Perhaps I will have the opportunity of arguing that in an agricultural debate.
I turn to the broader issue. I should have thought that from a political as well as from an economic point of view hon. Members opposite would have been more internationally minded. I should have thought that they would have been concentrating more on the expansion of world trade. I am sure that we will be more secure in every way if we can make a big contribution to broadening the whole of world trade. It is far better for us to have a smaller slice of a very large cake than to have a large slice of a small cake.
When I first entered the House of Commons a very remarkable trade union leader sat on the benches opposite. I do not think that anyone here this afternoon was in the House of Commons with him. I refer to W. J. Brown. Be illustrated the evils of protectionism by this story. It is a story, if I remember it rightly, of two donkeys who, for a time, had shared a field quite happily and comfortably. After a while, one of them thought that he was not getting a fair share. He believed in cutting off his nose to spite his face, so he kicked up a huge ditch right across the field. The other donkey was so angry that he kicked up another ditch. Thy first one kicked up another, and so it went on. Finally, the whole field was kicked up, and both the donkeys died of starvation. [HON. MEMBERS: "What happened to W. J. Brown?"]
I believe that the question of protectionism cuts right across parties. I do not claim that all the angels are on this side of the Committee. I can think of hon. Members opposite who share these views. I put it in this way. There are those who, like an old-fashioned general, believe in defence, in piling up one protective measure after another to try to ensure one's position. There are others of is who, like a modern general, believe in attack and adapting oneself to changing circumstances. I believe that there are many hon. Members opposite who take that view. The encouraging thing is that it is the leaders on this side of the Committee who take the progressive view. The depressing thing is that it is the leaders of the Labour Party who, with certain exceptions, take the reactionary, old-fashioned, view.
The strength of the £ depends on our costs here. If we keep our costs down, that is all right. If there is speculation against the £, if there is a bout of heavy stocking which puts a drain on the £, that does not matter, because we have reserves. That is what reserves are for. If a motorist is going for a long drive in a motor car and he has seven spare tins of petrol, it does not matter if his tank runs dry. However, if there is a leak in the tank, no number of tins will remedy that.
That is why stable prices here are the basis of security. It is generally agreed on both sides of the Committee that stable prices here means that wages do not rise more than productivity. The trade unions say that, if there is to be restraint on wages, there must be restraint on profits. That sounds fair enough, but how is it to be done? Whenever profits are being checked, employment falls, because manufacturers then drop the least profitable part of their activities. That happened in 1951, 1955, 1958, 1960 and 1962. In all those years, under Socialist and Conservative Governments, there was a check to profits and a check to employment. Attacking profits may well be good electioneering, but I am sure that it is bad economics.
I have no doubt that some hon. Members opposite will disagree with this, but I maintain that there is no harm in high profits. They enable a high rate of employment, high wages and a high rate of investment. The thing that does the damage is easy profits. It is worth remembering the words of Henry Ford the First, who said:
I make bigger profits than any other car manufacturer, and what is wrong with that? The wages I pay are higher than anyone else". I employ more men than anyone else and I sell my cars cheaper than anyone else.
I suggest that if hon. Members opposite attack easy rather than high profits they will be doing more of a service. If there is more competition in a free country employers cannot simply increase their prices because they would not be able to sell their goods. This may sound harsh, but I would go so far as to say that the best way to maintain and raise the high standard of living is to have a high rate of profits for efficient industrialists and a high rate of bankruptcies for inefficient industrialists.
The Chancellor cannot fix wages or profits, but he can create the right amount of competition by seeing that there is the right amount of spare capacity. Professor Paish, in the Statist, published on 20th February, showed that in 1951 there was no spare capacity at all, that there were sharply rising prices, a balance of payments crisis and falling output. In 1955, there was, again, very little spare capacity and we had two years of stagnation.
In 1961, there was, again, very little spare capacity, but action was taken earlier and we did not have stagnation. However, we had 18 months of only half normal growth. It is all rather like an illness. If the dose is taken—the dose being the re-establishment of spare capacity—at an early stage the dose can be very mild indeed. If the dose is taken late it will have to be severe. If the dose is not prescribed at all there must be a disastrous operation.
This is the first time that any Chancellor has taken steps to maintain spare capacity before we have started dangerously running it down, and credit is due to my right hon. Friend for doing this. If he has taken enough consumption off the market, growth can continue and investment need not be affected. That is all the more important because the investment industries are largely concentrated in the North, where there is more unemployment, and the consumption industries are largely concentrated in the South where there is greater pressure on labour