The Political Future in England

We read in Lord Riddell's War Diary, where the name of Phillip Kerr persistently recurs„ of a discussion of a certain Welsh poem which the then Prime Minister appears to have written, about twenty years previously, and Lloyd George is quoted as saying: "Kerr asked me to explain it. You can't explain poetry, but I said to him that it described the splitting of clouds or something of that sort, to which Kerr objected, 'But you cannot split clouds'. I ultimately gave up the attempt."

I have great pleasure in introducing to you today, The Marquess of Lothian. (Applause).

LORD LOTHIAN: Mr. Chairman and Gentlemen: I rather wonder how the historian mentioned by your Chairman today would have described politicians if they belonged to the House of Lords because, while it has the distinction of antiquity in the great part of England today, its duty is not to contain anybody who is, in any true sense of the word, a good politician. You will be glad to know that Mr. Lloyd George has never expressed a high opinion of that ancient institution to which I have the honour to belong. Whether I could work with such close association with him, since, through no act of my own I changed my name, I am not so clear. I never heard during the whole period of my association with him, any epithet of a eulogistic or enthusiastic character applied to the House of Lords.

Now, Gentlemen, I venture to think that perhaps because I have been associated for a long time with Mr. Lloyd George and, therefore, may be said to have had some capacity for appreciating political situations that you might like to hear an estimate of the political situation, the economic situation in the Old Country today, (Applause) because we may be confronted with very difficult and dangerous situations and I think it is a matter, not only of interest to ourselves but of interest to Canada, as to whether Great Britain is reasonably wellequipped to weather the storms which lie ahead.

I was asked repeatedly in the United States from which I have just come for the explanation of the British recovery, and I think it may be roughly based on the following three factors: In the first place, the return to power at the election of 1931 of a National Government which created in Great Britain the sense that the period of minority government had come to an end and minority governments are essentially unstable; and that you had a government composed of representatives of all three parties which had resolution, strength and above all, stability, and therefore people could plan their business programmes with the assurance that there was going to remain in power for a number of years a; strong and stable government. The second element was the vigour and the success with which that government balanced budget. It was confronted when it came into power, as some of you may remember, with a probable deficit of about £200,000,000 on a total budget of about £800,000,000--a 25 percent deficit. In the first year it cut from expenditures, about $80,000,000 and added taxation of £120,000,000, with the result that the budget has been kept balanced and the last budget even began to make some return of its cuts on wages and salaries and some reduction of the income tax.

It may surprise you that I, as a life-long Liberal in England, am not quite certain that a Liberal in England is exactly the same as a Liberal in Canada, but as a life-long English Liberal, you may be surprised to hear me say that the third factor in our recovery has been Protections. I am going to say something nasty about protection later on. There is no doubt that protection, especially in our present age, does bring what I might call short dated advantages to the country which puts it on. It transferred to within its own borders manufacture of articles which it previously obtained from abroad. The disadvantages of protection are the shipping on foreign investments and the dislocating of the world balance between supply and demand, which do not show themselves quite as quickly. Protection has undoubtedly led to the bringing into Great Britain of a number of industries smaller industries manufacturing specialty Products which were previously imported from outside.

The result of these three factors, stable government, a balanced budget and protection, has been. the reduction of unemployment in Great Britain by about 700,000 men and women, a recovery of business,, considerable expansion of what may be called capital industry, so obviously absent from the United States, and a surprisingly, small reduction--and for the last month or two, no reduction-in our export trade.

On the other hand, there is no use disguising from ourselves the fact that the problem is not solved. We have still got 2,000,000 unemployed and taking five per family or four to a family, 2,000,000 unemployed is a very formidable element in a population of 45,000,000. I think there is no doubt that the recovery is slowing up. Mr. Runciman, probably the best authority, said in Parliament in July that the curve of recovery was flattening out. If you read the statistics you will find that we are importing so little of a manufactured character from abroad that there cannot be much more to be obtained from the protective tariff in the transferring of industries to Great Britain. I think it is true that the period of recovery is slackening off and my own view is that Great Britain and almost all other nations will discover that full recovery is only possible when the nations begin to recognize and put that recognition into practice, that they must seriously set to work to restore international trade. (Applause).

Before going on to discuss that aspect of the question, may I return for a moment to the British position? We must have another election in England some time before October, two years hence and as it is unusual in England for only government or party to go to the supreme limit of its time, it generally being regarded as a sign of lack of confidence, the probability is that there will be a general election in Great Britain some time, not this winter but next winter, in the autumn, winter or spring of 1935 or 1936, because on the whole it is our habit not to have the election in the height of the summer or in the middle of the holiday season.

Now prophecying with regard to politics is proverbially dangerous, but it is an occupation peculiarly interesting to politicians and I am going to make a mild prophecy after giving an analysis of some of the problems of a political character in Great Britain today.

