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Orders Of The Day

Volume 436: debated on Friday 18 April 1947

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Cotton (Centralised Buying) Bill

As amended (on the Standing Committee), considered.

11.5 a.m.

Mr. Speaker, may I ask whether your intention is to call both the new Clauses standing on the Order Paper in the name of myself and my hon. Friends? I would suggest that if we could discuss them both together, so long as we are enabled to vote upon them separately, it might meet the convenience of the House.

I was proposing to call the first new Clause, because I realise that although it had a long Debate in Committee, it raises a point of major importance from the point of view of the Opposition. I would suggest, therefore, that both the new Clauses should be taken together, and I will call them separately for a Division. In view of the long discussion in Committee, I hope this morning's discussion will not be unduly long.

New Clause—(Compensation For Injury To Business)

(1) Any person who was immediately prior to the third day of September nineteen hundred and thirty-nine engaged in the business of raw cotton merchanting or of raw cotton broking and who shows that by reason of the provisions of this Act the resumption by him of such business in whole or in part is rendered impossible shall be entitled on making a claim for the purpose to be paid compensation by the Commission in respect of the pecuniary loss thereby suffered by him.

(2) The amount of compensation referred to in the foregoing subsection shall be a sum of not less than twice or more than five times the amount of the average of the annual profits, computed for the purpose of income tax, for the three complete financial years of such business next preceding the said third day of September nineteen hundred and thirty-nine arising out of the whole of the said business or of the part thereof as the case may be rendered impossible of resumption by the provisions of this Act.

(3) A person shall not be entitled to compensation under this Section unless he is able to show that it was his bona fide intention of resuming the business aforesaid and that he would have resumed such business but for the provisions of this Act or of any measure having the force of law and having substantially the same effect as this Act.

(4) In the event of any dispute arising out of or in connection with any of the matters aforesaid such dispute shall be referred to an arbitration tribunal to be appointed by the Lord Chancellor for the purpose of the determination of such disputes.—[ Mr. Lyttelton.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I put in a very earnest plea that the Government should accept this Clause. This and the next Clause on the Order Paper—[Provisions as to transfer and compensation of employees]—deal with two separate aspects of the subject, the first dealing with the loss of business as a result of the closing of the Cotton Exchange, and the second Clause dealing with the loss of employment to employees. First of all, let me address myself to the question of loss of business. I am sure that neither the right hon. and learned Gentleman the President of the Board of Trade nor the hon. Gentleman who now holds the office of Paymaster-General will take it amiss if I say that their arguments on the Second Reading of the Bill and on its Committee stage have been very perfunctory and wholly unconvincing on the subject. I was under the impression that where the State took over a business or dispossessed those who were carrying on such a business, the Socialist principle was that they should be paid, at least, compensation. Indeed, I believe some hon. Members have gone so far as to say that fair compensation should be paid. It is the feeling of everyone on this side of the House that, in many instances, the compensation has not been fair. But that is not an argument on which I need embark this morning, because I am concerned chiefly with the principle, and not so much with the method of assessment. The President of the Board of Trade on the Second Reading used these words:
"In this case, we are not taking any property or any business."—[OFFICIAL REPORT, 2nd December, 1946; Vol. 431, c. 156.]
That, I submit, is an entirely incorrect statement. It is quite true that he is not taking much property, because the property side of the cotton broking or merchanting business consists largely of office furniture and telephones, so that, with that reservation, I should accept the first part of the right hon. and learned Gentleman's statement that he is not taking any property. But I cannot agree that he is not taking any business.

The present Paymaster-General made things much worse by trying to explain what his then chief meant. The hon. Gentleman's argument was largely devoted to the impossible task of trying to show that no damage had been inflicted upon cotton brokers or merchants, who were, said the hon. Gentleman, quite free to act as they wished as brokers for the spinner. But under Subsection (1) of the new Clause which I am moving the merchant could only receive compensation for that part of his business which had been destroyed by Government action, and not for that part which subsequent events or actions might preserve. During Committee the Paymaster-General used these words:
"It may be argued, of course, that the function of importing raw cotton was their prime function,"—
it has not only been argued, but it is the fact; it was their prime function—
"but one must remember that they have been prevented from doing that ever since 1941."
This is a really astonishing line of argument. We all know—and, indeed, I should have to confess to a great responsibility for some of these measures in the war—that many businesses were shut down in the war, or concentrated. Many small shopkeepers, with one-man businesses, were called to the Forces, and, consequently, their businesses were, in the words of the hon. Member, "prevented" in 1941, and in subsequent years. Some of the shutting down of small retail businesses took place in a very simple way. The proprietor was called to the Forces, and, consequently, his business could not be carried on. In other cases the Board of Trade concentrated production in certain sections of the industry, and, consequently, plants had to be shut down.

However, over all these matters we took the most careful steps, by licensing new retailers, to secure that the opportunity for restarting their businesses was kept open to ex-Service men. Not only did they get, so to speak, a priority for licences to restart their businesses, but great care was taken by the Board of Trade to prevent new retailers coming in, in an unlicensed way, and setting up shop where they had previously carried on their businesses, and so destroying the goodwill. Those measures, as far as I know—and I remember it quite well—at the time had the support of every quarter of the House. They were based on a very sensible idea of justice. Look at what the Government are doing in this case. They are doing exactly the opposite. They are taking every step to see that, so far from being able to continue a previous business, there shall be no possibility of that business being continued. Later in his speech the hon. Gentleman said:
"It is a mistake to represent this Bill as if it were the first and only Measure to close the Liverpool Cotton Market."
That is another very tenuous line of argument. That is not the point at all. The point is, that this is a Measure to close the Cotton Exchange in perpetuity, and we require no information from the hon. Gentleman to tell us that the Cotton Market was, in fact, closed down during the war. It was; but the point is, that in other businesses which have been closed down during the war the opportunity of restarting them has not only been given, but, in certain cases—and particularly those which deal with ex-Service men—every facility which the Government could place at their disposal has been placed at their disposal, so that they should resume their business without interruption, and, as far as possible, without competition coming in from those who were not previously engaged in the business. The rest of the hon. Gentleman's speech—and I do not think I am doing an injustice to his argument—was designed to show that the Government had committed so many injustices in other cases that just one other injustice hardly mattered. His argument was directed more to showing what hardship had been incurred in other cases than to showing that there was no injustice in this case. He actually mentioned the Pembroke Dock. No compensation was paid when the Royal Navy transferred its business from Pembroke Dock. But that is no analogy at all. This was always a Government business, and in their disposition. Here, what is clearly happening is, that the Government are taking over other people's businesses, and, incidentally, following the now common Socialist practice of creating a whole new series of offences.

Could the right hon. Member give us some idea of exactly what tangible assets are being taken over?

11.15 a.m.

I have already dealt with that point. It is an interesting point, because it shows how far hon. Gentlemen opposite are from understanding the root of this matter. The assets are not only tangible. I have already explained that in the business of cotton brokering or merchanting, the tangible assets, unlike other industrial concerns, are confined chiefly to office furniture and telephones. Therefore, there is no means by which a man's tangible assets, and giving him any real capital to start again in business, can be determined. If it was plant it would be different. The real asset which a cotton brokering and merchanting firm has is a world-wide connection in cotton, and skill and "know-how." I am sure the hon. Member would be the last person to deny that brains are an asset in human life, just as much as machines. Those are the matters for which we are asking compensation.

The import of raw cotton, and its sale and distribution, was the main business of a large number of people who were members of the Liverpool Cotton Exchange, or who were affiliated to or associated with it. I ask the Government to consider the plain fact—and this will rather touch upon the point of the hon. Member for Oldham (Mr. Fairhurst)—that they admitted that a road haulier who is operating his own fleet of lorries under a nationalisation scheme is not only—and this is the hon. Member's point—entitled to compensation—that is the genteel word which is used, but I should prefer to call it a fair payment—for the actual lorries which are taken over by the State, but is also to be entitled to compensation for the loss of his business, for what is technically known as the goodwill, and a number of years' purchase of the profits being added to the physical value of the assets. The Government have admitted that, under a nationalisation scheme, the road haulier is not only entitled to what they call fair compensation—but which I should call a fair price—for the actual lorries being taken over by the nationalised authority, but also to so many years' purchase for the loss of the profit which he had been earning by operating his own fleet. It is in the second part of this compensation that the true analogy lies between the position of the road haulier, who is dispossessed of his business by the action of the Government, and that of a cotton broker, whose business is being taken over by the Government.

I must say I have subjected other parts of the speech of the Paymaster-General to a very close scrutiny. I can sum up by saying, that the first part of it consisted of saying that because the Cotton Exchange was closed as a war necessity in 1941 the fact that the Government intend to close it for ever, and to prevent, under severe penalties, the import of cotton by private individuals, the Government's action is one which does not attract compensation for those dispossessed of their livelihood. The second part of his speech—which, not surprisingly, is completely at variance with the first—was designed to show that the Government had committed so many injustices in the past that one more will not make very much difference. I say that the whole attitude of the Government on this matter is one of cynical opportunism. The Paymaster-General ended up his speech by saying:
"The reason the Government has never recognised liability to pay compensation for loss of business or goodwill caused by changes in Government policy in regard to economic matters or because of widespead economic changes over which the Government have had no control."—[OFFICIAL REPORT, Standing Committee C; 11th March, 1947, c. 331–2, 338.]
But this is not a correct statement at all. If so, no compensation would have been granted to the road hauliers. Or is it to be regarded as a change of Government policy on an economic matter, that the road hauliers should be incorporated in a national service and can no longer carry on their business as private individuals and not so when the Cotton Exchange is closed?

So far I have dealt only with the extremely tenuous nature of the Government's argument for rejecting compensation. I want to end by making a positive appeal. It is quite true that the number of people affected is very small; but I know quite well that hon. Members on both sides of the House do not regard as important whether their numbers are small or not; and whether they are politically vocal or not is a matter of no concern to hon. Members in any part of the House. We are here trying to follow a simple line of justice. We have all received—I have not myself, because I do not sit for a constituency which has any concern with cotton, but hon. Members in the North-West of England have received—not a very large number, but a fairly large number of letters, some of which are really heartrending.

Some play has been made by some hon. Members opposite with the fact that the first new Clause, as drafted, would confine compensation to those directly concerned in the business of cotton merchanting or broking, but this morning we have put down two new Clauses, one of which deals, as I said at the beginning of my remarks, with the loss of business, and the other of which deals with the loss or diminution of employment. I think it is probable that the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock), who, I am glad to see, is in her place, would readily vote for the second new Clause, and would be equally ready to vote against the first.

In the second new Clause there is mention of superannuation. Is the right hon. Gentleman aware that there is no superannuation scheme at all for the brokers or the employees, so far as the Cotton Exchange is concerned? There is no superannuation scheme of any sort

The hon. Lady has interrupted me and I am trying to reply. It is not a matter of the Liverpool Cotton Exchange, but the method of employment by cotton merchanting or broking firms, and in many of these firms, as the hon. Lady knows, there are superannuation and pension schemes.

I know myself of two or three of the largest brokers who have such schemes. Naturally, nobody is proposing to compensate people for something they have not got. All we are proposing to do is to compensate them for something they have got. I was just saying, when the hon. Lady interrupted me, that I felt sure she would have no difficulty in voting against the first new Clause, because that would do justice only to employers and partners, and she does not necessarily feel so keen about them as she does about compensation for employees. But that is not a view which I share. I do not care in the least whether there is any vested interest or not, or who these people are: I am only directing my remarks to try to get fair compensation for all those whose business has been taken away, or whose employment has been cancelled, or whose employment has been diminished as a result of an entirely arbitrary piece of Government action which has closed the Liverpool Cotton Exchange. If I cannot get, the support of the hon. Lady on the first new Clause, "I hope I shall get it for the second new Clause, because in this sad world I follow the old adage that half a loaf is better than no bread, and if we cannot do justice to all concerned, at least let us see that the employees are protected in this matter. At any rate, however hostile one may be to the Liverpool Cotton Exchange, however much one may disregard the great services which the Cotton Exchange has performed in the growing and spinning, weaving and finishing industries, the wickedness of this Exchange, in the opinion of the hon. Lady, can scarcely be visited upon the employees; and, therefore, they are, perhaps, entitled to even more consideration in her mind than the others.

The new Clause dealing with employees largely speaks for itself. It seeks, in general, to compensate employees for loss or diminution of their employment. I must admit that, in some cases, particularly with regard to the diminution of employment, difficulty may arise upon the assessment, and, therefore, this new Clause seeks to set up an arbitration tribunal appointed by the Lord Chancellor for considering those particular cases. I do not think that where there is a total loss of employment it will be very difficult to assess the compensation to which the employee is entitled, and I do not think that in those cases the arbitration court will often be evoked. But I admit, as I have already said, that with regard to the diminution of employment there may be some cases which may require careful consideration by an expert body. I come now particularly to the second new Clause, Subsection (2).

The point to which I wish to draw the special attention of the House is that of the compensation of ex-Servicemen. I have already gone into the ways in which the small retailer has been protected in the Board of Trade scheme. I would also draw the attention of the House to this fact, that, with the assent of all parties, we have been particularly tender on the subject of the reinstatement of ex-Servicemen in their employment. In fact, a statutory obligation has been imposed upon employers to reinstate those whose employment was interrupted as a result of the war, and that obligation has been very gladly and fully met. Now, in this case there is no question of reinstatement, because the Government have destroyed the business in which these ex-Servicemen would otherwise have found employment. I think that the Members who represent constituencies in Liverpool and Manchester are those who should deal particularly with cases of hardship, about which they themselves have had letters, and which have been brought to their attention.

I should, however, like to say that loss of employment weighs particularly heavily upon the shoulders of those who have reached middle age when they are released from the Services. They have the greatest difficulty, first of all, in finding new employment. Secondly, I am ashamed to say, having passed middle age myself, that they find it particularly difficult to adapt themselves to learning it. Thirdly, of course, there are those whom it is particularly difficult—and this is the point in which the hon. Lady will be interested—to fit into the pensions schemes their new employers may have in force. The cost of bringing a man who is 5o into a pension scheme may often be the reason why his claims for new employment are set aside in favour of those of younger men for employment, who have more years to run than the older men. If he were to receive a pension—or compensation rather—on the scale laid down In this new Clause, he would get a breathing space, an opportunity for training himself, and time to look around for new employment. But the argument is hardly less strong that the compensation should also be paid to the younger men, who may wish to set up in businesses of their own; and the small capital they would get, as a result of compensation, would be a considerable help to them in establishing new lines of business. Those are the main reasons why we press strongly that the Government should reconsider their attitude on this matter of compensation.

11.30 a.m.

Unless some such Clauses as these are accepted by the Government, the most heartless injustice will be inflicted—a man's employment is taken away, his chances of reinstatement in a similar business are practically nothing, and he is to receive no compensation. The impression, which I think is a false one, will be left in peoples' minds that these injustices are being inflicted because the number of people who have suffered are very small, and the political consequences of disregarding common justice are not likely to be great. That is not a reason which, in my experience, weighs with hon. Gentlemen opposite. I beg of them, if they cannot accept the first Clause, to consider the second one very sympathetically. It is true that the first Clause would largely compensate those who vote for us. It is true that the second would compensate those who vote for hon. Gentlemen opposite and for us, but that is no reason why we should not try to pursue a path of common justice to all the people whose livelihood has been removed by an arbitrary action, namely an Act of Parliament.

I wonder whether the right hon. Gentleman would clarify the Clauses? Subsection (1) of the first new Clause refers to "any person who was engaged." There is no definition. Would he tell us what it is intended to mean. Does it include the directors of a limited company, the managing director, the secretary, or professional persons engaged on a retainer? Does he suggest that where a person was engaged prior to 1939 and is now engaged in some very prosperous business elsewhere, he should get compensation, or are the same provisions to apply as those given in the second new Clause which provides that in the case of a workman, the fact that he is in employment now apparently disentitles him to compensation?

I feel that he is much more able to answer them than I am. It means those who are

"… engaged in the business of raw cotton merchanting or of raw cotton broking."
As far as I know, there are practically no limited companies. One of my hon. Friends says that there are none at all. Therefore, the hon. Gentleman's question about managing directors, and so on, does not arise. It means all those who are engaged in the business, whether they are keeping a ledger or whether they are a partner. It means all those engaged in the actual business of cotton broking and merchanting. It does not extend beyond that.

I think that in general the sampling of cotton, although it may be slightly reduced, will not be affected by this Measure. I imagine that the Government will employ that part of the industry in order to sample and handle cotton. Therefore, this is confined to those who were engaged in cotton merchanting and broking. Then the hon. Member for Oldham (Mr. Hale) asked whether compensation would be payable to those who have now become engaged in a more profitable line of business. I think that if somebody has lost the business in which he was engaged, and he is now engaged in another one, that is no reason why he should not receive compensation for what he has lost. However, if the Government accept the Clause and choose to confine it only to those who have not since been able to find another business, I would, reluctantly, be content with that. If something has been taken away from me and I have been able to find something else, there is no reason why I should not receive compensation for what was taken away. If the hon. Member takes away my house and I buy another, why should I not be paid compensation for the one which was taken away?

have listened most attentively to the very reasonable speech of the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). It was one of the most reasoned speeches I have heard him make on this subject, which I have followed very carefully through the Second Reading and the Committee stage. Compensation has been a question which has come up repeatedly throughout the various stages of this Bill. In our discussions we have always come up against one particular point. There is some equity in the argument advanced by the spokesmen of the Liverpool cotton brokers who sit on the Benches opposite. The weakness of their argument for compensation is that it is so intangible that it is impossible for anybody to bring forward a claim that can be met.

Yes, I will. The reason is that we have the residue of the people who were engaged in the cotton broking and merchanting industry at the beginning of the war concentrated into about 80 firms. The right hon. Gentleman made some play on remarks made by my hon. Friend the Paymaster-General on the last day of the Committee stage, when he referred to the closing down of the Liverpool Cotton Exchange in 1941. The right hon. Member for Aldershot has had quite a good innings on that this morning. At this stage I do not intend to throw a spanner into what should be, or could be, an amicable arrangement which I hope we will reach—that this Clause should be withdrawn—by referring to what the brokers and merchants in Liverpool did when they were approached by the then Government, for the good of the country, at the beginning of the war. I will not refer to that because it is not to their credit.

As the cotton merchanting industry was reduced to about 80 firms during the war, I think that, remembering that these firms were engaged in the futures market, in cotton, copra, cocoa and a whole range of commodities, it would be impossible to be definite on the point of how much was lost by a firm. If a firm was engaged in the futures market and probably had a line in a raw commodity, say cocoa, it would he impossible to get a basis for compensation—

Let me finish my argument. As it would be impracticable to meet a claim for compensation, and as the claims have been advanced on such poor and intangible grounds, I think that it would be helpful if we could have a statement from the Minister of the view likely to be taken by the Board of Trade and the advice that could be given to the cotton purchasing Commission. It would be interesting to know whether the Board of Trade are in favour of the merchants being retained. Make no mistake about it, I am in favour of that. [An HON. MEMBER: Some of them".] Yes. There is no doubt that they can, and will, fulfil a function if they are retained. If they were retained with a minimum such as I suggested on the Second Reading, so that selection can be given to the mills in Lancashire, as it has been given before, we could have a set up which would be more satisfactory to the cotton merchanting side of the industry. There has been a lot of talk about bulk purchase solving the problems of the cotton trade, but that is nonsense. I would say the same of much talk from the other side of the House about the damage that can be done to the cotton textile industry by the setting up of the cotton buying Commission.

I would ask the Minister to give us a guarantee that the Board of Trade will make strong representations to the Raw Cotton Commission that the merchants should be allowed to carry on, so that I would ask the Minister to give us a guarantee that the Board of Trade will make strong representations to the Raw they will be able to give Lancashire the service that they have given in the past, retaining the skill and knowledge of a large number of people who can serve the cotton industry very well.

I support the proposed new Clauses and I welcome very much the reasonable speech that has just been made by the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I would remind him that we must deal with the situation as it will be under the operation of the proposals in the Bill. The Bill will leave to the Liverpool Cotton Market only the functions of acting as selling agents for American shippers and of acting as buying brokers for the spinners. I think the hon. Member will agree with me that that is a very small proportion indeed of the business of those who have been engaged in this trade before. In view of that exiguous residuum we think there should be compensation for the loss that has been sustained. The hon. Member put his finger on the point, which is, that the merchanting of cotton is all-important. The point of the Bill is that it puts an end to the merchanting activities of the cotton market.

The hon. Member is quite right so far as restriction of brokering and the agencies is concerned, but the Bill does not restrict the sale of raw cotton.

I accept that correction, which is true. What have been called third country dealings are left, but I doubt very much whether that side of the business will develop very much. The Liverpool market is gone. The Bill deals with the case of the principals who have lost their businesses, to which they have devoted in the past a great deal of time, training and money, and they have suffered, as the hon. Gentleman has said, substantial loss.

I am sorry that the hon. Member for the Exchange Division of Liverpool (Mrs. Braddock) is not in her place, although I see her beyond the Bar. I wish to devote the next portion of my remarks to her views on these matters. The hon. Lady and the hon. Member for Nelson and Colne (Mr. S. Silverman) have always drawn a distinction between compensation for the employer, the principal of the firm, and compensation for the employee. The two proposed new Clauses have really been drafted to cater in part for that rather curious differentiation in their minds, in the hope that if the hon. Members could not bring themselves to give the compensation deserved in equity by principals or members of firms, for the most part small men who have made their own way, at least they might support a plea for com pensation for employees.

11.45 a.m.

In fact, the hon. Lady herself said in Committee that if it could be proved that employees were totally unemployed because of the closing of the Exchange there might
"be some consultation and some consideration on the basis of compensation, but not where alternative employment can be found."—[OFFICIAL REPORT, Standing Committee C, 11th March, 1947; c. 308.]
That statement rather disposes of the point about alternative employment, which has been raised on the other side of the House, because in the hon. Lady's opinion it would be just and fair that some system should be devised of compensation for people who have been totally deprived of their occupation by the passing of the Bill.

The question of superannuation schemes has been raised. Many firms are pensioning old employees and dependants, but when those firms go out of business they will not be able to continue to do so. I know of one case in which six old employees are being pensioned by the firm which used to employ them. If that firm goes out of business those pensions will have to stop. It is for that type of person that we ask compensation. I agree that there are practical difficulties in the determination of this matter, but it is extraordinary what a tribunal can do when it is given some funds and a problem to solve. I do not think there is the slightest difficulty about a tribunal being given certain directions and arriving at a fair basis for compensation. Without Clauses providing for compensation, the Bill, besides being against the interests of the country, will be mean and shabby.

