BRITISH INFORMATION SERVICES
AN AGENCY OF THE BRITISH GOVERNMENT
OF THE DAY
WINSTON CHURCHILL, Prime Minister, March 944.
War Decorations and Medals.
ANTHONY EDEN, Secretary of State for Foreign Affairs, March 28, 1944.
Power and Responsibility.
HERBERT MORRISON, Home Secretary and Minister of Home Security,
March 17, 1944.
The Police Service.
R. S. HUDSON, Minister of Agriculture, April 14, 1944.
C. R. ATTLEE, Lord President of the Council, April 19, 1944.
WINSTON CHURCHILL, Prime Minister, April 21, 1944.
Unity in Commonwealth and Empire.
LORD HALIFAX, British Ambassador to the United States, April 21, 1944.
The Work to Which We Have Set Our Hands.
SIR JOHN ANDERSON, Chancellor of the Exchequer, April 25, 1944.
Vol. II, No. 5 May 1944
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RT. HON. WINSTON CHURCHILL
House of Commons, March 22, 1944
The object of giving medals, stars and ribbons is to give pride and pleasure
to those who have deserved them. At the same time a distinction is something
which everybody does not possess. If all have it it is of less value. There must,
therefore, be heartburnings and disappointments on the border line. A medal
glitters, but it also casts a shadow. The task of drawing up regulations for such
awards is one which does not admit of a perfect solution. It is not possible to
satisfy everybody without running the risk of satisfying nobody. All that is pos-
sible is to give the greatest satisfaction to the greatest number and to hurt the
feelings of the fewest, But that is a most difficult task and it is easy to err on
one side or the other. One must be careful in the first place to avoid profusion.
The tendency to expand, shall I say inflate, dilute the currency through generous
motives, is very strong. When the Order of the Golden Fleece was founded its
first motto was "I will have no other" ("autre n'aurai"). But this proved too
austere an ordinance for the Emperors, Kings and heroes concerned, and the motto
was very rapidly changed to a much less self-denying and noncommittal form,
"I have accepted it" ("Je I'ai empris").
Other Times and Countries
The German distinctions have usually been very lavishly bestowed. When
Voltaire was invited to visit the Prussian Court he stipulated that all expenses
should be paid, and that the Order of Merit should be thrown in. Both were forth-
coming. So there were, before 1914, as is well known, very many German medals
and orders. Nevertheless, during the last war the Germans created about 'eighty
different crosses, medals and decorations, including various kinds for the different
Duchies and Principalities, and about twenty different distinctive badges of a
similar character. At the start of the last war the Iron Cross was a highly prized
decoration, but by 1918 it had been granted so freely that it was little valued
except, I believe, by Herr Hitler, who it is alleged gave it to himself some time
later. After the Armistice, the Germans, who are a most adaptive people, manu-
factured large numbers of Iron Crosses for sale to the French troops as souvenirs.
In the present war they have already some fifteen new medals and twenty-nine
new distinctive badges. They have not yet reached the stage of manufacturing
them for sale to the Allies.
The French, in the last war, were wiser than the Germans, but even they were
inclined to err slightly too much on the side of generosity. When, after the
termination of hostilities, they instituted a war medal for the troops, they got
drawn beyond the line which limited it to the Armed Forces. It was granted, for
instance, to hospital staffs generally, and then to the police, park keepers, Customs
officers and so on. The result was that, very soon after the war, it was impossible
to tell whether an individual had actually fought in the real fighting zones or not.
And ten years later the French found it necessary-and this also gave pleasure-
under the pressure of the ex-Service men to reopen the whole question and create
a distinction called the Croix du Combattant.
A similar process, though much more dignified, sedate and tardy, took place
in this country after the Napoleonic wars, but it was not until 1851 that the
services rendered between'1793 and 1814 by the Veterans who still survived
were recognized. Queen Victoria took a great interest in this, and the Duke of
Richmond, who led the public agitation, was given by the grateful recipients of
British Speeches of the Day
the long overdue awards, plate worth about 1,500 guineas. I hope that this ex-
ample will encourage my hon. Friends in their zeal and activities in this matter,
and that this hope may assuage any temporary dissatisfaction they may find in the
announcements which I have to make.
The Africa Star and the 1939-43 Star
It would have been very much easier to leave all this matter over on one side
until more leisurely times have come. On the other hand, this war has notw raged
for fifty-four months. Many famous campaigns have been fought, several have been
brought to a successful conclusion. Devoted, valiant service has been rendered
in many parts of the world on land, on the sea, in the air. Several million soldiers,
sailors and airmen have been sent abroad, where they have remained for long peri-
ods, enduring severe hardships, rendering faithful service and achieving splendid
results. They greatly value the distinction which a ribbon gives them.
I know of the satisfaction which has been given to our battalions of troops
which have been authorized to mount the Africa Ribbon or the 1939-43 Ribbon,
and I felt myself bound to try to attempt at any rate a partial solution of the
problem which I could submit to His Majesty, with whom these matters rest,
subject to advice. Accordingly, the Committee on the Grant of Honours, on
which all Services are represented, was directed in March last year to frame
Regulations governing the grant of the Africa Star-this was to commemorate the
expulsion of the enemy from the African continent-and also, the 19:9-43 Star,
with a different ribbon, covering service in other theaters of war, including, of
course, the oceans and the air. The Africa Star has already been awarded to
1,500,000 officers and men, and the latter decoration, the 1939-4 Star, to
1,600,000 officers and men, a total of 3,100,000 of our warriors in all spheres;
and with the other cases that are now under consideration I am told the two
ribbons together may ultimately cover nearly 4,000,000 men.
In considering the qualifications for the grant of the 1939-43 Star the question
arose of what period of service would be required. There are some forms of
service which are measured by time and others by the episode itself. We have
adopted both conditions. Six months is taken as the qualifying period of time,
but in special operations in which individual combatants would not have the
opportunity of serving six months actual presence with the Forces will be sufficient.
Naturally, in drawing up a list of such episodes it was necessary to consult the
Dominion and Indian Governments. The final list is now complete and will be
made public immediately. Indeed, my right hon. Friend the Secretary of State
for Air who will deal with any points which are raised in the Debate will, if he
thinks fit and the House desires it, be in a position to read out the list as we have
so far devised it. It had been hoped that it would be published two days ago,
but I am perhaps to blame for having somewhat delayed its publication. Additions
can be made to this list in accordance with well-informed opinion. I am very
anxious that Service opinion should fix and focus on, these different points, and
that we can profit by it as we get to hear of it, so that one can make submissions
to the Crown in respect of these matters, for this is a Royal Prerogative.
I hope that even in its present form the list may meet some of the many ques-
tions which are asked about this episodic aspect of the qualifications for the 1939-43
Star. Among the Naval Forces who served for a long time afloat and ashore in
the Mediterranean, and played a vital part in the victories there by cutting off
the German reinforcements, there has been, I am told, a discernible preference
shown for the Africa Star as against the 1939-43 Star, and the suggestion has
War Decorations and Medals
been made that an officer or man whose service qualifies him for either award
should be permitted to choose one or the other. I am advised that such an option
would be very difficult to work. It might also seem to reflect upon the 1939-43
Star if people who, on account of local associations, chose the Africa Ribbon
instead of the General Service Ribbon, which must be considered as the primary,
the senior ribbon. I am still studying this question. The same kind of question
occurs again in the case of those who served both in the First and Eighth Armies,
where there is an emblem. I have not finally dosed the discussion of this difficult
problem. I would like to see, in all these subjects, how opinion shapes. One
thing is dear, however, that no one can have both stars or both ribbons, nor can
they have both the two emblems, 1 and 8. To this last rule there is one exception.
His Majesty has approved of both the Emblems 1 and 8 being mounted on the
ribbons of General Eisenhower and General Alexander, these being the only two
officers who did, in fact, command the whole of the First and Eighth Armies.
The King's Badge
I ought not to overlook two other forms of reward of merit which have been
approved. First, there is the King's Badge, about which a discussion was promised.
The issue of the King's Badge is at present restricted to those invalided from the
Naval, Military and Air Forces and the Merchant Navy and fishing fleets through
wounds or war disablement attributable to service since September 3, 1939. The
question has arisen, Should it not be extended to those discharged through dis-
ability not due to service? Against this, as the House will see, it may be urged
that a considerable number of those eager to join the Fighting Forces have to be
rejected on medical grounds, and it would be argued that those whose disabilities
escape notice until after they had been enlisted ought not to have an advantage
over those who are rejected at the outset. Under National Service all men and
women in this country are doing the work which renders best service to our nation.
All forms of faithful service are honorable, but we do not propose at present
to extend the King's Badge beyond those whose disabilities are attributable to
their service. The matter must, however, be considered in conjunction with
chevrons, about which I will say a word in a minute or two. The only ex-soldiers
who will not be able shortly to wear any token of their service will be those who
have not qualified for either the Africa Star or the 1939-43 Star and who were
discharged for nonattributable reasons with less than one year's wartime service,
and these may be eligible in due course for any awards which may be granted
later in respect of military service, such as a general medal, But only those I have
specified, who do not qualify for either of the stars or who were discharged for
nonattributable reasons and who have less than one year's service, will not have
some record of their connection with our Armed Forces, be it by chevrons or
some other form.
The Official Chevrons
Even greater complications would arise if men and women invalided from the
Civil Defense general services, including the National Fire Service, were made
eligible for the badge. There is no fixed minimum medical standard for discharge
and there are those who have been discharged on account of reductions. I can,
however, announce today that the official chevrons for war service are to be ex-
tended to certain further Civil Defense organizations, including the Rest Centre,
the Emergency Food (including the Queen's Messenger Convoy Service), the
Canteen, the Emergency Information and the Mortuary Services, which have been
up to the present excluded. We are also on the point of expanding the chevron
scheme so that some 227,000 additional members of the Women's Voluntary
Services engaged in Civil Defense will also be eligible.
British Speeches of the Day
At this point I must explain that medals are struck at the end of wars and
stars are given for particular episodes or periods during their course. I must
4 also explain that the manufacture of medals or stars cannot possibly be undertaken
during the war and therefore all that we can do is to issue ribbons.
Emblems and Clasps
Apart from the right to wear particular ribbons certain emblems have been
approved under conditions which have been set forth in the White Paper. These
emblems are a very highly prized feature of these awards. There arc the Arabic
numerals 1 and 8 for service in the First and Eighth Armies, which played the
main part in liberating North Africa and which are valid from the period of the
Battle of El Alamein in October-perhaps, I am not sure, from the tinal repulse
of Rommel in the month before-I may be in error as to which. They served from
that period to the complete surrender or destruction of all the German and Italian
forces, upwards of 300,000 prisoners being taken, in Tunis in May. There is
also the Silver Rose, which is worn as a special emblem for the Royal Navy and
Royal Air Force, with the 1939-43 Ribbon. Those emblems, of which there
can only be a few, can be worn on their respective ribbons. They are undoubtedly
a super-distinction and are intended to be so. It will not be physically possible
to add to them indefinitely, because there is no more room on the little slip of
ribbon for a multiplicity of emblems without producing a confused impression.
The question of clasps, or bars as they are sometimes called-in my opinion
miscalled-on medal ribbons will not come up till after the war. Then, when
all the events can be seen in their true perspective and proportion, it must be
carefully considered. After the last war a large number of clasps were provision-
ally approved, but it was found impossible to make a general issue of them on
account of the great number earned by individuals and of the vast number of
persons whose claims had to be examined. This would have entailed enormous
staffs at a time when, among many difficulties, the need for economy was con-
sidered to be important. I do not know what will happen after this war when,
of course, we are all going to be so rich, or we hope so. The clasps :an only
be worn on the long ribbon-the long length of ribbon which carries a medal
or a star. There is no room for them on the ordinary narrow strips of ribbon
which are all we have to give at the present time. However, this whole matter
will be most attentively studied, bearing in mind, of course, that a clasp for
a spectacular action may connote less sacrifice and endurance and daring than
long service in the submarines, or in a series of bombing sorties, or hard service
in the front line, or in going to and fro across the oceans for months and years
There is another general principle which I will venture to commend to the
House. It is always easy in these matters to widen the Regulation and to admit
a new class. On the other hand, it is never possible to go back and take away
what has been given unless it has been given in error. There is no need for us
to take any final negative decision at the present time. I thought this Debate
would be one for consultation, for sensing the feelings of the country through
its best exponent, the House of Commons, rather than for the arbitrary laying
down of final awards. It is, however, necessary, while not taking negative
decisions, to take every step with great caution and to examine carefully the
consequences of other classes besides those newly benefiting.
Necessity for Discrimination
The most difficult border line case is, of course, the anti-aircraft battery,
and especially the Dover coastal batteries, which are constantly engaged with
War Decorations and Medals
the enemy's artillery across the Straits. I have been most anxious to include
these batteries in the 1939-43 Ribbon. Up to the present I have found no way of
doing so without opening the door, successively, first to the whole of the Ack-ack
Command and, secondly, to the searchlights and predictors of all kinds, without
which the guns cannot fire or cannot hit, and whose personnel were and still
often are, in equal danger to that of the gunners. In the next place you would
immediately come to the National Fire Service, whose casualties have been at a
much heavier rate than the ack-ack batteries. And, then, what about the Police,
who stood around and kept order and rendered every assistance? And what
about the A.R.P. and the Fireguards so often in danger and discharging their
work with so much efficiency as we can see even from our recent minor
experiences? If the National Fire Service and others like them were included,
how could the whole Regular Army which stood in Great Britain be excluded,
or the Dominion Forces which performed here a vital strategic role? If the
Regular Army were included, why should not the Home Guards be eligible, who
did their work without pay at the end of long days, who wore their uniforms
and played an essential part in hurling back the danger of invasion from our
shores? There remain a number of other categories such as the training and
maintenance personnel of the R.A.F., the bomb disposal squads, which is, with
the ack-ack batteries, one of the balancing cases. In many cases personal decora-
tions have been won on a large scale by that heroic band of men, but, at the
same time, I am admitting quite frankly the difficulties which these cases have
created-the difficulty of denying and the difficulty of opening the door almost
to a very vast extent.
If we were to take the whole course I have indicated and open the door to
class after class, as I have shown you would be asked to do and bound to do, I
think, in logic, this would involve throwing the 1939-43 Star and Ribbon open
to an additional 12,000,000 persons and by doing this I am sure you would
take away much of the distinction now attaching to the decoration. It would
become so common as to be very nearly universal. I am sure the soldier, the
sailor and the airman returning from prolonged active service abroad and
wearing the Africa or 1939-43 Star would feel bewildered when he saw all around
him 12,000,000, mostly adult, males who had not left the island but had got
the same ribbon too.
But if these grants were made so widespread, could you stop at the Services
themselves? Indeed, I think the civil population, the railwaymen, who bore
with immense composure and unflinching fortitude the full fury of the blitz and
went about their ordinary work with faithful diligence and punctuality under
the most trying conditions and those who continued in factories at work while
the danger signals were going, would certainly have a moral claim to be con-
sidered. If danger is to be made the test, if proper and correct demeanor in the
face of danger, and showing indifference to personal injury or life, if that is to
be made the test, millions of civilian men and women in their small homes
with nothing but the Anderson or Morrison shelters to shield them-not that
I depredate those admirable institutions-who all the time preserved so fine a
spirit, they would have a claim as against the men in uniform, and there are
many who have so far passed the war in districts unaffected by the blitz and have
not been in action-had the honor to be action-or come under the fire of the
I can assure the House I have given a great deal of thought to these questions
which I have been interested in all my life and I have assumed the duty of giving
British Speeches of the Day
the Committee on the Grant of Honours guidance from time to time and
representing the results of their labors to His Majesty in respect to the use of
his Royal Prerogative. I trust the House will see how very numerous the diffi-
culties are, yet I do not at all repent that we have embarked on this because
I know the pleasure it has given the three million men who already wear the
ribbon on their breast. As at present advised, we cannot consent to widen the
1939-43 Ribbon in order to include the whole Army or all who took part in
the Battle of Britain, and we could not take any step which would lead us or
drag us into such a course for the reasons I have tried to explain to the House.
