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Order Of The Day

Volume 441: debated on Wednesday 6 August 1947

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Consolidated Fund (Appropriation) Bill

Read a Second time, and committed to a Committee of the whole House for Tomorrow.

State Of The Nation

Motion made, and Question proposed, "That this House do now adjourn."— [ Mr. Whiteley.]

On a point of Order. I see there is a Notice of Motion to suspend the Rule, in the name of the Prime Minister——

May we have some indication from the Leader of the House or the Prime Minister of the course they propose to take today? I understand there are a great number of hon. Members who desire to take part in this Debate. May we have some indication from the Leader of the House?

The Motion to which the hon. Member refers would not have affected the business now before the House because the Adjournment is not Government Business. The question is, "That this House do now adjourn," and I would remind hon. Members that on the Adjournment matters affecting legislation are out of Order. That may be somewhat difficult in this Debate but that is the Rule and it is my business, as far as I can to uphold it.

3.30 p.m.

I am sure that this opportunity to debate for two days the grave economic state of the nation will be welcomed on all sides of the House. It would, indeed, have been quite impossible for us to adjourn, whether for a short or a long time, without such a Debate taking place. I am sure that this opportunity is welcomed by none more warmly than it is by the Prime Minister, who will have this chance of letting the country into the secrets which, as rumour at any rate has it, hon. Members opposite have already enjoyed—[HON. MEMBERS: "No."] Then it will be an equal treat for all of us. It is unfortunate that in accordance with the rules of Order, of which you, Mr. Speaker, have just reminded us, it will be impossible for the Prime Minister to give any account of the Bill that was presented yesterday, and for the same reason, of course, it would not be possible for me to discuss it. We shall, then, have to wait until the Second Reading of that Bill to hear the Government's reasons for its introduction, their intentions for its use, and any limitations which they propose upon powers which, at all events at first glance, appear to be absolutely without limit. Only then will it be possible for my hon. Friends to come to any final decision as to their attitude to that Bill.

It is only three weeks ago that we had the last economic Debate, but a great deal has happened since then. Therefore, I make no apology for putting again today the two questions which I then put to the Chancellor of the Exchequer. The first question was: What is the actual position? To that question three weeks ago, the Chancellor of the Exchequer gave a definite reply. That reply was bad enough. He showed that we were drawing on our American, and I think, too, our Canadian credit, at the then rate of £800 million a year. Since then it would appear, from statements that have been made, that the position must have got worse. We should like to know how much worse, and why. In particular, we feel it essential that if the Prime Minister is unable to do so, the Chancellor of the Exchequer should, later in the Debate, give us some clearer information than we have now as to the actual reasons why this drain is continuing. All of us appreciate clearly the reasons for that part of the drain which is accounted for by our deficit on the material, the visible, export and import account. What we are not able to appreciate are the exact reasons which account for the large gap of some £350 million between that material deficit and the total drain of £800 million. There is, in all quarters, great uncertainty as to the reasons for it.

Quite frankly, that uncertainty has been increased by an answer by the Chancellor of the Exchequer on 29th July. In reply to a Question by an hon. Friend of mine, as to the extent of the drain on our dollar reserves since 15th July, he gave this answer:
"There has been no substantial change in the drain during the fortnight since 15th July compared with the immediately preceding period."—[OFFICIAL REPORT, 29th July, 1947; Vol. 441, c. 257.]
Yet on the very day he gave that answer we drew on our credit to the extent of £75 million, a bigger withdrawal than we have had at any other time during the currency of the loan. The right hon. Gentleman could not have been ignorant, when he gave that answer, that that withdrawal had either been made, or was to be made within a few hours. He could not have wished to mislead the House simply on the ground that there might have been a few hours' delay between the time of the answer and the actual time of the withdrawal. We are, therefore, driven to the conclusion that, for some reason or other, the right hon. Gentleman was not prepared to class this withdrawal as being a drain upon our dollar reserves.

It is essential, in view of the rumours which are not only current in this country but are becoming current in America, that we should, during this Debate, have a precise statement as to the amount of our dollar losses attributable to all the various causes, whether it be the process of convertibility, whether it is some other capital leakage which had not been foreseen, and, finally, whether some of it is accounted for merely by a transfer from the dollar credit to the dollar reserve holding in the Bank of England, and is, therefore, something which leaves our net position untouched. We do not believe that it is possible, intelligibly and intelligently, to discuss the remedies unless we can be supplied with that information.

The second question which I asked the Chancellor of the Exchequer three weeks ago is, What are the Government going to do about it? The answer he gave then on behalf of the Government was quite plain. They meant, at that time, to do nothing about it at all. With the exception of a few irritating but, in view of the magnitude of the crisis, derisory cuts, they were going to be content to sit and wait for help from America, as one might have sat and waited in the old days for manna from Heaven. This decision filled many of us with feelings of despair and humiliation. In saying that, I think it applies to Members in all parts of the House. In the first place, we did not feel that we were in a position to depend for our salvation entirely upon help from America. Secondly, many of us thought that, even if we were in a position to depend upon that American help, we ought not to be content to depend upon that and upon that alone, to restore the prosperity of this country. Nothing I have seen convinces me that we have any right to be as certain as the Government appeared to be in the Debate three weeks ago of future American help. In asking for it, we are asking for a great deal.

We have to drop—at least I hope we shall drop—any pretence that a further loan can be on a commercial basis, or that it would be within the capacity of this country, or within the capacity of other European countries, to repay such a loan on a commercial basis, within any reasonable period of time. It is easy to say that it is to America's advantage to lend us the money, that their future security and their future prosperity depend upon preventing Europe and preventing us from relapsing into chaos. That may well be true, but these truths, which appear very simple and self-evident from the receiving end, do not appear anything like so obvious from the point of view of those who are called upon to give. In fact, if the American people are prepared, in the future, to give us and others this help, with no expectation of commercial return, and with none of the stimulus of war, then indeed that will go down to history as one of the greatest acts of statesmanship and generosity possible.

In other words, American help is something for which we can dare to hope but it is not something on which we can afford to rely. To regard it as as a great act of generosity which may come to our help is, I think, both more fair and more wise than to treat it as it has been treated sometimes in recent speeches by certain people who appear to have adopted in place of the old adage the new and, I think, unsatisfactory one that rudeness is a lively sense of favours to come. But, even if we were today absolutely certain that we could depend upon getting from America all the help that we wanted and all that we needed, we should only be entitled to regard that help, in the famous words of my right hon. Friend the Member for Woodford (Mr. Churchill), as a springboard and not a sofa. It is inconceivable that this great country could calmly settle down to be the permanent pensioners of the United States, content to live for ever on her dole and her memories That is something which the vast mass of the people of this country would reject immediately.

As I say, this feeling in regard to the Government's answer three weeks ago was not only held and expressed by my hon. Friends on this side of the House but, I believe, it was held by supporters of the Government as well. We are delighted to learn that it appears at least to have impressed the Government. If I were permitted to use a racing metaphor, with which I am not entirely unfamiliar, I should say that in this race it has been: "The Opposition, first; the Government back benchers, second; the Government, third—won easily; a bad third." We are assured, then, that we are going to get today a different answer from that which we got three weeks ago; but we must point out to the Government now that whatever the Prime Minister says this afternoon it will be right for us to do in the national interest, would have been equally right three weeks ago—[An HON. MEMBER: "Two years ago."] It would have been equally right six months ago when we discussed the White Paper. It would have been equally right at least a year ago when the present crisis was not only foreseen but was foretold by so many hon. Members on this side of the House.

I do not intend in my speech to go back over the past except in so far as it is necessary to look at the past in order to decide what we are going to do in the future. There will be other places and other opportunities for allocating the blame for the grave situation which we have to meet today, but, at any rate, we must make it clear that there has been the usual rush in the last few weeks among Members of the Front Bench opposite to find an alibi. I am afraid that this time some of their old friends have failed them. The weather—I am afraid that old and tried friend of the Minister of Fuel and Power will be no good to them this time. The bankers' ramp—in view of the self-congratulatory statements of the Chancellor of the Exchequer, they cannot use that. Even the Tory legacy is getting a little thin. [Laughter.] I am glad that hon. Members opposite appreciate that. They appreciate, as I do, that it gets a little thin when the most prominent Members of their Front Bench have been clamped to that bench for the last seven years. It appears, finally, that they have decided to go down together on this one alibi: the rise in world prices. That is a specious one because there is some truth in it. There is some truth, but it is neither the whole truth nor even half of it. It is just about a quarter true.

Just look at the figures. When we discussed the American loan nearly two years ago the original estimate was that that loan and the Canadian credit combined would last for about five years. Since that date the rise in commodity prices has been in the order of 28 per cent., although against that we must put a smaller rise in the value of our own exports. Therefore, on this reduced value of the loan, it is fair to bring that five years estimated period down by one-quarter. The loan, therefore, should have been expected, on the original estimate, to have lasted for just under four years. As a matter of fact, here we are today just over a year after that loan came into effect, already contemplating its almost immediate exhaustion. When we look for the reason for that gap, we believe that it lies in causes which, in the main, were within the control of the Government and could have been arrested by them. The importance of that lies in the fact that if what we believe to be the bad practices of the past are allowed to go on, they will result in wrecking any new plan in the same way as they have wrecked the old.

In this connection, I must say one word about the Chancellor of the Exchequer. I pick him out because I consider him to have been the worst offender over these two years. They used to be called the "guilty men." We regard the sins which he has committed as being sins not of omission, like those of many of his colleagues, but of deliberate commission. We believe that he has actively encouraged the inflationary proceedings over the last two years; that that inflation has resulted in the distortion of our economy, and that to that we owe many of our shortfalls in production, and lack of buoyancy in exports. The most blatant mistake that he has made during that period has been the obstinate pursuit of an artificial cheap money policy. It has often been pointed out to him. We have often said, with regard to the methods that he has adopted, that any budgetary advantage that he might get from them would be more than outweighed by the resulting capital inflation; and that has taken place. Purely as a result of what he has done, Stock Exchange values have been forced up to a wholly unreasonable level. He gratuitously created an immense mass of new purchasing power and he widened quite needlessly the inflationary gap which already was dangerous enough.

I remember that only a year or so ago the right hon. Gentleman, in an ecstasy of self-praise, said to the House of Commons:
"The previous all time 'high' for old Consols before this Government came in and improved the national credit was 94 in 1935. Where are they now?"—[OFFICIAL REPORT, 16th May, 1946; Vol. 422, c. 2250.]
I can tell him. They are at 84, almost exactly the figure at which they stood when my right hon. Friend left the Exchequer and the right hon. Gentleman opposite came into office. All this trumpeting and artifice resulted, at the end of two years, in the Government's credit basis being exactly what it was when they started, but what damage has been done in the meantime? It is not only the injury which will be imposed upon individuals and, let me remind the House, probably on those individuals who have reposed, perhaps foolishly, the most trust in the statements of the right hon. Gentleman; it is not an injury to speculators, or those who hoped for capital gain; it is an injury to those who tried to find a wholly safe investment for their own funds and who are now faced with having, in the course of a few weeks, lost one-sixth of their holdings, a loss which, for gravity and rapidity, has never been equalled in peace time before. Indeed, Shakespeare may well have had the right hon. Gentleman in mind when he spoke of
"Folly, doctor-like, controlling skill."
We are told in all the papers that the Prime Minister talked last week and will talk again today on proposed cuts. Of course, for reasons of which I need not remind the House, we are not entitled to treat these reports as having the same authority as they had previously. We can regard them only as intelligent anticipation, but, when they coin-side upon this one matter, there is probably something behind them, and I will tell the right hon. Gentleman why. If he, in fact, is going to make some announcement this afternoon-we on this side of the House are prepared to consider on their merits any cuts that he is going to propose to this country. In the situation to which this country has been brought, we recognise that there may be no way out at all except the hard way, but what we are not prepared for is cuts by themselves. We are not prepared for a continuance of that policy which, up to now has meant pills for earthquakes, even though there may be bigger pills for very much bigger earthquakes. Cuts can only be accepted today if they are just one part of a general plan which is adaptable and effective in dealing with the whole field of our present economy. Therefore, while we shall listen with interest to any proposals for the cutting of imports which the right hon. Gentleman has to make, we shall attach greater interest and greater importance to what he has to say upon the general plan as a whole. It is to some of those points with which any plan must deal, that I now want to address myself.

The first thing I want to raise is what we might call the strings to the loan. I mean by that these provisions for convertibility which today are resulting in a drain on our dollar resources, and which are not represented by any import surplus, and which, therefore, bring no direct benefit, no material benefit, to the people of this country in return for the exhaustion of the loan; and to the provisions as to non-discrimination, which prevent us taking what may be suitable, and indeed the only, measures to correct the grave visible adverse balance in dollars. I do not want to shirk any share of the responsibility which attaches in varying degree to all those who did not oppose the American Loan and the conditions attached to it. At the time when we agreed to its passage, we were all aware of these dangers, and indeed, they were pointed out in Debate, but we took the attitude that there was an even greater and more immediate danger in having no loan at all, and we hoped that two years of world recovery might make these arduous conditions at least practicable when the time came.

Events have proved us over-optimistic. Two years have not seen recovery; they have seen nothing but deterioration in the European economy, and, therefore, all the grounds on which we hoped that these provisions would become capable of performance have been entirely destroyed. Indeed, under present conditions, I regard these obligations not only as dis- astrous to us, but, I must say, as of no advantage to anyone else. I could quite understand the Americans attaching a great deal of importance to the nondiscrimination provisions if the situation was that these provisions ensured that, if we wanted to buy from somebody else, we, at the same time, had to buy from them, but that is not the effect at all now. All that it means now is that we cannot afford to buy from anybody at all, and there is no advantage to America and a great loss to ourselves. Similarly, convertibility might have been, for them, a very valuable safeguard, if conditions had arisen in which there would have been a chance of our building up on the basis of frozen sterling, the great sterling block which would have been inaccessible to goods from the United States, but it appears to have no meaning at a time like this, when the whole world is clamouring for American goods in quantities and qualities which America is still unable to supply.

Therefore, we do ask the right hon. Gentleman with the utmost seriousness, what are the proposals of the Government for relieving us of these obligations. We fully realise the difficulties with the agreements into which we have entered, but we say that it is quite impossible to sit still and allow the country to drift to ruin because of an arrangement which was entered into two years ago in wholly different circumstances and with wholly different anticipations from those which have been realised. To do so would be national suicide, and we believe that the Government have the responsibility of taking definite steps to see that we are relieved of obligations which have become undesirable for the world as a whole and wholly impracticable for us.

I want next to deal with the question of inflation. I remember that we raised this point in the economic Debate some time last March. In that Debate the Minister of Defence took part, and his only reply was in language which, I think, he fondly believed was the language of the quarterdeck, for he described the whole thing as "piffle and poppycock." We gather that the right hon. Gentleman is not to take part in this Debate. The Government have apparently learned that, though they cannot make him strong, at least they can keep him silent. We hope, therefore, that this time we shall get a serious answer to what we, on this side of the House and many others in the country, believe to be a serious question. It is quite true that, on the one hand, that of capital inflation, the recent collapse of the Stock Exchange market has to some extent decreased the danger. But that, in any case, was only an extra, a voluntary. It was outside the situation—grave enough—presented by the economic White Paper. It was in addition to the inflationary gap of £1,000 million which that economic White Paper presented to us. We believe this inflation, as represented by that gap, to be one of the most potent causes of the economic disequilibrium in which we are today. It is quite true that by the exercise of rigid controls it is possible to keep it in check with regard to certain ranges of commodities; but the only result is that it bursts out with redoubled vigour in other places. To that inflationary pressure, we have to attribute much of that loss of labour and materials which have been drawn from the primary functions into the secondary channels.

Any proposal which the right hon. Gentleman is going to make this afternoon for cutting down imports or for increasing exports, are, by themselves, only going to add to the inflationary danger; they are only going to decrease the amount of goods available in this country, and, by that means, merely increase the inflationary gap. Unless proposals are going to be made, as part of this plan, for dealing with the other half of the problem—the amount of money available—then the danger, after any new proposals, will be not less, but greater. We want, therefore, as part of the plan, the decision of the Government upon the inflationary pressures, which the Chancellor of, the Exchequer himself admitted last spring, and which are now becoming rapidly intolerable. At the same time, we should be glad of an answer to the question which my hon. Friends and I myself have already put on several occasions to the Chancellor, and which, hitherto, he has always avoided answering. Can we avoid, or even control, inflation so long as something round 30 per cent. of the national income continues to be taken by the Chancellor in taxation?

Now I should like to say one word upon agriculture. It would appear to the ordinary person that in our home agriculture lies one of the best and readiest methods of reducing our dependence upon foreign imports. Can anyone say that, for the last few months, since this crisis first became apparent in all its severity, full use has been made of that agriculture, or that any real proposals have been put forward to reduce by that means the flow of dollars? It is said, and seriously, of our present crisis that, since the end of the war, home agricultural production has fallen by something like £100 million in value. Most of that, in order to maintain the standard of life of the people of this country, has had to be made up by increased imports. That figure alone shows how profitable this field could be for a cut.

I know that agriculture today suffers from all kinds of difficulties, difficulties which will be dealt with in much more detail by some of my hon. Friends behind me. Lack of labour, lack of houses with which to attract labour, lack of machinery, lack of spare parts for the machinery which exists, all those things make it difficult for the increased production to be attained. It is just as serious a problem as that of coal, even if we have seen in regard to it none of the publicised, if ineffective, energy which the Government have been showing with regard to the coalmining industry. But, above all, if we are to have any real, sound increase in agricultural production, we must have a bigger supply of feeding stuffs. I know from the answers of the Minister of Food that he finds himself unable to procure them for this country. And yet, in the last food Debate, the right hon. Gentleman gave to the House and the country a long list of countries from which, in the near future, he expected to get largely increased supplies of pig and poultry products—Poland, Denmark, Holland; indeed, the list extended far beyond that. How far were those countries going to be in a position to supply us with those extra products, except on the basis of imported feeding stuffs? How far, for instance, were Denmark and Holland self-supporting in feeding stuffs?

The real answer is that we have been outsmarted, or rather that the Minister has been outsmarted, and that we have got to pay for it. Surely, the time has come, in this grave crisis, for maximum agricultural production. If that is decided upon, it requires three things—maximum drive from the centre, maximum incentive on the farm, and maximum assistance from other Government Departments. Continual pleas have been made from this side of the House for those things to be done. Continual tributes have been paid to the importance of agriculture, but, so far, words, although kind, have not been followed by deeds. We hope today that, at least, some definite proposals are going to be made for the increase of our agricultural production.

Finally, I want to refer to the planning of capital expenditure. We believe that the failure to adapt the amount of planned capital expenditure to our actual resources has been one of the greatest causes of inflation, and one of the things most wasteful in men and material. We have seen instances all over the place of complete failure to relate capital projects to the grim realities of capital possibilities. All kinds of schemes have been planned, and, indeed, started. Labour, time, and materials have been used on them, but only a small proportion can, or, indeed, should be finished in the immediate future. In the last few days we have had a glaring example of this, and it comes from the part of the world which I represent. It is the question of the Severn Bridge. I have no doubt that it is an admirable scheme, and that when it is possible to complete it, it will add greatly to the convenience of people. If it were introduced in a period of deflation, it would provide valuable employment. But can anyone say that this is the moment to choose to announce an intention to proceed on a scheme which will use a great deal of steel and employ a great deal of labour? Is there anyone who does not think that within the next vital, critical year or two, that steel can be used to much quicker and greater advantage than for the very indirect and long-term benefits which are all we can hope for from a scheme of this kind?

I am appalled at the naivety of the Minister of Transport that he should have chosen the last few days in which to make this final announcement about the project, although it is true, and that is a good example—that, in fact, expenditure on this project has been going on at this rate for a considerable length of time. In the old days, before we had any planning, we used, on a matter of this kind of Government capital expenditure, at any rate, to have a plan. It was a plan enforced by the Chancellor ot the Exchequer of the day, who made Ministers stand in a queue at his door, and who, on a rough and ready estimate of what he thought we could afford, permitted or refused their requests.

Of course, today all that control has gone. Over the last two years Ministers have been not only allowed, but encouraged to branch off on all kinds of schemes which add much to the prestige of their Ministerial offices. Grandiose schemes have been announced. Time has been spent on them which has no relation to present capacity, and, as far as one can see, the chief aim of the Chancellor of the Exchequer has not been to curb these extravagances but to make sure that he gets some share of the credit for them. We therefore insist that, as part of any plan, there should be announced to the country definite machinery which will, first of all, reduce to real proportions present plans for capital expenditure, and ensure in future that nothing is done which it is not within the power of this country to complete within a reasonable period.

As I say, there are many other points which I hope will be dealt with. I want to say one final word. Recent speeches by right hon. Members on the Front Bench opposite—by the Lord President of the Council, by the Foreign Secretary and, it is rumoured, even by the Prime Minister—have all referred to a Coalition. Like President Coolidge and sin, they appear to be against it. But these constant reiterations give the impression that they have been under continuous pressure from other parties who have been annoying them with their solicitations. It conjures up entrancing visions of my right hon. Friend the Member for Woodford spending his days amorously camped on the steps of No. 10, or my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) spending his evenings in Carlton House Terrace seductively serenading an all too solid Juliet on the balcony. We do not complain. We believe that similar illusions are not uncommon with elderly ladies. It does little harm to others, and it is reputed to afford them considerable satisfaction. But the fundamental gulf which exists today between hon. Members opposite and hon. Members on this side of the House makes any such suggestions impracticable and undesirable. That does not mean that we on this side of the House desire to, or will, go to the other extreme. If we reject any such idea, we also reject any idea of opposition, for purely party reasons, to whatever the Government have to propose.

Whoever got us into this crisis, the fact is that we are now all in it together, and it is the desire of all of us to get out of it. Therefore, we shall support whatever measures the Government propose, which we are convinced are necessary for the salvation of this country, provided always that they are part of a general plan effected to meet all our difficulties, that they are suggested by reason and not by panic, and that they are designed to meet the facts of the crisis and not the desires of a political ideology. We on this side of the House are prepared to do nothing at all to save Socialism, but we are prepared to do anything to save this country.

4.15 p.m.

The right hon. Gentleman the Member for West Bristol (Mr. Stanley) has made a speech couched in very reasonable terms, illuminated by flashes of humour, in relation to a subject of immense importance. I do not intend to make a purely party speech this afternoon. It has been suggested that I ought to reply to a rather exuberant speech made by the Leader of the Opposition on Bank Holiday at Blenheim, but I do not think it would be useful at this time. The right hon. Gentleman is entitled to make speeches on those occasions. He hit around him very vigorously. Sometimes he hit at us, sometimes he hit at some of his friends opposite, and sometimes the ball rebounded on to his own head. But it would be wrong for me to follow that sort of speech today. I would say only one thing in that respect. I think there were some unfortunate remarks which will have repercussions elsewhere where it might do harm, which I am sure the right hon. Gentleman would not wish, to this country. I would allude to one in particular, in which the suggestion was made that we had frittered away the American Loan. [HON. MEMBERS: "Hear, hear."] Well, I shall proceed to show that that is not true.

The right hon. Gentleman the Member for West Bristol has made a number of points. I hope he will excuse me if I do not follow him point by point. I have noted them, and almost all of them are already covered by what I propose to say. Any other specific points will be answered by the Chancellor of the Exchequer or the President of the Board of Trade in the course of the Debate. I want today to give the House and the country as full and fair a description of our position as I can. I want to trace briefly the course of events, because it is always tempting to "job" backwards. I thought even the right hon. Gentleman did so, to some extent, in assuming that the position in which we find ourselves today could necessarily have been foreseen some time ago. [HON. MEMBERS: "It was."] Well, perhaps I might proceed to describe our difficulties.

Let us for a moment glance at the position of this country. It is familiar to all of us here. We want to put it on record that in this country of 45 million people we have had quite an exceptional economy built up over the years by our own home resources and other resources, and our skill and power to add value to raw materials from all over the world. We had quite an artificial position before the first world war. We all know we had to import food and raw materials and pay for them with goods and services, and with interest on investments abroad. We also know that in the first world war that economy received a serious shock. We had to pay for the war with an immense proportion of our foreign investments. Increased industrialisation abroad pressed heavily on us, and we found, instead of having a large export surplus after the first world war, that our balance of payments was only achieved with great difficulty.

The second world war has been more costly, and let us remember that for a whole year we stood alone. The greater part of our foreign investments had been sold; great debts accumulated; our export trade was reduced to less than one-third; we had great shipping losses; physical damage from air bombardment; and we had had to change the whole organisation of our industry for war. We got through the world war, we all know, with the help of Lend-Lease which was rightly described by the right hon. Gentleman the Leader of the Opposition as "the most unsordid act in history," but which left us in a most vulnerable condition. We had a vast task of reconstruction, involving the redeployment of our whole economy, and what we required essentially was time, in order to effect that change over.

The United States and Canadian loans were essentially measures to buy time—time for ourselves, time which was also needed for the rest of the Old World to recover. We know the amount of those loans—£937,500,000 from the United States, £300 million from Canada. We were deeply grateful to the United States and Canada for this assistance. The loans were acts of statesmanship beneficial not only to ourselves but to the whole world. But they were essentially designed and accepted in order to enable us to stand on our own feet. I entirely agree with the right hon. Gentleman opposite that it would be utterly wrong for this country to become dependent permanently on another, however friendly our relations. But these were steps taken on the road towards recreating the world of multilateral trade and convertibility of currencies. We and our friends across the Atlantic were both working to this end, and we think it to be the most advantageous system for the world, and especially for a country in our position.

We should have liked, we all know, a larger amount. We doubted then whether this loan would buy sufficient time. We had hoped the loan would last us not, I think, five years, as the right hon. Gentleman said: we hoped it would last us well into 1949, possibly into 1950, by which time there was a reasonable chance we should have redeployed our economy and been in sight of equilibrium. As things have turned out, it is now certain that the loan will be exhausted before the end of this year. This essential difficulty of our position has never been absent—indeed, it could not be absent—from the mind of this Government. It could not have been absent from the mind of any other Government. I recall that in my speech on the Address on 16th August, 1945, I said:
"Sooner or later, we have to face the fact that we can only buy abroad, if we can pay I for imports in goods and services. Therefore, we must set ourselves resolutely to the task of increasing our exports."—[OFFICIAL REPORT, 16th August, 1945; Vol. 413, c. 109.]
And this is what we did, and not without success. By the end of 1946 our exports had reached a level of over in per cent. of the 1938 volume. I think it is well to bear in mind the very great efforts which have been made by the people of this country. I am sure that no one, whatever his political colour, whatever his desire to attack the Government, will wish to underrate or to run down in the very least what has been done by this country—there is always the danger of denigration—whose people sustained the brunt of the war longer than any other. An immense amount of internal reconstruction has been done. An unparalleled redeployment of labour has been accomplished with very little friction. There has been a great effort to try to increase and to build up our production and our exports.

