Economic Situation (Government Proposals)

Part of the debate – in the House of Commons at 12:00 am on 26th October 1949.

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Photo of Mr Charles Hale Mr Charles Hale , Oldham 12:00 am, 26th October 1949

That great leader of the Tory Party, the hon. Member for Orpington. [Interruption.] I am surprised to gather that they do not regard him as one of their most forcible thinkers. But when is someone going to disown this sort of thing? When, indeed, are the appeals which the Chancellor of the Exchequer is making to people to limit profits going to be reinforced by a single speech from the benches opposite? The right hon. Gentleman the Member for Woodford (Mr. Churchill), who, we are told, has a constituency engagement tonight, in the Debate on devaluation, made use of this expression as almost his opening sentence: We have reached a point in our post-war story and fortunes which is both serious and strange. We have before us this afternoon the financial measures which have to be taken as a result of four year's government by the Socialist Party."—[OFFICIAL REPORT, 28th September, 1949; Vol. 468, c. 157.] The right hon. Member for Warwick and Leamington was constrained to follow in that course today, though not putting it quite so forcibly. He put it in a manner which was a little more gentlemanly perhaps, but at the same time there was the accusation that the present financial crisis was due to the policy of this Government. [An HON. MEMBER: "What about Dalton?"] I propose to tell the story which Lord Keynes provided for me. He described it as a war-time story of financial prudence which had no parallel in history. Every one accepts that in the conduct of a war you cannot give every detail scrupulous financial consideration. Everyone respects the services of the right hon. Member for Woodford during the war. Everyone appreciates that it would be ungenerous to criticise him too much for the burdens left to the country. But when he comes to this House and says that the burdens which he left were created by us, at least we have the right to reply, and to point out what the truth is. We have heard of people who cannot see the wood for the trees, but it is the first time we have heard of a statesman so myopic that he wanders in a forest of his own planting and fails to see the trees which have grown from his own seeds.

What are the figures? The decrease in sterling balances through overseas losses, pre-war to post-war, was £3,928 million. The loss on foreign investments was £1,118 million. Of the balances, many were mortgaged, and many were depreciating. The depreciation of gold and U.S. dollar reserves was £152 million. Estimated depreciation of our railways, mines and large industrial plants was £900 million. Shipping losses accounted for £700 million, including cargoes. We are told that we have incurred these debts. [Interruption.] These are the figures. Destruction and damage to property amounted to £1,450 million. If we take the total of all these figures, which take no account of the running down of production, of tiredness, of increased depreciation in industry, we have a total of £7,000 million of liabilities accumulated in that period which have to be replaced.

I have not referred to the internal debt of more than £20,000 million, requiring £500 million a year to service it. But to see the real effect of this burden, I ask the House to consider one figure only. The total cost of replacing that over an imaginary period of 10 years—and I know that we shall not do it—is about £700 million, and the total yearly cost of the internal debt is about £500 million. This is the burden left, and £1,200 million represents 10s. in the pound on all wages being paid to all the productive workers in employment in 1938.

It is said that we have caused inflation. That is the claim. It is unparalleled ignorance to say that, but that is what the right hon. Gentleman said. If we want to look at the figures about inflation, the balance on current account has gone up from £1,244 million in 1938 to £3,266 million in September, 1945. The prudent policy of the Chancellor has reduced that. I do not want to delve into history, but I will go, not to polemics, but to the Budget statement of 1922, a statement made by a Conservative Chancellor four years after the First World War, when there was nothing like these burdens to bear—[Interruption.] Well, if we cannot have it from the horse's mouth, we will have it from the harness. What was said by that Chancellor was: I do not think I shall be regarded as exaggerating if I say that it (the past year) proved to be one of unexampled trial and difficulty for industry and commerce, and therefore also for finance. Its first three months were swept by the greatest industrial stoppage which this country has ever known"— and here I would interpolate that, of course, 1926 was still to come, as Tory policy had not yet developed. He went on: That occurrence had a disastrous effect on our trade, and serious results upon the revenue of the year. But, apart from that refractory incident"— and hon. Members will observe that when there is a nation wide lock-out of miners for months, it is a "refractory incident" for which Ministers have no responsibility. The Chancellor of 1922 continued: But, apart from that refractory incident, there was enough in the natural flow of events to cause great anxiety. The trade boom which followed upon the war had given place to a steep and sudden slump … Unemployment, as was inevitable, followed in the wake of these troubles. Its gravity and its extent throughout the whole of the past year have been not only a source of constant anxiety to the people of this country, but also a cause of great expenditure for the State."—[OFFICIAL REPORT, 1st May, 1922; Vol. 153, c. 1019–20.] That was the position, and my hon. Friend the Member for Bosworth, in his remarks tonight, outlined that position in his own way. Incidentally, in that Budget it is interesting to note the Tory Chancellor announcing an increase in the National Debt of £80 million, while the present Chancellor, accused of extravagance, has effected a reduction of £500 million. I thought that I had been here sufficiently long to understand the tortuous working of the minds—if they are minds—of right hon. and hon. Members opposite, but I cannot follow their reasoning for that claim. All of us on this side of the House are glad to see the Chancellor substantially restored to health, and we were all glad to hear his able statement today, and glad also to see that his mind was not disturbed by the venomous attacks to which he has been subjected by hon. Members opposite.

I will conclude with one word about 1922 and finish with this rather dismal story of wages and prices, matters of some importance to the people who depend upon them for their subsistence, even if they are not of importance to the hon. Member for Harwich. In 1923, the engineers' wages had gone up from 38s. 11d. to 55s. The farm labourers' wages had gone up from 18s. to 28s. The shipwrights' wages had gone up from 41s. 4d. to 48s. 7d., and that was at a time when the cost of food had gone up 200 per cent. or more. Indeed it soared to 290 per cent. at one time in that period and the cost of living generally nearly as much. I cannot understand why hon. Members opposite do not understand that, when this is all they have to put before us, there is at least an obligation on them today to make some suggestion or show some change of heart.

The hon. Member for Stroud (Mr. Parkin) made some observations about profits. I should like to make some observations about profits, too, but from another angle. I am associated with private enterprise and have the privilege of advising many large firms conducting private enterprise, many of them working hard to contribute to the national effort and planning the production drive and limiting profits; but we have to look at the overall picture.