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Commons Chamber

Volume 213: debated on Tuesday 21 February 1928

House of Commons

Tuesday, February 21, 1928

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Private Business

PRIVATE BILLS (Standing Orders not previously inquired into complied with).

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, referred on the Second Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:

Leeds and Liverpool Canal Bill.

Ricksmansworth and Uxbridge Valley Water Bill.

Newquay Water Bill.

Windermere Gas and Water Bill.

Colne Valley Water Bill.

Bills committed.

Bognor Urban District Council Bill (by Order),

Second Reading deferred till to-morrow.

Edinburgh Corporation Bill (by Order),

Second Reading deferred till Friday.

Falmouth Water Bill (by Order),

Second Reading deferred till Wednesday, 29th February.

Llandudno Urban District Council Bill (by Order),

Second Reading deferred till to-morrow.

London, Midland, and Scottish Railway Bill (by Order),

Second Reading deferred till Friday.

Oral Answers to Questions

Questions

Companies Bill

asked the President of the Board of Trade if he is aware that the public is being invited to subscribe to the capital of certain new companies in such a manner that the bulk of the profits of such companies, if successful, go to the holders of a very small proportion of the subscribed capital, and that the holders of this small proportion of capital are granted voting power considerably in excess of the proportion due to their share of the capital; and will he consider the advisability of including a clause in the Company Law Amendment Bill to prevent this practice from becoming an abuse?

asked the President of the Board of Trade if his attention has been directed to the growing practice, of company promotion, as illustrated in a recent appeal to the public, whereby the class of shareholders which provides the great bulk of the capital obtains neither a controlling interest in the company nor a commensurate share of profits; and will he take steps to protect the investing public against this abuse of the principles of sound finance by introducing appropriate safeguards in the proposed Measure amending the present company laws?

It is impossible, within the limits of a Parliamentary answer, to state fairly the relative advantages and disadvantages of legislation on this subject. There will be full opportunity of discussing the matter adequately on the proceedings on the Companies Bill, which is down for Second Reading to-day.

Does my right hon. Friend propose to make any further statement on this matter when introducing the Companies Bill?

I propose, in moving the Second Reading of the Bill to-day, to say something on the subject.

Has my right hon. Friend consulted, or will he consult, the Stock Exchange Committee and the leading bank interests in London, to ascertain their views as to whether steps should be taken to check this practice or not?

Before we decide, on the Committee stage, whether any provision should be inserted—and there are already certain provisions in the Bill which are relevant to the matter—obviously it would be necessary for the House to take into account all considerations.

Trade and Commerce

Patents

asked the President of the Board of Trade the number of new patents registered in 1927, and the number which lapsed owing to the failure of the patentees to pay the renewal fees?

The num her of patents granted in 1927 was 17,624, and the number which lapsed owing to non-payment of renewal fees was 13,289.

Film Industry (Advisory Committee)

asked the President of the Board of Trade whether he has received any requests from the Provincial Entertainment Proprietors' and Managers' Association, who represent cinema exhibitors owning theatres of great value in Great Britain, asking that one of their members should be appointed to the Advisory Committee set up under the Cinematograph Films Act, 1927; and what is the reason for representation being refused to this association.

The answer to the first part of the question is in the affirmative. As regards the second part, I appointed as representatives of the exhibitors on the Advisory Committee those gentlemen who had been chosen on a ballot of the members of the Exhibitors' Association, among whom, I understand, the greater number of the exhibitors connected with the Provincial Entertainment Proprietors' and Managers' Association are included.

Did the right hon. Gentleman take any notice of this very powerful organisation, which owns a very great number of cinema theatres, with very large amounts of capital invested, and does he not think that they ought to have been consulted as to some appointment on this Committee?

I answered precisely that question last Tuesday, when the hon. Member asked some supplementary questions.

As this is very important, may I ask the right hon. Gentleman whether, in making any fresh appointments, he will take into consideration the views of this very large organization?

If the hon. Gentleman will read the answer I gave last Tuesday, and the answers to supplementary questions which he put, he will see exactly what considerations move me in making these appointments.

Artificial Silk Stockings

asked the President of the Board of Trade the value of imports and exports of artificial silk stockings for the first month of 1928, or the last available complete month?

Stockings of artificial silk, or of which the chief value is artificial silk, were imported in January last to the sum of £41,909. British exports of these articles in the same month were valued at £53,089, and our re-exports at £3,186.

Do the Government; intend, in face of these figures, to take any further steps to safeguard this industry?

We are dealing with artificial silk, which is already subject to duty.

Tin Mines, Cornwall

asked the President of the Board of Trade the number of tin mines now being worked in Cornwall and the number which have been closed down?

Eleven tin mines are being worked, and at 10 others only prospecting or development work is in progress. In addition, there are 11 mines not working, but no statutory notice of abandonment has been given.

Are any steps taken by the hon. and gallant Gentleman's Department to see that these mines are not kept closed when they are capable of being worked?

I have no power, of course, to interfere in the opening or closing of mines.

Cotton Exports (Russia)

asked the President of the Board of Trade to give the annual exports of cotton yarns and cotton cloth to Russia from 1924 to 1927, inclusive, and the figures for the month of January, 1924 to 1928, inclusive?

The answer involves a table of figures, and, with, the right hon. Member's permission, I will circulate it in the OFFICIAL REPORT.

Will the right hon. Gentleman give just the first set of figures, from 1924 to 1927?

The following table shows the Total Quantities and Declared Values of Cotton Yarns and Piece Goods (of United Kingdom manufacture) exported from Great Britain and Northern Ireland, registered as consigned to Russia during the periods specified:—

Year.

Month of January.

Quantity.

Declared Value.

Quantity.

Declared Value.

Cotton Yarns—

lbs.

£

lbs.

£

1924

39,700

13,435

1925

4,544,700

632,838

19,900

6,064

1926

5,932,600

696,466

1,620,400

173,694

1927

184,400

44,872

59,400

8,696

1928

25,100

10,121

Cotton Piece Goods—

Square yards.

Square yards

1924

46,200

2,096

30,799

1,130

1925

16,029,700

610,809

978

37

1926

6,373,500

231,954

4,136,000

145,195

1927

433,300

26,460

1,287

177

1928

300

11

Russian Oil (Purchases)

asked the President of the Board of Trade whether any instructions have been given as to the advice to be tendered to local authorities who' inquire, for their own guidance, what is the attitude of the Government with regard to the purchase of Soviet oil derived from British-owned oilfields in Russia; and, if so, the nature of such instructions?

I thought the right hon. Gentleman wanted rather more particulars, and I have them all set out, for cotton yarns and piece goods year by year in quantities, in value and in months.

I will try to extract the figures. In the case of cotton yarns, for the year 1927, the quantity was 184,400 lbs., and the declared value, £44,872. In the month of January the quantity was 59,400 lbs., and the declared value, £8,696. For the month of January, 1928, the quantity of cotton yarns was 25,100 lbs., and the declared value, £10,121; while in the case of cotton piece goods the quantity was 300 square yards, and the declared value, £11.

Following is the table:

The Government have frequently stated that it is their intention not to interfere in any way with Russian trade, or with the freedom of, and facilities for, such trade. Inquirers as to the propriety of purchasing Russian oil are, therefore, informed that every person in this country is free to do as he pleases in this matter. So far as the Departments of Government are purchasing Departments, it is their practice to avoid the purchase of goods formerly the property of their own nationals which have been confiscated without compensation.

If inquiries are made from municipalities, would it not be advisable for the President of the Board of Trade to inform those municipalities of the action that the Government are taking, and that it is detrimental to the interests of this country that they should buy stolen oil?

I have answered my hon. and gallant Friend's supplementary question in the answer I have just given to the House. That is exactly the information which is given to all inquirers, whether they are municipalities or anyone else.

I am sorry; I did not quite understand my right hon. Friend. I apologise.

Has the right hon. Gentleman any first-hand knowledge as to whether or not the oil now being sold is stolen oil, or whether it is coming from new oil wells?

I have not the least doubt that a very large proportion of the oil which finds its way from Russia into this country is got from the large concession areas which were previously the property of British and other companies.

Does the right hon. Gentleman think it wise to make a categorical statement such as he has made in his reply to this question, unless he is absolutely sure that this oil is not coming from new wells?

I do not Bay that there are not here and there some new holes drilled in the ground; that is the way in which the mineral is obtained from the earth; but that the great bulk of these areas were under lease to concessionaires, including British subjects, is, of course, absolutely well known.

Will the Department do all that they can to impress upon all municipalities the desirability of buying British products in preference to foreign?

Pedigree Stock (Exports)

asked the Minister of Agriculture, in view of the importance of maintaining, in the interests of British agriculture, our export trade in pedigree stock to the Dominions and elsewhere, what steps are being taken to ensure that that trade is not hindered by temporary outbreaks of foot-and-mouth or other annual diseases in this country?

I would refer my hon. Friend to the reply I gave yesterday to my hon. and gallant Friend the Member for Louth (Lieut.-Colonel Heneage).

Safeguarding of Industries (Gas Mantles)

asked the President of the Board of Trade if he can furnish any estimate of the production of gas mantles in 1925 and 1927, respectively?

Complete data, of the production of gas mantles in this country in the years specified are not available. From the particulars available, however, it is estimated that the number produced in 1925 was about 310,000 gross, and that in 1927 the output exceeded that of 1925 by between 5 and 10 per cent.

Motor Cars (Production)

asked the President of the Board of Trade the estimated production of motor cars in 1927 and 1924, respectively?

From he Returns received in connection with the Census of Production, it appears that in 1924 about 140,000 motor vehicles were produced in this country, including cars assembled from imported components. According to the estimates of the trade, the number of motor vehicles constructed in 1927 exceeded by about one-half the output of 1924.

Mercantile Marine

United States Poets (Tonnage Tax)

asked the President of the Board of Trade what was the approximate tax levied on British shipping in American ports as retaliation for sour lighting dues; and whether this tax is levied on any ship ping of other nations?

I am not aware that any tax is levied on British shipping in American ports as a retaliation for the light dues levied in this country. So far as is known, the tonnage tax imposed at United States ports is levied on vessels of the United States, and of other countries, without discrimination.

Lighthouse Services (Cost)

asked the President of the Board of Trade whether his attention has been drawn to the demand for an explanation by the Liver pool Steamship Owners' Association of approximate figures of the cost of lighting 2,763 miles of coast in France at £139,693, as compared with £448,723 ex pended in lighting 2,405 miles of our coast line; and, in view of the burden of the light dues on shipping, whether he can bring pressure to bear in favour of economy?