But there have been difficulties and disappointments. First of all, the output of coal has been less than that required to meet our own needs, much less than to enable us to help Europe as well. The run-down of the equipment of the mines has been far greater than we had supposed. The recovery of the industry has been far too slow. I am not going into the history of that: we all know the position of the coalmines. Second, though I think most people in the country have responded very well, there have been some sections that have not, perhaps. Undoubtedly, it has been difficult to get rid of all the practices we ought to get rid of. But we do not quickly get rid of bitter memories of past unemployment. Third, I would agree that it might have been better if we had had a greater concentration of effort. It may be we have tried to do too much in a short time. It may well be that we have relaxed controls too soon. But I would remind hon. Members opposite of their vociferous demands for every kind of thing to be done, and for a great many relaxations of controls. Fourth—I am trying to put this frankly before the House—there has been, undoubtedly, some failure on the part of some workers to realise that shorter hours and higher wages must be matched with higher effort. But I say, despite these things, that the record of the people of this country in these two years is one of which any country could be proud.

Then there came—I am putting it in proportion, because it is important to get these things in proportion, and I think that some of the right hon. Gentleman's points were a little out of proportion to other matters—then there came the unprecedented severity of the winter. The fuel crisis of February and March caused great damage to our agriculture and to our industry. I am putting that in its historical setting.

In these two years we have always had to give adequate weight to two conflicting considerations in this matter of our balance of payments—the need for maintaining our external financial position, and the need for maintaining the strength and the morale of our people at home. Our people were very tired by the end of the war, and the immediate imposition of very heavy sacrifices by forgoing loans might well have resulted in failure to reconstruct. Time was needed after the rigours of the winter before we could impose some of the things we had to impose. I am saying frankly we had pressure put on us to give our people more—more food, more of everything—and I do not think that it is unwise to hold a balance in these matters. Despite the cost, we had to get the food and the raw materials necessary. To have foregone that would have been shortsighted folly. We cannot get production without consumption.

I have said that there were adverse factors preventing our build-up, but there were severe adverse factors which were developing entirely outside our control. As I have said, we were trying to buy time, not only for the recovery of this country, but for the recovery of the world, particularly the recovery of Europe; and that recovery has been much slower than was anticipated. The economic disruption had been far greater than had been realised. The political position of both Europe and Asia has taken a very long time to settle down—if it has settled down yet. For reasons which the Foreign Secretary has often explained, our foreign commitments have proved heavier, and their continuance more prolonged, than we had hoped. There were bad harvests in many parts of the world which increased the too great dependence of the rest of the world on the Western Hemisphere for food and raw materials.

That is a factor which we ought to bear in mind very clearly, because this was already showing itself even before the war. The disequilibrium between the continents has resulted in a steep rise in prices. I must again correct the right hon. Member for West Bristol on the price levels. The facts as given to me are that the price of our imports has risen, on the average, by more than 40 per cent. since the loan was negotiated, and by more than 20 per cent. since we began drawing on it. We are compelled to buy largely from the Western hemisphere in dollars at high prices. But we were not the only people in that position. The rest of the world is suffering from the same difficulties. The failure of their production, owing to the damage of the war, means that they, too, were compelled to buy a large part of their essential supplies of food and fuel from the Western hemisphere, and they have to pay dollars. So there is a world shortage of dollars.

I think it fair to say that that world dollar shortage would have arisen earlier had it not been for U.N.R.R.A. and for loans provided by the United States of America to other countries. That temporarily enabled production and the flow of dollars outside America to have its effect on exchanges. U.N.R.R.A. was a great undertaking, but all these efforts have been,. to some extent, disappointing. Those efforts prevented starvation and enabled consumption goods to be distributed in Europe; but they have not had the effect which was expected—of enabling the balance of production between the Western world and the Old World to be restored. The consequence is that the exports we sell to other countries are paid for in currency which we cannot use to cover our deficit with the Western hemisphere, and the countries which receive sterling in payment for what they export to us immediately convert that sterling into dollars so as to cover their deficit in dollars. Now it has been particularly in the last few months that the effects of those adverse factors have shown themselves, with ever-increasing severity. The over-all adverse balance, which was £400 million in 1946, has risen to an annual rate of something over £700 million in the first half of this year. That is the over-all. But the salient feature of recent developments is the increase in the dollar deficit, and I now want to say something about that dollar deficit.

For the year 1946 our total dollar deficit was under £350 million, even if we include the Canadian dollar output. That was partly due to the shortage of supplies. For the first six months of 1947 our United States dollar deficit was £405 million, which represents an annual rate of £810 million. Of this figure of £405 million, £176 million represented our own trading deficit wth the United States of America. In addition, we spent in dollars £29 million in purchases from the U.S.A. for Germany. We had to provide £118 million in United States dollars as part of the payment for our own purchases from the rest of the Western hemisphere. We had also to provide in United States dollars £58 million for purchases in the United States by the sterling area countries, £10 million for purchases by the sterling area countries in the rest of the Western hemisphere, and £14 million for similar purchases by European countries.

The most serious aspect of the situation has been the acceleration in this dollar drain during recent months. That has been reflected, as was pointed out, in dollar drawings. Of that total credit of £937,500,000 we have, to date, drawn £687,500,000. By the end of 1946, on the contrary, we had drawn only £150 million. From the beginning of January to the end of March we drew £125 million, but in April and May we drew £162,500,000. In June we drew £75 million. In July there were exceptionally heavy drawings, which we should not take as an indication of the trend, and the drawings were up to £175 million.

Can the right hon. Gentleman give any indication why there were those very heavy drawings in July?

I will give all the figures. My right hon. Friend the Chancellor of the Exchequer will give any further details. There are certain seasonal factors. I will give the figures, and the Chancellor will explain them further when he speaks. I am trying to give the House the facts as fully as I can. I am stressing the gravity of the situation, but I do not want to paint too alarmist a picture. There is a difference between gravity and panic. It is a matter of gravity. There is reason to believe that that very heavy drain in July was exceptional. We have still the £250 million outstanding in the United States, there is the £125 million of Canadian credit, and we have ultimate reserves of nearly £600 million.

Perhaps the right hon. Member will leave that point till later. I do not want to be too long. It must be remembered, however, that there is a point below which these ultimate reserves, which represent the reserves of the sterling areas as well as our own, cannot be allowed to fall. It is clear, therefore, that the drain cannot be allowed to go on at this rate. It is sometimes assumed that all our difficulties have arisen because of the Loan Agreement with the United States, and in particular because of the provisions concerning convertibility and non-discrimination. I should like to explain how we view these matters. Convertibility is not merely, or perhaps not primarily, a matter of our Loan Agreement with the United States of America. It is a necessity of many of our commercial deals with other countries. These countries, due to the world shortage of dollars, are, as sellers, demanding either convertible sterling or dollars. In a sellers' market the buyers cannot be choosers, and so we have been driven to pay dollars or convertible sterling to suppliers. The problem of convertibility is really a problem of the world shortage of dollars rather than one arising particularly from the Loan Agreement. The Loan Agreement has its place in the general picture.

Before the war, sterling could be transferred in London to any currency for ordinary current use anywhere. That is the function of an international currency. A return to this position has always been an objective of the Government. The American loan was designed to help us to return to this position at an early date, and on this policy— whether in our own selfish interests or in the wider interests of world economy—we have no intention of turning our backs. But it is clear that in the world shortage of dollars the formal obligation under the Loan Agreement puts an increasing strain upon us.

With regard to non-discrimination, the provisions of the Loan Agreement have hardly been operative at all. It is because of low production in other countries that we have been driven to buy so largely from the Western hemisphere. But the position is now changing, and with the cuts I shall be proposing in imports, the question of discriminating purchases becomes of much more importance. It will be a very real factor in our future purchases of food and raw materials. We approached the problem of the postwar world with a view to establishing speedily multilateral trade and convertible currencies. They are not yet in sight. It is clear that, unless the multilateral system can be made to work, and is supported by adequate finance, it will become incumbent upon us to seek ways out of our present difficulties along other lines.

As for the steps that have been taken, there has been constant consultation between His Majesty's Government and the United States on these matters. There was a way open to us: to give notice under Clause 12 of the Loan Agreement, but this would not cover the whole field, and we proceeded, therefore, to seek a further consultation on the whole of the implications of the Loan Agreement and the other difficulties with which we are faced, against the background of the present facts of our position, its developments and the world situation. We suggested to the United States Government that, as a first step, there should be official discussions on these matters, and I am glad to be able to tell the House that Mr. Marshall immediately replied agreeing to these discussions. I should make it clear that these discussions will not cut across the proceedings of the Paris Conference.

I must emphasise the point that the world dollar shortage is fundamentally a problem of under-productivity outside the Western hemisphere, and that the only, permanent remedy is a restoration of the balance between production in the Old World and production in the New. We intend therefore to play our full part in the efforts started at the Paris Conference, to see how the countries of Europe can best help themselves and each other, and turn to the best advantage of Europe and the world the suggestions made in the speech of Mr. Marshall. Meanwhile, it is incumbent upon us to spare no effort, both to remedy our own immediate position, and to make sure that we are in a position to make the fullest contribution we can to our own recovery and that of the world.

I now turn to the measures we propose to take to this end. These measures must be both positive and negative, and I turn to the positive measures first, as being the most important. First, we shall apply ourselves to the further re-deployment of our resources at home. We must concentrate as much of those resources as we can on the reconstruction and development of our basic industries and services on which the whole of our economy depends; on production of goods for export, and on the production of all those things which save us imports. This will mean cutting out unessentials, and making sure that our objectives are in proper relation to our resources. Second, we must increase our total output so that we can stand on our own legs as soon as possible. Third, we will press ahead with our plans for the expansion of production in the Colonial Empire.

These are positive objectives. However great the effort, they will take time to achieve and time to develop in sufficient measure, and that time is lacking. It may be that the chain of events started by Secretary Marshall's speech will lead to further American help towards the recovery of the Old World, and that we shall share in this help. But we cannot and will not base our plans on that assumption. It is in this light that we have reviewed all our commitments and requirements which involve us in expenditure of foreign exchange, particularly in hard currencies. This is the negative side of our proposals.

On the positive side, let me first take our basic industries and services. There we are setting ourselves definite targets. First of all, let us take coal. The House is well aware how vital to the industrial recovery of this country, and also how vital a matter for Europe, is the production of coal. We must get enough for our own industries and domestic needs. Coal once made a great contribution to our balance of payments, and it can make it again, and to the recovery of Europe. With some of my colleagues, I have been in consultation with the leaders of the National Union of Miners and with the Coal Board. They are, I know, wholeheartedly with us in our desire to raise output. Since the beginning of the year, the number of wage earners on the colliery books has shown a substantial net increase—27,000. There is every prospect that we shall reach the target of 730,000 by the end of the year, particularly if the Poles, who are willing and available, are accepted in the industry.

We have put forward to the mine-workers' leaders a proposal that, while preserving the five-day week and the general regulations of the hours of labour, there should be, as an emergency measure, for a limited period an extra half-hours' work per day. We considered various alternatives, including Saturday work, but came to the conclusion that this was the best. I know, too, that earnest efforts are being made to try to bring down absenteeism to the lowest possible level. There are also local matters which need to be dealt with; particularly we need increased "stints," which were contemplated as part of the five-day week agreement. These have not been settled with the local miners, and we want them settled as soon as possible. Our aim is an average weekly output from, 1st September, 1947, to 30th April, 1948, of at least four million tons of deep-mined coal, and in addition we want as much opencast coal as we can get. That is for the seven months, but we have to go on from there and over the years develop more and more greater output as rapidly as we can.

Second, and second only in importance to coal, is steel. During the winter months production should be running at an annual rate of 13½ million ingot tons, and for 1947 as a whole production should reach 12½ million ingot tons. That is about the amount forecast in the Economic Survey. But this is not enough. Certain types of steel are particularly in short supply, and have been acting increasingly as a brake on production in the manufacturing industries. Our target for 1948 is 14 million ingot tons. We believe that this is within, although only just within, the capacity of the industry. It will mean a special effort on the part of all concerned, and that effort will be forthcoming.

Third, transport. Increased production will throw an additional strain on our transport system, and that has been heavily handicapped by depleted rolling stock, lack of repairs and maintenance during the war years. In applying general measures, the Government have in the forefront of their mind the need to provide the transport industry with the resources needed to enable it to overtake arrears and meet this additional strain. We must not fail to move all the coal which the miners can produce.

Inevitably, this will involve some cutting of the movement of other freight traffic. It will involve cuts in passenger traffic. We are closely examining the question of what traffic should have priority at all times, and what traffic should be next in order of acceptance. So long as there is this shortage of wagons, some restrictions on movements are necessary. We are concentrating our efforts, and we have been. I do not want it to be thought that all these plans have suddenly been thought of last week. I am indicating plans which have been at work, have been developed, and have actually been enforced. I want to bring the whole picture together to show the kind of task facing the nation. We want to supply more engines and more wagons for the railways. We shall see that the materials are delivered and the labour is found to speed up the construction and repair of transport equipment. I would say here that traders and industrial firms must play their part in reducing the turn-round time of wagons at the terminals. Transport is the conveyor belt of industry; it must keep pace with production. I make an appeal here to all transport workers to justify the pride they rightly have in their calling, and to repeat now their achievements in the war by making sure that transport does not fail the nation in its need.

I now turn to agriculture. The right hon. Gentleman the Member for West Bristol rightly stressed the importance of agriculture. It is a great potential dollar saver. We must produce a great deal more of our food at home to replace imports which we can no longer afford to buy, especially expensive dollar imports. I cannot accept the right hon. Gentleman's statement that we have been neglecting agriculture. The Government are setting a high target before agriculture—nothing less than an extra £100 million worth of food by 1951–52, an increase of 20 per cent. on present output. I realise that that is a tremendous task. It will involve an immense effort, on the part not only of the agricultural community, but of the Government itself, who will have to see that the industry is provided with the tools for the job. Much more labour will be needed on the land, and houses and hostels and the supply of agricultural machinery must be speeded up. Do not let us forget that agriculture is a highly mechanised industry. The maximum supply of feeding stuffs must be obtained. I do not accept the point about bad buying. We have been doing our utmost to get feedingstuffs. Our buyers are skilled businessmen. There are skilled expert buyers at the Ministry of Food, and they probably know better than the right hon. Gentleman the Member for West Bristol. We must get our production of beef, bacon and eggs expanded rapidly.

We must remove all hindrances to production, and we must have sufficient manpower. We are depending far too much today on prisoner-of-war labour. We have suspended the call-up of young men for agriculture, but we shall need 100,000 workers. We shall need a big capital outlay and heavy commitments on the part of agricultural producers. The Government will take account of that, and the Ministry of Agriculture will announce this month the new scales of prices for future production. This will give farmers confidence to embark on expanding production, and provide them with the additional resources required. The county and district agricultural committees will be asked to take the lead. I appeal with confidence to the organisations of farmers and workers, and all sections of British agriculture, to renew the spirit, enterprise and effort that earned it the admiration of us all during the war.

I am appealing to workers on the land. There must be many thousands of young men and women with the inclination, and often with the upbringing, to fit them for life on the land. We must get the prospects right. We are providing more houses in the rural areas than under any previous programme; hostels, technical education facilities, with chances to improve position; smallholdings policy for those suitable and anxious to take up this work. There are big opportunities. We are appealing to women as well, either through direct employment or the Women's Land Army. We are appealing to men either directly or through the agricultural executive committees. In our new drive for greater production first things must come first. Food is the basic and, therefore, we must make this appeal to all in agriculture.

I have spoken of these four basic industries, but what we are asking for is a national effort. We want this effort to run through all industries. Time does not allow me to mention more than a few, but two vital ones are the engineering and textile industries. Anyone who enters the textile industry, which is particularly short of labour, may be sure that he is doing a fine thing for his country, not only for our home supplies of textiles, but for exports.

That brings me to the question of exports. Throughout the years we have been seeking to expand our exports while, at the same time, seeking to increase the availability of goods for home consumption. We have sometimes been accused of too great a devotion to exports. I have heard many taunts hurled at my right hon. and learned Friend the President of the Board of Trade about his addiction to austerity. Was my right hon. and learned Friend wrong to insist on the importance of exports? At times, we have been accused of not being active enough in the export drive. It is obvious that we must lean still further to the side of exports. I am well aware that this will mean hardship to many people, especially to housewives, who have endured, with very great patience, many shortages. But I am sure that if everybody will tell them that these things are not the wanton act of the Government, but are necessary for the country they will take heart. In the Economic Survey the export target was put at 140 per cent. in volume of 1938 by the end of 1947. Owing to the fuel and weather crisis at the beginning of the year that target cannot be reached, but the measures for the general increase of production, and for the re-deployment of our forces, will have, as one of its principal objects, to get as near that target as possible.

For 1948 we must raise our sights. Our target will be 140 per cent. of 1938 by the end of the first half, and 160 per cent. by the end of the year. I do not disguise from the House that this will be a very difficult target to reach. But we must strive to get it. Our great difficulty will be the concentration of our exports into those markets which will most assist our balance of payments. My right hon. and learned Friend the President of the Board of Trade will be speaking later in the Debate, and because I do not say any more now I do not want anyone to think that this is anything other than an absolutely vital matter.

If we want to do these things, we must ensure that fuel, raw materials, labour, and industrial capacity are made available where they are required. For this we require two things—first, an increase in productivity; second, the direction of effort into channels where it will be most fruitful. This will involve an effort by all those engaged in industry, and some sacrifices of individual liberty, although as little as possible. It will involve some sacrifices by both employers and workers. We shall have to ask or, if necessary, issue directions to firms, to ensure that their capacity is used to produce not those goods which will produce the highest profit, but those which are needed in the interests of the national economy. We shall have to take some measure of control over the employment of labour. During the war, we had to use full powers of direction of labour. It has been the desire of the Government and the country to move as quickly as possible towards restoration of freedom of the individual to undertake the kind of work he prefers. As things have turned out, it may be that we have moved too far and too fast in this direction.

We propose to re-impose the control over the engagement of labour which was almost universal during the war, but has since been removed from all industries except coalmining, building and agriculture. This will enable all workers, leaving one job and entering another to be guided into that class of work in which they can best assist towards overcoming our economic difficulties. Control of engagement only controls the movement of those falling out of employment. To find necessary manpower for essential employment, it may be necessary to take steps to limit employment on less essential work. In addition, in order to avoid workers remaining unemployed or taking unessential work in- stead of accepting essential employment for which they submitted under the Control of Engagement scheme, it will be necessary to resume to a limited extent the use of powers of direction. This is not a resumption of the general powers of direction, but an essential supporting measure to enable the control of engagement to be effectively exercised.

My right hon. Friend the Minister of Labour is at this moment discussing the details of the measures to be adopted with the National Joint Advisory Council. We need a better balance of production, and we need more production. We must have it quickly, particularly in the most essential industries, even before re-deployment of labour and resources can show their full effects. We have decided, therefore that, as an emergency measure, we must ask for longer hours of work wherever longer hours of work contribute to increased production. What is needed, first of all, is the lengthening of the hours of work in those industries which have an adequate supply of raw materials and whose output provides exports or saving in imports or is essential to the expansion of other industries. As I have already said, I have put to the coalmining industry the proposal that an extra half-hour a day should be worked for a specific period, and we are making similar proposals to other industries in this category. Once the desired increase have been obtained in these basic industries, the Government will seek a similar contribution from other manufacturing industries which depend on them for materials and power.

The increase in production will also require some increase of hours in transport to enable the additional production to be moved and to prevent wagons from being left loaded at the week-ends. My right hon. Friend the Minister of Labour is discussing the issues involved in these proposals with the National Joint Advisory Council. I would like to make it clear to the House that there is no intention of interfering with the negotiating machinery of the industries concerned, and also that we regard these proposals as emergency proposals to be operated only until such time as we can begin to see our way clear on the economic front. Management, too, must play its part. In general—and I say this in all sincerity—management is out to cooperate with the Government in over- coming our economic difficulties. But such cases as there may be of avoidable inefficiency or lack of will to serve the nation's best interest must be dealt with. The Government will not hesitate to take firm action just as was done in the war.

I have indicated that, I think, at great length.

Perhaps most important of all is something which lies right outside the field of government; all we can do is to encourage it. That is good feeling between management and men and a determination to stand together as fellow-workers to give of their best. An instrument that can be of the very greatest importance is the Joint Production Committee. The number of these committees has diminished since the end of the war, and my right hon. Friend the Minister of Labour, after consultation with the National Joint Advisory Council, is taking steps to stimulate their establishment, especially in essential industries where they do not at present exist.

I have stressed the need for increasing our production here at home. We have also to look overseas. The House, I think, has heard with approval the far-reaching plans which the Colonial Secretary has initiated for making available to the world the potential wealth of our African Colonies; but those schemes must take time to mature. The measures that I have outlined for increasing our production cannot be expected to bear their full fruit immediately. Though not long range, they are at least middle range plans. I have stressed these positive proposals because in the long run it is to them that we must look for our economic salvation. They will not be enough to overcome our present difficulties.

Therefore, I must now turn to the proposals which we are making for the reduction of expenditure. There is, first of all, the very large sums which we are expending in Germany for the feeding of our late enemies. My right hon. Friend the Foreign Secretary stated on Monday very clearly that what we cannot do when this present scheme runs out is to spend any more dollars for this particular purpose. Therefore, it does involve discussions and a review, in order to devise other plans. I do not think that I need add anything to that statement.

I come next to our defence Forces. We can help here in two ways—by reducing numbers and, therefore, expenditure overseas; and by reducing the total size of our Forces at home and overseas, thereby increasing our labour force at home. At present, we have something like 500,000 men and women in the Forces overseas. A substantial proportion of this manpower has been needed to meet obligations under International agreement and in clearing up the position left by the war. That is to say, it is a transitional requirement. The Defence White Paper which we presented in February of this year was based on the assumption that during 1947–48 it would be possible to make substantial reductions in the level of our Forces overseas. It emphasised, too, that the review of our commitments and of the numbers required to sustain those commitments is a continuing process. We hope for successive decreases in the numbers of men required. We now expect to withdraw some 133,000 men from overseas by the end of December, 1947, and to raise the total withdrawals from overseas stations to over 200,000 men by the end of March, 1948.

In addition, we are now planning to return to their homes before the end of this year some 34,000 non-United Kingdom troops whose cost is being borne by the British Exchequer, and that yields a further saving. These very large-scale movements will require careful planning of shipping and other matters. I have been looking into this on the information given to me, and I believe that it can be done. I must emphasise that despite this acceleration in the rate of withdrawal from overseas stations, and although certain calculated risks are being taken, there is no change in our foreign policy or in the defence policy which underlies our foreign policy.

Let me turn now to the second point—the total strength of our Armed Forces. In the Defence White Paper it was estimated that between January, 1947, and 31st March, 1948, the numbers in the Forces would be reduced from 1,427,000 to 1,087,000. This estimate was based on certain assumptions about withdrawals from overseas and assumed the fulfilment of a large part of that programme which I have just announced. After the careful review which we have now made, in addition to the constant review we are making all the time, we believe that we can bring that down to 1,007,000 by that date. This means that during the 15 months down to March, 1948, the numbers in the Forces will have been reduced by some 420,000. These are net figures. The actual releases will be as high as 830,000. In short, the three Services will lose 60 per cent. of those who were in the Forces at the beginning of 1947. That is a colossal rate of turnover. It involves the loss of trained men and their replacement by raw recruits; and if the efficiency of the fighting Services is to be maintained, great effort must be put into reorganisation and training. I do not pretend that the Government can contemplate with equanimity the retention in the Armed Forces of so large a proportion of our manpower.

It will I am sure be recognised that we are in a transitional period when we are not yet free from obligations incurred during the war and as a direct result of the war. This is a period when it is not yet possible clearly to discern the shape of things to come, and a period in which owing to the large numbers due for demobilisation at one time, it is peculiarly difficult to achieve a balance between trained men and trainees. We have planned for the gradual run-down of these Armed Forces. It is very difficult without creating chaos to accelerate this run-down more than within a limited amount at one time.

The Minister of Defence and I are fully conscious of the imperative need to relate our Defence policy and the requirements of the Armed Forces to the hard facts of finance and economics as they are, and as they are likely to be in the years which lie immediately before us. The House has already been informed that an exhaustive inquiry has been instituted into the whole future of our Defence policy, and of the shape and size of the Armed Forces required to implement that policy. The results of this inquiry are receiving the most careful consideration from the Government as soon as they are received, and meanwhile we shall not relax our efforts to find any further means of reducing the numbers in the Armed Forces during the current financial year. I cannot give further figures on that matter.

I must now come to the import programme. The House was informed by the Chancellor of the Exchequer on 3rd July of the provisional import programme for the year mid-1947 to mid-1948, amounting in all to £1,700 million. This programme took account of certain cuts which the Government, in view of the balance of payments prospects at that time, had felt obliged to make in the programme as it would otherwise have wished to approve it. These cuts included some £2 million to £3 million through the restriction on the import of newsprint, and some £20 million from the reduction in the consumption of tobacco and the reduction of stocks to match the new consumption level. The Chancellor also made it clear that we should not be able to afford all the imports of foodstuffs for which we had hoped, and the cut which we actually made in our original programme under this head amounted to some £50 million. Both the Chancellor and the Lord President in his speech on 8th July made it clear to the House that this import programme was provisional and that further cuts might have to be made. The right hon. Gentlemen opposite make a great mistake in thinking that we sat down and did nothing. As I have already pointed out, this was provisional.

The Government have decided that the following further cuts must be made. The House recently gave powers to levy an import on films. The Government propose to limit remittances on foreign films to not more than 25 per cent. of the earnings of these films. In his statement on 30th June, the Chancellor said we would reduce our imports of petrol. A reduction of 500,000 tons would save approximately £4 million. We intend to effect at least this saving. This will necessitate a reduction of the basic allowance for private motorists by one-third and a reduction of 10 per cent. in supplementary allowances. We are anxious not to impede the movement of merchandise by road, but some reduction in issues of petrol for the use of commercial vehicles will be necessary if only as one method of ensuring that the coupons issued for this purpose are really used for the purpose for which they are intended. Issues for commercial vehicles will, therefore, be cut by 10 per cent. All these cuts will come into operation on 1st October next. Maximum economies will have to be made in the use of petrol by the Fighting Services.

