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War Materials (Export)

Volume 478: debated on Monday 18 September 1950

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3.30 p.m.

I beg to move,

That this House urges His Majesty's Government to suspend the export of heavy machine tools and strategic raw materials that would add to the war potential of possible aggressors or which we or our Allies require for our own defence.
The terms of the Government Amendment on the Order Paper make it unnecessary for me to develop this subject as fully as I should otherwise have done, and I hope that I shall only have to crave your patience, Mr. Speaker, for a comparatively short time.

We on this side of the House are glad that our action has led the Government at least to make their position considerably clearer. They have gone, not all the way, but part of the way to resolve doubts and fears about our exports to East of the Iron Curtain. These doubts are by no means confined to the numerous manufacturers and exporters concerned in this country. It is more than this: Abroad, the British attitude has been widely misunderstood, and I do not doubt that it has, on occasions, been misrepresented. At least, this Debate will help those in the Dominions and more particularly those in the United States who are concerned to defend British policy in these matters.

I suppose that it is unlikely that the Government will move a vote of thanks or take this opportunity to congratulate the Opposition for having raised this subject today, and, as they are unlikely to do so, we wish to congratulate ourselves upon the success which has attended the pressure brought to bear upon the Government by my right hon. Friend the Leader of the Opposition, and which has attended our action in putting down our Motion. However that may be, I do not suppose—although I cannot be sure—that it will be neccessary to divide the House this afternoon. I think that we should avoid a Division if we can, because the problems raised are vital to the national safety and are necessarily extremely delicate in themselves. Our national course will not be made easier by violent controversy now that the Government's attitude has been somewhat clarified. But whether this kind of agreement is to be achieved or not depends, I think, on whether I can elicit some satisfactory replies to two or three simple and straightforward questions which I feel that it is my duty to put to the Government. So far as I can judge, the Government having gone thus far, should have little difficulty in conceding the points that I shall raise and in reassuring us upon them.

Before I come to them, I should like to begin at the end of the Government's Amendment and refer to the last sentence in it:
"… while at the same time maintaining, to our mutual benefit, trade between the United Kingdom and Eastern Europe."
In their context—and I emphasise in their context—we agree with these words; once safeguards against the export of equipment or materials of direct use in war or the preparation for war have been laid down, trade between West and East should continue where it is of mutual advantage.

I find it necessary to refer to this matter at the outset because in a previous Debate in 1949, my right hon. Friends the Member for Saffron Walden (Mr. R. A. Butler) and for Bromley (Mr. H. Macmillan) had to rebut a suggestion or an insinuation that we on this side of the House were advocates of an economic blockade of Russia and the satellite countries. Of course normal trade, even if it excludes a range of special tools, equipment or materials can often be shown to be of potential advantage in war to the importing country; but we must not shut our eyes to the fact that normal trade sometimes, and in some ways, acts as a preventive to war.

I thought that any suggestions of economic blockade had been finally put to rest in 1949, but it seems—and I hope that I am not doing him an injustice—that the insinuation came to life again in the speech of the Minister for Economic Affairs last week. He used this language:
"There is no point in cutting down our exports, breaking contracts and imposing economic blockades, and risking the delivery of vital supplies, if the only effect is that the orders go elsewhere to other countries."—[OFFICIAL REPORT, 13th September, 1950; Vol. 478, c. 1136–7.]
Of course, at the best, this sentence only touches the fringe of the problem, and because other people may do foolish things that is not a good reason for doing foolish things ourselves; nor because other sources of supply are open, is that a decisive argument why our own should not at least be regulated. If the Minister's words—and I agree that he may not have meant it—intended to fasten upon us a policy of economic blockade, it is as well that any such suggestion should be denied at the outset.

I now wish to put a number of points to the Government arising either out of our Motion or out of their Amendment. At the beginning of the Government's Amendment are these words:
"… Approves the policy of His Majesty's Government in stopping, in all appropriate cases, the export of equipment and materials likely to be required for the defence programmes of this country, of the rest of the Commonwealth, and of the North Atlantic Powers.…"
This appears to mean that we should only stop exports of, say, equipment if the equipment is needed by ourselves or by our Allies and associated countries for the Allies' defence programme. "Do we need it ourselves?" appears to be the test, and the only test in the Government's Amendment, which is to be applied. Surely, we cannot stop at that point. We must, in my submission, also be prepared to stop the export of certain specific and particular equipment or tools or materials on the grounds that they build up the war potential of possible aggressors in a direct way.

No doubt, if I may turn to an analogy it is a good reason for keeping a rifle in this country that you may wish to fire it off yourself; but there is another reason: you may wish to keep it in this country to prevent someone else firing it at you. Perhaps the words—and they are very favourite words in His Majesty's Civil Service—"in all appropriate cases" are intended to cover the point that I am now raising, but it may be that they are not. I should like some assurance that even if certain equipment or material is not needed by ourselves, but is direct war potential, then those tools or that equipment will not be exported.

I now come to some more detailed points, and I want in particular to refer to certain types of very heavy machine tools. The types I mean are, first of all, large vertical boring mills, which for all their name are frequently used for machining the circumference of very large components. I have no doubt that many Members who have been interested in war production some time during the last war or since will have seen these vertical boring machines boring the circumference of a gun mounting when it is being prepared for the ball races to revolve the gun.

Large boring machines are a different subject, because the machine, as opposed to the mill, is the actual machine that bores the centre out of the gun. I shall also refer to planing machines for machining large flat surfaces—armour-plate and so forth—and very large types of centre lathes used for finishing and turning large circular forgings like guns. I want to make it quite clear that these mills are machines. It would not be true to say that these machines and mills can only be used in the manufacture of armaments, but the point is that they are its most directly useful war potential in the whole range of machine tools.

My first submission is that all the heavier types of these tools or machines should be placed upon the prohibited list, which means that they would require a licence before being exported. On 23rd March, 1949, considerable additions were made to the prohibited list, and vertical boring mills and surfacing and boring lathes above 10 inches height of centre were added to the list, but for some reason which I shall seek to discover later large planing machines and large centre lathes are today still not on the list. This is entirely illogical.

I have here a schedule of exports in the course of manufacture by Craven Bros, of Manchester for export to the U.S.S.R. and Poland. Members may wonder why this particular manufacturer's name comes up again. [HON. MEMBERS "Hear, hear."] I will tell them. The reason is that they are specialists in this type of heavy tool. In some instances, they and George Richards and Sons are the only manufacturers in the country equipped to make certain very heavy types of tool.