The Opposition are always concerned with compensation, when we are dealing with questions of taking over organisations by the State or schemes of nationalisation. All they are trying to do is to get as much as possible from the State for those whom they represent. If the State had taken over totalisators for dog racing and horse racing, the Opposition would come here demanding that bookies and touts should be compensated. Most people in Liverpool have looked upon the Cotton Exchange in Liverpool as nothing more than a gambling institution.

Is the hon. Member confusing the words "Liverpool" and "Littlewood's"?

Not at all. I happen to have lived all my life in the Liverpool area and I represent a Liverpool constituency. I worked for about 16 years as an official on the docks, and I know something of the subject. I probably have handled more cotton than the hon. Gentleman has seen. I can truthfully say that I have received cotton, delivered it, seen it sampled, got it out to the samplers, and all the rest of it. I know what I am talking about, and I know something of the firms who have handled it. It appears to me that they are asking for something which cannot be justified. The only asset that has been mentioned this morning was the telephone, and even that belongs to the State, as has been pointed out. I would ask the Minister to give us something more specific concerning the likelihood of some of these firms mentioned by the hon. Member for Ashton-under-Lyne (Mr. Rhodes) continuing in business. I want to know what it is they are going to do. I am concerned, in the taking over of the Cotton Exchange and its business, whether or not there will be any limitation to the trade in cotton which has gone on for all time. We are not limited, in the amount of cotton which we import, to the cotton which we use in this country. I know from experience that in normal times consignments of Egyptian cotton which came to Liverpool and the firms which shipped it—

It is suggested that there are some firms who are not compensated, and I am trying to get from the Minister information as to whether these firms, who are likely to be outside the compensation, are to be retained on the particular work which hitherto has passed to Liverpool. So far as I know, that has been done by the cotton brokers—that is the cotton that came to Liverpool and other ports, which was transhipped to other countries. One-tenth of the cotton which came from Egypt passed through Liverpool, and it was not sent to the Lancashire mills, but transhipped to Philadelphia or Boston. Are the Cotton Commission to continue to do that? It is not only Egyptian cotton, but the cotton of other countries—I suppose there are 20 or more countries which import cotton. Will any of the firms hitherto concerned now be retained to buy cotton, so that they can re-export it? I feel sure that the business should be retained, because it is valuable. We shall have the earnings from the shipping companies, we shall get the varieties of cotton, and will have the handling of it. If we buy cotton in sufficient quantities to sell it, there is that margin of profit, out of which cotton brokers did so well in the past, and which the Commission will be wise to continue.

I was surprised that the hon. Member for Kirkdale (Mr. Keenan) was opposed to the justice of the claim which we seek to establish. With his knowledge of this industry and the people engaged in it, I think that he might have had a little more consideration for the interests involved. He drew our attention to such examples as the totalisator, but, surely, there is no comparison. This is a business which has not been established for two, three or 20 years. It is not a business which is immaterial to the welfare of the community. It is an industry which has grown up over 100 years, and into which much skill and experience have been put, and upon which a large number of people have relied for their livelihood. We, on this' side of the House, contend that during the war sacrifices were demanded of those who conducted this business. The time has come when those people are entitled to justice. I wish some hon. Members opposite, to whom I think justice is not unattractive, would consider some of those who will be affected by this Bill. I am going to stay a little later on this afternoon with such a man. He served seven years in the Navy, and his sole business experience is confined to dealing in cotton. He has established himself with a wife and three children. Now he returns from the Navy with no experience at all outside this business, and he has little or no prospect of employment. He and his wife are turning over in their minds the prospect of emigration. He sees nothing before him but a blank picture. It is not easy for a man who has reached the age of 35 to start afresh in a job or business. He is not welcome when he has no experience, and he cannot start afresh and establish himself by means of further education or grants.

Is not the hon. Gentleman aware that we have thousands in exactly the same position in Scotland at the present time?

I am glad that the hon. Member for West Fife (Mr. Gallacher), whose belief in justice I know to be extremely profound, has drawn my attention to the fact that there are a large number of people in Scotland in such a position. I sympathise with the people in Scot- land who find themselves without livelihood. It is perfectly true that there are many men who have come back from the Services who, through circumstances which are outside their control, and which are outside the control of the community, are unable to get a start again in life. Here is a case where the community is denying these people from getting a start in life by the deliberate and positive action of the Government. Surely, the hon. Member for West Fife is prepared to draw a distinction between what happens as a result of harsh or inexorable economic changes and what happens as a consequence of deliberate action on the part of the Government. I believe that even Socialism does not need to stoop so low as it appears to be doing in refusing these people compensation. The amount, after all, is not large; the administrative difficulties could be overcome. If one seeks the easy way out of this so far as administration is concerned, surely, a global sum could be allocated in compensation and left to the industry to allocate the proportions to the various firms. I suggest that justice demands that this action should be taken. I hope that the Paymaster-General will show, when he replies to this discussion, that the Government are not prepared to further besmirch their record by the action which they propose to take at the present time with regard to compensation.

12 noon.

The Debate has inevitably traversed ground covered by the Debates which took place in Standing Committee, and those Members who were in the Committee have repeated some of the arguments which they then made. I hope that the House will, therefore, forgive me if I repeat some of the things which I have said before. It may be to the advantage of Members of the House who were not Members of the Committee to know our arguments. In the first place, I want to point out and emphasise that many of the functions hitherto performed by merchanting firms may, under this Bill, be continued by them. That is one of the main arguments we adduce. It is true that they will not be allowed to import cotton into this country. That will be a monopoly of the Raw Cotton Commission, but there remain many functions which they ate allowed to perform. As I said during the Committee stage, there is nothing to prevent merchanting firms continuing to act as agents for the sellers of saw cotton abroad. As I have already explained to the Committee, merchanting firms do act as agents for the selling of Indian and American cotton. There is nothing to prevent that continuing.

The sellers of Indian and American cotton in India or America may use the Liverpool merchants to sell their cotton to the Cotton Control or in future to the Commission. They may also act as brokers for the spinners in this country in so far as the spinners choose to use them. At present some 6o per cent. to 70 per cent. of the cotton sold by the Control is sold through the agency of the brokers acting for the spinners, and if the spinners value their services there is nothing to prevent them continuing to use them. The merchants may also buy raw cotton from the Commission for the purpose of exporting it abroad. The hon. Member for Kirkdale (Mr. Keenan) referred in particular to this question of re-exports, or trans-shipment as he called it, and he asked for an assurance that there was nothing in the Bill to prevent it continuing. If he will look at Clause 1 (2, b) he will see that an obligation is laid upon the Commission to see that such quantities, growths, types and qualities of the raw cotton which shall be brought in will be consistent with meeting the requirements of British industry first and, secondly, of the export trade. They have a definite obligation to look after the interests of the re-exporting trade in buying their cotton from abroad.

In Clause 3 (3, a) there is a reference to the possibility of the Commission making contracts of sale which provides that the raw cotton sold to any person thereunder is sold with a view to exporting it from the United Kingdom. We have every intention of protecting the interests of the re-export trade. We see that it is a source by which we can earn foreign exchange for this country, and it is also an economic form of transport so that if there is a shipload of cotton to this country some of it may be trans-shipped and sent somewhere else. There is every intention of continuing that. I do not want to delay the Com- mittee nor to develop the arguments at any great length, but the first point is that we must remember that a substantial part of the business carried on before 1941 by firms of this kind can continue to be carried on far will continue to be carried on in so far as they satisfy the needs of the brokers.

The non. Gentleman used the term "very substantial." Does not he admit that the functions to which he has referred amount in total to a very small proportion of the form of business previously done?

I have no figures, neither I expect, has the hon. Gentleman the Member for Wirral (Mr. Selwyn Lloyd) to determine the exact proportion, but I will not admit for a moment that it is negligible.

Does not the Minister realise that the closing of the market in Liverpool must result in the stopping of much of the business attached to it before?

No, I do not admit that at all.

Secondly, I want to put forward this argument so that it may be recorded, because I do not need to delay the Committee with it, as it has been admitted by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). The argument is that the functions which are prohibited under this Bill have been prohibited since 1941. He said that there was no need to inform hon. Members opposite that the Liverpool Cotton Market was closed in 194I. I said "Hear, hear," because I was glad to know that they understood it. I am quite well aware that the right hon. Gentleman understood it all along, but from some of the speeches which have been made by some of his supporters in Committee and in the country and from some of the articles published in the Press, it is perfectly clear that opponents of this Measure have not appreciated that the Market was, in fact, closed in 1941. What the Government are doing under this Bill is to continue a system which has been carried on since then.

I have not interrupted anybody this morning, and I think that it would be better to leave me to develop my arguments all together and then I will gladly listen to any interruptions.

The decision to close the Liverpool Market in 1941 was similar to industrial concentration. That again the right hon. Gentleman the Member for Alder-shot has already admitted, but he seemed to suggest that because, theoretically, the opportunity to continue in business was still open to some of those concentrated firms their case was substantially different from that of the Liverpool firms. I do not agree. It is true that the opportunity to continue the importing function will no longer be there for the Liverpool firms, but many of the opportunities which concentrated firms lost for years with no payment of compensation of any kind whatsoever may never be regained and nobody proposes to pay compensation to them. I suggest quite seriously to the Committee that there have been similar losses—and one does not deny that there are losses—incurred as a result of import licensing, of requisitioning of premises for other uses, the retention of those premises by the Government, slow derequisitioning and all that kind of thing. I still feel that the analogies I introduced of the conversion of the Navy to oil burning instead of coal burning and the damage which it did to the coal industry of South Wales, or the transfer of the naval functions from Pembroke Dock elsewhere are reasonable analogies to use in this connection.

They are frustration of expectations and that is what we are dealing with here. We are asked to compensate people because their expectations of being able to continue after the war in certain types of business have been frustrated. That is what the arguments of hon. Members opposite are based upon, and I say, rightly or wrongly, that there are numerous precedents in the past where no compensation was paid for frustration of expectations. The right hon. Gentleman the Member for Alder-shot attempted to confuse the matter by introducing the question of the loss of goodwill by carriers under the Transport Bill. We on this side of the House hold that there is an essential difference between frustration of expectations due to a change of policy and circumstances and the taking over of a business. When businesses are taken over we recognise that there shall be compensation not merely for the purchase of the physical assets, but compensation for the loss of goodwill and earning capacity.

What has not been referred to this morning very surprisingly—but perhaps not so surprisingly—was that for five years under what they call in Lancashire the care and maintenance scheme, compensation has been paid. Certain very small and very slender services indeed connected with the rendering of invoices were made by the cotton merchanting firms to the Control, and under an arrangement entered into with those firms at the time that Cotton Importers and Distributors Limited was closed, the Cotton Control paid for those services sums in excess of their market value.

The hon. Gentleman has referred to the market value of those services. Can he enlarge upon that and clarify his point a little by saying what yardstick he is using to assess the market value of those services?

I am saying that the servicing of invoices for the transfer of cotton from the Control to the mills could have been done by clerks hired in the open market for very much less than the sums which were paid out to the Liverpool cotton firms for doing it. That was done quite deliberately in such a way that, after meeting expenses, which included the wages of the employees doing the work, the partners of the firms should each receive about £500 a year. That went on for five years—a scheme administered by the association in Liverpool—and at the end of the period, after the Government had decided that the bulk buying of cotton was to continue, we gave due notice of the termination of that scheme. When representations were made to us about the difficulties caused thereby, we extended the notice for a further period. Thus there was that substantial payment over a period of five years, there was due notice given of the ending of these contracts, the contracts have now come to an end and that is all there is to it.

So much for the first of these two new Clauses. As I said in Committee, I have not denied that hardship to individuals may be caused by changes of Government policy or of economic circumstances, but I can only say that we have now comprehensive systems of social insurance and services. After all, they are designed to take care of these changes in employment opportunity which occurred from time to time. I have the greatest possible sympathy with men advancing in years who have found it difficult to obtain new employment, but, as I said before, that is an argument for some special provision under the social services through the Assistance Board, the Ministry of National Insurance, or whatever it may be, and for special attention to be paid to the case of elderly men or women throughout the country whatever the industry in which they may be concerned so that their employment opportunities may be improved. We cannot go out of our way to make an exceptional provision in this particular case.

Then it has been said that we are taking over the business of other people. We are not. We are taking over the business which the Cotton Control has performed over a period of five years and we are continuing it in a new form by means of a public corporation. Having created a body intended to do this business of importing cotton and supplying the cotton industry of Lancashire more economically than the Liverpool market did it, it would be illogical to saddle the industry for two or five years thereafter with the burden of continuing to carry unnecessary persons on its pay roll. That is what we are asked to do This raw cotton buying Commission will be a public corporation similar, if you like, to the London Passenger Transport Board, and I should hate it to be said that it carried more passengers than that body. We see no reason why the cotton spinning industry of Lancashire should be saddled for from two to five years with the burden of paying to persons the difference—as I understand it—between what they actually earned during these last seven years and what they might have earned had some other circumstances prevailed In recognition of the misfortune suffered by particular individuals in Liverpool, we have agreed that the headquarters of this organisation shall be in that city.

12.15 p.m.

The suggestion was put forward by hon. Members interested in Liverpool on both sides of the House and long before the Bill was introduced, the Government announced their intention to establish the headquarters of the Commission in Liverpool.

Is the hon. Gentleman putting that forward on a challengeable basis, or is he saying that it is the obviously logical and economically correct place for the new headquarters to be?

It was a decision made, like many decisions, after considering a number of arguments, and if it had been grossly uneconomic, of course, it would not have been made. There has been much exaggeration of the number of employees affected by the changes that have occurred in the conduct of operations in Liverpool in the cotton business during these last years. At the end of March there were registered at the payments offices of the Ministry of Labour 109 persons, and at the exchanges of the Ministry of Labour 36 persons who had previously earned their living as employees of these firms—a total of 145. As I have already said, I do not give these figures in order in any way to suggest in the slightest degree that because they are few we should take no notice of them, but merely in order to correct the impression which has been given in some quarters that very large numbers have been affected by these changes. Over the years many who have lost earning and employment opportunities who were previously engaged in this industry have gained new ones.

Lastly, if we were to accept the proposals which have been made we should have very great difficulty indeed in determining who lost employment as a result of the war circumstances and who as the result of the passing of the Bill—the two criteria which are laid down in the Clauses we are asked to accept. As I have said, I agree that ex-Servicemen have returned to Liverpool to find their expectations of being able to take up business in that import industry have been frustrated, just as ex-Servicemen returning to ports in my own constituency—which has nothing to do with cotton—have found that their expectations of taking part in the coal export trade or the import trade in certain commodities which used to come through those ports have been frustrated because limitation of imports now confines the right to import to those who imported in a base year, or because certain of the export regulations similarly frustrated various expectations. There is no compensation for them. We should find it very difficult indeed to say that any given individual had lost his employment or his business as a direct result of these war circumstances.

After all, the total sum of the turnover of raw cotton in the Port of Liverpool, and in the other ports of Lancashire which take in cotton, is very much less than before the war, owing to the fact that the spinning industry is smaller because of its shortage of labour. Unemployment would have been there in any case, and it is virtually impossible to distinguish how much of the frustration of the expectation of employment is caused by the diminution in total turnover, and how much of it may be caused by the changes in methods of importing. I regret the misfortunes which individuals have suffered, and the Government regret it, but for the reasons I have briefly outlined—and I could have dealt with them in extenso—I cannot accept either of the new Clauses, in principle or in toto, and I must, therefore, ask the House to reject them.

I did not serve on the Standing Committee, and therefore I have heard the arguments for the first time from the lips of the Paymaster-General. I am bound to say that in a considerable experience I have rarely heard a more miserable collection of so-called arguments. A great number of them were, frankly, an insult to the intelligence of the House, as I will try to show in a few moments. Let me first deal with the speeches of the hon. Member for Ashton-under-Lyne hoped that the the hon. Member for Kirkdale (Mr. Keenan). They both made very moderate speeches, and showed that there are Members on the other side who, in their heart of hearts, are apprehensive about some of the results likely to flow from the passing of this Bill into law. The hon. Member for Ashton-under-Lyne hoped that the Paymaster-General would be able to reassure him that the Board would, in fact, use large numbers of merchants, and the hon. Member for Kirkdale hoped to be reassured on the question of re-exports. I do not think they got much satisfaction from the reply of the Minister.

Neither of the two hon. Members dealt with the question of compensation. The hon. Member for Ashton-under-Lyne said that it might be difficult to pick and choose and decide who was entitled to compensation, but that seems a very poor argument against the essential justice of the Clause we are putting forward. When we come to the Paymaster-General, he proceeded to argue on two completely contradictory grounds. He devoted himself in the first part of his speech to saying that this really was not a serious problem at all, because there would be large openings for merchants and brokers to continue the jobs they had been accustomed to do before the war. He said, in reply to the apprehensions of the hon. Member for Kirkdale, that they would still be able to act as agents for producers, including India and America, and he instanced two Subsections in the Bill which specifically enjoined the Board to make cotton available for re-export. If that is the case, it is a very small number of people who will be involved. It completely disposes of the argument he used later in his speech, that he was not prepared to impose at the beginning of its life, an overwhelming burden on the Board by the payment of compensation. If the total number of people is very small, why not have the system of compensation—normally you do not have compensation unless damage can be proved? He cannot have it both ways. Even if the extreme were true, and there were a large proportion of the people concerned, the total sum involved, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has said, would be negligible. Is the hon. Gentleman seriously going to get up and ask us to believe that million, in the light of the figures involved, would make any difference either way?

I am not arguing whether it is justifiable or not. All I am doing is to address myself to the arguments put forward by the Paymaster-General. He defended his refusal to paying compensation on the ground that it would impose a heavy burden on the Board in its early days. His words were that he was not prepared to saddle the Board with carrying this burden. I am saying that the burden is, in fact, negligible, and amounts to something in the nature of £1 million. I am asking whether anyone considers £1 million is either here or there in relation to the figures involved in the Board's operations. When we were discussing this Bill on Second Reading, the figure of the stocks was given as £90 million. In the course of the Committee stage, the hon. Gentleman said that the value had diminished to £80 million. And so the Board will have been involved in a loss of £10 million before it has started to operate.

That is not a fair argument. It is totally unfair to say that the £90 million has shrivelled to £80 million overnight. It was from the time the Bill was introduced and the matter was discussed.

It is a measure of the enormous fluctuations in losses and profits which the Board will have to carry over comparatively short periods of time. It is negligible—

; Is the right hon. Gentleman really arguing that an addition of ten per cent. is negligible?

It is not an addition of ten per cent. per annum, but an addition once and for all.

That is precisely the reason given by my hon. Friend for not adding that additional burden once and for all in these early stages of the transition period.

I am arguing only on the point of negligibility. The right hon. Gentleman's argument shows that the figure is not negligible.

12.30 p.m.

On the contrary; but if the hon. Member wants me to take up the time of the House on this argument, I will do so very gladly—it is the Government's time and not mine. Perhaps he will show the usual courtesy and take the trouble, having put forward the question, to listen to the answer. He said that the figure of £1 million is not negligible. The Paymaster-General said that he did not know within a million or two whether the figure was £80 million or £90 million. The figure of £1 million is completely derisory in relation to the total figures. The Paymaster-General talked about the numbers concerned, and, in an answer to an interruption by my hon. Friend the Member for Bury (Mr. W. Fletcher), denied that the closing of the futures market would result in fewer people being employed. Earlier, the Government defended this Bill on the ground that it would lead to more economy in labour. The Paymaster-General seems to have forgotten what his right hon. and learned Friend the President of the Board of Trade said in winding up the Second Reading Debate:

"We say that a large buyer can provide those services more cheaply, and the first example of that is that the actual staff engaged on it will be cut to about one-tenth of what it was under former conditions."—[OFFICIAL REPORT, 2nd December, 1946; Vol. 432. c. 153.]
That rather disposes of the argument which the Paymaster-General used, that the bulk of these people would not need to find re-employment. The hon. Gentleman did not realise that the abolition of the futures market would result in substantially fewer people being employed than before.

It does not seem to be clear to everybody opposite that the futures market closed in 1941. The loss of employment resulting therefrom has been taking place over a number of years. Is the right hon. Gentleman seriously suggesting that now, suddenly, there will be an additional loss of employment?

I will deal with that point when I come to the further argument of the hon. Gentleman. All I am concerned with at the moment is to refute the suggestion made by the hon. Gentleman, in answer to my hon. Friend the Member for Bury, that the permanent abolition of the futures market would not result in a reduction of staff, as compared to prewar. It is the people employed in that market prewar with whom we are concerned. The Paymaster-General said that there were adequate social services available today for those employees. I do not know whether the people in Liverpool, in the constituency of the hon. Member for the Exchange Division (Mrs. Braddock)—

Wherever they live, I do not think that they will be very comforted by reading in the Press tomorrow that the Paymaster-General's recommendation was "Put 'em on the dole."

Yes, some are my constituents, and they will not be pleased to know that the only solution for their difficulties is to "put 'em on the dole." That is the sort of sympathy which Members opposite have for these unfortunate people. The Paymaster-General talked about difficulties and frustration on entering employment. During the Committee stage he talked about ex-Servicemen who said they expected to be able to enter employment, to set up in new business, but had found great difficulty.

Really, the hon. Gentleman must be more accurate. I have already shown him up in regard to what his right hon. and learned Friend the President of the Board of Trade said. On 11th March, in standing committee on the Bill, the Paymaster-General—and ha ought to know by now that I do not make statements of this kind without being able to produce evidence if I am challenged—said:

"Nobody could have more sympathy than my colleagues in the Government and I have for men returning home from the war, of whom we have heard today, who find that they are not able to enter the business they had hoped to enter … My own constituency has nothing to do with cotton in the slightest degree, but a number of my constituents, ex-Servicemen, come to me and tell me of their difficulties in establishing themselves where they hoped to establish themselves."—[OFFICIAL REPORT, Standing Committee C, 11th March, 1947; c. 337.]
That is not re-entering; it is entering. The point I want to emphasise is that a large number of the men concerned are ex-Servicemen who were in the business before the war. They went into the business and have the right, not to enter into the industry, but to re-enter it. They have a statutory right of re-employment. There is no question of a feeling of frustration about not being able to enter an industry. By the Government's action they are not being allowed to re-enter their former business.

