition above the Gangway. If they had dared to bring in conscription in time of peace every hon. and right hon. Gentleman opposite would have taken the same attitude as they took in May, 1939. If the Opposition had dared to introduce direction of labour the party now in power would have called a general strike.
It is extraordinary, at a time like this when the spiritual rights of human beings are being threatened as they have never been before and when we have been through a six years' war fighting against dictatorship and the threat to freedom, that in this country we are taking the first steps down the road to totalitarianism. We shall, as I have said, come through this economic crisis, but let us beware of giving up any one of our spiritual rights, because when we lose those, we not only lose them, but we lose the right and the very means of getting them back. I started out with every good will towards the Government, but they have so misled us up to the present that we have no longer any confidence in them.