The question then arises whether a third and different Ribbon for another
Star should not be instituted for service in this country, whether it should not
be issued to the ten or twelve million persons affected. This would not detract in
the same way from the distinction of the 1939-43 decoration and it would certainly
be well deserved in several million cases. Well, I have asked that this should
be examined and pondered over and certainly, on this and other points as
I have said already, we shall be influenced by the opinions expressed and the
feelings manifested in this Debate and general endeavor to sense the feelings of
the House as a whole. I have not so far been able to reach any decisive conclusion
myself and certainly not any negative conclusion upon the point. All the same,
there are important or substantial reasons for postponing to the end of the war
this award which would, of course, involve something similar for the Civil Defense
in Malta, in other British countries, islands and fortresses which have been
subject to attack, and there are many other complications connected with it.
Therefore, I say that I remain in a state of not being at all convinced that this
step would be possible or desirable.
I may say, however, that at the end of the war, when medals are struck,
every one who has worn the King's uniform and served in uniformed, disciplined
Services, will, I presume-I say "presume" because the matter may nor rest with
His Majesty's present advisers-receive a Victory Medal to commemorate this
great struggle for human freedom. There will also, very likely be a United
Nations or Allied war medal of the widest possible application and it is upon the
background of these general medals, that the Stars, the issue of which His
Majesty has already approved, will shine brightly forth.
[Mr. Keeling: I would ask my right hon. Friend whether he would, for the
convenience of the House and as a basis for the Debate, give a list of the
qualifications for the 1939-43 Star which have been so far approved by the
Government, instead of leaving them to be read later by the Secretary of State
When my right hon. Friend has them in his hand he will read them out to
the House. I agree it will, perhaps, cut out a lot of questions. He will read them
out to the House if the House will approve, and, with your permission, Mr.
Speaker, extend to him the indulgence of allowing him to speak later in the Debate.
The Secretary of State for Air (Sir Archibald Sinclair): I will read this
list of the special operations: France, Belgium, Holland, Norway, Greece and
Crete, the North-West Frontier of India, the Lofoten Islands (March to December,
1941), Lucania, Syria, Spitzbergen, Hong Kong, Malaya, Vaagso, Burma in
February, 1942, and Burma in February, 1943, General Wingate's Force, Brune-
wald, St. Nazaire, Hardelot, Madagascar, Spitzbergen, Boulogne, Le Touquet,
the Aleutian Islands (air crew service only), Dieppe, Sark and Sicily.
[House of Commons Debates]
Power and Responsibility
RT. HON. ANTHONY EDEN
Secretary of State for Foreign Affairs
To the Free Church Federal Council, March 28, 1944
For four years the greater part of Europe has lain under German rule. Nations
have suffered, have writhed, have rebelled and been repressed with Nazi tyranny
Small powers whose territories gave valuable strategic or industrial prizes were
the earliest victims. Austria and Czechoslovakia were among these. Pretexts were
found or invented and the German armies marched in.
Poland by her refusal to yield first challenged this paralyzing process. But
we and France could not bring her effective help and the German armies marched
France herself fell and still the dirty brown patch of Nazi tyranny spread
wider until from Norway to Greece, from Brittany to the shores of the Black
Sea, no land save only little Switzerland was free.
The Miserable Henchmen
But in these last weeks there has been a new development. The process is
being carried still further. Germany's satellites have now suffered with her other
victims. Hitherto these wretched countries have been called upon to make a
heavy contribution in life on every German front, but they have been left at
least the semblance of control of their own affairs. And now all this, too, has
been swept away. No shred of self-respect is left to these miserable henchmen
of Nazi power.
And so all occupied Europe is today in torment and in ferment under the
thinning crust of German domination. Many of these invaded countries have suf-
fered to an extent and with an intensity of pain it is difficult for us to picture.
These tragedies will leave their mark, scars cannot be healed all at once even
when the day of liberation dawns.
The problems that beset South-Eastern Europe today are a forewarning of
those that will confront us in many forms in many lands.
Towards a New Life
After the last war the problems of European reconstruction were immensely
formidable. But this time the suffering has struck much deeper, the confusion is
more widespread, and so the work of healing will require more time and
There will be many mistakes; all cannot run smooth. Courage, perseverance,
infinite patience will be needed.. Above all an understanding that we cannot, at
all times and in all places, wholly impose our judgment upon others.
None the less it must be our task to do everything in our power to help the
countries of Europe who have endured so much for liberty and independence, to
help them by encouragement and example and by every means in our power to
build for themselves a new life from the wreckage of the old.
We must be clear about one factor. We must not expect the clock to start to
strike again at the hour at which it left off when German invasion fell upon
British Speeches of the Day
Europe. Many of these countries have been in the grip of the enemy for three
years or more. They will not revert to the old life, we must help them to find
In such conditions it is right that we should consider from time to time our
own underlying purpose as a nation and how we propose to give it effect. It is
certainly true that unless we set certain moral principles for our guide we shall
One can only navigate a ship by some fixed guide, a compass or, more roughly,
the Pole Star. But the very act of navigation, down to the hands of the man at the
wheel, is a constant correction of drift.
A ship, at any given moment, is hardly ever dead on her course, it is only
by a multitude of approximations that she makes her landfall and is saved from
disaster. But these approximations would only make confusion worse
unless.they were designed to hold and keep one right line.
For the Whole World
To apply this conception to the present situation I would say that the British
people are convinced that they are fighting not only for their own liberties and
the freedom of their own land but for the defeat of tyranny and for the good of
the world as a whole. This is their landfall, and they are as determined to make
it today as they were in the darkest hours of 1940.
It is very easy, I know, to be cynical about the moral principles which the
greater part of our countrymen regard as being involved in the present struggle. It
may be argued by some that they do not enter into it at all and that we are
simply, engaged in a struggle for existence and nothing else. It is indeed a strug-
gle for existence in which we are engaged. If Hitler had overwhelmed this island
our national life and all those liberties which our ancestors have won over the
centuries would have been utterly destroyed.
But we should not have been the only ones to suffer. The victory which
preserves our own independence will do the same for that of many other nations.
It is not a reproach to us that we are fighting this tyranny on our own behalf
when we are playing our part in saving others from it.
The Moral Law and the Law of the Jungle
The philosophy of the naked struggle for existence-der Kampf urs Dasein-
is the declared philosophy of Hitler. In Mein Kampf he has made it clear that
as between nation and nation there are no obligations and that the law of the
jungle is the only one that can prevail. This is also the view of Spengler, who
went so far as to declare that "Man is a beast of prey."
Here is a conception which I feel that everyone in this island would instantly
repudiate, but it is nevertheless a conception which has had a profound influence
on German philosophy and on the German way of life. It is a conception which
must be utterly rooted out if the world is to enjoy peace.
But if we say that we reject such a philosophy what is our positive creed
which in international affairs shall guide us in the maze of day-to-day affairs?
I suggest that it can only be the total antithesis to the Hitler philosophy; a con-
viction that nations are interdependent and that there will only be enduring
peace if they strive to keep faith with one another.
This means, then, that our policies must be sustained by a moral purpose.
I agree with the words of Quincy Adams, one of the most sagacious of Amer-
ican statesmen: "The more of pure moral principle that is carried into the policy
Power and Responsibility
of a Government, the wiser and more profound will that policy be." That, I feel
sure, is also your conviction.
There, also you, the Churches, have your indispensable part to play, to marshal
those moral and spiritual resources of which Christian humanity has accumulated
through the centuries a store, now maybe hidden, but certainly not buried,
beneath the weight of war and the suffering it brings.
Just as this moral principle lies at the root of the social structure within any
nation, so must it lie at the root of any workable and endurable international
Independence and Interdependence
It is quite true that in the past efforts to apply it have only been temporarily
successful, though they have occasionally succeeded for quite long periods.
But this does not mean that such attempts will always fail, and even if they
did fail it would still be necessary to pursue the ideal of interdependence, for only
thus can we escape from perpetual war and from one nation preying as a wolf
We tried to set out this conception in the documents which we agreed at the
Moscow Conference and in the communique issued after the conference at Teheran.
These statements recognize that after this war nations great and small will con-
tinue to exist and lead their individual lives. In other words, they accept that
the world community will be composed of a number of independent States.
They do not contemplate that there will be any kind of super-State.
But we must realize that in the world in which we live, the independence of
States can only be secured through international co-operation; that the inde-
pendence of States means, in effect, the interdependence of States.
We shall see in the future, as the Moscow Declaration forecasts, a large number
of States enjoying "Sovereign equality" varying from huge entities such as the
Soviet Union, the United States, and the British Commonwealth of Nations to
very small communities such as Luxemburg.
The Right and the Duty
This being so we have to find a way by which all these separate units each
with its own history and aspirations can work together for purposes so indis-
pensable to them all.
These purposes may be described as peace, freedom and welfare.
I put peace first because we know only too well that we cannot have the
other two without it. But peace itself would be a sterile thing if it were not
accompanied by the right of free expression and development, and for that pur-
pose we need an increase in human welfare so that men may have the time and
opportunity for something else than the mere struggle for existence.
How should we do it?
Not, as I have said, by imposing the will of one nation or group of nations
on all the rest but by those processes of ordered discussion inside the framework
of freely accepted institutions by which alone permanent advance can be won.
This is the work upon which we are now engaged.
All peace-loving States have both the right and the duty to share in it and we
must find a place for them all, great and small, in whatever institutions we set up.
10 British Speeches of the Day
Every State must have the right to make its voice heard in the discussion of
the means by which we arrive at our common ends, if only because each has
also a duty to contribute so far as its power extends towards the ends which we
When we speak of "peace-loving" States in Article 4 of the Moscow Declara-
tion we do not mean by this definition merely to refrain from using physical force
against others. We mean something more positive than that. We mean a readi-
ness to contribute something towards the security and welfare of other States
even at the cost of some sacrifice of immediate national interest.
Duties Must Vary with Power
But let us admit that though all States are equal in status they are not equal
in power and consequently their duties must vary.
The responsibility for the preservation of peace must fall in the first instance on
the Four Powers who signed the Moscow Declaration and I hope also on France
when, as we all trust, without long delay she resumes her place among the Great
They must be able to confer together regularly on the major problems of the
world and to give a decisive lead when action is necessary. They must, of
course, associate other Powers with them in their task.
But we must recognize that those who bear the greatest responsibility, those on
whose shoulders the burden will fall, must have the greater voice in deciding on
any action to be taken in the general interest. All independent States must be
free to declare their opinions and their grievances.
And all may profit by that.
But when it comes to deciding on action which only certain States, by their
military power, are in a position effectively to take, we cannot simply count heads.
The Great Powers have, and must have, special responsibilities in the field of
Agreement Among the Great Powers
This does not mean that there will be a dictatorship of the Great Powers.
Every free nation will have its own responsibility for peace, and its own contribu-
tion to make to it. But agreement among the Great Powers must be the founda-
tion; for we have seen what happens when the Great Powers fall out among
The immediate result is that the smaller States are overwhelmed. The first
problem, therefore, is to secure and maintain the co-operation of the Great
Powers. This can only be done if we have some common purpose, some common
set of principles.
It was these that we sought to set out in our conference at Moscow. But even
when principles are agreed the task is far from complete. Their application
presents continuing problems. Consultation between the three Great Powers is
therefore continuous today over the whole field of our relations.
But for dealing with certain problems it is useful to have special machinery
to help us in our task. This is taking shape, progress is being made.
For the first time here in London in the European Advisory Commission
representatives of the three Great Powers, the United States of America, the
Union of Soviet Socialist Republics, and ourselves have started work upon the
The Police Service
solution of some of the more immediate problems we shall have to confront
together. Useful and indeed essential work is being done on these, the fruits of
which will become apparent in due course.
I have been speaking to you of peace as a matter of political and military
security. But peace is something more than that.
Peace is a matter, too, of economic and social well-being. And here, too, the
United Nations are working out a practical policy.
The success of the Food Conference at Hot Springs, the signing of U.N.R.R.A.
Agreement, and the many Resolutions passed by the Atlantic City Relief Confer-
ence show not only that the Great Powers are prepared to give a lead, but also that
all Powers, great and small, are willing and anxious to play their part in a
It is difficult enough for a few Powers to reach agreement. How much greater
is the difficulty in achieving positive results when forty or more United Nations
meet round the table. That they have achieved such results is the remarkable fea-
ture of these economic conferences.
Moreover, the organizations which they have brought into being show that
there is room for every State to find its proper place as a part of the international
machine and so contribute to its effective running.
These achievements form only the beginning of what we hope to do by the
same methods, but they give good ground for hope in the future.
Certain it is that if the world is to undertake successfully the great task of
ensuring an expanding economy there must be much more co-operation in eco-
nomic questions than there has been in the past.
But institutions alone, however cleverly constructed, cannot ensure success and
so I return to the thought with which I began, that this great effort to obtain a
more ordered and prosperous world community cannot succeed unless it is
sustained by a moral purpose.
Here I am sure that the deep ambition of the mass of humanity is on our side
and that you here in this Conference will help us. We need your prayers, your
aid, your understanding. The task is arduous, the end is not in sight, but with
faith we can win through.
RT. HON. HERBERT MORRISON
Home Secretary and Minister of Home Security
At Torquay, March 17, 1944
The war has led to fundamental changes and has imposed new burdens on
the police. In particular, the police were called upon to act as an elder brother
to the newly established Civil Defense Services and to act as guides, philosophers
and friends in many spheres of Civil Defense which had only a remote connection
with police work proper. With the passage of time the new auxiliary arms of
the service have gained in experience and efficiency and have on many occasions
12 British Speeches of the Day
and in many ways strikingly demonstrated their value; so, too, have the all too
small number of women who have been employed on patrol duties and who have
had to deal with many delicate and difficult problems created by the war.
In Blitz and Battle
The Battle of Britain did not find the police service unprepared, and how it
rose to the crisis is now history. The records of police gallantry in those days
cover not merely police duties in the narrow sense but incidents in which the
police stepped into the breach and undertook tasks calling for initiative, resource
and courage, which they might well have left to others, such as the extinction
of fires, rescues from bombed buildings and the care of the wounded. They
lived up to the constitutional principle that the duty of the police is to protect
life and property as citizens acting for and on behalf of their fellow citizens. Their
performance in those stirring days has served to strengthen the already powerful.
bond between the police and the people. Human courage cannot be measured
in statistics, but it is a striking testimony to the service that up to the end of 1943
awards for gallantry to members of the different branches of the police service
numbered 552, and these awards included one George Cross and 115 George
Policemen are also bringing credit to the service in the Armed Forces in all
parts of the world. It is in accordance with the splendid traditions of the serv-
ice that they have volunteered in large numbers for particularly dangerous duties,
for the Navy, for combined operations, for flying duties-among others.
Nearly 4,000 policemen have been accepted as volunteers for flying duties.
This figure compares favorably with that for any other occupation; and, to realize
its magnitude, it is necessary to remember that there were some 70,000 regular
policemen before the war and only those under thirty-two years of age were
eligible to volunteer.
Many policemen have also volunteered and been selected for duties in con-
nection with the reoccupation of Europe. The reports which I have had of their
work in Sicily and Italy are, as I have said before, most gratifying and are a fine
testimony to the resourcefulness and versatility of the British policeman. As ever,
nothing seems to find them at a loss. What they have done ranges over the
whole field of civil administration: I am told of their attending to the water sup-
plies, organizing health services, getting the railways going again, and even
lending a helping hand in setting the wheels of industry revolving. One man
reports that he has been in turn lawyer, banker, post-office expert, and local gov-
As regards the future, the police will have their part to play in the vital opera-
tions to be launched against the continent of Europe, and we may be sure that
as ever they will rise to the occasion.
Value of Wartime Experience
The war has interrupted many developments which would have made the
police service more efficient, 'but the war has not been an entirely unmixed evil.
It is a first-class corrective to complacency, and the stresses and strains to which
it exposes the peacetime administrative machine are such as to bring to light its
weaknesses and to compel the taking of steps to put them right. On the whole, the
police organization has stood up extremely well to the unprecedented burdens
placed upon it, but it is no exception to the rule that wartime necessity is the
mother of innovations which may be of permanent value. In the police service,
The Police Service
as in the Armed Forces, women have proved their usefulness once and for all,
and I hope and believe that we shall never go back to the days when the time
and energies of trained policemen are employed exclusively upon the clerical and
other duties which the members of the Women's Auxiliary Police Corps have
shown can be performed equally well or better by women. Then, the needs of
war have led to far-reaching developments in police communications, including
the use of wireless. Important lessons have also been learned in the field of co-
operation-co-operation between police forces, co-operation between the police
and the military Government Departments, the Fire Service and other services.