Turning to the schedule of exports to the U.S.S.R., the first four items are large boring mills. There are seven 7-foot, one 16-foot and four 12-foot diameter machines—that is, 12 boring mills in all. In spite of these mills having been on the prohibited list since 23rd March, 1949, 10 of these machines have been licensed for export. On the Polish list are 15 specially equipped vertical boring mills ranging from 8-foot diameter to the very big diameter of 30 feet. All these, or nearly all, have received licences.

Repeated inquiries by the makers asking whether these machines are to be exported when they are finished, or whether the licences are to be withdrawn, have so far elicited no reply, or no clear reply, from the Ministry of Supply. As recently as 2nd August, the makers were advised in writing that His Majesty's Government could not encourage them to refuse to complete the orders that they had accepted, and no other guidance, as far as I know, has been vouchsafed to them.

The next assurance I want to be given is whether all these machines—that is 27 vertical boring machines in all—12 for Russia and 15 for Poland—will be kept in this country and not exported, whether their export has already been licensed or not. I turn aside at this point to say that the Government Amendment would appear to make it quite clear that the 18-foot and 16-foot mills will not be exported but kept in this country for our own purposes, because, if my information is correct, these mills are urgently required by the Ministry of Supply for the re-equipment of the Royal Ordnance Factories or other factories in this country. Probably the others are equally wanted here, although on that I have not the information to support that suggestion.

I am suggesting that both the 18-foot and the 16-foot vertical boring mills are an urgent requirement of the Ministry of Supply at this moment. These mills are very big machines, and in consequence take a very long time to manufacture. I am informed that the earliest delivery to users in this country that can be given is two and a half to three years, if the present exports are permitted. If the exports are stopped, our own defence programme would have the benefit of these machines within six months. I ask the House to think what these implications are. I am seeking the assurance that not only the two big mills, which I believe are urgently wanted, but all the 27 mills I have described will be kept.

I now come back to the schedule of exports to Russia. The next item is two 10-foot by 8-foot by 20-foot planing machines. This is large-sized equipment used, among other things, for machining armour-plate. I should myself describe them—I hope with a due sense of responsibility—as falling into the category of direct war potential. They are not even on the prohibited list—no licence is required for their export, and any one making these machines can export them to Russia without a licence.

Can we be assured, first of all, that these machines will be placed on the prohibited list, and, secondly, that the export of these particular machines will be stopped, irrespective of the date upon which the order was booked by the manufacturers? I do not think the Government should have very much difficulty in saying "yes" to this question, since it would appear to most people, whether laymen or otherwise, to be utterly illogical to put vertical boring mills on the prohibited list and keep planing machines off the list. Therefore, may I have an answer to this question?

Lastly, I come on this particular part of my argument to an even more absurd case and an even greater anomaly. I refer to very large centre lathes. These are not on the list and no licence is required for their export, yet in the schedule of exports to Russia of this particular manufacturer are two 80-inch, one 60-inch and one 50-inch lathes, and two for Poland of rather smaller dimensions.

Perhaps I might remind Members that these lathes are so big that the biggest one, if it were put into this Chamber in which we are now sitting, would give precious little room to Members on either side of the House. I would remind the House that this dimension of 80 inches is the dimension between the centre of the spindle to the top of the bed-plate. In other words, the swing of the lathe, as the term goes, would enable this lathe to turn a circular forging of 160 inches, which is rather over 13 feet in diameter—a tremendous machine. These lathes spell to me at any rate in present circumstances only one word—armaments. They are not even on the prohibited list, and I ask that they should be placed upon that list at once, and that the export of these particular lathes in process of manufacture should be stopped.

I hope that I have shown that at least some further elucidation and a clear-cut statement of policy is called for, since it appears to me to be just sheer nonsense or else muddle to put verticle boring machines on the prohibited list, whilst leaving the planers and those larger centre lathes entirely free to be exported. It is a curious principle that what is forbidden in the verticle should be permitted in the horizontal, and one which would carry us very far in human affairs if applied in other directions.

Before I sit down I must say a few words about materials. Very nearly all the materials in question—and this is a much more difficult part of the subject—have as many uses in peaceful production as they have in war. Rubber is an obvious example. Here I think the best test to apply is how greatly we want these supplies ourselves. It is surely unwise, to say the least of it, for the Allies to be stock piling certain materials and have no control whatever over purchases made by Russia and the satellite countries in the allied countries, which produce at least a high proportion of these very same materials.

The criterion here should first be our own needs, and that I think is the criterion in this particular section of the subject which is covered by the Government Amendment. Malaya produces about 40 per cent. of the world's rubber. Russia can buy enough supplies for all ordinary uses outside Malaya, but surely we should take some steps to earmark Malayan rubber chiefly for our own stock pile and any stock pile which the United States may form, and she is stock piling natural rubber at this moment. I am most anxious not to produce any argument which will raise prejudices, but there does seem to be an anomaly in exporting Malayan rubber to Communist countries without any attempts at control, when our men at this moment are laying down their lives to defend and protect the rubber plantations against the Communists. That is an undeniable proposition.

I admit that the more the question of raw materials is studied, the more difficult it becomes to draw a line between one use and another so as to define the limits of what ought to be prohibited or what ought not. Very often it is a quantative matter. Although it has nothing to do with the present subject, sulphate of ammonia is an essential part of agriculture up to a certain quantity, but over that quantity it is one of the ingredients of high explosives. Often quantity will give some guide, and another time reliance can be placed on the scarce commodity of commonsense or common-sense judgment. I can go this far, that I agree with the Government that the first test, if not the final test, is if we need these raw materials for our own need and that of our Allies and associates.

I have two more things to say. The first concerns raw materials and their stock piling. The time seems long overdue in many cases when we should set up some kind of clearing house or combined resources board amongst the re-arming countries to prevent a scramble for scarce supplies, and to decide in broad lines what supplies we can afford to export to the rest of the world. This is not only a question of the U.S.S.R. and her satellites, but it will, of course, cover exports to South America.

