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

The Bill which I have to invite the House to read a Second time is one of a strictly limited scope. It makes no provision to improve the system of education as commonly understood or impose any additional charge on the public funds. It merely seeks to adjust the expense and to put it on to the shoulders of those who are responsible. It is a statutory obligation at the present time, as hon. Members are aware, that the local education authority should provide free education for all children in their area. The difficulty which in this Bill I am trying to meet is that there are some parts of the country where there are a good many children who are in an area but not of it, the cost of whose education falls on the area in which they may happen to be.

There are two principal classes of such children with whom the Bill deals. There is, first, the class of child the educational responsibility of whom falls upon the guardians. These must be maintained in the workhouse or in some institution by the guardians or else they must be boarded out by the guardians, a practice which has become increasingly prevalent in recent years. Secondly, there is the class of child who has been taken by charitable institutions like Dr. Barnardo's Homes. Hon. Members are well aware of what happens. The boards of guardians and the charitable institutions, acting in pursuance of the principles which are now generally accepted by all sections of opinion, get these children out of the workhouse and out of the towns and cared for in the rural districts. That, from their point of view, is a very laudable object, but it tends to cast considerable obligations on the areas on whose shoulders the liability and burden thus falls. The result of it to-day is to relieve the education rate in the large towns at the expense of the education rate of, in many cases, the less wealthy country districts into which the children are sent. If I might give one example, and one only, to the House, let me quote a case brought to my notice the other day of a large charitable institution that proceeded in this way, and the result of whose action in bringing a large number of children into an area was likely to impose a burden on the local authority of something like 3d. in the £ on the rates. That, of course, is a very serious thing. I think the point, therefore, I am trying to meet is, as I will show in one moment, to place this burden on the shoulders where it ought naturally to fall, an idea that I think is very generally accepted. The principle on which this Bill proceeds is that the right authority to pay for the duty of educating the child is the authority to which the child belongs. Clause 1 endeavours to define this. In respect of Poor Law children there is no difficulty in ascertaining the area to which they belong. Every Poor Law child has a place of settlement, and though in the past the ascertainment of the place of settlement has often proved a very difficult matter, it is a fact which has to be ascertained for other purposes in connection with every Poor Law child, and, consequently, that place is adopted in this Bill as a test determining the area to which a child belongs. The difficulty is slightly greater in the case of children housed in charitable institutions. Very many of them are orphans, and those who have parents often have no settled place of residence, and it may happen that the residence of the parents is not in this country. Therefore the test suggested in this Bill is, I think, a common-sense one and one that is likely on the whole to work more smoothly than any other. It has been suggested that a child in a charitable institution shall be regarded as belonging to the last area in England or Wales in which he resided for a continuous period of six months before entering the charitable institution. In other words he may be regarded as belonging to the last area that would have been responsible for his education if he had not entered a charitable institution. If that test fails the Board of Education is required to determine to what area he belongs, having regard to all the circumstances of the case. It is believed that this affords the most satisfactory solution of a very difficult question.

Clause 2 is really consequential on Clause 1. It deals solely with children attending certified schools for blind, deaf, defective, and epileptic children. The Bill draws a distinction between day scholars and boarders in special schools. As to day scholars attending a special school in an area other than the area in which they reside, the provisions of the law are by this Bill assimilatd to the provisions already existing in the Education Act, 1921, as respects children attending public elementary schools in an area other than that in which they reside; but as regards boarders the principle is different. The principle of Clause 2 in this respect is that an authority is not responsible for providing boarding accommodation for children in a special school unless the child belongs to their area, in accordance with the test laid down by Clause 1. For obvious reasons the expense of establishing boarding accommodation is a much more serious undertaking. I propose that the Bill shall operate as from 1st April, 1923. I have chosen that date because it is the beginning of the financial year, and because, before that date, I had been in negotiations with the various authorities concerned. I hope for a general measure of agreement between those receiving and those paying, and therefore it is the more convenient to take that date.

I think this Bill, although not in the nature of sensational reform, is one which does meet what a good many hon. members connected with local administration know is a real and practical difficulty. I should not have introduced it if it were not that my own experience, and the experiences I have had since I came to the Board of Education, have convinced me that this matter is causing a very real degree of educational friction and difficulty. In the second place, I could not have introduced it unless I thought it was a substantially agreed matter. The matters with which it deals are extremely technical. There are one or two consequential Amendments in simplification of the Act of 1921, with regard to which I do not think it is necessary to occupy the time of the House at the present moment. Technical matters of this sort, when we are agreed on the general principle of the Measure, I think may very well be dealt with in Committee, and if the House decides to give this Bill a Second Reading, I hope that hon. Members will be willing to co-operate and lend their assistance to make this a workable Measure in Committee. As to the general principle of the Bill, I do not think there is any substantial difference of opinion.

I do not rise to oppose this Measure on the Second Reading, but I would like to point out that it has only been very recently placed in our hands, and I have a certain amount of apprehension as to some unexpected results which may possibly follow from this Measure. The right hon. Gentleman who has moved the Second Reading must realise that practically this Bill is an extension of the law of settlement which happens to have a very unfortunate history. It was introduced in an extremely modest way as a perfectly harmless and innocent reform calculated to do financial justice between one area and another, but the result over a long period of years has been as disastrous as it could possibly be. The right hon. Gentleman will realise that if a child is in the area of a local authority that authority has the responsibility. Unfortunately we have in London and other big towns to make heavy charges on those people coming from outside to attend our higher educational institutions. We have to charge, in London, a higher fee for our polytechnics to those people coming from outside our borders, and that is an unfortunate result. In the case of this Bill the effect is just the opposite. This is a case of ouside districts complaining that they are used as a dumping ground for children sent into their areas for obvious reasons of health, and they complain that these children have to go to their public elementary schools. On the face of it nothing seems more reasonable than to make, in such a case, the financial adjustment provided for in this Bill.

Let us consider for a moment the effect of this Measure on the boarding-out system. I do not know whether this Bill has the cordial approval of the Minister of Health, but I know that his Department has been pushing the boarding-out system as the proper method of dealing with orphan children under the Poor Law. I am not an enthusiastic supporter of the boarding-out system, but I know that there is a great consensus of opinion on the part of people who have studied the subject, that boarding out in the country is the best way of providing for orphan children under the Poor Law. Boarding out comes under this Bill, and the boards of guardians which are not willing to pay the higher price for maintenance of a child in a cottage home can decide to keep it in the workhouse because it is cheaper, and such boards of guardians will be discouraged from sending their children out into the country to be boarded out on that account. I notice that in Sub-section (4) of the Bill charitable institutions, where there are fewer than 12 children, are exempt, but unfortunately the cottage which receives only one child is not exempt. This is not a very large question, but I think it might be expedient to exclude individually boarded-out children. There is another argument I would like to put forward in this connection. A child boarded out in a cottage is practically part occupier in the same sense as a lodger, and really contributes towards the rent and rates of that cottage, and consequently is entitled in return to what is provided out of the rates.

Those who take the view that these children are outsiders fail to remember that they do actually contribute to the local rates. Take, for example, the big charitable institutions like Dr. Barnardo's Homes. Here there are a great many children to be educated, and there might be some reasons for suggesting that something should be paid for their education in that particular area. There should, however, be some recognition of the fact that that institution is a very large ratepayer in the district, and it should not have to pay its own share towards the rates and at the same time be charged for the education of the children as if they were not paying anything at all. In many districts these large institutions are very often by far the largest ratepayers in the district in which they are situated. I suggest that these charitable institutions ought to have some credit for the rates they pay when you are estimating what sum is due from them towards education. I am aware that all these points can be met by Amendments in Committee, but I wish to ask the Minister for Education whether he could not consider, in consul- tation with the Minister of Health, what may be the unforeseen and unexpected results of the re-introduction of the law of settlement by cutting out a number of water-tight compartments which must introduce restrictions to the free mobility of people in those districts.

In education we cannot afford to have people cut off from its advantages in that way. Whether it is technical, higher, or secondary education, it is vital to success that facilities should be available in the whole area of the country, and not localised to a particular area, and anything which makes rings round these areas and obstructs the free use of these institutions is a very considerable drawback. This is confined to elementary schools. It might just as well be extended to secondary schools, to technical schools, and even to the universities. With regard to the elementary schools, it is extremely difficult to make a balance-sheet between the rural area just outside and the municipal borough itself. Nowadays, the inhabitants of the one work in the other, and merely go home to sleep in the rural area. We have hundreds of thousands of such cases in London. They live in the rural area, and they are ratepayers in the rural area, but, as a matter of fact, they use the educational institutions of London. If London is to be asked to pay towards the education of children coming from outside London, then you might just as well ask that they should receive a subsidy in respect of those who reside outside in the rural area. It would be most regrettable if we embarked on that course, and I do suggest that the right hon. Gentleman may be setting going influences which, just as in the case of the law of settlement, are not expected and which may have very calamitous results.

Is there no other way in which it can be done? The right hon. Gentleman is the paymaster of these local education authorities. He is handing out to them a large and, some would say, an enormous sum every year. He is paying half the expenditure. Might it not even now be better so to manipulate that large grant-in-aid as to make them realise the superior interest of complete freedom and mobility as between one educational institution and another. I would ask the right hon. Gentleman to consider again whether he cannot accept Amendments in Committee which would limit the harm which I fear he may be inadvertently going to do.

I desire in half-a-dozen sentences to thank my right hon. Friend for introducing this Bill, and to say that, as far as my information goes, he is quite accurate in saying that it is a sincere attempt to bring a Bill before the House of Commons on which there has been substantial agreement among the large and varied kinds of local authorities. I agree with the right hon. Member for Seaham (Mr. Webb) that any variation of the law in these matters of delicate financial adjustment has to be considered with regard to its indirect effects as well as with regard to its precise provisions. I also agree that the law of settlement is not likely to be resurrected, and that the mutual benefits between one area and another are matters of great complexity and are eminently adapted for discussion in Committee rather than for debate on the Second Reading of the Bill. But the illustrations given by the last speaker, which were mainly drawn from the case of London or very large cities and the rural areas surrounding them, are not the only considerations which will have to be taken into account. I happen to live in a county, and am a member of the education authority of that county which we are all told in the geography books has a greater number of other counties touching it than any other county in England, and we are constantly up against the problem of making proper adjustments of rating between persons living in one county and using the educational institutions in another. I think this Bill has a proper object, and that the principle, which will require great care in application, is sound. I quite agree that it may want certain modifications in Committee. I trust that the House will pass the Second Reading now, and will let it go to a Committee as soon as possible. I am sure that it is one of those Measures which in Committee will be considered absolutely free from party predilections and, without being a very great reform, will be an honest attempt to do as far as possible what is needed, in a way which can only be arrived at by thrashing out the details in the light of our varied experience in different parts of the country.

I only want to say a few words following up one of the points made by the hon. Member for Seaham (Mr. Webb), namely, the indirect effects of this Bill. I am rather apprehensive lest this Bill will lead to boards of guardians who have homes outside their areas ceasing to send their children to the elementary schools and carrying on schools of their own. I have been chairman of the home of a board of guardians outside the area of that board, and our policy was to send our children as ordinary pupils to the elementary schools rather than to have a Poor Law school of our own. I am rather apprehensive whether this Bill may not lead to a reaction. I do not think it is going to affect us in London, because the education rate falls on the whole of the county, and boards of guardians are not likely to consider that very much. The same thing, however, occurs in smaller areas where the areas of the board of guardians and of the education authority are co-terminous, and I am afraid that it may operate in that way. I would like to support the point that this wants very thoroughly looking into as to its indirect effect, and to ask whether there is not some possibility of getting the same financial adjustment required without putting a premium on keeping the children away from the elementary schools.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time, and committed to a Standing Committee.

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

I do not propose to detain the House very long, because I have already explained, on the Committee stage of the Financial Resolution, why the Secretary of State requires Parliamentary sanction before he may borrow money in the United Kingdom on behalf of the Government of India, and we had comparatively full debates on the same subject last year. I took the opportunity on the Committee stage of explaining why it was necessary, seeing it is only a little more than a year ago we came to Parliament for powers, to ask for additional powers. Further, the details of the powers for which the Secretary of State asks, and the reasons for which he asks them, are fully set out in the Memorandum to the Bill, and I shall be glad at the close of the debate to answer any questions which may be put to me. Perhaps, however, I ought to refer in only a word or so to the general financial position in India, and to the position as regards the development of railways, which, indeed, I promised to do on the Committee stage on the Financial Resolution. I do not think it is necessary to go at any great length into the financial position, as I have already explained it in great detail in the debates on the Estimates. The salient point is the very much more satisfactory state of affairs now existing as compared with a year ago. The Budget has been balanced, and the effect on Indian credit of that, as I have already pointed out, is evidenced by the great success with which the Indian Loan was recently floated and by the high prices at which Indian Stocks stand in the market. With regard to the railways, the 1923–4 Estimates allow for a net profit of 3½ crores, after taking credit for economies in the working expenses of the railways equal to those recommended by the Inchcape Committee.

Taking a conservative view of the cost of future borrowings, that Committee with whose estimate I think we may safely agree, considered that we might look forward eventually to an average net profit on the railways of 8 crores. Since last year's Bill was introduced the work of improving the railways has been very energetically proceeded with, and during the current year it is hoped to devote no less than 12 crores to the provision of rolling stock, 7 crores to the rebuilding of station yards and other works of that kind, and 3½ crores to doubling and quadrupling lines and strengthening bridges. The work of electrifying the great Indian Peninsula Railway in its suburban branches has been begun, and when it is completed it will, in conjunction with the Bombay section of the Bombay-Baroda and Central India Railway, materially relieve the congestion in Bombay by enabling city workers to live further out. It will also produce additional revenue for the railways. There has been a decline, taking the railways as a whole, in the working expenses in 1922, and we expect a further decline this year.

A point was raised last year by a former hon. Member as to the provision being made for the poorer classes of passengers. I can only say that progress has been made in that direction, and that more facilities are being provided for third-class passengers. Further, the formation of central and local councils as recommended by the Acworth Committee, will, I think, bring the railway administration into closer touch with public needs and help to popularise railway development. I think this is a satisfactory record of progress which I have sketched out. I have put it to the House as briefly as possible, for it speaks for itself, and does not call for any lengthened explanation by me. There are just two other points I desire to deal with exceedingly briefly. It is quite obvious when the House is asked to sanction a proposal of this kind to permit the Government of India to borrow large sums of money in the British market that hon. Members should be entitled to inquire whether the conditions of public order in India are such as to justify any British investor in expecting as safe an investment for his money as heretofore. I should like to answer that question. In spite of what was stated in yesterday's Debate, there is a vast improvement in political affairs in India and a consequent improvement in public order. There seem to be still some hon. Members who think that things are far worse than they are. One hon. Member, in fact, used the term about the condition of the Punjab that it was one of complete anarchy.

There are critics in this country, and some in India as well, who simply regard India as a disturbed peninsula in a peaceful and prosperous continent. The exact opposite is the case. Since 1914 Asia has suffered a violent eruption scarcely less great than that in Europe. Compared with 1914 it would be difficult to imagine a greater change than that which has come over two great Empires in Asia, Russia in Asia and China. It is bound to be the case, as is the case in so many countries in Europe, that the general psychological effect of the War and the general unrest on the Continent as a whole have contributed to unrest in India. I think that is obvious. Critics in this country, however, fail to take into account the immense difference in conditions in India to-day as compared with 18 months or two years ago. I do not think that either the Government of India, or its executive head, or the Secretary of State have received sufficient credit from the public for the great improvement that has been brought about. It is a delicate subject to deal with, but I say deliberately that while my Noble Friend and the Governor-General did not take over an easy legacy from their predecessor, there is nothing whatever to alarm any investor in any country about putting his money into Indian loans.

I would like to turn to a point which was raised by the hon. Member for Farnham (Mr. A. M. Samuel) on the Committee stage of the Resolution. This is a question in which the hon. Gentleman takes great interest. He raised it last year and I then gave him an answer and promised a further answer this year. He asked whether it would be suitable to remove by legislation all restrictions on the borrowing powers of the Secretary of State. That is not a very simple question to answer. I admit there is a certain anomaly in the present position, but I should like to explain as clearly as possible what that position is. In this country Indian Stocks are not guaranteed by Parliament. It may be urged that the Dominion Governments which, in some respects, and only in some respects, occupy an analogous position, do not require statutory authority for their borrowings. But India is not yet a Dominion, and what the House has to remember is that as regards India the Secretary of State, as the Member of the Government responsible for India, has a different responsibility with regard to Indian finance, from that which devolves upon the Secretary of State for the Colonies in respect of Dominions finance. The Secretary of State for India is responsible to Parliament for the sound conduct of Indian finance in all its aspects, and so long as he remains responsible there is good reason why Parliament should desire to keep closely in touch with questions so fundamental as the raising of debt in this country. Further, in reply to the point raised by the hon. Member for Farnham—and I am glad to see he is now coming into the House, so that he will be able to follow my argument—of the altered condition of India to-day as compared with that prior to the Bill of 1919, I would point out that, so far as the central finances of the Government of India are concerned, the Act of 1919 did not relieve the Secretary of State for India of any part of his responsibility. Moreover, as the hon. Gentleman pointed out during the Committee stage, India Stocks "issued by the Secretary of State for India in Council under the authority of Act of Parliament and charged on the Revenue of India," are trustee securities under the Trustee Act, 1893, and I am advised that, if the authority of Parliament for the borrowings of the Secretary of State were removed, further provision would have to be made to enable these Stocks and future issues to remain in the trustee category. Looking at the matter, therefore, in all its bearings, I do into think that this House should be in any hurry to make such an alteration.