We ought as well to be thinking of the changes-rendered impossible by
wartime stringencies-which will be desirable when peace returns. My advisers
at the Home Office are already engaged upon the preparation of their plans in this
connection, and I have no doubt that local authorities, Chief Constables and the
service generally are also looking ahead and considering the same problem. This
is, in short, to ensure that in the postwar world the police service is up to date in
every respect, abreast on the one hand with modern technical developments and
capable on the other of fulfilling the constructive role which a police force should
play in a modern democratic community.
Questions for After the War
I will not attempt to outline today a program for the future of the police
service, but here are a few questions which will obviously have to be considered.
First and foremost, the efficiency of our police system turns upon the quality of
the individual member of the service, whether he is a constable or a Chief Con-
stable. How are we going to maintain and even enhance the quality of the police
service? What changes, if any, ought to be made in the recruitment and training
of young men coming into the service? Has the time not come when there should
be a central Staff College for the training of senior officers, and as a center of
research and thought on police methods? Have we made the maximum and the
best possible use of mechanical aids to police work? Do the office methods of the
police generally compare well with those in the business world and in Govern-
ment Departments? What is the permanent place of women in the police serv-
ice? What kind of building program should be envisaged, bearing in mind that
there will be many competitors-housing, schools, hospitals, factories are a few
examples-for the necessarily limited resources available?
It is above all essential that the police should remain strong, efficient and
incorruptible-a corrupt policeman is a menace-and . should enjoy the
confidence and respect of all classes.
It will be essential to maintain and, indeed, improve the already close rela-
tions which exist between the Ministers responsible to Parliament for the main-
tenance of law and order, the police authorities and the police service itself. There
has from time to time been talk of a national police service, and it has occasionally
been suggested that the Home Secretary of the day, or his Department, has had
dark designs on the local status of the police. It is not and has never been the
policy of the Home Office to replace the present system by a national police force.
The present constitutional position of the police service is typically British;
it has grown out of centuries of tradition, and it looks quite unworkable and
presents yet one more example of the incomprehensibility of the British to the
inquiring foreign visitor. But it works: and with good will and co-operation there
is no reason why it should not continue to work. Co-operation will, of course, be
essential; the days have gone when each unit of administration could be an inde-
pendent entity, regulating its force within its own boundaries without regard to
14 British Speeches of the Day
what is happening outside. There must, indeed, in many matters be closer and
closer collaboration, affecting the service, the police authorities and the central
So far as the Department is concerned, nothing will be left undone that can
be done to ensure the continuance of the closest and most harmonious working
arrangements both with the police authorities and with all ranks of the police
service. Difficulties, and possibly misunderstandings, may arise from time to time;
it is in some ways a tribute to the service that, after the strain of four years of
war, misunderstandings have not been more serious. There are bound to be
occasions on which all the parties concerned do not see eye to eye, but with good
will and a recognition of the other man's point of view such differences need
not and ought not to affect the harmonious working of the service as a whole.
It is in this spirit that we should-together-look forward as partners to
the problems of peace.
RT. HON. R. S. HUDSON
Minister of Agriculture
University of Aberystwyth, April 14, 1944
Let me begin by saying how pleased I am to be addressing your Federation of
Young Farmers' Clubs. Though naturally a good deal of what I shall have to
say is of particular reference to Wales, I like to feel that my words apply to the
whole body of young farmers in the United Kingdom. I regard you as one of the
most important and at the same time most promising movements in agriculture
today, and not only in agriculture but in the whole youth movement of our
We are living in stirring times. The war has left no industry and practically
no individual in the land untouched. One of its results has been a complete
agricultural revolution in this country. We have had agricultural revolutions
before: the Enclosure Acts of the eighteenth century, the Norfolk Rotations of
Coke and Townshend, the introduction of artificial fertilizers by Lawes at the
beginning of the nineteenth century. But never have we had such a revolution
as we are now living through as regards both scope and speed. We have crowded
into a short four years not only the re-learning of old lessons and the learning of
new ones, but the facilities for spreading that knowledge, for applying that
knowledge and for putting it into practice have, of course, been quite unexampled
in our history. For the first time, too, for twenty years farmers have been able to
reap the benefits.
Then and Now
Before this war farming in this country through the force of economic circum-
stances and through no fault of its own had gradually gone downhill. The land
and its equipment had been neglected. The art of farming was languishing. There
was little or no encouragement to put the science of farming into practice.
Now all that is changed. Farmers, their workers, their wives, their sons and
their daughters, with the help and encouragement of the Government have
wrought miracles and by their efforts have transformed the face of the country-
Four years ago no one thought this possible. Four years ago if you had
prophesied our present level of production you would not have been believed.
But this means, too, that we have changed our standards, our standards of
comparison, our standard of values. As you know I have the reputation of never
being satisfied. The more I travel about the country and see what has actually
been done the more I believe you can do.
I have as a matter of fact in my speeches to Parliament and in the country
repeatedly told the public of the great things the farming community have ac-
complished. Indeed as you probably saw I said the other day that agriculture
had in the last four years made greater strides in efficiency than any other great
But that does not mean that there is not still room for improvement, in some
fields room for great improvement. That is the lesson I am trying to drive home.
The great progress of the past year or two has opened unexpected vistas of still
further progress yet to come. Believe me it will be needed.
The Task Ahead
You young farmers are just entering on the threshold of your careers. Things
are not going to be easy after this war. We have destroyed our accumulated wealth
on a colossal scale. I have no doubt that we can accumulate it again, that we
can maintain, possibly even raise, our standard of living. That will involve work,
hard work. New wealth depends on production and economic production at that.
We are lucky in agriculture that we have four years before us when demand for
home production of food is bound to remain high, very high, when we are to a
large extent isolated from foreign competition. But the day is bound to come,
when European agriculture is restored, when the greatly increased world produc-
tion that has been called into being to help Europe in its need will be looking
for new outlets. No one can tell exactly when that day will come. All you can
be sure of is that it will come!
When that day comes, plan we never so well-I repeat to you what I have
said on so many platforms-the future of British farming will in the last
/analysis depend on the individual British farmer.
I seem to have aroused a certain amount of feeling by the use of the word
"efficiency." I am not quite sure why, as it seems so obviously the duty of every-
one of us to achieve that happy state. Looking back on the past four years of
really wonderful effort on the part of the farmers, I am indeed sorry that any
words of mine should have given offense to so many good friends.
But now you are asking and asking not unreasonably that the Government
should look ahead, and I conceive it to be my duty, having reconciled your claims
in my own mind with the national interest, to put your case before my colleagues.
I kaow, however, the conditions under which success is possible-also the con-
ditions under which it is not possible; and I should not be acting in the real
interests of the farming community only to speak words of praise and never any
of criticism. However much the farming industry has shown its mettle during the
war we must all surely admit that there is still a lot of land of which we are
not yet proud, and a lot of livestock that is very definitely poor. These are
problems that have to be tackled, and tackled immediately, and with boldness.
British Speeches of the Day
If sometimes, therefore, you think I am prodding you pretty hard please interpret
my seeming harshness as determination to achieve foundations on which, to-
gether, we can build a great and prosperous industry.
The simple fact is that the less British agriculture needs assistance, artificial
help, call it what you will, to even out differences between prices of home pro-
duced and overseas food the more likely we are to get what we ask for, namely
a stable long-term agricultural policy.
To come back to young farmers. On you as the farmers of the future, on what
you are, on what you know, on what you do, and how you farm, will depend
whether British agriculture takes its proper place in the national economy as one
of the greatest industries of the nation. We shall need enthusiastic and above
all well-trained men and women to carry on the work of the land.
Now good farming does not come by instinct alone. It is a science as well as
an art. Instinct and a feeling for the land is, of course, an invaluable asset. But
the ordinary average farmer can't farm well by instinct and instinct only, not
even when this is supplemented by the traditional farming lore of the district
passed down from generation to generation. To be a really good all-round
farmer a man must have knowledge-knowledge not only of the fundamentals of
his trade but knowledge, too, of modern up-to-date methods. For farming is a
complicated job. An efficient farmer today must be something of a scientist,
something of a mechanic and an engineer, something of a veterinary surgeon,
something of an administrator and an accountant, and something of a salesman
as well as a farmer pure and simple. Knowledge is the only solution-knowledge
constantly being refreshed and brought up to date. And the key to such knowl-
edge is education. By education I do not mean only instruction given to the
young. I mean also a continuous flow of advice and guidance which will reach
farmers and farm workers constantly throughout their working careers.
During the last few years we have done a great deal to build up such a
system. Farmers need no longer feel they are fighting a lone battle. At hand
they have in the technical officers of the Committees and in the specialist advisory
services capable practical men and experts who can advise them on the manifold
problems which arise from day to day in the battle of the land. In the Technical
Development Committees we have set up bodies who by practical demonstrations,
lectures, exhibitions, etc., are bringing to the farmer the results of best farming
practice and modern research.
Now all this work of technical advice has involved a heavy drain on our man-
power resources. As a result we have been obliged to limit very drastically
agricultural education, in its limited sense of the formal instruction of young
students in the science of agriculture. This of course was inevitable. But it is
a wartime limitation which I hope will vanish as soon as the man-power position
becomes easier and we can get a sufficiency of technically qualified people to
carry on the work.
Young Farmers in Wales
With the restriction of facilities for regular agricultural education, the Young
Farmers' Club movement has during the war had a specially important part to
play in giving young men and women the informal education which can be got
from the exchange of ideas and experience. It has also seized the favorable oppor-
tunity created by war conditions of developing a better understanding between
town and country. The "Young Farmer" is not necessarily somebody who is
going to work on a farm. Any boy or girl who is interested in growing things
or keeping livestock has a place in the movement. Flourishing Young Farmers'
Clubs have grown up in the heart of industrial towns. This is as it should be.
For I believe that it is essential for the well-being of the nation that in future
generations the division of interest and outlook between town and country should
be replaced by mutual understanding and co-operation.
The Young Farmers' Club movement has, I am glad to say, made great strides
during the past few years. I understand that you have now about 800 Clubs with
a membership of over 40,000. This is a great achievement. But I have not for-
gotten that some little time ago I set up a target of 5,000 Clubs, and I hope
that it will be possible to achieve this in the not too distant future. I hope, too,
that the membership will increase from its present figure to not less than 100,000
I should like here to express my particular admiration for the Young Farmers'
Club movement in Wales. I understand that there are no less than 144 Clubs in
Wales with a membership of nearly 7,300. It is, too, a Welsh county-Cardigan-
which has the highest number of Clubs of any county in England and Wales. Wales
can also claim not only a good record in quantity but also in quality. For the Na-
tional Efficiency Shield, which is open to Clubs throughout England and Wales,
was won last year by the Blaenporth Club in Cardigan. You, the leaders and rep-
resentatives of the young farmers in Wales, can justly be proud of your efforts.
Education and Self-Education
Now what of the future? I have mentioned today the way in which, during
the war, we are providing advice and guidance to farmers. Our aim in the future
must be to provide a comprehensive system of agricultural education.
We must lay the foundation in the schools by giving everybody a chance of
learning about nature and the countryside, and the part that agriculture plays
in the life of the nation and of the world. That is something you ought to know
whether you live in the country or in the town and however you intend to earn
For those who intend to enter some branch of farming as a career, there must
be an adequate provision of regular technical education after they leave school.
Those who aim at a career in agricultural research, teaching or advisory work, or
who expect to be farmers in a big way must go to a center of higher education,
a university, or an agricultural college, for the specialized knowledge they need.
We shall have to see that adequate facilities are provided for them. But the great
majority of those for whom training must be provided are the future skilled
workers and farmers. The most suitable training for them is that provided by a
Farm Institute whose purpose is to give young men and women a sound training
in the scientific principles underlying good farming and in modern agricultural
We need many more Farm Institutes if this type of training is to be available
for all those who want it and can profit by it. As I told the--Fouse of Commons
recently, it will no longer be left to Local Authorities to decide whether or
not to provide agricultural education at the Farm Institute level and below. In
future County Councils will be required, as a duty, to make provision for agri-
cultural education as an integral part of their educational proposals.
But education does not end with formal instruction in schools, institutes and
colleges. Some of the older ones amongst you may have realized already that it
is only a beginning. We go to school to learn how to go on learning when we
have left school. Unless you have learnt that, you have learnt nothing of any value.
The test of formal education is whether it enables you to go on educating your-
British Speeches of the Day
An important part of the job of the Young Farmers' Club is to promote the
process of self-education. In your Clubs you can carry on discussion and argu-
ment about farming and country life. You can encourage a healthy sense of
curiosity and a thirst for knowledge by means of lectures, films, exhibitions and
demonstrations. You can exchange with people of your own age and similar
interests ideas you have acquired by practical experience. All this is an essential
part of your education.
Let me turn for a moment to the education which we hope to provide in the
future for the farmer himself. For some time we have been considering proposals
for the amalgamation of the various advisory services into one national service.
The Government set up a Committee presided over by Lord Justice Luxmoore to
consider this problem and in its report it advocated the establishment of such a
national advisory service. Last January I announced that the Government had
decided to adopt this idea and to unify and combine the present county and
provincial advisory services into one advisory service for the whole country
under my Department. By this means we can continue and complete the coordina-
tion of advisory work which has shown such good results during the war It will
lead also to the more adequate provision of advice to farmers than has been
possible in the past, and incidentally there should be more qualified people avail-
able to give you young farmers a helping hand in the work of your Clubs. I
may, perhaps, add that under a unified national service there will be greater op-
portunities for the men employed than ever were open to them under the old
Welsh Tillage and Livestock
Before I close let me say a word about the food production efforts of Welsh
farmers generally. Wales is predominantly a livestock country. But in response
to national needs, Welsh farmers have raised the tillage acreage from 292,399 in
1939 to 884,983 in 1943, an acreage even greater than the 1870 figure of 722,000.
Of course a large proportion of this is devoted to fodder crops to replace
feeding stuffs which were formerly imported; you will be interested to hear that
only 133,000 acres or about 15 per cent of the tillage area was devoted to wheat
last year. Yet in spite of this great ploughing up effort the cattle population has
actually increased from 858,597 in 1939 to 905,455 in 1943 though, of course, this
has been balanced by a drop in sheep and pigs.
Let me say just a brief word to you about this livestock question. You prob-
ably know from the reports of my speeches during the last year that I have been
concentrating on the necessity of improving our livestock. That is one of the
main planks in my Four Year Plan. While this is necessary all over the country,
it is more particularly important here in Wales, which I regard as one of our
future livestock reservoirs. It is true that during the last year or so many Welsh
farmers have turned over to milk production in response to the urgent call to
produce more milk. But in the case of a great number of the smaller and more
out-of-the-way holdings they are not really suited for economic milk production
and their real job should be the rearing of calves for future sales as stores. It
is quite certain that more stores will be wanted in the next few years, as well as
more sheep for which Wales is also an important source of supply.
It is therefore of vital importance that Welsh farmers should concentrate upon
sound breeding policies which will raise the standard of their stock and produce
healthy animals really suitable either for milk or meat production. In doing so,
we must overcome any of our prejudices which stand in the way, such, for in-
stance, as insistence upon show points, dislike of dehorning, etc.
I mention these matters to you because, after all, the future farming of Wales
will be largely in your hands. It will be for you to implement Wales' long-term
agricultural program, which must, I am sure, be mainly concentrated upon the pro-
duction of livestock.
I have dwelt a good deal today on the problems of agricultural education and
technical advice, because I believe that it is one of the foundation stones of the
healthy and well-balanced industry that we all wish to see. I have dwelt on it also
because it is into this framework that the Young Farmers' Club movement must
fit its future activities. In conclusion, however, I should like to sum up what I
think should be the three fundamental aims of the Young Farmers' Club move-
ment. First, to provide a country Youth Service which will bring together the
young people of the countryside and imbue them with the ideal of serving the
community to the best of their ability. Second, to stimulate among young people
in town and country alike a far greater sense of the importance of country things,
country life and the agricultural industry. Third, to encourage among the future
generation of countrymen and countrywomen the continuance of education where
schooling leaves off, not only in the art and science of farming but in the art
and science of living.
With these three aims kept steadfastly in mind, I trust and believe that the
Young Farmers' Club movement has a very great future before it.
RT. HON. C. R. ATTLEE
Lord President of the Council
House of Commons, April 19, 1944
I do not intend to cover in detail the present provision made for scientific
research and development. I think the White Paper* which we circulated has
given hon. Members a good deal of information, and perhaps some information
that they had not quite had before in their minds as to the extent of the support
given by the Government to research. It covers a wide field. There are the
organizations with which I am more particularly connected, the Department of
Scientific and Industrial Research, the Medical Research Council, and Agricultural
Research Council; and in addition to these there are the research activities of
industry which are helped by the Department of Scientific and Industrial Research.