I want to end by recapitulating the questions I asked earlier on the subject of equipment. First, can we be assured that the further test—namely, what may be useful as direct war potential to an aggressor, will be applied to goods and equipment here, so that we may retain those tools and this equipment here whether we happen to be short of that particular piece of equipment or tool or not? Secondly, can we be assured that the export of these 27 large verticle boring mills, most of which have already been licenced, will be stopped? Thirdly, can we be assured that large-scale planing machines will forthwith be placed on the prohibited list, and that the export of the partially finished machines will be stopped? Fourthly, can we be assured that very large centre lathes above a certain dimension, that is to say a bigger range of these lathes, will be added to the prohibited list, and, in particular, exports of the particular machines which I have described will be stopped forthwith?

In conclusion, I hope I have shown that there are sufficient anomalies and illogicalities to justify a description of Government policy in these matters as, at least, very confused, if not in certain cases positively nonsensical. Therefore, I urge them with all the sincerity and force that I can command to make a thorough overhaul of all the methods, measures and regulations which are used to handle this delicate but nevertheless deadly subject.

3.58 p.m.

I beg to move, to leave out from "House," to the end of the Question, and to add instead thereof:

"approves the policy of His Majesty's Government in stopping, in all appropriate cases, the export of equipment and materials likely to be required for the defence programmes of this country, of the rest of the Commonwealth, and of North Atlantic Treaty Powers, and, in consultation with those countries, in continuing and, where necessary, extending the controls on the export of equipment and materials of military value, while at the same time maintaining, to our mutual benefit, trade between the United Kingdom and Eastern Europe."
The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) began with what was an unwarrantable assumption that no Government spokesman on this side of the House would be likely to offer him any congratulations. I should like immediately to put him right on that by offering my congratulations on the way in which he has approached this subject this afternoon. I think the dulcet tones in which he dealt with it were in marked contrast to the more strident tones of the right hon. Gentleman the Member for Woodford (Mr. Churchill) in a recent political broadcast.

I am glad that the right hon. Member for Aldershot took the line he did in attempting to avoid party conflict in this matter in the House this evening. No doubt he was wise in that decision, because I am sure that, had he attempted to make this a party issue, a number of my hon. Friends would have been rushing to the Library to dig up some information of which perhaps he would not have liked the House to be reminded, of shipments of strategic materials in the past, especially in 1939. I am sure that we are all agreed that the right hon. Gentleman was right when he said that this subject was far too serious a matter to be the subject of debates of that kind.

I think the House also will be glad that he, with his great interest in trade matters—it was one of the many speeches he has made on this subject since the war and, indeed, before it—recognised the desirability of maintaining trade with Eastern Europe. I think there were many people in this country—I am bound to confess I was one of them—who felt after hearing the right hon. Member for Woodford, both in a certain broadcast and his speech last week, that he was not so concerned with maintaining a legitimate amount of peaceful trade with Eastern Europe, and I am glad that the right hon. Member for Aldershot made at least his position clear this afternoon. I am sure that the House as a whole feels that we should maintain as much trade as is possible subject to the conditions which have been set out in the Amendment.

It is fair to say that hon. Members in all parts of the House have successively welcomed the steps which the Government have taken to develop trade with Eastern Europe. When I announced in the House in December, 1947, that we had reached agreement in principle with the Soviet Union about trade, that statement was welcomed—he went out of his way to do it—by the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden), and even more warmly by the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies). When we debated the agreement in March, 1948, the right hon. Member for Aldershot, while critical of the financial provisions and even violent on the subject of the price arrangements, had no criticism of the fact that we were trying to develop trade with Eastern Europe. He said:
"To be fair, I concede our crying need for these coarse grains for animal feedingstuffs."—[OFFICIAL REPORT, 2nd March, 1948; Vol. 448" c. 219.]
Neither he at that time nor the right hon. Gentleman the Member for Bournemouth,. East, and Christchurch (Mr. Bracken), nor anyone else in any part of the House, stressed the possible dangers from the strategic point of view of trade which might develop under the agreement. The same is true when the Anglo-Polish trade agreement of January, 1949, was published.

Since the Government will this evening ask the House to support a policy which includes the maintenance of trade with Eastern Europe, perhaps before I come to the other points dealt with by the right hon. Gentleman it would be right for me to indicate exactly what has been involved in this trade between Eastern Europe and this country. During 1948, 1949 and this year, Eastern Europe—I am excluding from that both Yugoslavia and Finland— will have sent us 500,000 standards of sawn softwood timber, which is equivalent to the timber requirements of something like 340,000 houses. Since the beginning of 1948 we have already received from them 1,500,000 cubic feet of hardwood, 50,000 cubic fathoms of pit props and 11,000 cubic fathoms of pulp-wood, nearly one-fifth of our total imports. We have already received 1,600,000 tons of coarse grains from them, to the value of £38,000,000, and these have represented something like one-third of our total coarse grain feedingstuff imports over the three years in question. These are quite apart from our imports of bacon, eggs and other foodstuffs.

I think the House will agree that the bulk of these essential imports—I want to stress that they are essential imports—with the world supply situation as it has been and with our dollar position as it has been, we could not have got from other parts of the world.

May I ask the right hon. Gentleman to complete the statement by explaining to the House that these imports far exceed the exports of this country to those territories?

Yes, indeed. That is certainly true. That is a point which my right hon. Friend the Prime Minister made in his broadcast, and I think it is a point that the House should certainly bear in mind. I am grateful to the right hon. Gentleman. I was genuinely glad to find—because I had had some worries about it—that there was in the right hon. Gentleman's speech no criticism of this trading policy. It would hardly be conceivable that even this Opposition could have made such lavish promises as they have about housing, the decontrol of softwood timber, feedingstuffs and so on if they had not been assuming at least a continuance of the present volume of trade with Eastern Europe. In the speeches of my right hon. Friend the Prime Minister and the Minister of State for Economic Affairs and in the Amendment—

Will the right hon. Gentleman say what is the proportion of the imports which we receive to the exports which we send to the countries in question?

I should want a few minutes to get the exact figures for the right hon. Gentleman, but, as his right hon. Friend has already explained to him, by far the greater part of the imports we have had from Eastern Europe have been paid for not by goods which we have exported from this country or goods which we shall export from this country, but by sterling which will be spent in other countries—principally sterling area countries—in buying wool, rubber and other things.

I should like to get the exact figures before committing myself. I had better explain that the figures have been changing quite considerably all the time, and the recent timber contract with the Soviet Union is very much affecting the total value of the imports which we have been having.

