 I was greatly puzzled when I read the order paper at the form of the official amendment of the Labour Party, and now having heard the whole of this debate I cannot say that my bewilderment has to any very great extent been removed. I have heard no case put forward of sufficient weight and sufficient breadth, supported by arguments of sufficient number and vehemence, to justify the very serious step which they have taken in placing this amendment on the order paper. When the present opposition formed a government, they formally expressed themselves in favour of a return to a gold standard at the earliest opportunity. The Prime Minister of those days, I have the quotations here but I shall not trouble the House with them, announced that policy of carrying out the recommendations of the Connliffe Committee and returning to the gold standard at the earliest possible moment, and then the Chancellor of the Exchequer, the Right Honourable Member for Coln Valley, Mr Snowden, went further and was even more explicit, not only in office but in opposition. He has repeatedly urged upon the Government that the right policy for this country is to return to the gold standard at the earliest possible moment. My Right Honourable Friend, the Member for Hillhead, in his most powerful and effective speech, a speech which might almost have relieved me of the duty of intervening at all in the debate, dealt with the late Chancellor of the Exchequer and quoted the article which he wrote only two months ago in the Observer newspaper, and he pointed out that not only had the Right Honourable Member for Coln Valley advocated a return to the gold standard, but he had pressed it as a matter of haste and urgency. He had pressed it as a matter so important that, to quote his words, �Risks must be run for the sake of the benefits which success would bring. England could give a lead in this matter, which would result in a general return to the gold standard.� �Well, sir, we have taken the advice of the late Chancellor of the Exchequer, but we shall hardly be encouraged to repeat the experiment, having regard to the treatment we receive when we do fall in with his views. We have taken his advice. We are actually on the gold standard. And what does he do? Speaking with the full responsibility of the official spokesman of the opposition in matters of finance, what is it he proposes that we should do? I quite recognise the moderation of his speech, the restraint and sobriety of all that he said on this subject and on both sides of it. But what is the course which he recommends to the House of Commons this afternoon? He proposes, now that we are on the gold standard, to deprive us of the precautionary measures and safeguards which, after long thought and patient preparation, we regard as vital to the success of the operation which he himself has counselled. Well, if you are looking for grounds of opposition, you can nearly always find some reasons, and so the blessed words, undue precipitancy, have been discovered to bridge the gap between the late Chancellor of the Exchequer's past and the views which some of his supporters in his party hold at the present time. Undue precipitancy. I understand the difficulties to which ex-ministers and the leaders of a party in opposition are subjected. I wish to make every possible allowance for them. But I must say, speaking quite frankly, and I hope without offence, that this incident makes it difficult, not for the Government merely, but for the House, to place full reliance on the character of the advice given by responsible leaders of the opposition in regard to grave and complicated matters of public policy. They advise a certain course publicly and repeatedly. We adopt the course. We take a decision in accordance with their advice, and then immediately they move an amendment, not only to condemn us for what we have done, but to deprive us of those practical safeguards by which alone what we have done can be carried through successfully. One may approve of the principle. One may even agree as to the urgency, and yet one may dislike the method. I have heard nothing in the speech of the late Chancellor of the Exchequer, which indicated any serious disapproval of the specific method we have adopted. It is a method which the highest experts have advocated. In carrying out the policy recommended by the late Chancellor of the Exchequer, we have taken every precaution which forethought and patience and long preparation could suggest. Undue Precipitancy Where is the undue precipitancy in acquiring discreetly over a considerable period of time the $166 million required to cover our payments to the United States for the whole of this year? Where is the undue precipitancy when we began these arrangements with the United States upon which these transatlantic operations were founded before Christmas last year? There never has been any step of this character taken by any government which, so far from being marked by undue precipitancy, has been more characterised by design, forethought, careful and laborious preparation. Mr B Smith See the results The late Mr Bonar Law, once in reply to an interjection of that kind, made a very pertinent quotation and said, It is no use trying to argue with a prophet. One can only disbelieve him. Mr Smith I only said, Wait the results There is perhaps one ground on which we might have been accused of undue precipitancy. I was waiting to hear the right honourable member for Coln Valley, whom I'm glad to see in his place, perhaps say that he would have approved of all that we had done, but for the fact that, instead of declaring last week that we would return to the gold standard on the 31st of December, we had in fact returned to it at the moment of my declaration. It is of course a question which requires careful balancing, whether you should give a long notice in advance or whether you should act instantaneously by giving a general licence to the Bank of England to resume gold exportation. I was advised that if we had waited the eight months before the end of the year, before the expiry of the present act, everyone would have had all that time to perfect arrangements for the export of bullion. Everyone, during those months, could, under the existing law, have withdrawn and hoarded gold against the day when the free export of gold became lawful, and all this pent-up volume which you could not measure, which might be very small or might be very large, but in any case would have been uncertain, would have been awaiting the automatic cessation of the existing law, and would have fallen upon us on the 1st of January 1926. That is a season when the normal demand for dollars is high, a season usually unfavourable to our ex-jecker, and at the unfavourable moment all this pent-up strain would have fallen upon our gold reserves. No one would have been able to predict what would have happened. Personally I'm not convinced that anything very serious would have happened, but there are many people who would have been alarmed, and these vague fears and uncertainties affecting the whole position of our trade and finance would have been deeply detrimental to our material well-being. If you are going to return to the gold standard, if that principle is to be carried into effect at all, now is, from every point of view, the moment which should be seized. This charge of undue precipitancy has enabled the right honourable gentleman to present a consistent or comparatively consistent front, but his argument as to undue precipitancy runs counter to all the most solid reasons which the government can produce. I must contrast the position of the right honourable gentleman with the position of Mr. Keynes, who is, I suppose, by far the most distinguished and able exponent of the opposition to the return to gold. He is the great advocate of a managed currency, the most powerful and persuasive advocate. While the right honourable gentleman opposite was writing in the observer newspaper articles demanding the return to gold, Mr. Snowden, not demanding, advising or suggesting, while the right honourable gentleman was writing in the observer articles which might easily have been interpreted to mean that he was ready to approve of a return to the gold standard, urging that risks should be run and that no time should be lost, Mr. Keynes was writing in the nation a series of searching and brilliant articles, formidable and instructive, in favour of a managed currency. You could not have had a greater difference than was exhibited between the writings of the right honourable gentleman and the articles of Mr. Keynes. What has happened in the event? The right honourable gentleman who advocated a return to the gold standard at the earliest moment, when we return to the gold standard, attacks us. But Mr. Keynes says, if we are to return to gold and in the face of general opinion that is inevitable, the Chancellor and the Treasury and the Bank have tried to do so along the most prudent and far-sighted lines which are open to them. That is the statement which was made, I say, by the most able, most powerful opponent of the return to gold. Here is the right honourable gentleman who is one of the strongest advocates of the return to gold, confronted with the same facts as Mr. Keynes, accusing the Government of undue precipitancy. Mr. Snowden, may I also quote this from Mr. Keynes? There remains, however, the objection to which I have never ceased to attach importance against the return to gold in actual present conditions in view of possible consequences and the state of trade. Certainly I say he is the most capable exponent of the opposite view and absolutely disagrees with the right honourable gentleman on the principle. And yet so fair-minded is he in judging this matter that, apart from the principle, if you're going to do it, he says this is much the best way. What is the explanation of the difference between the two? The explanation is that the right honourable gentleman, unlike Mr. Keynes, has to consider party manoeuvres and party exigences, and it is not thought prudent in regard to a matter of this kind about which many people entertain conflicting views that the official opposition should take up any attitude which, if unsatisfactory results accrued in the future, would prevent them from being able to say, I told you so. The right honourable gentleman is really in an excellent position. He is, in sporting parlance, standing on velvet. If everything goes successfully and no evil consequences arise, not even temporarily, if there are no spasms of any kind, he will be able to say, ah, we were always in favour of the return to the gold standard. The Labour Party in office declared itself strongly in favour of it. If, on the other hand, there should be in some few months time some spasm or some stringency, and momentary agitation is raised in the press, he will again be able to rise in his place, or write another article in the observer, saying that he had foretold it. Let us see what would happen if the official labour amendment were carried. We should find ourselves deprived