April, 1947.

My dear STREAT,

I have now received from the representative organisations of the cotton employers and operatives their replies to the proposals I put before them in Manchester on 3rd December last. These proposals were directed in the first place to the spinning section and envisaged a co-operative effort by all concerned—employers, operatives and Government—tó bring it thoroughly up to date and to establish it on a sound footing for the future. It may be helpful if I recapitulate the principal features of the scheme. So far as the industry itself was concerned the main lines of action were to be:

and the Government offered, as their share in the joint effort, to make a grant of 25 per cent. of the cost of the mechanical re-equipment of grouped mills. The first stage of the scheme would cover the re-equipment of mills containing one-third of the capacity of each group, when this stage was under way a second third would be dealt with, after which the position would be reviewed. In order to qualify for assistance groups would require to control a minimum of about 500,000 (mule equivalent) spindles but this figure might be relaxed somewhat in exceptional cases. Orders for machinery would have to be placed not later than two years from the scheme's coming into operation and a target date of five years would be set for the completion of deliveries.

The scheme, as I have emphasised from the first, must be regarded as a whole. It cannot succeed without the support of the leaders, and of the rank and file, of both sides of the industry. Moreover, it has always been our intention that the Cotton Board, and in due course its successor body, should play a large part in the development of the scheme, both as regards its day-to-day running and as regards any adjustments to suit changing circumstances. The task of the Cotton Board would be impossible unless it were assured of the co-operation of the principal sectional organisations. These organisations have considered the scheme with the utmost care and with full realisation of the grave responsibility, not only to their members but also to the nation, which rested upon them. There were various features of the scheme which were unwelcome to one side or the other, but the Federation of Master Cotton Spinners' Associations have now assured me of their willingness to assist the Cotton Board by advice and cooperation in connection with the scheme, and a Special Delegate Conference of the United Textile Factory Workers' Association have formally endorsed a recommendation of their Legislative Council pledging their full cooperation to the implementation of the scheme. The Card Room Amalgamation, after expressing their willingness to assist in connection with re-equipment, state that in so far as shift work is concerned, they will not actively oppose, nor will they recommend the members to accept, the system, so that the workers will have the freedom to decide for themselves when the issue arises.

In view of these assurances the Government feel justified in putting the scheme into operation from 1st May, 1947.

The Cotton Board have undertaken to advise the Board of Trade in regard to applications for assistance under the scheme and it will therefore be appropriate that applications should be addressed in the first place to the Cotton Board. You will no doubt be informing the firms concerned very shortly as to the manner in which applications should be made, but meanwhile the following paragraphs may help to clarify some of the issues that will arise:

As has already been announced, the scheme is being extended to cover deliveries made since V.J. Day (16th August, 1945). Qualified groups wishing to avail themselves of this must in the first place nominate mills to be included in their one-third for modernisation and submit details of their modernisation arrangements for approval.

(d) The Chancellor of the Exchequer announced in Parliament on 15th April his intention of reducing to half the standard rate the Income Tax charged when, as a result of the formation of approved amalgamations, machinery or plant is sold for more than its written-down value. The procedure for dealing with applications for approval, for the purpose of obtaining this concession, will be assimilated as far as possible to the procedure outlined above.

The above is no more than the general outline of the main essentials of the procedure to he followed. You will be able to fill in many more of the details when you communicate with those concerned. None of the plans can be made too rigid at this stage, and we, like you, will try to retain a sufficient degree of flexibility, especially in the early stages when practical experience may indicate how the administration of the scheme can be improved. Difficulties and unforeseen problems will undoubtedly arise but I am convinced that with the goodwill and assistance we have been promised by the industry we shall be able rapidly to overcome them.

The time has now come to put our proposals into effect. The Government are offering a degree of participation in the joint effort such as we have offered and can offer to no other Industry. We shall wholeheartedly carry out our share of the partnership. I appeal to all in the industry, employers, managers and operatives alike, to do their part with equal enthusiasm. Lancashire's pre-eminence in the cotton field was based initially upon the superiority of her equipment, the skill of her workers and the enterprise of her industrialists. The output of the industry must be increased. It cannot be increased by relying on pre-war methods and pre-war plant but only by the use of the best machinery, the best management and the best operational conditions in a way which encourages maximum production. I know that the sterling qualities of the people of Lancashire still persist and properly applied, can once more enable us to overcome our difficulties.

Yours sincerely,

(Signed) R. STAFFORD CRIPPS

Sir Raymond Streat, C.B.E.,

The Cotton Board,

Midland Bank Building,

Spring Gardens,

Manchester, 2.