The Paymaster-General said that employers had no "grouse" because, during the war, they were paid small sums while the market was closed and while the Control Board was in operation. But they were paid those sums, not by way of compensation for the permanent loss of business, but to keep a nucleus staff going against the day when the market would re-open. The whole essence of the payments was to keep a nucleus staff going against the day when the Liverpool futures market would re-open. It is idle for the hon. Gentleman to ask the House to believe that these payments were compensation for the closing of the business. So far from that being true, a great number of these firms found that the sum they were getting, in order to keep a nucleus staff, was wholly insufficient. In fact, they incurred substantial losses during the war. They would not have gone on doing that if they had been told, at the beginning, that their job and business would never be re-opened. They were confident in the belief that they would have the chance, after the war, of doing the job they did before the war.

The right hon. Gentleman has just said that there were substantial losses, yet he previously said that the total of losses was negligible.

We are talking about what we believe to be the sort of sum which would be involved. I am told that the sum total would be something in the order of £1 million and that, in relation to the whole expenditure by the Board, is negligible. In the case of an individual firm, the actual expenses over what they got are not negligible. All I say is that these people were asked to carry on with a view to re-opening as soon as the war was over, and circumstances allowed. The Government, by their action, have completely prevented that expectation from being fulfilled. It is not like an ordinary concentrated industry—hosiery, or something like that—which is continuing after the war, and where people who were concentrated had the opportunity of re-entering their job. This is a specific industry which, by the deliberate action of the Government, has been closed for good. We say that in these circumstances it is mere common justice that the people concerned, if they are able to show that they have suffered damage, and cannot get any other occupation, should be entitled to a fair measure of compensation from the Government.

I do not propose to say a word about the first of the new Clauses which we are discussing, because I think that the arguments from both sides on that Clause during the Committee stage were quite adequate. I do, however, ask your indulgence, Mr. Speaker, in prolonging the Debate on the second Clause. It is a wholly new Clause; it has not appeared before us at any previous stage. I am going to vote against it, and I think that right hon. and hon. Gentlemen opposite, who have taken so much trouble in its preparation and presentation, are entitled to know why I oppose it. I oppose it, first of all, because I do not believe in the sincerity of their intentions. I said that before, and I say it again. I have no faith in it of any kind. It is wholly out of court—

I do not think that the hon. Member is entitled to say that he has no faith in the sincerity of arguments used by other hon. Members. That, surely, is casting an unworthy imputation.

If you say so, Sir, I, of course, agree with you and withdraw it. [HON. MEMBERS: "Unreservedly?"] I withdraw it completely and unreservedly. I am perfectly certain that hon. Members opposite are sincere in wanting to do what they have always wanted to do. They are perfectly sincere in not wanting to afford one penny of compensation to anybody, because that is what the Clause is for.

On a point of Order. I would point out, Mr. Speaker, that what the hon. Gentleman has said is exactly opposed to the Ruling which you gave just now. For the hon. Gentleman to say that we are not sincere in wishing to give compensation to any working man is another imputation of insincerity.

What I am saying is that no one who reads this Clause can see any way in which any worker in industry would benefit. I accept your Ruling, Mr. Speaker, and I am sure that what this Clause actually proposes is what hon. Members opposite sincerely mean. It proposes to give no compensation to anybody. That is my reading of it. We have only to look at the first Subsection:

"Regulations shall provide that every person to whom this Section applies who in consequence of the operation of this Act suffers any loss or diminution of employment or any loss or diminution of emoluments or superannuation or similar rights shall"
receive certain things. But there are no such persons, and I believe that right hon. and hon. Members opposite know that there are no such persons. There is nobody in this industry who receives, or has ever received from the Liverpool Cotton Exchange, one penny of superannuation of any kind. There are people who have spent a lifetime in the industry, and who have been turned out at the end without receiving a single penny by way of pension, superannuation, or loss of any sort or kind. Hon. and right hon. Gentlemen opposite know that perfectly well.

On a point of Order. Is not the hon. Gentleman, Mr. Speaker, again repeating charges that we are putting forward arguments, knowing them to be false? I know of many firms who are making such payments at the present moment.

I would only repeat to the right hon. Gentleman my own experience, in which I have more confidence than I have in his. I say that there is no firm engaged in this industry which has ever paid any compensation, any superannuation or any pension of any kind.

A point of Order was raised. Again it is alleged that the hon. Member has imputed bad faith to hon. Members opposite. I am not sure that he did so, but he certainly ought not to have done so after my Ruling.

I would only repeat, Sir, that I am sure that hon. Members opposite intend, in perfectly good faith, to give compensation to every man in this industry who by reason of this Bill loses any superannuation that he formerly had, and I say that they know perfectly well that there are no such persons, and that, therefore, it is a very improper Clause.

The hon. Member says that he knows perfectly well that this is a fraud. He really must be a little more careful in what he says, and must not impute motives.

12.45 p.m.

I am not imputing motives at all. I am entitled to my view, first, that there is nobody who gets any superannuation, and, secondly, that there is nobody who could qualify for compensation under this Clause. With great respect, Sir, I am entitled to my view and right hon. and hon. Gentlemen opposite, who know this industry so well, know that I am right. I say that those are the facts.

Then the Subsection talks about diminution of emoluments, but does not define emoluments. Presumably, it means something different from loss or diminution of employment. I know this part of Liverpool very well. For several years, I represented on the Liverpool City Council many of the people who would be affected by this Clause. I know the subject inside out. I know of no such case, any more than I know of any superannuation. Therefore, that part of the Clause would entitle nobody to one penny of compensation. There is left—I must be careful of my words—a more comprehensible category—I will put it that way—of those who suffer loss or diminution of employment. Undoubtedly, there are such persons: everybody admits it. But they are very few indeed. What does this Clause offer to them? First, it places upon anyone who is to get compensation an impossible onus of proof. The words:
"Regulations shall provide that every person to whom this Section applies … suffers any loss."
clearly place upon such a person the onus of proving that he has suffered a loss or diminution of employment. But the Subsection does not say at what stage. Obviously, if a man comes forward and says, "I have lost part of my employment, and I have suffered a reduction in wages," since he is not to be entitled to compensation merely because he ceases to be employed, he must prove his loss He must do his best to find other employment at least at the equivalent rate. Only if he fails to do that will he be entitled to compensation. But the Subsection does not say how long he is to wait, or what efforts he is to make. It places upon him an impossible burden of proof which, in most instances, he would never be able to carry out, and, therefore, he would not get a single penny of compensation.

The idea that the State should compensate persons who suffer loss of employment, owing to the development of the Government's policy in trade and industry, is both a dangerous and a new one for hon. and right hon. Gentlemen opposite to put forward. The very first Standing Committee of which I had the honour to be a Member, was also concerned with the Bill to nationalise the cotton industry. The Cotton Spindles Act, 1936, was a Measure to levy on the owners of spindles a certain amount, and out of the pool of money thus created, spindles were to be bought and destroyed, so as to rationalise the industry, concentrate it, and make it, I quite concede, more economic and more profitable. But the loss of spindles meant loss of opportunity for spinners to work, which is precisely the point that is claimed in connection with this Amendment. In that Committee, some of my hon. Friends and I tried very hard to persuade the Government of the day to introduce into the Measure a proposal to compensate spinners who were thrown out of employment altogether because the spindles with which they worked were to be bought up and scrapped. We failed hopelessly in our effort; not one Conservative Member supported us, although on that occasion the money was not to be provided by the State, but was to come out of the levy which people made and which went into a common pool for the purpose of destroying spindles in order to increase the value of the remaining spindles.

We failed then, but there is enormous enthusiasm on the part of hon. Members opposite now, in quite different circumstances, to provide compensation because some advantage might be derived for a different class for which they have more sympathy. The proposal they make is dangerous for the reason that we art now engaged in this country in a new industrial revolution, of which this Bill is a small part. We have to re-orientate our ideas, to re-assess our assets and re-deploy them, and this includes, as we all know, a vast re-allocation of manpower in this country. It would defeat the whole of the social purpose which the Government were elected to perform, and which they are carrying through with courage and vision, if, every time they went forward a step in the allocation of manpower, they had the clog and drag of compensation. If that were introduced in all circumstances where changes of employment follow upon the introduction of major Government policy in trade and industry, it would make as difficult as possible the transitional social and economic phase through which we are now passing, and which is being managed with so much skill and courage.

Those hon. Members who sat in the Committee on this Bill can find a good many excuses for the irrelevant and hairsplitting speech of the hon. Member for Nelson and Colne (Mr. S. Silverman). During the Committee stage, the hon. Member put himself under a very severe restraint. It must be difficult for the most assiduous patron of HANSARD in the House to have to turn himself into a member of the Dumb Friends League day after day. That must have imposed a very great strain on the hon. Member, and he must be forgiven the little excursion he has just made into country a long way from the Bill. The imputations, both overt and covert, which he made about our sincerity can be judged by anybody who reads the report of the Debate, and by everybody who knows what is behind the Amendment. I will leave the hon. Member's speech at that.

The Minister's speech was really staggering. If that speech had been made by an employer who was throwing his men out of employment during that period about which we hear so much in the House, the years between the wars, there would have been a howl from hon. Members opposite about the bad employer trying to find excuses for not looking after his men and compensating them. The cares of office seem to have changed men's minds to a very great extent. That, undoubtedly, was the reason behind the Minister's speech. The argument he used about there not being very many people concerned has a classical procedent in the argument of the servant girl who found herself with an unwanted offspring and said, in excuse, that it was only a very small one. The Minister's argument was on the same basis.

As I am sure the hon. Gentleman does not wish to misrepresent what I said, I would point out that I made it abundantly clear that, in quoting the very small number unemployed, I did not intend in any way to suggest that that made the hardships and misfortunes less severe in any way, or made it possible for us not to care for them.

The very thin layer of synthetic sympathy sauce with which the crumb has been covered hardly alters what the Minister said.

On a point of Order, Mr. Speaker. What is the precise significance of the term "synthetic sym- pathy," and does it involve a charge of bad faith?

My attention was not directed at the moment to what the hon. Member for Bury (Mr. Fletcher) was saying. Therefore, I am unable to answer the question.

I would like to point out, as a culinary expert, that all sauce is, from a chemical point of view, synthetic. I turn now to an argument of considerably more weight. The Minister put forward, as vague and half-hearted compensation that might be received, the entrepôt trade in cotton that might fall to certain former members of the Liverpool Cotton Exchange who are now to be thrown out of employment, and he passed over an interjection I made by saying that it could not be so. I ask him to believe that he is wrong on that point. It is impossible for the entrepôt business in cotton, which was a large portion of the useful work carried on, work which gave employment and produced dollars, to be carried on unless there is a futures market. One cannot buy cotton in other markets, bring it to Liverpool, have the double handling charges, put it into store, take it out of store, re-ship it—one cannot bear all those charges—without serious loss to the Exchequer under the present scheme, and that loss will come out of the general funds that have been voted. To think that the members who used to do that very useful business will now be able to carry it on without a futures market to hedge in is really out of the question, and shows a lamentable lack of essential knowledge which should be in the head of the Minister when arguing a point of this sort. The Minister has given a blessing to that business, and says it is business that he would like to take place, and hopes that revenue will accrue to those who undertake it; but I say that it cannot be carried on unless there is a futures market in which to hedge the import which later becomes an export.

I was glad to hear that compensation for goodwill is not necessarily something which is altogether outside the purview of the Government, because the argument which is used that one should not compensate those whom we are seeking to protect because the loss they are suffering is intangible, and is based on goodwill, cannot hold water. The statement of the hon. Member for Kirkdale (Mr. Keenan) that cotton could be imported from Egypt by these members and re-exported is proof of the existence of goodwill. It is the direct personal connection between members of the Liverpool Cotton Exchange in the past, their knowledge, their personal contacts, their credit standing, and the transactions they have carried through in years past in Egypt, Uganda, and all over the world, which has made that business possible. If the Chancellor were here, I believe he would be in agreement with our argument that goodwill is the most important part of the business, and is the very real essence of what is being lost at the present moment.

I hope that in the reconsideration that may yet take place after the pleas we have put forward, with all sincerity, that matter will be taken into account, and that not only the plea put forward by the hon. Member for Ashton-under-Lyne (Mr. Rhodes), but the pleas put forward from this side, will lead to a review of the method to be used, so as to permit the entrepôt business to be continued, with greater employment than is at present contemplated of past members of the Liverpool Cotton Exchange, and proper compensation for those who are losing. The argument used by the Minister about the interim period between the original telescoping of this industry and the decision taken now is worth examining in the light of what has happened in regard to rubber. On the Minister's argument, the rubber exchange has been opened by the Government again after exactly the same arrangement was made. If his argument holds good, the money will be demanded back, because the rubber exchange has been reopened. In logic that is the next step the Minister ought to take. Does he intend to do that? If not, the whole argument that compensation has been paid already falls to the ground.

1.0 p.m.

When I read these two new Clauses last night I was in a considerable amount of doubt as to whether it would be possible to justify voting for them purely from the taxpayers' point of view. All the hon. Members who have spoken in this Debate up to the present have come from what I might call the cotton producing and manufacturing area. With the exception of my right hon. Friend who moved this new Clause and who has an exceptional knowledge of the subject, there has been no speaker from any other part of the country. It cannot be right that the only Members to take part in a Debate of this sort, which involves the taxpayers' money, should be those intimately or closely connected with the area concerned. This is a national matter, and I intervene on that account.

It is with regret that I notice the hon. Gentleman the Paymaster-General is no longer here; of course, I recognise that he has been here all morning. I want to thank him for helping me to make up my mind to vote for these new Clauses. He has had every help that he could have got from Government Departments, and he clearly admitted that the amount of compensation involved would not be damaging. He also brought forward the amazing proposition that, in the same way as we change from coal-burning to oil-burning in ships, this is a natural trend of development. I only wonder that he did not bring forward the more antiquated idea of the change from coach horses to railway trains. It was quite clear that the hon. Gentleman was entirely lacking in the clarity which one might expect from his right hon. and learned Friend whose name appears on the back of the Bill. I can only assure him that who wanted complete clarity to make our decision in this matter, deeply regret that we did not have the help of the right hon. and learned Gentleman, because he has a much closer and more kindly feeling for the workers for whom we are appealing in the second of the new Clauses, than his hon. Friend has, judging from the rather sneering remark he made about employment in the second part of his speech. So far as that point is concerned, the hon. Gentleman helped me to come to the conclusion that there was a complete case for voting in favour of the new Clauses.

I will not refer to the speeches from this side of the House. Neither will I deal with the speech of the hon. Member for Nelson and Colne (Mr. S. Silverman). But we did hear earlier in the day a very remarkable speech from the hon. Member for Ashton-under-Lyne (Mr. Rhodes) who, for practical purposes, appealed to the Government to accept these two new Clauses. In trying to decide whether these new Clauses are fair and whether, as a taxpayer, and in the interests of the taxpayer, I can vote in favour of them, I am completely convinced by the arguments put forward from this side of the House. As a result of the help I have received, particularly from the case presented by the Minister and from one hon. Member opposite, I am satisfied that, as far as fairness is concerned, one cannot possibly vote against the new Clauses.

I would like to give another reason. The Government are turning certain people out of the industry—not many people—some employers and some workers. I am certain that very shortly we shall want them back again, and it would be just as well to compensate them now and leave them with a desire to come back into the industry in a short time as they will when the situation is changed once again. The appeals for help which have been made in many other directions will be made to these people, when the industry is denationalised, and put upon its feet again. That is a reason which has

Division 121.]

AYES.

[1.7 p.m.

Agnew, Cmdr. P. G.Gridley, Sir A.Noble, Comdr. A. H. P.
Amory, D. HeathcoatHannon, Sir P. (Moseley)Peake, Rt. Hon. O.
Astor, Hon. MHare, Hon. J. H. (Woodbridge)Ponsonby, Col. C. E.
Barlow, Sir J.Headlam, Lieut.-Col. Rt. Hon. Sir CPoole, O B. S. (Oswestry)
Baxter, A. B.Herbert, Sir A. P.Price-White, Lt.-Col. D.
Boyd-Carpenter, J. A.Hogg, Hon. Q.Prior-Palmer, Brig. O.
Braithwaite, Lt.-Comdr. J. G.Howard, Hon. A.Reed, Sir S. (Aylesbury)
Buchan-Hepburn, P. G. T.Hudson, Rt. Hon. R. S. (Southport)Renton, D.
Bullock, Capt. M.Hulbert, Wing-Cdr. N. J.Roberts, H. (Handsworth)
Byers, FrankHutchison, Lt.-Cm Clark (E'b'rgh, W.)Roberts, Maj. P. G. (Ecclesall)
Carson, E.Lambert, Hon. G.Savory, Prof. D. L.
Challen, C.Lipson, D. L.Shepherd, W. S. (Bucklow)
Channon, HLloyd, Selwyn (Wirral)Smith, E. P (Ashford)
Clifton-Brown, Lt.-Col. GLucas-Tooth, Sir H.Snadden, W. M.
Cooper-Key, E. MLyttelton, Rt. Hon. O.Sutcliffe, H.
Crookshank, Capt. Rt. Hon. H. F CMacpherson, Maj. N. (Dumfries)Taylor, C. S. (Eastbourne)
Crosthwaite-Eyre, Col. O. EManningham-Buller, R. E.Thomas, J. P. L. (Hereford)
Darling, Sir W. YMarples, A. E.Thorp, Lt.-Col. R. A. F.
Dower, Lt.-Col. A. V. G. (Penrith)Marshall, D. (Bodmin)Touche, G. C.
Drayson, G. B.Morrison, Maj. J. G. (Salisbury)Wheatley, Colonel M. J.
Duthie, W. S.Morrison, Rt. Hon. W. S. (Cirencester)Williams, C. (Torquay)
Fletcher, W. (Bury)Neill, W. F. (Belfast, N.)Willoughby de Eresby, Lord
Fraser, H C. P. (Stone)Neven-Spence, Sir B.
Gage, C.Nicholson, G.

TELLERS FOR THE AYES:

Galbraith, Cmdr. T. DNield, B. (Chester)Mr. Studholme and Major Conant.

NOES.

Adams, Richard (Balham)Blenkinsop, A.Clitherow, Dr. R.
Adams, W. T. (Hammersmith, South)Blyton, W. R.Cocks, F. S.
Allen, A. C. (Bosworth)Bottomley, A. G.Collick, P.
Anderson, F. (Whitehaven)Bowden, Fig.-Offr. H. W.Collindridge, F.
Attewell, H. C.Bowles, F. G. (Nuneaton)Colman, Miss G. M.
Ayles, W. H.Braddock, Mrs. E. M. (L'pl. Exch'ge)Comyns, Dr. L
Ayrton Gould, Mrs. B.Braddock, T. (Mitcham)Cooper, Wing-Comdr. G
Bramall, E. A.
Baird. JBrook, D. (Halifax)Corbet, Mrs. F. K (Camb'well, N.W.)
Balfour, A.Brooks, T. J. (Rothwell)Corvedale, Viscount
Barstow, P. GBrown, George (Belper)Davies, Edward (Burslem)
Barton, C.Brown, T. J. (Ince)Davies, Ernest (Enfield)
Battley, J. R.Bruce, Maj. D. W. T.Davies, Harold (Leek)
Bechervaise, A. E.Burden, T. W.Deer, G.
Belcher, J. W.Butler, H. W. (Hackney, S.)Dobbie, W.
Benson, G.Callaghan, JamesDodds, N. N.
Berry, H.Castle, Mrs. B. ADumpleton, C. W.
Bing, G H C.Champion, A JEdwards, N. (Caerphilly)
Binns, J.Chater, D.Evans, E. (Lowestoft)
Blackburn, A. RChetwynd G REvans, S. N. (Wednesbury)

not been put forward today so far. I say to the Parliamentary Secretary to the Board of Trade—I see he has a smile upon his face, but he ought to know something of the complete changes which take place in the Government's theories compared with six months ago, if he has read their White Papers—that for that reason alone, we have an overwhelming argument for voting in favour of these two Clauses. I hope those hon. Members opposite who represent the cotton area and who have, as I have, very close connections with the industry—I have a connection from the wider point of view of taking a national interest in this matter—will do nothing by voting against these new Clauses which would hurt this industry today, or in the future.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 72; Noes, 210.