of every effective means of making the transition safe. We should not be able to secure the credits in the United States which are intended to warn off speculators, in the excellent phrase Lord Oxford used last week, to warn off the international banditty of finance from making attempts to overturn our gold standard. If we were left unprotected and such attempts succeeded, we should have to make very heavy shipments of gold, and we should certainly have to raise the bank rate. At the very time that we were exposed to this strain, we should, if the amendment now before the House were carried, have to pay out sovereigns from the gold reserves to everyone who chose to ask for them, and in order that there should be no risk of a shortage, the mint would be under an obligation of minting into sovereigns all gold tended to it. I can understand condemning the principle of a return to gold, but to approve the principle and then to leave this country defenceless in a vital matter of this kind, when it is already committed, is a course which I am quite sure very few responsible members in this House will care to support in the lobby. I do not know whether there will be a division or not on this issue, if there is, well and good, but if there should be no division, on the whole possibly some national, apart from party, advantage would be gained thereby. No doubts it is a serious matter for a minister and a government to have to take the responsibility for a measure of this kind. I will tell the House quite simply on what authority I base myself and what reasons have influenced me. I do not pose as a currency expert, it would be very absurd if I did, no one would believe me. I present myself here not as a currency expert, but as a member of Parliament, with some experience in dealing with experts and weighing their arguments. As the minister who has behind him, what I believe is, and what I dare say the right honourable gentleman believes is, upon the whole, the finest expert opinion in financial matters, in treasury matters, in the whole world. We have behind us the unbroken opinion of every government while it was responsible. We have every Prime Minister and every Chancellor of the Exchequer, except with some recent modification, the right honourable gentleman. We have every committee and every conference that has been held since the war. We have the currency committee's report, which has been available for several days in the vote office, and gives all our general reasons. That is the basis and the foundation on which we rely, not only as regards the principle, but generally as regards the method. Apart from the principle, I had to rely on the best expert advice I could get as to method and time. The advocates of a managed currency say, why do you not continue to manage the currency? See how successful it has been, see how well it has been done, why do you not continue a managed currency? I agree that the experts at the Treasury and the Bank of England who have managed the currency during the past few years have been wonderfully successful. This is all the more remarkable, because those years have been years of violent political fluctuation and disturbance, in spite of which they have managed to steer a steady course, maintain a fairly stable financial policy, and promote and enhance British credit. That is a great achievement, but surely the experts to whom this achievement belongs must be very high authorities on the subject. Surely they are the people who want to know most about it. Surely their opinion counts more than the clever arguments of academic theorists or the interested attitude of party politicians. I, as Minister, and the Government, take full responsibility. I am not setting our opinion up, but I am saying we are right to be guided by the statements of opinion we have received from them. Surely if you can rely upon a body of expert opinion which has actually conducted financially the affairs of this country with success and tended advice to their ministers, a long and changing succession of ministers, you are entitled to base yourself with real assurance upon the advice you receive from them. When the men who have managed the currency so well, according to the opponents of the present bill, tell me that they can manage the currency no longer upon this basis, and tell me it would have been impossible to have managed it so far as they have unless they had always had the return to the gold standard as a goal to steer towards, and that if we were now to repudiate the gold standard and introduce legislation for the purpose of prolonging the embargo, an immense injury would be done to the whole structure of British finance, surely their opinion should carry great weight. That is the advice upon which I have to rely and to which I am bound to pay the greatest attention. I have endeavoured, of course, to the best of my ability to think out the problem for myself, and I will give the House a few non-technical reasons why I think we are bound to take this step and take it now and take it in this particular way. The first of these reasons is the position of this crowded island which could not support its present population by the unaided exertions of its agriculture, its manufacturers or even its shipping, unless these exertions were supplemented by the worldwide interests of this country in finance and business. The great working-class population, such as we have here, requires above all things, and our economic problem requires above all things close and continuous contact with reality. There is no country in the world that can less afford to see its policy diverge from economic facts than our own. If we tried whatever government was in power to inflate our currency or credit in order to produce hectic expansion not warranted by underlying facts, the consequence of that action would be widespread misery among the population and probably lasting injury, perhaps even fatal injury, to the structure of our trade. We are often told that the gold standard will shackle us to the United States. I will deal with that in a moment. I will tell you what it will shackle us to. It will shackle us to reality. For good or for ill, it will shackle us to reality. That is the only basis upon which we shall be standing, and I believe it to be the only basis which offers any permanent security for our affairs. That is my first broad reason. The foundation of Great Britain's economic policy must be, as far as possible, based upon reality. Now the second reason is one which I think the Labour Party, the official opposition, might consider. We are not a self-supporting country. We have this immense working-class population. We have a population twice as dense as that of France. These people are dependent mainly on overseas food, and our industries are dependent on overseas raw material. What is one of their principal interests? It is surely stability of prices, when prices fluctuate violently, as in the year 1919, and when, as in 1920, there is a slump. The real wages of the work-people are continuously affected, and almost every step in the wage movement, either up or down, is attended by industrial fighting. This fighting wastes an enormous quantity of wealth and injures the whole community. On the whole, when there is inflation and undue expansion, I believe it to be true that wages follow with somewhat slower footsteps, the swiftly rising scale of prices. Great disadvantage is caused in such circumstances, by the decline in the value of money. Great strikes occur in the process of adjustment. Then, when prices fall, another set of quarrels begins, and serious wage reductions are demanded, which it is regarded as a point of honour to resist. There again you get friction, disturbance, and sometimes the long arrest of production in important industries. Some fluctuations are perhaps inevitable, but we must reduce them to the minimum. We should endeavour to keep as steady a level of prices as possible, and we are far more likely to get that steady level if we are not drawn into over-trading and inflation, and we regulate our arrangements by one common standard of value. Therefore, I say that what is wanted in the general interest of the wage-earning classes of this country is a steady, trustworthy, honest, and, if possible, uniform standard of value. What is my third reason? We are not only the financial centre of the world, we are also the centre of a wide empire. If we detached ourselves from the great self-governing dominions which our nations in themselves, the unique glory of this country, the like of which no other nation has been able to show, if we detach ourselves from their movements, we run the great risk of becoming isolated and loosening those bonds, the continuance and the fortification of which are indispensable to our well-being. Canada is already linked to the gold standard. South Africa, independently of us, was about to return to the gold standard. I received in the last few months frequent inquiries from Australia as to what is our position, and indicating what were their desires. If we had shown ourselves incapable of taking up any position at all, the self-governing dominions of the British Empire might have gone on to the gold standard by themselves, and the mother country alone would have been left to pursue a different policy. They would all have traded together, and the inconvenience they suffered by reason of the conditions of exchange would have been swept away as far as they themselves were concerned. Australia would have traded with South Africa, and all the dominions would have traded with the United States of America on a gold basis, and it would have been a gold basis with the pound left out. It would have been gold on the basis of the dollar, not of the pound, and we should have been left on a different foundation. That would have been a condition of affairs disastrous from every point of view. The same is true of foreign countries with which we deal. We have immense dealings with them, and we must have greater dealings with them if our prosperity is to revive. If the English pound sterling is not to be anchored to the standard which everyone knows and can trust, and which everyone in every country understands and can rely upon, the business, not only of the British Empire but of Europe as well, might easily have come to be transacted in dollars instead of in pound sterling. I think that would be a great misfortune, a misfortune which, if once incurred, might continue. Those are the three great reasons, economic, social, and imperial, which convinced me that we should return without delay to an international gold standard. We are told in the first place that the gold standard will be injurious to us because America is in favour of it. It is quite true that the universal or widespread adoption of the gold standard will be of great advantage to the United States, but as my right honourable friend pointed out, it by no means follows that because it is an advantage to the United States it will not be an advantage to us. The great free trade economist