The Chancellor proposes, as from 1st October next, to reduce the foreign travel allowance from £75 for 12 months to £35 for 14 months, with a corresponding reduction in the allowance for children to £20. Allowances for business men travelling abroad will also be more strictly limited. There will be a reduction amounting in value to £5 million in imports of miscellaneous consumer goods of the kind which is generally called the luxury type. It will be necessary to apportion this cut with very great care, so as to avoid the risk of damaging the economies of other countries and their power to take our exports and to give us increased supplies of essential goods. The field for saving in raw materials is very small if damage is not to be done to our productive effort and indeed to our whole economy. Some saving, however, must be made. We propose to cut the imports of timber by £10 million. The House will realise that this represents a cut not on the very low level of supplies we were able to import until recently, but on the considerably higher level which we had been hoping to reach. We hope we may make some saving by postponing part of our cotton purchases.

Finally, there is the programme of the Ministry of Food. From what I have already said about home food production, the House will realise that there will be no cuts in the imports of feedingstuffs, which must rather be expanded as increased supplies become available. We have decided that we must make an immediate and substantial reduction in our purchases of food from hard currency countries. We have, therefore, given instructions to make a reduction in the rate of purchases of the order of £12 million a month. Such a reduced rate of buying from hard currency sources of essential foodstuffs will mean that we shall confine our buying from those sources to essential foodstuffs. Our bulk long-term contracts for staple foodstuffs from these areas will not be interfered with, but for the present we must largely confine ourselves to such purchases as far as hard currency sources are concerned.

The House will wish to know what effect this decision will be likely to have on our level of distribution of foodstuffs in the coming months. That depends on a number of factors. It depends on the degree to which we are able to buy our foodstuffs from soft currency sources. So far as these soft currency sources are more favourable from the commercial point of view, the question of discrimination under Article 9 of the Loan Agreement will not arise. Where such purchases cannot be justified under the terms of the Loan Agreement, we shall be exploring the situation immediately with the United States Government to see what steps may be taken to enable us to obtain supplies from soft currency areas. The second factor which will determine the effect of the Government's decision on our rations is naturally that of how long this policy will have to be maintained.

It will be necessary at once to increase the points value of some of the non-basic foods, for they are largely distributed under the points scheme. As to basic rations we shall do everything in our power to maintain them and we shall not take risks with our stocks. If rations have to be reduced as a result of the policy outlined then the Government will introduce a differential rationing scheme designed to give preference to heavy manual workers. Preparations will be made forthwith against this contingency. Restrictions on consumption in restaurants and hotels will in any case be imposed forthwith.

I come now to the point on which the right hon. Gentleman opposite spent a great deal of time, namely, anti-inflation. I wish to say something on that, but I propose to leave the bulk of it to the Chancellor of the Exchequer. It is quite obvious that some of the measures I have outlined will restrict the amount of goods and services available for home consumption without any corresponding reduction in purchasing power, thus increasing inflationary pressure. We shall have to take such action as may prove necessary to prevent the unstaple purchasing power from creating an unbalanced situation. First, there must be a tighter control over both public and private capital investment; that is to say, we must concentrate on projects which will give quick returns in additional imports or in strengthening our industrial structure. Projects in themselves desirable will have to be postponed, while such investments as the re-equipment of our agriculture, power, supply and mines must take precedence. The right hon. Gentleman mentioned a bridge across the Severn. I understand that the work on that is merely taking soundings and borings in order to see what can be done on that as a future project. He was wrong in thinking that that would be put in hand at the present moment.

There will have to be a re-deployment and retiming, including some postponement, of our general building programme. This must be done so as to give first place to the building of homes for miners, agricultural workers and other key workers. I appeal to workers in all industries and employments not to press at this time for increases of wages or changes in conditions which would have a similar effect, especially where these increases are put forward on the basis of maintaining differentials between various categories of workers on the basis of former practice. Equally, I would appeal to employers not to seek to tempt workers away from essential work by offering higher inducements to work in less essential industries, thus creating a vicious spiral. I appeal to all those in control of industry and commerce to refrain from declaring high dividends.

It must be understood by all that if we wish to maintain our position in the export markets of the world, we must keep prices at a reasonable level. Finally, I would appeal to everybody to support to the utmost the savings movement which has been such a vital element in preserving an equilibrium between purchasing power and available commodities. In all these matters public opinion can do a very great deal. I am reminded that there is said to be a section of the public which renders no useful purpose and whose members contrive to make money in all kinds of dubious ways. We shall take all action open to us against these "spivs"—as I think they are called—and other drones, but I would say that public opinion can be a very powerful weapon here. We must also try to regain the habit of avoiding unnecessary waste and of collecting salvage which we developed so much during the war. Here I would, appeal to local authorities to redouble their efforts in this respect.

I have endeavoured this afternoon to set out, as fully and fairly as I can, the position in which the nation is today. I have not tried to conceal anything or to gloss over the dangerous features of the situation. I have stated the causes which have brought us to this position. The main cause of our present position is the fact that when the rest of the world was either defeated or standing aside from the contest, we of the British Commonwealth of Nations stood alone in defence of freedom and civilisation. I have stated the more immediate causes of our critical position in respect of our balance of payments and no one, unless he were blinded by partisanship, would deny that the major causes are outside the control of the people of this country and of any Government of this country. Whether the Government had been Conservative or Labour it would have been faced with this difficulty. No doubt this Government, like all Governments, have made some mistakes, and I am sure a Conservative Government would have made others, but if neither Government had made mistakes, we should still have been in this difficult position. If we had followed the various proposals put forward from time to time by the Opposition our state would have been worse, not better.

I have laid before the House the steps which the Government have taken and which they propose to take. I shall welcome any constructive suggestions, from whatever quarter of the House they come. I shall certainly not resent any reasonable criticisms, but I am not disposed for a moment to accept the proposition that had we not fulfilled our Election programme, but followed a Conservative instead of a Labour policy, we should now have been free from these anxieties. Nor do I admit for one moment the proposition that to unite the nation we must now follow a Conservative policy, whatever that policy may be—and I am not quite sure what it is. The policy of this Government is not based on ideological prejudice but on principles which I and my colleagues believe to be right and sound, and we shall continue to pursue them.

I was glad to note that the right hon. Gentleman, despite the strictures that he passed on us, said that the Opposition would support the efforts which the nation must now make. That is in line with our position. I agree that no question of Coalition arises. That has not been sponsored from either the Labour side or the Conservative side, but by some busy matchmakers in the Press. When, during the war, the Labour Party decided to support a Conservative Government, it did not demand as the price of its assistance that certain industries should be forthwith nationalised. Equally, I am sure that Conservatives would not expect as the price of their support that we should adopt capitalist principles. I am making my appeal to all sections of the nation, wage-earners, managers and technicians in industry, employers and workers in agriculture, mining and transport, to women as well as men, and to consumers as well as producers. I say to one and all, "This is your fight." We are a proud nation with a great achievement through the centuries. We have made a unique contribution to the world, and that contribution is not yet ended. Circumstances have placed us in a position of peril and anxiety. We must fight to regain our economic freedom just as we fought to preserve our political freedom.

In this uphill struggle we do not stand alone. Quite apart from the sympathetic interest which the United States Administration has evinced, we have kept our great partners in the British Commonwealth fully informed of our position and of the lines of action on which we shall be operating. As in the war, the free peoples of the Commonwealth countries have shown signal evidence of their wish to help us. I refer once again to the large-hearted effort, the heavy effort, which Canada made when in April of last year, she granted us a Canadian credit of £300 million in addition to the immense financial help which she had previously given us. The House is aware of the recent decisions of the Governments of Australia and New Zeal and to make a special contribution to our recovery by cancelling part of the sterling balances which had accumulated under war conditions. South Africa is also searching for ways of coming to our help. We are asking our Colonies to help us by restricting to essentials their claims on our foreign exchange resources, which are of course also theirs.

But I am speaking first of all today to our own people. I am appealing to all the people of this country to co-operate whole heartedly with the Government just as they did in the war. To win through we require the same qualities displayed during those long years—[HON. MEMBERS: "And leadership."] There will be hardship and a demand for hard work and self-sacrifice which will, I am certain, be forthcoming. We shall seek in this struggle to deal as fairly as we can with all sections of the community. We shall seek equality of sacrifice, and we shall seek, as in war, to protect the weak and the children. I cannot tell the nation how long it will be before complete victory will be acheived, but I am certain of victory. This is an economic Debate, but I should do a grave disservice to the country did I not stress the fact that we need more than an economic impulse behind this effort.

I am a profound believer in the British way of life, in our combination of order and liberty, in our respect for justice and for moral values. These are the things that unite us, though we may differ in the ways in which we seek to maintain them. We have, today, to get into the hearts of all our people the sense of urgency, so that they may do whatever tasks fall to them and may endure what hardships have come to them with a consciousness of the great issue at stake. The other day in Westminster Abbey, by a most moving service, we dedicated the young men who fell in the Battle of Britain. In 1940 we were delivered from mortal peril by the courage, skill and self-sacrifice of a few. Today, we are engaged in another battle of Britain. This battle cannot be won by the few. It demands a united effort by the whole nation. I am confident that this united effort will be forthcoming and that we shall again conquer.

5.30 p.m.

Despite the great gravity of our economic situation, the one thing which, more than anything else, affords us some slight satisfaction is that the Government have at last realised that agriculture is capable of making probably a greater contribution to our recovery than can any other industry. The Chancellor of the Exchequer made a statement a few days ago that the farming industry was the greatest dollar saver. Very seldom do I agree with anything that the Chancellor of the Exchequer has said, but on that occasion I entirely agreed. Unfortunately, his actions sometimes belie his words.

One charge which I wish to make against the Government is that they do not play as a team. The Minister of Agriculture has been endeavouring to place agriculture in the forefront in this country, but while he has been doing that, Ministers who should have been helping him have been acting in quite a contrary way. A few months ago, the Chancellor of the Exchequer, when concluding the Danish Agreement, told the Danish Government that he would do all in his power to assist them in the purchase of feeding stuffs. The Minister of Food has said he is going to buy in the cheapest markets in the world. The President of the Board of Trade thinks of nothing but the export trade, and is exporting agricultural machinery, spare parts and steel which are required for the agricultural industry. The Minister of Health, in spite of his protestations a few days ago, has done nothing towards providing cottages for farm workers.

What a team! Each of them is playing his own hand. They do not co-operate as a team. In all sincerity I suggest to the Prime Minister that he should call his Ministers together and that he should tell each individual one of them that if he refuses to play with the team, he will be sacked. In order to increase agricultural output two things are essential, confidence and labour. Until Ministers cooperate, there can be no confidence in them that they intend to see that we get on to full production. The Minister of Agriculture has just explained that the Agriculture Bill is a farmers' charter. It is nothing of the sort. It is machinery which is of no use until there is the right spirit with which to run it. It stands or falls by the annual price review. The farming industry has not been inspired by the prices which have been negotiated so far, because those prices have been niggardly and cheeseparing. The result of them has been that we have not got increased output from agriculture today. Our output has been steadily going down in the last two years, and it looks as though it will go down still further, unless we can get some encouragement.

For instance, taking the price of wheat, a commodity in which we are very short and of which the world has been short, the prices negotiated with the farmers of this country have been almost on the basis of a packet of cigarettes. We have been compelled to sell to the Ministry of Food our wheat at £10 to £15 a ton less than the Ministry is paying to other countries. That is not the way to get full production I want to make it clear that, in my opinion, this country can be very largely self-supporting. Let us remember that until 1873 we were self-supporting. We supported a population of 26 million people. It is my opinion that with the improved technical knowledge and machinery which we have available today, we can go a long way towards providing for the extra 20 million population.

It should be remembered that we can produce all the bacon, poultry, eggs, and vegetables that are required in this country—the whole lot, 100 per cent. We can provide a large proportion of the fruit and beef. What we want the Government to provide is the animal feeding-stuffs. I quite appreciate that the wheat for bread must be purchased from abroad so that the farmers of this country can consume their own cereals for their animals. For too long we have been mining our land, and going for cash crops and not returning to the land the fertility which it needs. That policy has to be altered, as it can be if the Government will go all out for the purchase of feeding stuffs.

At the present time, the Ministry of Food is making contracts all over the world to take surplus bacon, eggs and poultry. I suggest that those activities would be better employed if they were devoted to trying to purchase all the feeding stuffs which the world does not want. During the last two years many of us on this side of the House have called attention to the working of the International Emergency Food Council. We have never understood why other countries can produce bacon, poultry and eggs while we have to keep our pig and poultry houses empty. It is all nonsense to say that the feeding stuffs are not available. There is an export surplus of maize in Argentina this year of 6 million tons, although we have received only a few thousand tons from that country. Where has the rest of that maize gone? There is a record crop of maize and wheat in the United States. What has happened to the surplus? Are we leaving it to the International Food Council, or are we going to tell them that it is time they began to allocate some to us?

For too long we have been spending currency, either in the sterling area or the dollar area, on pears, pineapples and peaches—millions of pounds. That money would have been better spent on these feeding stuffs. What the housewives want is not pears, pineapples and peaches, but beef, bacon and butter.

They used to. More money should be pumped into the agricultural industry by raising the prices of all farm products. I trust that before the Minister of Agriculture indicates the prices which he will give for agricultural products in the course of this month, he will not have to consult the Chancellor of the Exchequer as to how much he can give. My feeling and the feeling of the agricultural industry is that in all price negotiations, the Chancellor of the Exchequer, in view of the enormous food subsidies he is called upon to pay, has always kept the prices down at bare board level.

While the output of farm products has been declining in the last two years, farmers' overdrafts have been increasing. I commend to the notice of the Government the National Farmers' Union survey of farm accounts for last year. That will be fairly illuminating to them. That shows that on a great proportion of the farms—I refer to the hill and marginal land which forms 80 per cent. of our agricultural area—the farmers have not been receiving more than a farmworker's wages. They have received nothing for management. They have no reserves, and the result is that they have no confidence to go all out and produce more food. Vast sums of money are to be spent on colonial development. That is a very worthy cause, and I say nothing against it. But why not spend something on home development? If the Government think our agricultural industry is properly developed, I should like to take them for a week-end and show them round some of the country I know where they will see plenty of land producing not 50 per cent. of what it could. Our hill farms are becoming derelict, and if something is not done, those men and women will be walking off the hills and leaving the farms. That applies to a great deal of the marginal land. Unfortunately, when the Minister goes out into the agricultural country, he is always shown some super farm and bases his views on agriculture on what is done on that farm. That is the same as the argument that every man who keeps a bicycle shop, will become a Lord Nuffield.

I ask the Government not to put too much faith in what they will receive in the way of surpluses from some of the countries which they are at present developing. I refer particularly to the African Continent. There is great scope for development there, but my opinion is that the population in that continent, which is increasing to an extraordinary extent, will absorb all the food produced there. The one problem facing Africa at present is to get the natives to work. The natives look upon two or three hours of work a day as sufficient. If that country is to be developed, the Africans have got to work. The first thing we have to do before the Africans can work is to feed them better. Therefore my opinion is that all the extra food which will be produced by this development will be absorbed by the population of that country and therefore the Government should not place too much faith in what may be produced for export.

Subsidies are a pernicious system. They were necessary during the war, but they should now be done away with as quickly as possible. Subsidies and controls mean black markets and officials, and it is my firm conviction that we shall never pull ourselves out of this economic mess until we let the economy of supply and demand play its part and allow prices to rise to somewhere near an economic level. The subsidies which are paid do not come from a hidden source of wealth. They have to be collected, at great expense, and paid back again, at more expense, and large numbers of people are kept in non-productive employment and hordes of people in the black market are making money to which they are not entitled. Until we do away with controls and subsidies, we shall always have that.

I know that on this question of food subsidies I am on a tender subject. My opinion may not be shared by all my hon. Friends. Food subsidies were instituted with the object of stabilising wages. They have done nothing of the sort. Since they were started, wages have risen by £1,500,000,000, and that enormous sum of money has been spent largely on drink, tobacco and gambling. Food prices should be allowed to rise to a more economic level in order to save this vast amount of money which has to be collected and paid back again, and some of the money now spent on these unnecessary luxuries should be spent on food. I realise when I say that that some of the lower range of wage earners and pensioners will feel hardship unless something is done to alleviate their position. The best way to tackle the problem is to give them assistance directly and not by giving it indirectly and keeping food below an economic figure.

Another problem facing agriculture relates to labour. We are losing our prisoner-of-war labour at a very rapid pace. Not too rapid for me, because I would like to see them all go back to their own country and all our people who are in their country return to work here. We are getting into a very dangerous position. We are losing this sort of labour but we are not getting regular labour in return, nor can we, until we get decent houses near where the men work. The Government should make an all-out drive and not play with the problem as they have done up to the present. It is no good saying that so many thousands of houses have been built in rural areas. They may have been built but they will not be occupied by farm labourers if the rent is 15s. or 16. a week. Houses will have to be provided at a figure the labourers can afford to pay or the wages must be put up to a figure which will enable farm labourers to pay those rents. It must also be remembered that if the wages are raised, the prices of agricultural commodities will also have to be raised.

The industry relies too much on casual labour. That labour is not responsible and is unskilled, and it is thoroughly unsatisfactory. We want to return to the days when we employed regular men day in and day out on regular work and taught them their job so that they took a pride in it. The casual worker will never learn his job and take an interest in it. We shall never increase output until we return to the old regular system. It is time the farm labourer was looked upon as the most skilled in any industry. It is time that other sections of the community, when they see the farm labourer's wage put up, do not want their own put up. They are the highest class of skilled labour, and they should be paid at that rate.

Before passing from the question of building these houses, I suggest we should turn our minds from building new towns, and use those bricks and mortar which would go to building prospective new towns in building houses in the countryside. We have too many towns in this country, but too few houses for people working on the land. I wish to say a word about the importance of agriculture from the defence point of view. During the two disastrous wars we have gone through too much of our time, too many of our men, and too many of our ships have been occupied in bringing food from abroad. If we were producing food in our own country, the ships and men would have been occupied in the jobs for which they were trained and provided and not in bringing food to this country.

If we are to pull through, we must have a resolute lead. Unpleasant things have to be done, and I can assure the Prime Minister that if he leads with a strong hand we on this side of the House will do all we possibly can to support him. All we ask is that he will take a resolute stand to pull us out of the present crisis. We want to get back to price mechanism and incentives and get away from the ideological dreams of the past two years. Make it worth while for the worker and employer to do a good job of work, and retain some of the results of his work. Increased home production will relieve the necessity for exporting many of the goods we are exporting at present, goods which we want for our own consumption. The housewife is tired and frustrated. She is fed up with queues, and when she sees an article in a shop window marked "For export only" she naturally goes off the deep end. It is time we put into shop windows things which are not for export. At present they are full of rubbish.

The hon. Member could not have heard a word of the Prime Minister's speech.

Increased exports will not close the gap. What will close the gap is increased home production, namely, agriculture. The Prime Minister said that he planned to increase home production by, I think, £100 million by 1951. We can increase our home production by £200 million by 1951 if there is wise planning and determination. We stand at a time of great crisis. Democracy is on its trial. Unpleasant decisions will have to be made. It will be for the people of this country to decide whether they will stand up to the decision. Let them understand this—we are one of the few democratic countries left in the world. We are on our trial. Let the people realise that the alternative to a democratic Government is a dictatorship of the Right or the Left.

5.54 p.m.

I think all hon. Members will agree that the speech of the right hon. Gentleman the Member for West Bristol (Mr. Stanley) who opened the Debate, and the speech of my right hon. Friend the Prime Minister, put the Debate on a very high level. I, in my humble way, will not attempt to do much; only to be very moderate. I think all will also agree that when the decision was made to accept the American loan, there were very few happy Members in the House. It was a bitter pill to swallow for this nation, a nation which had grappled with its economy first to hold up, and then to play a major part in destroying, Fascism in Europe. Whether the loan has been spent properly or not, in the light of events now known, is a debatable point. Yet no one can accuse this Government because price levels in America rose very highly immediately the deed was carried out.

During the war the labour and industrial potential of our country, so far as it applied to the actual production and physical necessities of civil life, was very small indeed. The war machine was hungry, and could not be satisfied. This country was and is a highly industrialised country with an export trade which is vital to our social economy. Almost our whole effort was directed to war purposes, and that had a twofold and profound significance. The more we put into our war effort to combat the immediate dangers of that time, the more we prejudiced our future economic position relative to that of our U.S.A. allies. Our American allies were certainly never mobilised to the extent that her people were reduced to austerity, or to a point where they had to reduce their social economy, or standards of life. One could have assumed that the mutual sufferings both countries had to face and to accept would mean some further national assistance for a longer period to enable countries to rehabilitate themselves. But no, the ideals of war became the hard economic facts of life, and for us the interim period between the ending of the war and our full industrial recovery has cost us 2 per cent. on £1,000 million.

The loan is almost spent, and we have not as yet, achived our maximum industrial recovery. It is an unpalatable fact and an unpleasant one, but it is the job of the Government and all our people to get down to the task of expanding our industrial effort, and rebuilding our political economy in as ruthless and determined a manner as may be warranted. Agriculture, coal, engineering, cotton, and exportable goods, must have a major place in our priorities Let me remind the House that those industries have in the past been exploited in an almost treasonable manner by those who held control at that time Among those priorities, I include houses and the health services. We, alone, can save ourselves from the economic consequences of the war and a decadent capitalism. It means work as never before, and not work to be exploited by individuals. Let us have no moaning whilst the job is being accomplished. Our people are a strong and resilient people, and, with the emotional urge and knowledge that achievement means our salvation and the attaining of a higher social standard for all, we can still enjoy our sport and recreation, and get on with the job of accomplishing what we have set ourselves to do.

We are a party Government, and I wish to remind the House once more that we placed our policy before the electors in 1945. We informed the electors that major changes would be made in the superstructure of our set-up if we were successful, and we were successful. The long winter we have experienced has affected our recovery—no one can truthfully deny that—and it caused much suffering and inconvenience to our people. But what a heaven-sent opportunity it was to the Opposition. I took particular notice at that time, and I never witnessed any anxiety on those benches about the condition the country was in then. The point that struck me was that there was a gleeful anticipation that something had happened which gave them a chance to bring down this Government.

The Economic Survey issued in March this year was, in my opinion, a first-class survey, but I regret that it was negative rather than positive. [An HON. MEMBER: "First-class?"] One can only speak the truth as one feels it. I was glad to hear our Prime Minister tell us, however, that that position will be altered. In that document we were told that there were over 20 million workers constituting the manpower resources of our country, and that goods and services were produced to a value of £8,500 million in one year. However, we had no clear picture of how many of the workers were producers, distributors or administrators. We were also informed at that time that there were 1,500,000 in His Majesty's Forces—a figure that I thought was far too high then, and evidence has since come to hand that others think the same. We were told that the object of planning was to use the national resources in the best interests of the nation as a whole, and only anti-social people will object to the using of our national resources in the most efficient and economical way in the best interests of the nation. I am still convinced that there are many such people.

If the above is accepted as a basis, then a capitalist economy is discredited. It has been patent for many years that the foundation of our social edifice, built on a capitalist economy, is unstable and cracking, and the root cause, as I see it, of our present industrial crisis lies in the fact that the capitalist economy has broken down, and indeed, had done so before 1938. The policy of "dog eat dog," of privilege and of most powerful positions held by those who by no means were the most efficient and industrious of our people, who in innumerable cases were the most unsocial, ruthless and unscrupulous individuals and groups, has resulted in masses of the people becoming unproductive units, living like parasites on others.

Useless and unjustifiable business, using much labour that could be used in essential production, has been going on for quite a long time in this country, and when the people who are doing a useful job—[An HON. MEMBER: "Where?"]—see the Government tackling that problem, then I am quite satisfied it will give great satisfaction and stimulus to those people.

I want to remind the House of one or two isolated points. I say to the Opposition that had it not been for the initiative of the President of the Board of Trade, I am wondering what condition the Lancashire cotton industry would have been in today. No one can accuse the President of the Board of Trade of not doing his level best to try to rehabilitate the Lancashire cotton industry. He has given an inspiring lead which had never been given before. It was left to a Tory Prime Minister in 1926 to tell the textile industry of Lancashire to cut out the dead wood then, and the attempt was never made. It had to wait until a Labour President of the Board of Trade took on the job, and I believe, owing to the exertions and the effort he has put into this job, that Lancashire will show that there is still life and initiative in our textile industry. It is one of our major exporting industries and in 1938 it was at its lowest ebb. That was not the result of a Labour Government. There were thousands of skilled textile workers walking the streets in my constituency and other constituencies in Lancashire with scarcely a shirt to put on their backs who could not get a job in the mills. Whose fault was it? The same thing applied to the coal industry. Our workers have bitter memories, as the Prime Minister said. They have not forgotten, and it is something which we have to wipe out. Today, I feel we can say to our people that the Government's action to increase production does not mean unemployment in the future. That is one of the things of which they were always afraid. Increased production and increased effort mean their salvation in the future, and I believe that when our people realise that, they will leave no stone unturned to do their part of the job.

What I am concerned about is whether the owners and the managers will play their part. Experience does not give us much hope that they will co-operate. Well, the Opposition say they will do so. Let me inform the Opposition again that, if we fall, very few will escape the deluge, but I do not think we shall fall. I believe that once again, the efforts of our workpeople will be such that we shall prove to the world that this England of ours is far from being down and out. In the last analysis, it depends on the workers and on no others, because there are millions of them and the others are few. If we can make them realise how serious is this situation, how essential it is that we should build up our export trade, that the time has come when we cannot expect to live on other people's good nature or on loans, I believe the people are ready and waiting for a lead. Today they have a lead, and I believe they will respond, but I am uneasy as to the reactions of other people who can play a big part in this job. I cannot say too forcefully that, no matter what may happen, no matter what other people may say, it is the colliers, the textile workers, the engineers, the transport workers, the shipbuilders, who really matter and who have to do the job.

I apologise—and agriculturists. Whose fault is it that the agricultural industry of this country is in the position it is?

There is more hope in the agricultural industry today than ever before because of the efforts of this Labour Government, and the time will come when the agricultural workers will again demonstrate the fact by voting in the right way—make no mistake about that. I make my final appeal, not to the House of Commons, but to the people outside who are listening anxiously and hoping that the necessary inspiration will come from here. I believe the Prime Minister has given them a lead, and I hope that the rest of the Debate will contribute towards it.