There is one further point in regard to this matter which, as I have said, is of some importance. The constitutional position of India is at present, avowedly, transitional, and I think that, if any change in the existing situation as regards these Stocks and their trustee character were proposed, it would only disturb the investing public. They would be led to think that there was some alteration which, in fact, there was not, and it would be particularly undesirable at a time when Indian securities are at a better price, when there is a demand for them, and when, as we believe, there is a very good opportunity to offer to the British lender in India, and India is likely to be a borrower on a large scale. I go further, and say that I think the only appropriate time to remove the existing restrictions on Indian Government borrowing in this country would be when, if it ever happens, it is decided, after full deliberation, to relieve the Secretary of State for India from his responsibility in regard both to Indian sterling debt and to Indian finance generally. I need hardly say that there is no intention of making that alteration so far as the Government are concerned, and, further, it would have to be dealt with as part of a large constitutional scheme, and not as a part of financial legislation. I hope that I have explained all the different points of the Bill, and that the House will be prepared to give it a Second Reading.

May I first thank my Noble Friend for having so kindly explained to me that which I did not ask about? I do not want to be funny, but that was not the point that I raised at all. It appears to me, if I may go over the ground again, that the Secretary of State comes down and asks, on behalf of the Indian Government, for permission to raise a loan in Britain. I need hardly say that I have always supported these loans, and shall do all that I can to help this one, but I do not understand why the Noble Lord comes down and asks this permission, now that the Indian Budget is entirely out of our control—

I think I must reply to what the hon. Member has just said. When he is good enough to say that I have not answered his question, he, perhaps, fails to realise that I dealt with his point before he came in.

I beg my Noble Friend's pardon. I am sorry that I was not in the House at the time, so I will take what he said as being satisfactory. Much as I can support his views, however, there are one or two points in the Bill which, as it appears to me, require consideration. Clause 4 gives power to raise £15,000,000 for the general purposes of the Government of India. I hope that this is not for the purpose of balancing the Budget. What is it for? Is it proposed to borrow this £15,000,000 instead of raising money by taxation, or is it for purposes which are yet undisclosed? Again, Clause 7 provides that no Stamp Duties whatsoever shall be charged on the transfer of any of the capital stocks issued by the Government of India. I do not know why the Government of India, when it raises money here, should be allowed to do so without paying Stamp Duties to the English Revenue. If an English Municipal Corporation, for instance, raises money in London, it has to pay or compound for Stamp Duty to the Revenue on the transfer by inscription and the same is true in the case of any of the self-governing Colonies which raise money in England. When they do so, they have to pay or compound for Stamp Duty on the transfers of their inscribed stock. I raised this point last year. There may be justification for omitting to charge to India Stamp Duties in this case, and, if there is, I am sure my Noble Friend will tell us what it is.

I am very glad that this money is going to be raised, whether it be in England or India, for the purposes of developing the prosperity of India. I only wish we could find more money for India. I only wish that the policy of developing railways and irrigation in India were carried a little further forward. My Noble Friend referred to the fact that public opinion was favourable towards these Indian loans. I wish it were even more favourable to them here, for the people of this country, during the past five or ten years, have been frightened of Indian investments. If anyone went to a stockbroker and said, "I have £1,000 to invest; I think I will buy Indian railways or Government stock," the stockbroker would often say, "Well, you know there is unrest in India; I do not know whether you are wise." During the last 20 or 30 years British money has been driven out of India to Mexico, Argentina, Brazil, into municipal and provincial bonds of South American States to the disadvantage of the popularity of Indian loans. But if people had put that money into India, I am certain that many a man would be better off at the present day than he is after investing in South and Central America, where there is unrest and often dishonesty. I can only speak as experience guides me, but I do believe in the real honesty of Indian investments, especially so far as those under the control of the Indian Government are concerned, and I say, whenever I have an opportunity of talking about the matter, that English people should be more prepared, more eager, to lend money to India, for the reason I have just pointed out, namely, that it is much safer in India than in South and Central America, and that India is the best outlet for British savings outside the British Isles. It is better and safer to lend to India than lending for the development of Mexico, Guatemala, and other States and provincial cities of South and Central America. As has often been said, we here are all Members for India, and we desire, above all, to carry out our duty of helping the people of India as much as we can.

After the invention of the alphabet, the greatest factor in the advancement of civilisation is the making and extension of roads and communications, and most of this money is for the purpose of broadening out the means of communication, by canals and railways, throughout India. The hon. Member for Taunton (Mr. Simpson) said yesterday that the whole of Indian life is a gamble on the rainfall. We cannot control the supply of rain, but there is one thing that this money will do, and that is why I am eager and anxious that this Bill should go through. It is by irrigation and storage of rain, by broadening out railway communications, that we can defeat, in some degree, the ill effects of deficient rainfall, by enabling grain to be transferred from a district of plenty to a district in which there is a scarcity. There is another side to the question, namely, that most of the irrigation works have more than paid what they cost, but that is as nothing compared with the protection against famine to large tracts of country. That wonderful Ganges canal, which was put down by Sir Proby Cautley, the uncle of my hon. and learned Friend the Member for East Grinstead (Mr. Cautley), has paid for itself over and over again, and has irrigated and defied famine in a district half as big as Europe. What has been the result of these irrigation works in the Punjab, in the Chenah and Jhelum districts? It has been the disappearance of famine, it has been to enable the native to produce more raw material and more food for himself and abundant and cheaper supplies for us; and even on non-altruistic grounds it is good, because the more food and raw material produced as the result of this extension of railways and communications, the more the Indian native has, more to sell and more to spend. Now, the first thing he does when he has money to spend, is to buy machinery and cotton, and the place he comes to for that is England.

No, he does not; he goes to Japan and China for it.

All the hon. Member for Royton can say is that there are certain duties on cotton with which I do not want to deal now, but which may operate against that—

And there are other matters as well.

—which will keep the Indian native from buying cotton in Lancashire; but, granted that what the hon. Member says is correct, if you increase the trade of India, even with Japan, it would mean that Japan would have a better purchasing power to come over here and buy here what she needs. Thus is trade stimulated directly or indirectly. The mystical agency of exchange always operates somehow. If we cannot get direct payment for Lancashire for our cottons, it must be remembered that India will have greater ability to buy goods elsewhere, and those who sell the goods have an opportunity of spending their money in different parts of the world, and we profit sooner or later. I hope, after the illuminating and splendid discussion yesterday, investors of this country will pay more attention to the financial needs of India. I hope that bankers and stockbrokers will again turn a friendly eye to the investment of English money in India and advise their clients that they can do better by putting their money under the control and guidance of the Indian Government and Indian railway companies than by putting it into much less secure investments and speculations in other parts of the non-British world. I hope I have not said anything to vex the Under-Secretary. I wish the Bill well and I hope it may pass.

I think we should do anything we can to enable India to extend her railways and improve her communications. The railways need a tremendous amount of improvement and extension. As regards the actual money this Bill is empowered to draw—£50,000,000—it seems to me that we ought to add some covering condition to allowing India to come to the best market in the world to get money. We ought to lay down that a certain percentage ought to be spent in this country. I believe it is not unknown for India to borrow money in this country and to invest it on the Continent. In the building of railway locomotives, rails and other material are required and I think the House would do well to put in a covering Clause to say that at least 75 per cent. should be spent in this country.

Irrespective of prices?

The hon. and gallent Gentleman may like to know that 95 per cent. is spent in this country.

I am very glad to hear what the Noble Lord says, and am only too glad it removes my objection. But I think something ought to be laid down in the Bill.

Does not the hon. and gallant Gentleman think that would have the effect at once of raising prices if it were known there was an obligation to buy in England?

Surely the right hon. Baronet knows that it is good for the workmen of this country if orders for locomotives, rails and such things are placed in this country instead of Belgium or elsewhere. With regard to the £15,000,000 which is empowered in Clause 4 it seems to me that we are encouraging the Government of India to balance their Budget by borrowing in this market. Whether that is the intention of the Government or not I do not know but it looks as if the Government of India might use this £15,000,000 to replace money which otherwise ought to come out of the taxpayers in India. I wish the Bill well and I only hope my fear that the £50,000,000 will not be spent in this country will be removed.

12 N.

I know that in many quarters of the House it is generally considered, when the positions of India and Lancashire are brought together—it is usually the "wicked" Lancashire point of view, so it is considered in some quarters of the House—when Lancashire endeavours to show cause why the workpeople in Lancashire can work one week in four in order to enable certain wealthy Indians to exploit their cheap labour with cheap money from this country, that we should sit quietly and acquiescent in respect to the position that sometimes arises by this cheap money. What is the position exactly? The Government of India will come into the English money market, not for what the hon. and gallant Gentleman says, for £50,000,000, but for £65,000,000. They will come into our money market, with an advanced bank rate now, which will have the inevitable effect of still lifting the price of money upon which we must exist in Lancashire, with an outlook of working one week in four for the employés. It is expected that we people who come from Lancashire to endeavour to protect the interests of the workers in Lancashire should sit quietly and acquiesce and support and applaud the position? Let us have a clear and definite understanding. We desire and wish the working-class Indians—not a few millionaire Bombay millowners—to have their opportunity in respect to the highest possible standard of life it is possible to give them, for we understand and know that the mysticism of the East is essential and necessary for the practicality of the West. We can bow and give full credence to the wonderful contribution which India has given to the West. When we understand and comprehend that we in Lancashire, as a cotton industry and a textile trade, contribute more to the taxes of this country than any other industry, and, I believe, any other county, we think we deserve some consideration as to how we should subsidise (by Governmental backing of this loan), and make more intense the competition of certain sections of these Indians to the detriment of the cotton-worker taxpayers in this country.

Something has been said about where and how India is buying, and where and how India is spending her money. Let me give a few figures in respect to the cotton trade. Of India's import of cotton yarn and twist in the nine months, April to December, 1922, amounting to 45,722,338 lbs., the United Kingdom supplied 27,633,756 lbs. and Japan 16,877,468 lbs. Japan has made marked progress in the cotton goods trade, increasing its shipments to India from a total of 9,000,000 yards in 1913–14, to 170,000,000 yards in 1920–21. This position was attained largely as a result of close co-operation between the Japanese Government, banks, merchants and manufacturers during and following the War, so that, at any rate, whilst our looms and our spindles are resting in Lancashire, India is enormously increasing her purchases from Japan and reducing them from Lancashire. We have to-day one of the most difficult times in the history of the cotton trade during the last 100 years. We in this House are going to make it even more difficult by raising the price of the money we desire to run our mills in order to assist a few millionaires in India—not the workers in India, mark you, but a few, and some of them European millionaires as well, who have settled in India and are exploiting us. I shall support His Majesty's Government because, as I said the other day, the Government have helped the Lancashire cotton trade in certain ways in regard to the growth of cotton, irrigation works in the Sudan, and also in India, and by giving place for the 6d. per bale levy, but I cannot give a silent vote on this matter. Then I consider the intense competition which the extremely low-priced labour of India is causing to us in Lancashire—labour under conditions which no civilised country would allow its workers to be employed.

Will not the increased wealth of India conduce to better trade in Lancashire? Are we to understand that we do little or no trade in cotton with India? If we do substantial trade with India, will not the increased prosperity of India mean increased prosperity for Lancashire?

I will now give figures showing exactly the competition of India with us in markets which were ours before we began to subsidise cheap money—via Government Trustee Stock—in India. In regard to the production of cotton piece goods by the Indian mills, the pre-war average was 854,141,000 yards of grey and bleached piece goods, and that had risen in 1921–22 to 1,284,752,000 yards, an advance of about 50 per cent. between 1914 and 1922, and passing into our markets. With regard to export of Indian coloured, printed or dyed piece goods, the prewar average was 42,384,000 yards, which had risen to 135,730,000 yards in 1921–22, or over three times as much.

On a point of Order. May I point out that this Bill has nothing whatever to do with the conditions of the cotton industry in Lancashire or in any other part of this country? The hon. Member says that we are subsidising cheap money for Indian cotton mills. This has nothing to do with any cotton mills in India. The money required to be borrowed is for general, railway, and irrigation purposes. The hon. Member's argument, as he has stated it, cannot be in order on this Bill. Anxious as I am to answer it, I should not be in order in doing so.

I have listened carefully, and I was wondering whether the speech of the hon. Member was one of those "lost leaders" that ought to have been given yesterday. It would have seemed more appropriate on yesterday's discussion. The hon. Member is quite entitled to discuss whether or not railway development and irrigation is to the detriment of Lancashire, or otherwise.

I accept your ruling, Mr. Speaker, and also I understand the view point of the Noble Lord. I declare that cheap money to India means dearer money to Lancashire, and cheaper transport in India means more competitive cotton prices to Lancashire. We have met the Noble Lord before in regard to these matters as well as on Import and Excise Duties. When I have dealt with the illegitimate competition which this money exercises against a hardly-pressed class in Lancashire, I shall show the uncertainty in English cotton spinning centres whereby and wherewith the Indian Government, through the competition of Import and Export Duties, in March, 1922, India threatened us with huge increases.

That certainly would not be in order.

Then I will content myself by passing to the China trade, to show again how the Indians are competing with us by reason of the cheap money which we are providing, and which would not be forthcoming as cheaply except by Governmental backing and by the sweated low-priced labour in Indian cotton mills. By these moneys being provided for the railways, transport and other purposes, the product of the Indian mills is cheapened and competes with us in our own markets, for we have a higher sense of comfort for our workers, are paying heavy taxes, and sometimes facing unbending inspectors of taxes as well. We in Lancashire are being compelled to work one week in four as a result of this competition. I ask the House to listen while I give figures which will show how the Indian export trade to China has been proceeding from 1913 to 1922. Previously to 1913, we in Lancashire supplied the majority of the world's needs in these goods. In 1913–14 the export of yarn from India was one-half what it is to-day. [An HON. MEMBER: "From what authority is the hon. Member quoting?"] I am quoting from the "International Cotton Bulletin," which is an accepted journal in the cotton industry.

No one can accuse me of taking a narrow or stunted point of view in regard to the progress of the daughter nations of the great British Commonwealth, but I do say that charity begins at home. We have to consider the uncertainty of the rulership in India in respect of power. It must be thoroughly understood that India to-day has enormous and very proper power, and I acquiesce in such power, provided that the electorate is of such an educated type as to be able to take that broad and honourable view which education gives to an electorate in regard to the utilisation of the powers which they possess. We Lancashire folk are contributing to the establishing of colleges to give the eastern textile workers an opportunity of textile education and instruction in the use of machinery, and we are doing that, mark you, by money from the cotton trade in Lancashire. I would ask hon. Members to realise, therefore, that it is no dog-in-the-manger policy that we are pursuing in Lancashire, but we do plead for support and practical sympathy with respect to the cheap money, low-priced and sweated labour by means of which India is taking some of the markets from Lancashire. The Government must understand that, in giving facilities for India to come into our money market in London, it is putting extra cost on the price of the money which we have to use in connection with one of the highest and most delicately financed industries in the country.

I regret that I was not in time to hear the speech of the Noble Lord. The hon. Member who has just sat down has made such a provocative speech that it would ill become us on this side to sit quiet. If we followed his argument to its logical, conclusion, it would be incumbent on the Government to prevent any foreign loans being raised in the home market. He wants to keep the rate of interest low. He believes that by foreign loans competing with British loans in the home market the rate of interest rises. Therefore, logically, he would exclude foreign loans from the London market altogether. Surely it is one of the legitimate causes of triumph to ourselves, that since the War London has regained its position as the money market of the world. The hon. Member did not object to a loan being raised for Austria the other day on London. Why should he object in the case of India? His argument seems to me absurd. He supports it by the suggestion that the cotton trade should have a special preference. Why should it get it any more than any other trade? There are other trades in India which compete 'with British trade. There is the nascent Indian iron and steel trade, which will be supported even more and more by loans such as we are proposing to make.