My attention has been drawn to the comparison to which my hon. Friend refers, but, as the Royal Commission on Lighthouse Administration reported in 1906, the conditions in the two countries differ in so many ways that any comparison of this kind requires most searching investigation before it can be accepted as even approximately accurate. Every effort is made to secure economy in the administration of the lighthouse services.

Do not the Board of Trade acknowledge that the coast of France is very well lighted?

That is by no means a complete answer to the difficulties I have indicated. For instance, there are comparatively few shoals outside the coast of France, and, I think, also, that there is a number of items which do not appear in the French accounts.

Rubber Export Restriction Scheme

asked the President of the Board of Trade the amount of British capital invested in the rubber-producing industry in 1921 and the amount so invested at the latest convenient date after the rubber restriction scheme had been put into force?

I have no information as to the amount of British capital invested in the rubber plantation industry. According to figures compiled by the "Economist," the amount of new capital raised on the London market by rubber plantation companies in the years 1922–27, inclusive, was £25,420,000. This sum excludes issues or portions of issues made for purposes of repayment, conversion or replacement.

Government Departments

War Office Press

asked the Secretary of State for War what is the number of staff now employed in connection with the separate printing press at the War Office; and, as this section was installed as a temporary emergency at the time of the Crimean war, whether he will now abolish this separate printing establishment in the interests of economy?

The staff employed in the War Office Press totals 26. As regards the last part of the question, the Select Committee on Estimates, 1926, of which my hon. and gallant Friend was a member, in paragraph 4 of their Second Report, expressed the doubt whether any appreciable economy would result from the abolition of this Press, and the Committee of Inquiry into Government Printing Establishments, 1927, in paragraph 392 of their Report, recommended that the Press should be continued as a matter of policy. I do not, therefore, propose to abolish the Press.

Has the right hon. Gentleman any other temporary Departments of the same antiquity that he has overlooked?

No, it has not been overlooked, but as a matter of policy it has been retained as a useful thing.

Are the Government carrying out the other recommendations of the same Report, which were to do away with some printing?

Scottish Office (Ex-Service Men)

asked the Secretary of State for Scotland the number of temporary ex-service civil servants employed in the Departments under the control of the Scottish Office and the Board of Health, respectively?

The total number of temporary ex-service civil servants employed in the Departments referred to is 100, of whom 85 are employed by the Scottish Board of Health. These numbers are exclusive of ex-service men holding unestablished posts and of the quasi-permanent non-pensionable clerks who belong to the special class which was constituted in 1925.

Ministry of Pensions (Ex-Service Men)

asked the Financial Secretary to the Treasury whether his attention has been drawn to the recent issue of notice of discharge to several efficient ex-service clerks in the Sussex area of the Ministry of Pensions, while similar notices have not been given to other temporary clerks, male or female; and whether he can state the decisions that have been arrived at by the heads of Departments concerned, as provided in paragraphs 9 and 17 of the third Report of the Lytton Committee?

I have been asked to reply. There are five temporary ex-service clerks in the office of the Sussex area of the Ministry of Pensions, all of whom have received notice of discharge owing to redundancy due to a decrease in the amount of work. The staffs in all Departments of the Ministry are continually under review owing to the necessity for making adjustments to meet the fluctuating requirements of the work in various offices. When reductions have to be effected, the recommendations contained in the Third Report of the Lytton Committee are followed closely in selecting individual clerks for discharge and, as provided in paragraphs 9 and 17 of that Report, special consideration is given, subject to efficiency, to all cases of hardship.

If there is any question of discharging a certain number of these temporary servants, will the right hon. Gentleman consider discharging those who have not seen service and give the work to' these service men by changing them from one Department to another as may be necessary?

Service, and particularly service overseas, is a matter which is taken into account. It is not possible to transfer these temporary clerks in the way suggested when it is a case of reducing the whole staff.

Surely this could be easily arranged as they are performing merely mechanical work?

Is, the right hon. Gentleman aware that the action described is creating a considerable amount of hardship and will he permit me to make representations to him on the matter?

I shall be most happy to receive the hon. and gallant Member's representations, but I must remind him that these men have been kept on much longer than others and this does clearly indicate that their service has been taken into account.

British Army

Bands (Civil Engagements)

asked the Secretary of State for War whether he is aware that the growing competition with civilian musicians who are members of the Musicians Union by military bands is causing discontent amongst men who are being thrown out of employment thereby; and whether, as the military bands are subsidised out of taxation, he will cause steps to be taken to remove this competition?

Military bands are only permitted to accept civil engagements because there is a public demand for their services, and they are not permitted to do so on terms which are lower than those which would be offered in the same circumstances to a civilian band. I see no reason for altering the present policy in this matter.

Would it not be advisable to pay them sufficiently, so that they shall not be dependent upon additional earnings elsewhere?

The hon. and gallant Gentleman did not listen to my answer. It is that they are employed at civil rates.

Service Overseas (Boys)

asked the Secretary of State for War the number of young persons serving in His Majesty's forces overseas between the ages of 15 and 17, 17 and 19, and 19 and 21, respectively?

On 1st October last there were serving abroad (including Indian but excluding the Rhine) 851 boys under 18 years of age, 584 soldiers between 18 and 19, and 7,549 between 19 and 21. A separate figure is not available for those between the ages of 15 and 17.

Considering the conditions that exist in many places abroad, for instance, those that existed at Shanghai until recently, will the right hon. Gentleman consider the advisability of raising the age at which men may be sent abroad?

Territorial Army

asked the Secretary of State for War what is the present establishment of His Majesty's Territorial Army; what is the present strength; and how many unite are complete?

The answer to the first part of the question is 181,700, to the second part 137,978, and to the third part 10.

Is recruiting improving for the Territorial Army in view of these startling figures?

In view of the fact that only 16 units are complete, how many unite are there?

I am afraid that the hon. and gallant Gentleman must give me notice of that question.

Supplementary Reserve (Trade Unionists)

asked the Secretary of State for War what is the number of trade unionists at present enrolled in the Army Supplementary Reserve; and whether he can give the figures, respectively, for railwaymen, transport workers, engineers, and miners?

Does the right hon. Gentleman suggest that the War Office has absolutely no figures as to the Army Supplementary Reserve? Are no-payments made, no register kept, no entries made anywhere at all?

Yes, a great many entries are made and payments are also made, and we have some information, but not the information for which the hon. Member asks.

Surely the War Office must have information as to the exact number enrolled now?

Would it not be inadvisable in the interests of the country if trade unionism was recognised in the Army qua Army?

Hospital Accommodation, Portsmouth

asked the Secretary of State for War what hospital accommodation is provided for Army purposes in the Portsmouth district; what is the number of patients that can be dealt with and what is the average number in residence; and what is the annual cost of upkeep?

There is now no military hospital at Portsmouth Military personnel are treated either in the Royal Naval Hospital, Haslar, or in the Royal Victory Hospital, Netley.

Housing

Scotland

asked the Secretary of State for Scotland if any decision has been made regarding the date upon which housing subsidy as applying to Scotland will cease, or whether any change in the basis of payments has been made?

No decision has yet been arrived at. The whole matter is at present engaging my attention.

In the answer the right hon. Gentleman has just given, there is involved a statement which he made to a deputation. He was going to give an answer. That was some months ago—in November. Has nothing been done since then?

Yes, I have been considering the matter, but cannot make a statement at present.

In view of the urgency of the matter, cannot the right hon. Gentleman say when he is likely to be in a position to make a statement?

Are we to understand that municipalities are not to be informed in due time as to the nature of their obligations?

asked the Secretary of State for Scotland whether, in view of the distress prevailing and the inability of occupants of new houses in housing schemes to pay the rents, any steps are being taken to prevent ejectments for non-rent payment?

I am not aware of any general failure on the part of the occupants of houses erected with State assistance in Scotland to pay the rents fixed, but as the management of these houses is in the hands of the various local authorities any steps necessary, on the failure of tenants to pay rents, must be left to the discretion of the authorities themselves.

asked the Secretary of State for Scotland the average costs of upkeep for steel houses and those of stone and brick, or a combination of these materials?

I am not in a position to add anything to my reply on this subject given to the hon. Member on the 17th November last.

Is there any prospect of my being able to obtain these comparative figures at any time?

Agricultural Parishes

asked the Minister of Health the total number of houses that have been completed at 1st February, 1928, in agricultural parishes in England and Wales under the Housing (Financial Provisions) Act, 1924, by local authorities and private enterprise, respectively; and whether he has any information as to how many of these houses are actually occupied by agricultural labourers or other country workers of similar economic status?

The number or houses completed in agricultural parishes in England and Wales under the Housing (Financial Provisions) Act, 1924, up to the 1st February, 1928, was 9,312 by local authorities and 556 by private enterprise. Statistics are not available in regard to the last part of the question.

Housing Estates (Women Managers)

asked the Minister of Health whether he is aware that trained women house property managers have recently been appointed by the Corporation of Bristol, by Chesterfield, and other authorities for work on their housing estates; and what other local authorities are now making use of the services of women managers, either in salaried posts or part time?

My right hon. Friend has noted with satisfaction that trained women house property managers have been appointed by certain local authorities, but he has no complete record of the authorities which have made such appointments. My right hon Friend will, however, have inquiries made, and will communicate further with the Noble Lady.

In thanking the hon. Gentleman, may I ask him to look into the case of the property managed by the Ecclesiastical Commissioners? They have women house managers, and I would suggest that the hon. Member might study their reports.

asked the Minister of Health whether he has had any information from the medical officers of health of East Ham, West Ham, and Essex, as to the insanitary condition of certain of the new houses built by the London County Council in their district; and will he ascertain to what extent trained women managers are employed by the London County Council as a means of assisting tenants to keep new houses clean?

My right hon. Friend has received no representation to the effect mentioned either from medical officers of health or from any other quarter. As regards the second part of the question, he understands that the housing estates of the county council are in the charge of resident superintendents; and that no women are employed in that capacity.

Scotland

Venereal Diseases (Notification)

asked the Secretary of State for Scotland the number of towns, if any, in Scotland which have approached him for power to make venereal disease compulsorily notifiable; and if he intends to exercise his powers in this direction in any town?

Since August, 1921, resolutions in favour of the general principle of compulsory notification of venereal disease, in one form or another, have been submitted to the Scottish Board of Health by 29 burghal authorities, by combined venereal diseases authorities representing burghs in Ayrshire and Lanarkshire, and by the Con- vention of Royal Burghs. The Corporation of Glasgow, at a deputation about a year ago, also raised the question of compulsory notification. In present circumstances I do not consider that the exercise of such powers as the Board have under the Public Health (Scotland) Act, 1897, would be an appropriate method of dealing with the matter.