The present House of Commons has 715 representatives, falling into two groups. There are about 540 members and the Opposition--the Labour Party and that section of the Liberal Party to which I have the honour to belong which withdrew from the Government after certain nefarious practices had been conducted at Ottawa three years ago. The balance of the House consists of the supporters of the National Government of whom no less than 460 or 470 are members of the Conservative Party, the balance being National Liberals or National Socialists or Labour-followers of Mr. Ramsay MacDonald.

As is always the case when you have a swollen majority, the principle opposition comes not from the Opposition but from dissension within its own ranks and that has shown itself very clearly in the vehement opposition which has grown up and is extending in, the Conservative ranks to the Indian policy of the Government.

Now, I am going to venture to give you a brief analysis of the Indian problem because it is going to break into controversy with extreme vehemence on or about November 20th of this year when the joint Select Committee Report on the White Paper on which the Government proposals are made will be published and the death struggle will begin between the "Die Hards," as I call them, led by Winston Churchill and the Government, in effect led by Stanley Baldwin, as to whether the proposals of the Select Committee should or should not be enacted into law.

Here are the elements of the Indian problem: India contains 350,000,000 people. It is divided into major areas-British India where a bureaucratic government run by the Indian Civil Service which is in effect a British Service tempered by the legislation which was brought into being in 1920 and which has some direct responsibility for the government but which hasn't a limited responsibility in the provinces. Three-quarters of India is known as British India; the other quarter is governed by 125 hereditary monarchs, none of which have representative institutions in the responsible sense of the word. India speaks about twelve main languages. It contains universities which are turning out university trained students at the rate of about 100,000 in the universities at the same time. The main divisions are religious--between Mahommedan Hindus whose relations to one another are not unlike those which existed in Europe at the time of the Reformation when Europe split between Roman Catholics and Protestants. Eight per cent of the population is literate and the population increased by no less than 31,000,000 in the last ten years.

There is an active native press--a native language press. Five-eighths of the ministers in the provinces are Indians and the Viceroy's Council of seven people contains three Indian members. India also contains a very large number of extremely able lawyers, trained in England, very largely, and the Woman's Movement has attained extraordinary dimensions in a very short space of time.

Now, the controversy in England does not relate as to whether or not there shall be a further advance to self-government; it relates to the speed and character of the advance. The "Die Hards", the Opposition, let us say, to the Government within the Conservative ranks, 'say in effect that the idea of trying to found an Indian Federation, more or less on the American model, containing 350,000,000 people divided as I have described, on a democratic foundation, with only eight per cent of the population literate and with the volcanic forces which undoubtedly exist in Indian politics, is to plan for certain disaster and, to refer to a well-known French expert, 'Great Britain has no right to take such chances with the fortunes of the 350,000,000 humble peasants who really have nothing to do with the government of the country and are not yet in a position to ensure stable government. The result in the transferring of full responsibility, as the Government proposes to do in the Provinces, to the Indian Legislature and partial responsibility in the centers, is to condemn India in due time--not necessarily rapidly, but eventually--to chaos worse than that to be found in China.

On the other hand, the Government takes a different view. They say, "We are committed and have been committed by Parliament itself to the problem of the steady extension of self-government."

Nationalism is the strongest political force in the modern world. It is growing rapidly in India and it is never stronger than where it is a protest against the government of one race by another race. Further, India contains great numbers of extremely able men even if you may doubt whether these are the people who will be returned to power by the ordinary democratic electoral system.

Finally, the future in India: The main positions in the Civil Service, in politics, in journalism, in business and law will inevitably fall into the hands, already to, a great extent are in the hands of students of the Indian universities and of the universities in Europe and the United States and every one of those students, as is always the case, is a frank and vehement Nationalist, demanding that India should have the right to run its own affairs and learn by its own mistakes, however disastrous those mistakes' may be. Therefore, unless you go forward to the degree which will carry the consent of the moderate minded people in India, you will invitably reproduce in India on a vastly greater scale, the situation which was produced by centuries of repression in Ireland in which the most energetic and enthusiastic and patriotic element went into revolutionary and blood-thirsty opposition as being the only way of removing what they regarded as the alien tie. Therefore, while admittedly there is grave risk in going as fast as the White Paper proposes,, it is dangerous to deny the expectation aroused in India and drive the whole of the youth and the intelligensia into violent, terroristic revolution which will poison the atmosphere of the country, which will poison Anglo-American relations and follow with disasters worse than that which may follow the other course.

There is the issue. It is a very grave responsibility which lies on Great Britain and the outcome will not only affect Great Britain, it will affect the world because if India, either through revolution or the breakdown of government, goes into chaos, that will be another blow and a very serious blow to the prosperity of mankind.

