REPLY TO LABOUR

Dominion, Volume 30, Issue 131, 27 February 1937, Page 11

REPLY TO LABOUR

Defence Bill Not a War Measure

CHANCELLOR’S SPEECH

Opposition Challenged To “Straight Answers”

NO AGGRESSIVE WAR (British Official Wireless.) Rugby, February 25. . The Defence Bill passed the second reading Vy 307 votes to 132 after a long debate in which Government speakers defended the measure as unfortunately inevitable in the present international situation. The Chancellor of the Exchequer, Mr. Neville Chamberlain, moving the second reading, welcomed the absence from the Opposition’s rejection motion of the suggestion made last week by Major C. R. Attlee that the Bill was “a war measure.” It would be very unfortunate, the Chancellor declared, if any apprehension of imminent war was created at a time when there was no reason or justification for any such fears. Citing the Opposition's invitation in the motion for the House to view with misgiving the massing of huge competitive national armaments, the Chancellor reiterated his own horror of Europe’s rearmament and unproductive expenditure, in which it had involved the’nations. The Folly of War.

Even now, though the prospect was discouraging, he did not despair of presently finding some new fields in which fresh contacts might be made to avoid the necessity for pursuing such folly to its bitter end, but in the meantime they could not afford to relax until they had provided for the country’s safety and its ability to fulfil its international obligations.

Mr. Chamberlain twitted the Labour Party on its repeated affection of ignorance of the relations which the Government’s reaarmament programme bore to its foreign policy. “The relation has been described and defined with the utmost clearness by the Foreign Secretary,” he said, “but Opposition members continue to ignore his statements. I must therefore ask the House to bear with me while I once more repeat the Foreign Secretary’s words.”

The Chancellor then read Mr. Eden’s well-known declaration at Leamington on November 20 commencing .-—“These arms Will never be used in a war of aggression, and will never be used for a purpose inconsistent with the League Covenant or the Pact of Paris.” He challenged Labour speakers to say whether they considered British arms should not be used for any of the purposes described by the Foreign Secretary or whether they considered they should be used for any purpose in addition. Not until they ceased evading such straightforward questions and gave a plain answer was he called ujton seriously to deal with such obscurelyinsinuated criticisms.

Anti-Profiteering Measures.

Mr. Chamberlain then turned to the charges that the proposals in the Bill would weaken national credit and depress the standard of living, and that the measure contained no effective provision to prevent profiteering. He said that no matter in the whole of the problems connected with the rearmament programme had received more continuous or more concentrated attention than the prevention of excessive prices. “I have no hesitation in saying that nothing that human ingenuity can devise or human effort can achieve to this end has been left undone,” be declared. He explained the machinery set up byi the Treasury for the purpose and the principles on which it was working, and concluded’ “You can take it from me, from the point of view of the Treasury, that I am satisfied that the interests of the taxpayers are being adequately protected.”

The Chancellor complained of exaggeration in the statement that the proposals would adversely affect the national credit, and of confusion of mind regarding the effects on the one hand of the vast armaments expenditure and on the other of borrowing to meet part of it. The national credit had been steadily built up during the last six years. During tlie crisis other countries had added to their debts. The national debt of the United States had increased during the last six years by a sum exceeding £3,000,000,000. There was nothing comparable in the British case. It had been necessary to suspend the sinking fund, but in three years from 1933 to 1936 there were realised surpluses amounting to over £40,000,000, in addition to the debt redemption of £32,500,000, making a total of £72,500,000. Also, the unemployment insurance fund had been put in a solvent condition and reserves had been accumulated which, if no distribution took place, would reach by the end of the present year the sum of between £52,000,000 and £60,000,000.

Moreover, the real burden of tbe nation’s debt was to be measured by the annual charge. In 1931 the interest on (he British national debt was £282,500.000. This year the debt ebarge would be about £210,500,000, so that the saving of £72.000,000 in interest alone would almost be sufficient to cover tbe average rate of borrowing contemplated in the Bill. Standard of Life. At the same time the standard of life had been protected by the provision of a constantly-increasing sum for social services. In the last Budget of the Labour Government, when unemployment was high, Mr. Chamberlain pointed out. provision for social services was £45,000,000. In the current year, when employment had enormously improved, tbe provision was £68,000,000.

Referring to the prediction that the Government’s policy would cause inflation, the Chancellor countered the Labour Party’s forebodings by calling attention to a speech yesterday by the well-known economist, Mr. J. M. Keynes, in which the latter expressed the opinion that it would be possible for the Treasury to raise £400,000,000 by borrowing without causing inflation. Mr. Chamberlain agreed with Mr. Keynes that the sum represented only a fraction of the available savings, while admitting that there were other demands upon those savings. But he maintained that the suggestion that inflation was necessary or likely was the work of a piece of imagination.

Finally, the Chancellor declared that the Labour Party's suggestion that the .whole o£ the defence expenditure

should be met out of current revenue—necessitating the imposition of fresh and crushing taxation—was pushing financial orthodoxy to dangerous pedantry