Bastiat, in a celebrated sentence, declared that all legitimate interests were in harmony. And I see no reason why what benefits the United States should not perhaps benefit us in our special needs as much or even more. We are told that the gold standard will put us in subjection to the United States, that we shall be shackled to them, and that we shall be bound hand and foot, and forced to conform to the course of their affairs. We are reminded that the United States have 800 million pounds of gold, half the supply of the whole world. They have at present in the Federal Reserve banks 300 million pounds above their requirements. Naturally we are told that if she is to use this gold her interest is to make it as available and potent as possible. Naturally she will help us to make it the dominant standard of value. I think that is a fair statement of the argument. What is there to say on the other side? First of all, whether we go on the gold standard or not, our interests are profoundly and intimately involved in those of the United States, which is larger than we. In some respects she is richer than we are. The two great communities are woven together by a thousand ties of trade and finance. We pay every year our 35 million pounds of war debt to the United States, but that is a small part of our mutual transactions. We have to buy from the United States the greater part of our cotton, tobacco, and a large proportion of our raw materials and wheat. We purchased last year 240 million pounds of goods from the United States, whether on a gold standard or on a managed currency or on any other scheme which can be conceived, her fortunes are bound to sway and influence ours whenever she booms or slumps. Before the war or after the war whatever we do our prosperity was and is bound to be affected by conditions across the Atlantic Ocean. Therefore it is not a question of whether the return to a gold standard makes us dependent on the United States, but whether it makes us more dependent or dependent in an unhealthy and a subservient manner. I think that the answer to that question depends on another. Shall we ourselves be stronger on the gold standard or off it? If that great entity of the British Empire united on this gold standard will be stronger then we shall be in a better position to hold our own in regard to the strong influences which will sweep across our affairs from the other side of the Atlantic. We are already very strong. In spite of all our war burdens and the immense exertions and the exhaustion that followed upon it we have managed to maintain London as the financial centre of the world. We have the control of a vast amount of the world's business. We have a magnificent credit to which all parties in this house have contributed. We have still, it is calculated, three billion pounds of foreign investments, the interest on which is calculated at about 220 million pounds a year. Even in gold reserves the position of the British Empire is impressive. We have 153 million pounds here and 107 million pounds is held by the Dominions. Then also the British Empire is the main source of the world's gold supply. 60 million pounds of gold a year or 70 percent of the whole supply of the world comes from under the British flag. Britain and her Dominions standing together united are an enormous power, a power so great, so intricate, so comprehensive, that it is strong enough to exist side by side in an amicable association with even a larger economic and financial power without being prejudicially affected in its own essential independence. In this way it is true, I think, to say that the interests of Britain are not dependent upon the United States, but that the interests of both countries are interdependent. Let me deal with another of the elements of doubt which have arisen. We are told of the 300 million pounds of surplus gold that are lying in the vaults of the United States. No doubt that gold will not move physically to any large extent, but it is possible that, as a result of the wide adoption of the gold standard in this and other countries, that this gold which is now inert will gradually become active. This gold will gradually serve as the foundation of credit in many parts of the world. If that is so, there will ensue a slow, gradual, healthy and perfectly legitimate expansion of credit all over the world. We may enter upon a period similar to that which we passed through in the 90s, when, without any violent fluctuations or improper inflation, there was a general broadening of credit due to the discovery of the gold fields of South Africa. It makes no difference whether the gold is 4,000 feet below the surface of the rand, or 40 feet below the surface in the vaults of the Federal Reserve Bank. It might well inaugurate a period of healthy expansion, during which everyone would be kept in check by continuous reference to the same standard of value. It is quite a different process to those processes of inflation caused by setting the printing press to work to multiply the paper currency, or by increasing the floating debt by selling treasury bills. It is a process founded on solid facts and related at every stage. I do not care to prophesy whether such a change will take place or not. If it takes place, it will certainly be accompanied by a gradual increase in the consuming power of every branch of the world's trade. Then we are told that this gold may come here in large quantities. We may be flooded with gold, as the right Honourable Gentleman, the member for Coln Valley, says. That is not precisely the problem that has most occupied the minds of my advisers during recent months. In his carefully balanced speech on both sides of the question, the right Honourable Gentleman can try to throw doubts on our policy, first of all by intimating how easily we might be thrown into inconvenience by a drain of gold, and secondly, how easily we might be thrown into inconvenience by being flooded with gold. It is suggested that if gold became a plethora here, and is discharged upon us in quantities which we could not properly absorb, prices would be forced up, and we should have a serious economic situation. Such a situation, however fantastic, however unlikely to arise, would leave us perfectly cool. The right Honourable Gentleman asked, Why have we not suspended the obligation of the Bank of England to buy unlimited gold at a fixed price? Why? If you are to maintain stability, you must resist disturbing influences from both sides. Stability is equally deranged by a too high exchange as well as by a too low exchange. It is essential that the bank should operate as a balancing instrument both ways, to buy gold when it is tendered, to deliver gold when it is demanded, always at a fixed, known, and previously declared price. In this way alone can we create a financial pivot on which the whole process of stabilisation will revolve. We are in this country in a position, alone among the countries of the world, to have no need to fear a violent flooding with gold. By a judicious and far-seeing provision inserted in the American debt settlement, a settlement to which I think the right Honourable Member for West Swansea referred earlier in the session, we have a right to pay off the principle of our debt to the United States at any time in gold. If, therefore, gold made its appearance in this country in inconvenient quantities and tended to drive prices up, all the treasury would have to do would be to float an internal loan, purchase the gold, and remit it to the United States in cancellation of the war debt. At every stage we should gain in this transaction. We should be paying off our debt by the most advantageous method and we should be substituting an internal debt for a vastly more burdensome overseas external debt. I do not, however, think there is any chance of this sort of thing happening. That is the sort of thing that only happens in heaven. I think the facts I have stated will constitute an absolute answer to the particular set of nightmares which are usually felt by those who fear we shall be thrown into convulsions by American gold. We have inexpungable means of defence if such a situation arose, but where will the gold, or the credit founded upon it, go if it be released from the United States in future years? It will go, as we believe, to European countries and other parts of the world, and insofar as it operates there it will tend to set them on their legs again. They will, of course, be more intimately associated with the United States in consequence of their loans, but a general revival is what we have to base ourselves upon. A general revival of consuming power all over the world is the hope that this country must cherish. That growth of consuming power internationally is bound to react favourably upon us. We cannot live without exports to the markets of the world. I must make one more point, if I am not detailing the House too long, the question of the index figures. We are told that there will be an immediate difficulty, because the British index figures are five points, I think, different from the figures of the United States. My right honourable friend, the Financial Secretary, very rightly pointed out that these index figures are not in themselves necessarily a complete guide. They are based on different foundations in each country. 150 articles here, 400 commodities there. These figures are not an absolute guide. It does not at all follow that an absolute equation of prices is essential to avoid disturbance and adjustment when the gold standard is restored. There is a certain degree of tolerance, as it is called in engineering, which has existed in the past. It is not a clear-cut mathematical calculation. Those who found clear-cut mathematical calculations on these index figures are likely to strain the figures further than they are warranted, and to draw wrong conclusions. We all lived through the year 1907. In that year, the index figures of the United States and of the United Kingdom were on a certain basis, 116 and 106, respectively. We were on the gold standard then. No violent convulsion occurred. Matters adjusted themselves between the two countries. In 1913, which is often taken as a starting point, the figures were on the same basis, 123.5 in the United States and 116.5 for the United Kingdom. A difference of seven points. The difference today is less than five points. I do not see why there should be any violent readjustments or fluctuations at the present time on account of the difference in price levels of the two countries. Those price levels have been steadily approximating and are now in a nearly harmonious condition for the introduction of such a change as the reversion to the gold standard. We are told, if you are wrong, if the strain is more than this country can bear, if there is a drain of gold, if we show undue weakness, there will be an increase in the bank rate which will check enterprise and increase unemployment. I am not given to prophecy about the bank rate. But I will say this, that I do not know of any immediate reason for an