The right hon. Gentleman has been talking about Eastern Europe. Do I take it that he means exclusively Russia and Poland?

I said Eastern Europe excluding Yugoslavia and Finland, but although we have only had trade agreements with the Soviet Union, Poland and Czechoslovakia, there has been some volume of trade with Hungary and Roumania, and to a very small extent with Bulgaria, but, for reasons with which the House is familiar, trade with Hungary has been down to a very low figure indeed in recent months.

Surely the question of whether or not we may be in trading difficulties does not enter into the matter? What I am anxious about in regard to supplying heavy-weight tools of a character which can only be used for war purposes is that if there is any likelihood of danger for this country the Government will stop such goods going abroad.

I gave way to my hon. Friend but it was really unnecessary because if he had waited a few moments more I should have explained to him that I was going on to deal with the successive steps which His Majesty's Government have taken to deal with the problem of shipments of goods of military value, steps taken with the general support of the House and always ahead of and not in response to promptings from the Opposition. It was not as a result of promptings from the Opposition, for instance, that on 15th February, 1949, I announced a wide extension of our system of export controls. I should like to remind the House of the words which I used on that occasion because they have been the basis of our policy ever since:

"The desirability of extending our export controls to cover a wider range of goods of potential military value from the point of view of our security interests is constantly under review by His Majesty's Government."
[Laughter.] I thought the right hon. Member for Woodford would enjoy that.

"As a result of a recent examination of the whole position, it is intended to subject an additional range of goods to export control."
We did that without even waiting for a broadcast from the right hon. Member for Woodford.

"This control will be operated in such a way that the goods in question, unless the subject of prior commitments, are not made available if this would be contrary to our security interests."—[OFFICIAL REPORT, 15th February, 1949; Vol. 461, c. 149.]
I went on to explain that we were keeping in touch with the other Commonwealth Governments, their principal partners in Western Europe, and with the United States Government. That policy was accepted by the House at the time, and I have not been able to find that the Opposition at that time or subsequently until the last few days criticised my exclusion from the operation of this control goods which were the subject of prior commitments. I think the feeling of the House was very fairly expressed in a supplementary question by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), when he asked on 24th March, 1949:
"While … there is no desire in any part of the House to seal the Eastern and Western Frontiers irrevocably, can the right hon. Gentleman set a great many fears at rest by indicating a list of goods which it would be possible to send in exchange for what we receive from these countries which are not in the nature of war export?"
I answered him by saying that he was right to stress this aspect of the matter. I went on:
"We keep a very close watch on the kind of goods that should be sent to these countries."—[OFFICIAL REPORT, 24th March, 1949; Vol. 463, c. 532.]
I also indicated that I was about to announce a list of goods which would not be sent. When I did announce that list on 31st March, 1949, there was again no criticism of the policy, or any suggestion that our control was not sufficiently far-reaching. The list we then announced covered some 51 items, apart, of course, from arms, ammunition and explosives which had always been subject to export control. The items that we added to the list at that time covered a great many of the heavy machine tools that are referred to in the Motion now before the House. They ranged from giant presses, and forging hammers of over 1,000 tons capacity, down to such items as electron microscopes.

The right hon. Gentleman has mentioned certain machine tools that he feels ought to have been on the list from the start. He put his argument very clearly. On that point I should like to say that very careful consideration was given to putting these particular machine tools on, and that the arguments which he has laid before the House this afternoon were very fully laid before the Ministry of Supply, I understood, by Craven Brothers, some 15 months ago, and they were considered. My hon. Friend the Parliamentary Secretary to the Ministry of Supply could, I think, explain better than I the reasons why they were excluded, but I can certainly give to the right hon. Gentleman the assurance that we will look at the list again. We are always examining it. We will certainly look at the list again, in the light of the remarks he has made this afternoon, to see whether these items ought to be included in the list.

We do not want to disagree needlessly, but surely something better than "We will look at the list again" ought to be given as answer to the precise question whether this particular class of tool, which is certainly essential for war purposes, should continue not even to be licensed?

I could not myself claim to be technically qualified to enter into a long argument with the right hon. Gentleman about the particular machine tools in question, but, as I have explained, all the arguments that were put by the right hon. Gentleman this afternoon have been the subject of very detailed discussion, as the result of an approach particularly from the chairman of Craven Brothers, and I say that my hon. Friend, whose Department has been dealing with the technical aspect of this matter, will take up this point, if he is successful in catching your eye, Mr. Speaker.

Cannot the right hon. Gentleman give a plain answer on the point and say "Yes" or "No" whether tools are going out of the country to arm war potential of possible aggressors or are going to be kept in the country? We want to know.

I am dealing with the point made by the right hon. Member for Aldershot that, in addition to the wide list of goods already covered, certain machines such as he has mentioned should be added to the list for security purposes. I am going to deal with the question whether any goods will be allowed out of the country which are already on the list, but the right hon. Gentleman has asked that the list should be extended. I have explained that those arguments have been very carefully considered, and I have said that they will be considered again. I have said that the Parliamentary Secretary will deal in detail with the technical reasons for the exclusion of these goods so far from the list.

I must press this matter. Cannot the right hon. Gentleman say, as a result of the profound and very careful consideration that has been given, he tells us, to this matter, whether the answer is "Yes" or "No"?

I have already explained that as a result of the profound technical consideration which was given to this matter last year and again this year it was decided that it was not necessary to add these particular items to the list. I have undertaken to give the right hon. Gentleman an assurance that the answer, which was then "No"—since the right hon. Member for Woodford wants the answer in those terms—will be reviewed, and that we will look at it again in the light of the remarks made by the right hon. Member for Aldershot this afternoon.

Perhaps if I dealt completely with the points raised by the right hon. Member for Aldershot then, after I have finished, if there is anything that the hon. Gentleman wants to ask me, I can try to deal with it

Having introduced our controls, we subsequently got other countries to agree broadly to the list that we had introduced, and that list has been progressively extended as the agreement of other countries has been secured to particular items. I think the House would agree with me when I emphasise the importance of agreeing this list with our friends in Western Europe and elsewhere. Without that agreement, any action on our part could be, and almost certainly would be, frustrated by shipments of goods from some other country to the countries with which we were concerned.