Of course it is true that the hon. Member speaks for a particular trade which he represents, but the arguments seems to be quite legitimate that if we have a prosperous India and India can borrow money more cheaply in London and spend it it is all to the good. They are going to spend a large amount of money which will mean an enormous increase in the production of wheat. They will export that, and will not want money for it, but goods which they will get from this country, so that that will be all the better for our trade. The thing seems to me perfectly simple. The railways of the Indian Government must have the money. The hon. Gentleman suggested that the Indian Government was about to build new railways to assist the Indian mills to compete with Lancashire. I do not think that that is the state of affairs. The fact is that railways in India, as elsewhere, during the War were not repaired and maintained as they ought to have been, and there are large arrears to make up. The Acworth Committee inquired into this matter, and recommended a large expenditure which is to go to the repairing of those railways, which will thereby facilitate the transport of goods from India to other markets, with the result that they will have credits to exchange for goods in our markets. It is astonishing to find, at this time of day, a member for a great constituency such as the hon. Gentleman represents, arguing in this way, and that he should think that by keeping India down we are benefiting England when quite the opposite is the case.

It is very unfortunate that I had not the opportunity of being here yesterday, but I was not sorry to hear the remarks of the hon. Member for Royton (Sir W. Sugden) because they give me perhaps the opportunity of saying one word from the other point of view. Part of what I desire to say has been said already ably by the hon. Member for Taunton (Mr. Simpson), but if I may, without transgressing the ruling which you have given, I would like to say, that with a considerable knowledge of the cotton trade of India that the competition which Lancashire is going to face in future, and increasingly face, has nothing to do with raising loans in England. The fact is that so long as India progresses, and she is progressing and will progress, I feel confident that she will continue to erect mills and grow short staple cotton. She will never compete, at least not for many years to come, in the matter of cloth made from long staple cotton.

That does not cover all the ground. We spin waste, short staple and medium.

I am not suggesting that there will not be competition. I am suggesting that there will be more competition for a definite grade of cotton suitable to the Indian climate and conditions. That is a fact that Lancashire will have to face and face increasingly. The remedy appears to be very simple, that people in Lancashire should devote themselves more and more, as they are doing, to the production of cotton goods in which they will not have to meet this competition. Turning to the actual Bill, one of the main objects is to raise money for railways. In this connection I wish to draw attention to a few extracts from the Report of the Inchcape Committee, which are very pertinent at the present moment. We are of opinion that the country cannot afford to subsidise railways, and steps should be taken to curtail working expenses. We consider that with economic working it should be possible for the railways of India to earn sufficient to yield a return of at least 6½ per cent. on the total capital at charge. It is evident that the failure of the railways to use economically all the capital invested by the State is one of the main factors responsible for the present financial difficulties of the Central Government. The last extract which I shall read is the most important of all: We are informed that there are many remunerative schemes such as opening up of lines for the development of mineral resources or the electrification of suburban trains. Many such schemes cannot be taken up owing to the difficulty of obtaining capital. This being so we cannot believe that it is legitimate in any circumstances to put six or seven crores of capital borrowed at a high rate of interest into lines which are already very heavily burdened as a result of their expenditure, and we recommend, except in the case of commitments already entered into, that no further capital expenditure be incurred on these lines. With the limitations which, I admit, always attach to the reading of partial extracts I think that these are very important points to be considered. The fact is that expenditure on the main lines of railways has to be cut down drastically. There are unlimited opportunities of building feeder lines in India. Capital is required from anywhere it can be got, and India can give a suitable return on all the capital which she can borrow. But, as pointed out by the Inchcape Committee, it is most important to curtail expenditure on the main lines until they are put on a proper economic basis, and this is a matter which has been before commercial opinion in that country for a considerable time. The next point is the question of raising money in India and England. There is a great deal to be said of course for raising sterling loans in England, and I have no objection to this Bill but am in favour of it. But it is also important to raise money locally.

It has been said in this House and in other parts of the world that the great difficulty in India is the hoarding of rupees and of metals. I would ask the Government of India what they have done during the last 20 years to try to do away with this inherent desire to hoard. I do not suggest that anything which they can do will put the matter right. Far from it. But perhaps the Government of India might do something more in the future than they have done in the past. The system of raising loans for the War in England by small investments was a great success. To a smaller extent the same system was carried out in India with some success, but since the War it has fallen off. Patriotic motives, which were put forward then, are not so strongly before the public now. In fact since the War Indian investments in Post Office Certificates have fallen off. That to my mind is due to the fact that the methods have not been satisfactory. It has not been possible for the small investor in India to get his Post Office Certificates cashed in any post office at any time. That is one of the essential things. There is no use in burdening these offers by the Government in a place like India with all sorts of restrictions.

If the native of India is going to give up hoarding he must be induced to do so by a system by which he can invest small sums, and get payment at any post office at any time, and as he gets hard up, as he probably will, get an advance, or repayment, before due date by some system of discount. I am afraid that India has not yet advanced to the state in which we can arrange for European banking in these matters, but India has unlimited wealth hoarded up still. She wants to raise money wherever she can. I quite agree she should raise some of it in England and I am not in the least afraid of the results of her raising it here. It will do good to India and it will do good to England, but the most good will be done to India when the Government of India induce the people to invest their own money in Government securities. It can only be done gradually and slowly, but it will be the greatest security for the future industrial prosperity of India and for the future political prosperity of India. It is a pity that the movement which took root during the War did not go forward as it might have done.

A point will doubtless be raised regarding the method of raising the money, and there has been a good deal in the newspapers as to the desirability of India having direct representation in the City of London and raising the money here. I am not going into that question, but I think a half-way course will probably prove to be most satisfactory. It is not certain that the Government of India, or the representatives of India, or even the Indian banking and commercial community are necessarily the best judges as to when to raise money at home and when to raise it in India. They will require advice from England as well as India, and I suggest it is desirable that the Government of India Bank—the Imperial Bank of India—should have a considerable say in these matters. The half-way course I suggest is that of a double system of control and advice as to the amount of money to be raised and as to whether it should be raised in India or England at a particular time. Though it sounds complicated, I think such a system would work quite easily, and would be of considerable benefit. I strongly agree with what has been said as to the desirability of India raising money, but there are two points which I would like the Government of India to consider. Those of us who have lived in India know that the soil of India has only been scratched. There is no limit to the possibilities of India's development. We do not really know anything about India's prospects. You could pour millions and millions into India and, in time, get a wonderful return, but there is a danger of going too fast. To many keen, intelligent and enterprising Indians it may seem that I am sounding the wrong note in saying that it is possible to go too fast, but there is such a possibility, and I think this note, sounded by the Inchcape Committee in connection with the railways, gives an indication of a particular direction in which we may go too fast without carefully considering our path. I hope also, when the Government consider the raising of these loans, they will pay special attention to the fact that for a good many years past, excluding the War years, the extremely high bank rate in India has been a great handicap to trade. I do not suggest that it could have been entirely avoided, but there is such a thing as balancing matters so as to endeavour to get a bank rate in India which would allow trade to flow freely both in and out. With these reservations or exceptions or limitations, I am entirely in agreement with this Bill. I hope the House will pass it at once, and I trust that not only this year, but in other years the Government of India will be able to raise money on sound loans, achieving better security and better credit every year and making use of London as well as India.

I wish, as a Lancashire man, to say something upon this Bill. Like all other Lancashire men who have spent their lives in the cotton trade I am keenly interested in what India does and keenly dissatisfied with what India has already done. As a Lancashire man I feel that the Indians made a great mistake when they put duties on Lancashire cotton in a way which we regarded as highly inimical to our trade and not at all necessary for India. These duties were put on the goods when Indian mills and manufacturing concerns were making huge profits and had no need whatever of protection. I draw an absolutely opposite conclusion from the facts to that drawn by another hon. Member who also represents a Lancashire constituency, the hon. Member for Royton (Sir W. Sugden). What we now require in India is the best of feeling between India and this country, and that can never be arrived at if Indians believe that Lancashire's sole desire is to advance the Lancashire cotton trade, whatever happens, as against the interests of India. That is not the way in which to secure the future of the Lancashire cotton trade in India. Good feeling is the very essence of what we require and I will ask the Under-Secretary for India to consider one or two things which have disturbed feeling in India, and I will make an appeal to him to remember those things in future, and to devote his efforts to getting a better feeling with India rather than increasing the tension which now exists.

Everybody knows that India, both from the religious and political points of view, has been extremely disturbed during the last three or four years. I am not going to argue as to the cause, but I am going to state the evident facts. A large proportion of the Moslems considered they had a great religious grievance and millions of the Hindus believed they had a great political grievance and the result was a boycott of Lancashire and other goods in the markets of India. Surely it is to Lancashire's interest to do everything possible to show that the people of this country desire, not only that their own trade should be safeguarded, but also desire fervently that the people of India should have every opportunity given them for development, that nothing should be put in their way by this country, no hindrances to their progress created, and nothing done to increase the bad feeling already existing. Taking this Bill as it stands, what are the purposes of these loans? They are for irrigation and railways. The cotton trade represents a very small proportion of the resources of India, and irrigation and railways can develop India and make wealthy precisely those people who buy Lancashire cotton goods, and that seems to me to be the plainest of business propositions, apart altogether from the other argument as to assisting India to develop her agriculture, and the country generally, in the best possible way. There are other things into which one could enter, and I could pluck a political crow with the hon. Member for Royton as to why print and coloured goods are not going from Lancashire to India in the way they should, but that would raise a fiscal argument and a technical argument about which some hon. Members would understand quite as little as they understand about the long staple and the short staple.

The hon. Member complained very bitterly about Lancashire goods entering into competition with sweated Indian labour products. May I suggest to him that a better way of dealing with this matter than that which he proposes, would be to do whatever is possible to help Indian sweated labour to secure better wages and conditions? I know an organisation which will try to do it, if the hon. Member will help us along with some funds. Sympathy can often be measured by the depths to which one's hands will go into one's pocket in order to achieve an object. That is by the way. Let me sum up my arguments. As a Lancashire man I bitterly regret what has happened with regard to the Indian import duties. Whilst I feel that Lancashire trade is undergoing and has undergone for years a tremendous trial, whilst I feel, as keenly as anyone can, that Lancashire trade with India ought to be developed, yet I draw a different conclusion absolutely as to method. In my opinion the best thing to do is to make these Indians feel, not that we are trying to hold them, as it were, as a subject race, bound to purchase our goods—

I must interrupt the hon. Member. I challenge him to point to any single speech I have made in my short political life, in which I have spoken of compulsion or subjection to any of our organisations.

I understood the hon. Gentleman to say that if India were permitted the right to raise this loan, which every other country in the world possesses, certain eventualities would arise. So I ask, if India is to be pre- vented from doing what every other country can do, what conclusion can we draw except that we are treating India as a subject people, and not giving her the privileges which Czechslovakia, and Austria, and Germany, and France, and Belgium can have in the London money market? That is the position. It is the wrong way of approaching this problem. It is not only a wrong way, but it is precisely the way that will inflame the feeling that already exists in India. Our policy should be a policy of absolute friendliness to India, trying to get our interests safeguarded in India because the Indians believe that our objects are good and our intentions are sincere and honourable, helping to develop India in every possible way, because precisely that part of India which will be developed by irrigation is the part that can supply this country with the goods that we need and in which the labourers can take the goods that we produce in Lancashire. Whilst I cannot speak about the intricate details of the finance of this Bill, I am in wholehearted sympathy with its main object, which is to help India to irrigate her country and to build railways, and if there is a Division I shall certainly vote for the Bill.

I am not antagonistic to this Bill, but I wish to utter a few words of caution. I hope that the Noble Lord, the Under-Secretary of State, will forgive me if I criticise one or two points, but I can assure him that it will be constructive criticism. This Bill is to allow £65,000,000 to be raised for India. It is stated in the Memorandum that £16,000,000 has not been raised by the last Resolution and Bill which we passed. I understood the Noble Lord to say that the responsibility for the finances of India, anyhow in this country, lay with the Under-Secretary of State for India.

I never said anything of the sort. I said the Secretary of State. The hon. Member must not put responsibilities on my shoulders.

I apologise for the mistake; I thought it rested with the Noble Lord and also with the Financial Committee. I do not think that anyone who has looked into the finances of India for the last four or five years can congratulate the Financial Committee, if there be one, on what they have done. First of all, you had in 1920 the endeavour to fix the rupee, an attempt which anybody who has looked into the matter will agree was rather bundled and was not good for the finances of India. We have had about four years of unbalanced Budgets. I am pleased to think that this year the Budget will be balanced. It is the immense amount of money that has been raised in the last few years, in addition to what it is proposed to raise to-day, which makes me nervous lest that country should be going too fast. I realise that India requires a great amount of money for railway development, canals, and so on, but you can develop a country, as well as an individual, too fast. What has been raised? In the last nine years the internal loan of India has increased from 146 crores to 421 crores. If you put that into sterling, in the nine years the internal loan has increased to £165,000,000 in nine years. I understand that there is a loan at present being floated in India for 24 crores. It is satisfactory news in the newspapers to-day that 16 crores was applied for on the first day. That is satisfactory from the Indian point of view, because I understand that money is cheaper in India than it is on this market. What have we floated in this country in the last 26 months? We have floated up to £60,000,000 of Government of India stock on this market. What I criticise the Secretary of State or his Committee for is the price and the unsatisfactory way in which these loans, which are external loans so far as India is concerned, have been raised in this country. There was an issue of £7,500,000 7 per cent., issued at £100, when the underwriters were relieved. That was in April 1921. In June, 1922, there was an issue of £12,500,000 5½ per cent., at £96, when the underwriters were left with 63 per cent. In October, 1922, there were £20,000,000 issued, 4½ per cent., at £85, and the under writers were left with 91 per cent. There was the loan issued in May, 1923, for a further £20,000,000, 4½ per cent., at £90, and the underwriters were left with 51 per cent. I do not think that that is quite satisfactory.

It is due to the unwarranted crying down of these Indian loans in certain quarters. The public is discouraged against Indian securities.

I do not think that it is entirely that. In the last few days this last loan, which went up two premium, that is to £92, has dropped to one discount, that is to £89. Why is that? Because of the Financial Resolution and the Bill before the House stating that there was a further £65,000,000 to be raised in this country on account of India. There is that overhanging the market. When you have a large sum like that overhanging the market people are bound to sell with a view to getting in at a cheaper price.

The interest on an external loan is indeed hard to pay, and I wonder if the amount which India has to pay to this country, annually, which I understand is about £30,000,000, is done on a satisfactory and cheap basis. India paying the interest on this external loan, which is floated on the London market, is just the same as this country having to pay our New York interest for the external debt which we owe to the United States of America. It is a great drain. As I said in the House only this week, what you produce you consume, with the internal loan in India, but with the external loan, that is, the London issue, what you produce you do not consume. It is very difficult for a country like India that is developing, to pay these large amounts without receiving anything in return, and I wish to impress on the Noble Lord the advisability of caution with regard to these large amounts which are being raised by India. Between 1900 and 1914 India raised loans in this country, but the average between those two dates was £6,300,000 a year, which is rather different from £60,000,000 in 26 months, and, as an hon. Member reminds me, another £65,000,000 on the top of this, and there is also, what I have not taken into account, the Floating Debt, which, I believe, is rather large. We want caution with regard to the development of a country like India, where we have the responsibility. I do not agree with all that the hon. Member for Farnham has said on the subject. I agree that India wants money, but I say, do not go too fast.

As a Lancashire Member, I should be much too timid to intervene between the lively discharges which we have had from the hon. Member for Preston (Mr. T. Shaw) and the hon. Member for Royton (Sir W. Sugden), but I hope it will not go out, either in this House or in this country or in India, that the peculiar interests of Lancashire and the genuine grievances of Lancashire impair in the least degree the desire of Lancashire, as of the country generally, to help India in every possible way. I rose for the purpose of supporting the suggestion made by the hon. and gallant Member for Kirkcaldy (Sir R. Hutchison) that it is really desirable in these loans to indicate that a certain proportion of the moneys so raised should be spent in this country.

That is the old Colonial system, which lost us the North American Colonies.

I have no time now to succumb to the temptation of the hon. Member's unhistorical and inaccurate memory on that point. What I desire to point out is this, that when we have borrowed money from America they have insisted that a certain proportion of it should be spent there, and when money has been borrowed in France the same stipulation has been made by the French Government. If there be anything in the argument addressed to the House by the hon. Member for Ilford (Mr. Wise), I think the statement in the loan that a certain proportion of it should be spent here would help to correct this largely artificial depreciation that Indian securities have been undergoing. The right hon. Baronet the Member for the City of London (Sir F. Banbury) pointed out that a large proportion of this loan is, or has been, spent in this country already. If so, what is the harm of having such a provision in the loan? The public, knowing that fact, would benefit by the reassurance—

I believe there is a permission given to the Indian authorities to spend their money for goods required in India for Government purposes in the cheapest market. We pledged our word, and we cannot go back upon it.

It may be impossible to do what we suggest, but I would prefer to take that from my Noble Friend who represents the India Office. I support my hon. Friend the Member for Kirkcaldy in his appeal, and I believe that what he asks would be of great value.

I wish to answer some of the points which have been put in this very short but interesting Debate, and I would also like to express appreciation of the support given to the Government of India and my Noble Friend the Secretary of State in all quarters of the House in regard to the proposal now before the House. I am especially grateful to my hon. Friend the Member for Farnham (Mr. A. M. Samuel), for, although we differ on one or two points, and I believe neither of us will ever be able to convince the other on those points, I am grateful for his general support. Perhaps I may be permitted to make a reference to one comparatively small matter to which he referred, and that is the question of why these stocks should enjoy the same privilege as that of British Government Stocks, of being free of Stamp Duty. My answer is that they have always been free. I admit that if we were starting afresh there might be something to be said for altering it, but they have always been so, and I think there is no very good reason for upsetting the arrangement.