There is a whole range of research work carried out by particular Departments,
and in the White Paper there has been given a general conspectus of these
activities, with one great exception, and that is the bulk of the work being done
in direct connection with the war. For obvious reasons it is impossible to set
out in detail at the present time the amount of work and, particularly, the direction
of the work of our research Departments. I am quite sure, however, that this
House realizes the debt the country owes to our scientists, and I am sure it is
present in the minds of all hon. Members that to a far greater extent than eve
before, this war has seen the application of science to the production of weapons
of offense and defense in all three elements.
*Scientific Research and Development, Cmd. 6415.
British Speeches of the Day
It has been said often that we have tended to fall behind other countries in
the quantity of our scientific output and the number of our scientists. It is
quite true that other countries have more numerous bodies of scientists and
devote more money to science, but there is no doubt whatever-and this war has
shown it-that in quality we fully hold our own. I do not know whether the
warfare that goes on between the scientists is sufficiently realized. We think
of the war in the air, the war on the sea, and the war on the land, but there
is also the war that takes place in the study and in the laboratory, and there
the brains of our scientists are pitted against the best brains of our enemies.
They have not been found wanting. Instances have been given, and there are a
great many instances that cannot be given. One, however, was alluded to by an
hon. Member, the countering of the magnetic mine and the acoustic mine, and
the speed with which the answer was found to the enemy's weapon. Another
instance is the development of the various devices for detecting the submarine.
Indeed, the Battle of the Atlantic was fought not only by our crews on the
high seas, but by the scientists continually at work at home. Take again the
ever increasing efficiency of our aircraft. Perhaps most striking of all has been
the development of radio. There is a field in which our scientists have con-
I mention these few fields of activity-there are a great many more--that we
may be conscious of our debt to the scientists, that we should recognize this great
asset which we have in the brain-power in this nation, and that we should make
full use of it in the post-war period. However, it is inevitable that at the present
time our best scientific minds are devoted to the war effort, and this Amendment
is rightly directed to the consideration of post-war problems. Before I leave the
question of science and the war, there is one field perhaps not so generally known.
It is called operational research. After operations have taken place there is a
kind of post-mortem by trained scientists who make a careful examination of all
the factors that have made for failure and success so that we may learn by them.
It is a remarkable development.
Science and Reconstruction
This Amendment, however, deals with post-war matters, and it rightly
stresses the vital part which research and science can play in reconstruction. I
can assure the House that the Government are fully alive to the fact that the
winning of the peace, just as the winning of the war, will largely depend on
a full and a right use of the scientists and of scientific organizations. The
Amendment goes on to ask for a bold Government policy and for Government
assistance. This we shall give. The Government should give assistance, and
should take a lead, but it is not a thing which can be left to the Government.
Government support for research must be backed by a readiness to use the
results of that research. It must be backed by public opinion, and the nation
must become more aware of the importance of science. Now that is a matter,
I think, of very slow growth in a nation like ours. There is sometimes a danger
of thinking of science as something quite separate from the rest of human
activity, almost a thing you keep for a special day in the week. Science should
not be something suggested as a kind of after-thought. We should be utilizing
scientific methods right through all our activities of Government and of industry,
and industry must be ready to take advantage of the new openings which the
application of scientific research affords. . .
We must constantly keep in our minds the need of moving into new fields of
activity. It is the nature of a highly industrialized country like ours, that we
should gradually move away from the older, the coarser, the simpler products
Scientific Research 21
toward the more refined ones, and we must acquire the readiness of mind to
do so. It is not enough to have highly skilled scientists in your universities or
even in your research institutions. You must have receptive minds in those
who are carrying on industry, and receptive minds in the general public.
The Amendment asks for money. That is very good. The hon. Member
had, I thought, a very advanced idea of money, because a million is only a token
payment to him. I would like a token payment like that; it seems to me very
considerable. I think the request is quite right but, remember, it is all right
to call out for money now, but, if you want your research to go on, if you want
your universities to flourish, you must get sustained support for this kind of effort.
I cannot help remembering that at the end of the last war there was an enthusiasm
for these things and then came the "blind fury with the abhorred shears"-
though it was not shears, it was the Geddes' Axe. That cut down a very great
number of promising things. Industry must make up its mind that it does
not intend to be stunted by anything of that kind again. . We have learnt
during this war the urgent need of promoting the growth of scientific knowledge
by its practical application to industry. It was after the last war that the Depart-
ment of Scientific and Industrial Research was created and it did escape the
Geddes' Axe. That Department, as hon. Members know, devotes its funds partly
directly to the prosecution of research and partly to the stimulation of co-operative
research by industry. That is important, because there must be partnership in these
matters. If it is all to be done by the Government for the benefit of industry then
industry will not take much notice of it.
On Being Research-Minded
The great advantage of co-operative research organizations is that they make
for a lively interest by those people who are contributing. Some industries have
been far ahead of others in making use of these facilities. Some have been very
slow, but there has been a quickening recently. The development of these research
organizations has not been conditioned by any reluctance on the part of the
Treasury to find funds. Indeed, we have been urging the extension of these
undertakings but, as I say, there has been a slowness on the part of some
industries. Where these research organizations have been set up there are always
keen businessmen who take advantage of the results achieved, but there is always
a certain number who do not. The research worker works in vain if the minds of
those engaged in industry are not sufficiently educated to appreciate what is
done. I am told that perhaps we lag behind the United States not in the quality of
our research work, but in that there is a wider dispersal of university education
among industrialists in America than on this side of the Atlantic-which means
that industrialists are readier to take advantage of research. I readily recognize
that there has been a great awakening recently. There was a stimulating pamphlet
by Sir Harold Hartley and there have been very valuable reports by the Federation
of British Industries and by our Parliamentary Scientific Committee. These have
attracted wide attention. That is not the only side of industry that is interested
in research. The T.U.C. [Trades Union Congress] has been showing great
interest, and on it we have two Members who serve on the Committee of the
Department of Scientific and Industrial Research, while the Mineworkers' Union
have shown great activity in regard to fuel research.
There is another matter which has been engaging the attention of the Gov-
ernment, and which has been alluded to by several speakers in this Debate, and
that is the need for the establishment of a fund of some kind to meet the cost
of developing new inventions and of providing facilities for testing new ideas
for industry. The Government recognize that need, and the best way to meet
British Speeches of the Day
it is now under examination. We must obviously consider how best this can be
fitted in with the work of the co-operative research organizations in industry.
I cannot at present give detailed plans, but when decisions have been come to
they will be given to the House. This is not a matter, however, which has
escaped the attention of the Government. We are very keen that there should not
be any loss of valuable inventions. People of experience tell me that you do
not find very many cases where really first-class inventions fall by the wayside.
There are a good many inventions one hears about that are important more for
the enthusiasm of those who think they have discovered something than for their
own intrinsic merit.
Science-Applied and Pure
I would now like to turn to a point raised in the Amendment, namely, the
request for generous support from the Government for the extension of teaching
and research at the universities. Here, again, the Government are entirely in
favor with the spirit of that request. It has been said, rightly, that you cannot
separate applied science from pure science. Pure science must go on at the
different universities, and there is a fund to give the financial support that is
necessary. The Government recognize that it is quite obvious that there will be a
much greater expenditure both on fundamental research and on teaching at the
universities. I do not think it is recognized quite how much is done by the
Government in this regard, but a great deal is done, and the University Grants
Committee, the personnel of which has been changed recently-with advantage,
I think, by making it somewhat wider-has not really been tied down narrowly
by the Treasury. I think Members rather thought that it had. As a matter of fact,
grants have been made in accordance with the requests of the universities and I
think you will find that the universities have, in the past, been perhaps somewhat
hesitant in seeking Government financial aid. They have the laudable desire of
preserving their independence and are always a little afraid of selling their birth-
right for financial pottage . .
Generally I do not think you will find that the Treasury have been niggardly
towards the Grants Committee. I can assure the House that these needs will
be met . .
We have to see to it that in the post-war world there will be an adequate
supply of teachers and research workers. The question of supply is being con-
sidered by the Norwood Committee and the question of demand is being
investigated by the Hankey Committee. We must have an adequate supply,
and we must draw on the whole of the community. No one can tell in what
garden the flower of genius will suddenly blossom. It is true that there are
very few men and women in any generation who can make discoveries. We must
see to it that we get an adequate supply and we must see to it that there are
adequate rewards to the scientific research worker and the teacher. We are very
alive to the point . about the future of these young people who will come
into industry after refresher courses at the university, but we must also see to it
that we must not overstock the market by providing more scientific workers
than can be absorbed, and it is for that reason that we are looking at both supply
The point has been raised of adequate payment for the scientific worker. I
think the reward has been insufficient in many cases hitherto. The whole question
of the relation of the payment made to scientists in Government employ in relation
to other Government employment of similar status is now being carefully
inquired into and already steps have been taken to raise the remuneration of the
heads of research institutions. There were certain points where there was
obvious disparity between the scientific worker and his fellow on the administrative
side . .
Science Cannot Be Isolated
It is very important that we should not think that science is something that
can be put away in one place and kept out of other Government offices. It has
been suggested that we should have a Ministry of Science. I think that would
be a great mistake. Once you have that other administrators would say, "This
is a scientific thing. It belongs to the other Department." What you want is
to see that there are persons in all Departments who are trained in the scientific
method and appreciate what it means. It is also right that, while you have
certain centralized institutions, you should have special research going on in the
various Departments. There is a great deal of research going on both in connec-
tion with war and also with post-war problems. A great deal is being done by the
Ministry of Works and Buildings in regard to materials of all kinds. There is
a great deal being done in agriculture. Many Members have referred to various
agricultural problems, some directly connected with research and science, others
perhaps rather wider.
I should like to refer to one piece of work which was initiated by the
Development Commission, and that is post-war fisheries research, by a very
strong committee presided over by the hon. Member for the Scottish Universities
(Sir J. Graham Kerr) ....
I was glad to hear hon. Members who spoke for agriculture suggest that,
if we are to have proper agricultural research, the agricultural industry should
make an adequate contribution. There again the same thing applies, that they will
value it more if they contribute. I think, broadly speaking if the agricultural
industry gives enough to research they will sufficiently value the results of
research. The same applies to the mining industry, in which certainly much more
might have been done . .
The Other Sciences
There is sometimes a tendency in the minds of people to narrow science down
to mean the natural sciences, but it is capable of application in other directions.
I should like to draw attention to a considerable improvement in the machinery
of government that has taken place during the war, and that is the creation of
a Central Statistical Section and a Central Economic Section. These were set
up in order that we might ensure the collection, through the different parts of
the Government machine, of the data necessary for determining policy and to
survey systematically the underlying economic causes, trends and effects. It might
seem surprising that we have not had that organization before. It is a piece of
permanent machinery. We must see to it that, in the machinery of government
as well as other things we utilize to the full the valuable lessons that we have
learned in the war ....
Statistics are an instrument to be used. They are an instrument for discovering
the results of actions and the likelihood of where future actions will lead. Gen-
erally speaking, I should like to assure the hon. Member who moved the
Amendment and those who have spoken that there is no question that the
Government is fully seized of the need for proper expenditure of money and
time on research, both technical and in the Universities. I cannot come down
with many millions-that is not my function-but hon. Members will find
reflected in the figures of the University grants a steady increase, and it is quite
British Speeches of the Day
obvious that it would be rather a futile thing to be passing a great Education
Bill through the House and to neglect the Universities at the top. I regard the
Education Bill as an essential means of getting the nation scientifically minded.
My view of this is that you have three parties. There is the Government and there
is industry, and you also have the general public. I am grateful to my hon.
Friends of the Parliamentary Scientific Committee for the work they are doing.
This kind of work will not endure unless public opinion is behind it. There is
sometimes a readiness to support things with money in war and to have a cold fit
of repentance after the war. I hope that the work which is now being done
will be sufficient to prevent that from happening.
[House of Commons Debates]
RT. HON. WINSTON CHURCHILL
House of Commons, April 21, 1944
When we planned this Debate together through the usual channels, it was well
understood that its main purpose was to enable the House to express its opinion,
and that the Government would have no far-reaching declaration of policy to
make. Indeed, it has been everywhere recognized that for us to commit our-
selves to hard-and-fast lines of policy, or even to the advocacy of particular sug-
gestions or proposals, would not be appropriate on the eve of the first meeting
we have been able to arrange-after many attempts-of all the Dominion Prime
Ministers since the war began. Thus viewed, I think it will be almost universally
admitted that the Debate has been a great success, and has been of far-reaching
usefulness; that the Motion* on which the Debate is founded is acceptable to
all; that there is, as the Noble Lord has said, an all-party agreement on most funda-
mentals; and that the level of the discussion has been worthy of the breadth of
the subject, and has been distinguished by speeches of a statesmanlike character,
for I can use no other word for speeches such as I heard yesterday. .. I much
regret that I could not hear all the speeches which have been made, but I sat up
till half past two this morning reading the full report of every speech, and I
crave the indulgence of the House for not having been constantly on the Bench
during this Debate, on account of some other things which, hon. Members may
know, it is my duty to look after.
One Divided World
What has struck me most about the speeches to which I have listened or have
read or upon which I have been kept well-informed, has been the great number
of enormous topics, some of which have formerly been matters of heated con-
troversy, and may be again, which Members have found it necessary, indeed have
found it inevitable, to take for an airing. A great number of these questions
concern our future, and they have been raised directly or indirectly. What changes
"That the United Kingdom should do its utmost by close co-operation and regard for
the different points of view of the nations of the Commonwealth to preserve in time of peace
the unity of purpose and sentiment which has held them together in time of war."
Unity in Commonwealth and Empire
are to be made in the political, economic, and defense structure of the British
Commonwealth and Empire? In what way will an ever more closely knitted
British Commonwealth and Empire become also, at the same time, more closely
associated with the United States? How will this vast bloc of States and Nations,
which will walk along together, speaking, to a large extent, the same language,
reposing on the same body of common law, be merged in the supreme council for
the maintenance of world peace? Should we draw closer to Europe-there is
another question-and aim at creating, under the Supreme World Council, a
living union, an entity in Europe, a United States of Europe? Or, again, should we
concentrate upon our own Imperial and Commonwealth organization, or upon
our fraternal association with the United States, and put our trust in the English
Channel, in air power,. and in sea power?
Other more familiar topics than these-because it is easy to see, from the re-
currence of these topics in so many speeches, the way in which the modern mind
of the House is moving-have been raised, like Free Trade versus Protection,
Imperial Preference versus greater development of international trade, and inter-
national currency in relation to the policy of the United States and the existence
of a vast sterling area. One even sees the gold standard peering around the corner,
and, of course, British agriculture close at hand. My hon. Friend the Member for
Eye said yesterday that the sole, or the main, lesson of the war was that the world
was one and indivisible. I should myself have thought that the main obvious
fact before our eyes is that the world is very seriously divided, and is conducting
its controversies in a highly acrimonious manner. Certainly it seems sufficiently
divided to give the peacemakers quite a considerable task to weld it into one
common mutually-loving whole at the peace table. I cannot pretend to have
provided myself with the answers to all these questions, with answers which
would give satisfaction to all parties here at home, and cause no complications
in our relations with foreign States, but I bid the House to take comfort from the
fact that, great as our responsibilities are, no reasonable person could expect us
to solve all the problems of the world while we are fighting for our lives. We
must be generous, we must be fair to the future, we must leave something to be
done by our descendants, if any.
The Economics of the Post-War World
My hon. Friend the Member for West Renfrew (Mr. Wedderburn), whose
laudable desire to probe into the distant past is not always accompanied by histori-
- cal precision, quoted-and I make no complaint of it-a speech which I made
forty years ago against Mr. Joseph Chamberlain's policy of Protection and Imperial
Preference which certainly does not, whatever else may be thought about it, reveal
me as a very ardent supporter of those policies, and certainly makes it very odd
that I should have, for the time being, the honor of leading the Conservative
Party. I have no intention of passing my remaining years in explaining or with-
drawing anything I have said in the past, still less in apologizing for it; but what
I am concerned to do is to show to the House, and also to Members of my own
Party, how strictly I have, during my stewardship, safeguarded the structure of
Imperial Preference, which has arisen out of the controversies and achievements
of the last forty years, against any danger of being swept away in the tumult of
this war. At my first meeting with the President of the United States, at Argenta
in Newfoundland, at the time of the so-called Atlantic Charter, and before the
United States had entered the war-a meeting of very anxious and critical impor-
tance-I asked for the insertion of the following words which can be read in
"With due respect for their existing obligations."