Our experience on industrial diamonds, when we put control on before other countries followed suit, showed quite clearly how important it was to get that degree of consultation. That list has been kept under constant examination and discussion with our friends in Western Europe, in the Commonwealth and, of course, in the United States, in the light of the strategic and other advice that has been available to us. We took the lead a year ago in making arrangements for constant consultation with other countries on this matter of control of exports of strategic value, and, as a result of this consultation with the countries concerned, we have drawn up and maintained in force two export control lists.

There is List I, which now covers 119 items, including metal-working machinery, chemicals and so on, of which exports to the Soviet bloc are prohibited. List II covers goods which are subject to quantitative control. A trickle of supplies is allowed in this case, related to what ought to be the normal peace-time civilian use in the countries with which we are concerned. These lists are constantly being amended or extended.

In the last few days we have been discussing with other countries concerned the addition of some 59 items for complete prohibition and 45 items for quantitative control. Many of the goods which we discussed are already subject to control in this country, so if international agreement is reached we shall be adding to our list a number somewhat smaller than will be added by other countries.

Can the right hon. Gentleman say whether, among those items will be the vertical boring mill, planing mills or the centre lathe? We are really without any answer on this point. I hope that I am not interrupting the right hon. Gentleman at the wrong moment, but I rather understood that he was going on to deal with the supply of materials. I have asked him specific questions and I shall continue to press for specific answers.

I am hoping to deal with the points which the right hon. Gentleman has made, if he will allow me to proceed. I am not going on to materials until I have dealt much more fully with machine tools.

The events of this summer have naturally caused the Government to review our control policy, to make sure that we do not export equipment required for our own defence programme or the programmes of our associates in the North Atlantic Treaty organisation and, of course, in the Commonwealth. My right hon. Friend the Prime Minister and the Minister of State for Economic Affairs have both made it clear that in all appropriate cases we shall not hesitate to take over equipment needed by ourselves or by our allies. I should inform the House that I am advised by my right hon. and learned Friends that we already have all the necessary powers for this purpose.

There is a considerable volume of capital equipment on order, not only for Eastern European countries but also for other countries, outside the Commonwealth and the North Atlantic Treaty organisation, equipment which, before the recent decision to step up our arms programme, we would not have required. Much of this may be required because much of the equipment on order for Eastern Europe may now be wanted and, as my right hon. Friends have made clear, we shall not hesitate to requisition any that we need.

The Motion which the right hon. Gentleman has moved draws a sharp distinction between equipment and materials needed by ourselves or our allies and equipment and materials of strategic value to potential aggressors. I have been dealing so far with the question of the capital equipment which we or our allies may need. The question of security, of control over the strategic shipments, is a separate one, because there might be goods of value to other countries which we ourselves, or even our allies, may decide we do not need for our own immediate purposes.

If I understood rightly, the right hon. Member for Woodford was principally concerned with the security point in his recent broadcast, though I am bound to say that for one who was so concerned with a security point, as we all are, and rightly, it seemed a little remarkable that in broadcasting to the whole world he should have gone out of his way to advertise that a particular town, indeed, a particular factory, was the location of what he called "a lot of confidential production for His Majesty's Government."

Is it not likely that the Poles and Russians knew where they were to get these supplies from?

Is the right hon. Gentleman not aware that there are two Russian inspectors who have a right to go into these works and who have exercised, or sought to exercise, their rights quite recently? Is there the slightest doubt that the Russians know where they bought the tools from?

I think the right hon. Gentleman was a little hasty in assuming that the management of Craven Brothers were going to be negligent in carrying out the request of His Majesty's Government to ensure that these inspectors should see only the Russian equipment and not the work to which the right hon Gentleman referred.

I must answer the other question put by the right hon. Member for Aldershot. He asked me whether it was not a fact that the Russians and the Poles would not already know where they were placing their own orders. I should have thought there was a fairly simple answer—they would know. But if the management of Craven Brothers have taken the steps they were asked to take, namely, to see that any inspectors who went there did not see work being done for His Majesty's Government, then it is at least possible that they would not have known what work was going on for His Majesty's Government until the right hon Gentleman—

When we are discussing a matter of extreme national importance like this, Mr. Deputy-Speaker, and there is a completely contradictory statement by the Minister of Supply, is it not—

No point of order arises there. Other hon. Members will have their opportunity to put their version of the case.

On the control of equipment and materials of value, as the Opposition Motion puts it—

I am sorry to interrupt, but before the right hon. Gentleman leaves this part of the subject, is he not aware that the Minister of Supply said that no secret equipment was being made by Craven Brothers, and said it at Question Time today?

I am usually aware of things that I hear my own right hon. Friends say in the House. [An HON. MEMBER: "Well, is it not right?"] The point I was making is that if the right hon. Member for Woodford had reason to believe—and he seems to be very well briefed in this matter of what is going on at Craven Brothers—[An HON. MEMBER: "He is."]—if he had reason to believe that secret work was going on there, whether or not subsequently that turns out to be the case or not, I should have thought it was a little remarkable that that matter should have been announced to the world in a political broadcast.

The right hon. Gentleman is making a reflection upon this firm. I had never heard of them before—[An HON. MEMBER: "You would not."] I treat with contempt such taunts. I had never heard of this firm until the managing director sent me all the correspondence he had had with the Ministry of Supply over the last two and a half years, in which he had been begging to know whether he should continue to export these vital materials to Soviet Russia in view of the darkening of the scene, and had never been able to get any decisive answer of any kind—only the kind of woollen fluff that we are served up with today. I am quite sure that the firm is under no blame and is not negligent. They only pointed out that Russian inspectors have the right to come into the factories, were pressing to come, were walking about the factories freely. and that the work in the factories both for the Government and for Russian and Polish exports was naturally mixed up together. I think it is unfair to throw blame upon them. All they did was to send their correspondence to me, and I alone am responsible for the use which, with their full permission, I made of it.

The speech of the right hon. Gentleman seemed to be based on the assumption that I was criticising Messrs. Craven Brothers for briefing him—[An HON MEMBER: "You were."]—in connection with the broadcast, or that I was criticising them for negligence. If the right hon. Gentleman will study what I said, he will find that I did not say anything of that kind. What I said when I was challenged, both by himself and my right hon. Friend, on the point of whether the Russians would not already know what secret Government work was going on at Craven Brothers, was that I hoped he would not be hasty to assume negligence on the part of Craven Brothers. It is a very different thing.