It is of very great advantage to them.

Undoubtedly it is. The hon. Member for Middleton (Sir R. Adkins), the hon. Member for Farnham, and the hon. Member for Ilford (Mr. Wise) raised the general question of the need for borrowing, and the wisdom or otherwise of borrowing the large sums of money mentioned in this Bill. The hon. Member for Farnham asked why we want to borrow as much as £15,000,000. Our reserve from general powers is something like £2,750,000, and the last occasion on which we took powers to borrow for general purposes was in 1908.

You are not borrowing that amount to balance the Budget?

No. I was going to explain that in a moment. The Government of India always have a certain reserve power. I believe I am right in saying that there is a similar power in every country, but in the case of India it is essential, because you may suddenly be faced with a failure of the monsoon, with famine, or something of that kind, and you must have a certain general reserve, even if very small. But I want to explain that, in addition, it may be necessary to fund certain short-term floating debt. To turn to the speech of the hon. Member for Ilford, I listened with some surprise to it. I know that he has shown that he does not believe in Indian securities to the extent that, I think, most other financial experts on both sides of the House do. I read his speech last year, and I have listened carefully to his speech this year, and I think I am expressing the recollection of other hon. Members when I say that he has on both occasions given the impression that he is not a very great believer in, at any rate, the present system of borrowing. In fact, he said so at the commencement of his speech. I do not know whether I can convince him now, but in giving, as he did, a more or less general view of the position, I think he ought to have taken into consideration and mentioned that we have got a balance this year, and that I believe we are going to have a surplus next year.

I did.

I did not hear the hon. Member say so.

I said so.

Further, the hon. Member should have mentioned, if he did not, that the balance of trade is infinitely more favourable now than it has been for a long time in India. As regards the general policy, my Noble Friend the Secretary of State does not think the borrowing position of India generally is in any sense unsatisfactory. As has been pointed out by hon. Members on both sides, in the case of a great territory like India, with immense potential resources that require development, you must constantly carry out capital expenditure on railways, and canals, and things of that kind. I ask the hon. Member to look at the matter from that point of view, and I hope, at any rate, he will consent to this proposal, because it would be hard to find anywhere in the British Empire outside this country, a sounder system than we have in India. So much for what I have to say on that point. I must just refer to the very remarkable speech made by the hon. Member for Kirkcaldy (Sir R. Hutchison). I gather, from the side of the House he sits, that he is a Free Trader, but he made a speech in which he said there should be inserted in this Bill a proviso that all the orders given should be in this country.

A pecentage of the orders. Obviously, all the money cannot be spent in this country, but as much as possible ought to be spent here.

The hon Member, it is true, said he would like to see 75 per cent. spent in this country. I can complete the assurance that it is not a question of 75 per cent. Actually last year 95 per cent. of the orders for railway equipment went to this country, and that in an absolutely open market, which is a tribute to the healthy state of British trade, as I said on an earlier occasion. I doubt whether it would be in order to go into all the intricacies of the cotton question which my hon. Friend the Member for Royton (Sir W. Sugden) put with so much vigour and sincerity before the House. I think he had a very complete answer from the hon. Member for Preston (Mr. T. Shaw), but I do want to refer to one point, which, I think, should be contradicted, because it is liable to give a wrong impression. He said, as I understood, that the Indian cotton industry was competing with Lancashire, because of the cheap money this country was providing.

I said it was one of the factors.

He used those actual words, the obvious implication of which would be, and to an uninstructed Member of the House would convey the impression that, under this Bill, it was proposed in some way to subsidise the cotton industry in India.

I say that the effect of the Government raising money for use in India was subsidising India in a direct fashion, in competition with Lancashire, for our trade moneys cannot be got as cheaply when backed by industrial companies.

That is practically the original statement—that the cotton industry in India is being subsidised by cheap money from this country. May I once again re-state the position? There is no question of subsidising. What we seek to do in this Bill is what we have done ever since India has been connected with this country, that is, to borrow money in the British market as every other country has done.

But the Government gives a backing to India Loans which not every other country gets when it comes to get money from the London market.

1.0 P.M.

The hon. Gentleman compels me to agree with what was said by the hon. Member for Preston, and I do not really think that speeches like the one he made are likely to help the cause we all have at heart, that is, the closest understanding and the best feeling between Lancashire and India. I can assure him there is no question of subsidising the cotton industry in this Bill. The only other matter to which I need refer was raised by the hon. Member for Kidderminster (Mr. Milne), namely, the electrification of railways and the curtailment of working expenses. As I said before, the curtailment of working expenses is being carried out gradually. I wish it had been possible to carry it out at a greater rate. Electrification, it is hoped, will soon be on a large scale in the suburban districts. As regards the question of raising money locally, every effort has been made to raise a local loan. It met with a good deal of success, but, as every hon. Member who knows India is aware, there is the greatest difficulty in inducing people in India to give up what the hon. Member describes as the habit of hoarding. He hoped that steps would be taken, but I do not think it is possible to compel people to give up bracelets.

I suggested very practical ways in which you could reduce the habit by making the system of small Government investments simpler.

I agree that the suggestion of the hon. Gentleman is worth consideration, but I am afraid that, however much you simplified, you would not be able to get over this ingrained habit of hoarding.

It was better during the War.

There was a special reason for that. As regards what the hon. Member for Ilford said about the slump in Indian securities during the last few days, I think he might also have mentioned the slump there has also been in British gilt-edged securities. For example, British Conversion Loan has slumped in the same period he gave, rather more, I believe, than India Loan. I think that fact is remarkable. I hope the House will now be prepared to give a Second Reading to this most valuable Bill. I think the suggestions and the speeches made to-day will be of benefit in India, and I hope they will also be of benefit in inducing the investing public to invest in the Loan.

May I, with the leave of the House, just explain that I am not antagonistic to the Bill? Indeed those were the first remarks in my speech. I said that the Budget would be balanced probably this year, and in no way did I mean to imply by my speech that it should be against the credit of India. I was only endeavouring to show the large amount of money which had been raised by India, and, as the hon. Member for Kidderminster had stated the two words "too fast," I thought it was advisable with this large Loan that precaution should be exercised.

Question, "That the Bill be now read a Second time," put and agreed to.

Bill read a Second time.

Ordered, That the Bill be committed to a Committee of the Whole House for Monday next, 9th July.—[ Earl Winterton. ]

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

The Public Works Loan Commissioners lend money to the smaller municipalities and public utility bodies. The House well knows that it is desirable, in their own interests, that the smaller municipalities should not have to go into the public market and raise loans for the needs of their locality. The Public Works Loan Commissioners is a body established so long ago as 1875. They are "fed" with money from year to year so as to lend it up to a limited maximum. The Commissioners provide loans for such local bodies as require them, and have obtained authority from this House to get these loans. I think the whole House knows that the Public Works Loan Commissioners are a voluntary body, and that this House and the country are very highly indebted to that body of expert business men who are quite unpaid, and who give their services gratuitously in the interests of the country. The amount it is proposed the House should assent to this year is a sum not exceeding £20,000,000. The House may like to know that on the first introduction of this Bill the amount was originally arranged, so that the repayment of the loans would gradually make it unnecessary to come to the House for fresh loans and for fresh money. As the municipalities paid off their loans and thus allowed the Commissioners to accumulate money, they were able to make further loans to those who desired them.

So it happened that between 1902 and 1920 there was no necessity to bring in this Bill in order to enable fresh sums of money to be expended. However, in 1920 a great housing program began in the country, and very large sums of money passed through the hands of the Commissioners to those needing it. In 1920, £15,000,000 worth of stock was issued; on 21st January there was another £15,000,000; on 21st November there was £20,000,000, and on 22nd January last year £30,000,000. This year we hope to get through with this £20,000,000. I think the House will see that this is the best and most economic way possible of providing money for the smaller local authorities. There is only one other thing I should like to mention and that is that the second part of the Bill relates to an unfortunate Scottish harbour for which work £10,000 was borrowed from the Commissioners in 1907. The authority got their harbour built. I make no observations upon that, but unfortunately they were unable to repay the lent money. If the local authorities or whatever the body concerned is unable to repay it, the Exchequer—

Excuses them.

No, the House lets them off. The Exchequer provides the money to be put in the Bill for the Public Works Loan Commission. In the case of the unfortunate Scottish harbour authority, the Eyemouth trustees, to which I have referred, who are unable to pay the portion of their loan owing, we are asking the House to remit it. There is £200 principal and £131 17s. interest.

And that is all that we will get?

I feel I owe an apology Mr. Speaker, for addressing a few words on a Bill, which I understand, usually goes through without discussion. In the course of his observations, the Financial Secretary referred to the housing scheme, and the activities of the Public Works Loans Commissioners in connection with it. In my own constituency there is a Public Utility Society which has built houses, and it is part of the business of the Public Works Loans Commissioners to make advances purely on a business footing. I would submit, however, that when we are considering social problems we are unable to consider them entirely as questions of what is strictly good business. The principle of my contention has been admitted by the Housing Bill which we had before the House the other day, when it was made clear that the equity of the case had to be considered. At the times the Public Works Loans Commissioners gave these loans they advanced a great majority of the money at a rate of 6½ per cent. interest. If the Treasury had taken means to secure a retrospective reduction of this 6½ per cent. interest to say 5 per cent. it would have meant that instead of the money the Treasury was prepared to make available being spread over all the public utility societies, it would have been concentrated on those societies which were in the particularly unfortunate position of having to borrow their money at a time when they could only get it at 6½ per cent. Later borrowings were able to be made at 5 per cent., but if what I suggest had been followed out, all the benefit would have gone to the poorer societies instead of the bankrupt and prosperous societies being treated practically the same way. Under the present scheme subsidies are given by the Minister of Health to the societies in the form of raising the rate in 1927 from 30 per cent. to 40 per cent. of the annual loan charges, the rate of subsidy till 1927 being 50 per cent.

In the case of the houses in my constituency to which I have referred the rent is from 17s. to 19s. per week in addition to which there are many other burdens—which everyone in this House will appreciate—and although a drop of perhaps 3s. 6d. per week would be at once involved—as the rent is based, at the orders of the Public Works Loans Commissioners, on the average over the whole period of the loan—yet none the less it is perfectly plain that this is not an equitable solution. There is an alternative under the Bill, whereby the societies may, by the subsidy being capitalized, purchase their houses which is an advantage in itself, but in this case, involves raising about £30,000 of fresh money at poor security. I should like to point out to the Financial Secretary the way in which these two schemes—the scheme which I consider would have been more desirable and the scheme which we adopted in respect to the Housing Bill—operate. Under the present scheme of the Housing Bill, a society which receives a loan of £1,000 and borrows the greater part of its money at 6½ per cent. would gain an extra £6 10s. and the lucky ones who borrowed at 5 per cent., an extra £5. Under the schema whereby the Public Works Loans Commissioners would reduce their interest retrospectively on the loans they made, the worst societies would get £15 extra and the lucky societies nothing. That, to my mind, is right and equitable. The whole of the concession would thus be made for the benefit of the societies which are in the worst and most distressed condition, and it is with the intention of meeting those cases that this Clause in the Housing Bill was made. Therefore, I consider the money is not being spent in the way intended to be by practically the same amount of money being given to the fortunate as to the less fortunate societies. There is another side to this matter, in that these poor terms have the result of making the Public Works Loans Commissioners the possessors of the mortgage on what I may call semi- bankrupt house property. The whole fact of the matter is that these schemes which receive their assistance from the Public Works Loans Commissioners, were initiated at the most inauspicious moment possible for creating garden suburbs and such like with any chance of success. The houses were built at the very top of the market, and the result is that all over the country you have side by side identical houses, one costing £1,450 and the other £450, and often less. There is no doubt that the high rents which these tenants have to pay in the garden suburbs are the economic rents, but you can imagine the discontent which is caused, and which anyone of us in this House would feel, if we were so placed, when you consider the great difference in the amount of the just—I suppose we must call it so—rent which has to be paid for two houses exactly the same, and when such houses built under the Local Authority schemes all rented at 12s. 6d.; and besides the heavy burdens of these high rents, the tenants have the burden of the rates and lighting and all the other expenses connected with their house. The Financial Secretary said in his speech, that when obligations to the Public Works Loans Board could not be met, the Treasury had to make it up; unscrupulous people might well seize advantage of this statement, to proclaim their inability to pay their rents, and tenants may ultimately be forced into such a position.

I submit that these are cases in which someone has to cut the loss, and I think it is up to the Treasury to take up this matter. When the Financial Secretary replies probably he will accuse me in the terms he used when speaking on the Finance Bill, of having no care for economy and being one of the many hon. Members who are always coming to this House asking for more money. To some extent that remark might be made when anyone discusses anything involving the expenditure of money, but I would point out that I am not now urging the launching out of any new legislation for spending money, which is where in the main we should consider economy, but that we are dealing with a situation which is past history and nothing can possibly alter. These burdens have to be shouldered by somebody, and the point is, who is going to shoulder them? It is the duty of every section of the community of this country to shoulder its fair share of the burdens of bad times, while they are on—indeed I hold this most strongly—and you cannot make concessions to one without making them to another, and the whole of the population has to pull its weight; but I would point out that the rents which these poor, wretched tenants in the garden cities, have to pay are based on the conditions of 1920 and 1921, and, unlike the rest of us, they will go on bearing their burden of these bad times till kingdom-come, however prosperous, times may be in future. I think that is a point which the Financial Secretary should consider in deciding whether the policy embodied in the mandate given to the Public Works Loans Commissioners is necessarily the right one.

The other day I was glancing through a remarkable book written by Lord Milner—whom I regard as one of the greatest Statesman of the day—and I was interested to see what he wrote upon the question of economy. He has had very large experience in business and political affairs, as hon. Members all know, and I would recommend them to read—the book is in the Library—what he has to say about economy running riot in 1921–1922, and how it very often means no economy at all. I need only recall the orgy of expense, which I believe to have been absolutely necessary, involved to the country in meeting the great industrial dispute of 1921, to show how much more expensive and uneconomical, discontent is than anything else. I perfectly sympathise with the Financial Secretary's difficulties, but specially in the interests of economy we have to make absolutely sure that the money we are paying out is spent in the best possible way. When the Treasury decided that the distress, but that is not a strong enough word—I must say disaster—to these tenants in the garden cities was so serious, it was not a good thing that the benefit given should be spread over all the societies, instead of being concentrated on the weak parts. I apologise for taking up so much of the time of the House, but I felt that it was my duty to bring those points forward.

The Noble Lord who has just addressed the House indicated that as a rule this Bill did not require much discussion, but I think he will agree with those on this side when we say that, on this occasion, there are exceptional circumstances connected with the Local Loans Commissioners and the funds placed at their disposal which would justify some discussion. I am not very clear, in the first place, as to what is exactly involved in the second part of this Bill regarding the unfortunate harbour at Eyemouth. It has been asserted that my Scottish colleagues are not likely to make any comment on this point, which will help to redress the injustice to our country, it has been hinted that we should calmly put this money into our pockets and say no more about it. There are, however, much more important parts of this Bill, and the first point of substance to which I wish to draw attention is the way in which the fund at the disposal of the Local Loans Commissioners has been built up within recent years, and how far the present proposal of the Financial Secretary is affected by the recommendations of the recent Committee dealing with the allocation of the War Savings Certificates and the Clause which was incorporated in the Finance Bill a few days ago.

The House will remember that a year or two ago it was arranged that half of the proceeds from the sale of National Savings Certificates in this country should be set aside for addition to this fund in order that they might be used in the localities for housing and other purposes, the idea being that in that way local thrift would be stimulated, because people would see houses being provided as the result of their effort and enterprise in the locality. When the housing problem was suspended—and this bears indirectly on what the Noble Lord has just said—there was an accumulation of money at the disposal of the Local Loans Commissioners to such an extent that it was necessary to appoint a Committee to consider whether, in the national interest, this allocation of half of the proceeds of that sale should be continued, because the effect of that allocation was to withdraw from the use of the Treasury and the Government a considerable sum of money which quite clearly, in view of all the existing financial circumstances, they should have freely at their disposal. We in that Committee of the Treasury made a certain recommendation, and I wish to find out how far that recommendation has been adopted by the Treasury. It was to discontinue the precise allocation, but to retain the principle which was in force, and, of course, not to penalise the local authorities. I wish to know how far that affects the proposal we are now considering. On that, I think, I express the feelings of all my colleagues when I say that we wish to encourage the principle which is embodied in the work of the Local Loans Commissioners, but we believe that it could be very considerably improved.