Now, the battle in this issue is solely and wholly within the ranks of the Conservative party. The Labour party, on the whole, is in favour of going faster than the White Paper. The Liberal Party supports the White Paper; the majority of the Conservatives, certainly in the House of Commans, support it, or have done so in the past. But there is a vehement, conscientious, formidable, resolute minority of the Conservative party which is convinced that it is its duty to resist this plan even to the point of disrupting the Conservative party itself. Nobody can tell you what its numbers are. Hitherto, it has succeeded in the party conferences, which is by no means always an accurate test--in fact is seldom an accurate test of the real feeling of the party--in obtaining about one-third of the votes. Last week at a Conservative party conference, it managed to secure practically half of the votes. What the exact significance of that change is, I do not know. Until you can see somebody who was present at the meeting, who can tell the local circumstances, you cannot tell. On the face, it

Now, Mr. Baldwin, for whom I have a great admiration, is confronted by, I think, the fight of his life over this issue. Mr. Baldwin has this faith--I do not say I have--that the Conservative party is the most important political force in England, that the Conservative party goes to disaster unless it is kept liberal and progressive in its general outlook and there is going to be a battle. This winter you will see it resounding from one end of England to the other. You will see it reported night after night in the reports of the House of Commons, between the "Die Hards," as I call them, led by Mr. Winston Churchill and Lloyd George, either to emasculate the bill or to abandon it, and prevent the transference of the responsibility to Indian hands, and the Government farces which will try and carry a majority in the House of Commons and also the House of Lords in order to enact that Constitution and put it on the statute books by July of next year.

You will also see great controversy in India because, on the whole the Indian politicians will say that the Constitution does not go far enough and by noisy agitation they will hope to get it liberalized still further.

I do not think myself that the "Die Hards" will succeed in disrupting the National Government. I believe that the National Government will succeed in putting the White Paper on the statute books„ as recommended by the joint Select Committee Report and I think after that battle is fought and, I hope, wcd, it will formulate a five year programme for domestic affairs and will go to the country asking far a verdict some time between October and April of 1935 and 1936.

Now, that is my prophecy but, as is always the case in politics, it is liable to be very much upset by events. Now, for the Labour Party: The Labour Party since its crushing defeat has been divided between the left wing, the ardent and extreme Socialists, whose most notable figure is Sir Stafford Cripps, and the more experienced Labour politicians and the leaders of the Trade Unions who, in effect„ create the organization upon which the Labour Party rests and who supply most of the funds with which it can fight elections. The first result of the defeat of 1931 was that the intellectuals in the Labour Party tried to lead the whole Labour Party into a programme of almost revolutionary Socialism to include the nationalism of banks, lands, textiles, coal, transportation, and something else, within the lifetime of a single parliament. That battle has, as the election becomes nearer, ended in the victory of the more moderate trade union wing of the party which is still describing those ends as the ultimate objective but have decided to take quite moderate steps in that direction in the next Parliament and do not even commit themselves to abolish the House of Lords. So the moderate forces in England are asserting themselves on the left side while the more extreme forces, if I may so describe the "Die Hards," are fighting their battle with vigour on the right.

I am not going to spend much time--hardly any time--in describing the prospects and future of the Liberal Party because it suffers from two difficulties: First, is that two-thirds of the Conservative Party, and now two-thirds of the Labour Party, are in effect, Liberals with a small "L". The Liberal programme of the Victorian age--Woman's Suffrage, Social Reform, Democracy, Self-Determination, is the accepted programme of a great majority of both the other parties. And the other difficulty--speaking as one politician to other politicians--is that elections, especially general elections, cost an infernal lot of money, and property finances the Conservative Party and trade unionism, on the whole, finances the Labour Party, and we still have to find the great leaders and captains of industry who will finance to the same degree the party to which I have the honour to belong. If that problem is realized, that is a fair diagnosis. My own view is that the National Government which, in effect, will be the Conservative Party, will win the next election, eighteen months hence, with a greatly reduced majority, but still an adequate working majority which will get 360 or 370 of the .seats. The Labour Party will come back greatly strengthened but with no majority and still a good way from a majority. I won't predict how many Liberals will be returned.