Ewart, R.Longden, F.Skinnard, F. W.
Fairhurst, F.Lyne, A. W.Smith, C. (Colchester)
Foot, M. M.McAdam, W.Smith, Ellis (Stoke)
Gallacher, W.McAllister, G.Smith, H. N. (Nottingham, S.)
Ganley, Mrs. C. S.McGhee, H. G.Smith, S. H. (Hull, S.W.)
Gibson, C. WMcGovern, J.Snow, Capt. J. W.
Goodrich, H. E.Mack, J. D.Solley, L. J.
Greenwood, Rt. Hon. A. (Wakefield)McKay, J. (Wallsend)Soskice, Maj. Sir F.
Greenwood, A. W. J. (Heywood)McLeavy, FSparks, J. A.
Grey, C. F.Mallalieu, J. P. W.Stamford, W.
Griffiths, D. (Rother Valley)Manning, C. (Camberwell, N.)Stewart, Michael (Fulham, E.)
Griffiths, W. D. (Moss Side)Marquand, H. A.Strachey, J.
Guest, Dr. L. HadenMellish, R. J.Strauss, G. R. (Lambeth, N.)
Gunter, R. J.Mikardo, IanStubbs, A. E.
Haire, John E. (Wycombe)Mitchison, G. R.Swingler, S.
Hale, LeslieMorris, Lt.-Col. H. (Sheffield C.)Sylvester, G. O.
Hamilton, Lieut.-Col. RMorris, P. (Swansea W.)Symonds, A. L.
Hardman, D. R.Moyle, A.Taylor, H. B. (Mansfield)
Hardy, E. A.Murray, J. D.Taylor, R. J. (Morpeth)
Hastings, Dr. SomervilleNaylor, T. E.Taylor, Dr. S. (Barnet)
Henderson, A. (Kingswinford)Neal, H. (Claycross)Thomas, D. E. (Aberdare)
Henderson, Joseph (Ardwick)Nichol, Mrs. M. E. (Bradford, N.)Thomas, George (Cardiff)
Hicks, G.Nicholls, H. R. (Stratford)Thurtle, E.
Hobson, C. R.Noel-Buxton, LadyTiffany, S.
Holman, P.Pargiter, G. A.Titterington, M. F.
Holmes, H. E. (Hemsworth)Parker, J.Tolley, L.
House, G.Paton, Mrs. F. (Rushcliffe)Turner-Samuels, M.
Hudson, J. H. (Ealing, W.)Pearson, A.Ungoed-Thomas, L.
Hughes, Hector (Aberdeen, N.)Peart, Capt T. F.Vernon, Maj. W. F.
Hughes, H. D. (Wolverh'pton, W.)Piratin, P.Viant, S. P.
Hynd, H. (Hackney, C.)Platts-Mills, J. F. E.Walker, G H.
Hynd, J B. (Attercliffe)Poole, Major Cecil (Lichfield)Wallace, G. D. (Chislehurst)
Irving, W. J.Pursey, Cmdr. H.Wallace, H. W. (Walthamstow, E.)
Isaacs, Rt. Hon. G. ARandall, H E.Wells, P. L. (Faversham)
Janner, B.Ranger, J.Wells, W. T. (Walsall)
Jay, D. P. T.Reeves, J.Whiteley, Rt. Hon. W
Jeger, G. (Winchester)Reid, T. (Swindon)Wigg, Col. G. E.
Jones, D. T. (Hartlepools)Rhodes, H.Wilkes, L.
Jones, P. Asterley (Hitchin)Ridealgh, Mrs. M.Willey, F. T. (Sunderland)
Keenan, W.Roberts, Goronwy (Caernarvonshire)Willey, O. G. (Cleveland)
Kinghorn, Sqn.-Ldr. E.Rogers, G. H. R.Williams, D. J. (Neath)
Kinley, J.Sargood, R.Williams, J. L. (Kelvingrove)
Kirby, B. V.Scott-Elliot, W.Williams, W. R. (Heston)
Lavers, S.Shackleton, E. A. A.Williamson, T.
Lee, F. (Hulme)Sharp, GranvilleWills, Mrs. E. A.
Lee, Miss J (Cannock)Shinwell, Rt. Hon. E.Yates, V. F.
Leslie, J. R.Shurmer, PYoung, Sir R. (Newton)
Levy, B. W.Silverman, J. (Erdington)Zilliacus, K
Lewis, A. W. J. (Upton)Silverman, S. S. (Nelson)
Lewis, J. (Bolton)Simmons, C. J.

TELLERS FOR THE NOES

Lindgren, G. S.Skeffington, A. M. Mr. Hannan and Mr. Daines
Lipton, Lt.-Col. M.Skeffington-Lodge, T. C.

New Clause—(Provisions As To Transfer And Compensation Of Employees)

(1) Regulations shall provide that every person to whom this Section applies who in consequence of the operation of this Act suffers any loss or diminution of employment or any loss or any diminution of emoluments or superannuation or similar rights shall either—

  • (a) be transferred and appointed to an office under the Commission at a salary and with superannuation or similar rights and on terms not less advantageous to him than his existing employment conditions, or
  • (b) receive from the Commission compensation in respect of the loss or diminution of his existing employment conditions not exceeding five times the annual value of his existing employment conditions.
  • (2) The persons to whom this Section applies shall be persons who have been employed full time during such period before the appointed day as may be provided in the regulations by any person engaged during the said period in the business of raw cotton merchanting or raw cotton broking or who would have been so employed but for any war service in which they have been employed or but for war circumstances and for the purposes of this Section the expression "war service" means service in any of His Majesty's Forces and such other employment as may be prescribed and the expression "war circumstances" means any circumstances relating to the said business of raw cotton merchanting or raw cotton broking brought about by any enactment order or regulation passed during the period in which the Emergency Powers (Defence) Acts, 1939 to 1945, and the Supplies and Services (Transitional Powers) Act, 1945, were in force or made under or by virtue of either of those Acts as a result of which the employment of such persons as aforesaid has terminated.

    (3) For the purposes of this Section the expression "existing employment conditions" means the conditions including the remuneration superannuation rights and other benefits applicable to a person to whom this Section applies immediately prior to the appointed day or to his employment in any war service or to the date when his employment terminated through war circumstances.

    (4) In the assessment of the loss or diminution of the existing employment conditions of any person account shall be taken of any regular employment in which the person to whom this Section applies is engaged at the commencement of this Act.

    (5) In the event of any dispute arising out of or in connection with any if the matters aforesaid such dispute shall be referred to an arbitration tribunal to be appointed by the Lord Chancellor for the purpose of the determination of such disputes—[ Mr. Lyttelton.]

    Division No. 122.]

    AYES.

    [1.15 p.m.

    Agnew, Cmdr. P. G.Galbraith, Cmdr. T. D.Nicholson, G.
    Aitken, Hon. MaxGammans, L. D.Nield, B. (Chester)
    Amory, D. HeathcoatGranville, E. (Eye)Noble, Comdr. A. H. P.
    Astor, Hon. M.Gridley, Sir A.Peake, Rt. Hon. O.
    Barlow, Sir J.Hannon, Sir P. (Moseley)Ponsonby, Col. C. E.
    Baxter, A. B.Hare, Hon. J. H. (Woodbridge)Poole, O. B. S. (Oswestry)
    Bowen, R.Headlam, Lieut.-Col. Rt. Hon. Sir CPrice-White, Lt.-Col. D.
    Boyd-Carpenter, J. A.Herbert, Sir A. P.Prior-Palmer, Brig. O.
    Braithwaite, Lt.-Comdr. J. G.Hogg, Hon. Q.Reed, Sir S. (Aylesbury)
    Buchan-Hepburn, P. G. T.Howard, Hon. A.Renton, D.
    Bullock, Capt. M.Hudson, Rt. Hon. R. S. (Southport)Roberts, H. (Handsworth)
    Byers, FrankHulbert, Wing-Cdr. N. J.Roberts, Maj. P. G. (Ecclesall)
    Challen, C.Hutchison, Lt.-Cm. Clark (E'b'rgh, W.)Shepherd, W. S. (Bucklow)
    Channon, H.Lambert, Hon. G.Smith, E. P. (Ashford)
    Clifton-Brown, Lt.-Col. G.Lipson, D. L.Snadden, W. M.
    Cooper-Key, E. M.Lloyd, Selwyn (Wirral)Studholme, H. G.
    Crookshank, Capt. Rt. Hon. H. F. CLucas-Tooth, Sir H.Sutcliffe, H.
    Crosthwaite-Eyre, Col. O. E.Lyttelton, Rt. Hon. O.Taylor, C. S. (Eastbourne)
    Darling, Sir W. Y.Macpherson, Maj. N. (Dumfries)Thomas, J. P. L. (Hereford)
    Dower, Lt.-Col. A. V. G. (Penrith)Manningham-Buller, R. E.Touche, G. C.
    Drayson, G. B.Marples, A. E.Wheatley, Colonel M. J.
    Duthie, W. S.Marshall, D. (Bodmin)Williams, C. (Torquay)
    Fletcher, W. (Bury)Morrison, Maj. J. G (Salisbury)Willoughby de Eresby, Lord
    Foster, J. G. (Northwich)Morrison, Rt. Hon. W. S. Cirencester)
    Fraser, H. C. P. (Stone)Neill, W. F. (Belfast, N.)

    TELLERS FOR THE AYES:

    Gage, C.Neven-Spence, Sir B.Lt.-Col. Thorp and Major Conant.

    NOES.

    Adams, Richard (Balham)Cocks, F. S.Hastings, Dr. Somerville
    Adams, W. T. (Hammersmith, South)Collick, P.Henderson, A. (Kingswinford)
    Allen, A. C. (Bosworth)Collindridge, F.Herderson, Joseph (Ardwick)
    Anderson, F. (Whitehaven)Colman, Miss G. M.Hicks, G.
    Attewell, H. C.Comyns, Dr. L.Hobson, C. R.
    Ayles, W. H.Cooper, Wing-Comdr. G.Holman, P.
    Ayrton Gould, Mrs. B.Corbet, Mrs. F. K. (Camb'well, N.W.)Holmes, H. E. (Hemsworth)
    Baird, J.Corvedale, ViscountHouse, G.
    Balfour, A.Davies, Edward (Burslem)Hudson, J. H. (Ealing, W.)
    Barstow, P. G.Davies, Ernest (Enfield)Hughes, H. D. (Wolverh'pton, W.)
    Barton, C.Davies, Harold (Leek)Hynd, H. (Hackney, C.)
    Battley, J. R.Deer, G.Hynd, J. B. (Attercliffe)
    Bechervaise, A. EDiamond, J.Irving, W. J.
    Belcher, J. W.Dobbie, W.Isaacs, Rt. Hon. G. A.
    Benson, G.Dodds, N. N.Janner, B.
    Berry, H.Dumpleton, C. W.Jay, D. P. T.
    Bing, G. H. C.Edwards, N. (Caerphilly)Jeger, G. (Winchester)
    Binns, J.Evans, E. (Lowestoft)Jones, D. T. (Hartlepools)
    Blackburn, A. REvans, S. N. (Wednesbury)Jones, P. Asterley (Hitchin)
    Blenkinsop, A.Ewart, R.Keenan, W.
    Blyton, W. R.Fairhurst, F.Kinghorn, Sqn.-Ldr. E.
    Bottomley, A. G.Field, Capt. W. J.Kinley, J.
    Bowden, Flg.-Offr. H. W.Foot, M. M.Kirby, B. V.
    Bowles, F. G. (Nuneaton)Gallacher, W.Lavers, S.
    Braddock, Mrs. E. M. (L'pl, Exch'ge)Ganley, Mrs. C. S.Lee, F. (Hulme)
    Braddock, T. (Mitcham)
    Bramall, E. A.Gibson, C. W.Lee, Miss J. (Cannock)
    Brook, D. (Halifax)Goodrich, H. E.Leslie, J. R.
    Brooks, T. J. (Rothwell)Greenwood, Rt. Hon. A. (Wakefield)Levy, B. W.
    Brown, George (Belper)Greenwood, A. W. J. (Heywood)Lewis, J. (Bolton)
    Brown, T. J. (Ince)Grey, C. F.Lindgren, G. S.
    Brown, W. J. (Rugby)Griffiths, D. (Rother Valley)Lipton, Lt.-Col. M
    Bruce, Maj. D. W. T.Griffiths, Rt. Hon. J. (Llanelly)Longden, F.
    Burden, T. W.Griffiths, W. D. (Moss Side)Lyne, A. W.
    Butler, H. W. (Hackney, S.)Guest, Dr. L. HadenMcAdam, W.
    Callaghan, JamesGunter, R. J.McAllister, G.
    Castle, Mrs. B. A.Haire, John E. (Wycombe)McGhee, H. G.
    Champion, A. J.Hale, LeslieMcGovern, J.
    Chater, D.Hamilton, Lieut.-Col. R.Mack, J. D.
    Chetwynd, G. R.Hardman, D. R.McKay, J. (Wallsend)
    Clitherow, Dr. R.Hardy, E. A.McLeavy, F.

    Brought up, and read the First time.

    Motion made, and Question proposed, "That the Clause be read a Second time."—[ Mr. Lyttelton.]

    The House divided: Ayes, 75; Noes, 217.

    Mallalieu, J. P. W.Roberts, Goronwy (Caernarvonshire)Taylor, Dr. S. (Barnet)
    Manning, C. (Camberwell, N.)Rogers, G. H. R.Thomas, D. E. (Aberdare)
    Manning, Mrs. L. (Epping)Sargood, R.Thomas, George (Cardiff)
    Marquand, H. A.Scott-Elliot, W.Tiffany, S.
    Mayhew, C. P.Shackleton, E. A. A.Titterington, M. F.
    Mellish, R. J.Sharp, GranvilleTolley, L.
    Mikardo, IanShinwell, Rt. Hon. E.Turner-Samuels, M.
    Mitchison, G. R.Shurmer, P.Ungoed-Thomas, L.
    Morris, Lt-Col. H. (Sheffield C.)Silverman, J. (Erdington)Vernon, Maj. W. F.
    Morris, P. (Swansea, W.)Silverman, S. S. (Nelson)Viant, S. P.
    Moyle, A.Simmons, C. J.Walkden, E.
    Murray, J. D.Skeffington, A. M.Walker, G. H.
    Naylor, T. E.Skeffington-Lodge, T. CWallace, G. D. (Chislehurst)
    Neal, H. (Claycross)Skinnard, F. W.Wallace, H. W. (Walthamstow, E.)
    Nichol, Mrs. M. E. (Bradford, N.)Smith, C. (Colchester)Weitzman, D.
    Nicholls, H. R. (Stratford)Smith, Ellis (Stoke)Wells, P. L. (Faversham)
    Noel-Buxton, LadySmith, H. N. (Nottingham, S.)Wells, W. T. (Walsall)
    Pargiter, G. A.Smith, S. H. (Hull, S.W.)Whiteley, Rt. Hon. W.
    Parker, J.Snow, Capt. J. WWigg, Col. G. E.
    Paton, Mrs. F. (Rushcliffe)Solley, L. J.Wilkes, L.
    Pearson, A.Soskice, Maj. Sir F.Willey, F. T. (Sunderland)
    Peart, Capt. T. F.Sparks, J. A.Willey, O. G. (Cleveland)
    Piratin, P.Stamford, W.Williams, D. J. (Neath)
    Platts-Mills. J. F. F.Steele, T.Williams, J. L. (Kelvingrove)
    Poole, Major Cecil (Lichfield)Stewart, Michael (Fulham, E.)Williams, W. R. (Heston)
    Pursey, Cmdr. H.Strachey, J.Williamson, T.
    Randall, H. E.Strauss, G. R. (Lambeth, N.)Wills, Mrs. E. A.
    Ranger, J.Stubbs, A. E.Yates, V. F.
    Reaves, J.Swingler, S.Young, Sir R. (Newton)
    Reid, T. (Swindon)Sylvester, C. O.Zilliacus, K.
    Rhodes, H.Symonds, A. L.
    Ridealgh, Mrs. MTaylor, H. B. (Mansfield)

    TELLERS FOR THE NOES

    Robens, A.Taylor, R. J. (Morpeth)Mr. Hannan and Mr. Daines.

    Clause 1—(Establishment And Primary Functions Of The Raw Cotton Commission)

    I beg to move, in page 1, line 21, at the beginning, to insert "The prices at which."

    I think it would be for the convenience of the House if we considered with this Amendment the next Amendment—in line 22, leave out from "Commission," to "as," in line 25, and insert, "sell raw cotton shall be such,". Each of these Amendments perfects the other. These Amendments are designed to improve the drafting of the Bill, and to take account of a point raised by the hon. Member for Bury (Mr. W. Fletcher). He does have moments when he contributes valuable suggestions to the Debates, and when he resists the temptation to make his epigrams. The hon. Member moved in Committee an Amendment to insert after the word "imported", in line 22, the words "or to be imported" on the ground that, without those words, the Commission would be precluded from making forward sales. I said at the time that that was a point definitely worthy of consideration. He also proposed an Amendment to insert after the words "subjecting it to any treatment so as to render it saleable" the words "in the raw state." On that point I was not satisfied that his Amendment was really necessary, but I undertook to consider it.

    What I am proposing here is a redrafting of the Subsection, because, as it now stands, it deals with one major matter, namely, that of selling prices; but it also refers, in parentheses, to a minor and quite different matter, namely, that of treating the cotton to render it saleable. I think the intention would be made more clear if reference to that minor matter were omitted altogether from this Clause, and were introduced, where it more properly belongs, in Clause 12, which deals with subsidiary functions of the Commission. When we reach that stage I would propose to move an Amendment, which is on the Order Paper, to introduce that matter in its proper place. So, the Amendment now proposed clarifies the intention of the Clause by making it say simply, that the prices at which the Commission shall sell raw cotton shall be such as may seem to them calculated to further the public interest in all respects. It will be seen that the words are not limited any more by reference to the cotton bought and cotton imported; and it is made quite clear that the function of the Commission is to sell raw cotton and nothing else. I hope, therefore, that the hon. Member for Bury and his hon. Friends feel that we have completely met the points made by them in Committee, and that these Amendments will improve the drafting of the Bill; and I trust the Amendments will be acceptable to the House.

    These Amendments are very acceptable to us on this side of the House, and I should like to thank the Minister for having given consideration to seeing that the substance of our points is acceptable, and for having met us in this very fair way.

    While echoing what my hon. Friend the Member for Bury (Mr. W. Fletcher) has said, that we are grateful to the Minister for having met us on this, I must remind the House that there were one or two other points of which, in the course of the Committee stage, the hon. Gentleman did say that, between then and the Report stage, he would consider the clarification. But there is nothing about them on the Order Paper. As it is technically impossible after this stage of the Bill in this House to make those clarifications, as there is no Question, "That the Clause stand part of the Bill," I hope that on the Third Reading he will explain why he has not been able to carry out, on these various points, his intention to clarify them. Perhaps I ought not to say "intention" and put words into the hon. Gentleman's mouth. I should say "understanding," and ask him to explain why he has not been able to carry out the understanding that there was that he would see whether he could meet the quite legitimate points put by my hon. Friends.

    It must be very deeply regretted, by those of us who happen to be here at this moment, that we have not the good fortune to have the presence of the right hon. and learned Gentleman the President of the Board of Trade, in whose name this Amendment is put down on the Order Paper, to guide us. The hon. Gentleman referred to moments of clarity on the part of my hon. Friend the Member for Bury (Mr. W. Fletcher). I do hope that some day, at some time, somehow, I may have the opportunity of suitably congratulating the Paymaster-General on his clarity. Let us look at these Amendments. They are helpful Amendments. They are Amendments which are cutting out of the Bill something which is bad, and something which, so far as I understand it, is fundamentally dangerous.

    1.30 p.m.

    It is a little difficult for many of us who have not had the advantage of serving on the Committee, but if I react the words which are proposed to be left out perhaps I shall be able to explain why I think the Government are doing something which is good on this occasion. It is unfair always to criticise the Government if one does not praise them when something is good and when they avoid a danger. I congratulate them further because their wisdom in avoiding this danger has largely come from the fact that they have accepted the good advice of the Opposition. These are the words which it is proposed to leave out:
    "… (in this Act referred to-as 'the Commission') shall sell the raw cotton bought and imported by them (after subjecting it to any treatment so as to render it saleable which they may think it expedient to carry out) at such prices …"
    Those are the words which I am glad to see going out of the Bill. I do not think that this Commission will be very valuable. I am sure that it will be a great advantage to stop them from treating raw cotton. That is what we are doing now. The less they interfere with the trade—I am only dealing with the two words "raw cotton"—the better it will be. The cotton is bought from somewhere abroad. It is for a short time in a Government Department and then it goes straight to the people who make it up. All that the Government do is to handle it. If we once begin to allow the Government to treat it then it will decrease in value during the whole of the time. The fact that the Government are avoiding that treatment, that chance to make a muddle and a mess of it and to render it useless, is something which I welcome. To give an example, just as we talk of bad stuff in coal so, under this, we might have got stuff produced and treated by the Minister described as "Cripps' cobwebs" or something frightful of that sort.

    For that reason I welcome this. I am glad to see that I have the support of one hon. Gentleman opposite. Whether or not he will have the courage to stand up and praise the Government for their good work in limiting control and muddle in this way, I do not know. When I see this sign of turning away from excessive control, as the Government undoubtedly are turning by this Amendment, it would be grossly unfair if I did not congratulate them not in a half hearted way, but in a thorough way. I would like the Minister to take a special message from me to the right hon. and learned Gentleman the President of the Board of Trade to say that I congratulate him on having brought his clear mind to this case and having come to a sensible decision, which is, to keep the Government away from treating the substance in any way and rendering it hopeless for further use as, undoubtedly, they would. We cannot afford to do that sort of thing today with any raw material.

    I wish to ask one question. As this matter now stands I am afraid it may lead to a certain amount of restriction on initiative. A duty has now been put upon the Commission to sell. It says:

    "The Raw Cotton Commission … shall sell …"
    Therefore, they have to take action. I have no doubt that the Minister will be able to assist me. What is the responsibility on the Commissioners if they act in breach of that? Have they any responsibility themselves? It may well be that the price may go down after they have bought cotton. I do not know whether the hon. Member for Bury (Mr. W. Fletcher) can help me on this. If the price goes down, then it would appear that they may have to sell at a loss. How is that calculated to further the public interest? I can foresee the time when the Commissioners will say to themselves, "If we sell at a loss somebody may come along and say, 'Look here, you are not acting in the public interest. You have a duty here to act in the public interest.'" Then they may say, "We had better hang on a little longer in case the price goes up again." When the Commissioners see that the price is going down, after they have bought some cotton, they may say that they have a definite duty to act in the public interest. Can a public informer come along and challenge their action by alleging that it is not in the public interest? If that is so, it will have a very bad effect. I would like information. There is no doubt I can be satisfied that this may not be so but at present, I find it difficult to understand.

    I wish to return to a point which I made on an earlier Amendment but which, apparently, would be more appropriate here. It was said that some of the cotton firms were likely to continue in business. I would like to know to what extent that is likely. If the Commission does not undertake powers which existed earlier, the position may not be so good in the future. I hope that the Commission will not be restricted by this Clause and that they will not repeat some of the blunders of the past. In regard to the import and export of cotton, it was not an uncommon thing before the war for cotton imported from America to be returned to that country and imported again. We looked upon that as involving unnecessary labour, but the fact remains that it was done.

    In normal times there were considerable quantities of cotton in transit and in this connection I would like to know how far the Commission is likely to take the place of the cotton brokers. I hope that they will take over the work, because a considerable proportion of cotton is brought to this country and re-exported. It is brought into ports such as Liverpool and Manchester and resold and exported. There is a likelihood that some of the firms engaged in this may set up in business again unless the Commission undertake the whole of the function. I wish the Minister would inform us whether the cotton Commission will be restricted from acting in the way the cotton brokers acted in the past. I hope that the Commission will not tie itself, and that the cotton trade will be carried on in a smooth manner. By cutting out the gambling that took place in the past, I think the position will be improved.