increase. Bank rates higher than 5% have been known before the war, in the autumn especially, when heavy purchases were being made in the United States by this country. I am not inclined to prophesy, but certainly nothing that has happened in the week that has passed since we took the momentous step of reverting to the gold standard brings the prospect of a rise in the bank rate any nearer. One thing that will bring about an immediate increase in the bank rate would be the rejection of this bill. It would prevent our credits in the United States. It would lead speculators to attack our parity. There might be an immediate demand for sovereigns for internal circulation. The only possible alternative to this bill is a speedy and serious rise in the bank rate. If we are to adopt the course recommended by the Labour Party, which I am sorry to say they have persuaded the right honourable gentleman, the member for Corn Valley, on his reasonable authority to father, if I say we were to adopt that course there would be a sudden and an immediate rise in the bank rate. I know that there is not the least chance of the House assenting to such an unwise proposal. At the same time it is worth noting, in view of some of the criticism and attacks that have been made during this session upon the rise in bank rate, the probable reactions which would occur if the bank rate were raised. The first is that if prices have been rising unduly, if there has been over-trading or inflation, prices are prevented from rising further. That is the first reaction. Is that a bad thing for the wage-earning classes? Since when has an undue increase in the cost of living been a matter of indifference to the wage earners? The second reaction is that speculation, as apart from legitimate business, is checked. Rings are broken, bubbles are pricked. If food or raw materials are being held up in large quantities for a rise in price, speculators are forced to disgorge, and the commodities are thrown on the market at reduced prices. Anything like a corner is prevented. Is there anything in that contrary to the interest of the wage-earning classes? What is the third reaction? The value of gilt-edge securities, which varies to some extent inversely to interest rates, is somewhat reduced. The right honourable gentleman, the member for Swansea, spoke with much reprobation the other night against the rentier class. As the bank rate rises, the rentier class, in so far as they are owners of gilt-edge securities, will find their invested capital priced somewhat lower. Is there any reason why that should arouse the wrath of the Labour Party? We on this side of the house regard it as a misfortune, but I should think it would make an appeal to many of their most deep-seated convictions. There is a fourth reaction, which attends the rise in the bank rate. I mean the improvement or maintenance of our exchanges, and particularly our exchange with the United States. Conceive the importance of a stable exchange, a parative exchange, with the United States. When sterling equals gold, or is on the same footing in relation to gold, as is the dollar, we are able to purchase the £240 million worth of goods that we have to buy from the United States, in the most favourable terms. We are able to make our debt payment of £35 million on the most favourable terms. The same argument applies to a large proportion of the £220 million of interest, due to us from our £3 billion of foreign investments. That is largely payable in sterling, and when sterling is equal to gold, we receive that interest on the most favourable terms. The same argument can apply to any payment that might be made to us in regard to inter-allied debts. In so far as sterling lags behind gold, there is on all these important accounts a heavy loss. If the pound dropped to $4, as I am advised it might have done, had we definitely announced the incapacity of this country to resume the gold standard, or as it might do now if the house rejected this bill, let us see what we should lose. I do not say that we should lose indirectly, for that would be far greater, but what we should lose that is traceable and recognisable, my figures are very rough. We should have to pay nearly one fifth more on our payments to the United States, whether for debt or raw materials and food. Similarly, we might lose one fifth of our £220 million of interest on foreign investments. That is, we might lose nearly £100 million per annum on our external overseas trading account, or nearly three times the present debt we have to pay to the United States. It is considerations like these which have to be balanced against the many disadvantages which follow when a rise in the bank rate takes place. These are not matters of theory, these are all matters of recent experience. All these reactions took place when the bank rate was raised in March. The exchanges were maintained and improved, the value of gilded securities slightly diminished, the cost of living was slightly lower, real wages were slightly increased, enterprise was slightly chilled. Most remarkable of all was the effect upon speculation. The Federal Reserve banks of the United States form a system which, like the Bank of England, is managed on the broad plane of public interest. When the Federal Reserve Board raised the American re-discount rate, it corrected and prevented unwholesome developments of speculation. An important feature in this speculation was an attempt to hold up the wheat supply. What was the result of raising the rate? Wheat prices dropped thirty cents in a few days. The Bank of England acted shortly after in harmony with the Federal Reserve Board, and in England the quarter and loaf immediately fell in price. Surely that is a matter of some consequence to the Labour Party. The right honourable gentleman, the member for Shettleston, made a most serious attack upon the rise in the bank rate. It was a most grave attack. He suggested that it would double the cost of building, and so add enormous burdens to the working classes. Does he really think that I, as Chancellor of the Exchequer, ought to have put pressure on the Governor of the Bank of England, quite unusual pressure, to prevent a diminution of excessive speculation and a consequent reduction in the price of the loaf of bread? Since I have been forced to deal at some length with this question of the bank rate, let me repeat what I have already said, in order that there should be no misunderstanding, that I know of nothing that would justify an increase in the bank rate in the immediate future. On the contrary, the situation is stable. All the evidence we have goes to show that the great transition to the gold standard has been affected so far, I am not going to prophesy about the future, not in the slightest degree, has been affected so far with ease and with success. I ask the House to pass this bill, and to pass it with all dispatch, as a matter of high public interest. The step we have taken of returning to the gold standard has, for good or ill, been taken upon the responsibility which they do not shirk of His Majesty's Government. We should be mad and criminal. If having taken that step, we deprived ourselves of any reasonable precautions which all authorities, even those opposed to the principle of the return to the gold standard, unite in regarding as indispensable. As to the future, that must make its own proof. It is a decision and a policy which cannot be judged by the incidents for a few months, which cannot be finally judged even by the fluctuations of a few years. It may be that in two or three years, material for forming a just provisional judgment will exist, and that the House will be able to say to the Government, you did right, or you did wrong. We have acted, however, with the utmost care and forethought. We have acted after full deliberation. We have acted with confidence, and we have certainly acted with decision. I am glad to think that we possess sufficient parliamentary power to enable us to drive through any temporary squalls or storms towards our destination, and that we possess not only the power in this parliament, but the time to follow long views to tangible conclusions. End of speech. The general strike, 1926. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Speech given by Winston Churchill to the House of Commons, 3 May 1926. The right honorable gentleman has certainly preserved the calm and restraint, which he enjoined upon others, and indeed the extreme self-control which the House has shown throughout this debate, is the measure of the deep anxiety and sorrow we all feel at the miserable turn which the fortunes of our country have taken. We gladly recognize the efforts for peace which have been made by the Trade Union Committee, by the right honorable gentleman who spoke last, and of course, by the right honorable gentleman, the member for Derby, who has striven with all the compulsive and persuasive powers of his nature and of his experience to bring about awarding off of this shocking disaster in our national life. We too have striven for peace, and we have deeds as well as words, which can be quoted. We have the subsidy of 24 million pounds which we have provided, although it ruined and shattered the finance of two successive years and which we have paid for and which is there. We have also provided another sum of approximately 3 million pounds, which could be used to ease the bump where the change over from subsidy to no subsidy would have involved very serious grievance. A sum of 3 million pounds at the present rate of subsidy applied to the districts where the change would have involved the greatest hardship would have been a very substantial alleviation for probably three months. Then, apart from making this immense contribution in the money of the taxpayer, we have accepted boldly and frankly the recommendations of the report as far as it falls upon us to do so. We did not pretend that we agreed with them. The very idea of finding 100 million pounds or more to buy out the owners of mining royalties implies an operation upon our credit deeply injurious to the whole of our conversion situation. We had our doubts about municipal trading in coal. There were other points, but when it came to a question of this great hope of settlement passing away because forsooth, while both the other parties adhered to the report, the government were not able to give its wholehearted acquiescence. We said, never mind what our opinions on these points have been. We will make the sacrifice of those political opinions in order that the matter shall not fall to the ground through any failure on our part. The right honorable gentleman, the member for Carnarvon Burroughs, asked what would happen if the owners had not accepted, and if the miners had accepted. Well, as far as I am able to state the case shortly, the owners have given a general acceptance with very small reservations, and I am quite certain that if the small reservations were the only outstanding points, negotiation, and if necessary parliamentary action, would ultimately have adjusted