In view of the fact that certain corporations are approaching the House for powers, would it not be better, before powers are granted to anybody, if a full inquiry were instituted into the subject by the Department?

No. The best way would be to allow the matter to be discussed in the House.

Has the right hon. Gentleman not also received strong protests against the suggested course of action?

Is it not against the best interests of government, either national or local, to do things by piecemeal, such as taking one town as against another? Would it not be better to have a full review and then legislate.

Nursery Schools

asked the Secretary of State for Scotland the total number of nursery schools in Scotland; if they receive any grant from local or national funds; and how many are in Glasgow?

The Department know of 11 nursery schools in Scotland, four of which are in Glasgow. Three of the four schools in Glasgow are conducted by the education authority and receive grants from national funds. Of the others, two are assisted by local education authorities.

Childeen (Free Food and Clothing)

asked the Secretary of State for Scotland the total number of children in Glasgow last year who received either free boots and clothing or free food, or both, from the education authority?

I regret that the available statistics do not permit of an answer to the question in the exact form in which it is put. My information is that, during the year ended 15th May, 1927, 19,264 children were supplied by the education authority with boots or clothing or both. Within the same period 176,830 breakfasts, 477,540 dinners and 151,352 teas were supplied to necessitous children at ordinary feeding centres. The greatest number of children supplied with food free on any one day was 2,418.

Old Age Pensions

asked the Secretary of State for Scotland how many women; applicants have been refused old age pensions in Scotland owing to their husbands not having reached 65 years of age?

As at 16th February, 1928, the number of women in Scotland who had been refused contributory old age pensions for the reason that their husbands, on whose insurance their claims were based, were under the specified age of 65, was 247.

asked the Secretary of State for Scotland how many women applicants for old age pension "have been refused in Scotland owing to their husbands reaching 70 years of age prior to 2nd January, 1928?

As at the 16th February, 1928, the number of women in Scotland who had been refused contributory old age pensions for the reason that their husbands, on whose insurance their claims were based, were over 70 on the 2nd January, 1928, was 2,596.

Can my right hon. Friend tell us how many of them have received the pension?

Share Fishermen (Insurance Acts)

asked the Secretary of State for Scotland whether he has any announcement to make as to the position of share fishermen under the Insurance Acts?

I have given this question careful consideration. From reports I have received the indications are that there is a general desire among share fishermen in Scotland to come within the scope of the Health and Pensions Insurance Scheme. An opportunity will therefore be taken of inserting an appropriate provision in the forthcoming National Health Insurance Bill, but the hon Member will appreciate that I cannot at present indicate the precise nature of that provision as certain details have yet to be adjusted.

Coal Industry

Amalgamations

asked the Secretary for Mines how many amalgamations have taken place under the Act of 1926; where they are situated; and the number of employès affected?

Three amalgamations have been sanctioned under the Act, two in Yorkshire and one in South Wales. The number of persons employed at the collieries affected is approximately 22,000. In addition, a number of other amalgamations have been effected without recourse to the Act. Some information regarding them was given in answer to a question by the hon. Member on 13th December last.

Can the hon. and gallant Gentleman give us any idea as to what advantage these very small amalgamations have been to the industry?

No. I suppose they have been carefully considered by those who have amalgamated.

Boys (Employment Underground)

asked the Secretary for Mines the number of boys employed underground in coal mines between the ages of 14 and 16; if a record is kept of the shifts worked on night turn by them; and, if so, how many they worked in 1927?

It is estimated that in the middle of December last the number of boys between the ages of 14 and 16 employed below ground was about 28,000. I have no records of the number of shifts worked by boys.

Is the hon. and gallant Gentleman aware of the importance of the second, part of the question, and will he endeavour to get the information asked for?

If the hon. Gentleman will see me afterwards I will find out what information he requires and see how I can meet the point.

Can my hon. and gallant Friend say if these boys are medically examined as to their fitness for this work before being sent down the pit?

Is there anything that the Government can do to prevent children between the ages of 14 and 16 years from working underground?

In reply to the first supplementary question, I think that in most cases boys are medically examined. [HON. MEMBERS: "No !"] May I say some.

I shall be only too glad to give details if the hon. Gentleman will put a question on the Paper. With regard to the other supplementary question, I have no power to interfere in the matter at the present time.

Does my hon. and gallant Friend not think that it is advisable that these boys should be medically examined between the ages of 14 and 16 years of age just as boys are before they enter the textile factories?

Is the hon. and gallant Gentleman aware that it is impossible for boys to work on the surface between the hours of nine p.m. and six a.m. now, and is there no possibility of extending this provision to boys working underground?

Can the hon. and gallant Gentleman say whether the Commission which is now seeing into the question of transferring the labour of the coalfields will look into the matter in view of the fact that boys are going into the pits to take the places of men?

Haulage (Inquiry)

asked the Secretary for Mines what progress has been made by the Committee who are in vestigating the use of the guss for hauling wheelless tubs; and when their report may be expected?

I understand that the Committee has made good progress with its investigation and has started to draft its report. The report will not, however, be completed until the Committee has had an opportunity to observe the results of experiments with other or modified haulage arrangements which are being conducted in certain mines. The Committee intends to visit Somerset again as soon as these experiments have progressed far enough.

First-Aid Appliances

asked the Secretary for Mines what steps have been taken by his Department to improve the equipment of first-aid appliances in coal mines in Great Britain during the past-two years?

Recommendations for improvement, based upon an extensive medical inquiry at the collieries, were published by my Department towards the end of last year and the special attention of colliery owners has been drawn to these recommendations by letter. The recently appointed Medical Inspector of Mines is giving the matter his close attention by inspection at the collieries and otherwise; and, with his assistance, the preparation of revised regulations has been put in hand.

Can the hon. and gallant Gentleman tell us how many of the 271 collieries which in 1926 were declared to have an unsatisfactory equipment—17 of them having very unsatisfactory equipment—have had their equipment improved since then?

Pit-Head Baths

asked the Secretary for Mines if any progress is being made with the provision of pit head baths in England and in Scotland; and how much money has been collected from royalty owners for this purpose?

Yes, Sir. Satisfactory progress is being made with, the provision of pit-head baths under the Mining Industry Act, 1926. Detailed information on this subject will be contained in the Sixth Annual Report of the Miners Welfare Committee, which I hope? will be published this week.

Piece-Workers (Standard Rates)

asked the Secretary for Mines the number of pits at which the standard rates applying to pieceworkers have been reduced since January, 1927, and the approximate number of persons affected thereby?

These are matters of arrangement between the owners and workmen at the individual pits, and I have no records of them.

Is the hon. and gallant Gentleman aware that in every district from John o' Groats to Land's End the miners have been on the minimum for eight months, and that in a good many cases they have had their standard rates attacked, even in scores of cases? Is he further aware of the appalling poverty that exists in these districts, and, in view of this, are the Government prepared to do anything to try and prevent a further reduction so as to save the miners from sinking further below the poverty line?

Severn Barrage Scheme

asked the Minister of Transport the date when the inquiry respecting' the Severn Barrage Scheme was commenced, if the investigations are now completed, and upon what date a report may be expected; the total expenditure that has already been incurred in connection with the investigation and what is the estimated amount required to complete the inquiry if it has not yet been completed; and what was the result of the Admiralty's Report on the scheme?

In accordance with the recommendations of the Committee of Civil Research, a small Expert Committee was appointed in 1926 to undertake certain preliminary investigations with a view to determining whether the technical difficulties of constructing a Severn Barrage can be surmounted. These preliminary investigations are still in progress, and it is not likely, I understand, that they can be completed for a considerable time. The expenditure already incurred is about £30,000, and the total cost of the investigations is estimated at £32,300. As part of these investigations a survey of the Severn Estuary has been carried out by the Admiralty, and the information obtained is being considered by the Expert Committee.

Is my right hon. and gallant Friend aware that it is a matter of common knowledge that this is a most impracticable scheme, and for how long are we going to waste further money on this matter?

I asked whether we had received a report yet, and if it was not a matter of common knowledge in the district that the whole scheme is impracticable?

If the hon. and gallant Member's friends in that district know better than the experts, why does he ask the question?

I want to ask the right hon. and gallant Gentleman why lie should waste public money on it.

Transport

Road Grants (British Materials)

asked the Minister of Transport whether it is a condition of grants from the Road Fund that only British road stone is to be used by the authorities to which the grants are made?

The condition that British materials alone should be used, except with the express approval of the Department, is only imposed in the case of road works expedited for the relief of unemployment, but local authorities have been urged to use British goods and materials where reasonably practicable in the case of road works as well as other works of public utility.

Is it not rather anomalous for the Government on the one hand to be pressing a policy which it does not seek to impose with the other. Will the right hon. Gentleman take steps to make it clear that it is the desire of the Government that British materials should be used on all occasions?

In cases where works are expedited for relief of unemployment there is an absolute condition that British material must be used. In regard to local authorities, we trust them to use British materials.

Is the right hon. Gentleman aware that there are cases in which the foreign quotations are actually higher than the British, and still the foreign material is used?

Quite so, but the last word rests with the local authorities and not with myself. I hope the local authorities will always give preference to British material, if they possibly can.

Would it not be best to follow the example of the West Riding who have purchased their own quarries and can now supply the stone cheaper than the contractors?

Coal Wagon and Transport Committee

asked the Minister of Transport when the Coal Wagon and Transport Committee are likely to issue their Report?

I understand that the Standing Committee are still engaged in the collection and consideration of the data conected with the matters remitted to them and I am unable to say when they are likely to issue a Report.

Motor Drivers' Licences

asked the Minister of Transport if he will consider the desirability of making a regulation that motor licences shall only be granted after a medical examination for physical fitness and a test of general capacity for driving?

My proposals with regard to the conditions with which applicants for driving licences should comply are contained in Clauses 14 and 15 of the Draft Road Traffic Bill which I caused to be published and circulated some time ago.

May I ask when the right hon. Gentleman proposes to introduce the Bill?

Edinburgh-Glasgow Road (Bridges)

asked the Minister of Transport if any progress is being made with the construction of the bridges over railways at the Glasgow end of the new Edinburgh-Glasgow road, without which this road is practically useless to the public; and when are these bridges likely to be completed?

Work has been started on the following bridges at the Glasgow end of the Edinburgh-Glasgow road: (a) over the Wishaw-Coltness line at Orchord, (b) over the Woodhall Colliery Branch Railway. I am informed that work will be commenced by the Glasgow Corporation this week on the bridge under the Rutherglen and Coatbridge branch, and with that over the London, Midland and Scottish Railway (Glasgow lines) at Haghill.

