Margaret Thatcher

Thursday, September 25, 1975

About this Event

The Heirs of Runnymede—the liberties first expressed in Magna Carta—heirs to a rule of law and a responsibility to pass those rights on to the next generation. Problems in Great Britain, similar to those faced in all western socieities: inflation, unemployment, absence of growth, and public expenditure beyond what the taxpayer can shoulder. Specific details, with reasons and solutions for the problems, and the role of politicians. Effects of the world-wide recession. Psychological effects on people. The challenges facing Canada and Great Britain in a world economy.

An Address by the Rt. Hon. Margaret Thatcher, P.C., M.P., Leader of the Opposition, British House of Commons

Mr. Chairman, Your Honour, Mr. Treasurer, distinguished guests, ladies and gentlemen: this is my first visit to Canada and for me it fulfils a very great ambition.For many years I have met your Ministers, your Parliamentarians, and a number of your people, as they have travelled to Europe and to Britain, and heard of the way of life you have fashioned here.To us in Britain it has always sounded like a great and successful adventure; an adventure in courage, in new technology, and learning to weld together the great variety of views from the several provinces of your country into one nation that is today Canada.


And now, at last, I have come to see these things for myself, and they live up to everything I’ve heard.

Part of the pleasure in coming here is that we share so much in common. We are all heirs to those great freedoms which are at the heart of the western ideal. Heirs of Runnymede–those liberties first expressed in Magna Carta–which have steadily been applied to all our people; heirs to a rule of law, without which there could be no freedom and no security and before which all men and women have equal rights. And heirs to a great responsibility–the responsibility of seeing that the best of those things we have inherited are renewed by our generation, transmitted to the next, and extended to other countries who choose our way rather than one which could lead only to political and economic servitude.

I know that you will want to hear from me about Britain, Great Britain.

It is true that at present we have problems, serious problems, and it would be foolish of me to ignore them. You do not solve problems by ignoring them, but only by facing them, by analysing their causes, by propounding solutions and above all by persuading public opinion to follow a proposed course of action.

Our problems are similar in kind, but perhaps different in degree, to those which other western societies have experienced. They will be familiar to you. They are inflation, unemployment, absence of growth, and public expenditure beyond what the taxpayer can shoulder.

We have all suffered from inflation–indeed that phrase “double-digit inflation” was invented to distinguish the modern level of inflation from the lower rates of the past two decades.

At home, our inflation rate is now 25 per cent per annum–a height most of us would have thought impossible only two or three years ago, and it is a height which would destroy any society if any government allowed it to continue.

As you know, in Great Britain, steps have now been taken to tackle it and the rate will come down next year.

But we have lost eighteen months, and that means not only that we are eighteen months behind some other nations in overcoming the problem, but that during that period it has got worse. Inflation never stays where it is. If you leave it alone, it goes steadily up. Therefore the actions we take now may have to be stronger and go on longer than in those countries which prescribed the remedies at any earlier stage of the disease.

But the problem will be dealt with–indeed we have no choice but to deal with it and deal with it firmly because more than any other nation in the world (with the possible exceptions of yourselves and Japan) we depend on exports for our standard of living.

We have to import half our food supplies and most of our raw materials–although we hope to be self-sufficient in fuel by the early 1980’s. For us to continue a rate of inflation higher than that of our competitors would be to pursue a policy which steadily reduced the standard of living of our people in a world where the standard of living of many others steadily rose.

No government, no political party could or would be able to stand back and see the standard of living of their own people go down when compared with that of others. And for all governments, all political parties in a free society, reality is the most potent factor in making economic policy.

Politicians and economists continually warn of what will happen economically if firm steps are not taken, but somehow people seem to hope that the inevitable will not come to pass. So long as the problems are only round the corner, we seem able to ignore them. Then comes the day when they are actually on the doorstep.

Until that point, politicians have a choice–they can do what is unpopular but advisable, or what is popular but unwise.

After that point, after the difficulties have become a crisis, the unpopular becomes imperative, but because the problem has become a crisis the action is acceptable to the majority of the people. It is often said that “politics is the art of the possible”. There is a danger in such a phrase. We may suppose impossible things which would be possible and indeed desirable if only we had more courage and more insight.

I have always felt that it is the task of politicians to be two or three years in advance of public opinion; to be able to foresee dangers, to warn about them, and then to guard against them. This, it seems to me, is the essential task of a leader–not to follow public opinion from the back but to lead it from the front.

I believe we could and should have taken preventive action against inflation earlier. But now we must fight it and continue to fight it as a top priority.

We are now in a world-wide recession–the United States, Canada, Europe, are all affected and so are the developing nations. The very interesting thing about this particular recession is that it has not been caused in the way other recessions have been caused, namely by deflationary policies.

This time it is the other way round. We have run into a recession through inflationary policies, and those policies have been caused by rates of expenditure far in excess of our capacity to produce the requisite goods. Either nationally or internationally, the money or credit has been found or created to accommodate this level of expenditure. The result of creating money not backed by goods is that the nations have experienced a rate of inflation which could not continue.

There is another characteristic of inflation. Even though each country puts its own house in order, there are times when inflation cannot be contained within sovereign boundaries. What one nation does may spill over and affect the inflation suffered by another nation.