What is the kind of improvement which we have in mind? The Local Loans Commissioners have the fund which comes to them from the National Debt Commissioners, and that fund is replenished from time to time, partly by new loans which may be gathered up, and partly by repayment of outstanding loans. That is the way in which, broadly and generally, this fund is recruited. The money is then lent under the regulations of the Local Loans Commissioners to the local authorities of this country for all the approved purposes in which they engage. In practice—and this is a very important consideration this morning—the larger local authorities have ceased to have recourse to the Local Loans Commissioners, and the smaller authorities, who have recourse to them, are making criticism or complaint to the effect that they might be accorded rather better terms than they now enjoy under this scheme. I make no particular point of the position of the larger local authorities, because I remember very well the evidence which was given before us in a Treasury Committee on this matter, when they made it perfectly plain that in many cases they could raise money in the open market on much easier terms than the Local Loans Commissioners could offer. The late Sir Thomas Munro made the very interesting remark before a Treasury Committee that the County Council of Lanark, which is one of the largest local authorities in the country, were being offered more money every week than they could take up at 3½ per cent. as against the 5 per cent. of the Local Loans Commissioners. Not only because they could get the money very much easier in the open market, but also because they refused to subscribe to what they considered rather difficult conditions, they did not apply to the Local Loans Commissioners at all.

Let us consider the position of the smaller local authorities in this country, because that is really what is at stake. The Public Works Loans Commissioners, so far as we were able to ascertain in that Committee, quite properly have to keep in view that they are handling public money. They have also to be perfectly satisfied that they have got reasonable security for the loans which they advance. My difficulty turns very largely on the kind of conditions which they lay down. Clearly, if you have in a locality a very heavy burden of debt, a high rate, a mass of unemployment, and a great many other difficult conditions, all that will undoubtedly rank against the kind of security which the local authority may be regarded as offering. But against that we must keep in mind that it may be that very authority, above all others, which most urgently requires a loan on the very easiest terms on which it can be obtained. It is precisely that authority which I am afraid under existing conditions is rather badly penalised. I wish to press upon the Financial Secretary—because this is practically the only opportunity that we have annually of urging such a consideration—that he might well consider, together with the Local Loans Commissioners, to whose public work I desire to pay the highest tribute, the possibility not only of simplifying the form which the smaller local authorities have to fill up, but also of making easier the conditions on which the loan is obtained. That might be done in the first place.

Then, in the second place, we must, if we are going to encourage local recovery based on the local authority, face a new view of their security. I do not think it is sufficient to look at their high rate, indebtedness, and things like that. After all, we are not dealing with a private concern which is likely to go bankrupt. We are dealing with a local authority which has very substantial resources, which, in an emergency, could possibly take exceptional steps, and which, in any case, requires money at the lowest possible rate. Why should not the smaller local authorities, in the midst of conditions which may be far more difficult than in the cities, be able to obtain money, either singly or in co-operation, on at least as good terms as are available to larger local authorities of the country? I know that to some Members that, from the point of view of finance, may seem a rather difficult proposal, but in all my inquiries in these Treasury matters I have never been able to find cut why there should not be such a scheme of combination among the smaller local authorities as would enable them together, if they cannot do it singly, to put forward the kind of Security which the Local Loans Commissioners demand. That is a very important proposal at this stage, because a large amount of new work is going to fall on the smaller local authorities, owing to recent Government legislation, and there is not the slightest doubt that the whole tendency of the Housing Bill and of other Measures is to place a larger burden on the locality and a smaller burden on the State. It therefore becomes increasingly important that we should not penalise the smaller local authorities in the matter of payment of interest, and I do trust that in connection with this Bill the right hon. Gentleman will be able to say something of importance and promise on that point.

The hon. Member for Central Edinburgh (Mr. W. Graham) has interposed a good deal of what I had intended to say. Like him, I do not feel at all certain that the small local authorities are getting their money as cheaply as they ought to do, and I am going to ask the Financial Secretary to answer one or two questions as to how this fund of the Public Works Loan Commissioners is financed, and how it is expended. First, I want to know whether on the loans that are made by the Public Works Loan Commissioners the terms of the loan and the rate of interest to be charged rest entirely with the independent Commissioners to whom he has referred, or whether the Treasury has any voice in fixing those terms. Further I want to know whether under the Act under which these gentlemen work entire control has been taken out of the hands of the Treasury and left with them. Secondly, I want to know what rate of interest they get their money at and what rate they charge for it. Are they making a profit, and, if so, how much? Why should they make a profit? Thirdly, I want to know whether they publish any accounts and, if so, where those accounts can be seen, because, although I have not made a very intense examination or search I cannot find any definite account from these gentlemen to show how their transactions are being worked.

Stopping there for a moment and dealing with the money that they lend, may I point out it is of great importance to the small local authorities that they should get their money at the cheapest rate? Anyone who represents a rural constituency feels at every turn the importance of this proposition. I am also interested in another matter, because the other day the House passed the Agricultural Credits Bill. So far as I understand it, I cannot get to the bottom of it, it is apparently to be left to these independent gentlemen to fix the terms on which a loan is to be advanced, and I want to ask the right hon. Gentleman if that is really so.

It is a matter for the Treasury, I take it, as to whether this money is to be available for the purpose which the hon. Member has indicated.

I am not at all sure that the Public Works Loan Commissioners will have power to lend money under the provision of the Agricultural Credits Bill, but I think they will.

I think the Financial Secretary to the Treasury might have carried the point a little bit further. One of the objects of this Bill is to feed the Public Works Loan Commissioners so that they can lend money to public authorities and also supply money for the loans that have to be made under the Agricultural Credits Bill. I want to know whether it rests with these gentlemen to decide on the terms on which loans are to be made, because if it does it may be within their power to render the decision of Parliament entirely nugatory. As I read Clause 1 of the Bill we are going to feed the Public Works Loan Commissioners with a sum of £20,000,000. It is to be done by the issue by the National Debt Commissioners, for the purposes of the Public Works Loan Commissioners, of various sums not exceeding £20,000,000. How is that money going to be raised? Is it going to be raised by the issue of Local Loan Stock? Here I want, to ask another question, if I may. A few years ago Local Loan 3 per cent. Stock was issued at about 50; in other words the country is paying in perpetuity 6 per cent. on what they have borrowed in the past for feeding the Public Works Loans Commissioners. I do not pose as a great financier, but to my mind that is a most extravagant method of finance. They have saddled the country in perpetuity with interest at the rate of 6 per cent. Is that so, or not? The real question is whether in calculating loans in the future that are to be made to local authorities or to be made under the Bill to which I have referred, the Commissioners are going to take into account, in fixing the rate of interest, what they have to pay on loans borrowed for entirely other purposes. That is a very important consideration.

At the present moment, our finance is in a state of flux owing to bad trade. Only a day or two ago the rate of interest on the Funded Loan was about £4 7s. The people who own Government stock for a long period are content with that rate of interest. I made a statement a few days ago that the Government could borrow money at the present time at 4½ per cent. I want to know whether, in the loans that are to be made, they take the present rate at which they can borrow the money as the basis of the rate of interest which they are going to charge? I also want to know how the money that is repaid to the Public Works Loan Commissioners, by way of instalment for repayment of loan, is used. Is it used for fresh loans, or is it used for the redemption of debt bearing a higher rate of interest? These questions are important in order to secure that the needs of the small local authorities and other persons who have to borrow from the Public Works Loan Commissioners shall be considered as regards the rate of interest. I hold the view very strongly that the Public Works Loan Commissioners are not given money for the purpose of making any profit out of the transactions, but are given it for the purpose of enabling improvements to be made at the lowest possible cost, and without any absolute cost to the Exchequer.

The points raised by the hon. Member for Central Edinburgh (Mr. W. Graham) were of a highly important character. I want to express a point of view based on the experience of localities in which my constituency is situated. I raised this matter in the discussions on the Housing Bill—the Bill to provide houses for the working classes. The information I have received from several localities points to the fact that, so far as they are concerned, the Housing Bill will of necessity remain a dead letter. They cannot utilise its provisions because of the restriction imposed by the Bill itself, and, again, because of the difficulty of raising money upon reasonable terms. In South Wales there are only a few large boroughs, like Swansea, Cardiff and Newport. Outside them, the areas are strictly limited, and most of them have been badly hit during recent years. Most of them are very heavily rated. A short time ago, in the Borough of Merthyr, the rates were 29s. 6d. in the £, and I believe that at the present time they are somewhere in the neighbourhood of 25s. That is due to the fact that the assessable values of property are low, and that bad trade has hit the collieries, who are assessed upon a tonnage basis. The locality, therefore, suffers in various ways. Again, they have been hit by the very large amount of unemployment, in connection with which they have had to give a large amount of relief, which, again, would raise their rates.

A borough like Merthyr, with a very serious housing question to face, with a keen desire on the part of the local authority to clear its slum areas and provide healthy surroundings for its people, is in a particularly difficult situation as compared with richer cities like Manchester. Manchester can raise money fairly easily and cheaply, and, under the Housing Bill, I think it is not unfair to assume that cities like that will actually be in pocket instead of out of pocket, because of their facilities for raising money. In the open market, it cannot be expected that local authorities with high rates, and with, the prospect of a continuance of fluctuating or bad trade, can possibly raise money within 1, 1½, or even 2 per cent. of the richer cities and localities. If it were possible to empower the Public Works Loan Commissioners to grant money at cheaper rates to these badly hit local authorities, I know it would be received with acclamation, and would enable them to go on with the work that is so extremely badly needed.

I want to make a suggestion here, at which I hinted the other day in an inter- jection to the Minister of Agriculture, about the question of raising money. I am not a high financier, and it may be that my suggestion will be laughed at, but I suggested in my little interjection that at the present moment the Government is receiving very large sums of money through the Post Office Savings Bank, the depositors in which receive 2½ per cent., and I wondered whether it would be possible for the Public Works Loan Commissioners to receive some of this money from the Post Office Savings Bank. It is the money of the citizens themselves, the people who do not invest in ordinary industrial concerns, but who deposit their money there for security. I do not see why a certain amount of that money should not be handed to the Public Works Loan Commissioners, so that they could use the citizens' own money and lend it back to them at a low rate of interest, which would still be profitable so far as the Government themselves were concerned. The Minister of Agriculture replied that the reason for the low rate of interest in the Post Office Savings Bank was because the money was on short deposit. It may be true that the individual deposit may be short, but I think I can illustrate my point by a paraphrase of a line of Tennyson, in which he reminds us that The individual withers, but the race is more and more. I might say that the individual unit of deposit is short, but the aggregate deposit is long. The total sum remains at a fairly equable figure, running into some hundreds of millions—I am reminded that it is £287,000,000. That is a continuing amount; it is never depleted to the full extent. That £287,000,000 is a continuing and, I think, in the main, an increasing amount, and, therefore, although the individual unit of deposit may be short, we can say that the aggregate amount of the deposits continues in existence for lengthy periods. I see no reason why the local authorities, in their difficult situation, should not be enabled, through the Public Works Loans Board, to utilise the citizens' money at a lower rate of interest than they can obtain in the ordinary market. I do not know what there is to stop that. It may be that it is not possible for financial reasons, but I can see no logical reason. The citizens deposit money with the Government, and receive 2½ per cent. interest. I suppose that that money passes into the control of the Bank of England, and I do not see why, when those same citizens are badly hit in their local authorities, and require money for local purposes, they should then have to borrow their own money back at double the interest which they themselves receive. It seems to me that a reform in that direction is badly needed, and I should like the Financial Secretary, when he replies, to indicate what are the difficulties in the way, and whether the suggestion I have made might receive consideration by this House or by his Department.

I wish to join with those who have already spoken in making an appeal to the right hon. Gentleman to consider favourably the suggestion that local authorities might be enabled to borrow money on more favourable terms than has been the case in the past. I wish to deal particularly with the experience of some localities in the immediate past, and I hope the right hon. Gentleman will be able to do something to relieve such cases as I am about to illustrate. As a member of a local authority, I know the difficulties which those authorities have in connection with money matters, and I should like to give one or two illustrations to show what local ratepayers are called upon to bear at this moment. In the Kirkcaldy district of Fife, they embarked upon a water scheme in 1913. It was begun, and had advanced to a considerable extent before the War broke out, but during the War it was stopped. They had borrowed over £100,000 for the construction of a reservoir and other services in 1913, and that money, I believe, was got at 3½ per cent. During the War the work was stopped, and, when the local authority wished to resume the construction of the reservoir, they discovered, when they came to the Public Works Loan Commissioners, that there was no chance of getting money at 3½ per cent. They were compelled to borrow from the Public Works Loan Commissioners a sum of £150,000, on which they have to pay 6½ per cent. for a period of 30 years, and they have also had to borrow an additional £50,000 at 6 per cent.

Here, therefore, is a sum of £200,000, on which that local authority has to pay 6 and 6½ per cent. for the next 30 years. What is the effect of that on the local ratepayers? It has been that during last year there was a water rate of 6s. 7d. in the £ for water alone, and during the current year that water rate is still 6s. 4d. in the £. The reduction in the rate is not due to any concession which has been made by the Public Works Loan Board. That local authority was compelled to go on with its water scheme, and wished to go on with it even during the War, but, as the House knows, it was impossible to go on with work of that description while the War was in progress. That scheme was held up during the whole period of the War at a time when it might have been possible to construct the work at a very much lower cost than ultimately was the case. The local authority in the district of Dunfermline was also compelled to embark upon a water scheme due to the construction of a naval base at Rosyth, which made a very large demand on the resources of the local authorities for water. They commenced the work, I think, in 1914. It was continued during the whole period of the War and is not yet finished. It has cost vastly more than it was estimated to cost at the beginning owing entirely to War causes, the shortage of labour, the cost of materials and especially the high rate of interest which has been demanded by the Public Works Loan Commissioners.

May I refer to another local authority which has a grievance. The Financial Secretary to the Treasury has promised that he will go into the whole matter and favourably consider the case. The Corporation of Dunfermline undertook very expensive services in connection with the development of Rosyth at a time when the cost of labour and materials was at the very highest point. Unless it gets relief from the House it is going to be saddled with enormous expense to the local ratepayers for years to come. These three illustrations I have given are merely indicative of what has been going on all over the country. Local authorities were compelled to go into certain schemes, not because they wished in many cases, but in order to provide work for the men who were being disbanded from the Army. They were compelled to go into the scheme and to go to the Public Works Loan Commissioners hoping to get money on much more favourable terms than they ultimately got. I hope this will be carefully and sympathetically considered by the Secretary to the Treasury because there is no problem in connection with local government which is giving town and county councils more concern than the enormous amount of ratepayers' money which requires to be paid in interest on money which has been borrowed during the last eight or nine years for work which has been carried out in their localities. It would be a great relief, not only to local administrators, but to the ratepayers in particular, if the right hon. Gentleman would sympathetically consider the appeals which have been made from both sides of the House in connection with this question of a lower rate of interest on the money which has been borrowed for the various schemes.

2.0. P.M.

I am not a financier, but I should like to warmly endorse much that has been said by the hon. Member who has just sat down, and to make this inquiry from the right hon. Gentleman why the Government should not authorise municipalities to have their own banks under the same authority as has been given to the City of Birmingham? I think the Minister of Health could give us some information. The citizens of Birmingham deposit their money in their own bank, and a little while ago—I do not know what the rate is now—they had three per cent. The money is, very largely, handed over to the Corporation of Birmingham at four per cent., so that the citizens are able to borrow their money from themselves at a lower rate than they get in the open market. It saves all the expense of issuing loans, and they get their money at a rate that is reasonable and fair. I cannot understand why the special facilities which Birmingham has been able to secure for itself from Parliament should not, by a general Bill passed under the responsibility of the Government, be accorded to other municipalities. It is obvious that the facilities that benefit Birmingham would benefit other localities if they had the same privilege. I should like some assurance from the right hon. Gentleman that he is seriously considering the desirability of bringing in the necessary authority so that all areas in the country can have those advantages. That certainly meets many of the objections which have been raised above the Gangway.

I should like to draw the right hon. Gentleman's attention to what is taking place in Glasgow and the adjacent boroughs of Rutherglen and Dumbarton. This Bill, when you read it first, looks as if it was an instrument to be used for the benefit of local authorities. Apparently a number of people are so interested in local affairs that they are placing an instrument in the hands of the public by law which is going to enable them to do something they could not do before. But the whole function of the Bill is another method of protecting the moneylender and the usurer. In Glasgow and in Rutherglen—

I do not think the Bill can affect Glasgow, though it may affect Rutherglen.