Hammersmith Road (Building Line)

asked the Minister of Transport if he is aware that a large block of buildings is being erected on the Hammersmith Road, on the right-hand side going out of London, on the Holland Park estate, and that although these buildings are being erected on land which was covered with grass a few months ago, they are not being set back from the Hammersmith Road, and apparently there will not be any appreciable widening of that thoroughfare, which is practically the only western exit towards Bristol and the great west road from London; and whether he will take powers to prevent new buildings being erected in congested thoroughfares without any widening of main roads of traffic?

I assume that the hon. and gallant Member refers to shops and flats now in course of erection at the corner of Melbury Road and Kensington Road. I have ascertained that there will be an average road widening of 12 feet on this frontage when the buildings are completed. The London County Council have ample powers as to the prescription of building lines within their area, and powers in this matter were conferred on all local authorities under Section 5 of the Roads Improvement Act, 1925.

Is the right hon. Gentleman satisfied that in this and all other cases the roads are being sufficiently widened, and, if not, will he take powers in order to compel the extra width which may be necessary?

I am doing all I can to widen these roads, but the hon. and gallant Member must remember that it costs money.

Is my right hon. Friend aware that the frontage line on this particular thoroughfare was settled a good many years ago, before there was any thought of building, on what the London County Council and local authorities thought was a proper width?

Empire Beam and Cable Communication's (Conference)

asked the Prime Minister whether the conference between the Home Government and the Do-minions on the question of beam versus cable communications has finished; what are the conclusions arrived at; whether the recommendations will be presented to Parliament before adoption; and why have the discussions been in private?

The answer to the first part of the question is in the negative, the second part therefore does not arise. As regards the third part, it is not possible at present to make any statement. As regards the fourth part, the issues involved are such that it is obviously in the public interest that the discussions should be held in private.

Greyhound Racing (Betting)

asked the Prime Minister if he has received a resolution from Leigh Town Council asking the government to legislate to give local authorities power to prohibit or license greyhound racing tracks and to make betting thereon illegal; and will he say what they intend to do in the matter?

My right hon. Friend has asked me to reply. I have received many such resolutions but I can only refer the hon. Member to the reply I gave to my hon. Friend the Member for Kidderminister (Mr. Wardlaw-Milne) on the 16th instant. As I then stated, I should be glad if an opportunity could be found of testing opinion on the subject, but I can at present hold out no prospect of a Government Bill.

Will the right hon. Gentleman consider, in view of the many representations which he has received, the setting up of an inquiry to investigate the whole matter?

I really do not think that is necessary. I have full information as to the progress of greyhound racing, and all I want to get are the views of the House of Commons on the matter.

Washington Hours Convention

asked the Prime Minister what are the difficulties which prevent the Government ratifying the Washington Hours of Labour Convention; whether these difficulties were discussed at the meeting of Labour Ministers in London; and in which respect, and on what point, disagreement, if any, existed?

It is not possible to deal with this matter within the limits of an answer to a Parliamentary question. The right hon. Gentleman will no doubt have an opportunity of raising the subject during the Debate on the Vote on Account.

May we have an assurance that if the matter is raised we shall get an answer to the question when we put it?

Franchise Bill (Limited Companies)

asked the Prime Minister whether, in framing the new Franchise Bill, he will consider the position of the limited companies throughout the country who, while contributing a large amount of the rates, are precluded from voting, and insert a Clause conferring the local government franchise on nominated representatives of such companies?

As I have already stated, I can make no statement in advance of the promised Franchise Bill.

National Finance

Penny Postage and Motor Taxation

asked the Chancellor of the Exchequer whether, seeing that a return to penny postage would assist in the revival of trade, even if it involved a temporary loss of revenue to the Post Office Department, he will consider its re-introduction?

asked the Chancellor of the Exchequer whether, in view of the desirability of encouraging the development of home manufacturing industries, he will consider the return to a penny postage system?

asked the Chancellor of the Exchequer whether, in view of his statements of two years ago and having regard to the unequal incidence of the present horse-power tax on motor vehicles, he has considered the imposition of a tax on petrol and a small registration fee on motor cars?

The whole field of taxation is always surveyed before every Budget, but I have no statement to make in advance of that date.

Will the right hon. Gentleman consider the desirability of increasing the postage to a shilling in the case of circular communications addressed to this House?

When the right hon. Gentleman surveys this situation, will he consider the enormous boom it means to Imperial trade at a time when we are trying to stimulate trade between this country and the rest of the Empire?

Can the right hon. Gentleman refer to any other commodity or service which is given to-day at pre-War price?

Can the right hon. Gentleman say what the present loss to the country would be by reversion to the penny?

I think the long Debates which always take place on the Finance Bill provide many opportunities for ventilating these subjects.

Whisky (Export Tax)

asked the Chancellor of the Exchequer whether he has considered the imposition of an export tax on whisky; and what sum would accrue to the Exchequer if a tax at the rate of half that of the home rate was imposed?

It is not usual to make statements on matters of taxation in advance of the Budget, but in this case I think I can go so far as to refer my hon. and gallant Friend to an answer given on 27th July, 1926, to the hon. and gallant Member for Brentford and Chis-wick (Colonel Grant Morden), of which I am sending him a copy.

Will the right hon. Gentleman consider that this export tax would be paid by the foreigners who desire real Scotch, and that with the amount so obtained he could reduce the tax on the home consumer?

My hon. and gallant Friend will see when he receives the answer that all these matters had been considered before it was given.

In bearing the question in mind in the Budget, will the right hon. Gentleman remember that the more whisky that is drunk the smaller output we get in work?

Reparations and Foreign Debts (Receipts)

asked the Chancellor of the Exchequer what moneys he will expect to have received in reparations and in payment of foreign debts, respectively, by the end of the present financial year; and what increase he anticipates from these sources, respectively, during the next financial year?

The estimated receipts under these heads during the current financial year (the period to which I understand the hon. and gallant Member to refer) are as follow:

Surely the amount that we receive in reparation under the Dawes plan and the payment we receive from our Allies under agreements have nothing to do with the right hon. Gentleman's Budget. Surely, he is straining his reticence a little too far in this case.

It is the case that we survey the receipts from these various sources.

This is not money which comes from the unfortunate taxpayers of this country, but from the Governments or taxpayers of other countries, and it has nothing to do with the right hon. Gentleman. Why does he not give the information?

Are the whole of these moneys received treated as income receipts or are any of them put to capital?

All these moneys are put into the general pool at the Exchequer, and the Sinking Fund, which this year is fixed at £65,000,000, constitutes the measures which we take, as a result of all the receipts, for the amortisation of debt.

Income Tax

asked the Financial Secretary to the Treasury what in general were the circumstances which precluded recovery of over-payments of Income Tax to the amount of £957 10s. 4d. during 1926?

The item referred to represents erroneous repayments of Income Tax which could not be recovered from the recipients. Generally speaking this was either because recovery was not legally enforceable or because when the errors were discovered, the recipients had not assets sufficient to justify proceedings for recovery or were dead without having left estate out of which reimbursement could be claimed.

asked the Financial Secretary to the Treasury whether, in the forthcoming Budget, he will so amend the law as to permit of women being granted Income Tax allow ance for a housekeeper on the same terms as men?

I would refer my hon. Friend to the provisions of Section 19 of the Finance Act, 1920, as amended by Section 22 of the Finance Act, 1924, from which it will be seen that the conditions governing the grant of the allowance for a housekeeper apply alike to men and women claimants.

Smuggling, Thames Estuary

asked the Financial Secretary to the Treasury whether smuggling is on the increase in the Thames estuary; and what steps does he propose to take to mitigate the evil?

There are no grounds for thinking that smuggling is on the increase in the Thames estuary. The hon. Baronet will realise that it would be against the public interest to indicate the measures taken by the Customs authorities to frustrate attempts at smuggling.

Questions

Fighting Services (Meat Supplies)

asked the Financial Secretary to the Treasury what is the estimated cost of meat purchased for the Army, Navy, and Air Force for the year ending 31st March, 1928; and what is the estimated additional cost which would have been incurred if home-produced meat had been purchased sufficient for one or, alternatively, two days' supply per week?

The cost of meat, excluding preserved meat, purchased for the Navy, Army and Air Force for the year ending 31st March, 1928, is approximately £970,000. If home-produced meat had been supplied on one day a week, the extra annual cost would have been approximately £70,000 and, if on two days a week, £140,000.

Does not the Financial Secretary to the Treasury consider that this extra cost would be a very small price to pay for the encouragement of agriculturists in this country?

May I ask whether the Department will support the Cabinet policy of buying British goods?

Post Office

London-Paris Telephone Circuits (Storm)

asked the Postmaster-General the number of telephone lines operating between Paris and London which were put out of action during the storm on the 11th February; and whether service has now been restored on all of them?

Eleven London-Paris circuits were put out of service on the 11th February; all but three have now been restored.

Can the Postmaster-General say when the complete service will be restored?

I cannot say. Two faults have supervened in the cables, and a third fault is in France.

Telephone Communications (Privacy)

asked the Post-master-General whether his attention has been called to the increasing frequency of third parties being put on to the line of a conversation in progress between two subscribers; and whether anything can be done in this respect to restore the confidence of business men and others that private conversations may not be overheard by third parties?

The observations made of the working of the service do not indicate that the number of double connections is increasing or appreciable. If my hon. Friend will furnish me with details of cases where there has been noticeable trouble of the kind, I shall be glad to have special inquiry made.

Is my right hon. Friend aware that I, personally, during the past fortnight on three occasions, have had a third party coming on to the line when I have been holding a conversation, and that the reason he does not receive complaints is because of the trouble it involves?

I do not suppose that the Postmaster-General listens in to the hon. Member.

Letters (Stamping)

asked the Postmaster-General if a record is kept of the number of letters sent through the post insufficiently stamped; if so, will he give the number for 1927; and will he state the regulations governing the delivery and acceptance or non-acceptance of such letters?

The reply to the first part of the question is in the negative. The addressee of a surcharged letter or other postal packet has the option of paying the charge or refusing the packet. If he refuses it, the liability for the charge devolves upon the sender under Section 3 of the Post Office Act, 1908.

Will the Postmaster-General consider regulations for sending them back to the sender and not to the addressee?

I have said that they have the option of paying or refusing to accept. In the case of their refusing, the package is returned to the sender.

Trans-Atlantic Telephone Rates

asked the Postmaster-General whether any negotiations are taking place between his Department and the telephone authorities in the United States of America for the reduction of the trans-Atlantic telephone rates?

I have already said that this question is under consideration. I cannot say more at present.

I have said that I can give no more information at present.