British Speeches of the Day
Those are the limiting words, and they were inserted for the express purpose of
retaining in the House of Commons, and the Dominion Parliaments, the fullest
possible rights and liberties over the question of Imperial Preference. Again, in
February, 1942, when the United States was our closest Ally, I did not agree to
Article 7 of the Mutual Aid Agreement, without having previously obtained from
the President a definite assurance that we were no more committed to the abolition
of Imperial Preference than the American Government were committed to the
abolition of their high protective tariffs. The discussions as to how a greater
volume of trade and a more harmonious flow of trade can be created in the imme-
diate post-war years in agreement, leaves us, in every respect, so far as action is
concerned, perfectly free. How could it otherwise be, when Parliament itself
would not only have to debate the matters, but would have to legislate upon them,
when they were brought before it? I am convinced myself that there should be
a careful, searching, far-ranging discussion on the economics of the post-war
world, and a sincere attempt made to reconcile conflicting interests wherever pos-
sible. There must be a wholehearted endeavor, begun in good time, to promote
the greatest interchange of goods and services between the various communities
of the world, and to strive for that process of betterment of standards of life in
every country without which . expanding markets are impossible, and without
which world prosperity is a dream which might easily turn into a nightmare.
Unity in Time of Stress
My right hon. Friend the Member for Devonport (Mr. Hore-Belisha) made
a remark which I particularly liked, when he said that the Empire is not a sick
body. I cordially agree. But even I can look back to the days when it was con-
sidered to be moribund. There were, when I was young, some statesmen whose
names are honored, who spoke of the Colonies as burdens, and of the Dominions
as fruit which would fall from the tree when ripe. I did not live myself in the
days when those speeches were made, but I remember well times of great
anxiety about the Empire, at the end of the last century. I remember the South
African war, and how shocked the War Office was, when Australia and New
Zealand actually wanted to send contingents to fight, and how they eventually
overcame their reluctance by adopting the immortal compromise unmountedd men
preferred." My right hon. Friend, who is not here, has made great improvements
since then. I have never thought myself that the Empire needed tying together
with bits of string. I agree with my right hon. Friend the Member for Devonport
that natural development, natural forces, mysterious natural forces, will carry
everything before them, especially when those forces are fanned forward,
as they will be, by the wings of victory in a righteous cause.
Then came another phase. Looking at the British Empire, say, thirty years ago,
in 1914, on the eve of the first Great War, all foreign opinion, especially German
opinion, was convinced that this vast structure of Empire, created and coming into
full life in Victorian times, had reached a condition of ricketiness and looseness
when a single violent shock would bring it clattering down and lay it low forever.
Then came upon the world a most frightful war, incomparably greater than any-
thing we had ever known, with slaughter far greater than any, thank God, we
have suffered in this struggle. I remember coming out of the Cabinet meeting on
an August afternoon in 1914, when war was certain, and the Fleet was already
mobilized, with this feeling: "How are we to explain it all to Canada, Australia,
South Africa and New Zealand; nay, how are we to explain it all to our own
people in the short time left?" But, when we left the fierce controversy of the
Cabinet room, and came out into the open air, the whole of the peoples of the
British Empire, of every race and every clime, had already sprung to arms. Our
Unity in Commonwealth and Empire
old enemies, recent enemies, Generals Botha and Smuts, were already saddling
their horses to rally their commandos to the attack on Germany; and Irishmen,
whose names I always bear in my memory with regard, John Redmond and his
brother, and others of the old Irish Parliamentary Party, which fought us for so
many years in this House in pleading the cause of Ireland with great eloquence
and Parliamentary renown-there they were, making these speeches of absolute
support and unity with this country until everybody said everywhere "The bright-
est spot in the world is Ireland." It may be that a grand opportunity was lost
then. We must keep our eyes open. I always keep mine open on the Irish
We had a pretty dreary time between these two wars. But we have great
responsibilities for the part we played-so we have, all of us-and so have the
Americans in not making the League of Nations a reality and in not backing its
principles with effective armed forces, and letting this deadly and vengeful foe arm
at his leisure. But, underneath, the whole Empire and ourselves in these islands
grew stronger and our resources multiplied. Little was said about our growth. Little
was visible of our closer union, while the forces which had sent the Anzac Corps
to the Dardanelles, and afterwards to the Hindenburg Line, and carried the Cana-
dians to Vimy Ridge, were all growing, unseen, unnoticed, immeasurable, far below
the surface of public life and political conflict. These are the natural processes
to which my right hon. Friend so aptly referred. Then, this war broke out. The
Mother Country-I must still ask leave to use this name; anyhow, I think it is
rather dangerous to plunge into new nomenclature, and I am not sure that any-
thing like "The Elder Sister Country" would be a very great success. There was
that old song which I remember in my youth, "A Boy's Best Friend is his Mother,"
and which seems to me to be sometimes worth humming again. The Mother
Country I say was geographically involved, once again, in the struggles of Europe,
and found it right and necessary to declare war upon Germany because Germany
had violated Poland and we had guaranteed to defend Poland. Instantly, from
all parts of the British Empire, with one lamentable exception, about which we
must all search our hearts, came the same response. None of the disillusionments
that had followed "the war to end wars," "the homes for heroes" and so forth-
all good slogans in their day-none of the disillusionments which we had gone
through, with the ups and downs of unemployment and great privations, none
of these had affected in any way the living, growing, intensifying inner life of
the British Commonwealth and Empire. When the signal came, from the poorest
Colony to the most powerful Dominion, the great maxim held, "When the King
declares war, the Empire is at war." The darkest moment came. Did anyone
flinch? Was there one cry of pain or doubt or terror? No, Sir, darkness was
turned into light and into a light which will never fade away.
What is this miracle? I think the word was used by some hon. Gentlemen
yesterday. What is this miracle, for it is nothing less, that called men from the
uttermost ends of the earth, some riding twenty days before they could reach
their recruiting centers, some armies having to be sent 14,000 miles across the
seas before they reached the battlefield? What is this force, this miracle which
makes governments, as proud and sovereign as any that have ever existed, im-
mediately cast aside all their fears, and immediately set themselves to aid a good
cause and beat the common foe? You must look very deep into the heart of man,
and then you will not find the answer unless you look with the eye of the spirit.
Then it is that you learn that human beings are not dominated by material things
but by ideas for which they are willing to give their lives or their life's work.
British Speeches of the Day
Among the various forces that hold the British Empire together is, and I certainly
do not object to the expression which my hon. Friend the Member for Seaham
used, "enlightened self-interest"; that has a valued and important part to play,
but I am sure he would make no mistake in placing that in front of those deeper
and more mysterious influences which cause human beings to do most incalculable,
improvident, and, from the narrow point of view, profitless things. It is our
union in freedom and for the sake of our way of living which is the great fact,
reinforced by tradition and sentiment, and it does not depend upon anything that
could ever be written down in any account kept in some large volume.
We have had the Statute of Westminster, which some thought would involve
the breaking of ties. There was a lot to be said about that on either side. It has
not impeded in the slightest degree the onward march of the Commonwealth
and Empire. It has not prevented the centripetal forces of our vast organization
from exerting their full strength. Here, after our failures-we are not the only
nation which had failures between the two wars-here, after the Statute of West-
minster, here after getting into this war, and dragging in the Empire so un-
prepared-and they themselves no better prepared either in arms or opinion-
here amid the wreck of empires, states, nations, and institutions of every kind,
we find the British Commonwealth and Empire more strongly united than ever
before. In a world of confusion and ruin, the old flag flies. We have not got to
consider how to bind ourselves more closely. It would pass the wit of man to do
so. It is extraordinary what a poor business it has become to sneer at the British
Empire. Those who have tried it in the United States have been discredited. Those
who have tried it in the Dominions have found no public backing, although there
is free speech for all opinions. Those who decry our Commonwealth of Nations
and deride the Mother Country have very little support.
A Family Council
The question before us is, How can we make things better? How cart we gain
greater results from our already dose ties? I do not think we should embark upon
that task with a sort of feeling that, if we do not do something, everything is
going to crash. I do not understand that. I do not feel like that. The forces
underlying our unity are superior to any temporary shortcomings for which any
of us may become responsible. We have to consider practical steps and to con-
sider these coolly and sagely. The world is in crisis. The British Commonwealth
and Empire within itself was never more united. Rudyard Kipling, that refreshing
fountain of British Imperial ideas, wrote of the Dominions:
"Daughter am I in my mother's house,
But Mistress in my own."
We have to take a step beyond that now. There is a family council. Methods'
must be devised, without haste and without rest, to bring the nations of the
British Empire into intimate and secret counsel upon the march of world events
not only during this war-because that is done with great labor and efficiency-
but after the war, so that they know fully our position and we theirs in regard to
the march of events and the action which may have to come from them. My right
hon. Friend the Member for Devonport spoke wisely and suggestively of "func-
tional unity" within the Empire and also of another applicable to the world at
large. The question had been raised: Should we-have a permanent machinery
like the Committee of Imperial Defense, only on a larger scale, a kind of lively
extension of the principle which is embodied in the name of the Chief of the
Imperial General Staff, which Lord Haldane created by a farseeing decision, a sort
of continuance, in an Imperial form, of the machinery which I, at present, direct
Unity in Commonwealth and Empire
as Minister of National Defence, should we set up something like this to be a
standing and perpetual committee of the British Empire? This is no more than
an expansion on a much greater scale and in much more precise detail of the work
hitherto done by the Committee of Imperial Defence, which my right hon. Friend
mentioned. But should it extend into the sphere of maritime affairs, of economic
affairs and of financial affairs, and how far?
These are obviously matters which we must begin to explore together when we
meet informally our colleagues from the great Dominions. There are some who
would clothe the machinery of union with Ministerial authority, there are others
who would have it extended to both economic and military affairs. I must say,
speaking for myself, I see very little difficulty about the first, about international
bodies being developed with more vigor. We have, of course, representatives of
the Dominions on the bodies which function under the Minister of Defence now.
I see very little difficulty about the first; I see very great advantage about the
second, namely, Ministerial contact. There must be frequent meetings of the
Prime Ministers, and they must be attended by those they choose to bring with
them, to discuss all aspects of Imperial policy and Imperial safety. Here as in
so many cases time marches forward with a friendly step. The vast developments
of air transport make a new bond of union-I think attention was drawn to it
by my right hon. Friend opposite-and there are new facilities for meeting, which
will make the councils of the British Commonwealth of Nations a unity much
greater than ever was possible before, when the war is over and when the genius
of the air is turned from the most horrible forms of destruction to the glories of
It will be quite easy to have meetings of Prime Ministers or Imperial confer-
ences, whatever you like to call them, every year or more often, on every serious
occasion when we get to the times of peace, and we shall encourage them at any
time in the period of war. It is not necessary that these meetings should always
take place in London. They may take place in other great centers of our United
Empire. Although I am still old-fashioned enough to consider Cockney London
as the heart of the Empire, I am quite ready that we should take wing in the
future. In this war we have already held, quite apart from the conferences with
the President of the United States, a conference in Quebec where I sat for several
days with the Dominion Cabinet, and we were all the guests of Canada, which I
may say is a very agreeable thing to be. It is very likely, as the somber marches
of the war succeed one another, when Hitler and Hitlerism are finished and blasted
from the face of the earth, we shall have conferences of the British Empire and
the United States in Australia about all these matters-and there are certainly
some in which we find cause of complaint against the Japanese. When peace
returns, and we should pray to God it soon may, the conferences of the Prime
Ministers of the Dominions, among whom we trust India will be reckoned and
with whom the Colonies will be associated, will, we hope, become frequent and
regular facts and festivities of our annual life.
The Whole and the Parts
One last word before I sit down. Some assume that there must be an inherent
antagonism between a world order to keep peace and vast national or federal
organization which will evidently be in existence. I do not believe this is true.
Both the world order and this great organization may be so fashioned as to be two
parts of one tremendous whole. I have never conceived that a fraternal associa-
tion with the United States would militate in any way against the unity of the
British Commonwealth and Empire, or breed ill-feeling with our great Russian
British Speeches of the Day
Ally, to whom we are bound by the twenty years treaty. I do not think we need
choose this or that. With wisdom, and patience, and vigor, and courage, we may
get the best of both. We have often said of our own British Empire:
"In My Father's house there are many mansions."
So in this far greater world structure, which we shall surely raise out of the
ruins of desolating war, there will be room for all generous, free associations of
a special character, so long as they are not disloyal to the world cause nor seek to
bar the forward march of mankind.
[House of Commons Debates]
British Ambassador to the United States
At the University of Michigan, April 21, 1944
Of the war you will not perhaps expect me to say much today. We are waiting,
as patiently as we may, on great events. We know that the dark days, when even
a German and Japanese victory seemed possible, are over. On the Russian front,
in spite of all that the German armies and the mud of the spring thaw can do to
delay them, our Russian Allies keep moving on; in Italy, the enemy is only able
to hold out against Allied pressure by drawing on divisions that he would fain
have saved for other duties; in the Pacific, the Japanese are losing one strategic
outpost after another to the brilliant assaults of American, Australian, and New
Zealand forces; at sea, the submarine attack on our lines of communication and
supply has been held and, for the time at least, defeated; in the air, with growing
strength and concentration of attack, we move day by day to mastery; whichever
way we look, we can see that the tide has turned.
But the war is not yet over. It will still make the utmost demands of effort,
of courage and of sacrifice from us all. At this moment it demands above all that
we should not lose our perspective; that we should not be unduly elated by suc-
cesses or allow them to persuade us that victory is already in our grasp; and that
we should not be unduly depressed by reverses-for we shall still have reverses-
and think when they come that there must be something wrong with our strategy
The other day I read this, which we might well take to heart in this hour:
"When we receive a check, and are not quite undone, we are apt to fancy we
have gained a victory; and when we do gain any little advantage, we imagine
it decisive and expect the war immediately at an end. The history of the war
is a history of false hopes and temporary expedients."
These words were not written by an Allied leader. They were not written
about this war, or the last war. They were written by George Washington to a
friend in Congress in the closing year of your Revolutionary War; and yet they
are as much a warning against overconfidence to us today as they were to your
forebears in 1781.
And that warning applies not only to the winning of the war, but just as
much to the winning of the peace. For that, too, will be no quick or easy busi-
The Work to Which We Have Set Our Hands
ness. There is no magic in victory which by itself will set the world to rights.
It will be the same world, only it will be torn and battered by the havoc of war.
We shall be the same people, though, as we may expect, tempered by suffering
and wasted by the strain; proud of that which under God we shall have been able
to achieve, and humble before the responsibilities that its achievements will have
placed upon us.
Nor may we forget that this is the second time in little more than a quarter
of a century that we shall have had the same task and the same opportunity. Are
we so sure that we shall rise to their measure today or tomorrow, where we so
largely failed in 1919? We may well ask, in no spirit of pessimism, but with high
resolve to search out our thought. What are our prospects of being more success-
ful now than then?
Today we all feel that unless we can really exorcise the spirit of war, we shall
have betrayed the hopes of millions, and all the sacrifices they have made will have
failed to buy that for which they made them. 'But we felt that in 1919 too.
Today we are filled with good intentions about building security and peace.
Our intentions then were not less good.
Today we feel that the world will be so weakened after this war that it will
surely have learned its lesson. It is true that this time the exhaustion is greater.
It is true that the destroying hand of war has touched more countries; that the
war itself is longer, larger and more ruinous. Yet in 1919 we thought the world
must surely have been convinced that not even to the victor could war bring rewards
to outweigh its cost.
We feel today that there is little hope for the world without true international
cooperation. But most of us can recall speeches of 1919 in which the statesmen
of all countries said this same thing with high eloquence and deep conviction.
Honesty and Sacrifice
It is clear, then, that good intentions, the certainty that failure would be be-
trayal, the consciousness of world exhaustion and of the wastefulness of war are
What then, went wrong?
One reason was our failure to recognize that good intentions and fine words
would not by themselves suffice. We signed-some of us-the Covenant of the
League of Nations, which was to insure peace. We signed the Briand-Kellogg
Pact, which was to oulaw war. But peace was not insured by the Covenant, and
war was not outlawed by the Pact.