6.10 p.m.

With what the hon. Member for Oldham (Mr. Fairhurst) has just said I must strongly disagree, namely, that we have had from the right hon. Gentleman this afternoon the lead for which the country is looking and which it is eagerly awaiting at the present time. Indeed, in so far as there was a call from the right hon. Gentleman for national unity, my hon. Friends and I, and I am sure the whole of the country, will be with him to assist him, but the measures which he put for- ward will be regarded as thoroughly inadequate to deal with the situation in which we find ourselves. Those proposals which the right hon. Gentleman put before the House this afternoon are not a call to heroic action by people who are eager, willing and anxious to bring themselves into a position of safety at the earliest possible moment. They are one more turn of the austerity screw, a rejection, a reversal of Government planning of the past, which leads to no amelioration of the lot of the ordinary man or woman either immediately or in the foreseeable future. Is this a blue print of "Socialism in our time" which we have had laid before us this afternoon? Certainly not. It is the honest attempt of the Prime Minister to bridge a 12-foot gap with an eight-foot ladder.

On two occasions the Prime Minister said, "I do not know how long this will be." Again, he said, "We could not foresee this." But this is a Government of planners. One can plan for the future if one can foresee it, but if one cannot foresee one's future, one might as well not make plans for it at all. In my view this Government could be called a Government of reversers. All their triumphs of the past are reversed within a few months of their achievement. With a great shout, the five-day week was introduced for the miners. Certainly no one who is privileged to spend all his or her working time above ground could begrudge the miners the achievement of the five-day week. But what were the arguments with which the five-day week was urged upon the House at a time when some of us were keenly anxious about coal production?

The arguments were three-fold. The first was the health of the miner, that he should have this complete rest for two days, in which he could refresh himself in the sunshine. That seems an admirable reason. The second reason put forward was that team work was now so much a feature of the work in the mines that absenteeism on the part of one member of the team was likely to slow down production, and, therefore, by having wholehearted work on five days a week, production would be the same. The third argument was that the mechanical devices in the mines were now of such increased complication that it was necessary to have a five-day week so that two days might be available for servicing the mines. They all struck me as being admirable reasons why a five-day week should be introduced. We shall hope that the Government spokesman, later in today's Debate, will be able to explain why a Government of planners, which accepted those arguments and others so freely only a few months ago, now find themselves able to destroy those arguments, and put others more satisfactory in their place to urge that there shall be longer working hours in the mines.

The hon. Member says it is a five-day week, but in the past all the agitation has been for shorter hours in the mines, and quite properly so.

Let me take another matter. The Chancellor of the Exchequer made a great boast of the manner in which he had been able to reduce the rate of interest payable on money. He said that he had brought the rate down to 2½ per cent. and that it was the unpatriotic citizen who would not lend his money to the Government at that rate. What has happened to the patriotic citizen? Now that the rate has fallen to 3 per cent., the patriotic citizen has been left "in the cart" by the Chancellor, but the unpatriotic speculator has been able to avoid it. The Chancellor has not come to the rescue of his patriotic citizens. One is entitled to ask how much lower is the interest rate to go? The Prime Minister announced direction of labour. Let us be quite clear that we are getting back the direction of labour which the trade unions and the Labour Party urged, in time of war, should be regarded as wartime measures only. Now, two years after the defeat of Germany and the defeat of Japan, those measures are being reimposed upon the working-classes of this country.

The hon. Lady says there is still a crisis. I would agree that there will always be a crisis as long as we have the benches opposite occupied by their present occupants. But where did the crisis start? Has it ended since the time the war ended? If the hon. Lady says, "Yes," I would ask what has caused it to come back again. If she says, "No," I must ask her what caused this Government of planners to lift this control so many months ago? This direction of labour, let us be quite clear, is only to be imposed upon the working-classes.

Oh, yes, as I understood the Prime Minister's statement. I hope sincerely that it is not so. Nevertheless, as I understood the facts announced by the Prime Minister, what was meant was the re-introduction of the Control of Engagement Order. That is, that workers who fall out of one job will be—I think the euphemistic phrase is—assisted or guided into some other work. That means that a young man who has sufficient independence in savings or otherwise to be able to avoid the employment exchange, will not be liable for direction. It will be those who are compelled to earn their daily bread who will bear the brunt of this "guidance." [An HON. MEMBER: "We shall see."]

I do not believe that the measures which have been announced this afternoon will, by themselves, do anything to bring this country out of the difficulty in which it finds itself. I am sorry that the Prime Minister was not more courageous in his announcement. I believe that his proposals can be only regarded as the little measures of little men. Even then, we would have more hope if they had been accompanied by some efforts, some earnest, on the part of the Government that they were to put new men in control of certain key points. No one can complain of the direction of the general industrial affairs of the country which the President of the Board of Trade has exercised. For months he has been a lone voice crying in the wilderness, and been contradicted at regular intervals by the more irresponsible of his colleagues.

He has been attacked from this side of the House, but the President of the Board of Trade does not mind blows from the front. It is stabs in the back that wound him. Surely, the President of the Board of Trade should hold his place in this new drive that is going forward, but in the absence of the Prime Minister, I ask the President of the Board of Trade, does he really think that the country will have any confidence in any plan for the marshalling of its fuel and power, so long as the present Minister of Fuel and Power holds his position? Could anyone regard the retention of the present holder of that post as an earnest of the new attack upon this difficult problem? It is unfair to say much more against that right hon. Gentleman, because we all know that he is a falling star.

Would the hon. Member not agree that a cardinal necessity for increased production of coal is the confidence of the miner, and that the present Minister of Fuel and Power enjoys that measure of confidence to the fullest degree?

The hon. Member for Lichfield (Mr. C. Poole) says that the present Minister has the confidence of the miner. Every man has one friend, even if it is only his dog. I doubt whether the right hon. Gentleman the Minister of Fuel and Power has widespread support amongst any section of the community. There are two other Ministers who ought to go. The Minister of Food ought to go and the Minister responsible for housing ought to go. Nevertheless, I do not wish to be entirely critical—[Interruption.] Hon. Gentlemen opposite are delaying me. I would ask them to read some of the speeches made by two of the Ministers I have mentioned at a time when we were in office, not indeed upon their Tory antagonists but upon the occupants of their own Front Bench, many of whom still bear the marks in their hearts even to this day.

I welcome the Prime Minister's statement that there is to be a drive for agriculture. Why was it not done three months ago? This is not any new crisis which has come along. Already we see in the country that the harvest is being reaped. As soon as the sheaves are out of the fields, the ploughs must go in. How long will the ordinary farmer have to wait before he gets assistance and guidance about the crops which he must grow? Again, what steps have we taken to conserve the food when we have grown it? I come from that part of England which produces the greatest potato crop in the country. If the subsidy on potatoes was removed, I believe that there would be an enormous saving in consumption. The price of potatoes should be brought into proper level with the cost of production. It does no good to anybody to be able to buy any commodity at below the cost of production.

I say to the Prime Minister and the Government that so far as the proposed steps will assist the country, they will have our wholehearted support. We shall not flinch from taking our share in the difficult days that lie ahead. On the other hand, we do not regard these measures as sufficient. We believe that instead of being an abrupt, sharp attack which would enable us quickly to overcome our difficulties, it is an approach which will merely depress the country down to a level of austerity and misery, even lower than at present, without any practical results. Nevertheless, we will work hard, both in this House to correct the Government in their errors, and outside in the country to get rid of them.

6.24 p.m.

I was pleased to hear, when the Prime Minister made his announcement, that we are not to adopt the remedies which hon. Members operated when they brought into being the Geddes Committee in the 'twenties and the May Committee in the 'thirties. Their solution was to slash at the social services. They gave an unemployment benefit of 18s. a week with the miserable pittance of 2s. a week to keep the child of an unemployed man. I am pleased that the Prime Minister has not adopted that method. I want to speak particularly about coal. I can claim to know something about it, having spent 32 years in the pit and not merely having observed the pitheads from a railway carriage as it flies by on its journey up and down the country. Far too many speeches have been made by Members of all parties lecturing the miner as if he suffered from some kind of malignant disease. The miner is as patriotic as any other member of the community. The sooner this lecturing is stopped, the better it will be. The sooner the miner ceases to be told that he is not pulling his weight, the better will be the output of coal.

I want to deal with the question of manpower in the mining industry. I do not want to discuss what happened years ago, but to focus the attention of the House on the fact that in 1940, the best men were taken away from the mining industry and the mines were provided with a labour force which was directed. The men directed to the mines under the Bevin scheme hated the very sight of the pits. The result was that those of us who had to handle these men in the pits found that they did not care whether or not they came to work. They used to take Monday and Friday off and sometimes they took other days as well. Absenteeism started to increase. This system of direction caused an increase in absenteeism. I do not say that miners are angels by any means, but absenteeism arose as a result of forced labour in the pits. On the other hand, we miners taught our children a hatred of the pits, and I make no apology for that. We did it because we made up our minds that none of our children would suffer the iniquity and poverty which we experienced in the mining industry in the 'twenties and 'thirties.

Today we must face the position of poacher turning gamekeeper, and we must ask our people to send their young lads into the pits to take up mining as a career. Since nationalisation there has been an increase in the labour force of 27,000, after allowing for wastage. In the main, that is due to ex-miners returning to their work. It is a non-recurrent recruitment. Unless we can persuade juveniles to come into the pits so that when they grow up they can move to the coal face work, then in the next few years we will again face this terrific manpower problem. I am glad that the Prime Minister referred to the Control of Engagement Order as the limit of his powers in relation to the direction of labour. The direction of labour to the mining industry is no solution. It is no good sending a man or a boy to the pits if he hates the pit before he gets there. He will not make a good workman. Therefore, we are forced to face the only remedy, which is that we must give inducements and ensure security of tenure to those who take up mining as a career.

There has been much talk in this House about the employment of Poles in pits. It has been said that we ought to do this and that, but, when all is said and done, the National Union of Mineworkers and even the Ministry of Fuel and Power cannot force Poles upon a gang of men if they say that they are not prepared to work with Poles. We would lose more output by men taking a stand against working with Poles, than we would gain by allowing the Poles to work. If I were still working at the coal face on a machine, and my life depended upon the actions of the second and third men following that machine, I would have a voice in the matter. I would want a say in determining who should be my mates working on the coal face machine where my life was at stake. This loose talk about the employment of Poles in pits ought to cease forthwith. We cannot force our men to work with Poles'. It is their lives, and not ours, which are at stake.

There is one problem of manpower which I would like to put to the Minister. We are returning ex-soldiers to the pits. Many of these ex-soldiers now coming back, and particularly in my area, are the people I sacked during the war because they were no use to the pits. They were taken on by the Services, and now they are volunteering to come back, and they are coming back to districts where ex-miners are desirous of returning to the pits. These people are being given preference over the ex-miners who are willing to return. I suggest to the Minister that the labour director should be given more elasticity to enable him to determine which of these men he should employ in the pits, rather than bring back these wasters whom we had to sack because they were a nuisance to the trade union officials and the mineowners alike.

My third point concerns machinery. Unless we can get more machinery, with spare parts for the existing machinery, conveyors, tubs, cables and drills, we cannot expect to achieve such an output as will maintain our industries and give us something for export. What do we find? It takes two years and four months to get a Mecco Moore coal-cutting machine or an overhead bar machine. If a manager is planning a new development, by the time he gets out his plans, and the division has given its sanction, and by the time the machinery is delivered to him, two years have gone before any long wall face can be put into operation. That gap must be shortened as quickly as possible, and there must be a concentration on the provision of mining machinery to ensure that, where a new development of mining is planned, there must be adequate machinery available in time to achieve the increased output.

What is the position of an area manager? It may be thought peculiar that I should argue about an area manager, but I think this is a point which the Ministry ought to tackle. The area manager of, say, 16 or 17 collieries has only powers of capital expenditure of £2,500, and, if the development of a long wall face is planned and it involves over £2,500, which is bound to be the case, it takes four months before the division arrives at a decision, and that means that there is a four months' time lag before the machinery is applied for, and it is 14 months before it is delivered, and before it has any effect on the increased output of coal. I suggest that the Minister ought to raise that figure to an amount equivalent to the sum which would buy the full equipment for that long wall face, and that he would then be able to avoid this loss in output and time.

The most important point I want to emphasise is the shortage of tubs and spare parts. The machinery in the pits in England generally is very old, and, during the war—and no one is to blame for this—spare parts and tubs were very difficult to get, because of the demands of the war. In fact, we could not get replacements of tubs that were destroyed. The result is that, at the end of this year, there is a deficiency in the number of tubs as against the 1938 standard. I want the House to appreciate this problem. Due to the shortage of tubs, we have to pay, under an agreement, 10d. an hour plus a percentage, amounting to 157 per cent., for every hour of waiting because of a shortage of tubs. This actually means hours of coal production lost, and if we had sufficient tubs, we could eliminate this waste of man-hours at the coal face and considerably increase the production with the present machinery.

Another point which I desire to raise concerns the question of the five-day week. I listened to the hon. Member opposite on this subject, and there is no doubt that, in a mechanised mine, the five-day week is the essential thing. It takes from Friday night to Monday morning to look after the machinery, to get the face prepared and to do some work on the haulage roads that cannot be done during the week when output has to be fully maintained. Therefore, I want to put it to the House that the five-day week, apart from this crisis, is the thing that matters in the pits, and that, as time goes on, all the mines of the country will feel the benefit from it. There is an agreement which was in existence during the war, and of which I would like to remind the Government today, by which the miners, the owners and the Ministry all agreed that the men should stop an extra half-hour to ensure that the coal face was stripped and to ensure the complete cycle of operations for the next day's output.

I think this point ought to be considered by the Government again today. It does not mean to say that if we put an extra half-hour on the miners every day that we are going to get an extra half-hour's coal production, because the face can only give its specific yardage, and, if it is cleaned up in seven and a half hours, we cannot get one tub of coal more than we are getting now unless the faces are extended. If the Government are to extend hours, instructions ought to be given at every pit that there must be an extension of the length of face to meet that extra half-hour. My proposal to the Government is that mining engineering firms should be given priority for steel, and that they should also be given the raw materials to ensure that the necessary machinery is produced in quick time and delivered into the pits. On the question of spare parts, if the law of patents is standing in the way, it ought to be swept aside, so that other engineering firms can help in making all the spare parts to ensure that there will be a regular inflow of new machinery, as well as spare parts with which to maintain the existing machinery.

I suggest that inducements should be given to get more labour into the pits, that a greater allowance of capital expenditure should be given to area managers, and that the Government should appoint someone with full powers, like those which Lord Beaverbrook had for aeroplanes during the war, so that everybody concerned in this job can get on with this vital question of producing the necessary machinery. Where there is a shortage of tubs, I suggest that we might ask the union for an extension of the coal winding hours, so as to ensure that all the full tubs are out of the pits at night and that the pit is filled with empty tubs ready to start the next day's production.

If sacrifices have to be made for increased production, they should apply to all, and not to the miners alone. If these sacrifices are made, there should be a guarantee that, when this crisis is over, the people concerned shall return to their pre-crisis conditions. I ask that the added hours of labour given by the community shall not be used to make enhanced profits for the employers of labour. I also ask the Minister carefully to consider those suggestions in connection with the coal problem, because, unless something on this scale is done, it is very doubtful whether, in the future, we shall get coal in sufficient quantities to ensure that our industries are in full swing, and give us a surplus for export.

6.40 p.m.

The hon. Member for Houghton-le-Spring (Mr. Blyton) has made a very considered speech, containing a number of constructive suggestions on how to deal with the coal industry, on which he is, of course, a great expert. I shall have to leave it to other hon. Members on this side who are more conversant with the industry than I am to discuss what he has been saying.

In his speech this afternoon, the Prime Minister referred, among other things to measures which the Government propose to take to see that labour is guided into the right channels. I am afraid that I was left a little in the dark as to how far the Government proposed to go in this direction, and to what extent it was intended to guide labour and to employ the method of direction. It is generally admitted that one of the greatest problems with which we have to contend is the maldistribution of labour, which is just as important as the actual over-all shortage of manpower. The result of that maldistribution is that we now find discordant voices being raised in trade union circles. Some well-known trade unionists advocate a policy of outright direction which, in my opinion, is utterly repugnant, and which, I think, will always be repugnant to the majority of the British people in time of peace. Others, on the other hand, repudiate the policy of direction, and ask for what they call a "policy of incentives."

I feel bound to say, in passing—although it is never profitable to go back on the past—that if the Government had listened to the advice tendered to them some 18 months ago or more by quite a number of people, including myself, and had called a national conference of trade unions and employers' associations with a view to hammering out a wages policy on certain agreed principles—after all, a wages policy is one of the main elements in a policy of incentives—I do not think it would have been necessary for Mr. Deakin and others to have put forward such a drastic and panic proposal as the outright direction of labour at this very late stage. Personally, I hope the Government will reject this policy of direction, and will adopt one of incentives. Over and above this question of particular incentives, designed to draw people into certain specified industries, there is, of course, the question of general incentives calculated to make people work their hardest when they get into the right places.

What I suggest is that the Government should review the whole of the rationing system. I was interested to hear the Prime Minister say that, if it became necessary to reduce rations, the Government were proposing to introduce a system of differential rations by which workers in heavy industries would get more than other people. That, of course, means that a certain specified class of people will get more rations, regardless of whether the individuals within that class work hard or not; in other words, they will get extra rations, whether they do anything to deserve them or not. Under the present system, it is true to say that, with minor exceptions, everybody, more or less, gets the same amount of rationed goods at, again, more or less, controlled prices. Most of the prices of rationed goods are controlled, and therefore, to a large extent, there is really no object for many people to work beyond the point at which they have sufficient money with which to buy the rations to which they are entitled.

Many people find that there is no incentive to work hard, because it does not particularly interest them to spend their money in the limited number of other ways open to them. That is why I say, as I said at the time of the Budget, that if tobacco imports had to be cut—as, indeed, they had—the Chancellor was absolutely right to put a heavy tax on tobacco instead of rationing it, because the more things which are taken out of the price system and put into the rationing system, the less object there is in earning money. The only things which people want in the end, if everything is taken out of the price system and put into the rationing system, are coupons with which to buy the rations to which they are entitled. There is no object in earning money, and in the end the point is reached where people might as well be paid in coupons instead of money. Of course, the opposite applies whenever anything is taken out of the rationing system and put back into the price system; then, the incentive to earn money is increased.

As I think hon. Members will realise, I am no great admirer of the Russian ecenomic system, but I think that in one respect—and I hope that in this I shall, at any rate, have the support of the hon. Member for West Fife (Mr. Gallacher)—we could with advantage take a leaf out of their book by trying to make available additional quantities of rationed goods at higher prices. In Russia, there are special shops where people, if they can afford it, can buy rationed goods at much higher prices. It would not be necessary to resort to that particular type of machinery in this country; we could use our existing shops. But the point is that there is already a black market in existence in this country. It may be small. Its extent is unknown, and it is extremely difficult to gauge how big it is; but there is no doubt that people can get additional quantities of rationed goods if they are prepared to pay the price.

I can assure the right hon. and learned Gentleman the President of the Board of Trade that it is not unduly difficult to get clothes without coupons if one is pre pared to pay an additional price for them. I know for a fact that clothing coupons are being offered for sale within the precincts of the Palace of Westminster at 2s. each. I can also tell the Minister of Food, if he does not already know it, where he can get additional quantities of rationed foodstuffs, if he is prepared to pay the price for them. What I am suggesting is that there ought to be a legally and officially recognised black market in this country. That may seem a con tradiction in terms, but if it were recognised, and if it were legal——

Royal Assent

Message to attend the Lords Commissioners.

The House went; and, having returned

Mr. SPEAKER reported the Royal Assent to:

  • 1. Companies Act, 1947.
  • 2. Agriculture Act, 1947.
  • 3. Transport Act, 1947.
  • 4. Isle of Man (Customs) Act, 1947.
  • 5. Town and Country Planning Act, 1947.
  • 6. Paisley Corporation Order Confirmation Act, 1947.
  • 7. National Trust for Scotland Order Confirmation Act, 1947.
  • 8. Nazeing Wood or Park Act, 1947.
  • 9. Borough of Croydon (Rating) Act, 1947.
  • 10. Tynemouth Corporation Act, 1947.
  • 11. London and North Eastern Railway Act, 1947.
  • State Of The Nation

    Question again proposed. "That this House do now adjourn."

    6.59 p.m.

    On a point of Order, Mr. Speaker. Before the hon. Gentleman proceeds, may I remind you that during the course of his speech he was responsible for making a statement which, I think, casts odium on the Members of this House and on other persons working within the Palace of Westminster. He made a statement to the effect that illicit and illegal transactions took place here in connection with both clothes and food rationing. I think the House is entitled to know whether the disclosures have been made to the Minister concerned, or whether the hon. Member intends to apologise.

    The hon. Member is responsible for what he says. He does not have to apologise because he makes what may seem to be a rash statement.

    Further to that point of Order, Mr. Speaker. Surely, the hon. Member has been responsible for a breach of Privilege, in that he cast odium on Members of this House?

    Not necessarily on Members of this House. After all, there are many other people besides Members who work in the Palace of Westminster, and lots of things go on of which we have no knowledge.

    Let me say at once that I was not intending to cast any reflection upon any Members of this House. I did not specify by whom they were sold OI by whom they were bought; and I most definitely do say now that, as a matter of fact, no Members were concerned in the transactions to which I was referring—[An HON. MEMBER: "Did the hon. Member report it?"]. That is a matter about which I prefer not to say more at the moment.

    In view of the very grave charges made against some persons unnamed, will the hon. Member now give the House the benefit of his knowledge as to the sources of his information?

    No, I do not propose to give any information regarding the sources of my information at the moment. I merely say that I do know for a fact that such transactions have taken place, and I make myself fully responsible for that statement. If it should be necessary to give any further information, or if it is desirable to do so, I shall be prepared to do so on another occasion. I do not choose to do so at the moment. As I was saying, a legally and officially recognised black market, is a contradiction in terms, because if it were officially recognised it would not be any longer a black market. But I ask the Government seriously to consider this expedient, if they really want people to work hard. It may sound outrageous to people in this country, and it may not even be possible, but I am convinced that this passion for equality, whether people work hard or whether they do not, and for what is wrongly called fair shares for all, will, if it is persisted in, ultimately bring this country to ruin and complete stagnation.

    Finally I want to say this, as a back bencher who does not take a particularly active part in the proceedings of this House, but who, nevertheless, watches the situation fairly closely. I think we can detect a certain similarity between the position of this country now and its position in 1938 and 1939. The setting is, of course, different, because in those years the crisis was mainly international in character, whereas today it is mainly domestic; but, nevertheless, we are moving into a crisis in an atmosphere of party warfare and recrimination. Each side is really doing its best to score off the other right up to the very last moment. I lay the blame for that state of affairs on the Government, because, after all, it is their responsibility to create the right atmosphere and to give that leadership which alone could call forth that supreme effort from a united nation without which we shall never succeed in turning the tide.

    Nevertheless, in that position in which we find ourselves, the responsibility rests on all of us. I think that we on this side of the House must refrain from saying anything which would tend to weaken enthusiasm for increased production among those sections of the community who support us—and they are very numerous. At the same time, I ask hon. Members opposite—and this does not apply to a good many—really to search their consciences, and to ask themselves whether they really are justified in continuing to use the same propaganda regarding such things as profits, private enterprise, and so on, which has served them so well in the past. Ought they really to continue to give the impression to their supporters that there is something immoral about profits as such, and that private enterprise is really nothing more than a necessary evil which has to be tolerated at the moment, but which is to be further truncated and curtailed at the earliest possible moment? I do not think they ought to continue to do that sort of thing, because I feel convinced that, unless both sides are prepared to exercise a certain amount of restraint in their propaganda, we shall never get that great, united national effort which alone can pull us out of our present difficulties. It may well be that, ultimately, the sheer force of circumstances will tend to mitigate the asperities of party warfare and pull us a bit closer together, but by then, as has happened in the past, it may be almost too late.

    7.5 p.m.

    Hon. and right hon. Members on both sides will understand that I follow a very distinguished Member of this House. She was a woman of great courage and great character. That does not of necessity make my task any easier tonight. We are discussing tonight another lady—old Mother England. In deference to Scotsmen and Welshmen and Irishmen I had better say old Mother Great Britain. The old lady is in great pain internally and she has got a few large external sores. There are those who would pretend that her present deplorable condition is due to Doctor Socialism, but we know that that is not true. We know that the old lady had these pains in 1938, because in 1938 we were failing to balance our export-bill. The pains certainly became more acute once war was declared, and had it not been for the blood transfusion that Doctor America infused into her, in 1941, it is certainly true to say that her crisis in 1941, 1942, 1943, 1944 and 1945 would have been greater than the crisis which the old lady is passing through at this moment. Further relief from the pain was given in the way of a loan, but now that medicine is running out and there is an element of doubt whether Doctor America is to continue to administer to the patient. But in any case the old lady is not ready for boxing up and burying. She feels that she can revitalise herself if her own sons and daughters, on whom she has a right to depend, rally around her as they have done in the past.

    But when it is a question of all her sons and daughters rallying round her, it does mean all and not just a few. I appreciate that in this great battle for life the old lady, to a large extent, has to rely upon what I would call the forgotten sons and daughters, the unimportant sons and daughters; because in essence, if the old lady is to survive it is a question of production, and in the matter of production it is the unimportant people in the main, in society who become important. In other words, the old lady today has to look to the miners and not to the millionaires; she has to look to the builders and not to the bankers; she has to look to the engineers and not to the racketeers; she has to look to the shipbuilders and not to the shareholders; she has to look to the labourers and not to the lawyers; she has to look to the clerks and not to the sharks; in other words, to the men and women who do the hard, essential and the vitally necessary work for society. They are, once again, the men and women who can pull old Mother England through this great trouble with which she is faced.

    If we are to overcome this crisis we must recognise the truth of what the folk of my party have said, right from the time Keir Hardie came here wearing a cloth cap, that there is no wealth except that which comes from work. That entails those who have been unduly critical of the people who do the essential work in our society themselves getting down to the task of rendering more useful service to the community than they do at present. What is needed now is a clarion call such as the right hon. Member for Woodford made to the nation in 1940, when he said he had nothing to offer except blood, toil, tears and sweat. This Government are in a position to say, if they can have that same blood, toil, tears and sweat, not that they have nothing to offer, but that they will have something real and tangible to offer at the end.