    I should like to add one thing, with the permission of the Chair. In replying to the last speaker will the Minister explain how it will be possible for the Commission to import cotton which is later to be re-exported if it does not throw out a hedge against it? If the Government are not going to sell futures in some open market against cotton which is not already sold, how will they be able to import without incurring double handling charges, when they will be in competition with other firms which will be throwing up a hedge in Antwerp, Havre or in America? How will they be able to do that except at great cost to the public?

    I should like the Minister to clear up this question of re-export and to tell us whether this is a matter which it is proposed to leave to private purchasers.

    Let me answer the last question first, as I have it in mind. It is not intended that the Raw Cotton Commission should engage in the re-export trade, with certain exceptions. For example, we have made special provision whereby it might act as agent of the Board of Trade in sending cotton to the Control Commission in Germany. Otherwise it would sell its cotton to exporters, who would carry on the rest of the transaction and sell it abroad. The Subsection under discussion requires the Commission to sell the cotton in the manner best calculated to further the public interest in all respects, which evidently means that it must have regard to the interests of the export trade and to the necessities of the spinning industry. It must also have regard to the interests of the taxpayers who would otherwise have to bear the loss. The way in which it is to be done is fully explained in the following Subsection. I am surprised that hon. Members have asked me for an explanation, because it is all there. It is contemplated that over a period of years of these operations the revenue should exceed the outgoings, but not to make a balance between revenue and expenditure in any particular year. The reason for that is the reason which everybody now approves, in relation to the national Budget. There is no great sanctity in the twelve-monthly period.

    I strongly dissociate myself from the new theory of Budget balancing over a period.

    When I said "everybody" I should have said all serious students of the subject. I think I have now answered all the questions.

    I apologise to the hon. Member. For the moment I had forgotten the question, which related to re-export and to the making of hedges by the Commission. We have said more than once that there is nothing in the Bill to prevent the Commission from engaging in these operations if, in its wisdom, the Commission decides that to do so is sound commercial policy.

    Would the hon. Gentleman answer the question I put to him? I appreciate that the duty of the Commission is set out in the following Subsection, but there is also a duty in the Subsection under discussion. If there is a breach of that duty, what action can be taken by any subject of the Crown against the Commission? If there is such action, will it not have a bad effect upon the operations of the Commission?

    The remedy in respect of alleged dereliction of duty on the part of the Commission is the Parliamentary remedy. The Minister responsible for the Commission will be answerable, and a full account of the operations of the Commission will be given every year to Parliament.

    Amendment agreed to.

    Further Amendment made: In page 1, line 22, leave out from "Commission," to "as," in line 25, and insert:

    "sell raw cotton shall be such."—[Mr. Marquand.]

    Clause 2—(Raw Cotton To Be Imported Only By The Commission)

    1.45 p.m.

    I beg to move, in page 2, line 23, to leave out "or."

    This Amendment and the Amendment which follows it on the Order Paper have been put down as the result of a promise I made when representations were put to me in Committee by the hon. Member for Eddisbury (Sir J. Barlow), who pointed out that the prohibition of imports might exclude samples and that it might be very desirable to permit merchants, who, as I have explained, would be carrying on a considerable part of their merchanting business, to obtain samples of cotton available to them in other countries. This would enable them to carry on their third-country or re-export trade. The hon. Member moved an Amendment in Committee to permit the importation of samples of cotton of a weight not greater than 5 lbs. each. We propose to go a little further. We now propose to permit the importation of cotton in larger amounts than 5 lbs.

    I am glad that the Minister has moved the Amendment. The absence of any mention of samples in the Bill showed the danger of a bureaucratic or theoretical approach to any sort of business transaction. It appears fantastic that it should have been kept out of the Bill. Many spinners have been adversely affected by the restrictions imposed upon the sending out of samples. I am glad that the Government, under pressure from the Opposition, have done something to make a bad Bill less bad.

    I should be ungrateful if I did not congratulate the Opposition on the part which they have played in getting this Amendment made in the Bill. It is not a matter of small importance. It is the second or third time that concessions have been given in this way, and I congratulate the Members who have obtained them. The Government have had the wisdom to make this concession. I cannot make out why, with the knowledge which the Department must have of the control of the cotton trade since 1941, this provision was omitted from the original Bill. It seems that the Government, once again, have added to the long list of hastily drafted Measures which have been put before this House after very little consideration. Another reason why I think it is reasonable to accept this Amendment is that it keeps open a tiny portion of the channel of trade, and does something to encourage the cotton people who are using this market to realise that it is not closed once and for all. It does something to lubricate and keep going this trade. So far as that is concerned, I congratulate the Government on accepting the Amendment. I speak as one who does not come from that area of England which is taking a very great interest in this Bill. I hope that these samples will drift into the country in considerable numbers. I think with regard to the removal of the limit that is a thing for which we ought to thank the Government.

    I would ask the Minister, as this has been due to muddle and mess on the part of the Government, if we may have an assurance that there is a proper definition in the Bill of the word "sample." In most Bills in which there is a word of that sort it is defined. I do not see any such definition in this Bill. It may be hidden away, and if so perhaps the Minister will be kind enough to tell me where it is, and what assurance there is in the Bill that a sample can be more than five pounds weight. Will he also give an assurance that, so far as this word "sample" is concerned, there will be no abuse? I wish that the word "sample" could be defined widely enough to include a whole shipload, because then that would wreck this rotten Bill. At any rate, may I have a definition of a sample? I think now that we have the welcome addition of two thinking Members more or less on the Front Bench opposite, and two ornaments, or drill sergeants—the people who stamp on your feet and all that sort of thing—we should be given some further knowledge. No answer?

    Amendment agreed to.

    I beg to move, in page 2, line 27, at the end, to insert:

    "or,
    (c) to cotton imported in a quantity small enough to indicate to the satisfaction of the Commissioners of Customs and Excise that it is imported as a sample only."

    This is said to be a consequential Amendment. I am a little doubtful about that, and, before I accept this as consequential, may I not have an answer to the question which I put very seriously a moment ago? It was as a matter of courtesy that I curtailed my remarks.

    The hon. Gentleman has already spoken on this subject. We were taking these two Amendments together.

    I think that I still have the right to speak again, but I do not wish to speak again if I may have the usual courtesy of an answer. If the Minister will say that he will give me the definition for which I asked I will sit down, and deprive myself of the right to speak again. I want to know the definition of a sample. May I help the Government by suggesting that, if it is necessary to define "sample", they will have the definition put in, in another place? I am willing to sit down at this moment, if they will give the assurance either that the definition is already in the Bill, or, if it is not there, that they will consider it.

    I feel fairly confident that the Commissioners of Customs and Excise who every day of their lives deal with samples coming through the Customs and are fully aware of what is a sample. I cannot say if the term is defined in other Acts of Parliament which regulate the duties of the Commissioners of Customs and Excise, but I Should be surprised if it were not, It is not defined in this Bill, and I give the hon. Gentleman the assurance that, before the Bill is considered in another place, the question of whether a definition of "sample" shall be put in, will be considered.

    Amendment agreed to.

    2.0 p.m.

    Clause 4—(Punishment For Prohibited Importation Or Dealing)

    I beg to move, in page 3, line 34, to leave out from "pounds," to "or," in line 36.

    I think that it would be convenient to take this Amendment together with the Amendment in line 38, to leave out from "pounds," to the end of line 40.

    These Amendments refer to the penalty Clause which the Government have thought right to put into this Bill. They are in line with the objections which we have had to this Bill throughout, and also with the compensation Amendment. The Government have made up their mind to have a monopoly. They are not going to be shown up by private enterprise raising its ugly head and, by its greater efficiency, proving that the Government are not carrying out this function as well as private enterprise could do it. There are a number of precedents in regard to preventing the survival of inconvenient rivals. Going back a long way there was the case of Naboth's vineyard. Then there were the Borgias. Even Al Capone did not want his racket interfered with, and with these precedents before them the Government no doubt thought it wise that there should be no rivalry in this particular racket. I must express my thankfulness that it is cotton that they have selected for this gamble, and not rubber in which I work. If it had been so, I am afraid I should have had to say:

    "Shades of the prison house surround the growing boy."
    Luckily from my point of view, they have selected cotton, in which they intend to keep a real closed shop so that nobody shall be able to deal, as has been done for generations, in cotton in the open market in Liverpool. The reason which they give for doing so is that it is too much of a gamble, but here we have big penalties to be imposed on anybody who tries to do what the Government themselves admit they are probably going to do. The Minister himself this morning admitted that they may deal in future on the open market. That is a gamble. I think myself that it is an effrontery to put in a heavy penalty Clause against people who do a job which they have been doing for generations to the great benefit of this country, to Liverpool and to themselves.

    It is really worth while the House considering what this penalty Clause means. People, who have trained themselves in a most useful function and to whom the whole world looked up with respect, because they knew their function and they put at the disposal of the community as a whole their stored-up knowledge, technique and industry, are to be punished by a fine or imprisonment. That is the state to which this country has come. Though the Government may not know it, this is part of a different export drive. This sort of thing will drive people with knowledge and experience out of this country and they will put their knowledge and their enterprise at the disposal of markets in Antwerp and Egypt where they can earn a living without the stigma being placed upon them of a fine or imprisonment if they carry out their profession.

    The hon. Gentleman is making a Second Reading speech, and is not dealing with the Amendment under discussion.

    This Clause states quite openly that a penalty will be imposed for dealing in this business and that the penalty will be either a fine or imprisonment. I should like to hear from the Government whether they really think that it is in order and that it is correct for them to put this slur and impose these penalties on people who should be used more intelligently for the benefit of the country. I, therefore, ask them to reconsider whether they will not withdraw this penalising Clause and continue to treat those, who have knowledge which they themselves have not got and which would willingly be put at their disposal, in a rather more fair-minded way. If we treat as a criminal someone who might be of assistance to us, he is not likely to enter into a good partnership with us. I can foresee the time when the Commission will want all the help it can possibly get from those who have the requisite knowledge. I oppose these proposals because, firstly, it is wrong to fasten a penal Clause on someone who wishes to carry out the function for which he has trained himself all his life, and, secondly, because it accords ill with the tradition that has been established in this country to cast quite openly a slur upon an admirable, well-conducted and universally respected community.

    I beg to second the Amendment.

    I want to ask one question. We have had a certain amount of experience of these nationalisation Measures, particularly with regard to coal. As far as coal is concerned, no such penalising Clause was put in the Bill.

    The hon. and gallant Member is not dealing with the Amendment under discussion. He cannot discuss coal on a Cotton Bill.

    The question which I want to put is this. Why is it necessary in this Bill to put in these words imposing a fine or imprisonment on people who contravene this Bill? It was not necessary to do it in other Measures. Is there something particular about cotton or is there something particular about the people who deal in cotton as opposed to those who deal in coal, or transport or anything else? I should like a reason why the Government pick out the dealers in cotton not only to do on them what they are doing now but what they have done in the past.

    If I might answer the last question first, there is no analogous position in the Coal Nationalisation Act. The reason why there is no such provision in that Act is that it is quite obvious that a man cannot start a colliery undertaking very easily. In this particular case it is quite easy to infringe the provisions of Sections 2 and 3 of the Bill we are discussing now, but it is extremely difficult and virtually impossible to start a colliery without being noticed. Therefore, it had been thought that a penal provision of this sort is not necessary in the Coal Act but some penal provision is necessary in this Act. That is the reason for the two penalties. The question has been asked about such penalties in other nationalisation Acts. In the Civil Aviation Act, 1946, there is, in point of fact, a very similar penalty, the difference being—and I speak subject to correction—that higher penalties are provided than in this Section.

    I will now address myself to the arguments advanced by the hon. Member for Bury (Mr. Fletcher) in moving this Amendment. We are not discussing the propriety of the restrictions contained in Sections 2 and 3. Those Clauses have been dealt with and the House has approved of them. Therefore it has expressed its will that the restrictions imposed upon the importing and selling of cotton which are embodied in this Clause are part of the law of this country. So it is no longer a question of whether there should be or should not be restrictions. They have been accepted and obviously they must be enforced. The question of whether we are taking too drastic steps to enforce what are necessary and useful restrictions is entirely another matter. The hon. Gentleman did not address himself solely to the severity of the penalties but also to the question of the propriety of the restrictions. The restrictions being necessary, one must assume that penalties are necessary in the application of these Clauses. If the Amendment were accepted the result would be that the only sanction for the enforcement of the restrictions would be a fine and not necessarily the full amount of the fine laid down, because as everyone knows a court has discretion as to the amount of the fine it may inflict and it need not necessarily inflict the maximum amount. Consequently the Government may find a person determined to evade the provisions of the Act because his reward for such evasion would make it well worth his while, and that the fine would be no deterrent inasmuch as he would get sufficient to reimburse himself for having to pay the penalty.

    May I be allowed to finish my point and then I will give way to the hon. Gentleman. That being so, it was felt that it was necessary to have as an alternative—even as an addition—to the fine something which was more deterrent in its effect and that is why we have thought it necessary that there should be the possibility of imprisonment in addition to the fine. I will now give way to the hon. Gentleman.

    I cannot quite follow that. Is the hon. and learned Gentleman's argument really that the Government are afraid that the court might use its discretion in a way the Government would not like?

    That is exactly the implication of what the hon. and learned Gentleman said. He said that the court might not impose the maximum fine and that the Government felt that there should be the possibility of imprisonment as well. The absolutely logical conclusion from that must be that the Government are afraid that the court might use a discretion which they do not like.

    I thought I had expressed myself clearly, and in fact I said nothing of the kind. I said that if there was a fine only it might still be profitable for a person who wished to evade the restrictions of Clauses 2 and 3 to carry on his business and incur the fine. I intended to say, and was in fact going on to say, that even if the maximum fine were imposed it might still be profitable to carry on a prohibited business. Perhaps I said it in inverse order, so that it is my fault if my meaning was not clear, but I intended to point out that not only might it be profitable if the maximum fine were imposed but in fact a court is not bound to impose the maximum fine and might think it proper to impose a smaller one. But even if the maximum were imposed that, in the view of the Government, would be an insufficient deterrent. There must be something to make it not worth the candle. We must have power to enforce the restrictions in such a way that there will not be breaches. That is why we think that a fine by itself would not be adequate.

    If that position is accepted and we must have some sanction in the nature of imprisonment I ask the House to say that the next step is a very easy one. The term of imprisonment which has been fixed upon—three months in the case of a summary conviction or two years in the case of conviction on indictment—cannot in my view, be said to be excessive. As imprisonment penalties go it is a moderate penalty. If we have to have imprisonment then the maximum term fixed upon is in no way out of the ordinary. It is, indeed, reasonable. In the case of the Civil Aviation Act, for example, the penalty provided for under Section 23 is, in the case of a summary conviction, three months or a fine of £500, or, in the case of conviction on indictment, two years or a fine of £5,000. It is for that reason that I said that the penalty was even greater in the case of the Civil Aviation Act. In these circumstances I hope the House will accept the view which I sub- mit that the penalty must include imprisonment and, in as much as it must include imprisonment, the maximum term chosen is in no sense an excessive one.

    2.15 p.m.

    I agree with much of what the hon. and learned Gentleman said and accept his argument that if we are to have this kind of trading and the Government administering things with the mind of a Government, then we have to have fierce and terrible penalties. That being so, I am rather interested in the position the Government have taken up. The hon. and learned Gentleman pointed out quite clearly that it might be easy under the present system and might in tact pay a man to be fined over and over again the sum of £100. The Solicitor-General was not however as strong on that point as he might have been and he did not press his case as hard as he might. I do wish I were not always finding myself in the position on these issues of having to get up and strengthen the Government's case. One hundred pounds is the kind of figure one puts in as a limit in these circumstances. It has been going on for a long time, but the value of the pound is not what it was and the penalty of £100 does not now correspond with a similar penalty imposed in a Bill four or five years ago.

    The hon. Gentleman must realise that he is out of Order. We are not discussing whether £100 should be the limit. We are discussing whether imprisonment should or should not be part of the penalty.

    With very great respect, Mr. Deputy-Speaker, the hon. and learned Gentleman took £100 as the balance against imprisonment and used that as an argument. I am saying that his case was even stronger than he made out. He said that £100 was not adequate and used imprisonment, which I am now coming to, as the opposite side of his argument—he had two wings to his flight of fancy. Naturally, the Government want to include imprisonment; they want this to be fierce and harsh and the right hon. Gentleman whose name is at the back of the Bill and whose absence is so continuous today is a man who believes in punishment. He believes that trade is wicked and he believes in punishing the trader, and hitting him whenever he can. Therefore, he likes to include in these Clauses fierce threats of imprisonment. I only wish I had been on the Committee so that I could have helped him to amend these provisions. I am sure he would like to see an inquisition added as well if he could, but he has not quite the courage to do that.

    The hon. Member is now speaking about an additional penalty whereas the Amendment proposes a deletion.

    I am saying that so far as I am concerned whatever the Government might have said on behalf of the inclusion of these words I personally would like to see them deleted, and I will now give one or two reasons why I think that their deletion would improve the position. At the present time there is an appeal going on for labour and there is a shortage of manpower in industry. Here it is proposed to put some of our best industrialists in prison, and I say that we ought not to encourage any court to do that at the present time. There is an appeal being conducted by the very people who want these punishments. They are urging people to develop their industries and to do more to encourage and help our trade and so on. Here we are laying down penalties which might discourage them.

    Having made these two or three points, I say that the Government are completely illogical. One minute they want good traders, good workers, good industrialists and good coal miners, and the next minute they say that they will punish them. I say that it is a most astounding thing that we should have got as far as we have in this Amendment. First of all, the Solicitor-General put only one side of his case—I presume he had not had time to have it all given to him—and secondly we do not have the main factor in regard to this Amendment at all clear. Thirdly, on an occasion such as this when the Government are making appeal after appeal to people outside, we do something like we are doing now. We should have the same spirit as enabled the Government to accept some of the other Amendments and which would permit them to take out some of these really physical punishments—which is what imprisonment is. It is entirely against modern ideas and is only used for real criminals, not for people who are trying to build up British industry and help to save the country at the present time.

    I want to press the Solicitor-General to reconsider this matter. He put the case against the Amendment with his usual courtesy and clarity, but I am asking him to proceed on the principle accepted in the Gilbert and Sullivan piece, of letting the punishment fit the crime. What is the crime likely to be? It is likely to be some infringement by a private merchant upon the activities of a monopoly. Do the Government really think there will be anything but unintentional infringements in the case of this monopoly which is backed by huge capital and wide powers? The only thing which is likely to happen is that people who are being relieved of certain of their functions may make a mistake as to the exact line of demarkation, and may, therefore, be transgressors in some very small way. It is wholly inappropriate to include in the Bill imprisonment for offences of that nature.

    It is all very well for the Solicitor-General to say that the courts will not impose imprisonment unless it is considered that the crime merits that punishment. Again and again one hears courts and tribunals saying that Parliament in its wisdom, has seen fit to make imprisonment the penalty for the offence, which leads them to their conclusions as to the nature of the penalty to be imposed. I have heard these words used on many occasions, and I am sure that the Solicitor-General has also heard them used many times. The insertion of imprisonment in a penal Clause leads courts dealing with these matters to take a very different view from that which might be taken if the penalty to be imposed was merely by way of fine. It is intolerable that these people, who have been in this business for a large proportion of their lives, should be put out of business and under the threat of imprisonment. Is it a fact that Socialist economics can work only if imprisonment is the sanction? Is it contended that a State monopoly cannot function unless there is a threat of imprisonment put over the heads of the rest of the community? Are the Government so certain their Commission cannot operate efficiently that they find it necessary to invoke this criminal sanction? I suggest that the case for the Amendment is extremely strong, and that this Bill should not be coloured by the inclusion of the right to send people to prison for these offences.

    The hon. Member for Wirral (Mr. Selwyn Lloyd), in complaining of the severity of the punishment, said that the type of offences to be dealt with would be mostly minor in character. When there is an offence which is minor in character, the court will impose a minor penalty—it may be as little as £5 or £1 If we were to accept the argument put forward, it might just as well be said that in as much as a theft may be a theft of only a very small thing or may be very minor in its degree of culpability, no Statute should ever provide the penalty of imprisonment. When there is only a minor infringement, the minor penalty will be imposed. The reason why we want imprisonment is that there may be major as well as minor infringements. There may be persons who deliberately, over and over again, and with thorough disregard of the Act and their own responsibility as citizens, scheme to get round its provisions. It is to deal with these persons that we want this penalty of imprisonment. We must be able to have an appropriate weapon to answer activities of this sort which deliberately attempt to overset the provisions of this Bill.

    Amendment negatived.

    Clause 6—(Provisions As To Independent Members Of The Commission)

    I beg to move, in page 6, line 9, to leave out "one year," and to insert "six months."

    This Amendment refers to the independent members of the Commission. There are to be three independent members, who virtually give their services whole-time, to whom there is reserved a special responsibility for price-fixing and other important functions of the Commission. These decisions it might be inappropriate and unwise to divulge to the part-time members, who will be drawn from the ranks of the employers, merchants and workers in the industry. These whole-time independent members will thus be in a situation where, in the course of the discharge of their duties, they obtain confidential information about the policy of the Commission, and particularly about forward-buying contracts into which the Commission may decide to enter. It was proposed in the Bill that there be a requirement that on ceasing to be an independent member such a person, for a period of one year, should not enter into a similar business where he might be able to use to his advantage the information he had gained in the course of his work as a member of the Commission.

    The whole question depends upon what time one considers is sufficient. If we make the period very long, we ensure that the person who ceases to be an independent member cannot go into private trade thereafter and use his special knowledge to his own advantage. On the other hand, if we make it a very long period, we lessen the ability to secure the best possible people for the Commission. If we offer a job for no more than five years, at the end of which there is to be a long period when the person cannot enter into the cotton business, we shall find it very difficult to get the best possible people to serve. The balance of time has, therefore, to be struck. Hon. Members opposite during the Committee stage thought that the period should be three months, whereas my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) went so far as to say it should be three years.

    2.30 p.m.

    We had to strike a balance of advantage somewhere between the two. It is a matter of degree and not of principle that separates us. After listening to what hon. Members opposite said, I undertook to bring forward this Amendment on Report. I gave that undertaking after having had advice from those who now conduct the business of the Cotton Control and who have been engaged all their lives in the cotton business and are fully aware of the way in which the control is conducted, how much confidential information is obtained, and how valuable it is over a period. When considering our attitude to the Amendment in Committee, we came to the conclusion that if hon. Members opposite made out a very good case, we would be prepared to compromise at a period of six months. I want to make it clear to my hon. Friends on this side that I did not give the undertaking to move this Amendment without having consulted my advisers. I have now consulted them again, and they assure me they are satisfied that the period of six months will be long enough. It will be a gain on the original period of 12 months by way of extending our ability to persuade the kind of people we hope to persuade to become members of this Commission, and it will limit the disadvantages to them.