For we forgot that human nature remains much what it has always been, more
often subject to passion and emotion than to reason. It has its moods of exaltation,
when no purpose, however high, seems out of reach; but it also has its black
moments, when no depravity of action is impossible. As we read the story of
1918 and 1919 in the light of the experiences of that last five and twenty years,
we sadly wonder at how quickly the unselfish comradeship of war slipped into the
distrust and haggling of the peace. So great and so fatal and so speedy was the
If we are to avoid a repetition of this tragic history, we must be honest both
with ourselves and with the facts. We must realize, and act on our conviction that
peace will depend upon us all, upon the wisdom, the good will, the determination
British Speeches of the Day
of each one of us. We shall assuredly fail again if, when this war is over, we
say, "Well, we have done our part. We have fought and worked, we have given
our service without stint and spent our money like water. Now we have won, and
it is for our leaders to see that this sort of thing does not happen again." That
will not be good enough. If we want peace, we shall have to go on fighting and
working and serving, and perhaps spending our money. The personal demands
which peace will make upon us all will be different from the demands which the
war is making now; but they will be just as great and just as necessary. To send
our leaders to their work of peace-making without the support of a strong and
enlightened public opinion is as though we were to send a few officers to make an
unsupported attack upon a strongly entrenched enemy.
Responsibility and Power
And we must not make the mistake again of supposing it is enough just to
set our signatures to documents. Treaties and Pacts and Covenants are necessary;
but unless we are ready in the last resort to see to it that they mean what they say,
they are a dangerous illusion. They appear to promise security, but unless they
rest upon the determination of you, and me, and all the other millions of our
fellow citizens to make them real, the security is about as good as the shelter given
by an umbrella against falling shrapnel.
Therefore, whatever arrangements we may make for international order in
the world, we must never forget that unless it has behind it a force sufficient and
ready to prevent its violation, sooner or later a Hitler, or a Tojo, or a Mussolini
will rise up to challenge it.
That places, quite inevitably, the greater responsibility upon those who will
have the greatest power-upon the United States, upon Russia, upon the British
Commonwealth, and, as she can develop her potential resources, upon China. If
we can jointly agree upon the pattern of the future peace, that pattern will stand.
If we fail to agree, there will be no pattern and no future peace.
Nor must we make the mistake of supposing that we shall have done all that
is necessary when we have conquered and disarmed the aggressors, when we have
restored or rectified old frontiers, when we have constructed the machinery for
preserving peace. The gangsters with whom we are at war are no freaks of nature.
They were not thunderbolts falling out of a blue sky. They were the kind of
people who, sooner or later, were likely to appear in the economic disorders of
our time. They did not create these disorders, though they fully exploited them;
and if we are to protect ourselves against the appearance of other gangsters, we
have got to get rid of the disorders.
The Long, Laborious Road
That means we shall have to cover a wide field. International trade, currency-
stabilization, the development of industrially backward or bankrupt countries, the
adjustment of the supplies of raw materials, the problems of communication-
these are all matters which cannot be ignored. We may find it difficult to handle
them on an international basis; to do so may in many respects require us to revo-
lutionize our thinking; but in a world that every year grows smaller, with every
part more dependent on every other, we have no choice. That is not the conclusion
of starry-eyed idealism; it is the verdict of plain common sense. It is no longer
possible economically, any more than it is possible politically, for a nation to
retire within itself and take no heed of what is happening in the great world
Finally, we must bring the same patience to the work of peace as we need
today in the tasks of war. That is more easily said than done. We shall have a
long laborious road to travel. We shall undoubtedly meet with many disappoint-
ments on the way. There will be times when difficulties will appear almost insur-
mountable; times when we shall be exasperated by what we consider the unreason-
ableness of our friends; times when we shall feel deeply suspicious of each other's
motives; times when we shall be tempted to quit the whole business and go back
to minding our own affairs. Those will be the times when we shall need patience;
when we must remember how much it lies in our power to make or mar the
future, and how, by yielding to the unworthy impulse of the moment, we may well
destroy for our time and generation the vision of a world at one and at peace.
Posterity will forgive us much; but it will rightly never forgive us if we lose
faith and let go the work to which we have set our hands.
RT. HON. SIR JOHN ANDERSON
Chancellor of the Exchequer
House of Commons, April 25, 1944
I should like now to sketch the background of our domestic financial policy.
I could not do so, however, without first paying my tribute to the soundness,
courage and wisdom with which my predecessor, Sir Kingsley Wood, laid the
foundations of that policy. He seemed to have the gift of knowing just how to
introduce new and drastic measures in a manner so disarming that Parliament and
the country were willing to assume at his hands the heaviest burdens of taxation
ever laid on a free country almost ar readily as if they were indulgences. Never in
the history of this or any other country has a Chancellor of the Exchequer, or a
Minister of Finance, carried such prodigious fiscal measures into force with so
little opposition and even with general acclaim. High qualities of heart and mind
made this possible and the country owes him a very great debt.
The foundations of the policy which Sir Kingsley laid down can be briefly
outlined. In the first place, we cover by taxation as much of current expenditure
as we can. We do this for two purposes-to keep the future burden of debt with-
in limits and to absorb current purchasing power which might otherwise press
upon the prices of goods and services of which the supply is restricted and which
cannot easily be rationed. In the second place, we maintain such controls over the
loan market that Government borrowings can be undertaken at a low and steady
range of interest rates. The year's results indicate that once again this has proved
compatible with an ever-increasingly successful savings campaign. Thus, Table II
of the White Paper shows that personal incomes in 1943 were about 600,000,000
above 1942 and that of this amount considerably more than half-385,000,000,
in fact-was paid away in additional taxes and that more than one-third, namely,
221,000,000, was saved. The result is, as the Committee will see, that there has
been no increase in what the public spent on consumption in terms of money, after
allowing for indirect taxes and subsidies, in spite of a rise in prices, similarly
reckoned, of about 2 per cent. Thus, in spite of a large increase in incomes the
amount spent on consumption, in real terms, was actually reduced. This is a most
remarkable achievement on the part of the faithful public, an achievement which
deserves to be made known to the whole world as a distinguished performance.
British Speeches of the Day
The extraordinary readiness of the public to save, in spite of the tremendous
volume of taxation, can be emphasized by another comparison. In 1938, before
the war, 76 per cent of personal income was spent on consumption. By 1942 the
percentage had fallen to 58. One might have thought that that was the best of
which human nature was capable. Nevertheless, in 1943 the percentage of per-
sonal income spent on consumption had fallen to 53. These percentages are esti-
mated on a true basis, that is to say, eliminating the effect not only of duties but
of subsidies. This great achievement in voluntary personal saving-the aggregate
in terms of money last year was more than eight times what it was before the war
-is the clue to the soundness with which it has been possible to conduct our
public finances in time of war.
In the third place, we have aimed at maintaining a reasonable stability in the
cost of living, partly by means of an intensive and successful rationing system, and
partly by subsidizing costs. Here, again, I can claim that our policy has been
fully successful. But I cannot claim that in this field the position is so satisfactory
that I need do no more than leave well alone, for I am not, I confess, altogether
happy about the present trend of events. I must begin by reminding the Com-
mittee of what has happened in the three years since Sir Kingsley Wood explained
the principles and conditions of the stabilization policy in his Budget of 1941.
This year's statistical White Paper shows that the cost, exclusive both of indirect
taxes and of subsidies, of the whole body of goods and services which enter into
consumption stood in 1941 at 29 per cent, and in 1943 at 38 per cent, above the
pre-war level. The cost-of-living index, on the other hand, stood in 1941 at 28
per cent above the pre-war level; and it stands at 29 per cent today. Meanwhile
the subsidies which have been necessary to maintain this stability have been in-
creasingly costly. In 1940 we were spending 70,000,000 on subsidies; in 1941,
as the result of the definite introduction of the stabilization policy, the cost rose
to 140,000,000. In 1943 the figure had risen to 190,000,000 and in the current
year the cost will be greater still. Without these subsidies the cost-of-living index,
instead of being 28 per cent over the pre-war level, would have probably reached
about 45 per cent above it on the average of the calendar year 1943, and it might
reach 50 per cent above it during this financial year.
These figures of increases are, in themselves, moderate. They contrast with the
gloomy forebodings widely entertained in the first year of the war, when it was
almost taken for granted that prices would go on soaring indefinitely, as they did
in the last war, and that the money in our pockets would become worth less and
less as time went on. I do not think, however, that anyone will deny that the
benefits that we have gained hitherto from the stabilization policy far outweigh its
cost. Nevertheless, as I have said, I am disturbed at the trend of these figures.
The maintenance of the stabilization policy is as necessary and as beneficial as when
is was first introduced, and the general principles underlying it are as sound as
they were. But I am afraid we can no longer regard a cost-of-living figure of
25 per cent to 30 per cent above pre-war as sacrosanct, for the conditions laid
down by my predecessor as necessary to the maintenance of this particular figure
are now being imperfectly fulfilled. May I remind the Committee what Sir
Kingsley said when he announced the stabilization policy. He said:
"I put this forward as a most important development of policy, and I hope
we may thus create conditions which will enable the wages situation to be held
about where it now is. It is clear that persistence of the tendency towards
rising wage rates, which necessarily increase costs of production at every stage
of the productive process, would compel abandonment of the stabilization
policy."-[OFFICIAL REPORT, 7th April, 1941; col. 1322. Vol. 370.]
What has happened to wage rates in the three years that have since passed?
In 1941, wage rates were 21 to 22 per cent above the level of September, 1939.
In 1943, the increase had reached 35 per cent to 36 pr cent on the average of the
year. Today, the rise amounts to 40 per cent. This is the increase in wage rates.
Earnings have, of course, increased considerably more. Thus, during the period
over which the cost-of-living index has been rigidly stabilized, wage rates have
risen by about 15 per cent. A number of these increases were necessary to remedy
anomalies in particular industries. No doubt other increases have been justified
by a significant increase in the efficiency of labor, despite wartime handicaps, but
there has been, in certain directions, an increase in the effective labor costs of
domestic production. When the stabilization policy was first introduced, wage
rates had risen 6 per cent less than the cost of living, but today they show a rise
of 11 per cent more than the cost of living. It would place the stabilization policy
in an altogether false perspective, and the purpose of it would to a large extent
be stultified, if the Government were to continue blindly pouring out subsidies, to
keep the cost of living down rigidly to a pre-determined level, without regard to
the current level of costs and wages. The apparent ease with which the stabiliza-
tion policy has, so far, been carried out, must not be allowed to mislead people into
taking it for granted. I should be failing in my duty if I did not remind the
country of the vital link between wages and prices and warn them frankly that
grave dangers loom ahead if the tendency to a general upward movement is not
kept in check. It is equally important that industrialists should do everything they
can, especially when they are taking war contracts, to keep prices as low as pos-
sible. There may be some people who think that, because new techniques have
enabled us to control prices and to maintain orderly distribution, inflation of in-
comes no longer matters. That is a fallacy. The more incomes are out of line with
prices, the more it is necessary to intensify the most inconvenient forms of control.
We all hope to see the end of rationing and other controls as soon as we safely
can. We must make certain that, in the meantime, the volume of money incomes
is not so swollen that the removal of controls would be attended by violent price
The increased cost of domestic production is not, however, the whole explana-
tion of the increased subsidies now being required to stabilize the cost of living.
Some part of the explanation is to be found in the growing cost of imports, which
affects particularly the food component of the index. It is one thing to subsidize
prices in order to avoid the vicious spiral of inflation at home. It is another thing
to use subsidies without restraint, so as to increase the gap between domestic
prices and world prices. Such a policy, if pushed too far, might create very great
difficulties for us after the war.
These two developments are sufficient reason why the details of the policy
must be looked at again. They are certainly not reasons against continuing a
policy which has played so fundamental a part in the success of our domestic
policy. It is the firm intention of the Government, as has been announced on other
occasions, to maintain the policy, so long as they have the vital co-operation of all
sections of the people, and to continue it on the same conditions during the
transitional period when we are turning back once more from war to peace. We
believe that one great element of anxiety can be removed from people's minds if
they feel that they can rely on the Government maintaining the same firm control
British Speeches of the Day
over prices to tide over the awkward problems of transition to normal civilian life
as it has done during the war itself. The asset of stability will be hardly less
valuable then than it is now.
While, however, I can give this solid assurance that the Government intends to
maintain the policy as firmly as it has done hitherto, it would be wrong to bind
ourselves to a rigid adherence for an indefinite period of time to the level which
prices happened to have reached in April, 1941, at the time when the policy was
inaugurated. I must have regard to the changing levels of wages, costs and prices,
and must from time to time review the precise level at which stabilization is to
be continued in the light of current conditions.
When, as in the case of coal, wage costs, as far as not offset by increased out-
put-that is an important point-have raised the actual cost of vital commodities,
and when it is known to the whole country that costs of production are being still
further increased by increases of wages, the stabilization policy would become an
altogether artificial affair if we were to attempt to mask these developments by
making arbitrary reductions in the prices of other articles in order to maintain
the level of the cost-of-living index unchanged. We have, therefore, felt it right
that these increases of price should be allowed to reflect themselves in the cost-
of-living index in the natural way. I mention this now because, if and when this
happens, I should not wish anyone to think that the situation had in any way got
out of hand or that the Government was not still as firmly in control of prices or
as firm in its determination to maintain the stabilization policy as it has been for
the last three years.
Having regard to the higher domestic costs of production, and also to import
costs, I feel that for the ensuing year a range for the cost-of-living index of 30
per cent to 35 per cent over pre-war should be substituted for the 25 per cent to
30 per cent laid down by Sir Kingsley Wood in 1941. This will only offset one
quarter of the increase in wage rates which has occurred since he spoke and it is,
I think, in a better and more stable relation to the current facts of wages and
prices at home and abroad. I should add that while this should be regarded as
the current range, the upper limit is a maximum only, and no substantial increase
towards the new higher limit is immediately in view.
External Finances and the Balance of Payments
I now turn to the position of our external finances, which will become an in-
creasingly important problem as the war draws to its dose. Last year, Sir Kingsley
Wood gave a general account of the factors in our external finances. I need not
repeat this, but hon. Members may find it useful to look at that story as a guide
to the further chapter which I shall unfold. Once again, we are receiving the
immense contribution to the pooling of resources represented by Lend-Lease from
the United States, not only of finished munitions, but also of food and raw mate-
rials. Similarly the Canadian Government have during the last two financial years
made a most munificent contribution to our needs, first by the billion dollar gift
to us and last year by a corresponding gift to the United Nations; and it gives
me deep pleasure to inform the Committee that I have learned that the Canadian
Government will again make a contribution to the war effort of the United Nations
this year on similar lines.
For our part, we give Mutual Aid to the United States and Russia and our
other Allies on a very large scale and in proportion to our resources. On this it
may be remembered that we have a population of about one third of that of the
United States and a national income of not much more than one fifth. This story
is told in the Report on Mutual Aid published last November as Command
There is another side to the story-the drain upon our resources of the ex-
ternal costs of the war. We have to meet vast and growing cash expenditure in
other countries for military operations and supplies. To finance our purchases in
the United States before Lend-Lease, and to meet these external costs, we have
already parted with overseas assets to the extent of 1,000,000,000, and we have
incurred undischarged overseas liabilities amounting to 2,000,000,000. We are
not yet at the end of this tale. We have parted with all this, not to neutrals, but
nearly all of it, some 90 per cent, to our Allies and associates, most of whom will
emerge from this war with their overseas financial position greatly strengthened
as a result, just as ours is greatly weakened. I make no complaint of this, for we
are in this war with all we have got, but no one must suppose that a country can
wage a war on this basis for several years and emerge at the end without a price
to pay. We have not yet paid that price.
I sometimes detect indications of a temper in the country and in the House
in the attitude to the future which does not pay due regard to these somber facts.
I must, therefore, explain our problem to the Committee.
Post-War External Financial Position
This second world war will complete a revolutionary change in our financial
position. Before 1914 the United Kingdom was the world's leading creditor
country. Year by year, we received from other countries, interest and dividends on
the investments which British citizens have made abroad for many previous
generations. These annual receipts amounted to a very large sum, and they would
have sufficed, had we chosen so to use them, to defray a large proportion of our
import bill for food and raw materials and other commodities that we imported
from overseas. In fact, we did not need to use much of this external income for
that purpose. Our exports, visible and invisible, were large enough in those days
to cover most of our imports, and we used most of our income from overseas in-
vestments for the purpose of making fresh investments. In the first world war
these great investments of the past proved their value to us as a nation. By
mobilizing and selling only part of them, we were able to finance not only our
own war needs, but those of our Allies in the period before the United States
entered the war. As a result, however, our receipts from overseas investments were
so much less.