When Rutherglen went out to get loans the immediate need of houses placed the community in the hands of the ordinary blood-sucking moneylender at 6½ per cent. If the Bill had been intended to do a service to local bodies it would have been something to protect the citizens in places like those I have mentioned from the blood-sucking tentacles of the investor, because interest is the greatest bugbear It is the one thing that stands between the country and continued prosperity. Here we have cases where we have built houses for the people in Scotland where after 60 years' interest has been paid and we have bought the house one-and-a-half times and we are still left with the principal to pay. There is no principle, indeed, but mere blood-sucking. I make no apology for using the term. I hoped when a Bill like this came along men occupying responsible public positions would have indicated that they, at least, were going to stand between the public, who have no protection but this House, and this system of sucking the lifeblood out of the community. All these townships are paying interest for money that ought to be made available every year for local improvements—children's playgrounds, the building of new halls, recreation grounds and better water supply. When you come to try to make a new lung, a breathing space, inside one of these little towns it places a community in the hands of the financiers, and just as it goes into the filthy clutches of these financiers, so it draws the lifeblood out of the Community in the form of interest. I can give no hope to the people of Scotland or anywhere that they are to receive any protection at all from the Bill. No encouragement or help is given to growing communities to build up and to arrange for cities for health purposes, for these places will become cities in the future. Instead of doing that, you are mulcting them, by this system, in millions of debt, which even after 60 years they will not have cleared off. Under this system you place them in the hands of the money lenders.

I do not think the House will want me to go into the question raised by the hon. Member who has just sat down. I am sure he is sincere in what he has said; but if the town of Rutherglen, or any other town in his constituency, wanted to raise money for the purposes of a park or for the institution of schools and offered a loan to the people of Rutherglen at 2 per cent., while I was offering a loan of 5 per cent., I wonder which loan the people of Rutherglen would choose in which to invest their money. After all, human nature is human nature, and if the hon. Member or any of his friends had saved a bit of money and they wanted to invest it they would look at two things, interest and security.

What is human nature? If a man went along the bank of a river and he saw another man struggling in the water and he dived in to save him, without thinking about it, that would be human nature. He would dive in to save the man.

He would not dive in for the interest he would get out of it.

No, that is what I am saying. You think of nothing else but interest.

A person invests money for the purpose of security and for the purpose of interest. The hon. Member has a good deal of influence in his own constituency, and I would suggest to him that he should ask the local authority to issue a loan of 2 per cent,. and see what will happen.

We cannot do so. The law will not allow us.

Several serious questions have been put to me, and I will attempt to answer them. The hon. Member for Central Edinburgh (Mr. W. Graham), who always interests the House when he deals with financial questions, raised the point that the large municipalities can borrow on their own terms, and on far better terms than those on which we lend to the small municipalities. We do not ask anybody to borrow from us. There is no compulsion on anybody to borrow from us. This is an arrangement made in the interests of the smaller localities, who cannot borrow in any other way. Glasgow, Edinburgh, Manchester and London can go into the money market and borrow on their own terms. These great municipalities do not go to the blood-sucking financiers, but they issue loans in their own neighbourhood which are taken up by their own citizens, who are proud to take a share. They get the money quite easily in that way, and on very favourable terms.

This Bill is for the purpose of providing means of borrowing for the small localities who cannot go into the market, and who cannot very well issue a loan in their own neighbourhood because the expense is too great. We do not deal with the big municipalities. The Local Loan Commissioners act under the direction of Parliament, and their orders are to lend the money, as I said when I was dealing with the Agricultural Credits Bill the other day, as cheaply as it can be lent, without loss to the Exchequer. Loss to the Exchequer means loss to the individual taxpayer. If the Local Loans Commissioners lent £100,000 to Rutherglen or Merthyr Tydfil at a lower rate of interest than they had to pay for it themselves it would mean, in effect, a subsidy to that particular town. All that the Local Loans Commissioners have to see is that they lend the money at exactly the cost to themselves, plus a very small amount for the expense of borrowing the money, keeping the accounts, and so forth. In the last few years there was great difficulty owing to the price of money, and a good number of municipalities and others came to the Local Loans Commissioners at the time when money was very dear in 1920. I do not agree with the hon. Member for Dun- fermline (Mr. W. Watson) that we had any hand in putting up the price. That was brought about because everybody had to borrow at that time, and it forced up the price.

The way in which the money is obtained is that local loan stock is sold either on the market or to the National Debt Commissioners at the price of the day. In 1920, when money was expensive, we could not sell local loan stock of 3 per cent. at a higher price than 50. People would not buy it. They preferred to buy something else. That meant that people who borrowed money in 1920 had to pay 6 per cent., plus a half per cent. for management, which accounts for the 6½ per cent. which has been referred to in several speeches. To-day they are borrowing at a lower rate, or, at any rate, they were before the change in the bank rate yesterday. We are able to issue local loan stock, including the cost of the expense of it, at somewhere about 4¾ per cent. If the country continues to prosper, and if the price of money goes down and we continue to pay off our debts, I hope sincerely that we shall be able to lend money as the years go on at a much less rate.

The question of the Post Office Savings Banks has been shot at me on more than one occasion during the proceedings on the Finance Bill, and I do not think it would be out of order to deal with that point now. We were told by one hon. Member opposite that the investor in the Post Office only gets 2½ per cent. interest, and then the Post Office Savings Bank Department lends the money to the Local Loan Commissioners at 4½ per cent., or even higher. We must not forget that the Government guarantees the return of all money invested in the Post Office Savings Bank. A man who puts his money in a savings bank which is not guaranteed by the Government takes a risk, because if the trustees of that savings bank invested his money in Consols at the old high rate, and Consols have gone to pieces, he is unable to get his money back in full. A man who puts money into the Post Office Savings Bank knows that as long as Great Britain lasts he can go to the Post. Office and get his money back.

The money was piling up in the Post Office Savings Bank all during the end of the last century. It was invested in Consols. Nobody expected a European war. The hon. Member for Central Edinburgh knows that Consols were the premier security. I remember, unfortunately, myself buying them at 112. They have gone down and down, but the security of the Post Office depositor remains unaffected. He is going to get his money back, though it is not really represented by the capital. To-day it is true that the Post Office, while only paying 2½ per cent., is able to lend the money at 4½ and even higher. The National Debt Commissioners drive a very hard bargain with the Exchequer for the Post Office money. The difference between the amount which they receive on the new money in interest and the 2½ per cent. which they are paying to the depositor in the Post Office Savings Bank is going to pay off the capital account. I hope in the course of a few years—I do not know that I really do hope it, because I want to see the price of money go down—that, if the price of money remains high, all the new money in the Post Office Savings Bank will be earning 4½ per cent. or a little more, and the difference between that and the interest paid the depositor will be going to replace the loss on the old transactions in Consols. When those amounts are paid off, then will be the time for the hon. Member for Springburn (Mr. Hardie), or anybody else, to ask that the rate paid to the depositor should be increased.

I am not suggesting that the depositor should receive more. What I am suggesting is that the deposits might be used for public purposes, at less than the rate which is obtained in the open market.

Does not the hon. Member see that each Government Department has to make the best bargain it can? The custodians of the Post Office money are bound in honour to the Post Office depositor to get the most interest they can for the money. It would not be fair to the people who lent the money at the low rate for the Post Office to lend it to the municipalities at the low rate, because the hon. Member knows that a few years ago the Post Office deposits were at 3½ per cent., and it might be hoped if the high rate of money lasts long enough that it will accrue to the Post Office depositor.

Is not the reason why the Post Office is trying to get more money from the Treasury than the money which it is paying the depositor, in order to replace in the Post Office account the money which has been lost through the depreciation of Consols?

That is what I have just said.

It is necessary to do that, in order that these losses may not be continued?

I do not know whether my hon. Friend has been here, but I have said that at least twice.

What I want to know is why the local municipalities cannot get the money direct, instead of coming to you? Tell us about the juggle.

I think that I have made the matter clear. If the hon. Member will do me the favour of reading the OFFICIAL REPORT to-morrow, with the real intention of seeing whether I have made the matter clear, I think he will find that I have done so. The hon. Member for East Grinstead (Mr. Cautley) wanted to know whether the Local Loans Commissioners or the Treasury fixed the rate of interest. The Treasury has the last word in fixing the rate of interest. It depends, as I have explained, on the cost of raising the money plus a small amount for the administration of this fund. Then the hon. Member asked where he could get the accounts. The annual accounts deal with the whole of the transactions of the Local Loans Commissioners' Department, and the last accounts were issued two days ago. As to the money saved by the sale of stock, those who like to go into the market to-day, as a great many people do, and invest money in Local Loan Stock, get a return of 4½ per cent., but they do so, roughly, on the same terms as that at which we are able to sell our stock.

My hon. Friend also asked me how the money is going to be raised for the purposes of the Agricultural Credits Bill—whether it will be by the issue of local loan stock. Yes, it will be. He asked whether the local loan stock, under the Agricultural Credits Bill, is going to be raised at 50, but the credit of the country is better now than it was three years ago, and the stock can be sold now at either 57 or 58. In a few years' time, when money goes to a higher price, we can sell our stock on better terms, and car give agricultural credit and credits to housing authorities, or anybody who wants to borrow money from us. There is no fixed rate of interest. It depends from time to time on the cost of money. The hon. Member for Dunfermline complained—I think that I have almost answered his point—of the difference in the rates which Dunfermline has to pay now and what it had to pay previously. Before the War it borrowed £100,000 at 3½ per cent. Since the War it borrowed £150,000 at 6½ per cent. for 30 years, and it has to pay into a sinking fund. He did not mention that the sinking fund is credited also on the other side at the rate of 6½ per cent. with the money which is paid into it, so that the people of Dunfermline get the benefit on one side of the high rate which they have to pay on the other.

My hon. and gallant Friend the Member for Shrewsbury (Viscount Sandon) referred to a proposal that the Public Works Loan Commissioners should make things easier for the public utility authorities by reducing the rate of interest. That is a proposition which, judging by the applause which greeted it, seemed to appeal to a good many Members of the House. The explanation why that would be wrong is this. I have explained how that money comes to be borrowed. When public utility companies in the year 1910 came to build under these housing schemes they had to pay for the money at the current market rate. If we were to lend the money to the public utility companies in Staffordshire to build houses at a less rate than we have to pay for it at the time we borrow it, we should be charging the taxpayers in Scotland and other places in order to lend money at a cheaper rate to public utility companies in Staffordshire.

Is not that money being made up as things stand, to the Societies and it falls on the taxpayer?

The Treasury cannot make up any loss to anybody. The Treasury has no power—to use the word of an hon. Member—to juggle with the money of the country. It can only act in accordance with the decision of the House of Commons. We have no right or power to grant payments to anybody. We can do it when the House of Commons decides that there is a case for helping some particular locality. We can do it under the instructions of the House of Commons. In connection with the Housing Bill which has just passed through this House I had not the privilege of being on the Committee, but I understand that certain proposals were made to ease the position of housing authorities who had borrowed at a high rate of interest, and those suggestions have been passed by the Committee upstairs, and no doubt will be passed by this House. There is no power to make any alteration in these matters. The House of Commons came to the conclusion, I think rightly, that power should not be given to the Treasury or the Loan Commissioners to make any exception in regard to the cost of money for these loans. We have a statutory duty placed upon us by Parliament, in dealing with all these questions of finance, to sell our money exactly as anybody else sells boots or clothes, at the market price of the day. It would be unfair for us to sell money to Staffordshire at a cheaper rate than to Merthyr Tydvil, just as it would be unfair for us to sell a house or boots at a cheaper rate in one particular district than in another.

The price at which you buy it?

Yes. Money is bought and sold in exactly the same way as any other commodity. We have to buy it and to sell it at the same price, plus a small amount for expenses, for keeping the accounts, and so forth. I am sorry that I cannot see any possibility, so far as the Treasury is concerned, of breaking away from what I regard as one of the soundest principles in finance. If we were once to do that, because someone had made a bad bargain and had asked to be let off at a cheaper rate, we should have every kind of pressure put upon Members of this House. Heaven knows that our life is not an easy one because of pressure now put upon us by our constituents! If hon. Members knew that their constituents could come to them and say, "Press the Treasury for one-half per cent. off here and one per cent. off there," what a life they would have, and what a life the Secretary of the Treasury would have, too!

Would the right hon. Gentleman say something about municipal banks?

I have not raised a point of order, but I do not think that municipal banks come within the provisions of this Bill. That subject raises a very large question If the hon. Member likes to bring in a Bill dealing with it, the Treasury will give it careful consideration.

Would the right hon. Gentleman say something as to the accumulation in the Local Loans Fund of War Savings Certificates? I believe that the amount is over £30,000,000. Would not that help us to grant a little easier conditions, at all events, for a period?

There, again, we have to borrow money, and we have to pay interest. The arrangement was that we were to lend to the local authorities, on security, up to one-half of the local certificates bought in their own division. That was a proposal for popularising the certificates. It has recently been considered by a Committee, which came to the conclusion that the principle was not sound, and should be stopped. But that in no way affects the position of the local authorities. We are prepared still to make loans to the local authorities. A local authority comes to us and says, "Our people are still investing largely in certificates. There has been £10,000 invested in the past year. Will you lend us up to £5,000?" and, subject to the security being sound, we are prepared to do it.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Ordered, "That the Bill be committed to a Committee of the Whole House for Monday next."—[ Colonel Leslie Wilson. ]

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

This is a much simpler Bill than the last. It is moved every year. By its constitution, the Isle of Man is entitled to impose certain Customs Duties, but those Customs Duties are not valid unless this House sanction them within six months. It is our duty to sanction them. I do not know what the Isle of Man would do if we did not sanction them. We might be exposing ourselves to a declaration of war from the island. There never has been any difficulty in times past in passing this annual Customs Bill.

Will the right hon. Gentlemen declare what are the Customs Duties?

They are all set out in the Bill. There is a duty on tobacco, the same as in this country; a duty on beer, which is slightly different; and duties on spirits and cocoa, and import duties on clocks and watches, exactly the same as the Imperial Duty. But for some reason there is no duty on pianos or harmoniums in the Isle of Man.

Would these be double duties?

No; there is only one duty.

Question put, and agreed to.

Bill read a Second time.

Resolved, "That this House will immediately resolve itself into the Committee on the Bill."—[ Colonel Leslie Wilson. ]

Bill accordingly considered in Committee, and reported, without Amendment.

Bill to be read the Third time upon Monday next (9th July).

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

This Bill raises no point of principle and I do not think it involves any controversy. It embodies proposals agreed upon at a conference of representatives of the five great cities of Scotland, Aberdeen, Dundee, Edinburgh, Glasgow and Greenock, and is designed to effect certain improvements in the machinery of town council elections in Scotland. The first Clause proposes to fix the time by which nominations for town council elections must be made and the time by which nominations must be withdrawn respectively four days earlier than at present. The municipal elections in Scotland are held on the first Tuesday in November, and as the law now stands the nominations may be made up to the Tuesday previous, and can be withdrawn up to the afternoon of the Thursday, which leaves a very short time in which to make the necessary arrangements for the employment of presiding officers and so forth. That often means working at high pressure and involves considerable additional expense, and we propose to ante-date the period fixed for the nominations and withdrawals by four days in each case. This Clause applies only to the five great cities, but all other burghs can adopt it, by resolution of the town council, if they so desire. The second Clause empowers the returning officer in a burgh which is divided into wards, to appoint a deputy returning officer or officers. This power is already possessed by returning officers at Parliamentary and county council elections. A returning officer may have a good deal of time taken up in connection with spoiled papers and so forth, and the declaration of the poll may be delayed by the fact of there only being one returning officer, and it is therefore proposed to apply, to municipal elections, the same rule in this respect as that which now applies to Parliamentary and county council elections.

Clause 3 proposes a slight amendment of the law. As the law now stands the votes cannot be counted after the hour at which the poll closes until 9 o'clock on the following morning, unless the agents of the parties or, if there are no agents, the parties themselves, agree otherwise. The Town Councils (Scotland) Act of 1900 provides that the poll shall be declared on the following afternoon and it was found that in some cases this led to delay. In the majority of cases, the parties or the agents gave the consent indicated, but it is felt that in cases where that consent is not forthcoming, the returning officer should be authorised to proceed with the counting of the votes during the hours between the close of the poll and 9 o'clock on the following morning to prevent any delay in the declaration of the poll. In Clause 4 we propose that it shall be possible to have a polling station outside a polling district. This rule prevails in connection with Parliamentary elections. There may be a school or a hall available within the polling district, but nevertheless inconveniently situated for the great bulk of the electors, whereas one immediately outside the polling district might be conveniently situated. It is allowable, as I say, in Parliamentary elections to have the polling place outside the district, and we propose that the same rule shall apply to municipal elections. The fifth Clause applies to Glasgow. In the rest of the country, parish council elections take place on the same day and under the same conditions as the town council elections, but in the case of Glasgow, there is a special and separate parish council election under the Glasgow Corporation (General Powers) Act, 1896. We propose to make the necessary Amendment to enable the returning officers in Glasgow to have the same powers as those conferred on returning officers in the rest of the country by the proposals of Clauses 2 and 3. It is a short and unpretentious Measure, and I hope the House will be prepared to give it a Second Reading.

Question put, and agreed to.

Bill read a Second time, and committed to a Standing Committee.