If, as I understand, hon. Gentlemen opposite are interested to know our views on the subject of the control of equipment of military value, perhaps they will allow me now to continue. I have already indicated that there is a wide range of goods subject to international control, and the House will have gathered, from my announcement about the impending extension of that list, that we shall not hesitate to widen, whenever necessary, the range of goods covered; but, as I have indicated to the House and until the last few days I do not think this policy has been criticised or challenged—the control does not at present cover goods which are the subject of commitments entered into before 8th April, 1949. As I have said—and I want to deal in a moment with the specific instance referred to by the right hon. Gentleman—a good number of these items ordered before 1949 will come into the category of equipment which we ourselves, and others associated with us, may require.

The right hon. Gentleman has referred to certain heavy machine tools which have been the subject of some considerable public comment, particularly the two large vertical borers at present on order for Poland from Messrs. Craven Brothers, and also, of course, other machine tools on order for Russia. I do not want to go now into all the relations between the Ministries and Craven Brothers. I quite agree with what is, I think, the view of the right hon. Gentleman, that no useful purpose would be served by going into the long correspondence which, like him, I have studied with close attention. I should, however, like to say a word about the Polish orders in particular.

The Russian agreement, as I have already made clear in an answer to a Question this afternoon, does not provide any specific undertakings with regard to machine tools, with the exception of wood-working machine tools; but they were covered in general terms by the agreement with Poland. In that agreement we undertook not to prohibit the export to Poland of capital equipment ordered on or before the date of signature of the agreement, namely, 14th January, 1949. A considerable proportion of the Polish orders were, in fact, placed before that agreement was signed.

We have been endeavouring, in very close consultation with Messrs. Craven Brothers, to find out whether and when the particular machine tools were ordered. It has been extremely difficult to get accurate information from them—I say that with no reflection on them, because I think they have had their difficulties also about this; it was only this morning that we heard to some extent in contradiction—again, I make no complaint—of previous information which we had had from them that one of the important machine tools in question was, in fact, ordered before the Polish agreement was signed, and not after it was signed, as we have been led to believe.

I think that when he has had time to study this, the right hon. Gentleman will draw the deduction that if the machine tool had been the subject of an order after the signature of the Polish agreement, there would have been no obligation on us to ensure its shipment, but if it had been ordered before the Polish agreement there would be an obligation, which, I think, makes something of a difference.

Perhaps the right hon. Gentleman will let me continue. I am sure the House will agree that, despite the assurance we gave in the Anglo-Polish Trade Agreement of 1949, there has been in the interval since that date such a substantial change of circumstances that it should now be reviewed. The events of this summer, and, in particular, the defence programmes which world conditions have forced on us, make a great difference to the position so far as equipment required for defence purposes is concerned; and there can be little doubt where the responsibility for those world conditions lies. I am sure the House will agree that certainly we ought not in present circumstances to be denied the use of such necessary equipment for our own defence programmes. [HON. MEMBERS: "Hear, hear."]

Before I deal in detail with those particular machine tools, perhaps I ought to remind the House, if I need to, that Eastern Europe has been a traditional market for our machine-tool industry for very many years. It would be a very serious thing if the whole of our machine-tool exports to Eastern Europe were to be cut out. In fact, 41 per cent. of our total exports of metal-working machine tools went to these countries, almost wholly to the Soviet Union, in 1938–39. I am not quoting this figure in any criticism. It was 82 per cent. in 1932, and certainly without those orders the capacity of the machine-tool industry could not have been maintained and we should have been in a far worse position and shape for meeting the needs of war in 1939 to 1945, as the right hon. Gentleman will be the first to agree.

Perhaps I should give figures for comparison. The proportion of our exports going to these countries in 1949 was 16 per cent., and in the first half of this year, 17 per cent. In fact, the Soviet Trade Agreement was welcomed by the industry's spokesmen as re-opening this traditional market.

As I have made plain, there are still substantial orders outstanding on the British machine-tool industry from Eastern Europe—

Yes, principally Poland and Russia. We are at present engaged in obtaining information from the firms concerned—I understand there are about 30 of them—to obtain full details of each particular order, the specifications, the expected delivery dates, and so on. When that information is available, the case of each particular item will be considered by the production Department concerned—the Ministry of Supply, the Admiralty and so on—where necessary, in consultation with Government contractors or others, such as sub-contractors, who are concerned with our defence programmes.

In addition, if the items are not wanted by ourselves, particulars in respect of each item will be circulated also to our partners in the North Atlantic Treaty organisation and in the Commonwealth to see whether they will require them. This process of exhaustive examination of the possible requirements of each machine tool by our partners in the Commonwealth and in the North Atlantic Treaty organisation will necessarily take some considerable time, and during that period it is intended that the goods concerned shall not be exported. In other words, each machine tool will be held back in order to see whether we require it for our own purpose.

I cannot give an undertaking—and I am sure the House would not press for it—that after our partners and we ourselves have examined these items, the export of all goods which were ordered before the control was imposed, and which are not required by any of us, will be prohibited. I cannot give an undertaking that in every case there will be a prohibition of exports. The first thing will be to see whether any of our partners requires the tools.

Of course, I am sure the right hon. Gentleman will take into consideration any strong representations he receives from the United States in favour of the export of these raw materials to Soviet Russia at the present time.

I am not quite clear of the purpose of the right hon. Gentleman's intervention. He will be aware, as I have said, that we have all along maintained the closest relations with the United States in considering the lists of prohibitions.

Are we to understand that we shall exercise a right to withhold delivery of articles of which we undertook by treaty not to withhold delivery? In other words, are the Government now committing themselves to the view that obligations under a treaty can be abrogated or repudiated if there is a substantial change in circumstances?

May I ask my right hon. Friend whether, in spite of treaties that may be made, in view of the importance of the safety of this country he will take all possible chances of restricting everything which can be used for war purposes from going out of this country to the Cominform?

I cannot give my hon. Friend for the Scotland Division of Liverpool (Mr. Logan) the complete assurance for which he asks, but I agree with the point of his intervention. Since this trade agreement was signed, there have been considerable changes in the relations between our two countries, which are bound to affect our trade relations as well as other matters, and, in particular, the shipment of goods which we may require for our own defence purposes.