those very small outstanding points. If I say that we on our side made great efforts for peace, and if we freely acknowledge the efforts of the parliamentary leaders of the party opposite, I am not quite prepared, quite frankly, to extend that tribute to my right honorable friend, the member for the Carnarvon. I do not think his record on the subject entitles him to censure and criticize the government. What is the right honorable gentleman doing today? He is criticizing us for not making a further prolongation of the subsidy. He has criticized us for not doing that at a time when a general strike is actually about to take place in the country. What did my honorable friend say nine months ago in July last? I have no quarrel with the right honorable gentleman opposite on that point. When we gave the subsidy in July last, the right honorable gentleman, the member for Ogmore, Mr. Hartshorne, said they were grateful and recognized it as a help. If it is not a settlement, they said, thank God it does tide us over, and they accepted it with thankfulness. But my right honorable friend, the member for Carnarvon used it as an occasion for derision and scorn, which he heaped upon the government, and not only did he criticize the subsidy, he criticized the giving of the subsidy under the threat nothing like so definite is that which we have now, not a threat of a general strike. He said we had given the subsidy not because of any considered judgment, but because of the threat that was made and added, quite frankly, the government were afraid of facing cold steel. That was the line of argument used by the right honorable gentleman nine months ago when there was a great justification for the subsidy, namely, that the facts of the coal trade were not known and had never been fully explored. I do not think it is possible for the right honorable gentleman to justify that line of argument which he used nine months ago, or reconcile it with the kind of appeal which he has made to us to be reasonable, to put aside any influence of threats and so on, which might be in our minds and to extend the subsidy on this occasion. I must say that among all the very excellent sentiments which have been expressed this afternoon, there has been no success in evading the grim, obvious underlying facts of the situation. The first fact of the situation is that we are told we must now continue the subsidy. All this talk about withdrawing lockout notices and giving time for further consideration and allowing negotiation to be continued reduces itself down to this, that we are to go on paying the subsidy. There is nothing else in it. It is no good our saying, withdraw the lockout notices when the owners will ask how they are to conduct their business at a loss, provable I believe on the figures of about 600,000 pounds a week. Therefore the lockout notices are to be withdrawn. That is only another way of saying you must continue the subsidy. I do not take up an unreasonable position about that matter. In the budget I revealed deliberately and by design to the house the fact that I still possessed 3 million pounds, which could be used as a taper, which could actually be used for a prolongation of a fortnight or three weeks, but that before we undertook that step it was essential that we should be in a position to say honestly that we believed reasonably there was some prospect of matters being further advanced at the end of that period. I can only give a general outline of what has passed, although I have followed with deep interest in close attention all the negotiations. I have not been involved in the actual personal conduct of these negotiations. My right honorable friend opposite has seen me waiting about outside doors at critical meetings and keeping in the closest touch with events, but I have not been present myself and therefore if I state anything which is not precisely and exactly what occurred honorable and right honorable gentleman opposite will understand. I have however a general view of the position and I have the information of my colleagues here in regards to particular details and I say without hesitation that the impression left upon me is that for all practical purposes the miners have not budged one inch since July last. I do not see and I do not know in what practical way they have at all rescinded from the position which they then held so strongly and intensely that there must not be one minute's prolongation of the time or one shillings diminution of the wage. If they will not accept a reduction of wages and if the owners cannot be forced to carry on the business at a loss it is perfectly clear the only alternative left is for the state to continue the subsidy for a prolonged period. Does anybody suppose that the continuance of the subsidy for a fortnight is going to allow this matter to be settled? I cannot believe it for one moment. How can we justify prolonging this subsidy while the coal trade is being reorganized? Mr. Thomas, there is a very important point here. I only deal with the question of the fortnight. Is the right honorable gentleman aware that the advisors of the government actually told us on Saturday night that there might be a possibility of getting general agreement on the basis of their report within another two days? The Chancellor of the Exchequer allows me to speak. It was said it might be possible to get agreement. Some people who were most optimistic said in a couple of days, and some said in a fortnight. And, as the right honorable gentleman knows, ideas as to the time it differed, the real question at issue was this. That there would be no real guarantee or assurance, whatever, that if an extension was given we should not be at the end of a fortnight's prolongation in exactly the same state as we are in the present time, because the miners have never budged one inch from their attitude as regards accepting the report. At any rate, however, many differences there may be an interpretation of what was said and what was inferred on a particular occasion, let the House look at the plain and simple facts. Is there anyone who does not believe that my right honorable friend, the Prime Minister, has desired to avert this breakdown more than any other man in the whole country? Is there anyone who can dispute the fact, as Chancellor of the Exchequer, I have a great political interest in averting this disaster as any other member of the House? Does anybody seriously hold the idea that the question of a small prolongation would have stood in the way if there had been any practical hope of settlement? We would gladly have made a sacrifice, and even if we had made this statement to the contrary, we would not have allowed that statement to stand in the way, provided we were sure there was not a certain, but a reasonable hope of getting a permanent solution. Obviously, however, things cannot get into the position where we are committed to an indefinite prolongation of the subsidy, although somewhat vague reorganization is going on laboriously in the coal trade as preliminary to any readjustment of economic conditions. It has been said, what does it mean it is taxpayers' money? It is money taken from the pockets of the people of the country. It is taken from the necessities and comforts of the working classes. Agriculture, steel, iron, shipbuilding are all suffering too, and in some cases, and in many parts, the conditions both of hours and labors are worse in those industries than they are in the coal industry or parts of it. How can you justify the whole country being forced to pay this particular levy almost indefinitely when there is no prospect of any solution? Anyhow, whether it is just or not, that there should be a continuance of the coal subsidy to the miners and mine owners in the pressing circumstances. That is a question which parliament and parliament alone can competently decide. This parliament representing 45 million is the only body that can judge the correlation of all the interest in the country. If that be so, if I have given a fairly accurate account of the situation, what is the position created by the decision to call a general strike? That decision is the second fact in the situation. The first fact is the demand for a continuance of the subsidy. The second is the terrible, blasting, devastating menace of a general strike throughout the country. The right honorable gentleman drew distinctions between general strikes. He said there were general strikes to force legislation, and that these were shocking and unconstitutional, but a general strike out of mere sympathy in a wages dispute apparently he regarded as legitimate. I see no difference whatsoever between a general strike to force parliament to pass some bill, which the country does not wish for, and a general strike to force parliament to pay a subsidy. There is a great distinction between a trade dispute designed to bring about a solution as between masters and men, and a general strike of this character. We all deplore strikes, but the strike has been found almost the only way, when other means have failed of getting to a conclusion in regard to trade disputes, and organized labor has repeatedly repulsed the idea of compulsory arbitration. We have recognized it for years as a lamentable method of adjusting disputes when everything else has failed. Suppose we have a minor strike, as we have seen twice before, it is a process of reducing people by cruel losses on all sides. Government minors and mine owners are all reduced to the same position where after the lapse of time, they come into a more reasonable frame of mind and offer in weaknesses or in sorrow to make a settlement. That is the process, and it is the process that British labor has always claimed to have the right to exercise. But that is an entirely different thing from the concerted, deliberate organized menace of a general strike in order to compel parliament to do something which it would otherwise not do. A general strike is a great number of trades which have been selected and which have been informed in a very elaborate and thorough accounts which have been given in the papers, obviously means if it were continued for any length of time, the ruin of the country. Therefore the country and parliament which represents the nation are confronted quite simply with the choice either of being ruined or of submitting to pay very large sums of the taxpayer's money to one particular trade which they do not think justified. It is really not possible. I am not going to use one single provocative word for after all what is the use of provocative words on such an occasion here in the House of Commons. Probably our words may go no further than the House of Commons, but all the more should they be sincere and unprovocative. It is absolutely impossible to justify the submission by parliament to such a demand. We know how hard the leaders opposite have tried to get the ministers to make some concession, but the miners were unable to. Time and again my colleagues informed me they were not able, their leaders, to give any practical acceptance of