What was more important, that war dealt a heavy blow to our export trade
and we were never subsequently able to restore our exports to the volume they
had reached before 1914. That loss of export trade entailed tragic consequences,
for it was the main cause of the long-continued unemployment during the inter-
war period in our depressed areas. But though our exports and the income from
overseas investments were reduced, there was still enough, when added together,
to enable us to pay for what we bought. The wide favorable margin on the
balance of payments which was used in the past to make fresh loans abroad, had,
however, disappeared. In some years we had a favorable balance of moderate
dimensions. In other years we had an adverse one. By and large, our position
was this: our international income had been reduced and we were living right up
to it, not beyond it, but up to to it, for the first time in our modern industrial
history. That was the change produced by the first world war.
This world war is making further deep inroads into our net international in-
come from investments. I speak of net international income, for we have to con-
sider the effects, not only of the sale of our overseas securities, but, as I have
already indicated, of the external debt we have incurred for the prosecution of the
war. The broad fact is already sufficiently clear, that when the war is over, we
British Speeches of the.Day
shall have ceased to be a large-scale creditor country. We shall no longer be able
to rely, as hitherto, on being able to finance any material part of our import
needs from overseas investment income.
Post-War Export Trade
Now this fact must be taken, in conjunction with the other fact I have just
emphasized, that we were already living up to our international income when we
entered the present war. We cannot afford this time to accept a further loss of
export trade, and continue to import as much as before. On the contrary, if we
are to avoid a drastic curtailment in our volume of imports, such as might threaten
our standard of life and gravely prejudice our prospects of active employment, it
will be indispensable for us to increase our exports, and recapture some of the
trade which we lost in the inter-war years. That will be a matter of life and death
to us, for it is impossible for any country to live indefinitely beyond its inter-
Let me make one point plain at this stage. The Government cannot make an
export trade. That depends on the manufacturers, merchants and workpeople of
this country. What the Government can do is to try to make conditions in which
export trade can flourish, both by its foreign policy of co-operation in the inter.
national field, by an appropriate internal policy in managing and disposing of
physical resources, material and labor, and by its financial policy.
In that connection let me say a word on another aspect of our external financial
problem. It is vital to maintain confidence in the value of sterling. I spoke a
moment ago of the debts we are incurring to many other countries in order to
finance our war purchases. A large part of that debt takes the form of what are
called "sterling balances," which are very much like deposit accounts which other
countries are content to hold in London. It is a very convenient form of wartime
borrowing, and it has been rendered possible by the confidence which sterling
enjoys as a reliable international currency. It would add greatly to our difficulties
if anything were to happen to disturb that confidence and cause countries to
prefer some other asset to a sterling balance. In practice, I have no doubt that
confidence in sterling will be maintained as a consequence both of our perform-
ance in the war and of the steadiness of our policy both today and in the post-war
years. . .
SThe plans which my colleagues and I are preparing for the days after the war
are based on the assumption that we shall be in a position to import the raw mate-
tial necessary for active employment and sufficient food to maintain a standard
at least a little better that what we are enjoying now. It is right that this should
be our assumption, for we intend to make it good. It is also right that I should
warn the Committee that we shall start with no solid or realized basis for it, given
the somber background which I have described. A nation of sound heart should
find such a situation stimulating. I take it as a challenge to the industry of this
"My flank recoils, my centre yields. Excellent! I attack,"
Marshal Foch is supposed to have said on a famous occasion. The burdens are
large and, indeed, our initial debit balance may be larger than the figures I have
given. But the productivity of this country is also large, and we can carry this
burden in due time if we make an effort. It will not be a light effort, especially
after the endurances of the war. Our only means of doing so will be by our own
goods produced here at home. We have no other resources available.
When the war is ends there will be a demand all over the world for goods,
and if we decide to give a reasonable and proper priority to the imperative needs
of our export trade, we shall not find much difficulty in selling. But we must not
abuse that opportunity by taking a short view. Our aim must be to re-establish
old connections and develop new ones which are likely to be of enduring value,
rather than to snatch quick gains in a seller's market. Speaking as Chancellor of
the Exchequer I am more concerned to see a steady and rising income from our
exports than to build up, possibly on an unstable basis, a temporarily improved
position of our foreign exchanges. The renewal of a contract tomorrow is worth
more to me than the last penny out of today's contract.
I used a phrase a moment ago that all this should be a challenge to the vigor,
the initiative and the adaptability of our industry. Four and a half years ago a
much graver challenge was thrown down and was accepted. Looking back over
the industrial history of those years, I believe that the most important fact that
stands out is the inventive boldness and enterprise of our industrialists, our scien-
tists and our technicians, and the adaptability of our workpeople. We must, I
think, always be a country predominantly of high-grade products, for otherwise we
throw away part of our inherited technical industrial skill. Our high-grade
products can only hold their own and find their markets if we keep our light
shining a little ahead of the rest. Competition in industrial and technical inventive-
ness is the finest competition of all, and it is the one most beneficial to the world.
There will be no easy money in the export trade, but there will be good money
and secure money for the benefit of our people if the same drive is applied to the
problems of the export trade as has been applied to the problems of the war. Nor
will the urgency be much less.
Excess Profits Tax
What I have just said shows the vital importance of looking ahead to the
health of our industry, and what I have to say now is concerned mainly with ques-
tions of post-war industrial taxation. Before coming to that, I would like to turn
for a moment to a feature of wartime taxation which has been the subject of
repeated representations to me as regards its effect on industrial enterprise-that
is, the Excess Profits Tax.
I have had this matter under most careful review. Many of the complaints
regarding the incidence of Excess Profits Tax are really criticisms of the rate of
the tax, for the 100 per cent rate takes away the whole of the profit above the
standard, and leaves no margin to bear the unevenness of incidence which is in-
evitable in any taxation of this kind. I cannot, however, entertain any suggestion
for the reduction of the 100 per cent so long as hostilities last. As has been more
than once said by my predecessor, the 100 per cent rate springs from other con-
siderations than those of purely fiscal policy, and these other considerations remain
today in full force.
I must remind those who complain of the rate that the law has made special
provisions for the refund, after the end of the war, by way of a post-war credit,
of 20 per cent of the net amount of taxation paid at the 100 per cent rate. This
credit was originally provided for in the Finance Act, 1941, subject to such condi-
tions as Parliament might hereafter determine. In the Finance Act, 1942, the
promise of the repayment was made more definite by indicating that the conditions
governing payment would be "conditions relating to the distribution, application
or capitalization of profits for the benefit of shareholders by way of dividends or
bonus share distribution." It is quite clear that all trading concerns that have to
face post-war expenditure on rehabilitation and reconstruction or, indeed, that
have to face capital expenditure of any kind whatever, can look forward with ab-
solute certainty to having their post-war Excess Profits Tax credits available for the
financing of such expenditures. Allowing for the Income Tax payable on all re-
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funds of Excess Profits Tax, the post-war credit represents, net, a sum of 10 per
cent of the annual produce of the 100 per cent rate of tax, and this represents a
fund growing at the rate of 40,000,000 to 50,000,000 a year. The availability,
after the war, of such a fund must obviously be a great factor in enabling industry
to turn back to peace-time production, and to face any expenditure involved there-
in. While I recognize that the payment, as the law stands, is contingent, I think
industry may safely leave the future to the wisdom of Parliament, and be content
with the assurance already given in the Statute, as enabling it to count on the post-
war credit being available to finance post-war expenditure.
As regards the general basis of the charge, as distinct from the rate, I have
had many representations. To discuss them in detail would be a lengthy process,
for which I will seek some later opportunity. The Committee may be prepared,
for the moment, to accept my assurance that I have thought very carefully about
this matter, and to hear very briefly what I propose. It is a modest relief, especially
important to small business for those cases, of which there are thousands, where
some standard other than the profits standard applies. Subject to one qualification,
which I shall mention in a moment, I propose that, as from the 1st of this month,
all standards, except profit standards, should be increased by 1,000. This increase
will apply to the cases where the standard is a minimum standard, or the personal
working-proprietor standard, or a standard representing a percentage on capital
employed in the business. It will benefit no less than 30,000 small businesses,
10,000 of which will pass out of charge.
The qualification which I mentioned is this: Speaking generally, deficiencies of
profits below the standard in any accounting period work either backwards or
forwards, as a debit against the excess profits of another period. Deficiencies due
to this new relief will work forwards and not backwards; that is to say they can
be set against excess profits of future periods but not against excess profits of past
periods. Largely arising out of this relief, a strengthening of the provisions of
Section 35 of the Finance Act, 1941, dealing with the avoidance of taxation, will
If I say no more at this juncture about this Duty as a whole, it is because, as I
have said, I hope to find an opportunity for a more elaborate statement later. I
have taken into account the cost of this adjustment of the Excess Profits Tax in
the Estimates, which I will give the Committee later, of the yield of revenue in
the current year. Only a small part of the cost falls this year, because the adjust-
ment and collection of Excess Profits Tax necessarily lags behind the completion
of the traders' accounting year. The cost in a full year will be 12,500,000.
The general account which I have given of the background of our finances
makes it plain that our financial problems will not suddenly disappear at the end
of the war and certainly not at the end of hostilities in Europe. So long as the
war with Japan continues, the end of hostilities in Europe will make a much
smaller difference to our war expenditure than might be supposed. We shall still
require a great effort to beat Japan promptly over the vast area of the Eastern
war. At the same time we shall be faced with demands for expenditure on some
of those programs of social and economic development upon which we are
now working. The Committee therefore will not expect the Chancellor of the
Exchequer, on the morrow of an armistice, to come down to this House and cele-
brate the occasion with proposals for the immediate reduction of taxation. Nor
should we build up exaggerated hopes of an early lightening of our wartime tax
burden. By pre-war standards, the general burden of taxation will have to remain
high for some considerable time to come.
Nor will the demands of the post-war period end with high taxation. We are
not likely, indeed, to be able to meet our expenditure entirely out of revenue at
first. We shall have to borrow. If we are to maintain the soundness of our
present financial policy and to achieve borrowing without inflationary loss of
values, saving will, also, have to continue on a high level. The need for saving
will be reinforced by a shortage of consumption goods until industry has changed
over from war to peace conditions. Unless we consistently follow a policy which
will keep purchasing power within reasonable bounds, we shall face a runaway
rise in prices, a feverish boom and then disillusion and bitterness. It would be no
good to rely solely on Government controls to prevent that happening. Controls
must start with self-control. If self-control is weakened, Government controls
will be fighting a long battle against every form of selfishness in every section of
But though we cannot expect, as individuals, an immediate easing of the
burden of taxation when hostilities cease, there are vital preparations for recon-
struction which we can make in the field of taxation, as in other fields. We must
prepare such measures as we can devise to give industrial enterprise a fair chance
to meet the challenge which the future holds for all of us. Industry is entitled
to know where it stands, and there is, in my judgment, a very definite contribution
which taxation policy can, and should, make to the problems of reconstruction.
Post-War Income Tax on Industry
That brings me to what is, in some respects, the most important part of what
I have to say, for it concerns the methods of measuring the profits of industry on
which Income Tax in the post-war period will fall. The Committee may remem-
ber that a fresh study of the position of industry in relation to the incidence of
Income Tax on profits was initiated by my predecessor a year ago, when he
announced that he had asked the Board of Inland Revenue to examine the subject,
with particular reference to profits which are not distributed but are ploughed back
into the business for further development, and the treatment of capital expenditure
for which no allowance is made in the existing Income Tax code. Evidence has
been received since that time, in the course of a very full inquiry, from organiza-
tions representing industry, including agriculture, and the whole subject has been
anxiously examined by my advisers and by myself since I took my present office
some six 'months ago. As a result, I am now able to give the Committee some
important declarations of Government policy.
I must emphasize that I am addressing myself to Income Tax in the post-war
period, and the proposals which I make will not come into effect until the return
to peacetime production sets in. I think the Committee will agree that I should
indicate my intentions now in outline, if not in full detail, in order that industry
may make their plans for reconstruction in the light of that knowledge. There are
many details to be filled in before we can see the translation of our policy into
statutory form, and my advisers are now engaged on this task. My intention is to
propose legislation on the subject in good time, so as to enable us to bring the
new arrangements into force speedily on the termination of hostilities.
Two main propositions have been advanced by industry. The first is one
to which I do not feel able to accede. It is that there should be a reduction of
Income Tax in respect of any industrial profits that are not distributed but are
placed to reserve for the future development and extension of the business. This
in effect, would be giving relief for the act of saving, and that is not, in my
judgment, the appropriate approach to this problem. The other proposition
advanced by industry is that taxable profits should be real profits in the sense
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that those profits should be struck only after making all proper deductions and
allowances, especially adequate allowances such as might be made on a com-
mercial basis for the amortization of money expended on assets which are used
up in the making of profits.
This proposition is not new. It has been frequently urged in the past and fre-
quently considered, but the issue has undoubtedly become more pressing nowa-
days, when the standard rate of Income Tax has risen to such high levels. Tax
should be charged on true profits reasonably measured, but not more. The appro-
priate allowances for capital expenditure are of supreme importance in relation to
the work of reconstruction at the end of the war when, in order to take up the
challenge which I have mentioned, in the interests of employment policy, in-
dustry of all kinds may have to embark upon modernization and re-equipment. It
is, therefore, to these questions, that I now address myself.
Industrial Re-equipment: Plant and Machinery
The main class of expenditure in modernization and re-equipment will be
on plant and machinery. Under the existing law, as hon. Members know, the cost
of plant and machinery is normally written off throughout its life by an annual
wear-and-tear allowance and by an obsolescence allowance, which is given when
the plant and machinery is replaced, to cover any part of the original cost, less the
scrap value, which has not been written off by the annual wear-and-tear allow-
ance. I propose that there should be given, apart from these allowances, a special
initial allowance of 20 per cent of the cost of new plant and machinery. An
allowance of this kind, which will allow one fifth of the actual expenditure on
plant and machinery in any year to be written off forthwith against the profits of
that year, as they come under charge for taxation, will represent very substantial
financial assistance to industry in carrying out its post-war re-equipment. The
change will mean, of course, that there will normally be a smaller obsolescence
allowance to be given in those cases in which the plant has not been fully
written off during its life, and, to that extent, it will diminish the force of the
complaint made by industry for many years that no obsolescence allowance is at
present given where plant and machinery are not replaced.
I am, however, ready to meet that grievance so far as it still remains. I pro-
pose as part of the post-war policy that in the case of a continuing business the
obsolescence allowance shall be given when plant and machinery is scrapped
whether the particular piece of plant or machinery is replaced or not. It may
happen, on the other hand, that a trader may sell plant and machinery at a price
in excess of the written-down value, and I must obviously attach to my proposal
with regard to obsolescence a provision to recover the excess allowance in such
New Industrial Buildings
The other main industrial assets of importance in modernization and re-equip-
ment are industrial buildings. Allowance is made under the existing law in respect
of the cost of repairs and maintenance of buildings, but apart from the special war-
time provisions for exceptional depreciation of buildings provided since the begin-
ning of 1937, the present law makes no allowance in respect of the depreciation of
buildings except for the special allowance given for mills and factories. Again, I
look at the main purpose, which is the modernization and re-equipment of pro-
ductive industry, and therefore to the buildings employed in productive industry.
I think, therefore, both on practical grounds and on grounds of cost, that the
existing differentiation between such buildings as factories on the one hand, and
other trading premises such as shops and offices on the other hand, must be main-
tained. In the case of buildings such as factories-and I include in that term
buildings associated therewith, say for the welfare of the staff or the storage of
raw materials or goods produced-I propose that the cost of the building should
be written off on the basis of a fifty years life, by an annual depreciation allow-
ance of 2 per cent of the cost, and that as an immediate instalment of that allow-
ance there should be an initial allowance, not of 20 per cent, but of 10 per cent,
of the actual expenditure. The new depreciation allowance of 2 per cent, though
not of course the initial allowance of 10 per cent will apply to existing factories as
well as new ones, in so far as the cost has not been written off under existing
wartime conditions, and in so far as the life already run is less than fifty years.
It will thus replace the existing mills and factories allowance.