So, looking at the picture as a whole, especially in relation to the extraordinary confused and dangerous state of the world, I do not think it is altogether unsatisfactory. I am more confident of the future of Great Britain today than I was five years ago. (Applause) We were pretty badly strained by the Great War and after the Great War there was a lot of wild thinking and reckless habits, political and. otherwise, which found echoes in Great Britain. I think we have recovered what the Americans call our poise and there is a great deal of vigorous thinking going on on all sides--Conservative, Liberal and Labour--which is animated by a very high public spirit and a willingness to face facts as they are and deal with things on the basis of fact. I think we shall see our way through though there are very great difficulties ahead, economic and political, especially in India, and also international. At any rate, I feel a quiet optimism about my country, at any rate. (Applause). I said a few minutes ago that I thought that no nation would get rid of its unemployed and return to full prosperity until enough nations realized that they had to make a resolute effort to restore international trade. I am trying to think that in another year's time, if the United States has come out of its tailspin-which I confess, after being there, is a considerable "IF"--that you will see a more considered and determined effort to reverse the extreme economic nationalism of the last three or four or five years which has been the root cause of the failure of Democracy in so many countries in the world.

I am now going to inflict on you for a few minutes;, my criticism of protection, having admitted its advantages to Great Britain for the last three years. The more I think of it and the more my colleagues and friends think of it, the more do we become convinced that the basic principle upon which the prosperity of the world rested during the last century, which saw the greatest rise in the standard of living ever known in human history, were essentially sound, and it will not be possible to depart in any serious degree from them. Now the basis of the economic problem, as I see it-this is simply an individual view-is how in an age of constant invention, constant new enterprise, constant introduction of labour saving devices, all of which enable the individual to buy more for his dollar, how are you going to keep capital and labour making those things or those fragments of things which are, in the sum total, actually exchangeable against one another? That is the root problem and in theory there are only two ways of doing it. One is Communism, which is the only form of Socialism which will work and Communism says the state will determine first, what everybody shall consume. It will give you eggs on Monday, hash on Tuesday, fish on Wednesday. It decides that it will prohibit any kind of private economic enterprise and, having thus derided what is to be consumed, it can then plan distribution and production. If it allows any form of private enterprise, as the N.E.P. proved in Russia, its planning goes to pieces. ,If you don't go into Communism, the only alternative in a world in which you allow private property, private economic initiative and consumer's choice, is to allow competition and price in the market to determine what it shall produce and where capital and labour are to go, for it means, inevitably, in a progressive society, the constant destruction of all capital, the constant provision of new capital and the perpetual movement of labour from one kind of occupation to another. During the last century, competition and price kept supply and demand in very fair equilibrium, despite the introduction of the factory system, despite the discovery of railways and electricity. It can do so still, despite all was production if the system itself is allowed to function, but that does not mean that there is no room for what we, in England, used to call Social Reform, but competition inevitably involves suffering arid. distress and anxiety for the employee and in the great Liberal Parliament of 1906, whose works have been one of the principle reasons why we have come through the depression with so little social trouble at home, said, in effect, that the community should temper the wired of competition to the shorn lamb of labour, that it must provide for the three major anxieties of the employee--what is to happen to him in his old age when he can no longer get a job; what is to happen when he is thrown out of a job through no fault of his own, and has to take time and money to find a new job; and what is to happen in case of sickness if his resources are not adequate to enable him to pay the doctor, and the hospital bills. The system of Old Age Pensions, insurance against unemployment and insurance against sickness have done a great deal to mitigate those hardships though what you can do is obviously dependent and limited by your national wealth at any one time.

In addition, we adopted the principle that the greater inequalities of wealth were socially undesirable, and by graduated income taxation and death duties-which I„ personally, think are high-we have done something to mitigate and prevent from generation to generation the great social inequalities. There is no doubt that there is room for state intervention to protect the employee in various other ways and increase the amount of the social life of the community. It is all designed to allow the repetitive system to function without interference, to leave the competitive system to function but to add to it Social Reform.

Once you begin to put on excessive tariffs, embargoes, exchange systems, when you adopt what I think is the fatal system of protection to prevent the competitive system moving capital and labour internationally, the moderate level of protection of which they say, "Put it on; it can do no harm and will do a great deal of good." once you begin to think you can found prosperity on unlimited public work, on unlimited borrowing of public money and spending it, you get in a tailspin such as the United States is in today and I believe these basic laws, these basic principles which served the world with, incomparable success in the last century, and which, with all the minor defects it is easy to record, raised the standard of living to an extraordinary degree, when it had stayed stable for a century before. It transported millions of people across this country and gave the highest standard of living ever known, and the basic principles are such that if you add to them an immense amount of Social Reform, you must not interfere with the basic principles themselves. When mankind comes to a realization that the basic principles must be obeyed, when they Cease to think that our difficulties can be solved by economic nationalism, when they cease to think you care work yourselves to prosperity, Democracy will again begin to spread and the whole theory of the League of Nations will be recovered and we may enter an era of peace and prosperity which seems quite out of reach today. (Applause).

PRESIDENT PORTER: On behalf of The Empire Club, I wish to thank you, Sir, for your most concise and comprehensive survey of the situation in Great Britain. I am sure we shall all watch events unfold themselves in fulfillment of your prophecy. (Applause).