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

This Bill, in the opinion of the Ministry of Transport and the Government, is necessary in order to deal with the probable continuance of unemployment during the coming winter, and it proposes to effect a small Amendment in Section 16 of the Railways Act, 1921. We are only taking power however to continue this amended provision for two years so that the House does not part for more than two years with any control which it had before. Section 16 of the Railways Act provides that the Ministry of Transport may, on the application of any railway company, authorise that company to afford such reasonable railway services, facilities and conveniences in connection with its undertaking as may be specified under the Clause. That includes the provision of such minor alterations, extensions and improvements of existing works, as will not involve, in any one case, an expenditure exceeding £100,000. The powers invested in the Ministry at the present time, enable them to authorise works up to £100,000 in the case of any one particular work, and the object of the present Bill is to extend that power and raise the limit from £100,000 to £500,000. The main purpose of the Bill to enable the railway companies, more rapidly, to undertake works for the relief of unemployment. We must face the fact that unemployment will exist next winter. It may not be as bad as last winter—that we cannot tell—but unemployment will be with us, and I am seeking to enable the railway companies, when they have works which they want to put in hand for the relief of unemployment, to proceed without being hung up by this £100,000 limit. At present, any work costing over that sum, has to come before the House, and we know that a private Bill introduced, say, in the autumn, could not possibly get through for a good many months and that practically nothing could be done in that way. We therefore wish to get this extended power, for a period of two years only, to raise the limit to £500,000.

For each year?

That is the amount for a particular work. If a railway company comes to us at the present moment and says there is a work to be carried out which will cost £90,000, the Ministry can authorise that work, but if it is anything over £100,000 we cannot authorise it, and we want to raise that limit to half a million. We could, as a matter of fact, last year have authorised both the Midland and the Great Western Companies to undertake works which were urgently needed, and which would have given a great deal of employment, only we had not this power, and there was not time to get a Bill through, and so these works fell through and the employment was not given. The procedure, as far as public control is concerned, will not be altered by the Bill. Public notification must be made of the works proposed to be carried out; then objections are sent in to the Ministry, who consider them, and at their discretion a public inquiry is held in the locality to ascertain what the objections are. I am much more concerned, however, as to the Parliamentary control.

Is the sum of £8,000,000, accumulated by the companies during the War, and still unspent, to be regulated by this rate of £500,000?

This has nothing at all to do with that. I see that the hon. Member for Central Edinburgh (Mr. W. Graham) is in his place, and as he has a Motion down to reject the Bill, I would like to put a point or two to him. Parliamentary control is, in my opinion, amply retained under the provisions of Section 29 of the Ministry of Transport Act, 1919, which secure that any draft Order made by the Minister must be submitted to the Chairman of Committees in the House of Lords and the Chairman of Ways and Means in the House of Commons, and that if either of these officials—not both, but either—considers that the proposals are of such a character or magnitude that they should be submitted to Parliament by the ordinary method of a Bill, the Order can only be made after it has been approved by Resolution of both Houses of Parliament. I submit that if we have the consent of both the Chairman of Committees in the House of Lords and the Chairman of Ways and Means here, and they consider these works are proper works to be done in the same way as the works hitherto done up to the limit of £100,000, we have ample safeguards against any loosening of Parliamentary control.

It is not as if this were a new principle, because this procedure has been carried out for some years past, and all that I am asking is to extend that procedure from works up to £100,000 to works up to £500,000. I ask the House to give this Bill a Second Reading, because undoubtedly there are railway works which can be carried out, and which ought to be carried out, this winter for the relief of unemployment. I honestly consider that if I had this power given to me, I should be able during the coming winter to secure some works, at any rate, for the relief of unemployment, and thereby help that condition.

I am certain that Members in all parts of the House have every sympathy with the object for which the Minister is asking the Second Reading of this Bill, but before a Second Reading be given, or the spending of any more money by our railways be authorised, I think the House ought to understand whether the railway companies are going to carry out their responsibility to the public of this country in a better way than has been the case up till now. There is no doubt that the recent amalgamations of the railway companies have placed the people of this country more completely than ever in the hands of those companies. When the amalgamations were under consideration there were many Members of this House who readily supported the idea, under the impression that it would be an advance on things as they had obtained up to that time, but I think there are a number of us who gave a ready assent to these amalgamations who have changed our minds to a considerable extent since then, and who to-day feel that those amalgamations are putting the people of this country more completely in the hands of the railway companies than ever they have been before. That being the case, we ought to see that, before their powers are extended, the railway companies are compelled to give more reasonable facilities to the public, and to treat the public all over the country in an equitable manner.

The right hon. Gentleman said that the railway companies' powers were proposed to be extended. May I point out that their powers are not extended, but that it is the Ministry's powers that are to be extended, which is rather a different thing.

It is perfectly true that the Minister is asking an extension of his powers, but, at the same time, that extension will make it possible for the railway companies of this country to spend up to £500,000 on works, whereas at the present time they can spend only up to £100,000 without coming to this House for a Bill to authorise that expenditure. That is extending the power of the companies through the Ministry, and I think hon. Members of this House are quite entitled to take advantage of this opportunity to discuss, particularly with the representative of the Ministry of Transport, the manner in which the railway companies are carrying out their responsibilities to the people of this country. I intend to bring to the notice of the Minister in charge a few of the ways in which I think the railway companies of the country are not carrying out their responsibilities to the people, and, first, there is the case of workmen's tickets. It will be within the recollection of the House that a few months ago there was a reduction of fares, amounting, I think, to taking off the last additional 25 per cent. that was put on to railway fares; but that did not apply to workmen's fares at all. Workmen's fares are continued at the same rate as that at which they had been charged since the fares were raised, and they are not getting any advantage from the reduction that was made in the fares, generally speaking.

For the last four months I have been in communication with the officials of the London and North Eastern Railway Company regarding this matter, on behalf of the miners in my own district. I have been asking that the miners in my district should be given the advantage of the reduction that was made to the travelling public generally. They have had it under consideration, but I have not been able to get any fruitful result from my negotiations, and they still have it under consideration. Not only have I been in communication with the railway companies regarding this matter, but the Executive of the Miners' Federation of Great Britain have had this same question up with the representatives of the whole of the railway companies, and their efforts have been as unfruitful as my own. Up till now, we have not been able to get any reduction in the fares of the miners in travelling to and from their work, notwithstanding that a general reduction of 25 per cent. was made in the fares throughout the whole of the country. What applies to the miners, applies to all other bodies of workmen. It is not the miner alone who is suffering this disability. All other workmen are being treated in the same way. I do not think the representative of the Ministry of Transport would deny that that is unfair treatment as between one section of the community and another. That ought to be straightened out before we extend the powers of the railway companies.

3.0 P.M

Let me take another case in which different parts of the country are being treated differently by all our railway companies. Take the question of tourist tickets. It is possible for the people of London to get tourist tickets to various parts of the country, particularly to large areas in my own country, Scotland; whereas, on the other hand, people living in the areas to which those tourist tickets apply from London, cannot get a tourist ticket to London. They are placed under a disability, therefore. Take another instance of the manner in which the railway companies are treating one part of the country differently from another. It is possible for the people of London to get a one-day excursion ticket—and it applies to Sunday—to certain places outside the London area, at a fare and a quarter, whereas in the provinces you have not facilities from those places to London. Then take the question of the cheap Saturday fare and cheap Wednesday afternoon fare. In that matter, the railway companies are treating the travelling public in exactly the same way as they have been doing in other respects. You can get a cheap Saturday fare from certain places to certain other places, whereas some places are excluded from the privilege, particularly those where there is no competition from motor omnibuses. The places that readily get cheap Saturday railway fares are the centres where motor chars-à-banc are running in competition with the railway companies. Wherever there is no competition of this kind, it is a very difficult job indeed to get those facilities. It ought to be the duty of the representative of the Ministry of Transport to see that that unfair and inequitable method of treating one part of the country as compared with another is ended at the earliest possible moment. As a matter of fact, before he agrees to extend the spending power of the railway companies, to increase the power of those monopolies, he ought to see to it that they carry out their responsibilities. He read out to us what are the responsibilities of the railway companies to the Ministry of Transport, and he ought to see that those responsibilities are carried out. Take another example. Within recent times, reductions in freights have taken place, and there you have the railway companies treating certain industries in exactly the same way as they have been treating certain parts of the country with regard to fares. You get a more substantial reduction of freights applying to one district than another. At certain times, reductions in freight took place in regard to the commodity that was purchased by certain industries, whereas other industries did not participate in the reduction. I do not think there is any section of British industry that has suffered more in this respect than the industry in which I have been interested the whole of my life, namely, the mining industry. There, again, I think it ought to be the duty of the representative of the Ministry of Transport to require the railway companies to treat all sections of the people on equitable and just principles. I find that, since amalgamation took place, some of the companies have taken advantage of the reduced competition between themselves to keep running, particularly on the main lines, old and worn-out stock. Had there been the old competition that used to exist, they would not have dared to do it. I myself have complained again and again to the representatives of the London and North Eastern Railway Company with respect to this, but it goes on. You even find old and worn-out stock being used on the principal trains between Edinburgh and London, and the people who are using that service have great reason to complain. I think, admirable as is the object which the representative of the Ministry of Transport has in view, that before we give any further powers to the railway companies, this House ought to see to it that the companies are compelled to stand by their responsibilities and to treat people of this country in the same equitable and just manner.

A considerable section of the people of Scotland, at least, were under the impression that the linking-up of the railways was going to be of general benefit, but we are finding that, as far as Scotland is concerned, we are not getting the same treatment as other parts of the country with respect to fares, freights and the stock that is being used on the lines between Scotland and England. If it is to continue, it will be another one of the things that are gradually ripening the idea, that unless Scotland gets fair play, it will have to cut the painter. I think that would be such a serious matter to the predominent partner, that you ought to think seriously about it, or you will allow these things to accumulate, until they reach such proportions that the people of Scotland will demand Home Rule. I hope that this Bill will not get a Second Reading until we get, from the representative of the Ministry of Transport, some definite assurance that these inequalities of treatment are going to be remedied, and that he is going to ask the railway companies to carry out their responsibilities in regard to fares and facilities to his own Department. He has read out to us what are the responsibilities of the railways to that Department. The companies should be compelled to give the facilities and to carry out their responsibilities to a greater degree than at present.

My right hon. Friend the Member for West Fife (Mr. Adamson) has properly taken this opportunity to draw attention to those inconveniences under which a certain section of the people labour, as a result of the railway services at the present time. I wish very briefly to recall what happened in Committee upstairs when the Railway Act was being considered in the summer of 1921, and when this precise proposal which we are asked substantially to amend this afternoon was under consideration. The House will recollect that the Railway Act introduced a radical change in the railway organisation of this country, in that it wiped out, as from 1923, 130 odd railway companies of this country and replaced them by four great railway amalgamations or trusts. That is a very important element when we are considering what is at stake in this Bill. In Committee Members, I think, of every political feeling, took the view that, having regard to the very large powers which the railway trusts were going to obtain, and to the fact that we were wiping out all effective railway competition in this country and that £1,300,000,000 or £1,400,000,000 of capital was at stake, we must maintain under the particular form of guarantee we were giving to the railway companies effective Parliamentary control. We laid down—and this was not a party contention—that one of the effective methods of Parliamentary control was frequent regard to all forms of railway capital expenditure.

What is the proposal which the Ministry of Transport makes this afternoon? The Minister asks the House to go back upon the Clause which we inserted in the Railway Act of 1921, under which we provided that the capital expenditure might, under the Ministry, proceed up to £100,000, while anything more than that would have to be carried out by an ordinary Bill promoted by the railway companies themselves. Now the hon. and gallant Gentleman comes to us, not two years after the Bill was passed, and asks us to extend his powers of authorisation from £100,000 to £500,000, which is—I think he will agree—a very important proposal when we pass to the next consideration, namely, the capital expenditure allowable under this Bill. Let me make it perfectly plain—and I am sure in this I am expressing the feelings of my colleagues here, and probably that of all Members—when I say that we are not opposing the proposal so far as unemployment goes. We recognise that it will provide a certain amount of employment which is urgently required, and we should be the very last to stand in the way of a proposal like that now. However desirable that may be, it does not relieve us of the duty of drawing attention to the very important principle which affects the traders of the country, the travelling public, and the whole relation of this House of Commons to these four amalgamations or trusts.

That issue is sharply raised in regard to this matter of capital expenditure. The Railways Act, 1921, limited the amount to £100,000 because they wanted a very effective form of Parliamentary control. I admit that that control does cot wholly disappear under this proposal, but there is not the slightest doubt that it is modified, and it will be difficult for this House to keep in close touch with an amount up to £500,000, the decision for which really rests with the Chairman of Committees in either House. That after all is where the real decision rests. Under this Bill the matter will only come to the House of Commons in the event of there being some difficulty or doubt in the mind of the Chairmen of Committees. We take the view that the matter should come to Parliament for decision, and that that is a very important consideration.

Under the Railways Act, 1921, a form of guarantee—I have not put it higher than that—was given to the four great railway undertakings in Great Britain. We guaranteed the net revenue of 1913 and made an allowance on account of capital expenditure in the past, present and future, so long as it remained unremunerative. The important point is that capital expenditure ranks as an item to be taken into account before the Rates Tribunal. That tribunal fixes freights, charges, and fares, and all the rest of it for 44,000,000 people who depend upon the railway services in Great Britain.

For that reason, it is important that this House should retain the most complete form of Parliamentary control. In the Committee stage we shall seek to make substantial Amendments in this Bill. I say quite candidly that I would vote against the Second Reading, and go to a Division, even if I only had two supporters, except for one reason, that I do not want to penalise unemployment. If this means employment, many of us are prepared to sacrifice a good deal, but we, must make this protest, and we may even yet go to a Division if we do not get a satisfactory reply. In any case, we shall propose substantial Amendments during the Committee stage.

All that has been said by the hon. Member who has just sat down as to the origin of this Clause is absolutely correct. I have the greatest fear as to the enormous powers given to the great railway companies. This House must keep control over them, and the Minister must have very close control over them as well. Sir Eric Geddes urged that the Minister should keep a watch on the railway companies for the benefit of the public, and he said that they should not be allowed to do things without the consent of this House. Nobody wants to stop the unemployed getting more work. We all want to see this work done, and there is no reason why it should not be done with the consent of this House. The more often we can get the railway companies under the review of this House the better. We do not want them simply to go to the Ministry and get an Order without coming to this House. I should like to make the suggestion that that can be done under this Bill. I will wait until the Parliamentary Secretary comes back, because it is rather important that he should hear it and see whether he can give his consent, because, otherwise, I shall be inclined to vote against the Second Reading of the Bill. Now that the hon. and gallant Gentleman has returned, I will make my suggestion. Would he, in Committee, insert at the end of Clause 1 the words Every Order made under this Bill shall lie on the Table of both Houses for thirty days before the Order becomes effective. It is the same precaution that we take with regard to Orders in Council. Then before the Order became effective, the matter could be raised in this House. In ordinary cases, where it was quite evidently for the benefit of the unemployed, and there was no incursion by the railway company upon the privileges of this House, the Order would lie on the Table and at the end of 30 days it would become effective. It would, however, give this House power, whenever one of these Orders was made and when a railway company had been disobeying, to haul that company over the coals on that particular subject. If the hon. and gallant Gentleman could accept that Amendment or say that he would consider the insertion of words on the Committee stage, it would remove the difficulties not only of myself, but of many other Members who have some fear of the railway companies, and I make the suggestion in the hope that the hon. and gallant Gentleman will agree to it.

This is a very innocent-looking little Bill, and so short that there might be a temptation to let it go through without opposition. But I think the House will see that there is a very great constitutional principle involved. Parliament has given very great monopoly powers to the railways, and that has been accentuated by the legislation of the last few years, whereby competition has been eliminated and monopolies practically set up. The great handle that the House of Commons has always had over the railway companies has been the necessity for them to come to Parliament from time to time in order to get the necessary powers to promote works. On every such occasion local Members raise grievances, and, in return for giving the companies their powers, they have been able to get very substantial concessions. I remember many cases where the railway companies have had to come to this House and where the London County Council have been able to wrest from the railway companies concessions as to workmen's fares and cheap tickets, as was very well put forward by the right hon. Gentleman the Member for West Fife (Mr. W. Adamson).

I agree with the hon. Baronet the Member for Lichfield (Sir C. Warner) that if we are to let this little innocent Bill go through, we ought to make it clear that in Committee it will need considerable Amendment. A special appeal has been made to the House because the Bill is likely to give productive work to the unemployed. It is a serious responsibility to delay even for a short time anything likely to bring these men useful employment, to take them off the insurance scheme, and to make them users. It is quite another thing to make unemployment an excuse for giving very much larger powers to railway companies. When the figure of £100,000 was fixed, it was a sensible figure, because ordinary work ought to be covered by that amount, but when the Minister practically asks for autocratic powers to sanction work up to a half-a-million sterling, it is quite another story. The kind of work we want to go on is the improvement of permanent ways. I do not want to see under this Bill the Minister have power, without the consent of Parliament, to sanction great alterations in railway stations. We had an example of that the other day in London when it was proposed to seriously interfere with an important traffic centre under a Railway Bill. Fortunately the authority representing the London area was able to get very considerable alterations in the interests of the general public. If, under the cover of this Bill, railway companies are going to be allowed to make great extensions in their railway stations and great changes in the organisation of their traffic systems, then that would be a very serious matter and the Bill ought to be resisted. When we come to Committee we might put in Amendments limiting the scope of the Bill to schemes that will merely give employment, schemes of a purely productive character, but not those that will alter methods of transport. The House of Commons has always been able, through its power to require railway companies to come to it for sanction for any big undertaking or scheme of work, to keep a check on what they do. The House should be very jealous of that power, and should see that the Bill is so amended in Committee as to secure its retention.