    I wish to thank the Government for having accepted our point of view in this matter. If they continue to divide by six what the hon. Member for Nelson and Colne (Mr. S. Silverman) contends, and what we contend by two, they will get very near to the right balance in these matters.

    I am glad that the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) thinks that I have any influence on these matters, even so negative as that which he suggests. I feel that the Government are not treating their supporters very fairly in this matter. I do not pretend that the difference between six months and 12 months is a matter of fundamental principle, for it is not, but even if one concedes that the assessment of the exact period is a matter of fine balance between one consideration and another, one must remember that 12 months was the period originally in the Bill, which the Minister defended at first in the Committèe, which we defended, and on which we supported him, acting on the basis that the proper advice had been taken and that the proper time limit had been worked out with those best qualified to advice.

    It now looks as if that was not so. My hon. Friend asks us to say that it was not so and to say that those who advised him did so wrongly, and that when they advised 12 months they were making a mistake. The Government are a little too inclined to do that, and to embarrass their supporters in the country in this way. They make a proposal, they defend it vigorously and eloquently, with facts and arguments, and we loyally back them up, incurring such unpopularity as is involved in the country; and when we have involved ourselves up to our necks, lo and behold, the Minister in charge of the Bill says, "Sorry, boys, the Opposition were right, and we were wrong, so you must go back and convince those in the country whom you asked to support us that you ought not to have done so." We do our best, but it is a little difficult.

    My hon. Friend will admit that in this case I did not say the Opposition were right.

    The Minister said six months, the Opposition said three months; the period is now six months. The Minister says that they were more right than he was. What are the facts? My hon. Friend said that he gave an undertaking in Committee, but if he will look at what he said, he will find that he did not quite give an undertaking. Many of us said to him at the time that he was right not to go so far as to give an undertaking, and that we hoped he would look at it very carefully. I do not agree that there was anything wrong with 12 months. The period of assessment for many of the purposes under the Bill is 12 months. If a man takes an appointment under this Commission and makes himself acquainted with the long-range views and knowledge and information collected in many parts of the world for the purposes of the Commission and then decides to give up his appointment and go into private practice, it is not too much to ask him to wait for a sufficient period so as to make sure that the knowledge and information which he derived as a public servant shall not be used in private trade to his own advantage and to the disadvantage of his compatriots. If he has to wait 12 months, it is not a very long period. As I said in Committee, in most private firms the period of restrictive covenant would be very much longer. I do not propose to vote against the Amendment, but I think that, for the first time in his skilful handling of this highly technical Measure, my hon. Friend has let us down.

    When I find that the hon. Member for Nelson and Colne (Mr. S. Silverman) opposes a view which I hold, I am always fortified in believing that my view is right. The hon. Member always attempts to push his own doctrine irrespective of the true merits of the case, and on this occasion he is pronouncing a new faith—"My Socialism, right or wrong." He commends that view to the Government. Whatever mistakes we make, he says, however ill-considered a phrase or a period of time in a Bill may be, however pressing may be the demands of reason to alter it, in no circumstances must we depart from what was originally decided upon. That is not a very sound view to press upon the Government.

    I moved an Amendment on this matter in Committee because I felt this was a peculiar circumstance. Here we are not dealing with a man who is coming out of semi-Government service to indulge in private, trade on his own behalf in the same business. This Bill is designed to see that he does not do that. A man coming out of the Commission's service cannot himself set up in the same business, because the business is the monopoly of the Commission. Therefore, it was a very special circumstance. Although I should like to have seen a period of three months, rather than the original 12 months, I am grateful to the Government for making this very reasonable alteration, and I am glad that they have at last seen the wisdom of it.

    Amendment agreed to.

    Clause 12 (General Powers)

    I beg to move, in 8, line 5, after "thereto, to insert:

    "(including any treating of raw cotton required for rendering it saleable in the discharge of those functions.)"
    I believe that I have already given the House an explanation of this Amendment in my remarks on a previous Amendment which I moved, and which the House accepted. This Amendment is consequential on the Amendment to Clause 1 (3). In the interest of tidy drafting, we omitted these words from the Clause, and we now propose to insert them in a more appropriate place. Perhaps I should explain to those hon. Members who were not in the Committee that the only sort of treatment implied here is that of drying and cleaning the cotton in order to render it saleable as raw cotton. The words already provide that the Commission may deal in raw cotton, and not in any other kind of cotton.

    Amendment agreed to.

    Clause 26—(Exercise Of Powers Of Board Of Trade)

    I beg to move, in page 15, line 34, after by," to insert or under."

    This is a drafting Amendment. Without these words the Clause would refer only to action taken under the Act itself, and not to action taken by regulations under the Act.

    Amendment agreed to.

    Motion made, and Question proposed, "That the Bill be now read the Third time."

    2.43 p.m.

    Since the Bill was read a Second time, two things which bear upon the subject have happened. First of all, the Government have, presumably, deployed all the arguments they could in favour of the Bill. They have got to the bottom of the official brief case, and the contents of that case have turned out to be extremely poor. That is the first thing. The next thing is that a White Paper on the economic situation for 1947 has been produced which, whatever its demerits on remedies may be, has at least shown the very great gravity of the foreign exchange position from which this country is now suffering. It also shows very clearly, and in the plainest language, that the stringency of foreign exchange is going to get much greater as the year progresses.

    Without wishing to recapitulate in full the arguments which have been deployed during the Second Reading, I think it is necessary to examine again the main reasons which have impelled the Government to put forward this Measure, and to beg them, even at this eleventh hour, to withdraw it. As far as I can make out—it is not a very easy task to be sure—the burden of the Government's argument for introducing this Bill, according to the Paymaster-General in his speech during the Committee stage, was that the Bill had been brought forward in the interest of having a stable price for cotton in the United Kingdom. Of course, that argument is inherently false. It is, we must admit, quite possible to keep the price of a commodity like cotton stable in one particular country, but it has to be done by the taxpayer absorbing all the fluctuations which are inherent in an agricultural commodity of this kind. I would not deny that it is conceivable, under conditions of inflation, that the taxpayer may make a monetary profit. That is possible, but so heavily is the scale weighted against the taxpayer, when there is stability of the currency, that he is bound to make a very heavy loss over a period of years.

    The terms of trade, so to speak, under which the Commission have to carry on its business, are so heavily weighted against the Government that heavy losses are bound to occur. If hon. Members opposite are returned in the next Parliament, they will very well remember what I am saying this afternoon. If I may use a medical analogy, what the Govern-are doing is to substitute a piece of wood for the mercury in the thermometer, to paint 98.4 on the wood, and then to put it into the patient's mouth and say, "You are all right, my boy. Your temperature is normal." To give another illustration, it is quite possible to keep the price of cotton stable, in the same way as it is quite possible not to see the burglar if one puts one's head under the bedclothes. But the fact of the matter is that the price of cotton is unstable because it is an inherently unstable commodity. It is subject to the rain, the wind, the sun, and the pest, and, so far, His Majesty's Government have not succeeded in extending their control over any of those four factors, and it will be a very long time before they attempt to do so.

    The next thing is that there is a great Socialist predilection to imagine that the market price of any commodity, even if it be a stock or a share, is determined by some preternaturally clever, and generally dishonest, people in top hats, who have information which enables them to make intelligent guesses by which they exploit the rest of the community. Nothing is further from the truth. Most market prices are brought about by the exercise of very little intelligence. This is particularly true when one comes to look at a commodity like cotton. The market price is the synthesis of the hundreds and thousands of buyers and sellers every morning. Whereas the weaver who is tendering, or who has just had a successful tender, is buying futures, the grower may be selling them at the same time in order to stabilise his prices. For 20 years, I have been conducting this kind of business, not in cotton, but in metal, where the use made by my firm of the metal market was to avoid having to speculate in the raw material with which we were dealing—copper, lead and tin. That is the object.

    But when the consumer buys more than the merchant is prepared to run on his books, then he must buy futures in order to hedge it, and vice versa. The whole object of a terminal Market of this kind is to form an easy clearing house, without the exercise of those preternatural powers which are essential if the Commission is to do its job properly. The object of the terminal exchange is to strike the market price every morning. In order that a single Commission, a small coterie of brains, should get the market price right, it is necessary for them to know the state of every order book in the cotton spinning, weaving and finishing industry each morning, and to know the number of sellers, and the quantities on the growing side as well. Such information cannot be collected by a single Commission. If it could, it would be out of date by the time they got it. There is only one way to get a commodity in international exchange in order, and that is by allowing a free market, and by allowing the plus or minus, the excess of buyers or sellers, and to strike that market price by this simple means. I will not go into the fact that the Government buyer is always a marked man. I said the other day that a Government buyer was looked at like the criminal looked at Inspector Lestrade. He had only to look at his boots, and he knew that he came from Scotland Yard. Nowadays, we look at the man to see whether he has a black despatch box with a crown on it, and we know that he is a Government buyer.

    I admit that there has been speculation in the Liverpool cotton market. We all know that, but I do not think that the House would be anxious for me to develop the argument as to whether speculation is a good or bad thing, although, as a matter of fact, there is a great deal to be said for the stabilising influence of speculation on markets. Admitting, for the purpose of this argument, that speculation, as conducted in a staple commodity on a big scale, is a bad thing, which I do not—then the right way to handle the matter is to curb that speculation by demanding very large margins, or charge very high commissions for those outside the trade, rather than by destroying the medium which has been used so long and so successfully by all sections of the cotton growing and processing business. Because Lloyd's has sometimes been used for gambling transactions that is no reason to shut it up, because Lloyd's is absolutely necessary for the shipping business. The argument that because there has been speculation you should shut up the Liverpool Cotton Exchange is entirely misjudged. If speculation is felt to be harmful, the right thing to do is to impose high margins and high commissions for those outside the Liverpool Exchange, and not destroy the Exchange.

    There is a feeling that to open the Liverpool Exchange would be detrimental to our foreign exchange position. I have heard that said, and I have seen it written, by Members opposite. That is fallacious. In the first place, the Government themselves have admitted that £1 million of foreign exchange is earned every year by the Liverpool Cotton Exchange. That estimate is a low one, and takes no account of the indirect profits accruing through banking, shipping and insurance, which used to flow into that market. But, always subject to exchange restrictions to prevent the export of capital, it cannot be wasteful to have a terminal market open, since what is retained as a result of its transactions shows the exact need for the manufacture of that quantity. So the argument that there is something which causes waste and overbuying in the existence of a terminal exchange is not sound. It is not possible to establish an international market in a commodity of this kind except in a country which, geographically situated like our own, is not a large grower, or a grower of cotton at all. Those who think that the Government have exported the international market from Liverpool to the United States are doing the Government a slight disservice. That market will not exist in America, because America is too large a grower and user to be used as an international market.

    It is a thousand pities, when the object of everyone is to promote the free exchange of raw material, to expand international trade, when Members make speeches about international organisations, and call for co-operation between the nations, that the Government should destroy, by a stroke of the pen, one of the organisations which, for many years, has done a great job in the cotton industry, and has generally incurred the praises of all those who are engaged in it.

    Lastly, on the general principle. I can think of no instance where a Government have established a monopoly in a commodity, not one pound of which they grow or control themselves. Surely that is extraordinary. It is one of the things which will cause the taxpayer a great loss. The Government have no cotton of their own in this island, with which to iron out the fluctuations in the market. They are simply speculators in other people's goods, with all the terms of trade against them.

    So much for the inherent fallacies which have promoted this Bill. With regard to the loss of foreign exchange, the Paymaster- General said, earlier today, that, spread over five years, the cotton industry could not support £1 million, which we suggested might be the amount of compensation which those dispossessed of their business would attract. Yet, on the Government's own admission, the closing of the Liverpool Exchange will cost the country £1 million per annum in direct loss of foreign exchange alone. How are these two arguments compatible? The Paymaster-General has made no attempt to make his argument compatible. We all know that we are not only in an extremely tight situation for foreign exchange, but also that that stringency is particularly concentrated in the Western hemisphere countries, in the dollar in particular—14 per cent. of our exports and 42 per cent. of our imports coming from the Western hemisphere. How are we to believe that the Government really take this situation seriously, when they proceed to undo one of the means which gives us five to six million dollars per annum of direct exchange? How can we take these things seriously? Now we understand why there have been no remedies put forward in the economic White Paper. Here is an action by the Government which, for no sufficient reason at all, is being taken in the opposite direction. They are cancelling earning power, chiefly in dollars, to the tune of five million dollars per annum; they are cancelling, or greatly reducing, the indirect earnings which flowed into the country as a result of this free market—earnings in banking, shipping and insurance. No argument has been produced by the. Government, of any cogency, in support of this Bill, except to say that the Government believe that we shall be able, out of our intelligence, to buy cotton and distribute cotton more cheaply than a free market. The whole case rests on an assertion which has not been supported by detailed argument.

    To sum up, we shall vote against this Bill, because the service to the spinner will be far less good than it has been. It is bound to operate at high cost to the tax-payer, because the terms of trade under which it will work will place a permanent handicap upon the operations of the Commission. Secondly, we shall oppose it because the loss of the foreign exchange is a frivolous reversal of what ought to be done today. Thirdly, the Board of Trade is supposed to be the guardian of our trading interests. On this occasion we see the gamekeeper turned poacher, and a piece of British trade for which they are the guardians is cast away, without any sufficient argument to support their action.

    3.1 p.m.

    Since this Bill was first introduced—and we were warned it was to be introduced—the whole economic background of the world, in commodities, has changed very considerably. I had hoped the Government's flexibility of mind might have changed with it. But what are the significant facts that have altered since then? First of all, this country has had a lesson in the effects of what nature can do. A severe winter, followed by floods, has already upset, inside these islands, the whole of our agriculture and nearly the whole of our economy. Is it not to be deduced from that, that the forces of nature on cotton growth throughout the world will be, as they always have been in the past, quite sufficient to bring about enormous fluctuations, based on the fact that there will be more cotton one year than the next? That will have a vast effect on cotton prices, and none of the machinery set forth by the Government in this Bill will alter that fact. I shall revert to that in a few moments, when I come to the Minister's main argument in Committee, that the chief advantage of this Bill was stabilisation.

    What else has happened? There has been the advent into the cotton world of a new factor in Japan. Japan's new plans for cotton to be supplied by America, on terms not at all analogous to those at which we buy, will have an enormous effect on the cotton industry in this country. There is already a commission going from Australia to Japan to see what can be done in the way of trade between Australia and Japan. That again has to be taken into account from the point of view of the Lancashire cotton trade. Then we have, as pointed out by the President of the Board of Trade himself, the process of economic evolution which is taking place throughout the world, and countries which were hitherto only importers and not manufacturers are now starting to manufacture. That again must have its effect on the Lancashire cotton industry. I have seen signs of it increasing in India; it is beginning to happen in China, and I would not put it out of the question in Malaya in a very short space of time.

    These facts lead one, inevitably, to the conclusion that cotton in Lancashire is on the danger list. It has not had time to recover from the effects of the war; it is hardly convalescent. In the Budget, it has been given one or two small and quite ineffective doses of febrifuge, but they are not enough to rescue it from its state of a very sick man. That is the burden of His Majesty's Government, which now introduces a Bill to be another and firmer blow to the Lancashire cotton industry. That is not only my opinion. I should like to quote the opinion of the newspaper "Time" which, as everybody knows, is a very well-informed journal on this matter. In their recent issue they say:
    "A British Government Commission now does Britain's cotton buying. Britain's spinners now pay more for their cotton than spinners elsewhere with access to free markets."

    I would point out to the hon. Member that that article is nonsense. On two days only the price of cotton 'to the spinners of this country has been above the American price to American spinners.

    I do not agree at all that that makes it nonsense. That is taking it over far too short a space of time. The hon. Member will remember, that not so very long ago there was an adjustment of 4d. in cotton in one direction. That may easily take place in the other direction. I think the opinion is one based on considerable knowledge. I repeat that cotton is certainly on the danger list, and I can see nothing in this Bill which will help; in fact, it will do exactly the opposite. What were the Minister's arguments in support of this Bill the whole way through? They were, first of all, that it was wrong that gambling should take place in the Liverpool Cotton Exchange and elsewhere with a raw material which was so vital to this country. But the Minister himself, during the course of the Committee stage, quite openly said that the reason they wanted such very large sums of money available was that at some moment they might think cotton was cheap and they might want to buy a very large quantity. In other words, it is moral and all right for the Government to gamble with the people's money behind them, but it is wrong for there to be an open market used for "hedging" by anybody else. The Minister himself is going to "play the market". I think he should have been made "Playmaster-General" instead of Paymaster-General.

    Let me deal with the other argument, which was that stabilisation was to be the great thing. The great benefit to be obtained by this Bill was stabilisation. But it is stabilisation inside a vacuum. It is useless to use the word "stabilisation" when, in fact, the price of the commodity with which one is dealing is fluctuating throughout the rest of the world. Sooner or later, if the Minister makes sufficient wrong guesses, the protective circles of money with which he has provided himself under this Bill will be exhausted. If his buying of cotton is bad over a sufficiently long period, then his stabilisation will cease to be a thing of reality at all, because he will have used up all the money from the funds which have been voted to produce stabilisation. A stabilisation fund is exactly parallel to the funds that are being used to stabilise the price of food and of other commodities—the £450 million which appear in this year's Budget. The £80 million or £90 million referred to in the Bill are to be used for exactly the same purpose.

    The note of warning which the Chancellor sounded in respect of continuing to use public money for that purpose should be sounded in this connection as well. There is no doubt that this cry of stabilisation was completely and utterly unreal. The Government, having taken a certain line regarding rubber, opened the market, and permitted a reduction in the fees to be charged to outsiders for an article which is in exactly the same position, so far as the world is concerned—namely, that it is not in short supply—I cannot see why arguments which induced them to open the rubber market have not been used with regard to cotton. There is not one shred of difference, from the point of view of either the moral or the economic argument.

    There is now a meeting on international trade at Geneva. Some of the representatives at that meeting must be having a considerable laugh up their sleeves when they see that the President of the Board of Trade, who represents this country at that meeting, to plead for international trade, and who is working very hard for it—I am convinced that he is sincere—also has his name at the head of a Bill which is about to suppress an international market which was definitely asked to be retained by every single member nation at Geneva at the moment. It would be extremely difficult to explain that away. How can we achieve this stability in any commodity nowadays? The Minister knows that with regard to tea, the country has been warned that there will probably be a rise in its cost. We cannot achieve stability in that commodity. We cannot achieve this stability in any commodity nowadays? The Minister knows that with regard to tea, the country has been warned that there will probably be a rise in its cost. We cannot achieve stability in that commodity. We cannot achieve stabilisation in commodities. For the Government of this country, which is not a producer but a consumer of cotton, to believe that stabilisation inside a vacuum will not be crushed into nothing by the force of nature in a few years' time is, to my mind, a sign of how their permanent wedding to theory has blunted their intelligence and their ability to look at the real facts of the case.

    Many hon. Members on this side of the House feel very strongly indeed, and I would like to send out from these benches a message. Hon. Members opposite felt strongly about the Trade Disputes and Trade Unions Act, 1926. I can remember the right hon. Gentleman the' Secretary' of State for Foreign Affairs coming to this House and making an impassioned speech, saying how delighted he was, after 20 years, to be able to see that Act repealed. I should like to say with equal force and with equal strength and with equal sincerity that we on this side of the House send out a message to Liverpool that the day will soon dawn when we shall be able to do exactly the same thing, and reverse this pernicious Measure, and allow the opening again of one of the strongest and greatest instruments for international trade that there ever has been, and which was one of the things in this country envied by other nations. I sincerely hope the time is not far distant when we shall be able to put that promise into action.

    3.11 p.m.

    In the few moments during which I wish to speak I will address myself to one or two points which have been mentioned. With regard to the repercussions on international trade, one of the best and most heartening pieces of news—for me, at any rate—that I have heard since I came into this House was the news last week that 20,000 bales of Russian cotton had been landed in the docks in London as against 6,000 bales landed in the same period of time from America. That happened last week. My point about it is this, that, far from the closing of the Liverpool Cotton Exchange meaning a decline in international trade in cotton, I think that it will stimulate it.

    At present, there is, without any doubt, a ganging up of the raw material people all over the world. That is correct. I saw this cotton when I was in America last year. That has been given to Japan by America to be used up on Japanese machines, and to be sold back to us here, if we are not careful, for dollars—stuff that is not fit to use in any mill that I know in England, and which, according to reports, cannot be used in any mill anywhere on the Continent either, it is so low in quality. The same thing applies to the Australian mission to Japan on wool.

    I agree with the hon. Member for Bury (Mr. W. Fletcher) that we are in a very tight spot. Very often I am despondent about the small amount of knowledge that there is down here as to what is actually taking place behind the scenes in Lancashire and Yorkshire on the question of textiles. We are in a very dangerous position—very dangerous. If we persist in backing America and backing Japan to maintain 80 per cent. of Japan's exports in textiles, we are asking for suicide in Lancashire—and Yorkshire, too, ultimately. The time has come when something must be done about it.

    With regard to making a working proposition of the Cotton Commission, I would say this at this stage, that to make it work we must retain the firms that have served the cotton industry so well in the past. I have said it before. I have said it at every stage, and I say it again. It seems to me an almost impossible job to drag an answer from the Board of Trade on the subject of what they intend to do with those firms, and what they are going to do with the men employed by the firms. The hon. Member for Kirkdale (Mr. Keenan) has made the same plea at every stage. We want an answer. We demand it. We want it. Why should not these people know where they stand? I am backed up by the fact that the retention of these firms will give satisfaction to the spinners in Lancashire. I would ask the Minister again to try to find out, if he cannot give some information on this subject, whether the Board of Trade is sympathetic to the real demand in Lancashire for this, which demand has been made by hon. Members on this side of the House and on the other side, too.

    3.15 p.m.