    If Mother Great Britain comes through this struggle—as she certainly will if her sons and daughters rally round her in the manner she has a right to expect—when she is once again in a position to distribute favours, it will be her job to see that those favours are distributed to those sons and daughters who stood by her in her hour of need. In other words, we have to appeal again, in the main, to the people from the mean streets and back streets, the people who do the really hard, productive work. They are the backbone of the nation in this crisis, because this is a crisis of production. If we put it to the workers in productive industry that this is a fight against the age-long curse of the workers of this country, the age-long curse of poverty—because this is essentially a fight against poverty—then I am positive they will give their wholehearted support. If we get the response to which we are entitled in these days of difficulty then, without question, not only will old Mother Great Britain get well and strong again, not only will she have reason to be proud of her sons and daughters, but, great as her past has been, an even greater future will he before her because of that magnificent response to her appeal in her hour of need.

    I appreciate that probably I have not followed the honoured custom of this House of not being controversial in a maiden speech. But when a question such as this is being debated, it is difficult not to say something which could be offensive to some Members of the House. If I have transgressed, I am very sorry indeed. But I feel keenly upon this matter, and I think the House would prefer me to be honest and sincere, and to know that I am honest and sincere, even though I may be offensive, rather than that I should make a cuckoo speech which was completely out of keeping, and quite unbefitting the times through which we are passing.

    7.15 p.m.

    It is my privilege and pleasure to congratulate the hon. Member for Jarrow (Mr. Fernyhough) on an excellent maiden speech. He had two advantages, in that he was speaking for an important industrial and shipbuilding constituency, and was following in the footsteps of a right hon. Lady who had the respect of hon. Members on all sides of the House. I am certain we can look forward with interest to further contributions from the hon. Member.

    I propose to take up the time of the House for only two or three minutes, because there Was one point raised by the Prime Minister with which I felt I must deal. It was referred to also by the hon. Member for Houghton-le-Spring (Mr. Blyton) in his excellent speech, namely, the question of the half-hour extra work in the mining industry. My right hon. Friend the Member for West Bristol (Mr. Stanley) said that we should deal with the proposals of the Prime Minister, on their merits. It is necessary to say straight away that it would be a complete illusion if the country or this House were to imagine that as a result of an extra half-hour in the pits there would be any substantial increase in production. In saying that, I know I shall have the support of hon. Members who are familiar with coalmining. The only men in the pits who can increase production are the coal getters, the face men, and the overwhelming majority of those men work today on machine faces. Those faces have been constructed, laid out and organised on a system which allows of three cycles during the 24 hours, and it is impossible, by means of an extra half-hour, to achieve any additional production off those faces. The only way in which that could occur would be by an extension of those faces, which hon. Members will recognise would require a major physical reorganisation of the pits, and that could not occur overnight. That would be a long-term matter.

    As long ago as last February I asked for a reconsideration of the 11-day fortnight. I ask again now. That is the only practical approach to this problem. An extra half-hour may mean slightly cleaner pits; it may mean a neater operation; but it will not produce the additional coal which we require. It would be a great mistake if hon. Members went away from this Debate with the impression that that extra half-hour will result in additional output. I am sorry to have to adopt this attitude in regard to what I am sure the Prime Minister put forward as a constructive proposal. I would challenge the Government on these two points. First, had this proposal the sanction and agreement of the technical members of the National Coal Board? I doubt it. Secondly, can the Government suggest that it will, in fact, mean any additional production? I doubt that also.

    It is necessary to say these things, because we have come to the consideration of our economic position with a desire to see some solution. No solution lies in this proposition, and once again I ask the Government to reconsider this matter. The 11-day fortnight is a practical proposition, and the Government would be wise to think along those lines. It would be of a temporary nature, and need last only for the duration of this crisis. But that we should buoy ourselves with any false hopes in regard to the proposition of the extra half-hour would be wholly wrong. I do ask the Government to think again.

    7.19 p.m.

    I desire to take part in this Debate, not so much because of the critical position in which the country is, but because of the need to give the people of the country the opportunity to learn the real facts. I believe that to spend even half a minute talking about what happened yesterday is but a futile waste of time. We cannot afford to stand in this Chamber today and talk about yesterday. Yesterday has gone. It is tomorrow to which we must look forward. We must find out how we are to get out of this mess. I do not want to start scratching old sores, and I do not want to be among those who would say, "I told you so as long ago as April, when I spoke about production."

    I believe that the hon. Member for Jarrow (Mr. Fernyhough) hit the nail on the head, and as a member of his party I should like to congratulate him on his maiden speech. Mother England is, indeed, really sick. She cannot all the time keep having sicknesses and keep getting better, because the day comes when you meet with your final sickness. This country is beset by many evils. I am not a financier, but the position reminds me of the position which many families get into. I happen to be a justice of the peace, and I hear some terrible stories on the bench. I well remember the case of a couple who came before the court because they had had a quarrel. Like the Labour Party, they started off with all the good intentions in the world, but then they found themselves heading for rather difficult times. They decided to have a debate about the position, just as we have done. The husband said, "You know, Mary, you have been spending more than I have been earning. I have given you all the money I have earned, and in addition I find you have been borrowing. We cannot go on like this." His wife replied, "There is something I have to tell you. We should not be in this position if you had not been having a few odd days off from work."

    It behoves all of us, from the Prime Minster down to the newest Member, to go into the constituencies and put the position fairly and squarely to the people. It is no use putting our head into the sands and thinking things will turn out all right. We cannot expect American good will to last for ever. Germany looks to us, for help. I go to Germany almost weekly, and I say to the German working man, "Look here, lad, you have to prove to Britain that you have done everything possible to help yourself, and to that extent we shall try to help you." We have to do the same to America, and show her that we are doing everything humanly possible to help ourselves. This is a job for the trade union leaders. It calls for real statesmanship and true leadership. I am dismayed at some of the stories I hear when I go about the country. I know for a fact that one of my colleagues has twitted me with being an enemy of the miners. That hurts me, because I was born among the miners and raised among them. I am no enemy of the working man. I am one of those working fellows who is prepared to tell the truth about what we have to blame ourselves for, which is rather different.

    I am glad that the Prime Minister mentioned the question of steel. Our boys in every steel plant in the country are doing all they possibly can and work is being carried on continuously for 168 hours a week. But I would utter this word of warning: I hope and trust that the Government will not think of slashing their rations. Even today they are not getting the food they deserve. It is hot, heavy and sweating work, and these men deserve a break. We have caused very little trouble, but I warn the Government that if they attempt to cut their already insufficient rations, they are heading for trouble. We have to face up to these things and tell the truth. I believe that the honest-to-God working miner is now beginning to find that the country needs his help, and I am certain that the miners will give it. I am certain of that, but I wish that we had asked them for their help earlier. We hear a lot of talk about clarion calls, but these are not the sort of things which inspire. What we want is a sustained effort and a week-by-week production in our factories until we get out of this mess.

    I noticed last week it was stated we had some 696 Poles in this country, receiving £4 5s. a week for not doing a hand's turn of work. On the other hand, we have lodges who are refusing to work with the Poles. I always understood that Socialism was international. I always thought that we raised no barrier against any man, whatever his creed, colour or religion, when it comes to helping the country in which he lives. Any man resident in Britain, who is living within our Constitution, has a right, if called Upon to do so, to make his contribution towards helping us to recover. I hear that we have engineers who have refused to work, or are asking that certain Polish engineers engaged on vital work of creating coal-cutting machinery should be dismissed. These are things we have to face up to. We should have the guts and courage to talk about some of our failures, and to make an effort to put things right.

    Our steel industry wants to do more, but again more coal is necessary. I pointed out at one of our recent meetings that the works in which I have had the privilege to work for 32 years closed down for a fortnight, the first time they had closed down since the General Strike of 1926. They closed down three weeks ago because they had used up their allocation of coal and had to put the rest of their coal to stock, with the result that 16,000 tons of ingot steel was lost. These are the things we have to put right. In Bolton, which is the finest textile town in the world, boilers are being fired with sawn-up rubber, and joiners' shops are being turned into sawmills to provide the power to keep our people going. They are putting to stock slurry and everything else which is not coal. I hope that the Prime Minister's call will be heeded, not as a call to an individual section, but as a call to the whole mass of honest-to-God working people in the country. I get around a good deal, and I say to the House, with all the sincerity and conviction I can command, that individually we are still the finest working people in the world, deserving the finest standard of life. Unfortunately, because of wars and economies, we find ourselves in this perilous position today. I appeal to all our trade union leaders, irrespective of their politics, whether they are Communist leaders, Socialist leaders, or those who have no politics at all, that the day is past when the political colour of a man matters; it is Britain first on this occasion in all things.

    I could speak about the evils perpetuated by hon. Members opposite, but I would say only this: To change the Government now would only worsen the position. A Tory Government would lead only to the scratching of old sores. The Tories cannot put the position right. The only thing that can is the courage, skill, energy, drive and good will of the working masses. They are the people to whom we must appeal, and if we make the appeal to them I know that they will respond, and that we shall get through this mess. We can, and we must by our own efforts, build in our country the standard of life that Almighty God intended all decent Britishers should have.

    7.30 p.m.

    It is indeed a pleasure to hear the diagnoses of our troubles which have been given by Members from the benches opposite this evening. There appears at last to be a realisation of the depth of the difficulties into which we have drifted. It would have been gratifying and inspiring if this call for work had been made at any time during these past two years. Our national poet in Scotland once wrote,

    "Oh wad some Pow'r the giftie gie us To see oursels as others see us!"
    It is desirable and revealing occasionally to turn the limelight on ourselves and be able to see just how we look in foreign eyes. Under the Marshall Plan, which demands that this be done, 16 nations have come together, each with their eyes fixed on one another, and all eyes fixed on us, while the United States of America has her eyes fixed on all 16 of us. Let us see what exactly it is we look like to those who are scrutinising us so carefully. Members have heard foreigners use the expression "Mad dogs and Englishmen," and, consequently, foreigners expect to find paradoxes when they come to look at us. But surely they did not expect to find the absurdities and follies to which they have been treated during the past few years.

    The first thing they saw was a great leader, who had led the country out of what they thought to be an impossible position to victory, cast out into the wilderness in favour of a party which certainly did not contribute to this country being ready to meet the great test through which it came. I have heard Frenchmen, who regard my right hon. Friend the Member for Woodford (Mr. Churchill) as the greatest of all war leaders, quote by the yard his wartime speeches, although unable to speak more than a few words of English. Foreigners have noticed the promises of impossibly better things, made at the time of the Election, fail one after the other. They will notice tomorrow, as the result of the Prime Minister's speech, that the target of 175 per cent. increase in volume of exports which we set ourselves not long ago, and which was cut down to 140 per cent. in the Economic Survey, is now to be cut still further. How with this reduced figure are we going to bridge the gap? It is always difficult to lead a whole nation into logical thought, and particularly difficult after a war, when minds have become distorted by war ideas and the impact of war, when all values of life and property have been written down to nothing, and sane finance and economy have been thrown overboard. It is the duty of any party aspiring to power to try to lead that thought back to true lines. That is what should have been done at the time of the Election, and should constantly have been done up till now. But there is a glimmering coming from the party opposite which now shows that they realise, at last, that great obligation.

    A Government which believed—as I accuse this Government of teaching—that after all the waste of war any nation could enjoy a higher standard of living and a greater degree of leisure was flying in the face of inexorable economic facts which will bring down, and are certainly fringing down, this country to its knees. The eyes which are turned on us see an administration clogged by a mass of nationalisation which, at best, can only claim to bring advantages in the far-distant future, and which, in our view, will not even do that. They see legislation passing at jet-propelled speed through this House, and which is surely putting the "mock" in democracy. They watch a country which has recently been described as being an island of coal spending all its energies to bring foreign coal to Newcastle. They watch Ministers blowing hot and cold between complacency and anxiety. They hear the Minister of Fuel and Power, in one of his more optimistic speeches, saying, "There will be no fuel crisis." They hear the Minister of Food saying, "There is no need whatever for housewives and the people generally to feel that they will find it impossible to obtain at home, or from abroad, the food which they need."

    They listen to the Chancellor of the Exchequer say, without a sign of reluctance or remorse, that the terrific sum of £3,100 million will be expended in the current year. They hear him use the words, "A new Britain has taken the cost of social security proudly in its stride. The money has been found." They ask where has it been found? In the United States of America? When next our emissaries go to negotiate for a further loan, will it be surprising if some there murmur, "Is their journey really necessary?" They may hear the small voice of the hon. Member for South Cardiff (Mr. Callaghan), at the time of the Budget, say, "To suggest that we shall have to go crawling to the United States for another loan, and that we shall be faced with hunger and unemployment, is a wild exaggeration." They rub their eyes, and ask themselves whether they are dreaming. Is not this exactly what is happening?

    They notice that the shorter working week has been introduced into the coal mines, and take note of the fact that one hour's extra work a week on the five days would have produced all the coal which has been sent to Europe by America. They hear the Minister of Fuel and Power say, "If the five-day week does not work out, I shall say so." Has the right hon. Gentleman come to us and said so? All that he treats us to is occasional verbal vitriol, and the foreigners take note of the fact that vitriol is neither fuel, nor power, nor medicine. Is the extra half-hour to be worked as an emergency the answer to the problem? We have heard Members who are specialists in this matter say that it will produce no extra coal, and that in any case the extra half hour should be treated as an emergency matter. That is an utterly wrong attitude of mind. This extra half hour, if we are going to produce coal, would not produce enough in permanency to make ends meet. It is noticed that Ministers complain that the country is suffering from a labour shortage, but that more are in employment than before the war. It is known that there are more miners than in 1941, with more modern machinery, producing less than they did in 1941, and it is said, "Is the problem that there are too few workers, or is it not that there are too few people really working?" It seems to them that the Prime Minister's prospectus, which they will now see, will be inadequate, and will leave a big gap to be covered.

    These foreigners look at the hoard of management, and ask themselves, "How impressive is this?" They have listened to the story of how the weather has affected crops and output, and they are not impressed. A Government that cannot make provision for that sort of thing is not half a government. "I've never 'ad a chance, guv'ner," is a familiar theme. All this reminds them of a film in which the Marx brothers—no relation to the propounder of Left Wing theory—were pummelling a patient who cried, "Hey, I am not the patient," whereupon they replied, "That is all right by us, we are not the doctors either." Is not that exactly what is happening? Here is industry being pummelled, slapped, and exhorted by Ministers, and being threatened with nationalisation and then expected to produce more. The foreigners who look at the benches opposite say, "These are not the doctors for Britain." They have looked for real leadership, and I am glad to have heard that pronounced again by Members on both sides. They note that heroic measures are necessary, but where are the heroes? Instead of direct, determined drive, all they hear is an amorphous mass of discordant thought. They saw a well-thought-out plan of conscription put forward by the Minister of Defence, reversed a few days later under pressure from the back benches. They notice the deference paid in all these matters to Transport House, They realise the Micawber-like attitude of waiting for something to turn up which actuates the Government.

    All that turns up is one crisis after another. They think that the Front Bench belong to the cult of those who believe in economic fairies? Following the theatre in the presentation of Peter Pan, if you, Mr. Speaker, found it in your prerogative, and desired to call on all those who believed in fairies to clap their hands, the burst of applause it would attract from Members opposite would be really surprising. But it would not be the applause for Tinker Bell, or some starry beauty of the pantomime, but applause for Uncle Sam, beard, dollars, and all. This is the economic solution in which they have put too much trust. Let them learn to believe in themselves and really lead, and not look to Transport House, over their shoulder, for approbation or criticism. Then they might have a chance of telling the people of the country, who are waiting for a lead, and wanting a lead, where they should go, and set an example to the people which the country will, in very truth, follow.

    7.41 p.m.

    I will endeavour not to waste the time of the House so completely as the hon. Member for Central Glasgow (Colonel J. R. H. Hutchison). I will try to deal with the international aspect of our present discontents. It has been generally admitted that the cause of our present difficulties largely arises outside this country but, hitherto, most of the remedies discussed have been remedies within this country. In point of fact, of course, in order to meet this crisis we need a combination of internal measures and of policies in relation to other countries. The greatest single factor in the international economic situation is the policy of the United States. As the policy of the United States is one of the major factors on which we are relying, and has to be considered in relation to our troubles and how to get out of them, I will dwell for a few minutes on that policy.

    I believe that a good deal of the unnecessary difficulties with which the world is wrestling and the unnecessary delay in the recovery of Europe are due to the fact that the United States after the last war as after the first world war hastened to remove controls and returned to unplanned private capitalism. If any hon. Member is interested in the disastrous results of this policy that ensued after the first world war, I would urge him to read the monograph of the Economic Section of the League of Nations Secretariat on the Recovery of Europe and the measures taken between 1919 and 1921. The spreading consequences of what has happened in the United States are, first of all, the premature and abrupt ending of Lend-Lease and then of U.N.R.R.A.; secondly, the failure to bring down tariffs and the consequent permanent export surplus, and thirdly, the rise in prices, which have deprived us of 50 per cent of the purchasing power of our loan.

    The ways in which we have as a consequence begun to suffer acutely—we and other countries—from a dollar famine, and how the dollar famine and our other difficulties have been aggravated by the convertibility Clause and the nondiscrimination Clause in the Loan Agree- ment are familiar to the House, and I will not enlarge on them. It is, however, important to note that these developments with their repercussions on our present difficulties, show no signs of slackening in the United States. On the contrary, the President has gone through a series of protests and surrenders to forces which he himself described as enemies of the people and irresponsible and selfish. An anti-trade union law has just been passed over his veto and an anti-progressive witch-hunt is going on in the country and, finally, the President has signalised his capitulation by a proclamation——

    Is it in Order, Mr. Speaker, to criticise the head of a friendly State? The hon. Gentleman has described an act of President Truman as "capitulation," and I understood that there was a well-known Rule of this House that one cannot criticise the head of a State—a President or King?

    I think, speaking from memory, that one must not use opprobrious epithets. One must not cast reflections on the head of a friendly State.

    Am I to understand that "capitulation" is not, in your opinion, Mr. Speaker, an "opprobrious epithet"?

    I was describing what had happened. I did not impute any unworthy motive, and these are the terms in which President Truman has described his doctrine. He says:

    "There is one thing that the Americans value more than peace. It is freedom, freedom of worship, freedom of speech and freedom of enterprise."
    He identifies freedom of enterprise with the values of Western civilisation and democracy, and concludes:
    "The pattern of international trade that is most conducive to freedom of enterprise is one in which major decisions are made, not by Governments, but by private buyers and sellers under conditions of active competition and with proper safeguards against the establishment of monopolies and cartels. That pattern of trade that is least conducive to freedom of enterprise is one in which decisions are made by Governments. That was the pattern of former centuries. Unless we act and act decisively it will be the pattern of the next century."
    That is a declaration of diplomatic and economic and secondhand military intervention against Socialism in Europe and the world.

    Is it in Order to describe a statement made by the President of the United States as a "secondhand military intervention"?

    I was not listening, and I did not hear the actual words which were used.

    Is it not the case that, time and again, from the other side we get the most appalling references to Stalin, and there is nothing said?

    I did not hear anything said about Mr. Stalin. I think that we must be very careful as to what is said about the head of a friendly State. After all, we should hate it if the Americans said something very unkind about the Prime Minister of this country, no matter what one's politics might be, and naturally the Americans might resent the same kind of remark about their President.

    When the hon. Member speaks of "secondhand military intervention" and what is really meant is firsthand military intervention, is it not better that he should say so?

    Further to that point of Order. Although this to hon. Members opposite may be a laughing matter, it will cause a great offence in the United States, and I say that when the hon. Gentleman uses a direct term about the President of the United States and "secondhand military intervention" he should withdraw.

    Surely, while one may not inquire into the private behaviour of the head of a friendly State, if one describes policies which he enunciates as head of that State in terms which are reasonable, it is not offensive to the head of that State. We must be allowed to comment on policy.

    The policy of the country, of course, is one thing, and to refer to an individual is another. If the hon. Gentleman said that it was a secondhand administration——

    I am describing the policy of the United States outlined in President Truman's declaration of last March. I describe that policy as virtually a declaration of economic, diplomatic and secondhand military intervention against Socialism and the Left in Europe, and by "secondhand military intervention" I mean precisely and exactly what the United States Administration is now doing in Greece, where it has supplied the Greek Government with arms and munitions to conduct a civil war. That I think is accurately described as "secondhand military intervention." If hon. Members opposite are going to show so much emotion and sensitiveness at this stage I warn them that they will probably find their feelings altogether out of control by the time I have finished with them.

    As the hon. Gentleman has referred to me, may I say I have no objection since it appears to be a catfight, but I do not think anybody of his character should attack the President of the United States.

    I do not really know whether what the noble Lord the Member for Horsham (Earl Winterton) said was quite in Order, and I would ask your opinion on it, Mr. Speaker, because I think he was passing a reflection on my character.

    I wondered too. The noble Lord said "anybody of his character" but it might be a very good character. [Laughter.]

    If I am taking up too much of the House's time, it really is not my fault. [Interruption.]

    The Marshall Plan was originally believed by optimists here to supersede the Truman policy and to be a different policy which stressed ideological faction somewhat less and was more concerned with the economic reconstruction of the whole of Europe. Unfortunately, it became clear after Secretary of State Marshall's second speech to the Conference of Governors of States that the so-called Marshall Plan, in fact, merely applied to Western Europe the policy outlined in the original Truman doctrine. That is a policy of social and ideological intervention in Europe. Moreover, in the United States, whereas the Administration proposes, Congress disposes, and that is more than ever the case in Presidential election year with a Republican majority in Congress pitted against a democratic Administration.

    It is highly important, therefore, in gauging the effects of the Marshall Plan on our prospects, of reconstruction, to study the state of mind of American public opinion and particularly the state of mind of Congress. "The Times" Washington correspondent, who is a first-class authority on American affairs, on 4th August, in a very interesting despatch, described the attitude of American public opinion. The first point he made was that American public opinion very naturally and properly, stresses that United States assistance to European countries should be supplementary, and that European countries should be basically responsible for solving their own problems. That, I think, is a perfectly sound and reasonable point of view. But it places the main responsibility on us to help ourselves by measures of mutual aid and self help, and then let us see what extra help we can get from the United States.

    The other point made by "The Times" Washington correspondent was:
    For the average American the recent history of Britain represents an experiment in Socialism, a system for which he has deep suspicion. … The number in this country who think of and wish well to Britain under a Labour Government is probably small. …At the mere wind of Socialism, the American buttons his coat and turns up his collar. Socialism is for him an advance along the road to Communism."
    That, of course, is the general "run-of-the-road" American opinion. But what about diehard Conservative American opinion? The "New York Herald Tribune" recently quoted a gentleman named General Wood, of the "Sears Roebuck Catalogue" and columnist O'Donnell, who pleasantly referred to the Marshall Plan as "Operation rathole" and said that it means that "the American taxpayer will shell out five billion dollars a year for a bunch of quarrelling bums." The "quarrelling bums" are ourselves and the other European States.

    I would not have ventured myself to apply it to the noble Lord, but if he thinks it fits——

    That is the best description I have ever heard of the Socialist Party.

    Then we come to the attitude of Congress. First there are the leaders of American public opinion, like ex-Governor Harold Stassen, who is the progressive potential candidate of the Republican Party—whether he makes the grade or not is another matter—and is regarded as being most progressive and internationally minded. He has made a number of broadcasts in which he said that the condition for this or any other European country receiving American help should be that they should give up any further advances towards Socialism—any further measures of Socialisation. Senator Joseph Ball, in a broadcast—and he is also a fairly progressive senator, who is for the Marshall Plan and international co-operation—observed:

    "If the real issue in Europe is between Socialism and Communism rather than between Communism and the free society, then it is hopeless and we had better conserve our resources for the inevitable conflict."
    As the House well knows there have been frequent statements in the American Press that the United States are anxious that the Labour Government should give up that part of their Election programme which calls for the nationalisation of the steel industry. And recently Mr. Alastair Forbes, in the "Sunday Dispatch," reporting this statement in the United States, with that peculiar conception of patriotism which attaches to the Party opposite, expressed the fervent hope that the United States would put pressure on our Labour Government to give up the programme which it was returned by the people to carry out, and to abandon the nationalisation of the steel industry. That, of course, is not something that a self-respecting Labour Government is prepared to do or which the Members of the Labour Party would tolerate.

    What about Congress itself? What are our chances of getting this help in the near future from Congress? First, we have the "New York Herald-Tribune" despatch saying that:
    "So strong is the economic isolationism in Congress that the Truman Administration does not dare call it back into special Session even to consider the Marshall Plan for fear that Congress would disapprove of it."
    The "Washington Post" on 9th July, in a very interesting despatch from its two star correspondents, Joseph and Stewart Alsop, reported that one of the most capable and best informed Senators, himself deeply convinced that the Marshall proposals were our last best chance, said he was very much worried because:
    "The State Department is failing to protect its rear If Bevin and Bidault and the Europeans came up with a first rate plan tomorrow and Marshall asked for the necessary appropriation the day after, he would be turned down flat by an overwhelming majority in Congress."
    So much for the political difficulties and uncertainties in the way of our obtaining anything from the Marshall Plan. In fact, if Congress cannot discuss it this autumn and does not meet until January or February, that is Election year, and then, as an American newspaper, the "New York Herald-Tribune" says, in Presidential election year American politicians behave like bull moose in the rutting season. I take it that that means, without being too indelicate, that they rush about the political backwoods snorting and shaking their antlers and pawing up the earth. In other words, they do not behave rationally.

    Better than that anyway. Then we come to the report of the International Economic Policy Sub-Committee of the House of representatives, which first of all—[Interruption.] Hon. Gentlemen opposite do not like what I am saying because there is too much realism for them but they had better take it. I am doing the dishing out. This Committee recommended, first of all, that the condition for receiving any further loans from the United States was to accept supervision of those loans, as had been done in Greece. The second recommendation was that no States in Eastern Europe, the States in which the Communist Party were important, should be allowed to participate in obtaining the benefits of the scheme.

    The third proposal was that the Ruhr should be handed over by us to the United States and incorporated in the American zone on America's own terms. Of course, as regards the non-participation of Eastern Europe and the introduction of American methods and capitalism into the Ruhr, we are seeing a good deal of the programme of this report being realised.

    The hon. Gentleman talks of the non-participation of the countries of Eastern Europe, but I always understood that they were invited to Paris and refused the invitation extended to them.