As to the two vertical boring machines referred to by the right hon. Gentleman, both of these were ordered, as far as we can tell, before the agreement. It is already clear that one of them, on which work has not yet begun and which will not be ready until December of next year, will be needed for our defence programmes. It will, therefore, not be leaving the country. The second one, which will not be ready for some 18 months, will be the subject of the procedure I have mentioned; in other words, full particulars will be circulated to all Government Department, to our partners in Western Europe and to the Commonwealth, to see whether they require it.

I have given way several times.

The Motion in the name of the right hon. Gentleman also refers to raw materials, and, of course, the control covers a very wide range of raw materials. In addition to this control, we maintain some administrative control on particular materials. It would, of course, be impossible, short of a complete blockade, to stop all shipments to Eastern Europe of materials which are capable of being used for military purposes; but, as my right hon. Friend the Prime Minister said, we are watching for evidence of abnormal orders of these things, especially of goods that might be re-shipped or sent to Korea. It is, therefore, vital that any supplier who is approached with unusual orders and, in particular, orders which seem unrelated to normal peace-time requirements from any of these countries, should seek the advice of the appropriate Government Department.

So far as these supplies are known to us, we are taking administrative action with the firms concerned to control or limit shipments to keep down these exports to reasonable figures. There was, for instance, evidence a few weeks ago of abnormal orders of copper wire, and some shipments were made. When it was brought to our notice, the British Non-Ferrous Metals Federation co- operated in restricting exports, and all copper was put under control a week ago.

I was not clear—and the right hon. Gentleman did not clear my confusion—whether the Opposition were asking to put under control such shipments as wool and rubber. As I have explained, the greater part of Russian sterling expenditure in the past two years has been on wool and rubber, although some quarters, and, if I have not misunderstood the Press report, I believe the noble Lord the chairman of the Conservative Party in a recent speech in the country, have been asking for these particular materials to be put under control to prevent them from reaching the Soviet Union. In reply to that, I need only say that these items are not exported in the main from this country although there may be some small re-export in particular cases. But to control these particular items in the way suggested would almost certainly mean abolishing the free market in these commodities.

The suggestion has been put forward in certain quarters—and the right hon. Gentleman re-echoed it this afternoon—that it might be necessary for these and other materials to be put under some system of fair allocation of supplies in order to see that rearmament and other needs are met and to keep prices within bounds. That is a much wider question than we are discussing this evening. But the House should be under no illusion that if we are seriously to consider putting these strategical materials—although the phase in this context is almost meaningless—under such a form of control as to deny them to particular countries this would not only mean closing free markets; it would not only mean—unless we were able to get a very wide international agreement—that the countries concerned could just as easily get them from countries outside—Indonesia is a case in point; but it would mean also that action of this kind would be tantamount to an economic blockade against a group of countries with whom we have had, and still have, mutually advantageous trading relations and who have been, and are today, delivering to this country substantial quantities of at least one material of undoubted strategic value.

Timber, wool, rubber and other materials, like machine tools, are capable of alternative uses; they can serve the purpose of war, or the purposes of peace, reconstruction and capital development. "The Times" pointed out in a leading article last week, to which my right hon. Friend drew the attention of the House, the dire consequences of extending—

We also are capable of quoting articles from "The Times." "The Times" said:

"This country has until now—within safeguards—been ready to live and trade with all who live at peace with it. If one nation sufficiently mistrusts another's aims, it will be justified in refusing to trade with it at all; and such a refusal might be regarded as a logical development of the present defence policies of the other Atlantic Pact Powers. But an economic blockade would take all concerned a long step farther along the road to open war. And the aim of these defence policies—and the deep hope of the peoples who resolutely support them—is that the peace shall be preserved . …"
I was glad to hear the right hon. Gentleman say this afternoon that, as far as he and those for whom he spoke were concerned, economic blockade was not part of their policy, because in many parts of the country, in certain sections of the Press and among certain speakers—

I might even quote my Conservative opponent in my division if the right hon. Gentleman wants a case in point—there has been a tendency, following the broadcast of the right hon. Gentleman, to press for measures which would be bound to lead to an economic blockade.

I am much obliged to the right hon. Gentleman, who has certainly been very patient and considerate to the questioning that has taken place, but what is his suggestion that I have advocated an economic blockade? I do not remember anything of the kind. I would like some words quoted to justify it.

If the right hon. Gentleman will listen to me for a moment replying to his question, I am sure he would not want to misrepresent what I have just said. What I said was that I was glad to hear from the right hon. Gentleman, speaking for himself and for those on behalf of whom he was speaking, of the Opposition—

The right hon. Gentleman says in the same breath, "speaking for himself," as if to suggest a difference, and "speaking for the Opposition," the official Opposition; what is the point of putting these two opposite propositions in the same sentence?

I should be surprised to think that the right hon. Gentleman's memory of such things in the Election campaign is so short that he did not realise it was possible, and indeed usual, for Members of the Opposition to speak with totally different voices. I said I welcomed the fact that the right hon. Gentleman himself made it clear and, speaking for those for whom he was speaking this afternoon, refused to contenance any question of economic blockade. There is nothing wrong with that. I further went on to make plain that it was a matter of great relief to me and, I am sure, to the House generally, because in certain quarters there have been articles, there have been speeches—I referred to a speech by the noble Lord the chairman of the Conservative Party and, when challenged for a particular example, I referred to the Conservative spokesman in my division—I am relieved to find that the official spokesman for the Opposition, not those engaged in political propaganda in the constituencies, has now repudiated any question of an economic blockade—

—and I would suggest that the lead which I think has gone out from both sides of the House this afternoon on this question should be followed because of the grave consequences which would undoubtedly result from any attempt to put an iron curtain, a complete iron curtain, on trade between Eastern and Western Europe.

Before the right hon. Gentleman sits down, may I put this to him? He has said that either before decisions are arrived at, or when a decision is arrived at, consultations take place between His Majesty's Government, the Government of the United States, the Commonwealth and members of the Atlantic Treaty. Could he say a word on the machinery, if there is any machinery, for such consultations, because it is very important that there should be no disputes or quarrelling amongst the allies?

I think II made it clear to the House that, following the introduction of our own control list, we took the lead in Europe in establishing machinery under which from time to time, in fact very frequently, the Powers of Western Europe, together with Canada and the United States, considered the control list in force in the several countries and attempt to reach agreement on possible extensions to that list, when it is felt that those extensions should be made; and that as a result of that machinery there are now in operation two controls, one of which covers goods which the export of which to Eastern Europe is completely prohibited and the other of which covers goods subject to quantitative control related to the normal peace-time civilian use of the countries with which we are concerned.