Savings Bank Department (Lighting)

asked the Postmaster-General whether his attention has been drawn to the unsatisfactory nature of the lighting in the women's branches of the savings bank department, and to the constant com plaints of the staff culminating in a mass meeting of clerks; and whether, in view of the close figure work in which these branches are engaged, he will take steps to secure such improvement as will bring up the standard of lighting to that to obtaining in commercial banks?

My attention was drawn to this matter, and measures to improve the lighting were taken immediately. These steps have proved effective and I understand that the staff are now satisfied.

Telephone Rates (Farmers)

asked the Postmaster-General whether he will consider reducing the telephone rentals charged to farmers from business rates to residential rates?

I regret that I am not in a position to give farmers exclusive telephone lines at lower rates than subscribers engaged in other businesses. I should perhaps call my hon. and gallant Friend's attention to the fact that a telephone service for farmers and residents in rural districts is available at specially low rates by means of rural party lines.

Outer Hebrides (Wireless Service)

asked the Postmaster-General whether, in view of the repeated disconnection of the submarine telegraph cables to the Outer Hebrides and the consequent serious effect on the fishing industry, ho will make careful inquiries into the practicability of setting up a wireless service to and from the islands?

The question of providing a permanent wireless service in place of cable communication between the Outer Hebrides and the mainland has been most fully considered. The cost would be far in excess of that of the existing cable communication, and little or no advantage would accrue from the change. When the cable between Stornoway and the mainland is interrupted, emergency wireless communication is established between Lochboisdale and Tobermory as soon as practicable.

Underground Cables

asked the Postmaster-General whether, in view of the delay which occurred in telephoning and telegraphing by reason of the number of overhead wires and cables brought down in recent storms, any further extensive scheme of transfer to underground cables is to be engaged upon?

A large number of overhead trunk telephone and telegraph wires have already been placed underground and further routes are being so transferred. Where practicable a service by means of alternative underground wires is maintained when overhead routes are put out of service by storms. The isolation of commercial centres by breakdown of overhead lines is now rare and of brief duration.

Branch Offices

asked the Postmaster-General what services other than postal and telegraph services are per formed by branch post offices; and which of these have Been added during the last three years?

The answer is long and perhaps the hon. Member will allow me to circulate it in the OFFICIAL REPORT.

Following is the answer:

The following services other than postal and telegraph services are performed by branch post offices and sub post offices, some of them by the larger offices only.

Payment of postal drafts issued by the Post Office, Government Departments and certain approved societies.

Sale and repayment of National Savings Certificates (and in Northern Ireland of Ulster Savings Certificates).

Savings Bank business. Payment of Government stock dividends. Government life insurance business.

Inland Revenue business (sale of stamps, including Entertainments Duty stamps and of stamped paper and forms; acceptance of documents for stamping).

National Health and Pensions and Unemployment Insurance business (sale of stamps and issue to applicants of various forms, cards, leaflets and claim forms; payment of Old Age, Widows' and Orphans' Contributory Pensions).

Payment of Old Age and Blind Persons Pensions under Old Age Pensions Acts, 1908–1924, and Blind Persons Acts, 1920, and issue of leaflets and claim forms.

Payment of naval, military and Air Force pensions and allowances on behalf of the Admiralty, War Office and Ministry of Pensions.

Issue of local taxation and carriage licences.

Sale of stamped application forms for public service vehicles, etc., licences in Northern Ireland.

Exchange of mutilated or defaced currency notes.

The only additions during the last three years are the payment of Old Age, Widows' and Orphans' Contributory Pensions and the sale of stamped application forms for public service vehicles, etc., licences in Northern Ireland.

Crown Lands (Golf Courses)

asked the Minister of Agriculture for whom, and at whose expense, the two golf courses are being constructed on the Crown lands between Bagshot and Ascot.

I would refer the hon. Member to the reply I gave to my hon. and gallant Friend the Member for Dulwich (Sir F. Hall) on the 21st of November last, a copy of which I am sending to him.

Southern Rhodesian Bill

asked the Secretary of State for Dominion Affairs what is the position with regard to the Southern Rhodesian Bill for the control of natives, which confers on the native commissioners very stringent powers over native workers?

The Act has been assented to by the Governor but is awaiting the signification of His Majesty's pleasure before coming into operation.

Can we be assured that we shall have an opportunity of discussing it in this House before effect is given to it?

I am considering the correspondence which has passed during my absence, and I may have to make a further statement.

Schools (Construction)

asked the President of the Board of Education what progress is being made with the work of the committee inquiring into the construction of schools; and when the preliminary report, that was completed in the summer of last year, will be available for the information of local authorities?

I understand that the committee are waiting to receive final figures based on actual tenders of the cost of certain typical schools of which they have pre pared plans. I hope to be able to publish the committee's views on the construction of schools of all types when their investigation of the subject is completed.

asked the Secretary of State for Foreign Affairs whether His Majesty's Government has decided to comply with the request of the Council of the League of Nations to assist with a grant the settlement of Armenian refugees in Erivan?

After careful and sympathetic consideration of the request of the Council of the League of Nations, His Majesty's Government have explained in reply that, in view of the large amount already contributed by them to Armenian relief, they would not be justified in calling on the British taxpayer to make further sacrifices for this purpose.

Animals (Slaughter)

asked the Minister of Health the number of local authorities who have adopted by-law 9b, relating to the slaughter of animals for food, and the number of those who have adopted it in part?

Of 261 local authorities who have adopted the by-law mentioned, 30 have applied it to some animals but not others, and the rest to all animals.

Poor Law

Destitute Persons

asked the Minister of Health whether, when he authorises the closing of any casual ward, he impresses on the guardians and the master and porter of the workhouse that it is their duty to admit any casual or destitute wayfarer who applies for admission under urgent circumstances; whether he impresses it by a Circular or other written document; if so, whether a copy of such document can be obtained; and whether and how he renews the impression, as in the course of years guardians and officers change?

When, sanction is given to the closing of a casual ward, the guardians are reminded by a special letter that the sanction does not relieve them of their statutory responsibilities in the matter of affording relief to destitute wayfarers and wanderers, and that the guardians must be prepared to relieve in the institution any destitute person who applies for relief and is unable to proceed to the next casual ward. My right hon. Friend's inspectors are in constant touch with guardians, and he does not think it is necessary to renew formally this reminder of the guardians' duties.

Able-Bodied Men

asked the Minister of Health if he will inform the House as to the advice his inspectors are instructed to give to boards of guardians in regard to able-bodied men; and whether it is to offer them the institution or out-relief in return for test work?

My right hon. Friend's officers are instructed to advise boards of guardians to comply as strictly as practicable with the Regulations in force, which are contained in the Relief Regulation Order, 1911, and do not contemplate the grant of unconditional out-door relief to able-bodied persons.

Contributory Pensions Act

asked the Minister of Health the total amount of benefits paid out to widows, orphans and old age pensioners under the Widows', Orphans' and Old Age Contributory Pensions Act from 4th January, 1926, to 31st March, 1927?

The total amount paid out for widows' and orphans' pensions from 4th January, 1926, to 31st March, 1927, was £8,221,000. Old age pensions under the Widows', Orphans' and Old Age Contributory Pensions Act, that is pensions from age 65 to age 70, did not become payable until January, 1928. If the question is intended to refer to old age pensions to persons over 70 under the Old Age Pensions Acts, which became payable by virtue of the Contributory Pensions Act from 2nd July, 1926, the estimated amount of such pensions paid from 2nd July, 1926, to 31st March, 1927, was £2,900,000.

Rating and Valuation Act, 1925

asked the Minister of Health the cost of the revaluation which is now taking place under the Rating and Valuation Act, 1925?

It will not be possible to ascertain the cost of the revaluation until the work has been done.

National Health Insurance (Benefit)

asked the Financial Secretary to the Treasury whether he will modify Treasury Circular of April, 1925, paragraph 14, which directs that deductions from pay for sick benefit are to be made in cases where temporary sickness of one or two days occurs within a period of 12 months of receiving sick benefit, so that when an employed person has been sick for less than three days and has not been placed on National Health Insurance benefit the deduction may be refunded on producing a certificate from his approved society showing that no benefit has been paid for the sickness in question, observing that in the case of an employé who has been over 12 months since receiving sick benefit no deductions are made for temporary sickness?

In the cases envisaged sickness benefit would be payable under the National Health Insurance Acts. I cannot regard omission to comply with the rules of approved societies as to claiming benefits as justifying an exception to the principle under which the usual deduction is made from sick pay in respect of sick absences for which insurance benefit is payable under the Acts.

Candidates (Local Government) Election Deposit Bill,

"to require candidates at local government elections to deposit a sum of money to be forfeited under certain conditions," presented by Colonel Sir Arthur Holbrook; supported by Mr. Hannon, Mr. Smithers, Lieut.-Colonel Sir Alan Burgoyne, Colonel Applin and Mr. Rentoul; to be read a Second time upon Wednesday, 29th February, and to be printed.

British Guiana Bill,

"to make provision for the government of the Colony of British Guiana," presented by Mr. Amery; supported by Mr. Ormsby-Gore; to be read a Second time To-morrow, and to be printed. [Bill 41.]

Education (Scotland)

I beg to move,

"That leave be given to bring in a Bill to amend paragraph ( b ) of Section Eleven of the Education (Scotland) Act, 1883."

In asking permission to introduce this short Bill I would explain that it is made necessary because of the decision of the Dumbartonshire Sheriff Court, whereby although the education authority had offered payment for the travelling arrangement of a child the parents were still allowed to exercise their right under the 1883 Education (Scotland) Act and to keep the child at home. As a result of the passing of that Act parents residing outwith a three miles limit from the nearest school, can refuse to send a child to school, despite the fact that the payments for travelling expenses are offered and arrangments made by the education authority for their conveyance. In 1883 when that Act was passed there were not the travelling facilities that we have today and there were not the same arrangements in connection with educational organisation. It was therefore far more difficult to get children to school if their home was over the three miles limit of distance from a school. The 1883 Act, in Section 11 ( b ) provides that certain reasons must be accepted by the Sheriff as being reasonable excuses for children not attending school. The Section states that where there is no public or inspected school the child can attend within three miles, measured according to the nearest road from the residence of such child, that must be accepted by the sheriff as a reasonable excuse for non-attendance at school if the parents claim the right to keep the child from school. As a result of the Dumbartonshire case the executive of the education authorities of Scotland found it necessary to appeal to this House through myself to have the Act amended, and I am submitting this short Amendment of the 1883 Act on behalf of that executive. The Bill contains only one Clause which will mainly provide a proviso to Section 11 ( b ) of the 1883 Act, and will read as follows:

"Provided that where reasonable facilities are provided by an education authority for the conveyance of such child to and from a public school beyond three miles from the residence of such child, measured as aforesaid, such distance shall not be a reasonable excuse for non-attendance at school."