    But in point of fact they were asked only as an afterthought, and the whole thing was rushed through in Paris without any serious intention of bringing them into partnership. If we had meant business we would have referred the whole matter to the European Economic Commission of the United Nations. The fact that we did not do this laid us open to the suspicion that we were yielding to pressure by the Americans, who said that if Russia came in we should not get any credits from Congress. Finally, this report of the House of Representatives talks with approval of the Hoover letter—the programme outlined by ex-President Hoover for dividing up Europe into two blocks and organising and reviving big business in Germany and Japan as outposts of American capitalism against the Soviet Union and the forces of social revolution. That is the spirit of Congress and the lines on which we may be expected to be invited to co-operate. Apart from the political aspect there is the financial side and the question of how much money we are in fact likely to get. The maximum sum mentioned is 3,000 million dollars a year for about five years—that is, some £750 a year.

    I am sorry, I should have said £750 million a year, and that is for the whole of Europe and China as well. Incidentally, we are by no means first in the queue, a position which I believe is held by Greece. Congress, on the other hand, has never gone beyond a maximum of £500 million as the sum they contemplate as the overall sum to be disposed of in all the countries concerned, including China and this country. On top of that there are the economic difficulties and the question of what we can buy with the dollars if we ever get them. The Prime Minister referred- in his statement to the disappointing experience of U.N.R.R.A. and the failure of European countries to obtain rehabilitation goods for reviving their production. I know something about that, and can state that in Yugoslavia although it was possible for U.N.R.R.A. to get trucks from the United States, and a limited amount of spare parts, when they asked for machine tools to manufacture spare parts they found that there was nothing doing, because American manufacturers were not interested in supplying any European States with machine tools that would enable them to become independent of American supplies—even of spare parts. That same experience has been ours in the last two years in trying to obtain heavy machinery from the United States.

    Surely the hon. Gentleman should be aware that the attitude of the United States with regard to Yugoslavia is affected by the fact that they object very much to the murder of a number of their pilots flying over Yugoslav territory.

    Unfortunately, the failure to supply the machine tools occurred a long time before that incident and, in any case, it does not explain why we failed to get any heavy machinery from the United States—or, at least, why we have received a good deal less than we needed—unless, of course, the right hon. Gentleman thinks that because we have a Labour Government the United States manufacturers are not very keen on supplying us with these things. Another important factor is that the American railways are in a very bad condition because they were not maintained during the war and have not been restored since. They are in such poor condition that they can barely handle the existing volume of traffic and, because they have gone into private hands again, they prefer to transport light goods paying high freight rates such as radios, refrigerators and motor cars, and it is difficult to get them to handle wheat, let alone heavy goods, which pay low freight rates.

    I think it is doubtful whether the United States would be capable of supplying European countries who have put up a long term plan with the volume and kinds of goods they want, with the priorities they ask, unless American economic life were replanned very much as it was during the war to supply lease-lend goods. I am profoundly sceptical as to the possibility of unplanned American capitalism delivering the goods on a sufficient scale. The conclusion I draw is that United States help, even if we obtain it, will be too late and too little, and there is a serious danger attached of political pressure of an undesirable kind. We must give up the idea that there is a Santa Claus on the other side of the Atlantic ready to come to our assistance, and must realise that we have to concentrate on measures of self-help and mutual aid in Europe and within the Empire and the Commonwealth.

    Certainly, and the U.S.S.R. I am coming to that. Western Europe alone is unsatisfactory because it is too lopsided from an economic point of view, too unstable politically and too divided socially. Among the rather odd assortment of States we have is Turkey, a bankrupt military dictatorship keeping an Army twice as big as it can afford on American dollars. Then there is Greece, whose reconstruction programme, now that British pounds have given out—we spent £132 million on Greece—is American dollars, to subsidise the black market and to feather the nests of corrupt politicians and tax-dodging profiteers. The Austria of Chancellor Fig1 is also kept hovering on the brink of collapse by American dollars, and it has not much of a reconstruction programme. The Italy of de Gasperi and the present régime of France, with the Ramsay MacDonald of France, Prime Minister Ramadier, in charge, are not doing so well either, because the plain truth is that without the participation of the trade unions and the working class in postwar Europe you cannot get very far in reconstruction and self-help. The Scandinavians are standing aloof and are not anxious to be drawn into the political and ideological alignment pursued by the Truman policy. That leaves us with Portugal, Iceland and Benelux.

    The policy of developing the Commonwealth and Empire is a valuable one but it cannot suffice because it is long-term and will require a great deal of capital. There is no escaping the vital necessity of giving priority to establishing good economic as well as political relations with the States of Eastern Europe and the Soviet Union with the planned economies of these countries, which really are helping themselves and helping each other and normally produce a surplus of food and raw materials. Of course, in order to do this—and I come immediately to this point since hon. Gentlemen opposite are asking for it—the first thing for the Labour Party to do is to dissociate itself sharply and completely from the anti-Communist Jihad in which hon. Gentlemen opposite see fit to indulge. After all, the Communists do happen to be a decisively large part of the working class trade union and political leadership of most of Europe, and particularly of those countries' with which it is vitally important that we should trade in order to obtain food and raw materials. While I do not suggest that we should apply the principle that the customer is always right, nevertheless, I do not believe that we will do much business if we use shot guns and rat poison as instruments of negotiation with the powers of Eastern Europe. The Communists are rather' like the islanders whom the indignant explorer who landed on their shores described as "morose and intractable savages, who, when fired upon, do not scruple to retaliate." We can no longer afford the tragicomic spectacle of the Foreign Secretary playing Sancho Panza to the Don Quixote of the Leader of the Opposition, tilting at the windmills of anti-Communist, ideological fanaticism.

    I think it is time that the Labour Government stopped plodding dully in the wake of the old warrior, who is already prancing towards the third world war, brandishing his 1919 ideological tomahawk and ululating his Russian intervention war whoops, with tremolos and variations that he appears to have borrowed from the Central European chiefs whom he slew and scalped so doughtily only yesterday. The Government should no more be intimidated by the Tory blood and thunder foreign policy than they are impressed by their milk and water home policy. If there is anything more manifestly unnecessary and unwanted at this juncture in our affairs and the present state of the world than a milk and water home policy, it is a blood and thunder foreign policy.

    The Tories' idea of defence is to put this country in pawn to Uncle Sam in order to be able to wave a tinny and hollow-sounding mailed fist at Uncle Joe. Fortunately, it is now generally realised that we can no longer afford that kind of foreign policy.

    We are committed to a drastic cut in the Forces. It is nearly a year and a half ago, to wit, on 4th March, 1946, that I urged and begged the Government to cut the Forces drastically and also to cut or share their so-called world peace commitments which, so far as they are not prepared to share them are not genuine world peace commitments but imperialist hangovers. I am glad that at last the Government are proceeding along the line which I begged them to follow a year and a half ago. What I would like us to do as an immediate measure in order to deal with the situation is to offer to the Russians to split the difference on the Anglo-Soviet trade treaty. The million tons of cereals we would get from them this year would be valuable not only in themselves, but would also bring down prices of cereals in the United States and all over the world, as has already happened in other directions. A more long-range measure I would like to see is that we should, frankly and bluntly, say that we can no longer consider ourselves bound by Articles 7, 8 and 9 of the American Loan Agreement. We ought to recover our freedom of action.

    I would like to see us propose to the International Trade Conference at Geneva that they should revise the most-favoured-nation-clause on the lines suggested by the League Economic Committee before the war. That would give us the right to conclude tariff preferences with groups of States, provided that those preferences were open to any outside State willing to make equal cuts in its own tariffs towards the group. Above all, I want us to make a new start in our foreign policy, to recast its mental and moral foundations, and to stop being intimidated by the party opposite in our foreign policy, as long ago we ceased to be impressed by their lack of policy in home affairs. We should take our stand boldly on our Socialist principles, and should get together with the countries of Eastern Europe and with the Soviet Union. That would not mean we should have to part company with America, but we should be in a better bargaining position. The way to Washington on terms that would bring us there as an equal partner and a leader in European reconstruction instead of a bankrupt suppliant, lies through Prague, Warsaw, Belgrade and Moscow.

    8.13 p.m.

    I congratulate the hon. Member for Gateshead (Mr. Zilliacus) on his ebullient performance after his defeat at the party conference. I had begun to be afraid that his long absence from our debates presaged a change of heart, but I am glad to note that he has come back again entirely his old self—although he did not deliver this speech on the occasion of our Debate on foreign affairs, when perhaps it would have been more appropriate.

    If the House will bear with me, I desire to bring the Debate back to the point at which it was left by the Prime Minister this afternoon. After all, with due respect to the hon. Member for Gateshead, we are primarily concerned in the Debate, not with the shortcomings of America, however many valid criticisms we may find of that great country, but with what we are proposing to do to get out of an extremely menacing crisis. I think hon. Members opposite will agree that that is our main purpose in this discussion.

    The right hon. Gentleman the Prime Minister began his speech by saying that he was not going to make a purely party speech. With respect to him, I think that was a wise decision. There are, of course, many things which must be discussed in a Debate of this kind which divide us deeply, but it was wise to begin by emphasising certain things about which we are united. We are all gravely anxious about the crisis in which our country stands. We are all confident of our country's future despite the difficulties, which appear at times to be overwhelming. We believe in our country and mean to see that it survives, despite any errors of statesmanship which may be committed by its leaders. Furthermore, we may say we are determined about this, that deeply as we differ about matters of importance and principle, we are all determined to pursue our differences according to the laws and mechanism of Parliamentary democracy—no small thing in a country where differences are as deep as they must be at the present time.

    Therefore, I may say at once that, to that extent at any rate, the Prime Minister's appeal for national unity does not fall on deaf ears so far as this side of the House is concerned. I say that despite some rather provocative remarks which are made by hon. Members opposite from time to time. I suggest to them in all seriousness that if the Prime Minister, the leader of their party, is going to call on all sections of the community to unite behind a drive for production, they do not particularly assist that demand when they accuse us, as they have today, and as they have on many occasions past, of being members of a party of parasites, and unscrupulous exploiters of the poor who do not love their country. The senior Member for Oldham (Mr. Fairhurst) used practically that language and the hon. Member for Norwood (Mr. Chamberlain), in a supplementary question yesterday, fresh from his moral rearmament triumphs, used the very word "parasite" to which I object. That is not the way to national unity. I can say to hon. Members opposite that however offensive they may be to hon. Members of this party, we love our country no less than they do, and we will give our country that same devoted service they would expect to give it themselves, whatever they may say about us and however they may traduce our motives or our characters.

    There is a sense in which national unity at the present time is not a possibility. I wish to emphasise the degree to which it has become impossible. The Prime Minister has more than once—today was only one of a series—appealed to us to recapture the spirit of Dunkirk, and when it has been pointed out to him that the spirit of Dunkirk was founded upon a common policy in which all the Members of the then Government agreed, he has replied with the specious argument, in which no doubt he sincerely believes, that because the Labour Party won the Election it was wrong for the occupants of these benches to ask them to desist from their programme of nationalisation and Socialism to which they were committed in their Election manifesto. The Prime Minister has said—I go with him so far—that hon. Members opposite sincerely believe in their policy. But they must also recognise that we on this side, who at the nadir of our fortunes at the last General Election had the support of some nine million of voters, sincerely believe that it is that very policy of Socialism which is largely responsible for our misfortune. They may think it absurd that we should hold this belief, but they must reckon with the fact that we do hold it, and not only do we hold it but it is held also by those who support us in the country—a very large portion of the community—who are entitled to make their voices heard. When, therefore, the right hon. Gentleman asks for national unity, my reply must be the same as it was in March; that no national unity is possible on a political basis unless the Government call a halt to nationalisation.

    Is it not the case that the Labour Party, and the workers who support the Labour Party, went into the war effort and the Dunkirk spirit under private enterprise with which they disagreed as strongly as the Conservative Party disagree with Socialism?

    The hon. Gentleman has failed to get the point, which is that the whole nation supported the war effort in 1940 because they all believed, whether they were Socialists or Conservatives, that the policy to be pursued was to win the war by all means possible without regard to their private political convictions, but we cannot go into a similar political unity now because we believe that the very policy which is proposed is the actual cause of our miseries. It is for that reason, and not any want of patriotism on our part, which must lead us to reject the proposals which the Prime Minister made this afternoon.

    So many hon. Members wish to speak that the amount of concessions I can make in this Debate must be less than usual. I hope the hon. Gentleman will acquit me of discourtesy. The Prime Minister seemed to me to touch the centre of this matter in that part of his speech when he said that it was easy to be wise after the event. I think he used the phrase "jobbing back." But we have not been wise after the event. I can think of none of the factors mentioned by the Prime Minister this afternoon, not one of them, which could not have been foreseen by an averagely intelligent child of 16 in the year 1945. I can think of none of them which was contained in the 1945 Election Manifesto, and hon. Members opposite must really reconcile themselves to the belief that we on this side of the House are going to say up and down the country that they got power by a fraudulent prospectus, that they have proved themselves incompetent to govern, and that they are pursuing political and economic principles which, if pursued indefinitely, will lead us into even worse disaster. It was obvious in 1945 that this country had emerged from the war in such an economic condition that we must necessarily either have to endure what we are now enduring—a sharp drop in our standard of living—or we should have to obtain from abroad a line of credit to tide us over the transition period——

    And what about the programme of hon. Members opposite?

    It was obvious, therefore, to anybody that our duty, when we obtained the line of credit—which any intelligent child could have seen was insufficient for the purpose—was both to husband that line of credit enough and to take immediate and urgent steps to make us self-supporting as soon as possible. That was the manifest duty of any respectable Government of this country in 1945, and the case of the Opposition is this—not merely that these present austerities would never have occurred under a Conservative Government, but that they ought never to have occurred under a reasonably competent, a reasonably efficient and reasonably patriotic Government of a Socialist persuasion. These things are unnecessary, and they have always been unnecessary. They are the direct result of a want of planning and a want of foresight by a Government which describes itself as an administration of planners.

    If the hon. Member suggests that this austerity is unnecessary, will he tell me how it is that, in a previous crisis, his party put over 850,000 people on the means test and robbed them of their savings?

    I thought the hon. Gentleman had something useful to contribute to the Debate. The fact is—[HON. MEMBERS: "Answer."] I am talking about our present economic difficulties. The fact is that this Government have been guilty of the same mistake three times over, and each time the mistake has been in a more important matter and has led to consequences each time more severe. The first time was in the early spring of 1946 when the maladministration of our food situation led to the resignation of Sir Ben Smith. The second was the fuel and power crisis in the spring of this year when the maladministration of our coal industry ought to have led to the resignation of the Minister of Fuel and Power. The third occasion is now, when the maladministration of our economic situation should certainly lead first to the resignation of the Chancellor of the Exchequer, and secondly to the dismissal of this Government, and the Dissolution of Parliament.

    In each case the mistake has been the same. In each case the country was faced with a prospective crisis, which could easily have been foreseen, and which ought to have been dealt with in time. In each case it could have been dealt with in time, not so as to avoid all hardship, but so as to incur a hardship far less than that which has in fact been incurred by the policy of putting off the evil day. That was true in the case of food, that has been true in the fuel crisis, and still more has it been true in the dollar crisis which we are discussing today.

    In view of what the hon. Member said in his last few sentences, why does he not deal with his own opposition to bread rationing?

    If the hon. Member will look up my speech in HANSARD he will see that what I said on that occasion has been proved abundantly right. I said that the bread rationing scheme as then presented was

    "the ill-thought-out and over-complicated scheme of a cocksure and inexperienced administrator."—[OFFICIAL REPORT, 18th July, 1946; Vol. 425, c. 1466.]
    I was referring to the exchange of points and B.U's——

    The hon. Member does not want B.U's for points, he wants it all his own way.

    I well remember that on that occasion the hon. Member for North Hen-don (Mrs. Ayrton Gould) reproved me, and said the interchangeability was a brilliant device on which we should congratulate the Minister.

    The hon. Member for Oxford (Mr. Hogg) was on the playing fields of Eton whilst the unemployed were marching the streets and going hungry.

    The hon. Member for Sparkbrook (Mr. Shurmer) has anticipated me in the remark I was going to make. I have at last learned what the song in the heart of the Chancellor of the Exchequer really is. It is not the "Red Flag," it is "The Eton Boating Song."— "We all swing together"—and swing together the right hon. Gentlemen undoubtedly will, unless the political roundabouts take them away in time. We are living in a world of economic make-believe created by the Front Bench opposite. We are told there is a shortage of coal, a shortage of labour, a shortage of dollars, but for all practical purposes there is just as much coal in the ground as there ever was——

    —and as we could legitimately hope to win in a life time We are told there is a shortage of labour, but there are available for work in this country far more men and women than there have ever been. We are told there is a shortage of dollars, but there are far more dollars in the world than ever before. There never have been so many dollars in the world. It is only that our great Socialist Government cannot get the dollars—[HON. MEMBERS: "Oh."] No, Sir, the real truth about the matter is this—there is no shortage of labour, there is a maldistribution of labour. There is no shortage of coal; there is a failure to produce it. There is no shortage of dollars; there is a failure to produce those goods which will exchange for dollars. The case for the Opposition is that the Government, by their policy, have directly contributed to, if they have not actually created, all these failures.

    I will deal, first, with the shortage of labour. There has been no wages policy throughout the whole history of this Administration. Yet a wages policy was one of the first things which a planning Government should have produced. Although there has been considerable control of prices there has been no price policy either. Still worse, there has been no planning whatever of the balance between our capital expenditure and our expenditure on current account. These three factors, taken together, are the cause of our present crisis. I am not in the least impressed with the various excuses and alibis put forward by the Front Bench or from the back benches opposite I am not in the least impressed by the talk of this rise in dollar prices. Hon. Members who put forward that argument talk like children. What did they think dollar prices would do? Did they think they would fall? Did they think they would remain stable? Anyone who has the slightest grasp of the most elementary economic principles must have known that dollar prices would rise, and, knowing it, have taken urgent and necessary steps in order to deal with the crisis when it came. Instead of that, we are told that this rise in dollar prices has caught this, Government of planners unprepared. They ought to get out and make room for a Government which can foresee the facts.

    Look at the want of balance between the reward for skilled labour and the reward for unskilled labour. Look at the want of balance between the man who produces much and the man who produces little. Look at the swollen non-essential trades, and the labour-starved trades which produce commodities which every one needs and wants.

    Thank the Labour Government for it, because no one else is responsible. What is the reason we have such a plethora of workers in the football pools, for instance, and so few in textiles? The reason is that right hon. and hon. Gentlemen opposite, in their superior wisdom, have so far controlled the essential trades that they cannot pay wages which compare with those of the non-essential trades, which they did not control. That is the reason. I challenge a single hon. Member opposite to deny it. So paradoxical, so utterly wanting in plan, so utterly wanting in economic knowledge or political sense, have been that Front Bench, that they have permitted this to happen under the flag of planning itself. That is what they have done in two years of power—swollen the non-essential trades and starved the essential ones, and thereby produced the crisis.

    That simply illustrates the general choice which this country will sooner or later have to make. The Minister of Health, the other day, in a speech in which at last appeared some elements of realism said, in sharp contrast to many speeches from the benches opposite, that it really did appear in the last resort that appeals to ideological patriotism were not enough to create production in this or any other country. That, strange as it may seem, is not simply a piece of political cynicism; it is also a moral proposition, because while it is wrong for the individual to exploit the community, it is also wrong for the community to seek to exploit the superior skill or energy of any particular individual.

    There are two incentives which move mankind. There is the incentive of the totalitarian—the incentive of the stick—and the incentive of free enterprise—the incentive of the carrot. No country can avoid the use of both incentives, to a degree. There is no country so free that it does not employ the stick and there is no country so totalitarian that there is not some element of the carrot introduced, at any rate to those higher grades in the managerial state which are so well supported in our more highly developed Socialist labours. But, in the last resort, the Government sooner or later will have to make up their minds upon which of these incentives they are going to place their reliance. I am very much afraid that, little as he may have intended it, the Prime Minister this afternoon announced the first tentative moves of the Government towards the application of the totalitarian incentive of the stick. There are only two ways out of this crisis. One is to compel people to do what is necessary and the other is so to affect the economic laws that they provide an incentive for the people to do what is necessary.

    The hon. Gentleman was not in the last Parliament or he would have known something about that. [HON. MEMBERS: "Answer."] I am anxious not to take up the time of the House unduly because I know that many other hon. Gentlemen wish to speak. Nevertheless the hon. Gentleman has challenged me and under the taunts that I have not answered him, I will answer now. He asked whether I have read Corinthians 13, the Hymn of Love. Yes, I have and I have sometimes noticed the sad contrast between those who call us parasites in the name of what they claim to be moral rearmament, and the sentiments indicated in that passage. As I see it——

    The hon. Gentleman appears to be looking at me. When I referred to parasites yesterday, I was not referring specifically to him; nor was it in the name of any particular cause.

    The hon. Gentleman does not refer to me as a parasite, but apparently his Christian charity does not extend to other people. According to the doctrine to which the hon. Member for Elland (Mr. Cobb) referred, all men are brothers and there are not some who are parasites and some who are not. I leave the hon. Gentleman there. It is a point which is inconsistent with his profession. I will return to the point on which I was challenged. I suppose by his objection that the hon. Gentleman thinks that Christians must believe that the only motive which ought to animate people in working hard for their country is simply a love of their neighbour without hope of reward. I am afraid that I do not agree that that argument is theologically correct. It is not illegitimate in this world for people to work for their livings, for their wives and their families. Hon. Members opposite, many many times in this House, have appealed, and in my recollection never in vain, to the honourable and dignified position which a worker, whether with head or hand, holds because he really does want for his wife and family some reward in return for the service that he gives.

    I say most earnestly to hon. Gentlemen opposite that the Minister of Health, when he gave vent to this doctrine in words not dissimilar to my own, was not attacking their idealism but was appealing to their commonsense, which some of them sadly lack.

    I have been led off the path of what I intended to say, but I want to make two more short points in conclusion. In the last resort, the choice which the Government will have to make is ultimately a choice between a totalitarian state, however mitigated by the tolerance and decency which we know exists among hon. Members opposite no less than here, and some return to the price structure. It may be that we shall make different choices, but, at any rate, let us know what the choice is. Their approval of a return, if only temporarily, to the direction of labour is a clear indication of their faltering steps towards totalitarianism. I beg hon. Members to turn back before it is too late. The price structure had many faults, but some, and indeed most, of them can be mitigated.

    I would have liked, and I hope on another occasion to indulge the temptation, to answer the hon. Gentleman specifically upon the problem of unemployment, but I say in all sincerity to him, although perhaps I have not as much right to say it as those who are actually unemployed, that I sincerely believe that even if those who were unemployed for long periods before the war had a choice between a totalitarian system and a free system, even with these faults, which I am sure can be cured, they would be with me in choosing the latter.

    I said in March that the publication of the Economic White Paper marked an end of the mandate of this Government. It marked an end of its mandate, because, when they went to the country with the little pamphlet "Let Us Face The Future," they went to the country with what was intended to be a comprehensive programme. The publication of the White Paper in March rendered it inevitable that this Government should now seek to impose upon, the people austerities and restraints which, however necessary some may be, are still austerities and restraints for which they have not a shadow of a mandate at all. They are governing this country, not by any mandate which they have received from the electorate, even if their policy is wise, but governing it upon the certainty that they can control the votes of over 200 hon. Members opposite.

    That being so, there is only one honourable course for them to take, and that is, at the earliest moment, to advise His Majesty to dissolve this Parliament and go to the people with their new programme. If they win, good luck to them. They will have won according to our Parliamentary democratic methods, but if they do not win, then, at least, we shall have a Parliament more capable of giving rise to that national unity for which the Prime Minister has, I fear, appealed in vain this afternoon. This House of Commons has many virtues. Most of us have made many friendships in this Parliament but, from now onwards, we are going forward in uncharted waters without a vestige of the right to govern in the light of the changed circumstances of the case.

    8.44 p.m.

    The right hon. Gentleman the Member for West Bristol (Mr. Stanley) said that the argument of the Tory legacy had worn thin, and, having listened for the last half-hour or more to the hon. Member for Oxford (Mr. Hogg), I am beginning to think that the Tory legacy has worn very thin indeed. The hon. Member suggested that the only course open to the Government was to resign and go to the country. I would remind him that there have been by-elections during the last two years, in all of which seats held by this party have been won by Members of this Government and I challenge him to give any case in the last 50 years of a Government which came back from a General Election and survived two years without losing a by-election.

    Then the hon. Gentleman need have no fear about the result of a General Election.

    The hon. Gentleman ought to realise that, in such circumstances, there is no need to put the country and the people to the expense of holding a General Election.

    The hon. Gentleman says that we might lose 100 seats, to which I reply, "Complete rubbish." The events of the last two years show that we have not lost any seats which we held, and that is a perfect answer to the hon. Gentleman's point. I want to turn to the general aspect of his speech. He said that the policy of Socialism was responsible for our misfortunes today. I do not want to weary the House tonight by going through the whole of the things he tried to say—we are used to the effusions to which he gives vent from time to time—and I do not think he will think I am unfair when I say that the essence of his speech is summed up in the words that the policy of Socialism is responsible for our present misfortunes. I thought—and this is where I agreed so much this afternoon, as I often do, with the right hon. Member for West Bristol when he told us about the Tory legacy which we had inherited being very thin—that it came ill from hon. Members opposite to come to this House in 1947 and to talk about the responsibility of this Government for the economic misfortune which, in the main, is the result of their own misgovernment between 1919 and 1939.

    We expect to have these interruptions from hon. Members opposite when they have things thrown at them which are unpalatable, and, no doubt, as the evening goes on, we shall get more of them.

    I want to look at this whole problem. We are confronted with the question of the balance of payments, and with the fact that this year we are faced with an export deficiency which the Government are finding it difficult to bridge. At a later stage, I want to come to the question of how the Government are going to bridge this gap. We have been told that the deficiency at the present time is due to the policy of Socialism. I remember, back in 1932, the then Conservative Chancellor of the Exchequer trying to justify the tariff policy of the late Mr. Neville Chamberlain by suggesting that we had to have tariffs in order to balance our payments, because we were in a bad position in those days. I suggest to this House that ever since 1913 we have been in a bad position in regard to the balance of payments, and that it is a long-standing problem which has confronted this country for 25 years, and which the Tory Governments in the past would never face. Their policy of tariffs and Imperial Preference provided no lasting solution to the problem.