the commission's report. But whether or not the miners are right really does not arise for the purpose of argument. You may think they are right, and we may think that they are not right. But anyhow right or wrong the position we are in tonight is that we have either got to face the ruin of the country or submit to a demand which is placed upon us under duress. Therefore it seems that the general strike turns not upon the decision of the trade union congress even as to whether the claims of the miners are just. It turns on the failure of the trade union committee to persuade the miners to accept some modification. Mr. Thomas, this is not a laughing time. If there is a genuine desire to find the facts I am going to do it. The right honourable gentleman is not correct, and I'd better correct him. It is true that the general council were empowered, and I speak officially on their behalf in saying they will accept all the responsibility. And while we were at a critical moment a critical letter was handed to us. The prime minister knows we were then engaged in finding and had already said that we believed that we could find a formula for acceptance. That was our mutual word between us, and it was an unfortunate fact that this other incident happened that bursted up just when we were likely to succeed. Do keep that in mind. I am bound to say I do not share the hope that this right honourable gentleman had at that time, because I have been up against these very grim facts, that the miners are not prepared to accept any modification of their conditions at the present time. I am not blaming them a bit, but they are not, and on the other hand, we are not prepared to continue the subsidy unless we see some swift finality in that process. But in this position, when it is our view, and the view of the parliament, that we are confronted, either with acquiescing in the ruin of the country, or submitting to the dictation of one particular industry, itself the interested party in the dispute, I cannot conceive of any parliament worthy of the name, let alone the oldest and strongest parliament in the world, which would so completely abdicate its position, which would submit to such dictation without making every exertion and undertaking every expense, and running every risk and taking every measure in its power that circumstance may require. I am told this is not a strike to starve the nation into submission, and I readily recognize the offer which has been made to convey food and necessaries by the trade union committee. But what difference does it really make to the issue, whether the country is immediately to be starved into submission, or whether ruin is to be brought upon it, out of which famine will emerge in a few weeks or months? There is no difference. It may have been a wise thing for the trade unions to have done, but as far as affecting the situation is concerned, it affects it in no way, and what government in the world would enter into partnership with the rival government against which it is endeavoring to defend itself and society, and allow that rival government to sit in judgment on every train that runs and on every lorry on the road. Our title deeds in this house, and after all, we represent a great mass of electors, an honorable member, not the majority. We do not represent a majority, but we represent a large number than honorable members opposite. Our title deeds do not allow us to contemplate such a situation. We cannot by any means divest ourselves of the responsibility of maintaining the life of the nation in essential services and in public order, and in pursuance of that we are bound to take every measure, and even perhaps, as time goes on, measures which if they were ventured today would seem very drastic, but which in a few weeks everyone might consider necessary. In the nature of things, that is what is so serious about the situation. It is a conflict which, if it is fought out to a conclusion, can only end in the overthrow of parliamentary government or in its decisive victory. There is no middle course open. Either the parliamentary institutions of the country will emerge triumphant, and the nation which has not flinched in the past through many ordeals, the nation which indeed has always shown itself stronger and nobler and more generous in its hours of trouble, will once again maintain itself and be mistress in its own house, or else on the other hand the existing constitution will be fatally injured. And however unwilling honorable members opposite may be to produce that result, the consequences of their action will inevitably lead to the erection of some Soviet of trade unions on which, whether under parliamentary forms or without them, the real effective control of the economic and political life of the country will devolve. Such a transference could only mean the effectual subversion of the state, and therefore weighing all the consequences, we feel bound to act as circumstances may require. It is hardly to be conceived that any consideration of weakness or fear would prevent ministers or members of parliament from doing their duty to the end. No one can doubt what the end will be, and let me say this one last word before I sit down. If the executive government of the country were at this crisis, and face to face with the situation which has now for the first time developed in our land, for never before has it emerged in this form. If we were in this crisis to show ourselves as incapable and impotent, and unable to make head and to carry on the control and authority which the nation has entrusted us, that would not end the conflict. The government may be brushed out of the way, but other forces, enemies to the parliamentary constitutional system of this country, forces which deserve and require the constant control of democrats in every land, would emerge and carry on the struggle in infinitely more disastrous and tragical forms than that which we are now threatened. From every point of view, including that of our duty in the long interest of the working classes of this country, we are bound to face this present challenge unflinchingly, rigorously, rigidly, and resolutely to the end. The right honorable gentleman opposite said, Is this then the end? The position of the government is not changed in any way. We are seeking peace. We are defending ourselves. We are bound to defend ourselves from this terrible menace which is levied upon us from tomorrow morning, but we are still perfectly unchanged in our attitude as it was last week. The door is always open. The negotiations were interrupted, as they had to be interrupted, as we were getting into the closing hours before this new situation supervened, and a clear and definite statement of the government's position was essential before possibly all means of public communications were cut off. There is no right of there being a gulf across which no negotiator can pass, certainly not. The right honorable gentleman asked me, Is the government taking the position that it will not negotiate? One can approach the government who has authority, and can parlay with them, and it is our duty to parlay with them. But the trade union congress have only to cancel the general strike and withdraw the challenge they have issued, and we shall immediately begin with the utmost care and patience with them again, the long and laborious task which has been pursued over these many weeks of endeavoring to rebuild on economic foundations the prosperity of the coal trade. That is our position. No door is closed, but on the other hand, while the situation remains what it is, we have no alternative whatever but to go forward unflinchingly and do our duty. End of speech. German Rearmament This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Speech given by Winston Churchill to the House of Commons, 2nd May 1935. We have before us in the sphere of foreign policy three new and separate documents of importance. We have the League of Nations Resolution. We have the declarations of the Stresa Conference. And we have the Prime Minister's article in his own organ, The Newsletter. I find myself, I think in common with the great majority of the House, not in one party but in all parties, in very general agreement with the Prime Minister and his Majesty's government upon the measures taken by the government in these three documents. The sentiments set forth in the newsletter about the dangers of German rearmament are akin to those which I myself have expressed several times in the last two or three years, beginning in the autumn of 1932. The Stresa Declaration, including the statement that the three powers, Great Britain, Italy and France, will keep in touch with one another and are pledged to study the maintenance of peace in common, seems to be no more than national safety or national survival requires. There remains the resolution of the Council of the League of Nations, complaining of the growth of German armaments, and of the unilateral violation of treaties. I have seen a great deal of criticism, in quarters where one would least expect it, of France, for appealing to the League of Nations against Germany, and of the League of Nations for giving a faithful verdict upon the questions submitted for their judgment. When I hear extreme pacifists denouncing this act of the League of Nations, I am left wondering what foundation these gentlemen offer to countries for abandoning individual national armaments. We are reminded how, in a state of savagery, every man is armed and is a law unto himself, but that civilisation means that courts are established, that men lay aside their arms and carry their causes to the tribunal. This presupposes a tribunal to which men, when they are in doubt or anxiety, may freely have recourse. It presupposes a tribunal which is not incapable of giving a verdict. Personally, I admire greatly the self-restraint and courage with which France addressed herself to the League of Nations. It was far better, surely, than that she should have dealt in ultimatums, or should have seized territories as hostages, as would have been the practice in former generations. She appealed to the tribunal, which has been set up, and I do also admire the spirit of the tribunal, and of these different countries, some great and some small, drawn from different parts of the world, who showed themselves, according to their lights, prepared to give justice. If we are to be told now it was very wrong for France to go to the League of Nations, and how foolish and tactless of the League to give its opinion, if that view is to be held by those who have hitherto told us to look to this international procedure, then they have absolutely stultified all their arguments. For never again, if that is the case, will nations be prepared to abandon the security which resides in strong national armaments. All that prospect, the only prospect which opens itself before our eyes, of establishing a reign of law and building up a great international structure to which all nations will exceed, that prospect and hope will dwindle and die away. Therefore