    I regard this as a very sorry day indeed for Lancashire and Cheshire. I have been a member of the Manchester Exchange for about 25 years. As some hon. Members know, it is attended regularly by everyone' interested in the cotton industry. Cotton merchants, spinners, weavers, and finishers and representatives of every other section of the industry go there on most days of the week and, in particular, on Tuesdays and Fridays. It is the focus point of this tremendous trade of the past and the diminishing trade of today. I have attended comparatively regularly for the last 25 years. I find that practically every section deplores what they consider this tragedy of the Cotton (Centralised Buying) Bill. I have listened to the Debates throughout the whole of the stages of this Bill hoping to find some really convincing reason why this would be an improvement to the trade. I have found no convincing reason from any Government speaker. I think the nearest reasoning which I have come across was that of the Chancellor of the Exchequer who quoted what he thought were two great authorities on this subject. He quoted Sir Frank Platt and spoke most eulogistically of him and his work, saying that he was head of the Lancashire Cotton Corporation. The Chancellor paid great attention to his views. I would point out that whilst Sir Frank Platt, whom I know well, has taken a prominent part in the work of the Lancashire Cotton Corporation he never has been the head of that organisation.

    Some three years ago the Chairman was Mr. On, who takes a very antagonistic view of this Bill and who has shown it repeatedly, specially in a long letter which he wrote to "The Times" in April of last year. The present chairman of this large organisation, Sir John Grey, has not on any occasion given any, indication that he is in favour of centralised buying. In fact, it is rumoured that although Sir Frank Platt is known to be in favour of centralised buying the large number of spindles represented by the Lancashire Cotton Corporation did not vote either for or against when a vote was taken on this question some months ago. Indeed, that large organisation together with another large firm, decided to abstain from voting. In spite of that, the vast majority of spinners—practically 80 per cent.— voted against centralised buying.

    We have seen Government bulk purchasing work admirably during wartime in regard to certain commodities. There are special reasons, which I have not time to discuss at length, which make that type of buying a success. We have yet to see centralised buying of this type prove successful in peacetime. We have already experienced the great difficulties of the centralised buying of food in the Argentine, and the similar form of purchase of rubber from Malaya and tea from India and Ceylon. We have seen some of the buying edifices in those parts of the world crumble and sometimes crack. Others are groaning under the strain. There is nothing to show that bulk buying is anything like the certain success which the Government suggest. I do not wish to take very much longer because many others wish to speak, but I would point out that there is ample evidence that the vast majority of people in all sections of the trade in Lancashire deplore the step which the Government are taking. It is a step which has been taken purely from political and not from commercial motives. No evidence has been produced to prove that it is commercially sound. It is being done in a spirit of ignorance and vindictiveness for which the country will, I believe, one day pay very dearly.

    3.21 p.m.

    I shall vote for the Third Reading of the Bill with the fullest possible support of the working-class electorate of my constituency, in which the Cotton Exchange building is housed, and also with the fullest support and backing of the whole of the working-class in the Liverpool area. I say that with perfect honesty and sincerity. I know that the position the workers in Liverpool have taken for many years with reference to the Liverpool Cotton Exchange has been one that has been stated by them, namely, that the Exchange was nothing but a parasitical organisation through which huge individual profits were made, at times when people in the lower sections of the industry had to remain out of work for long periods, if there was any difficulty in the cotton speculation that went on in the Exchange. I know that we are speaking here from two entirely different angles. Hon. Members on the opposite side speak entirely for those who have been able to make large fortunes—

    I am speaking quite definitely for the people of the working-class in Liverpool, who have been out of work on many occasions. They have had to remain out of work for long periods without question of compensation of any sort for their unemployment. At the same time, the people for whom hon. Members opposite speak have gone short of absolutely nothing that they have required.

    I rise to place on record a rather interesting incident which took place in the Liverpool area in the autumn of last year. I was rather disturbed when I received a report of something that had happened in the Liverpool area. I am certain that Clause 4, which is the penal Clause, is absolutely necessary, although I hope it may not have to be used against cotton brokers engaged in the Liverpool area. When the Bill was being discussed, all sorts of comments were made in the first instance about how it would affect Liverpool. The cotton brokers, who number 200 or 230 members, decided to have a meeting to discuss what was probably going to happen. A private meeting was rapidly called. It was discovered when the meeting was opened that, by some peculiar chance, a Press reporter had got in. After the reporter had been asked to leave—which he did—a rather serious discussion took place about the position in which the brokers would find themselves when the present Bill became an Act of Parliament.

    The matter was fully discussed, and the chairman asked for questions from the brokers themselves, and quite a lot of questions were asked. When the questions were nearly finished, one gentleman got up and asked the chairman whether something could not be done about it. The chairman answered; "That is what we are trying to do. We are finding out what can be done about it. What exactly do you mean?" The speaker asked whether there was not any action they could take about it. The chairman asked: "I do not know what sort of action you are suggesting." The speaker went on; "Can we not take some revolutionary action?" The chairman got up then and said: "If it is revolutionary action you are talking about, I'm with you." The brokers also got up and cheered the view that there should be some revolutionary action. I know they did not know that I knew this, because they thought it was a private meeting. They do not yet realise that in Liverpool I can generally get to know anything that is going on there, private or otherwise. I think that this is the first time a record of this particular meeting has been made anywhere.

    It is for that reason that I was pleased to see Clause 4 in the Bill, because it may be necessary, if this suggested revolutionary action takes place, for this Clause to be used to curb the activities of those who may think it possible to sabotage the position in relation to the Bill. If this Bill, and the centralised buying of cotton, is able to produce for the State the tremendous profits which have been produced for individuals out of the purchase of cotton, it would be a great asset to the State, and particularly to the Socialist State. I hope that when this Bill has been passed and put into operation those people in Liverpool, who have had very little out of cotton, from the point of view of the work which they have had to do in relation to it, will be certain of permanent employment and a better standard of existence.

    3.26 p.m.

    The hon. Lady is usually controversial, and I do not propose to follow her in the controversial remarks which she has made. I want to bring back the argument to the more serious points. The first point which, I submit, is to be made against this Bill is the fact that it will involve the State in a colossal gamble. When we first began discussion of this matter, any mention of gambling or speculation was greeted with a sort of pharisaical horror on the benches opposite. The Paymaster-General admitted, during the Committee stage, that it could not be denied that the Commission would operate in a speculative way, and he referred to the unpredictable and speculative nature of the crop. He made it clear that the Commission would buy when it thought that prices were low. He admitted completely that it was a speculative business. Coupled with that speculation, the Commission is to carry a huge stock of cotton, which is a dangerous position for a speculator to be in. It is not only to carry this huge stock of cotton, but, if I understand the cover scheme aright, it will also have to carry an enormous stock of manufactured goods, and of finished and semi-finished materials. The State is to carry these tremendous stocks, when undertaking at the same time highly speculative transactions.

    The second point is that we were told that it would not hedge cotton. Today the Paymaster-General has gone further, and rather indicated the probability—he certainly admitted the possibility, and he rather, I think, also suggested the probability—that the Commission would hedge. Where are they going to hedge? I would say in passing that I think most people would agree that they would be very wise to hedge. But, if they hedge, where are they to hedge if not in New York? It is only practicable to hedge cotton on a market where you can also tender. That means that if they hedge, they must be prepared to tender on New York, and either be prepared to ship back or keep in New York large stocks of cotton. If they do that, what about the warehousing, insurance and contracts and arbitrations necessary? And will not they, in fact, be setting up, or taking a large part in, a market in New York precisely similar to the market in Liverpool which they have extinguished? Every one of these transactions to which I have referred will cost dollars and I submit to the House that it is a farcical situation. Owing to the nature of these transactions, the Commission is going to play a major part in a market like that which the Government propose to destroy, and is going to have to pay dollars to do so.

    The Paymaster-General admitted that the industry was going to have to pay for all this. He repudiated any idea that the taxpayer might have to subsidise the operations of the Commission. He said quite definitely that there was no question of a subsidy by the taxpayer. In other words, if the Commission is wrong on its unhedged gambles then the industry was going to have to pay. That means that the industry which is endeavouring to sell its goods in world markets is going to be put out of competitive business. I submit that we come back in all these matters to the export trade, and anything that is going to make our export trade more difficult to carry out is a blunder. So the first series of points against this proposal are that it is speculative; that speculation will be unhedged; if it is hedged it is a transaction of hedging; that will cost dollars, and any loss that there may be has got to be borne by the industry itself.

    The next series of points against the Bill in my submission is that it is a bulk purchasing scheme and its consequences will be the normal consequences of bulk purchasing. We have had in the linseed oil scandal a perfect example of the result of bulk purchases. We have had created against us a bulk selling organisation and I suggest that that is the inevitable consequence of bulk purchase. In the case of the linseed oil business, there was an intermediatory authority in the shape of the Argentine Government intercepting the profit.' In other words the primary producer got no further inducement to produce. Such a state of affairs is not going to bring additional advantages to this country.

    Reference has been made to the principle of the widening of the basis of world trade. I have a quotation from a speech by Senator Vandenberg which I had hoped to quote: In it he expressed quite clearly his view on behalf of those for whom he is entitled to speak that if there is going to be a series of bilateral trade agreements between countries by way of bulk purchase then the United States will have to review its whole position on its present proposals for the widening of the basis of world trade.

    Next it is going to involve the destruction of a delicate piece of trade mechanism. Speaking at Geneva only a day or two ago the President of the Board of Trade made this statement:
    "We have to reconcile two great economic facts. One, the value of the stable and traditional channels of trade, more delicately balanced than some seem to realise, judging from the suggestion for its direction into new channels at short notice."
    That statement seems to indicate a glimmer of light entering into the outlook of the President of the Board of Trade in this matter. Here we have a most delicate piece of international trade mechanism which is to be destroyed.

    There is this further disadvantage in the case of bulk purchasing schemes that individual service cannot be maintained. I think that I speak here with the support of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). The Commission will be too big to study individual requirements. The broker could study the individual outlets for his cotton, mill by mill. There has been, as the Paymaster-General mentioned on a previous occasion, a certain standardisation in America. Certain universal standards have been adopted but within those standards there are very large variations of the grade and staple. It is essential for the individual spinner to receive individual attention and to be able to have the particular cotton which suits him scientifically and carefully provided.

    I believe that the members of the Control staff and of the Commission staff have no conception of the complexity of the task with which they are being confronted and we have today had striking confirmation of that from the speeches made by the hon. Member for Ashton-under-Lyne. As a spinner he obviously views with horror the disappearance of the cotton merchants from Liverpool and I say again that this Bill does mean their disappearance. The other functions of acting as sellers' agents for American shippers and as buying brokers for spinners are not 'the function of the cotton merchant primarily, and this Bill provides for the extinction of the cotton merchant as a merchant in cotton and the consequence will be that the spinner will not get precisely the cotton he wants.

    That, I submit, has been conceded by the Member for Ashton-under-Lyne. And again we come back to the question of the export trade. We have had a very serious warning about Japansee competition and it is vital if we are to recover our export trade that the spinner should get exactly what he wants. A commission—by the very nature of its existence and because of its size—cannot have that individual knowledge of individual outlets for the cotton that the merchant had in the past.

    The only argument in favour of this Bill, when all the discussion has been sifted, is the fact that it may lead to the stabilisation of prices, but that is only an advantage if the price is stabilised at a competitive level. Any fool can stabilise at 25 per cent. above world prices, and the one thing which has never been explained to the House or to the Committee is how the price can be stabilised at a competitive level. We want to know how that is to be done. It is in fact fantastic that a country which grows not one pound of this commodity and which uses only 10 per cent. of the world crop should be able to stabilise the price. If, we stabilise our price above world levels we come back to the question of the export trade, which will suffer most seriously in consequence.

    The matter of the loss of dollars has already been referred to, and I do ask the Government, even at this eleventh hour, to think again on this matter. I do not really believe that they or their advisers knew quite what they were embarking upon when they started on this proposition which, as was admitted, was full of political content. I think they prejudged it; there was no public examination or inquiry. I do ask them even now to change their minds on this matter. After all, changes of mind are not out of fashion these days. One is led to believe that considerable deletions have been made from the Transport Bill, and even on the matter of conscription we understand there has been a substantial change of mind. I suggest that the Government should follow the present prevailing fashion and that on this matter of such complexity they should think again and hold their hand even at the eleventh hour. I believe that this Measure is disastrous to Lancashire's export trade and a cruel injustice to Liverpool. It will involve the destruction of a great international market, and if the Government persist in this they will one day, if they have the welfare of the country at heart, bitterly regret what they have done.

    3.40 p.m.

    I should like first of all, in winding up this Debate, to comply with the request to say something about those matters which I undertook during the Committee stage to reconsider, but about which we have placed no Amendments on the Order Paper today. The right hon. Member for Aldershot (Mr. Lyttelton) asked, in connection with Clause 8, that we should consider an Amendment making it obligatory on the Commission to present its annual report and statement of audited accounts at the same time. I understand that my hon. Friend the Secretary for Overseas Trade has communicated with him on the matter, and that he has undertaken to consider presenting the report and statement to Parliament at the same time.

    On consideration of Clause 9, it was proposed that the words "in the raw state" should be inserted to make it quite clear that what the Commission were selling was raw cotton. I have already alluded to that, and have said that we are quite satisfied, on taking advice again, that it really is not necessary to introduce these words in the Bill. The Bill already lays upon the Commission the clear obligation to deal in raw cotton. In regard to Clause 18 (3), it was suggested that it was unnecessary to include provision for the power of the Commission to repay advances. We have taken legal and Treasury advice, and we are advised that it is necessary to put this in the Bill, to put beyond the doubt the power of the Commission to repay advances when they wish to do so.

    Is the Paymaster-General satisfied that it will be ultra vires for the Commission to deal with anything but raw cotton?

    Yes, Sir. In regard to the research Clause, it has already been agreed by the Committee that the Commission may have power to research or to finance research in the processes of manufacture. In regard to the remainder of the transactions of the Commission, it is clear that it is limited to raw cotton.

    May I now say a word to my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes)? I feel that he was disappointed with what I said in reply to his previous remarks, and yet I cannot understand why. The last thing I desire is to appear in any way to disregard the significance of the remarks he may make on this subject. There is obviously no one in the House who knows more about the textile industry than he does, and I have sympathy with his views on the subject. I have already said that when the Commission is established, work will remain for these firms. There is nothing in the Bill to prevent them engaging in re-export of cotton, or acting as brokers if the spinners are prepared to use them in that way. I do not know what more I can say than I have said already.

    What we are a little concerned about is to what extent the Commission will be concerned with transhipment.

    The Commission is obliged to see to it that cotton is provided for transhipment and the re-export trade, which it can do through the merchants.

    Would my hon. Friend say whether the Board of Trade will give a direction to the Cotton Commission to see that these firms will be employed?

    We cannot direct the Cotton Commission to see that the firms are employed by spinners, or purchasers abroad to see that firms are enabled to sell cotton abroad. All that we could do would be to direct the Commission to use their services in some way, as agents. They are acting now as agents for foreign shippers. I do not see how the Commission, or the Board of Trade, can insist on the retention of these firms in business. Some will continue without doubt, but others may find competitive conditions too difficult, and in that event no one can prophesy what they will do.

    The right hon. Member for Aldershot said that he felt the Government had got to the bottom of the official brief case. The right hon. Gentleman is rather fond of referring to the fact that Government spokesmen do have the advantage of obtaining the advice of civil servants. But let there be no doubt whatever in anyone's mind as to whether the Government believe in this Bill. We do believe in it, and the longer we studied it and examined the actual operations of the present Control, the more satisfied we were that we ought to keep the Control going. I am proud to be associated with this Bill, and to have had the honour of piloting it through all its stages in this House. Having said that, let me reassure the hon. Member for Bury (Mr. W. Fletcher) that I do not intend to play the market, as he forecast. The responsibility for dealing in raw cotton will be that of the Raw Cotton Commission, and I am not seeking an appointment to that body.

    It is common ground between the Opposition and the Government in this matter that the business of cotton growing and selling is subject to fluctuation, is inevitably speculative—if speculation means that you cannot foresee, with certainty, the supply and demand of a commodity produced by thousands of growers and consumed in thousands of spinning units all over the world. Of course, that is speculative enterprise, and anybody who deals in cotton is bound to speculate in that sense of the word. I defy anybody to find in any speech that I have made on this subject any suggestion to the contrary, any suggestion that speculation, in that sense, is indefensible or undesirable. I wish Members would distinguish between inevitable and necessary speculation on a spot market and the kind of outside speculation—by those who have no business in the cotton industry at all—which becomes associated with the free futures market. In a situation where you are engaging in business from which risk is inseparable, there are only two ways of evening out the inevitable fluctuations. One is to have a market of numerous buyers and sellers of futures, each betting, as it were—and I do not want to use the word "betting" in a contemptuous way—on his own judgment—

    —of the movement of supply and demand, and thereby providing facilities for the producer and the user to hedge their risks. That is a fair description. That is one way to do it, and the way in which it was done during the 19th century. The other way is to have a single buyer, holding all the stock, and using it as a buffer. The former method, we suggest, was expensive in manpower, and never eliminated fluctuations. It merely took the financial risk arising therefrom off the shoulders of the user. The method of the single buyer using the stock as a buffer, is cheaper in man-power, and gives, I think, longer periods of price stability. In the long run, if we have an economically run Commission, employing 25o people, it will give us cheaper cotton than a free market of more than 3,000 people. That is the basic reason why one must be cheaper than the other; it will take fewer people to run the same service.

    The cheaper cotton will give us a competitive ability in foreign markets in manufactured cotton and will easily make up for any loss of foreign exchange we may incur, as a result of the closing of the futures market. As I suggested in the Second Reading Debate, these gains in foreign exchange are no so valuable as some may think, because they consist of "hot money" transactions, and of obtaining money on short periods from America, or other centres in which people are prepared to put money into this market for the time being.

    If the hon. Gentleman will look back on the Government's pronouncements, he will see that they admitted that the net gain each year in direct foreign exchange is equivalent to about £1 million. Therefore, his arguments about "hot money" are entirely wrong.

    There was such a period before the war, but, in the present situation and in the present difficulties of exchange, it would not be prudent to encourage that kind of transaction to any large extent. Therefore, for years to come, we could not hope to earn anything like that amount from that type of transaction.

    That is what I am saying now, and I hope I am saying it loud enough to be heard. This type of transaction, whatever it gained us in the past, would not, in the years to come, gain us much. The gain from cheaper cotton, which would have its effect in the long run in our competitive power in the foreign markets for manufactured cotton, would outweigh the loss of that "hot money" gain.

    On the other Bills which the Government have brought before this House, the Opposition have been saying, "Do not put the clock forward so fast. Why do you hurry on? Why are you trying to do all these things one after the other? "In this particular case, they are pleading with us to put the clock back, and are saying, "Please ignore all that has been done during the war; ignore the fact that you have got your cotton on satisfactory terms; ignore the fact that you have reduced the number of people necessary to import and distribute it in this country, and go back to a 19th century laissez faire system, which we are taught to believe in the text books had certain advantages, and gave advantage to our particular friends." I suggest that their attitude to this is as doctrinaire as anything they have ever accused us of being and that they are trying to get back to a 19th century system which is out of date, and are asking the Government to put the clock back.

    I rest my argument further upon the fact that we have proved that we are not doctrinaire in this matter at all. We restored the entrepôt coffee market for the advantages which we might gain from foreign exchange in that market. We restored the fur market, which was one of the first things my right hon. Friend the President of the Board of Trade did when he came to office. We reopened the rubber market. We are not doctrinaire, and, in re-establishing the rubber market, we secured, by agreement with the Treasury, those restrictions upon undue speculation about which the right hon. Gentleman spoke—high margins, and that kind of thing. A balance of advantage was struck in each case, according to the nature of the source and various types of the raw material under consideration and according to the variety, or otherwise, of the consuming industry. The great difference between rubber and cotton in this respect is that rubber in this country is consumed by a large number of different industries, whereas cotton is consumed almost solely by the spinning industry. Thirdly, there is the amount of foreign exchange which might be expected to accrue from the transaction. In the light of these three main criteria, which I have not time to develop now, we made up our minds in respect of each commodity concerned, and so we shall continue to do.

    In conclusion, I say that the economy of manpower in this particular type of distributive service, the proved success of the splendid work of public servants, during the past five years, in operating this type of control, the necessity for stability of price, the necessity to place in the hands of the experienced men of the cotton industry the control of the supply of their own material, justifies this Bill. We are placing at the service of the cotton industry a twentieth century instrument to meet a twentieth century situation, and I' have pleasure in commending the Bill to the House.

    3.56 p.m.

    I have no intention of talking the Bill out, but I say that it is disgraceful that so few Members have been able to take part in the Third Reading Debate today. This is a Measure which affects seriously our marketing of cotton, and British trade in general. The Liverpool Cotton Exchange has brought trade to many people in the past. A vital mistake was made when a bad Amendment to Clause 8 was accepted, which had the effect of reversing a good Amendment made to Clause 1. My hon. Friend the Member for Bury (Mr. W. Fletcher) said, in a much more able way

    Division No. 123.]

    AYES.

    [3.59 p.m.