The provision for travelling expenses will have to be met by the authority. The executive put in the word "reasonable" because it might be possible that an education authority may seek to have conveyed to school a child residing six, seven or eight miles away. In cases of that kind the parent will have the right of appeal to the sheriff and the sheriff, if he decides that reasonable facilities are not provided, will still have the rights left by this amending Bill to allow the parent to keep the child from school. With this explanation and in the hope that permission will be granted, and, if permission is granted, that the Government will provide the facilities for the Bill with a view to meeting the unanimous desire of the executive of the education authorities of Scotland, I beg to move the Motion.

Question put, and agreed to.

Bill ordered to be brought in by Mr. Westwood, Mr. Couper, Sir Samuel Chapman, Dr. Shiels, Mr. W. M. Watson, Mr. Rosslyn Mitchell, Mr. Barr, and Mr. MacKenzie Livingstone.

Education (Scotland) Bill,

"to amend paragraph ( b ) of Section Eleven of the Education (Scotland) Act, 1883," presented accordingly, and read the First time; to be read a Second time upon Tuesday, 6th March, and to be printed. [Bill 42.]

Civil and Revenue Departments (Estimates, 1928)

Estimates presented,—for Civil and Revenue Departments for the year ending 31st March, 1929, with Memorandum [by Command]; Referred to the Committee of Supply, and to be printed. [No. 27.]

Civil and Revenue Departments, 1928 (Vote on Account)

Estimate presented,—showing the several Services for which a Vote on Account is required for the year ending 31st March, 1929 [by Command]; Referred to the Committee of Supply, and to be printed. [No. 28.]

Selection (Standing Committees)

Standing Committee A

Mr. William Nicholson reported from the Committee of Selection; That they had nominated the following Members to serve on Standing Committee A: Mr. Barr, Mr. Batey, Mr. Cowan, Dr. Vernon Davies, Sir Walter de Frece, Mr. Dennison, Mr. Dixey, Mr. Drewe, Mr. Ellis, Mr. Erskine, Captain Arthur Evans, Lord Fermoy, Lieut.-Colonel Gault, Captain Fergus Graham, Mr. David Grenfell, Mr. Griffiths, Mr. Harris, Colonel Howard-Bury, Mr. James Hudson, Mr. Haydn Jones, Major Kenyon-Slaney, Sir William Lane Mitchell, Major Long, Captain Peter Macdonald, Colonel Mason, Mr. Hugh Morrison, Mr. Nuttall, Mr. Oakley, Major Price, Sir Cooper Rawson, Mr. Ritson, Sir Frank Sanderson, Viscount Sandon, Lieut.-Colonel Stott, Mr. Tinker, 'Mr. Townend, Mr. Viant, Brigadier-General Warner, Commander Williams, and Major Yerburgh.

Mr. William Nicholson further reported from the Committee; That they had nominated Standing Committee A as the Committee on which Government Bills shall not have precedence.

Mr. William Nicholson further reported from the Committee; That they had added the following Fifteen Members to Standing Committee A (in respect of the Stabilisation of Easter Bill): Mr. Sandeman Allen, Major Birchall, Captain Bourne, Mr. Briant, Mr. Brocklebank, Lord Hugh Cecil, Captain Fairfax, Mr. Hardie, Sir Vivian Henderson, Sir Alfred Hopkinson, Mr. Jenkins, Mr. Rosslyn Mitchell, Sir Philip Richardson, Sir Henry Slesser, and Mr. Withers.

Standing Committee B

Mr. William Nicholson further reported from the Committee; That they had nominated the following Members to serve on Standing Committee B: Major Ainsworth, Major Astor, Mr. John Baker, Rear-Admiral Beamish, Mr. Bethel, Mr. Blundell, Colonel Douglas Clifton Brown, Mr. Burman, Major Carver, Mr. Clayton, Mr. Colman, Mr. Connolly, Mr. Crawfurd, Mr. Culverwell, Mr. Dean, Sir William Edge, Mr. Forrest, Captain Fox-croft, Lieut.-Colonel Gadie, Mr. Hanbury, Mr. Haslam, Captain Arthur Hope, Sir Alfred Knox, Miss Lawrence, Mr. Lindley, Mr. Looker, Sir Richard Luce, Mr. Lumley, Major Alan McLean, Sir Frank Meyer, Mr. Montague, Captain Moreing, Mr. Otho Nicholson, Mr. Scurr, Captain Waterhouse, Lieut.-Colonel Watts-Morgan, Mr. Wellock, Mr. West-wood, Mr. Thomas Williams, and Colonel Woodcock.

Scottish Standing Committee

Mr. William Nicholson further reported from the Committee; That the following Members representing Scottish Constituencies are appointed to serve on the Standing Committee for the consideration of all Public Bills relating exclusively to Scotland and committed to a Standing Committee:—Mr. William Adamson, Sir William Alexander, Duchess of Atholl, Mr. Barclay-Harvey, Mr. Barr, Sir George Berry, Mr. Boothby, Mr. Ernest Brown, Mr. James Brown, Mr. Buchan, Mr. Buchanan, Sir Samuel Chapman, Brigadier-General Charteris, Commander Cochrane, Sir Godfrey Collins, Mr. Couper, Mr. Cowan, Colonel Crook-shank, Earl of Dalkeith, Major Elliot, Captain Fanshawe, Sir Patrick Ford, Sir John Gilmour, Mr. Duncan Graham, Mr. William Graham, Sir Robert Hamilton, Mr. Hardie, Mr. Thomas Henderson, Sir Harry Hope, Sir Robert Home, Sir Aylmer Hunter-Weston, Mr. Clark Hutchison, Sir Robert Hutchison, Mr. Johnston, Mr. Thomas Kennedy, Mr. Kidd, Mr. Kirkwood, Major Broun-Lindsay, Mr. Livingstone, Major MacAndrew, Sir Murdoch Macdonald, Mr. Robert Mac-Donald, Mr. Maclntyre, Mr. Neil Maclean, Mr. Macpherson, Mr. Mac-quisten, Mr. Maxton, Mr. Rosslyn Mitchell, Mr. Stephen Mitchell, Lieut.-Colonel Thomas Moore, Mr. Murnin, Mr. Rose, Mr. Scrymgeour, Lieut.-Colonel McInnes Shaw, Dr. Shiels, Sir Archibald Sinclair, Mr. Skelton, Mr. Robert Smith, the Solicitor-General for Scotland, Sir Alexander Sprot, Mr. Stephen, Mr. James Stewart, Captain Streatfeild, Mr. James Stuart, Mr. Sullivan, Mr. Templeton, Lieut.-Colonel Thorn, Mr. F. C. Thomson, Mr. McLean Watson, Mr. Weir, Mr. Walsh, Mr. Westwood, Mr. Wheatley, and Mr. Wright.

Mr. William Nicholson further reported from the Committee; That they had added the following Ten Members to the Standing Committee on Scottish Bills (in respect of the Slaughter of Animals (Scotland) Bill): the Lord Advocate, Mr. Campbell, Sir Henry Cowan, Captain Crookshank, Mr. Evan Davies, Mr. Hugh Edwards, Major Samuel-Harvey, Mr. Mackinder, Mr. Riley, and Sir Godfrey Dalrymple-White.

Reports to lie upon the Table.

Orders of the Day

Companies Bill

Order for Second Reading read.

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

The Bill is already familiar to the House because it is practically the same Measure as that which came to us last Session from another place and with which we were unable to proceed owing to the pressure of Parliamentary business. The Bill is based upon the report of a very able Committee—the first Committee since Lord Loreburn's to review the whole of our company law and practice. The Committee, which took an enormous amount of evidence, was very representative in character. It included some of the ablest men in law, commerce, finance, industry and accountancy. It had the benefit of the experience of the Law Courts and the Board of Trade at its disposal and a representative of the Stock Exchange was a member. It was presided over by Mr. Wilfrid Greene, whose name is a household word to those familiar with company law. The House owes a real debt of gratitude to the members of that Committee and particularly to the chairman. To ask a very busy member of the Bar to undertake an enormous inquiry of this kind means asking him to sacrifice a great deal of his time and also to make a considerable financial sacrifice. Mr. Greene was indefatigable throughout the meetings of that Committee and I happen to know that he devoted the whole of a Christmas holiday to writing the report of the Committee. I think that is typical of the generous public spirit which we find, and have almost come to expect as a matter of course, in this country among men of ability.

The Committee in their broad review find that the company law and practice at present in force meet the needs of the community at large—and the commercial community in particular—in general, in a highly satisfactory manner. They also point out that many suggestions made to them show that the idea that frauds and lesser malpractices can be stopped by the simple expedient of prohibition by Act of Parliament, dies hard. They also emphasise the fact that the imposition of statutory regulations and prohibitions might not merely put a stop to the activities of a wrong-doer, but place quite intolerable fetters upon honest business. I think what is worthy of special consideration in the Committee's report, which is extraordinarily wide, is the manner in which they weigh carefully the advantages and the disadvantages of action in particular cases and seek to find the happy mean. They have recommended changes in the law—some of them drastic—and in other cases they have recommended that we should refrain from action, because it might be of doubtful advantage and might gravely interfere with the necessary elasticity of business.

The Report is unanimous and it is, as I have said, the Report of the very experienced and representative body of men. It deals, in the first place, with a number of matters of principle on all of which the Committee are unanimous. Then it deals with an enormous number of minor points on which amendment of the law is recommended. The Bill follows the recommendations of the Committee and it follows, in its general arrangement, the order of the Companies Consolidation Act of 1908 with some exceptions. It gathers in a separate part of the Bill amendments of the law dealing with Scotland alone; and in the Schedule are a number of minor amendments. I would have thought, and I still hope, that this was a Bill which the House would welcome as a practical contribution to our commercial law, and that it would not invite any undue amount either of eloquence or opposition. I still hope that is so, in spite of the fact that I see there-is now on the Order Paper a very tentative Motion for rejection—indeed I am not sure whether it is to be regarded as a Motion for rejection at all or not. As I understand it, the objections raised are not to the Bill as a Bill or to its provisions. These, say hon. Gentlemen opposite, are very good, but two criticisms are offered. The first is that, in addition to this Bill, we have not brought in certain other Bills. That may be right or not right, but it is no reason for not passing, this Bill if it is a good Bill.

The other criticism which hon. Gentlemen offer is that it will be unreasonable to present to the commercial community of this country an Act of Parliament of such a complicated character in its drafting and that it is legislation by reference. That argument we have anticipated. You must legislate by reference when you amend a number of Acts of Parliament, but if the House approves of this Bill, we have no intention of putting it into force until a Consolidating Act has been passed in the usual and proper manner through this House. That Act will consolidate the present Measure, as it leaves this House, with the Act of 1908 and any other Measure which may exist. Accordingly, it is not our idea that there should be a series of Acts of Parliament dealing with the subject, but that there should be one single consolidated Act in which the whole code of company law will be presented to the public. I think that really meets the criticism of hon. Gentlemen opposite.