My main proposal for the reconstruction period will thus consist in the deduc-
tion from taxable profits of 20 per cent allowance on all expenditure on new plant
and machinery, and 10 per cent allowance on all expenditure of new industrial
buildings. The allowance in respect of plant and machinery will cover all busi-
nesses, and will be of particular value to shipping, where it will materially assist
the policy of keeping our incomparable Mercantile Marine thoroughly up to date,
while incidentally, I hope, providing a steady flow of scrap to the steel industry.
Taxation of Agriculture
In the case of agriculture, the farmer commonly does not, while the ordinary
industrialist generally does, provide the whole of the capital required for the
business; for in the case of the tehant farmer, part of the capital is provided by the
landowner in the form of farm buildings, farm cottages and so on. It occasionally
happens in ordinary industry that new factories are built and let to traders, in which
case they will rank for relief to the landlord, in the same way as if they were
built by the trader. In agriculture, it is the rule rather than the exception for the
landlord to provide the buildings. There is a co-partnership between the owner
and the farmer, and expenditure on the development of the agricultural industry
is borne by the two partners. So far as the farmer bears the expenditure, he will
get precisely the same relief as the ordinary industrialist. So far as the landowner
does so, he will qualify for similar relief against not only the income drawn from
the land, but against any other income liable to tax.
While speaking about capital expenditure in the farming industry, I should like
to refer to a further measure of assistance which the Government will shortly be
proposing to Parliament. My right hon. Friends the Minister of Agriculture and
the Secretary of State for Scotland and I are agreed that it is desirable that ample
loan facilities for long-term loans at reasonable rates should be available to agri-
culturists to enable them, among other things, to repair and improve farm build-
ings, and to carry out other capital works. For this purpose we shall shortly
introduce a proposal that the Government should grant further appreciable finan-
cial assistance to the Agricultural Mortgage Corporation and the Scottish Agricul-
tural Securities Corporation, in order that they may make a substantial reduction
in their lending rates of interest.
Income Tax Relief for Other Capital Expenditure
In addition to my proposals for taxation relief for new expenditure on build-
ings, plant and machinery, it is proposed, in the measurement of profits, to pro-
vide allowances in respect of the cost of certain other kinds of industrial assets
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which are used up in the earning of profits. I take first, the case of patent rights.
Where a patent is acquired on the basis of the payment of a royalty, the royalty
is income subject to deduction of tax, and the trader paying the royalty enjoys,
in fact, full allowance in respect of the cost of the patent. But where the royalty
is acquired by payment of a lump sum the lump sum is not treated as the income
of the recipient, nor is any allowance made under the existing law to the trader
in respect of the lump sum, though that expenditure is used up in earning
profits over the life of the patent. When this subject has been examined in the
past, as for instance by the Royal Commission on Income Tax, the two questions
of charging the lump sum to Income Tax in the recipient's hands and writing off
the expenditure in the buyer's accounts have naturally been linked together. I
propose, as far as patent rights after the war are concerned, to maintain this link
by providing for the writing off, during the life of the patent, of any lump sum
paid by a trader in acquiring the patent, while making the sum payable for the
patent rank as income in the hands of the seller, with suitable provision enabling
him to spread that income over a number of years to avoid any hardship that might
arise if it were taxed as the income of the year in which it is paid.
A similar issue arises in the case of leaseholds where the lease is granted on
the payment of a premium in addition to a lease rent. The position of leaseholds
is much more complicated and while I should like to propose outright the appli-
cation of a similar principle to that which I have outlined for patent rights, I must
say no more than that this subject also will be further considered.
I propose also to introduce a depreciation allowance in the extractive indus-
tries, that is, in mines, oil wells, quarries and the like, where capital expenditure
is incurred on various types of assets which are limited in life by the life of the
mineral or oil deposits. New expenditure in respect of sinking shafts and the pro-
vision of surface facilities will qualify for an additional allowance on the same
principle as new buildings, plant and machinery, and the balance of expenditure
will be written off against subsequent profits.
The general outline I have just given did not touch upon one subject which,
in its more general aspect, was fully debated in the House last week. I refer to
scientific research, particularly to the consistent application of research to methods
of production. The taxation aspect of this matter was mentioned in the course of
last week's Debate: I am glad that this occasion makes it possible for me to take
up that question, and, I trust, to make some contribution to the examination of
a subject which has always been of the greatest personal interest to me. As my
right hon. Friend the Lord President said last week, we ought not to depreciate
our own efforts in the field of research. When the time comes, there will indeed
be a remarkable story to tell of industrial and applied scientific developments in
this war. In the application of research to the problems set to the scientists, we
have shown ourselves at least equal to any other belligerent. Industry has responded
to the compelling urgency of war, and a magnificent team of research workers
has met that urgency.
Research has three aspects. There is the fundamental research of the scientists,
whether at the university, or in the laboratories attached to industrial establish-
ments or industrial organizations. Successful research is not a mass product. It
does not flow merely from numbers of research workers. It requires an imaginative
quality of the mind. Without fundamental research there can be no hope of
steady progress, and still less of those strange leaps of the creative intelligence
which produce in peace no less than in war some of the most important discov-
series. But to industry research has a limited value if it stops at the laboratory.
There are two further stages. There is what I might describe as the pilot plant
stage, where laboratory results are tried out experimentally on a larger scale. Every
industrialist knows that it is a real difficulty to translate the delicate skill of the
scientific researcher, and the artificial conditions in which he may have worked,
into terms of large-scale production. I believe that in this country we have been,
perhaps, slow in developing this essential stage. The next and final stage is the
commercial production of the product.
These are the three integral parts of the same creative process. To fail on
any one is to fail over the whole. Therefore, in considering the help which taxa-
tion policy can give to research, my aim has been to help the whole process. It is,
I think, most desirable that industry should know in advance the taxation treat-
ment which will be accorded to research expenditure which is undertaken when
hostilities cease. I propose, therefore, to include provisions on this matter in
the forthcoming Finance Bill.
Income Tax and Research Expenditure
For taxation purposes research expenditure is divided between that incurred by
a central body on behalf of a section of industry and that carried out by a trading
concern in its own works. It has been the practice of the Inland Revenue, since
the last war, to allow as a deduction, in computing profits, all annual payments
made by a trading concern to a central research body approved by the Depart-
ment of Scientific and Industrial Research, though this allowance did not extend to
a particular payment earmarked for a special capital project. As regards a trader's
own research, the general principle has been to distinguish between expenditure
of a revenue character and capital expenditure, allowing the former and dis-
allowing the latter, though in practice there has been no undue insistence on this
In my view, and I think the Committee will agree, expenditure on research
stands on a different footing from the other expenditure of a trader. It is not imme-
diately related to the making of profits, as in the case of expenditure incurred in
the manufacture and sale of goods, nor do the benefits accrue mainly to the
originator. I think therefore that there is a case for modifying in favor of research
expenditure the distinction which the Income Tax Acts draw, and must indeed
draw, between capital and revenue expenditure.
My proposal is that any research expenditure of a capital character, which
means normally expenditure on laboratory buildings, plant and machinery, should
be allowed over a period of five years, or over the life of the assets if shorter, as a
deduction from profits for Income Tax purposes. In addition, all current research
expenditure such as salaries, wages, cost of materials, repairs, and so forth, will
be allowed as and when incurred by the trader.
This allowance of capital expenditure over a period of five years will be the
rule for research carried out by a trading concern on its own account. In addi-
tion I propose that any payment, whether for a capital purpose or not, made by a
trader to a central research body approved by the Department of Scientific and
Industrial Research shall be allowed, as and when made, as a deduction in com-
puting the profits of the concern. Contributions to research being carried out by
a university or college on matters of concern to the trader's business will
similarly be allowed.
I hope that the Committee will agree that in this comprehensive attempt to
relieve from taxation altogether funds devoted by industry to the support of
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fundamental research, to the translation of laboratory research to production, and
to the full-scale development of the product, the Board of Inland Revenue have
tackled the problem with a sense of realities born out of their close interest in the
effects of taxation upon industrial recovery and the buoyancy of the revenue.
I believe that in what I propose, I am meeting all the reasonable claims of
industry for adapting taxation policy to the development of industrial research.
There is too much evidence that before the war we were falling behind other
important industrial countries in the range, although not necessarily in the quality,
of our industrial research and its application. As I have said the war has demon-
strated to the world that the quality is there, and the war gave financial oppor-
tunities of an extended range. I am trying to carry forward, within practical limits,
to the solution of our urgent peacetime problems of production, significant finan-
cial help. I have no doubt that industry will respond over a wide field. The ideal
towards which we ought to move is a general practice by which each manufac-
turer devotes a contribution, measured by his own turnover, to the furtherance of
scientific knowledge. I hope also that there will be a much wider pooling of
ideas and technique in the development of research, even down to the production
of what I have heard described as that mysterious catalyst the "know-how." In
many fields we have a lot of leeway to make up, and co-operation is economical
of time, money and skilled personnel, all of which will be in short supply, and in
some cases very short supply, after the war. Further, I think that the industrial
research worker should be encouraged to regard himself not only as serving the
organization which pays him, but as contributing to the sum of available knowl-
edge, and enlarging the horizons of the material world. We must provide our
research workers not only with the physical apparatus which supplies their needs,
but with the motive which evokes their latent powers.
There is one other matter which I can conveniently mention at this point.
When reviewing the steps which I might take to ensure that, consistently with Rev-
enue needs, methods and scope of taxation are not inimical to the growth of indus-
try after the war, I turned my attention to the chemical industry, so far as it is
based on products derived from oil or coal. Here there is the vast field to be
opened up, of which plastics are one, but only one, example. I regard it as of the
first importance that this country should play a large part in these new develop-
ments. In the main, the existing Customs Duties on imported oil have been
framed primarily with a view to raising substantial revenue from the use of oil as
fuel, whether in internal combustion engines or otherwise. It should be possible,
without unduly sacrificing revenue, to make sure that the tariff offers no obstacle
to the chemical industry in obtaining the necessary raw materials from oil. I am
not, however, in a position to lay specific proposals to this end before Parliament,
for the reason that, although the main objective is clear, there are various aspects
needing close expert scrutiny before the exact form of legislation to be introduced
can be determined. In particular, investigation is needed of the inter-relationship
of raw materials derived from oil and from coal respectively. My right hon.
Friend the Minister of Fuel and Power and I, accordingly, intend shortly to ar-
range for an inquiry to be set on foot, in order that we may be supplied with
the necessary data on which specific proposals can be based. I have reminded the
Committee that we are still at war, and that the needs of the war must be cur chief
immediate preoccupation. But I have also said that I have felt entitled to look
forward. In my remarks about our internal financial policy and our external finan-
cial position, I have indicated the problems. I hope, and believe, that. in the
account I have given of my policy with regard to the incidence of taxation upon
The Budget 47
industry, I have drawn in firm outline a not unimportant contribution to industrial
recovery after the war and to the policy of full employment, to which the Gov-
ernment and the community have pledged themselves.
In conclusion, I must turn back to our Budgetary prospects for the present
financial year and I will keep the Committee for only a few minutes longer. In
some respects, my task of estimating the needs for which the Budget must provide
is probably more difficult than at any time during the war. So far as the National
Debt is concerned, the interest on our growing debt will probably require some
55,000,000 more than the cost last year and I propose to provide for a debt
charge of 420,000,000. As in previous years, power will be sought to borrow
any additional sum necessary to cover the contractual Sinking Funds. Other
Consolidated Fund services, are put at the same figure as last year's expenditure
of 16,000,000. Ordinary Civil Votes, at 501,000,000, will require some
37,000,000 over the Budget estimate of 1943-44, owing to increases on supple-
mentary pensions, school meals, roads, and expected deficit on the Post Office, and
When we come to the Vote of Credit expenditure, the prospect is obviously
full of uncertainties. If the war in Europe were to continue throughout the
financial year, Vote of Credit expenditure might be anything between
5,000,000,000 and 5,200,000,000. But if I am to make any reasonable esti-
mate of the probable soundness of our financial program, on the lines followed in
recent Budgets, I must recognize that there are possibilities of a change in the
course of the war before the end of March, 1945. It would be idle to attempt
to evaluate the bearing of such possibilities on the Budget. Indeed, to do so
would hardly be consonant with the Government's determination to press on with
the war effort and to take nothing for granted until victory is achieved. But, for
the purposes of this particular Budget, I think I would be justified in assuming
a very round sum for our Vote of Credit expenditure. I propose to put it at the
figure of 5,000,000,000, compared with 4,900,000,000 estimated last year and
an actual expenditure of 4,950,000,000. On that basis, the total expenditure to
be provided for in 1944-45 will be 5,937,000,000.
Towards that total, the various Inland Revenue duties are expected to pro-
vide 122,000,000 more than in 1943-44, and to rise, for the first time, to the
notable total of 2,000,000,000. The increase is practically all attributable to the
Income Tax, which is put at 1,300,000,000, an increase of 116,000,000 over the
yield last year. The yield of Excess Profits, after taking into account the effect
of the changes which I have proposed with regards standards, is estimated at
500,000,000, practically the same as the amount actually received from this
source of revenue last year. The other Inland Revenue duties I put at approxi-
mately the same figures as last year.
As regards Customs and Excise, the supply of many dutiable articles con-
tinues to be controlled and restricted. This sets limits to the yields of the duties
on these articles. I shall, however, be receiving a full year's yield from the
Budget increases of 1943. But this year will see the departure overseas of
large numbers of those who consume the principal dutiable commodities.
When our Expeditionary Forces go overseas, the beer and spirits they drink,
the tobacco they smoke, and the oil they use, will become free of duty. Ac-
cordingly, it is necessary to discount the Customs and Excise estimates by
making some allowance for this migration of consuming power. I would,
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however, warn anyone against wasting his time. That is what he would do
if he attempted to deduce from these figures any estimate of the numbers likely
to leave our shores. I have mentioned the matter only to explain why I am
putting Customs and Excise estimates for 1944-45 at a lower figure than the
actual receipts for 1943-44. The total estimate, taking into account all these factors
and the minor adjustments which I mentioned earlier, is 1,038,000,000, which is
5,000,000 less than I received last year.
All other items of revenue, none of which calls for special comment, are ex-
pected to yield 64,000,000, roughly the same as last year. The total revenue
for the year will thus be 3,102,000,000, leaving an excess of expenditure over
revenue of 2,835,000,000. The excess will have to be covered by borrowing.
In accordance with recent custom, I shall ask the House to give a speedy passage
to the National Loans Bill, which will give us the borrowing powers needed for
1944-45 and which will be in the same form as in recent years.
Sources of Finance
How far may we expect to finance our expenditure in 1944-45 from the
sources of borrowing to which I referred in my review of the past year? Any
estimate of overseas disinvestment must be very precarious, and I propose to put
it at practically the same figure as for the calendar year 1943, namely 650,000,000.
That means that the amount of expenditure requiring finance at home will be
5,287,000,000. Of that figure revenue will cover 3,102,000,000. I expect
about 300,000,000 to be available from extra-Budgetary funds, local authority
surpluses, and war damage, and war risk payments in the hands of the public. As
regards impersonal savings, the excess of tax liabilities over payments will prob-
ably show a further fall and I am assuming that gross impersonal savings will
probably amount to about 225,000,000. It is very difficult to estimate what the
total of personal savings is likely to be, but I will assume that it can be put at the
perhaps conservative figure of 1,550,000,000. On that basis, the residue re-
quired for domestic finance would amount to 110,000,000. For technical reasons,
explained in the National Income White Paper, the estimates of the residue in
1942 and 1943 have now been reduced below those previously given, but the
figure of 110,000,000 which I have just quoted for 1944 is a very moderate
and satisfactory figure, by comparison with the revised totals for recent years.
On the basis of these revised estimates, I can now give the Committee the
three salient features of the outlook for this financial year. First the prospective
deficit, although slightly larger than the actual deficit last year, is practically the
same as that which my predecessor thought it right to accept in his Budget a
year ago. Second, the revenue from taxation will amount to 52 per cent of
our total expenditure, a higher proportion than in any previous year during this
or the last war. It will represent no less than 58 per cent of the expenditure re-
quiring what I have called domestic finance-a slightly higher percentage than
in the year just ended. Thirdly, it appears that it will be within our capacity
to finance the prospective deficit from savings and other sources of a non-inflation'-
In all the circumstances, I have decided that, apart from the quite minor
changes already mentioned, it is not necessary for me to'propose any additional
taxation on this occasion. Therefore, to return to my metaphor of physician and
patient, the prescription is "The mixture as before."
[House of Commons Debatesl
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