    Adams, Richard (Balham)Greenwood, Rt. Hon. A. (Wakefield)Pargiter, G. A.
    Adams, W. T. (Hammersmith, South)Greenwood, A. W. J. (Heywood)Parker, J.
    Alexander, Rt. Hon. A. V.Guest, Dr. L. HadenParkin, B. T.
    Allen, A. C. (Bosworth)Gunter, R. J.Paton, Mrs. F. (Rushcliffe)
    Anderson, F. (Whitehaven)Guy, W. H.Peart, Capt. T. F.
    Ayles, W. H.Haire, John E. (Wycombe)Pursey, Cmdr. H.
    Ayrton Gould, Mrs. B.Hale, LeslieRandall, H. E.
    Baird, J.Hall, W. G.Ranger, J.
    Barstow, P. G.Hamilton, Lieut.-Col. R.Reeves, J.
    Barton, C.Hannan, W. (Maryhill)Rhodes, H.
    Battley, J. R.Hardy, E. A.Ridealgh, Mrs. M.
    Bechervaise, A. EHastings, Dr. SomervilleRobens, A.
    Belcher, J. WHenderson, Joseph (Ardwick)Roberts, Goronwy (Caernarvonshire)
    Benson, G.Hicks, G.Rogers, G. H. R.
    Berry, H.Hobson, C R.Sargood, R.
    Beswick, F.House, G.Scott-Elliot, W.
    Bevan, Rt. Hon. A. (Ebbw Vale)Hudson, J. H. (Ealing, W.)Shackleton, Wing-Cdr. E. A. A.
    Bing, G. H. CHughes, Hector (Aberdeen, N.)Silverman, J. (Erdington)
    Binns, J.Hynd, H. (Hackney, C.)Silverman, S. S. (Nelson)
    Blackburn, A. RJanner, B.Simmons, C. J.
    Blenkinsop, A.Jay, D. P. T.Skeffington, A. M.
    Blyton, W. R.Jeger, G. (Winchester)Skinnard, F. W.
    Bottomley, A. G.Jones, D. T. (Hartlepools)Smith, C. (Colchester)
    Bowles, F. C. (Nuneaton)Jones, Elwyn (Plaistow)Smith, H. N. (Nottingham, S.)
    Braddock, Mrs. E. M. (L'pl, Exch'ge)Jones, P. Asterley (Hitchin)Smith, S. H. (Hull, S.W.)
    Braddock, T. (Mitcham)Keenan, W.Snow, Capt. J. W.
    Bramall, Major E. A.Kendall, W. D.Soskice, Maj. Sir F.
    Brown, George (Belper)Kinley, J.Sparks, J. A.
    Brown, T. J. (Ince)Kirby, B. V.Steele, T.
    Bruce, Maj. D. W. T.Lee, F. (Hulme)Stewart, Michael (Fulham, E.)
    Butler, H. W (Hackney, S.)Lee, Miss J. (Cannock)Stubbs, A. E.
    Callaghan, JamesLewis, A. W. J. (Upton)Symonds, A. L.
    Castle, Mrs. B. A.Lindgren, G. S.Taylor, H. B. (Mansfield)
    Champion, A. J.Lipton, Lt.-Col. M.Taylor, R. J. (Morpeth)
    Chater, D.Longden, F.Taylor, Dr. S. (Barnet)
    Chetwynd, G. R.Lyne, A. W.Thomas, D. E. (Aberdare)
    Clitherow, Dr. R.McAdam, W.Thomas, I. O. (Wrekin)
    Cocks, F. S.McAllister, G.Tiffany, S.
    Coldrick, W.McGhee, H. G.Tolley, L.
    Colman, Miss G. M.Mack, J. DTomlinson, Rt. Hon. G.
    Comyns, Dr. L.McKay, J. (Wallsend)Turner-Samuels, M.
    Crawley, A.McLeavy, F.Vernon, Maj. W. F.
    Daines, P.Mallalieu, J. P. W.Viant, S. P.
    Davies, Ernest (Enfield)Manning, C. (Camberwell, N.)Walkden, E.
    Davies, Harold (Leek)Manning, Mrs. L. (Epping)Walker, G. H.
    Deer, G.Marquand, H. A.Wallace, G. D. (Chislehurst)
    Dobbie, W.Mellish, R. J.Wallace, H. W. (Walthamstow, E.)
    Dodds, N. N.Messer, F.Weitzman, D.
    Dumpleton, C. W.Millington, Wing-Comdr. E. RWells, W. T. (Walsall)
    Edwards, A. (Middlesbrough, E.)Mitchison, G. R.Whiteley, Rt. Hon. W.
    Edwards, W. J. (Whitechapel)Montague, F.Wilkes, L.
    Evans, E. (Lowestoft)Morgan, Dr. H. B.Willey, F. T. (Sunderland)
    Evans, S. N. (Wednesbury)Morris, Lt.-Col. H. (Sheffield, C.)Willey, O. G. (Cleveland)
    Ewart, R.Moyle, A.Williams, D. J. (Neath)
    Fairhurst, F.Naylor, T. E.Williams, J. L. (Kelvingrove)
    Williams, W. R. (Heston)
    Field, Captain W. J.Nichol, Mrs. M. E. (Bradford, N.)Wills, Mrs. E. A.
    Follick, M.Nicholls, H. R. (Stratford)Yates, V. F.
    Gallacher, W.Noel-Buxton, LadyZilliacus, K.
    Ganley, Mrs. C. S.O'Brien, T.
    Gordon-Walker, P. C.Paget, R. T.

    TELLERS FOR THE AYES:

    Mr. Pearson and Mr. Collindridge.

    than I can do, that this Bill will do nothing whatever to help our dollar exchange position at the present time. On the contrary, it will hurt it. This country is being deprived of a great market, which may well go to Antwerp and New York and so cut out our people for all time. For that reason, I shall oppose the Bill.

    Question put, "That the Bill he now read the Third time."

    The House divided; Ayes, 179; Noes, 72.

    NOES.

    Aitken, Hon. MaxDower, Lt.-Col. A. V. G. (Penrith)Morrison, Rt. Hon. W. S. (Cirencester)
    Amory, D. HeathcoatDrayson, G. B.Neill, W. F. (Belfast, N.)
    Assheton, Rt. Hon. R.Duthie, W. S.Neven-Spence, Sir B.
    Astor, Hon. M.Eden, Rt. Hon. A.Nicholson, G.
    Barlow, Sir J.Elliot, Rt. Hon. WalterNield, B. (Chester)
    Baxter, A. B.Fletcher, W. (Bury)Noble, Comdr. A. H. P.
    Beamish, Maj. T. V. H.Fraser, Maj. H. C. P. (Stone)Poole, O. B. S. (Oswestry)
    Boothby, R.Fraser, Sir I. (Lonsdale)Price-White, Lt.-Col. D.
    Bowen, R.Gage, C.Prior-Palmer, Brig. O.
    Bracken, Rt. Hon. BrendanGalbraith, Cmdr. T. D.Reed, Sir S. (Aylesbury)
    Braithwaite, Lt.-Comdr. J. G.Hannon, Sir P. (Moseley)Robinson, Wing-Comdr. Roland
    Brown, W. J (Rugby)Headlam, Lieut.-Col. Rt. Hon. Sir C.Snadden, W. M.
    Buchan-Hepburn, P. G. T.Howard, Hon. A.Stanley, Rt. Hon. O.
    Bullock, Cant M.Hudson, Rt. Hon. R. S. (Southport)Sutcliffe, H.
    Byers, FrankHutchison, Lt.-Cm. Clark (E'b'rgh W.)Taylor, C. S. (Eastbourne)
    Challen, C.Lambert, Hon. G.Teeling, William
    Channon, H.Linstead, H. N.Thorp, Lt.-Col. R. A. F
    Clarke, Col. R. S.Lloyd, Selwyn (Wirral)Touche, G. C.
    Conant, Maj. R. J. E.Lucas-Tooth, Sir H.Vane, W. M. F.
    Crookshank, Capt. Rt. Hon. H. F. CLyttelton, Rt. Hon. O.Walker-Smith, D.
    Crosthwaite-Eyre, Col. O. E.Macpherson, Maj. N. (Dumfries)Wheatley, Colonel M, J.
    Crowder, Capt. John E.Marlowe, A. A. H.Williams, C. (Torquay)
    Darling, Sir W. Y.Marples, A. E.Willoughby de Eresby, Lord
    Davies, Clement (Montgomery)Marshall, D. (Bodmin)
    Dodds-Parker, A. D.Morrison, Maj. J. G. (Salisbury)

    TELLERS FOR THE NOES:

    Commander Agnew and
    Mr. Studholme.

    Bill accordingly read the Third time, and passed.

    Hill Farming Losses

    Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Snow.]

    4.5 p.m.

    The matter to which I wish to draw the attention of the House this afternoon is that of the plight of the hill farmers in the country as a result of the recent severe weather. I know that all farmers throughout the country have suffered loss not only as a result of the prolonged cold weather, but also as a result of floods, but I hope I will be excused if this afternoon I refer only to the hill farmers, as that is a subject which particularly affects a large number of my constituents. This House is fully aware of the importance that is attached to hill farming. One of our earliest duties in this Parliament was to pass through all its stages the Hill Farming Bill which arose as a result of reports from two committees, the De La Warr Committee and the Balfour Committee set up by the Coalition Government to put forward recommendations as to how this industry could be rehabilitated.

    Since that Bill was passed we have been faced with this disaster, and I would like to remind the House that the last crisis which we discussed, that of the coal shortage, arose only because my hon. Friend the Member for Darwen (Mr.Prescott) was lucky in securing the Adjournment of the House on which to debate that subject. Now I have had that good fortune, and raise a matter which will vitally affect our food in the next few months or years. I know that a number of statements have been made from time to time; two, I think, Lave been made by the Minister of Agriculture, and the Chancellor of the Exchequer mentioned this aspect of our economy in his Budget speech when he assured us, and repeated the assurance to us yesterday, that he would not be niggardly in the matter of compensation or in whatever way it is decided to tackle the problem.

    The full extent of the capital losses cannot yet be calculated. It is variously estimated to he from 20 per cent. to 5o per cent. of the hill flocks, and in some instances, I believe particularly in Wales, they go up as high as 8o per cent., but in my constituency and, no doubt, in many others, the snowdrifts are still on the fell sides and they must be still covering a number of victims of this severe weather. Also many of the breeding ewes which have survived the winter are too weak to reproduce, and in some parts of the country we will be lucky if as much as 4o per cent. of our lambing stocks reach maturity. It is not only sheep which have been affected. There has been a large loss of cattle. I have seen not only dead sheep, but also dead cattle lying on the fell sides in the snow. The loss of cattle will vitally affect the country's milk production later in the year. The point that must be borne in mind is that these hill flocks can only be re-established by their own breeding. These flocks are "bound to the ground." I think that is the term. They are acclimatised to their own particular part of the fell. If new stock is introduced they will wander all over the country, and involve the farmers in a great deal of extra work and trouble. Therefore, the problem with which we are faced is, how the hill farmers are to earn their livelihood while they are building up their flocks, which may take anything from three to five years, or even longer. It is true, of course, that, in the normal process of eliminating the older members of the flock, there will be a certain number of sales, which will take place this season.

    The Minister of Agriculture, I know, is fully aware of the position, because only a few weeks ago at Gloucester he said that the hill farmers occupied a key position in our whole agricultural economy, and that we could not afford to see them go under for lack of help in their hour of need. But later, I think in the same speech, he said, referring to the responsibility in this matter, the problem of assuring supplies of feeding stuffs for the hill districts was the 'first to arise, and that these difficulties were foreseen last harvest, when abnormal losses of fodder crops occurred as a result of the bad weather at the time. The farming community will not forget that they gave ample warning to the Minister. The Minister now repeats that these difficulties were foreseen last autumn. We accuse the Government of not taking adequate steps at the time to ensure that fodder would be made available during the winter months for farmers who had had a bad hay crop. The Minister went on, as is customary, to apportion blame in other quarters—to say that priority in transport was given to fuel. I am afraid that appears to be another case where the Minister of Agriculture has failed to make his point with the Cabinet, for the Minister of Transport and the Minister of Fuel and Power obtained the priority.

    There are several special points to which I should like to draw the attention of the Government in connection with the country districts. The farmer's wife has had a particularly difficult time during this bad weather. Owing to the rationing and points system she has ben unable to lay in stocks of food, a thing which all country people use to do before the war. I should like to ask the Government if they could consider some scheme whereby the farmers in isolated districts—some of my farmers have been cut off from market for as long as eight weeks—could be allowed to build up stocks of coal and feedingstuffs during the autumn? Extra rations for self-employed farmers is also a vital question. I know we discussed this in the House last night. I must say I thought the Parliamentary Secretary to the Ministry of Food excelled herself when she suggested that these farmers might all run canteens. Perhaps, if she will come up into the more remote parts of our country, and see how the farmers live, instead of enjoying the more exotic atmospheres elsewhere, she would be wiser, I he miners are receiving special consideration with regard to food, and I should like to see that extended to hill farmers.

    Another point which arises is that of farmers' sons being called up for national service. Could not that be deferred for the time being? The most difficult type of labour to replace is farm labour and, where there may be only one or two sons on an isolated farm, if they are taken away, then the cultivation and, indeed, the whole success of the farm suffers severely. A small item which has been mentioned before at Question time is that of baling wire which has added to the troubles of the hill farmers. Hay is carted on the fells largely by the use of sledges, and hay which is not baled is very difficult to handle. I ask the Minister whether he can arrange also for additional supplies of timber to be made available to the wheelwrights in the country districts. They have had very great difficulty in effecting the necessary repairs to the sledges used on the mountains during the bad weather.

    A minor point which farmers felt acutely was the loss of 4d. per gallon suffered because milk produced in February could not be delivered until March when, as the Minister knows, the price was reduced. In regard to extra rations for calves over six months old, if some of the rations available in the discretionary allowance could be used for this purpose, it would be greatly appreciated. The young stock on the hill farms has suffered great privations in recent months. Many hon. Members feel that the farmers would have been in a position to have weathered at least some of their losses if the price structure and taxation during the past few years had enabled them to build up reserves. Few people in the towns fully realise the gravity of the situation. Perhaps they will begin to notice its effect on their dinner plates later in the year. I am afraid that, as a result of this disaster which has befallen the hill farmers, there may be a flight from the hills. It is very difficult to replace the farmers when they leave. The solution which, so far, has been offered, is that of an agricultural fund, to which the Government are to contribute. When speaking at Gloucester the other day, the Minister of Agriculture said that it would take every ounce of determination that our hill farmers possessed to surmount their losses. I think it will take a little more than determination. We want something tangible from the Government. The Minister also said:
    It is cleat that our home food supplies are goring to be seriously prejudiced by our recent heavy losses and the lateness of the season."
    We want to hear what remedy the Government are to put forward. The Minister has also said in this House that the Government considered that the losses were a matter of national importance and that they should be restored at the earliest possible moment. I think that there will be difficulties with the administration of the agricultural fund. It is to be administered in districts by three representatives from the National Farmers' Union and three from the county committees. Would the Minister himself like to be one of these farmers having to administer a fund to his fellow farmers and having to impose innumerable means tests? The National Farmers' Union are afraid that as a result of this they may lose a large number of members. In any case, while we appreciate the generosity of those who have contributed to the fund—and we thank them for that—we fear that the amount of money which it is hoped to raise will be far from adequate. These losses have been estimated to be in the neighbourhood of from £20 million to £40 million.

    This is a national problem. The small hill man has to meet the cost of rent, fertilisers and seeds for spring sowing. He needs financial help immediately. I hope at a later stage, when compensation is considered, that some reference will be made to the census of 1946 and to the June return of 1947. Only then can he see the full extent of the loss which those farmers have suffered. I have included in my remarks not only the hill farmers, but also the farms on marginal land. Their losses have been in the neighbourhood of 25 per cent. or more. I urge the Minister to do all he can for these important sections of the community.

    4.21 p.m.

    I am sure the House will be greatly indebted to the hon. Member for Skipton (Mr. Drayson) for raising this question. I fear that I cannot associate myself with the criticisms he has made of the Government, nor do I entirely agree with all the matters of fact that he has stated. Things may be different in his part of the country from what they are in mine. I speak as a practical hill farmer and as a member of the Committee which has been set up by the Secretary of State for Scotland to advise him in the administration of the Hill Farming Act. I do not think we can yet ascertain the nature of the disaster. Definitely we have incurred a disaster but quite how bad it will be we do not know. Ewes are still dying of the suffering that they went through during the winter, and in some parts of the country hill lambing is only just starting. On my own farm, hill lambing starts today. We cannot possibly tell what the weather is going to be. If the weather is warm and the sun is shining the lambs will require only about half the milk they need when it is cold.

    Farmers have obviously lost so much money that they are seriously concerned lest they should be deferred from putting in claims under the Hill Farming Act. The House will know that it is necessary to put in a comprehensive scheme of rehabilitation. That will cost a lot of money and in many cases the farmer will be deterred by the loss he has suffered from putting in any sort of claim at all. He will fear that the scheme will be too expensive. That position will react very seriously upon the national interest. It is absolutely necessary that we should rehabilitate our new grazings and be enabled thereby to raise more sheep and cattle. I ask the Parliamentary Secretary to give some assurance this afternoon to the hill farmers that will enable them to go forward with confidence with their comprehensive schemes under the Hill Farming Act.

    4.23 p.m.

    The House is, I agree, indebted to the hon. Member for Skipton (Mr. Drayson) for raising this important matter of the plight of the hill sheep farmers. The gravity of their losses arising from the exceptional severity and duration of the winter weather is fully recognised by the Government, who have been doing their utmost to mitigate the effect and they are taking further steps towards that end. The preliminary estimates of the losses were that we had lost one million ewes, and 1,750,000 born and unborn lambs which had perished from exposure or starvation. [An HON. MEMBER: "In the United Kingdom?"] Yes. The greater proportion of them were on the hills. Store cattle were also affected. From further inquiries which have been made it is believed that those figures understate the severity of the crisis. The figures are not known finally but it is believed that in Great Britain the loss of sheep is as high as 1,140,000 and that the lambing losses may be as high as two million. The effect of these losses is very great. The sheep-breeding stocks on the hills have been greatly reduced and most hill farmers' incomes must be affected for some years, both through the smaller sales of draught ewes, of lambs, of wool and of cattle. Inevitably, they will be compelled to retain all suitable ewes and ewe lambs on the hills for breeding purposes until they can re-establish their flocks.

    The National Farmers Union have set up a fund out of which hill farmers may be compensated for their capital losses on livestock, so far, of course, as the size of the fund permits, and the Minister has announced tht the Government are prepared to contribute to that fund approximately the same amount as is subscribed by farmers and others. Compensation will be paid from that fund for exceptional mortality among ewes and hoggs and also for ewe lambs normally retained on the farms for breeding. It is, of course, too early to state what the size of the fund will be, and, therefore, to what extent the total capital losses will be met. Under the Hill Farming Act, subsidy payments are made on the number of ewes and shearling ewes in the flock on 4th December in the previous year, and the rate of subsidy is determined on the basis of changes in costs and receipts of the hill sheep farmers, in the 12 months preceding that period. This subsidy payment takes account of the greater or lesser net returns to the farmer over the period. The rate for 1947 has already been fixed at 8s. 9d. per ewe—ewes that were in the flock in December, 1946. That rate was determined before the blizzard and before the ill effects of it on the sheep flocks were known, so there is no reason to alter the 1947 rate.

    The Government have decided to do two things: Firstly, to assist those farmers whose flocks have been seriously depleted, it is proposed to pay the subsidy payments for 1948 and 1949 and perhaps 1950 upon the number of ewes and shearling ewes that were in the flocks in Decembre, 1946. That is, of course, on the numbers as they were before the blizzards. I am sure that the House will appreciate what that means in practice. It will mean, in fact, that by adopting the December, 1946, figures, the volume of the subsidy that will be paid to the hill sheep farmers will be much greater. Even if we return to the normal flocks in 195o, and pay the subsidy on the number of sheep, ewes and shearlings that there were in the preceding December, the arrangement will be made by which on appeal, on the individual facts of a particular case, being established, the 1946 December figures can still be taken as a basis. I am sure that the House will readily agree that this is of not inconsiderable assistance to the hill sheep farmers in meeting their difficulties.

    Secondly, it is proposed that the Ministry shall pay in 1947 to those farmers who desire it, an advance of up to 5s. per ewe against the subsidy payable in 1948 Clearly, that will enable the hill sheep farmer who has had some difficulty in tiding over this period to draw an advance up to 5s. per ewe which normally would be payable when he gets the 1948 subsidy. In regard to the rate of subsidy for 1948, and in the next few years ahead, it is bound, of course, to reflect the smaller numbers of ewes and lambs which hill farmers will have for disposal in the autumn, both in this and succeeding years, and therefore, it has not been possible at present to forecast actually what the rate of subsidy will be for 1948 and the subsequent years, but I think that it is reasonable to say that inevitably it is bound to be appreciably higher than the 8s. 9d. per ewe payable this year as it has regard to the income and debts of the hill farmers. I should think that it is unlikely to fall below 10s. earlier than the next two years ahead. These are the very positive things that are being done in this matter. There is a further point that this may involve amendment of the Hill Farming Act. Then we want to do what may be possible—and we all know the difficulties—to get stock suitable for the hill farms. In Northern Ireland, where the weather has been less severe, if there are any suitable sheep coming into the grading centres capable of going on hill farms, we want to obtain control of them, so that we can help the hill sheep farmers

    With regard to the two points of criticism which have been made, I know that the hon. Member appreciates, no less than I do, the assistance which the Government have tried to give to the hill farmers during these difficulties, and he is aware that we tried with some success, in his own neighbourhood, to drop fodder from aeroplanes. The Government made no difficulties in enabling the hill farmers, so far as they were able, to get fodder on to their farms. They could have done it. In point of fact, the Government had an assisted scheme by which they undertook to provide 75 per cent, of the costs necessarily involved in transport to bring fodder from another part of the country into the hill districts. If criticism is to be made we must not overlook the other side of the matter.

    The hon. Gentleman made one other point, and that was in regard to timber used by the local wheelwright. He asked that something might be done in regard to this timber. Every one knows how exceedingly tight timber is, and we in the Ministry have an allocation but I can assure hon. Members that we have no difficulty whatever in getting rid of our allocation. The wheelwright has the highest possible percentage of timber supplies that we could reasonably give him within our own Department, and if I remember rightly, wheelwrights at the moment are getting 8o per cent. of their applications met. I think for the current quarter their applications are being met to the extent of 70 per cent. of their demand. I should like to assure the House that in this matter of timber supplies we are doing everything possible to meet these difficulties, particularly those of the village wheelwright, because the Ministry is very appreciative of the assistance which village wheelwrights give to the farming industry generally.

    There was one other point on which the hon. Member for Skipton was critical. I was astonished at his criticism, of the way in which the fund of the National Farmers Union, which the Government is assisting, is to be administered in the localities. He complained of the fact that there are to be three farmers on the Committee. Who would he have administering the Committee if it were not the farmers themselves? This fund is to help the farmers in all these localities, and I do not see how it could be properly administered without the assistance of farmers. I am perfectly certain the farmers would not like that suggestion.

    No, I have not time to give way. I think I may say with the utmost respect that the hon. Gentleman was a little previous with his criticism on that point. The administration of the fund has been most carefully thought out, and I feel certain that when the fund is administered it will be done with credit to the organisation and the parties responsible for it.

    The Question having been proposed after Four o'Clock and the Debate having continued for half an hour, Mr. DEPUTYSPEAKER adjourned the House without Question put, pursuant to the Order made upon 13 th November, as applied by the Order made upon 12th November.

    Adjourned at Twenty-four Minutes to Five o'Clock