I will come to that point. I am prepared to deal with it later on. I may state now that for the convenience of the House a White Paper has been prepared by Parliamentary counsel, containing all the material Sections of the Act of 1908, with the Amendments which this Bill proposes written in, and thus, when we go into Committee, hon. Members will have before them the Act of 1908, as it will appear when amended in the Consolidation Act. I thought that course would be convenient and the document is in the Vote Office now. There is one Clause of the Bill which we propose to bring into operation as soon as the Measure passes into law, and that is the Clause which deals with share hawking, or share pushing. [HON. MEMBERS: "What is the number of it?"] The number of that Clause is 83, and that we propose to put into force as soon as the Measure passes. The rest of the Bill will come into force lay Order in Council after consolidation.

4.0 p.m.

This is the kind of Bill which does not lend itself very well to a Second Heading Debate, because it is, of course, a collection of Amendments of very diverse, dissociated subjects, which have only one point in common, and as each of them arises in the Company Law under the Act, therefore, really the right place to discuss the details of this Bill will be, I am sure, the Committee stage and afterwards, if necessary, on Report. But I think it would be convenient to the House if I indicated, quite briefly, some of the more important questions of principle which are involved. Clause 1 prevents a company from using, without the consent of the Board of Trade, any name containing the words, "Royal," "Imperial" or "Municipal," or suggesting Royal patronage, or connection with His Majesty's Government or with any local authority. That, I think, is a provision which speaks for itself, and will command general assent. Clauses 2 to 11 contain a number of minor Amendments with which I need not trouble the House at this stage.

Clause 12 raises a question of principle. It prohibits a company from providing financial assistance for the purchase of its own shares. As the House is aware, it is already the law that a company may not traffic in its own shares. There have been cases in which companies, without breaking the strict letter of the law, have engaged in what amounts to a traffic in shares in their own companies. For example, a syndicate may be formed, and borrow money from the bank to purchase shares. The syndicate may then, with those shares, come into control of the company, and proceed to lend themselves the money with which they have previously purchased shares. That is a typical instance, and other instances can be thought of. This Clause is designed to prevent the indirect purchase by a company of its own shares.

Clause 13 gives the Court power, in proper cases, to review a resolution passed at a separate meeting of the holders of shares of a particular class in respect of the modification of rights. For instance, there may be a case where there is a separate meeting of preference shareholders, but the preference shareholders, or the majority of them, may be more interested as ordinary shareholders. They, therefore, use their power to pass a resolution which is, in fact, not in the interest of the preference, but of the ordinary shareholders. The law provides no right of redress to the other preference shareholders at the present time, and this Clause proposes that where a class of shareholders is prejudiced by the action of the majority, the minority, provided it amounts to 15 per cent., shall be able to apply to the Court for relief. Clause 14 gives power to a company to issue redeemable preference shares, subject to certain safeguards. The next Clause which, I think, is important, is Clause 21, which abolishes the necessity for a second meeting to pass a special resolution, which, I think, hon. Members will regard as unnecessary. The Clause ensures that there shall be a reasonable length of notice, so that all interested will have an opportunity of attending the general meeting.

Clause 26 is important. It deals with offers for sale, and, in short, provides that where an offer for sale is, or may properly be deemed to be, made in complicity with the company, the offer shall be treated as a prospectus, and the directors of the company will be responsible for seeing that there appear in it all particulars which the law lays down as necessary in a prospectus. It will not touch cases where there is no privity between the company and the vendors who offer the shares for sale. An independent person wishing to dispose of a large block of shares will be perfectly free to do so. This only deals with the case where an offer is being made on behalf of a company. I think the House will agree that there is no reason why in these cases the directors should not afford to the public all the protection which they are required to offer to the public where they issue a prospectus direct in the ordinary way. That protection is, of course, without prejudice to any right the public may have against the person who makes the offer, as well as against the directors. Clause 27 provides that where a form of application is annexed to a prospectus, a full prospectus must be issued, and not an abridged prospectus. There has been a great deal of criticism from time to time, because, although the law provides that a prospectus must contain full particulars, people may issue an abridged prospectus, which is all a good many of the public see, and attached to that abridged prospectus is an application form, on which many people subscribe. This is a simple requirement, that where an ap- plication form is sent to the public, the full prospectus must be issued.

If the right hon. and gallant Gentleman would not object, I think it would be rather convenient if one dealt with these questions in a reply. Clause 28 adds certain requirements to those already laid down as to a prospectus, namely, that the rights in respect of capital and dividend that attach to each class of shares shall be stated, as well as the voting rights. That is practically the common practice to-day, but the combined effect of that and Clause 27 will be that in every prospectus which passes to the public full information will have to be given.

I think it will be convenient, perhaps, if I state here a word about a matter which was raised at Question Time today, and has received a good deal of attention in the Press, namely, the question of Is. shares. These two provisions to which I have just referred, the provision which requires the added information to be given in the prospectus, and the provision that no abridged prospectus may have appended to it an application form, are very relevant to this question, because those provisions do ensure that the public get all the information they require. You may take a horse to the water, but you cannot make him drink, and you may take information to the public, but if the public want to have a foolish gamble, no Act of Parliament will stop them. But I think, probably, there is a large measure of agreement in the House as to the use or abuse of the practice of issuing 1s. shares. Criticism, I think, is not directed at the denomination of the share; it is not the Is. share to which objection is taken. Where criticism has arisen is in one or two cases where the 1s. share gets an excessive proportion of the total profit. The other objection, which, I think, is more serious, is the voting power attached to these shares.

The criticism has been made that a small number of people with shares of a low denomination get a large amount of profit if the venture turns out to be a success, and that they have excessive voting power. The criticism is that the virtual control of the company may be vested, not in the people who put up the bulk of the working capital, but in people who hold a very small number of deferred shares for which they have either given cash or some other consideration, and that is a much more serious criticism. It is very easy to make these objections, and it is very desirable that if those be at all sound criticisms—and I think the House agrees that, on the whole, they are sound—those criticisms should be voiced in this House, and should be reported and repeated outside. But when you come to consider whether you can usefully legislate, that is a much more difficult question. As I have already said, the Committee have pointed out that, in trying to save a fool from his folly, restrictions might very easily be imposed which would militate against sound business and the elasticity with which sound business ought to be carried on. Take the first criticism, that of excessive and unfair division of profits. The deferred shareholder is getting too much. It may be very fair criticism of some prospectuses, but how in the world are you going to put in an Act of Parliament how the profits of a concern should be divided amongst the different classes of shareholders? You could not possibly lay down a rule which would be fair in one case and not unfair in another. The House will agree that it is perfectly impossible to legislate as to how profits should be divided. It is nearly as difficult, or nearly as unwise, to legislate about voting power. You can easily find cases where any reasonable critic may say, "This is unsound finance," but if you legislate at all, you have got to make a general law which will apply in all cases. I think the House will be well advised, therefore, to pause before it imposes any obligation about voting power. There are cases where, in the national interest, it is desirable to maintain British control of a company. The law already lays down, I believe, that in certain classes of undertakings there must be British control.

Would you, Mr. Speaker, mind asking the right hon. Gentleman to observe the Rule of the House, and address you, as we cannot hear what he is saying?

I hope I am making myself audible to the House. I was dealing with the control of voting power. You have got to make your legislation general. If you do that, then in any case where the national interest requires a minority control, you will make it absolutely impossible for such a provision to take effect. Therefore, is it not the wise course for Parliament to require that the fullest information shall be given to all those who are invited to invest their money; that the Court shall have power to protect the rights of special classes of shareholders; and that, given these safeguards, with well-informed opinion and the sound conduct of finance that generally prevails, the public will obtain that measure of protection which the State can afford without an undue interference with the conduct of business?

Clause 29 abolishes a meaningless provision about a minimum subscription, which, I think, is in every memorandum and all Articles of Association, and is rendered illusory; but the Clause requires something, I think, very sensible in its place. It requires that there should be a statement of the purchase price, the amount required for preliminary expenses, the amount of any commission payable, and the working capital required.

I will read the Clause. The Clause provides for the insertion of the following new paragraph: a discount is put on a sound footing. At present, to all intents and purposes, the practice exists, but here the practice is taken, and the limits within which it may be exercised are laid down. Clause 33 requires every company to cause proper books of account to be kept and increases the facilities for shareholders to obtain copies of balance-sheets and directors' and auditors' reports.

Clause 34 requires certain information to be contained in a balance-sheet, including, in the case of a holding company, information in regard to how the aggregate profits and losses of any subsidiary company have been dealt with in the accounts of the holding company. I think there this Committee have come to a wise compromise. They do not lay down absolutely the form of the balance-sheet of a holding company, nor do they unduly restrict the way with which they may deal with either profits or losses of subsidiary companies, but they do provide that shareholders must have from the balance-sheet a sufficient knowledge of whether profits have or have not been earned in subsidiary companies and how the profits or losses are being dealt with. I think that is a very reasonable compromise. Clause 42 is, I think, the next important Clause; it is intended to make it easier for the shareholders to get an inspector appointed by the Board of Trade under Section 109 of the principal Act. It also provides that where the Public Prosecutor, after an inquiry, is satisfied that a criminal offence has been committed, a prosecution shall be initiated at the expense of the State. Clause 44 gives power to compel a dissentient minority of 10 per cent. or less to concur in an amalgamation, subject to an appeal to the Court if the minority think the terms are unfair.

Clause 48 simplifies procedure in reconstruction and amalgamation, and the House will remember that the Committee recommended, in order to facilitate amalgamation, that there should be relief from Stamp Duty. That, the House has already given effect to by the Finance Act of last year. Clause 60 is designed to secure to creditors effective control in voluntary liquidation where a company is insolvent. Clauses 65 to 69 deal with fradulent or improper actions by officers of companies which have gone into liquidation. The most common example that I can cite is the abuse of an officer of a company who has himself a floating charge upon the assets of a company and who then fills up his security by obtaining a number of goods from the company upon credit. That plainly is fraudulent trading, which ought to be brought within the scope of the law. Clause 70 gives better facilities for enabling prosecutions to be undertaken for offences committed by officers of companies in the course of winding up such companies.