I am in general agreement with His Majesty's government, upon all these three steps which have been taken by them in the last few months in company with other nations. If I criticize these measures, it is not at all because of their character, but because of their tardiness. Why was all this not done two or three years ago? If the Prime Minister, two years ago, had thought what he now says in his newsletter about the German danger, he need perhaps never have published his thoughts to the world. Instead of lecturing the German nation, now already so heavily armed, he could have imparted his ideas as wise guidance to our own cabinet. If only the French government two and a half years ago, when the German process of rearmament began, had laid their much talked of dossier before the League of Nations and demanded justice or protection from the concert of Europe. If only Great Britain, France and Italy had pledged themselves two or three years ago to work in association for maintaining peace and collective security, how different might have been our position. Indeed, it is possible that the dangers into which we are steadily advancing would never have arisen. But the world and the parliaments and public opinion would have none of that in those days. When the situation was manageable, it was neglected. And now that it is thoroughly out of hand, we apply too late the remedies which then might have affected a cure. There is nothing new in the story. It is as old as the Sibyline books. It falls into that long, dismal catalogue of the fruitlessness of experience and the confirmed unteachability of mankind. Want of foresight, unwillingness to act when action would be simple and effective? Lack of clear thinking? Confusion of counsel until the emergency comes? Until self-preservation strikes its jarring gong? These are the features which constitute the endless repetition of history. All this leads me to the principal matter, namely the state of our national defences and their reactions upon foreign policy. Things have got much worse, but they have also got much clearer. It used to be said that armaments depend on policy. It is not always true, but I think that at this juncture it is true to say that policy depends to a large extent upon armaments. It is true to say that we have reached a position where the choice of policy is dictated by considerations of defense. During the last three years, under the government of Herr Hitler, and before him under that of Chancellor Bruning, Germany worked unceasingly upon a vast design of rearmament on a scale which would give the Germans such a predominance in Europe as would enable them, if they chose, and why should they not choose, to reverse the results of the Great War. The method should be noted. The method has been to acquire mastery in the air and under the protection of that mastery to develop, and it is fortunately a much longer process, land and sea forces which, when completed, would dominate all Europe. This design is being completed as fast as possible, and the first part of it, German ascendancy in the air, is already a fact. The military part is far advanced, and the naval part is now coming into view. For the last two years, some of us have been endeavoring to convince His Majesty's government of the scale and pace at which German aviation was progressing. We debated it in March 1933, on the air estimates of 1934, in August 1934, in November 1934, and quite recently in March 1935. On all these occasions, the most serious warnings were given by private members who spoke on this subject of whom I was one. The alarm bells were set ringing, and even jangling, in good time, if only they had been listened to. This afternoon, I am not concerned with what private members said in giving their warning, but I am bound to address myself to the main statements and promises which were elicited on these occasions from His Majesty's government. In March 1934, we had the first declaration of the Lord President. Any government of this country, a national government more than any, and this government will see to it that in air strength and air power, this country shall no longer be in a position inferior to any country within striking distance of our shores. That declaration was considered of high importance. That was in March, but nothing happened until August, when, under the pressure, not indeed of those honorable gentlemen in this house who were raising this matter, for their pressure could easily have been disdained, but under the pressure of events, the government produced a five years program for increasing the home defense portion of the Royal Air Force to 75 squadrons, comprising 880 machines by 1939. Anyone could see that that was utterly inadequate, and that it bore no relation whatever to the pace at which German aviation was developing, and to the military character which it was assuming. At that time, nine months ago, I urged that without a day's delay, measures should be taken first to double, and then to redouble the Royal Air Force. Anyone can see now, and most of all the ministers responsible, that the policy of doubling and redoubling the Air Force, which I then proposed, was the least which should have been set on foot. If nine months ago these measures had been begun, you would today have been beginning to reap the harvest, and beginning to obtain results, and very different would have been the position. In November, some of us moved an amendment to the address, and I took the responsibility then of making some definite statements, or rather understatements, about the German Air Menace. In order that the government should have an opportunity of consulting their expert advisors, I supplied the Lord President with a praisy in advance, and upon this he made a series of strong declarations. I must read these to the House. It is not the case that Germany is rapidly approaching equality with us. Her real strength is not 50% of our strength in Europe today, as for the position this time next year, that is, November of this year. So far from the German military Air Force being at least as strong as, and probably stronger than our own, we estimate that we shall still have in Europe alone a margin of nearly 50%. It is quite true that my right honourable friend in that second statement said, provided that there is no acceleration in Germany. But it is very difficult to know what is acceleration, when the original speed at which the German Air Force was constructed is not known, and when the final limit at which they are aiming is known. Then came this declaration, the most important that we have had. The Prime Minister has repeated it today. His Majesty's government are determined in no conditions to accept any position of inferiority with regard to what the Air Force may be raised in Germany in the future. Here we have an assertion that the government, with all their sources of information, were convinced that they had, or would continue to have for many months, a large air superiority over Germany, and that in no case would they fail to maintain what has been called air parity with Germany. These assurances were accepted. Mr. Lloyd George spoke in that debate. I remember his speech well. He declared himself completely reassured. He declared himself in agreement with the principle that we should maintain our parity, and said that he was completely reassured by the fact that we still had this air superiority, and that the government intended to maintain it unbroken in the future. The leader of the Liberal Party accepted it, and he too rapidly decided in his own mind that the government statement was right and that mine was wrong. That was in November. Only six weeks ago the Under Secretary of State for Air was put up to say that at that date in March 1935, that is to say last March, we had a substantial superiority over Germany, and that in November of this year we should still have superiority. Only six weeks have passed since then, and surely we are entitled to ask what has happened to bring about the extraordinary change in the whole color and configuration of the landscape. We are told that Herr Hitler made a statement to the Foreign Secretary at Berlin in the conversations, which it now seems we're most fortunately undertaken, otherwise I suppose we should never have known. We have not always been accustomed to depend for our information upon statements, however frank and friendly, that may be made by rulers of other states. All these statements that were made by the Lord President, and later on behalf of the government, and under instructions from the government by the Under Secretary for Air, are admitted to be untrue. I do not say that they were made in bad faith, but they were utterly wrong. They were the reverse of the truth, and more than the reverse of the truth, certainly. If the government statement was that we should be 50% stronger than Germany at a certain date, and we find that they are 50% stronger than we are, it was the reverse of the truth, and far worse than that. Is there a member of the government who will get up now, and say that in November next, we shall still have a 50% superiority? Or that we have a superiority today? No, sir. The whole of these assertions, made in the most sweeping manner and on the highest authority, are now admitted to be entirely wrong. We have had a confession from the Prime Minister today, that the then estimates have been found to be below what is now understood to be the truth. There is a second unpleasant chapter on this subject of which I will merely indicate the title and the contents. The German military machines have all been produced within the last two and a half years. Therefore, they are the latest design. An honorable gentleman has just placed in my hands a telegram, which has arrived and been published in one of the evening newspapers, in which General Göring says, We have no old machines. Our planes are the most up to date in existence. Many of our designs, on the other hand, are seven or eight years old. The average of our machines. These facts are perfectly well known. There is nothing in them that is not known, or I would not say it, is certainly double the age of the designs which have been created in Germany. It cannot be disputed that both in numbers and in quality, Germany has already obtained a market superiority over our home defense air force. But it is the third chapter of this story, which is the most grievous. The rate and volume which the output of German military airplanes has attained is many times superior to our own. The Undersecretary told us six weeks ago that the additions that would be made to our first line air strength, which was then thought sufficient, would be 151. There is reason to believe, as I said on that occasion, that the comparable German output of military machines is between at least 100 and 150 per month. Many people would put it much higher. The German air industry is therefore turning out military machines at perhaps 10 times the rate at which ours are turned out. And those machines are being formed into squadrons for which