I agree with the hon. Member for Lichfield (Sir C. Warner) that the more frequently railways come under review in this House, the better it is for the whole community. I do not think we should grant any great concessions to the railway companies, without making them realise that they should do something for the agricultural community. I want to show how that community is penalised by the railways. I do not think "penalised" is too strong a word. Recently I had a pleasing experience. My hon. and gallant Friend who is in charge of this Bill met me with extreme courtesy and went to a great deal of trouble to redress a grievance which had arisen in my own constituency. A complaint was sent to me that the railway company were charging, for the conveyance of poultry houses, at the rate of £4 9s. 9d. for two. I felt almost ashamed to bring such a trivial matter to my right hon. Friend's notice, but it did seem very unjust that such a charge should be made, and therefore I was forced to pursue the question. My right hon. Friend went to the trouble of making investigations, with the result that the railway company agreed to reduce their charges to £2 10s. 2d. What I want to know is, will the railways persist in charging the agricultural community extortionate freights for carrying their goods, unless and until a Member of Parliament brings each individual case to the Minister, and the Minister insists upon their reducing the freight?

I should like to point out to the hon. Gentleman that I am afraid it is not a case in which the Minister can insist. He can only use such powers of persuasion as he may possess in order to get the charges reduced.

Exactly. I intend for the future to make use of my hon. and gallant Friend, and I recommend all Members on these benches, whenever they have brought to their notice cases of penalisation by the railways of the agricultural community, to go to my hon. and gallant Friend, who is courteous always, capable always, and has the power to persuade a railway company that it is robbing their constituents. If I had known of this six months ago, I should have been able to render much better service to my constituents. In future, I shall know that it is no use making speeches in this House, but that the right thing to do is to go to the Minister of Transport and say that the charges which are made ought to be reduced, and will he please get them reduced. My hon. and gallant Friend has confessed that he is able to do these things. The railway company, if it recognised its duty to the agricultural community, would not require the intervention of myself as the representative of Dumfrieshire, or of my hon. and gallant Friend.

I should like to mention one or two of the exorbitant charges made to the agricultural community by railway companies, which have brought the matter home to me in a much more aggravated form because I know what the agricultural communities in other parts of the world are charged, and I think I can state, as a general proposition, that wherever you get cheap agricultural transport you get a prosperous state of agriculture. It is cheap transport that the farmer wants. It is the cost of transport to-day that renders necessary Agricultural Rates Bills and Agricultural Credits Bills; all not worth a snap of the fingers compared with a reduction of freights to a reasonable rate. I will give some examples of what is being paid now. I have been collecting these particulars for a considerable time. It costs 40 per cent. of the wholesale price in freight to supply agricultural produce to the London community. That is the cost of freight that the farmers in Norfolk and in some parts of the Midlands have been paying. It works out in the case of potatoes to £52 per acre on produce, and £8 on manure, so that altogether £60 per acre goes in railway freights. That has to be paid before the farmer gets anything, and in the end the consumer has to pay it. What is the use of passing Agricultural Rates Bills or doing some little tinpot thing that only means a few shillings, when there are these charges which mean pounds to the farmer?

Here is an instance in which 3½ tons of carrots were carried. The carrots yielded £8 11s. 3d. The cartage to Liverpool was £1, the railway freight £4 18s. 4d., tolls 10s. 11d., and commissions £1 15s. That adds up to £8 4s. 3d. for the 3½ tons, and the total return to the farmer who grew the carrots was only £8 11s. 3d. It is quite easy for the railways to alter that. In every one of the Dominions the railways are put primarily at the service of the agricultural community. In South Africa, railway freights on agricultural produce to the farmers is only half the full rate on all other goods. That is their policy. I should like to read one or two extracts to enforce this argument. This is what appeared in "Country Life" a short time ago: Nothing would be more materially helpful to the farmer, especially the small farmer, the small holder (a large class which it is most important to encourage and keep on the land), than an immediate reduction in the parcels post rates for food to the old scale of 3d. per lb., followed up by a general reduction in railway rates of not less than 33⅓ per cent. for agricultural produce. Unless we have cheap transport, we have dear food and penalisation of the farmer. The journal I have quoted goes on to say that agricultural produce can be sent from France and Denmark at less than half the rates that the home producer pays. Here are some other figures of great interest to bring this fact home. The agricultural freights on goods in South Africa—I have worked this out from an official document from the Minister of Railways—come to £15 per acre for a distance of 200 miles compared with £52 in this country on potatoes. In many of these countries the agricultural freights rate is made just to pay expenses and in some cases there is a loss but it is made up in other things, because they all realise that the farmer, of all the producers in the country, deserves consideration because he is producing the food of the country. If we want to encourage agriculture, instead of dealing with things that are not essential we have to focus our attention on essentials; and what interferes with his profits and cripples his productivity is the enormous freight rates. I have asked the hon. and gallant Gentleman frequently about these railway freights on agricultural products and he always shelters him- self behind the Railway Rates Tribunal, which is not worth a snap of the fingers to the farmers. They manipulate them right enough. They have made very few concessions and what they have made do not count. If the hon. and gallant Gentleman is going to extend the powers and increase the facilities of railway companies he must bring home to them that they have a duty to the community which they are not discharging, and especially to the agricultural community.

I wish to put a question to the Minister, in order to try to clear up a point I have raised before. Whether it is that I cannot make myself clear, or that there is no desire on the other side to answer the question I do not know, but I am going to have another try. During the War it was agreed that, since the railway companies could not get the labour to carry out necessary repairs, a sum of money would be allowed to accumulate in order to be used to absorb the unemployment that was bound to come after the cessation of hostilities. I understand that sum accumulated to £8,000,000. I have asked before why it was that since that sum had been allowed to accumulate in the hands of the railway companies, and since we have been overtaken with a time of distress and unemployment, they were not called upon to put it into circulation as wages and thereby make things better. The Minister of Transport to-day said it had nothing to do with this Bill. Has it not? Does the House of Commons require to give its signature to the expenditure of the £8,000,000 which has accumulated or not? I am always suspicious when someone comes along with the idea of making the railway companies appear as great philanthropists in the interests of unemployment. I am always suspicious when anyone who wants to get more power in his hands comes with his left hand clean and says he is going to do something for unemployment, and then says behind his back, "That sort of thing will keep the Labour men from speaking against us, and in that way we will pull in more with the right hand than we give as a promise with the left." I am not taken in by promises like these. If they were honest and sincere men who loved their country and desired to benefit the unemployed, they would do it without making a condition of getting something for doing that which is the duty of every man who claims to be a noble citizen. They do not do that. They make no concessions without getting twice what they give. In suburban areas in Scotland, the railway rates for passengers and goods stand almost at war level. Where pre-War the passenger paid 6d. it is now 10½d. That is the average of suburban rates. We as a community are asked to give new powers to companies that treat the public in this way. In one suburban area, they spent £1,500,000 in putting up a railway in stupid competition in order to frighten off some other railway from that area. This stupid expenditure forms portion of the company's capital, and profits have to be paid upon it, with the result that we have to pay for it in increased fares. That and other reasons induce me to give whole-hearted opposition to this or any other Bill that comes along of the same sort.

The Parliamentary Secretary to the Ministry of Transport said that £100,000 in any one particular was the old arrangement. I understand now that the idea is to substitute five in place of one. Does that mean, "in any one particular" job? Or can a railway company come forward, and say that they want to spend £500,000 on a station south, and then afterwards come along and say they want to spend £500,000 on a station north, east or west? Are we to have 'repeated the business of spending £1,500,000 on a golfing station, away up in the hills, where only the rich men can go twice a week, while down in our city we have one station, built in 1846, which still stands as an empty shell, with only the plant holding it together. Are we to be treated by rich men's companies in this way, that they build huge stations for our own and American millionaires, while we are to stand by and see our workmen's fares kept up at high rates, our suburban business man's rates kept up, and our agricultural rates kept up, and all to give power to men who are interested in golf or some other sport. I hope that we shall refuse to extend a single item of the existing powers over the £100,000, and that in Committee the Government will bring forward some explanation of why they have been approached. I am not in the least deluded by the talk of helping the unemployed. All sorts of methods have been adopted since the combination have been able to get together and to get their managers appointed. There is an underlying scheme and a game in all this. Unless the representative of the Ministry of Transport is able to answer the questions which have been raised by myself and others, we are going to see that he does not get the Second Reading.

I have no criticism to offer of the way in which this Bill has been discussed. I understand that hon. Members opposite think that there is some deep-laid plot underlying this proposal. I assure them that there is nothing more than what appears in the Bill, namely, enabling the Minister to authorise the construction of works up to a limit of £500,000. The hon. Member for West Fife (Mr. W. Adamson), the hon. Member for Dumfries (Dr. Chapple) and other hon. Members raised the question of railway charges, workmen's tickets, tourist tickets and one-day excursions. Though these are not strictly relevant to the subject-matter of the Bill, I appreciate that it does give them an opportunity of raising these questions. Therefore, I do not complain that they have been raised. I have no power over these charges, no power either to reduce or to raise them. Parliament in its wisdom two years ago handed over the revision and fixing of these other matters to the Railway Rates Tribunal. One hon. Member said that he had no confidence in that tribunal. I have no power in reference to that as the tribunal which has been set up by Parliament stands.

The railway companies are allowed to charge the rates which were in force in August, 1921, and any representative body, traders, local authorities, and others, can make, and do make, representations to the Railway Rates Tribunal and ask them to reduce the fares. I never heard of any representative body asking that fares should be increased, though no doubt there is the power if they so wish. I quite appreciate what has been said as to the grievance in reference to all these matters of rates, especially in connection with agriculture, which is fighting for its life at present, but if any representative body, even if a small one, goes to the tribunal with a complaint as to rates, the matter is investigated fully, and if the case is made out, they will get a reduction. When the appointed day comes, which I hope will be in a very short time, next year, when the tribunal has gone through all the fares—and there are thousands of them—what are called standard charges will be fixed, and it will be the duty of the tribunal to review those charges, and any revision which is thought necessary will be made. I have put the position clearly, and I advise those two hon. Members who make these complaints about railway fares to tell those who complain to them that their remedy is open to them through this Railway Rates Tribunal. One or two hon. Members have stated that this Bill is a concession to the railway companies. I strongly dissent from that statement. The Bill is not a concession to the railways.

It saves them from the trouble of having to promote a Bill.

It all depends on the way in which you think that the Ministry carries out its duties. If it has carried out its duties satisfactorily under the £100,000 limit, why should it not do so equally fairly under the new limit?

It is a very great concession to relieve them of the obligation of introducing a Bill.

It is also a concession to the unemployed. I must say something with reference to the suggestion of the hon. Member for Lichfield (Sir C. Warner). On the spur of the moment the hon. Member cannot expect me to accept his suggestion unreservedly, but I promise that I will immediately, and very carefully, consider it, and, if at all possible, I will try to embody it in the Bill in Committee.

If my words be not possible would the Parliamentary Secretary offer us some equivalent, so as to give this House power to stop these Orders should it not approve them?

I will explore all the possibilities.

I wish to put a question to the Parliamentary Secretary in reference to the point raised by the hon. Member for Lichfield (Sir C. Warner). It is very difficult to ascertain what is the position of Orders under this Bill. I find this proviso in Clause 1: Provided that any Order by the Minister under that Section authorising the alteration, extension, or improvement of works involving an expenditure exceeding one hundred thousand pounds shall be subject to the same procedure as an Order under Section seventeen of the said Act authorising the acquisition of land and the construction of works. That is an illustration of how futile it is to have this kind of legislation. I turn to Section 17 of the Railways Act of 1921 and I find this: For enabling railway companies to effect alterations, extensions, and improvements of existing works in pursuance of an Order of the Railway and Canal Commission or the Minister under this Part of this Act, the Minister may make any such Order authorising the acquisition of land or easements and the construction of works as could have been made under paragraph ( d ) of Sub-section (1) of Section 3 of the Ministry of Transport Act, 1919"— That is one reference— for the purposes specified in that paragraph, and that paragraph and Section twenty-nine of the same Act"— Another reference— other than the proviso to Sub-section (3) of that Section, and the Rules made under that Section, and the Regulations contained in the Second Schedule to the same Act shall, so far as they relate to railways, apply accordingly. That is a further reference. Paragraph ( d ) of Sub-section (1) of Section 3 of the Ministry of Transport Act, 1919, states: For enabling any directions given by the Minister under the last foregoing paragraph as to alterations and improvements and additions to be carried into effect, the Minister may, by Order, authorise the owners of any undertaking to acquire any land (or easements) and to construct any works, and the Order may incorporate the Lands Clauses Acts"— Another reference— subject to such modifications as may be specified in the Order, being modifications of those Acts made or authorised to be made by the Development and Road Improvements Funds Act, 1909"— Still another reference— or any other enactment. I ask the House to mark that, "any other enactment." Then there is the proviso that nothing is to be deemed to empower the Minister to authorise the acquisition otherwise than by agreement, of any land belonging to the owners of another under- taking or a local authority, and so on. Then there is a reference to Section 29 of the same Act, and the proviso to Subsection (3) of that Section throw some light on the question put by the hon. Member for Lichfield. In Section 29, the following words occur: The Minister may make Rules in relation to matters preliminary to the making of Orders and Orders in Council under this Act. … Any Rules so made shall be laid before Parliament as soon as they are made. The rules in relation to the making of the Orders have to be laid on the Table, but not the Orders themselves. We are making a new departure, and it seems to me that under the Railways Act, 1921, Parliament was concerned as to the extensions to be made. We find in Subsection (1) of Section 16 of that Act the following words in parenthesis: (including the provision of such minor alterations and extensions and improvements of existing works as will not involve in any one case an expenditure exceeding one hundred thousand pounds). Obviously the House of Commons was then concerned that such an Order should only made for minor alterations and extensions, and if the House then agreed that only the Rules and not the Orders were to be laid on the Table it was on the express stipulation that they only related to minor alterations. Here we have a proposal which goes beyond minor alterations and deals with substantial capital undertakings up to half a million. That raises an entirely new situation and takes the scheme of this Bill altogether outside what was contemplated under Section 16. If Parliament was content that Orders made under Section 16 should not lie on the Table, that gives no reason at all why a similar exemption should apply to the far more important and extensive Orders contemplated in the present Bill. The right hon. Gentleman should give an undertaking that when an Order of such an extent and kind is to be made it should lie on the Table and Parliament should be made aware of exactly what was being done. I have no desire to prevent any necessary works being done. Everybody is agreed that in many respects our railway facilities are inadequate as they stand, and that the facilities which are offered in connection with many railway stations are totally inadequate to the public needs. The House will be glad to know that railway companies, even at this late hour, are willing to carry out such developments, but it is natural that the House should have some assurance that the developments which are to be carried out and the extensions which are in view are really extensions and developments which are directed to supplying public needs, and not purely for luxury purposes, as the hon. Member for Springburn pointed out. It is easy to put forward the plea of providing for unemployment. Undoubtedly, in the places where unemployment exists to the greatest extent, you frequently find that there is the greatest need for railway extension also. It is in the crowded urban centres where you have the largest amount of unemployment, and a great deal of recent railway work has not been done there at all, but where there is not much unemployed population. If we pass this Bill without any provision that the Orders of the Ministry are to be subject to the supervision of Parliament, we have no security that the works will be undertaken for the relief of unemployment where the unemployed people actually live

Will my hon. Friend allow us to get the Second Reading of the Bill now? I will do all I can to meet the points he has raised.

May I ask the Minister in charge for a reply to my question whether a railway company under this Bill can come for powers once, twice, or three times?

Each separate transaction will be considered on its merits.

I am very reluctant to do anything that is disagreeable to the general sense of the House, but it has been represented to me that there are other hon. Members who desire to take part in the Debate on the Second Reading of this Bill, and if I am reluctant to assent to the appeal of the hon. and gallant Gentleman opposite, it is not out of any discourtesy to him, but because I think there are a number of hon. Members here who desire to put points before him, and who think the Second Reading—

rose in his place, and claimed to move, "That the Question be now put."

Question put, "That the Question be now put."

The House divided: Ayes, 152; Noes, 81.

Question put accordingly, "That the Bill be now read a Second time."

The House divided: Ayes, 156; Noes, 73.

Motion made, and Question put, "That

the Bill committed to a Committee of the Whole House.—[ Mr. W. Adamson. ]

The House divided: Ayes, 75; Noes, 152.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 3.

Adjourned at Twenty - three Minutes after Four o'Clock till Monday next (9th July).