    Prior to 1913, this country was able to buy whatever it wanted with its exports and its other services, without relying in any way on the interest from its overseas investments. At that time, our overseas investments were always reinvested, and led to more exports. The first world war made it necessary to sell a portion of our overseas investments. I would like to remind the House, in view of what my right hon. Friend the Prime Minister said this afternoon, that we recovered from that position within five years of the 1914–18 war. We had as many overseas investments in 1927 as in 1914. We recovered from that position, but at no time from 1920 to 1939 was this country able to pay for its imports with its exports and services. Each year, we had to draw on the interest from our overseas investments. The House should be reminded, because it seems to be important, that for three years before the 1939 war we had an adverse balance of payments which would have required about a 20 per cent. increase in exports to put it right. We are told by the hon. Member for Oxford that this adverse balance of payments is due to the policy of Socialism. No doubt the hon. Gentleman was referring to the Socialism of the late Mr. Neville Chamberlain and of the Tory Government in the years 1937, 1938 and 1939. Why is it that we had a deficiency in our balance of payments in those years, even taking into account the whole of the interest on our overseas investments? I am afraid the suggestion of the hon. Member for Oxford is just a little too shoddy.

    This is where I wish to say a few words of criticism of the Government. The problem with which we are confronted today would have had to be faced by any Government. We are not in this crisis because of the war, although the Bill with which we shall have to deal in the next few days says that we are. The war merely accentuated the situation. If there had been no war, we would have had a crisis of this kind, though of not such a large dimension. [Interruption.] The hon. Member for Oxford laughs, and one expects him to laugh when he hears a few reasonable arguments with respect to this problem. I wish to detain the House for a few moments to deal with the points which have been put before us by the Prime Minister, and I wish to say how completely disappointed I am with the way in which he has faced the problems, as indeed a lot of us on this side of the House are disappointed. The magnitude of the problem does not appear to be recognised. We are not concerned so much with short-term remedies, necessary though they are—and I appreciate the difficulties of the Chancellor—but we are greatly concerned to see that a long-term policy is formulated based on what is a correct diagnosis of the position. We must get our foundation right. If we felt that the long-term policy was right, we would put up with any sacrifices of a short-term nature.

    So much of the discussion has proceeded on the basis that our balance of payments is out of equilibrium. We are told by the Prime Minister that we are going to try to balance the position between the Old and the New World. That is something which we will never see happen. The world has changed. I wish to direct the attention of the President of the Board of Trade to this problem, in the hope that he will deal with it when he replies. The whole argument which has been put forward in the last two years has been on the basis of multilateral trade, of increasing international trade and getting rid of trade barriers, with all of which we agree in the main. But if one takes one's mind back to the time of the American Loan, one remembers the speech which the late Lord Keynes made in another place when he argued the whole position and said that our policy was one of getting back to multilateral trade. I will not weary the House by quoting the speech, but I would like to refer to two points in it. He said in that speech, and later in an article in an economic journal:
    "Putting one thing together with another, and after pondering all these figures, may not one feel himself justified in concluding that the chances of the dollar becoming dangerously scarce in the course of the next five to ten years are not very high? I found some American authorities thinking it at least as likely that America will lose gold in the early future as that she will gain a significant quantity. Indeed, the contrary view is so widely held, on the basis (I believe) of mere impression, that it would be a surprising thing if it turns out right."
    And later:
    "Perhaps one may be left for the moment to form his own judgment, in the light of the above, of the most probable order of magnitude of the American favourable balance of visible trade in the post-war environment. An average of $2 to $3 billion a year over a period of years beginning in 1947 looks to me fully high on the basis of present expectation."
    Who will argue now we are not short of dollars? And he said that if we assessed the export surplus of America on an average of two or three billion dollars, we would be putting it high—he said "fully high"—on the basis of present expectations. Yet it is obvious that we are going to face an export surplus this year, not of two billion dollars but 12 billion dollars.

    For two years, with obvious sincerity and an enormous amount of energy the President of the Board of Trade has made an attempt to get back to the field of international trade as we knew it in the old days, on the grounds that we are a country whose life blood depends on international trade. If that is so, our life is ebbing slowly to its close. We are living in an entirely changed world. Though international trade has been increasing over the last 30 years, international trade in manfactures, which is what this country is interested in, has been going down. We are confronted today with the request to increase exports by 160 per cent. in the last six months of next year, on the basis of 1938 exports. But of our exports in 1938, 25 per cent. were in certain raw materials, coal and other things of that sort, which, I think, it is common opinion to say, we shall not be able to export this year or next. Therefore, we are going to rely entirely on exports of manufactures, which means that the target of 160 is an export target of 200 per cent. of 1938 in manufactures.

    I do ask the Government to think of this thing, and to realise that that is completely impossible. It is impossible for two reasons, if only for two The first is that the production of manufactures over the world in the last 30 years has gone up 100 per cent.—it has doubled, roughly—but trade in manufactures in the last 30 years has not gone up at all, and, in point of fact, it has gone down and in the last six or seven years, in the main industrial countries of the world, of which this is one, it has gone down 20 per cent. since 1913. If that is the trend, surely we have got to realise that, because of tariffs, because of the industrialisation in other countries, and the increased production of manufacturing industries in different parts of the world, the mutual advantage which comes from international trade in manufactures becomes smaller.

    So we have the position today that while trade in raw materials and in food is going up—and we see that all the time: the production of food and raw materials in the last 30 years has probably gone up about 50 per cent. although the trade in them has gone up by 25 per cent.—in manufactures, on which we depend for an increase in our exports, there has been a trend, towards a reduction, since 1913, particularly since 1930. It is a trend which the Tory Government in 1929 and 1931 tried to put right by tariffs and other things—by the Ottawa Agreement, and other things of that kind—but they did not right it. I am not raising this in any party sense at the moment. I am trying to get down to the fundamental economic problem, which is this. We are faced today by the fact that the development of the 20th century is very different from that of the latter part of the 19th century, that international trade is not today as it was in the 19th century, when we were the workshop of the world. By the end of that century we could afford to buy a lot of imports, process them, and export them; but we are confronted today with the fact that the quantity of the things we ourselves import and export as manufactures will not ever even get back to the level of 1929. I doubt really if world trade in manufactures will get back to the 1929 level—so where is our increase? The whole tendency in world trade of manufactures is downward.

    If this is so—and I ask the Government to take up this argument—but if that is so, we are facing a problem which is a very different one from that raised by the hon. Member for Oxford, which was the problem of Socialism. It is not that at all. We are producing today only a tenth of the world's manufactures as against three-tenths at the end of the last century, and we are exporting today only one fifth of the world's manufactures as against two fifths at the end of the last century. We are in an entirely different position, largely because of the rise of America.

    I do not want to weary the House with details of the enormous extent to which American production has increased. I get very weary of hearing hon. Members talking of soft and hard currency areas. There would be no problem of that kind if America put into the world sufficient dollars. We were never a big exporter to America. We never sent more than 6 per cent. of our production to the United States. But when I hear the right hon. Gentleman the Member for West Bristol say we must be independent of America, I wonder what he looks at and thinks of. Does he not realise that our exports have for the last 20 years always gone exactly the same way as the national income of the United States? Not because we are big exporters to America, but because we sell goods to countries which have already sold goods to the United States and got dollars in that way. Until those dollars are made available in different parts of the world we are not going to get back to the position we were in before the war. Hon. Gentlemen opposite shake their heads, but surely these are the facts? Surely the United States bought rubber and other goods from Malaya and we were able to export to Malaya and get dollars in return? We have never relied on exports to America to buy raw materials elsewhere The convertibility we are worrying about is only a problem because other countries of the world are short of dollars. This is not, as the Prime Minister tried to suggest this afternoon, due to the war, because the countries who are short of dollars and who are controlling their dollars today are countries like the Argentine, Mexico, Canada and Sweden, to mention only a few on the list who have dealt with this problem recently.

    In this fifth decade of the twentieth century we are in a position in which American production, trade and investment is so great that her export surplus today is the best part of 12 billion dollars: Her export surplus is twice her total exports in 1938; her production today is four times what it was in 1938. It is ludicrous to talk of multilateral trade. Russia plays no part in world trade; America dominates three-quarters of world trade, and there are left only a number of small nations who can never stand up to that unless we have Lend Lease, and "that sort of thing again. During the five war years 30 billion dollars were given away to the world, and, therefore, things went on. I put it to the House that since 1929, the year of a great economic crisis, no country in the world, except Germany, has ever recovered from that crisis; no country ever got back to its production or trade in volume or value, apart from Germany, except during the war period.

    America did not up to 1939. She did during the war, but she did not in peacetime. And she did it during the period of the war only because of the war and because of Lend-Lease. At the end of the war, we ended Lend-Lease, and we then had U.N.R.R.A., which finished last year. Then we are surprised that there should be a shortage of dollars in the world, when we still have not overcome the problem which caused the crisis in 1929, which is the problem of a dollar shortage all over the world.

    I desire to make two suggestions which I consider ought to be taken into account at the present time. It worries me that the Government—and the Prime Minister in his speech this afternoon—should think only in terms of short-term remedies. The Prime Minister did not realise, or acknowledge the fact, that the crisis we are now facing is an accumulation of 20 years' development; there have been 20 years during which the position has been changing. Obviously, the two wars made the position infinitely worse than it otherwise would have been; they accentuated the problem. We must face the fact that we are now in a world in which we cannot rely upon the export of manufacturers to the extent that we did before. I pay tribute to the President of the Board of Trade for the way in which, for two years, he has done his best to raise the whole level of exports. But I do ask him to bear in mind that before the war the trend was always on the way down, that America has a market of 120 million as against our 45 million, that we are unable to compete with the rising mass production on which America can rely, and to realise that we, therefore, have to look at this problem from an entirely different point of view.

    Today, we have been given a series of short-term remedies which do not add up to a bagatelle. We are to cut timber imports by ten millions as if that will help. Since the conclusion of the war with Japan we have spent more on our overseas commitments than we have received from the whole of the American Loan. This is the crux of the problem and it is not being faced. This afternoon, we have been told that it is intended to cut our Armed Forces. In 1946 we spent £300 million on our Forces overseas. We were told that we would spend £175 million this year; but it must be over £200 million at the moment. These are figures which ought to be tackled. We must face the fact that we cannot afford the luxury, whatever the necessity, of spending the sum which went on our Forces overseas last year. We must withdraw our Forces from Palestine, Germany, and from other parts of the world so that we can cut this expenditure which, in the last resort, comes down to dollar expenditure. But we must face the problem of other cuts as well. Obviously, we can improve agriculture, and at the same time cut films, petrol and similar items, in order to have more for raw materials which go into exports.

    But those are all short-term problems, and I suggest that there are two really serious long-term problems which ought to have the consideration of the Government. The first is that we must rationalise our industry, and apply Socialist methods in the doing of it, in order to see that we obtain ten times greater efficiency in our industry than we have had before. For the last ten years, every Member sitting on the Government Front Bench has been saying that private enterprise is inefficient, and that the Socialist method is the method of approach. Now we are in a crisis, it is time we applied our Socialist ideas. It means nationalisation of steel, of which we heard nothing today, and it means stepping into a lot of inefficient industries.

    If we are to compete with America and other countries of the world, we have to learn the art of mass production. That means that in most industries we have to reduce the number of firms operating to two or four. I have already spoken on the problem of building. There we have the utmost inefficiency There are 40 different types of prefabricated houses out of the 80,000 being built. Since when has that been mass production? We have the same thing happening in the motor car industry. We have to standardise manufacturing of all kinds. The Government have to step in and lay down the conditions under which this standardisation is to be done, and we not only have to reduce the number of firms within an industry, but reduce the number of industries and concentrate on high quality and capital goods. I do not know whether this new Bill is for the purpose of stepping in and reorganising industry.

    For 50 years this country has lived on the fat which has come from its external investments. Today, in Australia, they are producing steel cheaper than in this country. That is in a country with only a few million people, and they are doing it because they have not been living on the fat of investments abroad—I admit they have iron ore and new machinery. They are producing steel at £1 to 30s. a ton cheaper than in this country, and we cannot afford that position to go on. I ask the Government to realise that they have to put their house in order on a long-term basis. For years we have been saying that private enterprise is inefficient, and that a Socialist Government will come in and make industry efficient. That is our job, and that is the way to meet this crisis.

    The second thing is bluntly to face the fact, and why not face it and get rid of this cant and humbug going around the country, that we can still go on living as we did 50 years ago? We are a small country which is not big enough to mass produce, and you cannot survive in the 20th century unless you have a market big enough to mass produce. The only way to do that is to set up in Western Europe a customs union and a common currency. This may need imagination, but let us face the fact that American prosperity today comes not from the fact that the Americans are more intelligent than the Europeans, or that they have greater resources than Europe. If we look at the resources of the 14 countries who came to the Paris Conference a few weeks ago, it be found that they have greater resources in raw materials than the United States.

    If a free trade market of 200 million people is brought about, you will create an area within which there is an ample source of supply for raw materials and which is big enough to give this country and Europe the markets needed for survival. It may not be realised that of the 10 billion dollars of manufactured goods that went into the world trade before the war, 7 billion came from Europe. It may be a bit of a come-down for this country to regard itself as a European State, but that is the way to build up an economic structure for Europe. I ask the Government to think of this much more seriously than they have done. The problem that confronts this country is so great, and so great is the need for long-term policies, that it is necessary to build up such an area in which there can be multilateral trade, and to get rid of our old ideas.

    Let us increase world trade, but we ought to do that in an enlarged area, in which this country and other countries of Europe can trade. If we start doing that we shall build up an area which can provide the raw materials we require, and the manufactured goods which the continent of Europe requires. I apologise for delaying the House so long, but, apart from 1940, there never was a time like this. We are now facing the greatest problem that any country has ever had to face. A hundred years ago Pitt told the country that we could save ourselves by our own exertions, and Europe by our example. We saved ourselves by our exertions in the last war. We must now set the example. This country has a chance of reorganising its industries and putting them on a basis which is really efficient, modifying private enterprise by Socialist ideas and getting rid of its inefficiencies, and getting real order instead of our present inefficiency. We should call the countries of Western Europe together to build up an area in which the peoples can live together and trade. Let us concentrate on long-term remedies, because that is the real problem to face.

    9.12 p.m.

    I have been in the Chamber for four and a half hours continuously, and I have listened to many interesting speeches. The speech of the hon. Member for Gateshead (Mr. Zilliacus) caused considerable amusement and merriment, but when the public have unfolded to them tomorrow the full story, as told by the Prime Minister, I can assure him that they will find nothing to be merry about. As the hon. Member for North-West Hull (Mr. Mackay) has just said, this nation is faced with a problem of the greatest magnitude.

    When the Prime Minister sat down, after making his speech, I looked at the faces of Members on the Front Bench, and other Members of the party opposite. They portrayed anxiety, fear, and dread. The hon. Member for Bolton (Mr. J. Jones), in a remarkable and forthright speech, asked, "What are we going to do about it?" There has been a lot of talk in the House today, and when I sit down another dozen or so Members will rise to try to catch your eye, Mr. Deputy-Speaker. The whole of tomorrow afternoon and evening will again be spent in Members talking about this crisis. I suggest that what the nation wants is less talk; it wants real action. This House could do a big thing if it would send a message of encouragement to every section of the community. There is not the slightest doubt that additional sacrifices will be demanded from the common people. Working men will be directed, with all the inconvenience that that will cause, and housewives will face further cuts in essential food supplies. Industrialists—everyone from the top to the bottom—are to be asked to carry further sacrifices. A message of encouragement and of our sincerity to the nation would, I think, be a noble thing and help to spur on the men to increase production. If whoever is replying on behalf of His Majesty's Government would bring in the necessary legislation to reduce the salaries of Members of Parliament from £1,000 to £600 this would show our sincerity, and that we are prepared to make some sacrifice when calling upon other sections of the community to do likewise.

    9.15 p.m.

    Listening to the speeches from the other side, I have been wondering whether hon. Members had completely forgotten that we had passed through six years of the most devastating war which the world has ever known—not only destruction of men and materials but devastation of whole countries. When they talked of a change in Government, I was reminded of what happened in the '30's when we had Tory Government—the dire poverty and unemployment in 1939 which resulted in one-third of our population suffering from semi-starvation, and more than one-half of our people not having sufficient of the right kind of food to eat because they had no money to buy goods. I am wondering what would have happened if a Tory Government had been returned after six years of war on top of the problems which they have built up before the war. I was pleased to hear from the hon. Member for Oxford (Mr. Hogg) that hon. Members on that side were prepared to give devoted service to the country. I thought to myself,

    "ye shall know them by their fruits"
    and I hope that they will give more than lip service to this country in its time of need. I am glad that most of us in this Chamber recognise that strong measures will have to be taken and that planning will have to be carried out, if we are to pull out of our difficulties. We on this side are wholeheartedly with the Government in any action that they may take that will help to avert the greater crisis that we see ahead of us. One of the measures which I particularly welcome is the reduction of the Forces but, like many of my colleagues on this side, I would welcome a still greater reduction. I would like to see our Forces brought back from Greece, Italy and Germany, leaving a minimum of Control Commission personnel in Germany.

    I agree with the decisions that have been put forward to increase the targets in our basic industries and agriculture. Many of the technical details have been dealt with by hon. Members on both sides of the House, and I would like to deal with more simple but very necessary matters if we are to get the full support of our people. I want to deal with the things that affect our people very closely. The Prime Minister asked us to put forward suggestions, and I want to suggest certain actions which, although they may not show any immediate benefit, will at least have a very good psychological effect. If the people of this country believe that real equality of sacrifice is aimed at, then they will have a greater incentive to give of their best. Therefore, I say that, first and foremost, we must deal with high dividends and profits. It is no use asking our people to work harder if, in working harder, they are merely increasing the already high incomes of a few people.

    That is no incentive at all to our people nor is the fact that we still have many idle people in the country and many who are in non-productive work. There are plenty of pleasures for the idle as well. I was glad to hear the Prime Minister's statement on the proposed restrictions on foreign travel, and I hope he will place restrictions on some of the pleasures like Ascot races. Personally, I should like to see all able-bodied persons who are doing non-essential work being placed on essential work. There would be the necessary protection, but we have to do something about all these people doing unnecessary work.

    Such as pools and work of that kind which we can do without.

    While I am dealing with these points I know that I am expressing the wish of a great many people in this country when I suggest that lavish arrangements should be avoided for the forthcoming wedding of Princess Elizabeth. The general opinion amongst the workers is that it would not be right to spend large sums of money on this wedding when we are asking the workers themselves to economise even in the necessities of life. I know there will be thousands of people who will want to see the wedding, but I am quite sure that an austerity wedding will be much more appreciated throughout the whole of the country.

    We are appealing to those of our people who are producing the necessary goods and services and unless those people are assured that all others are also being made to pull their full weight in working for the benefit of the whole community, then their enthusiasm to do so is going to be considerably damaged. There is one thing I should like to say and that is with regard to our Government factories. The workers in Government factories have a feeling that their production—and I say their production—is carrying too many unnecessary officials and administrative staffs. I hope that full inquiries will take place and comparison will be made in relation to the prewar ratio of established staffs and the actual producers, because the workers in those factories are considerably disturbed at the present state of affairs. I hope the Minister will note the reply given by the Minister of Supply in answer to a Question asked by my hon. Friend the Member for West Woolwich (Mr. Berry) regarding this particular point. The answer is given in Monday's HANSARD.

    Wages, too, are a great incentive to work but when a skilled worker can take a day off his work and it will only cost him 5s—a skilled worker told me that that was what it would cost him if he took a day off—I consider that this state of affairs is an incentive to a worker to take a day off rather than a deterrent. I hope the Chancellor will take special note of that and try to remedy it so as to give a greater incentive to our people and to the men at work. In this austerity period ahead it would be greatly appreciated if the workers in essential industries could be given additional rations. That would please the workers in the countryside and also housewives would not oppose the putting of restrictions on restaurant meals. As to the proposal that coupons should be given up for meals in restaurants, this could be done by a scheme of points rationing and the points could be interchangeable so that if not used for meals, they could be spent by the housewife on points goods, and would at least make her feel that she was not being given such a raw deal. In the circumstances where she has to provide all her family meals from the meagre ration she would feel that she was being given a little extra help.

    I have said before in this House, and I say again, that the splendid job of the housewife is not being fully recognised. I know that the right hon. Gentleman paid a tribute to the housewife today but I hope that in this new austerity period which we are expecting our housewives will be given some priority. We depend too much on their job of keeping their families healthy, content and happy. I hope that the appeal to housewives to enter into full time and part time employment will be successful, but to ensure that, it is necessary that wherever possible, the maximum convenience is created for those with heavy responsibilities, and in particular, for those in industry. One very important way of easing the housewife's burden would be to remove the necessity for her to stand in queues or to travel from shop to shop to find the goods that she needs.

    The shorter the supply of goods the more important is it that there should be fair distribution, and this can be managed much better if the goods that are scarce are allocated to distributors in proportion to their registrations. It would be extremely convenient for the busy housewife if she could obtain her fair share of goods without having to crawl round the shops like her less busy sister who is anxious only to obtain all she can whether she needs it or not. I make the plea to the Minister of Food that he will consider allocating the goods which are scarce, on the basis of the number of registrations. He has already done this in relation to dried fruit, and I am quite sure that he could extend the scheme which would be really helpful to the housewife since she would be able to buy most of her goods in one shop. It will also help the shopkeepers who have catered for the housewife's needs in the past and are still trying to do so.

    In this respect I want to make special reference to the Co-operative movement of which I am a member. No other trading concern has given so much loyalty and support to this Government and to the people of this country during these difficult times. We have made no demands for high profits, we have raised no objections to the reduced retail margins, and at the same time we have consistently supported the Government by increasing our holdings of Government stocks. I know that it is only right that a Co-operative movement should loyally support the Government, but I think that the Government also have a duty not to make things more difficult for that movement and its members, most of whom are ordinary workers. The datum line of distribution compiled on the 1939 figures is based on a period when poverty in industry and in the agricultural areas affected a great many of our workers. They were unable to buy the things which they can now afford, but because they could not afford them in 1939 while other shops in the richer areas obtained them, a larger quantity of goods is now being directed to the areas where the non-workers are to be found. They are still getting the cream. There is no fairness or equality of sacrifice, which we shall have to have if there are to be further cuts in commodities. The Minister admits that the 1939 line had an anti-social effect in canalising foodstuffs to the pleasure areas rather than to the working areas.

    The Co-operative movement caters for most of those who are working. Since 1939 it has increased its membership by three quarters of a million, which represents about two million of the population, yet we are still tied to 1939 quotas. About 25 per cent. of the registrations are going through the Co-operative movement, yet only 16 per cent. of the pointed goods go to the Co-operatives, thereby causing inconvenience for millions of Co-operative housewives. There are approximately 26 foodstuffs which are in short supply and most of them are included in the points scheme. The theory that a consumer can buy points goods anywhere is something that does not work, because points goods in short supply are almost invariably refused by retailers to customers who are not registered with them for straight rationed goods. A great deal can be said for allocating those supplies on the basis of rationed goods.

    We have complaints coming in from Co-operative societies regarding difficulties and handicaps due to the datum line distribution. Our membership are constantly complaining that goods are in other shops but they are not to be had in the co-operatives. It is no use saying that the co-operative movement gets it fair share until goods are shared out according to the number of actual and definite customers. The general question of datum line distribution is boiling up again and will be intensely acute in the days ahead. I therefore appeal to the Government to take notice of one or two of the suggestions that I have made, which will ease the troubles of the housewife and will give an incentive to the working class of the country to give their full support to the Government.

    9.34 p.m.

    The hon. Lady for North Ilford (Mrs. Ridealgh) is certainly a believer in equal misery, but when she says that the workers of this country cannot be expected to put forward their best unless the Royal wedding is an austerity one I think she is both wrong and insulting. [HON. MEMBERS: "Why?"]

    Historians, writing in the future, will find it strange and difficult to understand that the Government have delayed so long in taking any steps to deal with the crisis in our balance of payments which is the inevitable result of their policy, and which could so clearly be seen to be coming on. All my hon. and right hon. Friends have been predicting it for the last two years; every foreign nation has been predicting it. The British Press, with the exception of the "Daily Herald" has performed a great national service in pointing out precisely what was going to occur. Everyone has told them. Why has nothing been done? There was a most interesting article last Sunday in "The News of the World" by a very distinguished gentleman called Lord Dukeston. The article was called, "The people must be told the truth." The sentence I want to call to the attention of the House is this:
    "Everyone competent of forming a judgment upon economic matters has been aware of the coming crisis for a considerable period; but with the knowledge of the strain we endured as a nation during the war, we have delayed this crucial problem until such time as the morale of our people enabled them to face it."
    Lord Dukeston is a nobleman of some weight and influence in the party opposite. He is an ex-President of the T.U.C. When he said, "We have delayed …" I presume he means that the Trade Union and Labour movement has done so. Whether he thinks that morale is better than it was after-the Election when we are told that people danced in the streets to celebrate the Socialist victory, I do not know. His view was that it was right to suppress the truth because the people of this country had not got the courage to face it.

    It is very difficult to reconcile that with what the Prime Minister said today and even more difficult to reconcile it with recent performances by the Chancellor of the Exchequer. It is only three weeks ago that the Chancellor of the Exchequer when winding up the last Debate on our balance of payments said:

    "We shall conceal nothing from the people of this country, and shall continue to tell them the facts, as we have done in the past."—[OFFICIAL REPORT, 8th July, 1947; Vol. 439, c. 2165.]
    One cannot reconcile Lord Dukeston's article with that and still less can one reconcile Lord Dukeston's visit with some of the more exuberant utterances of the Chancellor of the Exchequer. Early this year he said:
    "There will be no financial crisis—our present financial controls are strong enough to prevent that."
    It is difficult——

    I have not got it, but that is what the right hon. Gentleman said. He has said the same sort of thing many times. The explanation is difficult to find. It may be that all hon. Gentlemen opposite suffer from that chronic malady of politicians of the Left described by the great Lord Salisbury as "the essential cowardliness of optimism."