long trained, ardent personnel are already assembled, and for which an ample number of aerodromes are already prepared. Therefore, at the end of this year, when we were to have a 50% superiority over Germany, they will be at least between three and four times as strong as we are. Behind all this rapid peacetime production lies the industry of Germany fully organized for war manufacture and steadily tending in its character to the condition of war manufacture. This can be drawn upon at any time, gradually, and to any extent which they choose. Where then is this pledge of air parity, and that we should not accept any inferiority to whatever the German Air Force might be? The Prime Minister said today that the Lord President's declaration stands. It stands only as a declaration. The facts do not support the assertion. It is absolutely certain that we have lost air parity already, both in the number of machines and in their quality. It is certain that at the end of this year, we shall be far worse off relatively than we are now. Our home defense force will be, for a long period ahead, a rapidly diminishing fraction of the German Air Force. It may reasonably be urged that the units of the German Air Force, having been prepared in conditions of secrecy, have not at the present time acquired the efficiency of our squadrons in air tactics and information flying. It is very dangerous to underrate German efficiency in any military matter. All my experiences taught me to think that any such supposition would be most imprudent. Anyhow, now that the Germans are openly marshalling and exercising their squadrons and forming them with great rapidity, we may take it that six months of this summer and autumn will amply give them the combined training which they require, having regard to the long, careful individual preparations which have been made. Therefore, any superiority which we may at this moment possess in personnel and in formation flying and in air maneuvering is a wasting asset and will be gone by the end of autumn, having regard to the enormously increased German air strength and the superiority of their machines. The Prime Minister, in his article in the newsletter, used the word ambush. The word must have sprung from the anxieties of his heart, for it is an ambush unto which, in spite of every warning, we have fallen. I have stated the position in general terms, and I have tried to state it not only moderately, but quite frigidly. Here I pause to ask the committee to consider what these facts mean and what their consequences impose. I confess that words fail me. In the year 1708, Mr. Secretary St. John, by a calculated ministerial discretion, revealed to the House the fact that the battle of Almanza had been lost in the previous summer because only 8,000 British troops were actually in Spain out of the 29,000 that had been voted by the House of Commons for this service. When a month later, this revelation was confirmed by the government, it is recorded that the House sat in silence for half an hour, no member caring to speak or wishing to make a comment upon so staggering an announcement. And yet how incomparably small that event was to what we now have to face. That was merely a frustration of policy. Nothing that could happen to Spain in that war could possibly have contained in it any form of danger which was potentially mortal. But what is our position today? For many months, perhaps for several years, most critical for the peace of Europe, we are inexorably condemned to be in a position of frightful weakness. If Germany were the only power with which we were concerned, if we stood alone, compared with Germany, and if there were no other great countries in Europe who shared our anxieties and dangers and our point of view, and if air warfare were the only kind of warfare by which the destinies of nations was decided, we should then have to recognize that this country, which seems so safe and strong a few years ago, which bore with unconquerable strength all the strains and shocks of the Great War, which has guarded this homeland and its independence for so many centuries, would lie at the discretion of men now governing a foreign country. There are, however, friendly nations with whom we may concert our measures of air defense, and there are other factors, military and naval, of which in combination we can dispose. Under the grim panoply, which Germany has so rapidly assumed, there may be all kinds of stresses and weaknesses, economic, political and social, which are not apparent, but upon these we should not rest ourselves. It seems undoubted that there is an effective policy open to us at the present time by which we may preserve both our safety and our freedom. Never must we despair, never must we give in. But we must face facts and draw true conclusions from them. The policy of detachment or isolation about which we have heard so much, and which in many ways is so attractive, is no longer open. If we were to turn our backs upon Europe, thereby alienating every friend, we should, by disinteresting ourselves in their fate, invite them to disinterest themselves in ours. Is it then expected that we could go off with a wallet full of German colonies gathered in the last war, and a worldwide collection of territories and trade interests gathered in the past, when the greatness of our country was being built up, while all the time we should in this vital matter of air defense be condemned to protracted, indefinite and agonizing inferiority? Such a plan has only to be stated to be rejected. There is a wide measure of agreement in the House tonight upon our foreign policy. We are bound to act in concert with France and Italy and other powers great and small who are anxious to preserve peace. I would not refuse the cooperation of any government which plainly conformed to that test as long as it was willing to work under the authority and sanction of the League of Nations. Such a policy does not close the door upon a revision of the treaties, but it procures a sense of stability, and an adequate gathering together of all reasonable powers for self-defense, before any inquiry of that character can be entered upon. In this August association for collective security, we must build up defense forces of all kinds, and combine our action with that of friendly powers, so that we may be allowed to live in quiet ourselves and retrieve the woefulness calculations of which we are at present the dupes, and of which, unless we take warning in time, we may someday be the victims. End of speech. Recording by John Chase Edmonton. The abdication. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Speech given by Winston Churchill to the House of Commons, 10th December, 1935. Nothing is more certain or more obvious than that recrimination or controversy at this time would be not only useless, but harmful and wrong. What is done is done. What has been done or left undone belongs to history, and to history, so far as I am concerned, it shall be left. I will therefore make two observations only. The first is this. It is clear from what we have been told this afternoon that there was at no time any constitutional issue between the king and his ministers or between the king and parliament. The supremacy of parliament over the crown, the duty of the sovereign to act in accordance with the advice of his ministers, neither of those was ever at any moment in question. Supporting my right honourable friend, the leader of the Liberal Party, I venture to say that no sovereign has ever conformed more strictly or more faithfully to the letter and spirit of the constitution than his present majesty. In fact, he has voluntarily made a sacrifice for the peace and strength of his realm, which goes far beyond the bounds required by the law and the constitution. That is my first observation. My second is this. I have, throughout, pleaded for time. Anyone can see how grave would have been the evils of protracted controversy. On the other hand, it was, in my view, our duty to endure these evils, even at serious inconvenience, if there was any hope that time would bring a solution. Whether there was any hope or not is a mystery which, at the present time, it is impossible to resolve. Time was also important from another point of view. It was essential that there should be no room for aspersions, after the event, that the king had been hurried in his decision. I believe that if this decision had been taken last week, it could not have been declared that it was an unhurried decision, so far as the king himself was concerned. But now I accept wholeheartedly what the Prime Minister has proved, namely, that the decision taken this week has been taken by his majesty freely, voluntarily, and spontaneously, in his own time, and in his own way. As I have been looking at this matter, as is well known, from an angle different from that of most honourable members, I thought at my duty to place this fact also upon record. That is all I have to say upon the disputable part of this matter, but I hope the house will bear with me for a minute or two, because it was my duty as Home Secretary, more than a quarter of a century ago, to stand beside his present majesty, and proclaim his style and titles, at his investiture, as Prince of Wales, amid the sunlit battlements of Carnarvon Castle. And ever since then he has honoured me here, and also in wartime, with his personal kindness, and, I may even say, friendship. I should have been ashamed, if, in my independent and unofficial position, I had not cast about for every lawful means, even the most forlorn, to keep him on the throne of his fathers, to which he only recently succeeded amid the hopes and prayers of all. In this prince there were discerned qualities of courage, of simplicity, of sympathy, and above all of sincerity, qualities rare and precious which might have made his reign glorious in the annals of this ancient monarchy. It is the acme of tragedy that these very virtues should, in the private sphere, have led only to this melancholy and bitter conclusion. But, although our hopes to-day are withered, still I will assert that his personality will not go down uncharished to future ages, that it will be particularly remembered in the homes of his poorer subjects, and that they will ever wish from the bottom of their hearts for his private peace and happiness, and for the happiness of those who are dear to him. I must say one word more, and I say it specially to those here and out of doors, and do not underrate their numbers, who are most poignantly afflicted by what has occurred. Danger gathers upon our path. We cannot afford. We have no right to look back. We must look forward. We must obey the exhortation of the Prime Minister to look forward. The stronger the advocate of monarchical principle a man may be, the more zealously must he now endeavor to fortify the throne, and to give to his majesty's successor that strength which can only come from the love of a united nation and empire. End of speech. Read by Kara Schellenberg on June 29th, 2008 in San Diego, California.