4.51 p.m.

The President of the Board of Trade has spent nearly 25 minutes coming round to the point of saying what all of us in this House know he will eventually say—that the case put forward with such clarity, and supported with so many facts, by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) that these particular types of machine tools, which we all know are vital to our rearmament programme, are to be retained in this country, whether they were made before or after the Polish and Russian Treaties.

In view of the good and factual atmosphere in which this Debate is taking place it would have been very much better if the right hon. Gentleman had said at once what we know perfectly well will be proved by the facts—that the machines are not to go. It really is slightly farcical, when one knows that these consultations between the Ministries which are particularly concerned in this export question have been going on ceaselessly, not only since the Korean incident but before, that a picture should be drawn for us that the Government are now setting in motion machinery which has been working for a long time.

The fact remains that the conclusion to which the right hon. Gentleman has undoubtedly come, and which he will either announce to us openly or let out on a smaller occasion, is that owing to a great extent to the pressure brought from this side of the House, these goods are not to be sent out of the country. It is as well to affirm once and for all that that is the answer, and one wonders why it was not given at once. Why did the Minister not get up and say "Circumstances have altered enormously; we quite realise that it would be wrong and dangerous to export these things and we shall not do so?" That would have engendered much greater confidence than the vast circumlocution in which he indulged.

The key words in the Amendment which the right hon. Gentleman has moved are "in all appropriate cases," because what is the actual fact? It is that whether raw materials from other parts of the Dominions or the Empire or exports from this country are concerned, the decision as to whether they should be exported must be made by His Majesty's Government. Hitherto, the practice, which was to some extent outlined by the President of the Board of Trade, has been that when any firm or association approaches a Government Department with a query the buck is passed back to them. That is done in something like the following form, and the right hon. Gentleman knows that on this subject I am speaking from some considerable personal experience.

Let us suppose that a firm puts forward the query, "Should we accept this order?" whether it be a direct order or indirect in the sense of coming from one of the satellite States or through a neutral country, and the firm either has considerable doubts or in some cases has fairly certain knowledge as to what the eventual destination is to be. The reply that is nearly always given is, "If you think that the country concerned could obtain supplies from an alternative source, it is, on the whole, better that you should supply it yourself because it may be the means of acquiring gold or dollars or other desirable currency, or may even be part of a barter scheme which already exists." That system may well have been appropriate up to a few months ago. I do not think it is appropriate now.

In this Amendment the Government are taking upon themselves what they should have taken before, namely, the bounden duty to give a much firmer instruction both to individual firms and trade associations, and to decide once and for all on their own responsibility whether deliveries should or should not be made. I believe that to be of the greatest possible importance. To take the case of rubber—and I at once declare my personal interest as a trader in rubber—I would remind the right hon. Gentleman how time has altered the view of the Government. I think I am right in saying—it may not be known to right hon. and hon. Gentlemen—that rather less than three years ago some 10,000 tons of rubber out of the Government stocks in this country—the small exiguous stocks which did not represent even three months' supply—were actually sold and shipped to Russia.

It is true that at the same time a considerable shipment was made to the United States for dollars. Nevertheless, when the right hon. Gentleman was just now trying to point a finger at firms and individuals, and talking about what would be found if one went to the Library and made slight researches about what they had said and done, I would ask him how he reconciles that with a delivery at that time of 10,000 tons of an important raw material of which this country has quite insufficient stocks, and whether the right hon. Gentleman would think it wrong for trades and associations to do the same?

I suggest that the truth in this matter, and the right hon. Gentleman must know it, is that the whole world, including this country, has for a long time been dollar hungry and in dire need of dollars; and that the prime motive actuating the sale of raw materials as well of manufactured goods has been the obtaining of dollars or currencies almost equal to dollars. The right hon. Gentleman knows quite well that the Soviet Union has been a considerable buyer in both dollars and gold. He knows quite well that the Soviet has bought through neutrals. The time has now come when this constant examination of all orders must require a slightly closer method of co-operation. The right hon. Gentleman will be the first to admit that the great trade associations dealing with raw materials have been in constant touch with and have been constantly asking questions of Government Departments as to what their policy should be. The Rubber Trade Association in particular, working through the agency nominated by the Government, which is the Bank of England, have been a prime earner of dollars and have on every single occasion reported to the Government what they thought might be the final destination of certain contracts, and have co-operated to the full.

The House must also take into consideration the fact that for two and a half to three years there has been a constant endeavour by all concerned to stop the leaks of gold and dollars in the sterling bloc. It is a rather interesting fact, and shows the difficulty of imposing anything like a workable—I will not say sanction—method of directing raw materials into the desired channels, that it was quite impossible to stop enormous quantities of wool, tin, rubber, diamonds and other products of the British Empire from finding their way outside the proper channels through which they should have gone, resulting in great gains to others outside this country. It was only devaluation which brought that state of affairs to a close. It is wise, when we are considering these matters, that we should think not only of what is immediately desirable but also which is really practicable.

This question of rubber has been brought to the attention of everyone very much indeed during the last few days, I think in a rather unfortunate manner, because Mr. Symington, whose name is well known to hon. Members, and who holds a high position in America, has thought fit to refer to hoarding and profiteering in rubber. If there is one thing which cannot be laid at the door of the producers, whether natives, who represent 50 per cent. of the producers, or European-owned estates, it is that they have deliberately attempted to take advantage of the tight situation in rubber.

The truth of the matter is that there has been an enormous increase in the natural demand throughout the world, due to trade expansion in America and elsewhere, of nearly all raw materials, and the expansion of production cannot in any way keep up with it. There lies on our doorstep as an immediate problem how we are, to the best advantage, to achieve two or three objectives at the same time. The first is to see that the stock- piles in Western Europe, in this country and in America get the first priority, and that they are filled as rapidly as possible. In that connection, I was a little surprised to see in the Prime Minister's statement at the beginning of our Debate last week some advice which he gave to manufacturers:
"As to raw materials, it is not considered that there should be any serious shortages"—
That, I think, is a little optimistic—
"but I would make a special appeal to all concerned in industry not to increase their stocks beyond their actual needs."—[OFFICIAL REPORT, 12th September, 1950; Vol. 478, c. 968.]
I should have thought the right advice to give—and it is directly to do—