    It was not difficult to tell what was going to happen. The cause was staring us in the face. We have been living a lie for the last two years. As the Prime Minister pointed out, we lost 25 per cent. of our wealth during the war and we were faced with the task of rebuilding our wealth at the end of the war in a world which was politically and economically distracted. In spite of all that we have behaved as if we were far richer than we were before the war. That is the answer to the hon. Member for North West Hull (Mr. R. Mackay). In spite of that we have said that we will have shorter hours and higher wages, put up our exports by 75 per cent., have a larger building industry than before the war, make good the whole of the war damage, make good our arrears of maintenance, and have great schemes of colonial development. The House must reckon that these great schemes of colonial development have to be financed in the short run out of the resources available to the people of this country. We also said that we would have vast capital schemes for the re-equipment of our industries. It is these capital items which are the most important of all. On top of that, entirely wantonly, the Chancellor has imposed his absurd monetary policy. All these things do not add up. How can they possibly add up? What we have seen is a massive refusal to live within our means. That was bound to result in a foreign exchange crisis. There is nothing new in a country living beyond its means. It has often happened before, but it has always resulted in a foreign exchange crisis, and that is a basic fact which I hope the House will bear in mind.

    There are many things with which one can distract attention from this fact. We can talk about everything since the Fall of Man having been the fault of the Tories, we can talk of Eve being the first member of the Housewives' League, and by such means we can distract attention from what is going on. We can do it also by this double attitude towards America. We get the Foreign Secretary calling them moneylenders, and, at the same time, hon. Gentlemen opposite saying that they have a moral duty to support our prewar standard of living. We can go on distracting attention like that. Then, there is Article IX. It will be a heavy burden, it was a hard condition when it was imposed, as my right hon. Friend the Member for Woodford (Mr. Churchill) said, but I, personally, doubt very much if, so far, it has had a great effect either on the sources from which we buy our imports or on the destination to which we send our exports. Whether, in the future, we have special arrangements with the Empire or with the Western bloc or with Eastern Europe, the fact we have to remember is that these countries will have an understandable preference for being paid for the goods they sell, and being paid in goods at the right price and of the right quality. There is no easy way out.

    On convertibility, I would say this. Obviously, it has been responsible for part of the acceleration of our loss of dollars in the last month or so, and it may well be that the Government have shown their usual level of competence in dealing with this problem. The point I would like to make is that, basically, what is going on now is something very old-fashioned and very familiar—a flight from sterling. The world is trying to sell our currency, which they believe to be overvalued and unsound. That is what is going on now. We have to reckon that no system, whether multilateral, regional or bilateral, can work if we are inefficient, high-cost producers and if our trade is so unbalanced as it is now. Hon. Gentlemen opposite have preached on this subject for many years. They have preached the doctrine that "all men are paid for existing, and no man must pay for his sins." That is a Hubris, which is always followed by Nemesis.

    We have tried to hold on to an untenable position, and we are now seeing a series of disorderly retreats to unprepared positions. First, we get the 48 hour retreat on conscription, and now, the Prime Minister gets up at three minutes to 12, only three weeks after the last Debate, and announces another disorderly retreat. I would say that the Prime Minister's speech showed every sign of haste in preparation and disagreement behind the scenes. It was vague; we never got down to any details, and, though the speech contained a cer- tain number of figures, none of the figures were added up so that the people of this country could see where they were. We were told that £144 million worth of food from the hard currency areas per annum would be cut, but we were not told what this was going to mean in rations, which is precisely what the people want to know. Surely, it should be possible to tell us what it is going to mean? Then as far as the actual cuts in imports were concerned again the figures are difficult to add up, because the £144 million cut from hard currency areas may possibly be balanced by imports from soft currency areas. It seemed to me, adding them up in the best way I could, that the conclusion was that the total of these cuts was less than one-quarter of our visible adverse balance. That is not counting invisible imports, and not counting our special difficulties over hard currency. Therefore, the conclusion the country will draw is that we are still leaning very heavily indeed on American support, and if we do not get that support we shall be in a desperate position. On the question of raising targets I would say this: if we cannot hit the target at 100 yards it is not likely that we shall hit it in 200 yards. I think that is a perfectly adequate comment.

    I wish to make comment on that direction of labour. We are told it is to be a limited direction of labour. Possibly I do not carry the whole of my hon. Friends with me, but I am passionately opposed to the direction of labour. I believe it is slavery. How many hon. Members opposite said during the conscription Debate that it would lead to industrial conscription? It is all very well to say that it is only limited direction—that we have slaves in this country, but there are not such a lot of them. That is an argument which goes very ill with the Prime Minister's peroration, when he said that what he was standing for was moral values.

    The Prime Minister made an appeal to trade unions for longer hours and not to press for wage increases. I have a good deal of sympathy with trade union officials on this matter. Trade union officials have a tremendous negative power, but their positive power is not so great. The trade union official is paid to get better conditions for his men, paid to fight for them. If you put all the aces into the hands of the trade union official and say, "You must not play them," a very dangerous position is produced. A senior official may say, "I am all right, because if I succeed I will get my garter and a seat on the gas board and all will be well," but whether he will carry his men with him I am more doubtful. I believe that this is breaking up yet another valuable British institution. On the things that really count, on the Budget and capital expenditure the Prime Minister was vague, and I defy anyone to understand what he meant. I do not think that he understood himself. As for saying that what will be reduced is the number of "spivs," that must be wrong, because there are to be a great many more controls, and the one thing on which "spivs" will thrive is controls.

    What we are seeing is Socialism working out in precisely the way my hon. Friends have always predicted it would work out. There are three stages we have always predicted. First, the honeymoon, then the stage of increasing muddle, frustration, multiplication of controls and increasing poverty, and the third stage is the stage of extra-Parliamentary Government, and the loss of civil liberty. During the honeymoon period you spend your money, and what you can borrow as well. That is what we have done, and that stage is over. Now we are trying to escape the consequences by the second stage, the multiplying of controls and the employing of large numbers of people to prevent other people from making things. We are gradually becoming a coupon State, a ration-book State and a permit and docket State. In addition, we are threatened with differential rationing.

    The real danger of all these things is that they kill the monetary incentive. We have seen in Germany precisely what occurs when that is done, when one's docket, one's ration card is worth more than one's wages. Whatever the damage may be in our zone in Germany, it is still one of the richest parts of Europe. It is prostrate and starving, for the very reason that the monetary incentive has been completely killed. The other day, the Minister of Health said, very rightly, that if one is trying to get someone to work ideology is not enough. The 20 million people in the concentration camps in Siberia, and the timber camps in the Arctic are dying witnesses to that. It is very true. Ideology is not enough, and we are killing the monetary incentive.

    That brings us inevitably to the third stage, the stage of direction of labour and the abolition of civil rights. What I would like to know about this direction of labour is, What sanctions are to be applied to someone who either does not go where he is directed or does not do any work when he gets there? What is to happen, because it is no use having the direction unless there is some sanction? That takes us straight on to the slave State.

    I see no basis whatever for a fruitful compromise between our ideas and the ideas of hon. Gentlemen opposite. Whatever they may wish to do, they are being led on to the slave state. Therefore, I rejoice that my right hon. Friend has said that there will be no Coalition. To join up with a party which is morally and intellectually bankrupt would be mad. People like the hon. Member for Cheltenham (Mr. Lipson), who wrote in "The Times" this morning that party warfare should come to an end, are either people who have no foresight, or people who do not believe in absolute values—who have no real convictions. Anyone who can see what is happening, those who believe in absolute values, cannot think it could ever be right to compromise in any way with what is going on now.

    There is no need to abandon the free society. The system works perfectly well. I wish the hon. Member for North-West Hull (Mr. R. Mackay) was in his place. He was one of the indignant virgins of Socialism who wrote "Keep Left." In that they said that after previous slumps the free system recovered and touched new peaks of productive power, but this never happened after the slump of 1929. That is not true. The index of industrial production in America was 119 per cent. in 1929, 113 per cent. in 1937, and was 189 per cent. in the first quarter of this year—two years after the war. In America there is no maldistribution of labour such as we have here. The standard of living is higher than ever before. It is not an accident that the dollar is a hard currency; the Americans are producing things which people want. Here also, in the decade of 1929–39, which included the slump years, the real national income per head, including the unemployed, rose at least as fast as it did during the average of the 19th century, which was the period of the most rapid economic advance in history. I would say to the gentlemen who wrote "Keep Left" that their conclusions and recommendations are on precisely the same level as the facts which they adduced.

    The answer is that the system does work. We can have prosperity and liberty under it, and we can have it under no other system. The return must be gradual. The first thing we have to do, and I wish the Prime Minister had insisted more on this, is to adjust our expenditure, particularly our capital expenditure, to our means, and not treat the situation as the Chancellor of the Exchequer does, as consisting of watertight compartments. He says, "I have a wonderful Budget. We have a terrible balance of payments. I have got a wonderful monetary policy but the terrible thing is that wages are going up." We cannot treat these things in watertight compartments. Clearly we must realise that if in fact we do not adjust our capital expenditure to our savings, fresh loans are only water on the sands. All the economists have said that. The Bank for International Settlements in a most interesting report the other day pointed it out in great detail. There is an admirable article by Mr. Roy Harrod in the "Daily Mail" today putting this forward. Lord Brand in another place made a most weighty speech on the subject. Practically every economist has spoken on the same lines. The Liberals, now crowding the benches there, put forward precisely the same point. It is those people of great weight and intelligence to whom the Chancellor of the Exchequer was referring when in his Budget speech he said their policy was intellectually wrong and morally reprehensible. I am bound to say that I prefer their judgment to that of the right hon. Gentleman, particularly in view of some of his more exuberant statements, such as when he said:
    "Our achievement is already great and our plans open up still more splendid vistas for the future of our native land."
    That was intellectually wrong and morally reprehensible. It out-Shinwells Shinwell. These are the people to whom we are now asked to give dictatorial powers. The Prime Minister has rejected a return to the free society. He says he will go on with Socialism. He is now advancing to the third stage that I have indicated, the stage of the abolition of civil liberty. The people of this country have paid for their seats at this performance and hon. Gentlemen opposite have decided that the doors will not be opened until the third act of the farce is completed. I suppose we may draw some consolation from the fact that they will never ask for tickets again. But there are desperate dangers during this period to our standard of living, to our whole way of life, to our values and to our position in the world. In these anxious days we shall need—anyway those of us who oppose the Government will need—all the faith, strength and energy of which we are capable. I feel that in this country the ship of State is like a vessel which is trying to fight to keep off a lee shore during a storm. It is fighting desperately to keep off the rocks. I would say of the ship, as a poet once said:
    "She moves—with all save purpose lost
    To make her offing from the coast;
    But, till she fetches open sea
    Let no man deem that he is free."

    9.58 p.m.

    I will not attempt to follow the hon. Member for Flint (Mr. Birch) through the fairly wide panorama of gloom that he has attempted, because I have promised to speak very briefly, as I think that most of us on the back benches who are successful in catching your eye, Sir, should attempt to speak on this occasion. I want, therefore, to deal only with one limited but important subject which has not been stressed in this Debate. So far as I can recall, it has been raised only once—by the hon. Member for Leominster (Mr. Baldwin) who spoke first from the back benches opposite. I refer to the subject of agricultural manpower. It seems to me that this is the most urgently critical aspect of the whole manpower situation. With food cuts in prospect I beg my hon. Friends who re present urban constituencies to consider this problem most earnestly. Other industries besides agriculture are under manned, but there is no other industry in the country which was asked, as agriculture was asked this afternoon, for a 20 per cent. increase in output and which has to face——

    It being Ten o'Clock, the Motion for the Adjournment lapsed, without Question put.

    Sunday Cinematograph Entertainments

    Resolved:

    "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Borough of Eccles, a copy of which Order was presented on 4th August, be approved."
    "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the County Borough of Reading, a copy of which Order was presented on 4th August, be approved."
    "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Redditch, a copy of which Order was presented on 4th August, be approved."
    "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the City of York, a copy of which Order was presented on 4th August, be approved."
    "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Borough of Bexhill, a copy of which Order was presented on 4th August, be approved."—[Mr. Oliver.]

    War Criminals, Germany

    Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Snow.]

    10.2 p.m.

    I rise to raise a very important and serious case of what I and all others who know this case believe to be gross maladministration of justice in Germany. Before I go into the details of the case, I wish to make it quite plain that I am not making a general plea for anything in the nature of an amnesty for war criminals, or anything of that kind, but I feel it is right to hold that the more war criminals there may be about in Germany, the more essential is it that justice, and absolute justice, should be done in every case.

    There are several questions I shall ask the Minister and they concern the death in Germany of Oberst Hesselmann, Hesselmann was Commandant of a prisoners-of war camp at Koenigstein. I have good reason to know what sort of man Hesselmann was because, amongst the prisoners of war for whom he was responsible, was my brother. Now this man had under his charge during the war officers of several different nationalities, British, French, Dutch and American, and I would like to read out, before I describe what happened to Hesselmann after the war was over, the sort of thing that was said about him by those officers for whom he was responsible. This is merely one of several typical statements. It is signed by several Dutch officers who, goodness knows, had every, reason to be hostile to the Germans. It was written in March, 1947. They say this about him:
    "We, the undersigned do certify that we were prisoners of war for two years in Offiag IVB Königstein where Colonel Hesselmann was in command.
    This Colonel behaved himself towards us extremely correctly and was, in our opinion, a resolute opponent of the Hitler regime.
    He did all he could to render our captivity more supportable."
    Then there follow a good many signatures.

    Apart from that, Hesselmann certainly saved the lives of my brother and one other officer whom he categorically refused to hand over to the Gestapo towards the end of the war, when ordered to do so, and he even went so far as to show my brother and his friend where they could hide in the event of the Gestapo forcibly breaking into the prison camp. Now we come to the time immediately after the conclusion of hostilities. Hesselmann was engaged in work on one of the refugee committees, and was working on a scheme concerning the spiritual renaissance of the Germans under the famous Pastor Niemoeller, who has himself testified to Hesselmann's fine Christian qualities.

    I would like to read the account by Hesselmann's widow of his arrest. One realises, of course, that, as it must inevitably be, this is, prima facie, a biased account, but investigations have satisfied those of us who have inquired into this case for a good many months that what she says in that account is subtantially correct. She says:
    "On the afternoon of 13th February, at 1.25 p.m., an English captain came to my house and asked for my husband. He said, approximately, 'We must talk to him in Bad Oeynhausen and Minden, perhaps for one or two days He made me drive with him to Stillen Friden where my husband was taking part in a session of the refugee committee of the Evangelical Church, and bring him out. On the way, I asked him for what reason my husband was wanted. The captain replied that he did not know. My husband returned home in five minutes time, in order to take away with him things for the night The British officer again repeated to him that it was only a question of one or two days interrogation in Bad Oeynhausen and Minden Everything else I only know as the result of the few words which my husband spoke during his last days and from the two letters from Minden."
    I should pause at this point to say that, in fact, Hesselmann was arrested—inevitably and quite properly, so far as the actual arrest was concerned—at the request of the French, in connection with the murder of a French general who had been taken out of the prison camp by the Gestapo during the war. Although it is beside the point, those who know most about this affair believe Hesselmann to have been completely innocent of the charge. His wife then goes on to explain how he was treated immediately he was arrested:
    "He was brought into the British military prison in Minden and there his fur coat and scarf were taken away, and, without further explanations, he was put into a cell. The prison was unheated and the cell had, apart from a pasted window-lead, no daylight."
    I will not weary the House with all the details, but, after three days of complaint, and as a result of pressing personal requests he got back his coat and scarf. One knows of course, that the taking away of the coat and scarf is a regular part of the routine to prevent possible suicide. The account goes on:
    Since after seven days I was without news of my husband, I went to the Intelligence Service at Bielefeld where they very politely looked into my husband's papers. They knew nothing about his arrest, and a reference to higher authority there was also without success. In the afternoon of 17th February, I learned from the Charity Organisation of the Evangelical Church of the whereabouts of my husband, and, on the morning of the 18th, I drove in a car belonging to this organisation to Minden, to the prison chaplain, Pastor Puffert.
    "He told me it was impossible to visit my husband, neither could he arrange for an interview with the Commandant of the prison. I gave to Pastor Puffert a certificate signed by Dr. Uebmann that my husband had been under medical attention since the beginning of December."
    That is true. He had duodenal trouble, which is what eventually killed him.
    "This stated that my husband since the beginning of December had been treated on account of his stomach trouble,"
    and she goes on to describe the details of that trouble.
    "On the 19th of February he wrote to me that he had been transferred to a hospital. About the 21st February two German doctors were with him. My husband wrote in his second and last letter on 23rd February that he hoped to go to a British hospital on the '24th. Instead, on the 24th he went to the French Military Mission at Bad Salzuflen … A letter which he wrote to me there did not reach me, neither was the personal request to the French for a drive through Bielefeld to inform me about his illness granted."
    He was then taken by the French to Wittlich.

    Those are the facts of this case. That officer was arrested by the British at the request of the French, and, as I say, under the terms of the agreement, the British authorities were bound to surrender him to the French for purposes of this interrogation. But up to the time that he was handed over to the French to be taken to their zone, he had never been told why he was arrested. He had never been charged. He died in French hands on 22nd March, a very short time after he left British hands, still with no charge whatever having been brought against him. Those are the plain facts of the case. It has in it all the elements of the most tragic sort of case of this kind. We have the arrest of a man who risked his life to befriend British officers from the Nazis. He was arrested without charge, and his widow was kept in ignorance of his whereabouts and the reason for his arrest, and he died.

    As the result of various inquiries made by myself and others, His Majesty's Government looked into this matter. A rather significant suggestion was made by the French afterwards; they suggested that this man had committed suicide. Of course, I know that is not His Majesty's Government's responsibility, but it is all part of the case. That charge was subsequently withdrawn. That fact should not escape notice. After Hesselmann's death, the assets which he left to his widow were blocked and, as far as I know—and this is one of the points on which I would like an answer from the hon. Gentleman—those assets are still blocked. Frau Hesselmann is without any subsistence at all, because her husband's assets were blocked on the suspicion that he was a war criminal, but he has not been tried because he died. She still has not got any money at all. I want to know whether this is the usual custom, and, if it is, whether it is not about time that justice was observed in these matters. I would also like to know whether Frau Hesselmann will at once be given these assets where are hers by right. That is one question I ask the hon. Gentleman specifically.

    The other question concerns arrest without charge. As a result of inquiries that I made, I was told by His Majesty's Government that it was not usual in these cases to make a specific charge against those who were arrested because so many had to be arrested on grounds of suspicion, that it was inevitable that some time must elapse before the evidence was sifted, and so forth. That, in my submission, is just not good enough. If the organisation in Germany is not capable of observing the rules of justice as we in Britain understand them, it is about time the organisation in Germany was changed. There are the two question which I ask—and had already asked—the hon. Gentleman to be good enough to answer.

    All I wish to say in conclusion is, that I have tried to tell the story of this case without any attempt at the dramatic. I have simply given the facts. I feel very deeply about it all the same. I feel deeply about it, naturally, because, as I have explained to the House, my brother and another owed their lives—not less than their lives—to Hesselmann, who risked his neck by disobeying the instructions of the Gestapo to hand my brother over. I feel deeply about this case because I believe it to be one of conduct absolutely contrary to the essentials of justice as we understand them. When one contrasts the humanity and fairness of the treatment which Hesselmann meted out to those prisoners under his charge with the inhumanity and un-kindness of the treatment he received during the time he was in prison without any charge, and kept in those uncomfortable conditions in the cell, and finally passed on to the French in whose hands, and under whose callous treatment, he died—when one contrasts these two examples of treatment—then I think that one hangs one's head in shame and humiliation. Hesselmann is dead. Nothing more can be done for him in this world. But his widow lives, and all I ask now is that she, at least, should be relieved of the sadness and sense of insecurity under which she is now so unfairly and unreasonably labouring because what is hers by right has been denied her by the clumsy hand of badly administered justice in Germany.

    10.18 p.m.

    I am sure that Members of the House will appreciate the deep feelings of the noble Lord in this matter, especially in view of the wartime experiences of a member of his family; and if it is true, as it well may be, that this man was innocent, and a brave anti-Nazi, then it is indeed sad that he died under arrest on the list of the United Nations war criminals. But, as the noble Lord himself said, the guilt or innocence of this man is not relevant to the conduct of the British authorities in the matter. Whether he was guilty or innocent, it was our duty to arrest this man and hand him over to the French. A great deal of the noble Lord's speech, in which he spoke of the anti-Nazi work of Hesselmann and of his work for the Refugee Committee, was, therefore, irrelevant to the issue we are discussing, and might tend to prejudice the minds of hon. Members against the British authorities in Germany.

    The circumstances of the arrest were as follow. As hon. Members know, the United Nations War Crimes Commission was set up in London on 20th October, 1943, to bring to trial people accused of war crimes. Hesselmann was listed by the War Crimes Commission as a war criminal in connection, as the noble Lord said, with the murder of a French general. The Committee of the War Crimes Commission examines every case brought to it by a member of the Commission, and decides whether a prima facie case can be made out for the arrest of the person concerned. In the case of Hesselmann, the Committee unanimously decided that there was a prima facie case against him. Therefore, through our war crimes liaison officer in Paris we received a request from the French Government to arrest Hesselmann. He was arrested on 13th February at Bielefeld and sent to the War Crimes Holding Centre at Minden.

    The fact of his innocence or guilt—if he is guilty—could have made no differ- ence whatever to our actions in this matter. I want to make that quite clear. Had he been the darkest of war criminals, or the best anti-Nazi in the world, we should have treated him in the same way, and rightly so. Thus, all we can be accused of in this matter is, I think, unnecessary suffering caused to Hesselmann during the period of arrest. I do not object to the testimony of a widow. From what I heard, even though she be a widow, I did not think her statement was a substantial charge against the British authorities. The noble Lord did not give us all the details; perhaps if he had done so he would have conveyed a better impression of what he was charging us with. But the few facts he did mention did not seem to me to constitute a substantial charge, even if they were true.

    I thought I had made perfectly clear that the charge I was levelling against His Majesty's Government was that this man was arrested and put in prison without any charge. Surely to goodness that is enough suffering for a man, let alone what he goes through in the cell.

    I will come later to the charge on which he was arrested. The noble Lord implied that unnecessary suffering was caused to him in prison. If that is not so, I will not bother to state my case. The facts are that he was treated humanely, and with fairness and sympathy. He complained on 16th February of feeling ill and was seen by a German doctor on the same day. The doctor's report says:

    "He can stay where he is for about a week, provided he is kept warm and lying down and given special food. No immediate urgency, and no danger to life."
    The doctor said that he was suffering from an old stomach trouble, for which Hesselmann said he had been treated, on and off, for 10 years, and had refused an operation. Immediately following the doctor's report, Hesselmann was provided with eight blankets instead of four; he was given a specially prepared diet of bread and milk, and was in receipt of American food parcels. His coat and scarf were removed from him, as the noble Lord said, as a routine procedure, and were compensated for by the special arrangements in respect of the blankets. Now, in the twentieth century that is not hard or cruel treatment of a prisoner at all. The truth is, as hon. Members know, that in the treatment of prisoners our military are probably the best, the kindest and the gentlest in the world, and I want to remove from the minds of hon. Members any suggestion that Hesselmann was treated in any way other than humanely and considerately.

    On 25th February, according to our duties and rights, we handed him over to the French, not for conviction but simply for trial. He was taken away in a private car, he sitting in the back. The noble Lord gives no evidence of ill-treatment by the French, and there is no reason to suppose that he was ill-treated by the French.

    The noble Lord did not bring any specific evidence of ill-treatment by the French. If he has no specific evidence to bring I think that these unsubstantiated charges are most unfortunate, and I entirely resist any suggestion that he was ill-treated. If he was not ill-treated by the French, and if the noble Lord has no evidence to bring, he should not make that charge. That is quite clear.

    Did the Under-Secretary say that my noble Friend did not bring any charge of ill-treatment by the French?

    I said so, and the noble Lord then interrupted me to say that they had let him die.

    "They let him die" implies that they in some way ill-treated him, but no specific evidence has been produced.

    I am sorry to interrupt, but the Under-Secretary provokes me to say this. I told him and the House about the first suggestion the French made, namely, that this man had committed suicide—a suggestion which they subsequently withdrew. I am quite content to leave the conduct of the French in the hands of the House on that basis. I do not want to press that because I know it is not the responsibility of the Under-Secretary. It is part of the whole case, that is all.

    We will leave it then, and come to the question of whether he was told what was the charge. He was told that he was to be arrested and questioned in connection with war crimes. He was not told the specific detailed charge on which he was arrested. Our procedure is, and it is the right and proper procedure, to leave the framing of the specific charge to the Government in whose country the man is to be tried. That must be so. The French Government in this case have the responsibility for charging him, and for investigating his case. Clearly, we cannot take on ourselves the responsibility for making these specific charges, and we have the right not to make a specific charge but to arrest him in connection with war crimes.

    I come now to the only other point of substance, namely, that of the blocked account. The position under Law 52 which is valid in the British zone, is that the accounts of those on the list of war criminals are blocked. The normal procedure is that an account is unblocked after acquittal, but this is the first case of a man dying while being held in custody. The first feeling of most hon. Members will be immediately to unblock his account. I have arranged for urgent inquiries to be made whether that is possible or not. We do not yet know whether the account is in the British zone, but we are finding out, and if it is at all possible, we will immediately unblock it.

    Surely, until a man is proved guilty he must be presumed innocent, and therefore this account should at once be unblocked?

    One could equally say not until he is proved innocent, because it might not otherwise be possible to make a claim on his assets. For that reason, I cannot give a firm undertaking that the account will be unblocked.

    Can we find out exactly which way the junior Minister is speaking? He says, first of all, that the account will be immediately unblocked, and, secondly, that he will make inquiries and if it is all right the account will be unblocked.

    I carefully did not say that we would unblock it. I would like to say that, but if he were guilty, there would possibly be claimants against his assets. Therefore, I cannot, before making inquiries, unblock the account. Meantime, it is true that the wife can, if she wishes, draw from the account to the extent of 300 Reichsmarks a month. I would end by saying that the evidence the noble Lord has produced about the character of this man is strong, and since we all agree that if he is innocent it is tragic that he should remain on the list of war criminals, I will send the evidence immediately to the United Nations War Crimes Commission, and ask them to reconsider the case.

    Can the French Government take any action to prevent the unblocking of this account?

    Do we immediately clear ourselves, under this procedure, of responsibility of seeing how prisoners are dealt with the moment we hand them over?

    The answer to the first question is that that is one of the things we would have to consider. For example, if the French could not prove innocence, they could, no doubt, in legal theory, make a claim for part of the assets for the damage the guilty man had done. To that extent I imagine there is a case, and that is the kind of thing I shall immediately order an inquiry into. The answer to the second question is that when we have handed over these people the receiving Government is then, under our agreement, responsible for them.

    I should need notice of whether the United Nations Commission could call for a report.

    Question put, and agreed to.

    Adjourned accordingly at Half-past Ten o'Clock.