Many firms have been in difficulty because they could not find enough working capital to finance stocks on the required scale, or to pay the rising wage demands, or to replace old capital equipment, let alone to expand. Some have gone out of business, some have had to reduce the numbers employed. But, I repeat, this time it is not deflationary policies which have led to unemployment but inflationary policies.

Although in Great Britain our levels of unemployment at present are a good deal less than other countries, they are still rising and will, we fear, rise further. That is another reason for making the -battle of inflation our top priority.

A few months ago I had occasion to reread the speeches on economic and financial matters of leading politicians of the last thirty years. They all had a similar ring about them. Many of them contained warnings to the effect that “we cannot go on living beyond our means”, “we cannot spend more than 100% of what we produce”, “you cannot get a quart out of a pint pot”, and so on.

These phrases will be familiar to you. We have all said them often. And indeed they are true. Why then have they been ignored for thirty or forty years? I think for many years the truth has been obscured because we have all gone through a period of rapid growth. During that time, it has been comparatively easy for governments to deal with problems by handing out more money through increased public expenditure on many desirable projects.

Some of that greater expenditure was financed out of real growth. Some of it exceeded the growth. Then the growth stopped, but the rise in public expenditure continued, and so did the rise in borrowing. When growth stopped, governments had got so much into the habit of increased expenditure that they went on spending more even though the growth was not there to finance it.

People who have become accustomed to think of government services as “free” are perhaps at last realizing that there is no such thing as a government grant, only a taxpayers’ grant. Now we find that expenditures which looked at in isolation may seem socially desirable have to be judged by their economic effect. Will they in the end reduce the incentive to create more wealth by taking away too large a proportion of present effort and discouraging more? The worst thing one could do in any society is to reduce the capacity of its citizens to create more wealth.

Over the years, the political emphasis has been on greater and greater expectations. The other side of the equation is greater and greater effort. Without the effort, the expectations cannot be realised. Without extra production, extra money will only result in increased prices.

This is the lesson, not only for Britain but for many other countries too. It is a lesson none of us can afford to ignore.

From time to time, we move into a different world, a world in which we look not only at our own national problems, but we look at international problems as well. This is just such a time. For it has been brought home to us what we have known intellectually for years–that the world’s resources of raw materials are finite and that some of the solutions to our problems may be in the direction not of using more but of using less. Further, the developing nations who have some of these commodities, though by no means all, expect their standard of living to rise at a faster rate than in the past.

In the last session of the United Nations we saw a degree of co-operation and mutual understanding greater than we have ever seen in the past. The interdependence of nations is now becoming a reality as well as an ideal.

Canada and Britain have a great deal to contribute to this forward movement. We are both part of the Atlantic societies–societies which have shown the World how much increased prosperity can and does result from giving rein to freedom of opportunity–a freedom based on individual choice and decision. We both inherit the European tradition–a European history which not only inspired our democratic ideals but which gave us an artistic culture and a scientific inventiveness. And it gave us something else–the capacity to use those benefits for our peoples as a whole.

There were other civilizations which invented turbines for printing presses long before the European culture and tradition. But the difference was that when they were invented in Europe, their potential was realized and harnessed for the benefit of the civilization as a whole. From that moment of time, European civilization of which we are all a part went forward faster than any other previous nations.

We are both senior members of the Commonwealth of Nations, a commonwealth which because of its diverse interests and experience, because of the way in which it has met and overcome many difficulties, because of its ideals, tolerance and humanity, has much to offer to the counsels of the world. We are proud that we both share these traditions.

I am told that in the Lester B. Pearson building in Ottawa this tribute to Mr. Pearson appears: “Sooner and better than his contemporaries he had come to understand that the world, for all of its diversity, was one . . . that no nation, even the most powerful, could escape a common creaturehood and a common peril.”

This is one of the challenges of our time, and it is a challenge which we in Canada and Britain can and shall meet. The other challenge, perhaps an even greater one, is to keep faith with the liberties and freedoms our forefathers won.

I have spoken a great deal about economic matters. The dangers of these matters lie not only in the financial consequences serious as those are. The greater danger is that society may lose faith in itself, and become uncertain of its future. I have seen this, as we have struggled with economic problems, as we have struggled with a high rate of inflation. I have seen it in other nations. What has happened? They are not only questioning, they are becoming uncertain, unsure.

I see no real cause for any such loss of confidence. The western societies have provided opportunity and incentive, and because of that they have attained a standard of prosperity and a standard of living unknown in any other political system. When I travel to the Iron Curtain countries I find that almost each and every one of the people I meet there says, “We have produced so many tractors, built so many schools, so many hospitals. We have raised our standard of living by so much.” They have far less to boast about than we have in prosperity. We have far more to boast about: the standard of living that has been reached through an opportunity and incentive society. I beg of you to boast about it and not criticise it.

We have done more than just create an increased standard of living. We have created an increased standard for living. Because in the western societies we have founded our political constitutions on respect for human and individual rights, we have attained that liberty which is the true mark of civilization. No free country has had to build a wall to keep its people in. Problems there will always be, but so long as we keep faith with these things, so long as we keep confidence in ourselves, we the heirs of Runnymede will always have the vitality to pass on to others the great freedoms bequeathed to us.


Our distinguished visitor and speaker was thanked by Sir Arthur Chetwynd, Bt., Immediate Past President of The Empire Club of Canada.