Clause 71 is an important Clause. It abolishes any contract or provision, whether in the company's articles or otherwise, whereby a director or an officer of a company is to be indemnified against liability under the general law for any negligence, default, breach of duty, or breach of trust. At the same time it provides that the Court, in determining whether any person ought fairly to be excused for any negligence or breach of trust, is to take into consideration all the circumstances of the case, including those connected with his appointment. In that case, I think we have found a happy medium. It prohibits the custom which has grown up of putting in a clause excusing a director, however grossly negligent he may be, which is plainly a provision which no one would seek to defend, but at the same time the Committee fully realise and lay it down that in the large undertakings of to-day it is obviously quite impossible for a director to do more than exercise a general supervision, that he cannot possibly have detailed knowledge of all that goes on in a business, and that if you attempted to impose such an obligation upon him, you would prevent a great many quite competent people from becoming directors, and at the same time you would probably hold up the whole conduct of a business. That is why the Committee lay stress on the fact that while no one ought to claim complete exemption from liability for all negligence, if a claim is made against a director the Court should take into consideration the whole of the circumstances of the case. Clause 75 provides that an undischarged bankrupt shall not act as director nor take part in the management of a company without the leave of the Court.

Before the right hon. Gentleman gets away from this question of directors' responsibility, will he say if there is any Clause dealing with a multiplicity of directorships held by one man?

Not in the least. I think it would be extraordinarily unwise for this House to attempt to lay down that a man should be a director of only two or three companies. In no walk of life are men of great ability too common to-day, and I think it would be a most unfortunate thing, at a time when we want industry to develop, at a time when we want to get industries rationalised, as the phrase now goes, at a time when we want the driving power and experience of able men in such developments—I think we could not do a more futile thing than to say a man can only be a director of one or two companies.

The point I was raising was the question of directorships held by one man in as many as 50 or 60 different companies.

It is very easy to make that kind of criticism, but I am sure the House will want to approach the consideration of this Bill in the same way as the Committee did, and that where you have a recognised evil against which the public ought to be protected such protection should be afforded, but, for Heaven's sake, do not let us go and, because of prejudice or of some bad example which may be cited, fetter the necessary elasticity with which businesses ought to function.

The hon. Member will have an opportunity of moving Amendments, if he wishes, in Committee on the Bill. Now I come to Clause 83, which deals with share hawking or pushing, and here again, while the House, I am sure, would want to deal with an evil which has been very commonly recognised, they will want to deal with it in a way which does not put a handicap upon reasonable business. The proposal in the Bill is that, first of all, the hawking of shares from house to house is absolutely prohibited. No one will be able to engage in that enterprise at all. Then strict provisions are laid down in regard to written offers of shares which are not quoted on recognised stock exchanges in Great Britain, and that is exactly what we want to get at. In such cases the offer must be accompanied by a signed statement in writing, giving ft number of particulars. He has to state whether he is a principal or an agent; he has to give particulars of the capital of the undertaking, of the rights of shareholders, as to whether the shares are fully paid; he has to state what the past dividends are, and that would puzzle him in a good many cases; he has to say what debentures there are; he has to give full particulars of the directors; and he has to say whether or not the shares are quoted on any recognised stock exchange in the world and, if so, where; and, further, special particulars are required of gentlemen who deal in those mysterious things called units. They have to give a number of further particulars, which will state exactly what the unit is, how it is composed, how divided, and so on.

I think my hon. Friend the Member for Chislehurst (Mr. Smithers), who has taken a very active interest in all these matters, would agree that a fairly tight net has been drawn here, and that comparatively few of these sharks will get through; and, at the same time, I think we have taken care to draft these provisions in a form which, while preventing any fraudulent person from exercising his business, will not interfere with legitimate transactions. Clauses 91–106 are Scottish Clauses, and the Lord Advocate and the Solicitor-General for Scotland will oblige if anyone desires to put questions on them. We propose that when this Bill is through, it shall be followed immediately by a consolidating Bill.

That depends on how expeditiously we can proceed. A consolidating Bill does not take up a great deal of the time of the House, and there should be no delay, and we shall be ready, when this Bill is through, to go forward with the consolidating Bill. We can then fix a date, by Order-in-Council, at which one consolidated Act will come into force. Clause 83, however, will come into force as soon as Parliament has approved the present Measure.

When the right hon. Gentleman was talking of hawking from house to house, did he include the little shopkeeper?

I am advised that a shop is a house within the meaning of the Act.

Does the Bill exclude hawking altogether? Why not include offices and places of business?

I would rather not enter into Committee points. We have got to be very careful in the drafting of this provision, otherwise you may prevent people whose business it is to deal in shares from conducting their business in the City. If you put in a Clause to say that no office shall be included, it will probably prevent a stockbroker visiting a jobber in his office. I do not like to disagree on the law with so great an authority as the hon. and learned Gentleman, but I have been at pains to be advised in this matter as to exactly what would be the legal effect of the kind of words he would suggest, and it is because we find that a wide drafting of that kind would prevent the perfectly legitimate business which is carried on in every city in the country, that we have drafted a Clause in the form in which it is in the Bill. I think I have drawn the attention of the House to the more salient features of the Bill, and I think they will agree that it is a practical Measure and that we owe a debt of gratitude to the Greene Committee.

I beg to move to leave out from the word "That" to the end of the Question, and to add instead thereof the words: main features which we think ought to have been observed in dealing with a large and important revision of Company Law. Generally speaking, the Opposition welcome very much the attempt to deal at this stage with a general reform of Company Law. Probably no one knows better than the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) that in the last 10 years there has been considerable agitation and pressure for a reform of the Company Law, and the views we express to-day are by no means to be taken as meaning that we are hostile to reform.

We think, indeed, that it is overdue, and our real point is that in dealing with such an important revision of the law, the Government has missed a great opportunity. While it is argued that it is advisable, before proceeding to consolidate, to have an amending Bill, that kind of procedure makes it difficult for the lay Member of the House to follow the discussions in detail. Although a Consolidation Measure is promised by the President of the Board of Trade, he has undertaken to operate at once a Clause of this Bill which is over two and a half pages in length, but it will not be issued separately. The Act will be placed on the Statute Book, and the lay mind who wants to satisfy itself as to the Company Law will have to buy the new Act in order to be informed of Section 83, and he will be confused about the whole position. It would be much more satisfactory if we did not get legislation by reference. Mr. Justice Eve, than whom I do not suppose there is any better authority on Chancery Law, said before the Greene Committee that legislation by reference is the bane of legislation, and we feel that, although the President of the Board of Trade has partly met our case by promising an early Consolidation Bill, we are justified in having included the subject in our Amendment.

As to the missing of the opportunity, I want to put this very clearly to the President of the Board of Trade. There is a strong feeling in the minds of the shareholding public, as well as of the general public, that the whole administration of our Company Law wants overhauling. The Greene Committee are probably right when they say that a large measure of the present law forms a, good basis for administration, but when we look at the details of administration we find that there is a Registrar of Public Companies who is also concerned with the Stamp Department of the Inland Revenue. There is a Department at the Board of Trade also performing certain functions concerned with the administration of Company Law. The business of industrial insurance is now placed under a separate Statute and carried out under the direction of a Commissioner, who, in another Department, is also responsible for the administration and supervision of all the banking and trading functions of the industrial provident societies, and of trade unions, covering finance running into hundreds of millions of pounds a year; he has also certain powers over procedure which are not to be found in the Company Law. If the three Departments were brought together, either under one head, or under one Minister, and properly co-ordinated, we could have an administration of Company Law which would be of extraordinary value to the business of companies and, in particular, to the safety and security of the shareholders.

The President of the Board of Trade is not without precedents in this matter. Even some of the smallest States in our Dominions have given a lead. Let me refer, for example, to a Statute like the Ontario Companies Act. All the corporate trading bodies are concentrated under one Act of Parliament, under one Registrar, and the whole thing is economically and efficiently administered and with very necessary safeguards for the public and the shareholders. Whether it is the President or his advisers or the form in which the case was put to this Committee for consideration, I do not know, but a great opportunity has been missed for a real consolidation and an overhauling of the administration, and for really satisfying that growing feeling in the public mind that something needs to be done.

The President of the Board of Trade must have read the letters in the "Times" in the last few weeks from those who seem to be anxious to form a kind of national shareholders' association, because they can see no adequate protection in the Statute, and do not anticipate that there will be adequate protection in this Bill. I hope that the President of the Board of Trade will take note of that. I do not suppose it is possible to persuade him now to make any great change during the passage of this Bill, but I do ask him to take into consideration the co-ordination of the administration of the various Departments which control or administer the Statutes governing various corporate trading bodies in the country. The main point we have in mind in moving the Amendment is that while the recommendations of the Greene Committee have secured certain desirable reforms, which are embodied in this Bill, they fail to give what we are insisting upon, and that is a much larger amount of publicity as to the operations of the great number of companies in this country. Last week I did not find myself in agreement with the right hon. Gentleman the Member for Carnarvon Boroughs in regard to the "Yellow Book," but when I plead for publicity in this matter, I am in agreement with those who compiled that book. The whole series of reports of Government Departments, which were received by the right hon. Gentleman from 1916 to 1922, laid down the urgent necessity of publicity, and for more reasons than one. What the President of the Board of Trade has said about the necessity of being extremely cautious of what we may do for fear of restricting business and interfering with the elasticity of commerce and the like, is, in the words of a well-known chartered accountant, who is the vice-president of the Incorporated Society of Accountants and Auditors, "Sheer humbug."

I put four reasons why there should be more publicity. First, it is in the interests of the shareholder; there is not anything like enough publicity for the safeguarding of the shareholder. Secondly, there should be more publicity from the point of view of the traders who have to enter into contracts with these various companies. After all, these companies have a privilege conferred upon them when they register; they obtain the privilege of limited liability; they can trade and incur liability, but only pay up to the extent of their shareholding. The exact financial position of these companies ought to be so publicly known that every legitimate trader who is going to enter into a contract with them should reasonably know what are their bona fides, and what are their possibilities.

Thirdly, in the interests of the general public there should foe more publicity. When I talk of the general public, I shall be reminded, as the Greene Committee has mentioned, that out of the 85,000 companies registered, 75,000 are private companies; but most of the other 10,000 public companies are very important, and it is plain from the Report of the Standing Committee on Trusts, and of the sub-committees under the central Profiteering Act, and from other documents, that these companies more and more tend, by wholesale amalgamation and interlocking, to set up monopolies. Some of the most important of these companies are connected with the bare necessities of the social life of the country. No one has found that out more than the right hon. Gentleman the Member for Carnarvon Boroughs, and nobody who has read the Reports of the Standing Committee on Trusts and the sub-committees of the central Profiteering Act, can fail to understand the urgent necessity for wider publicity in that regard.

The fourth point I urge for publicity is the most important of all at the present juncture. We get a great deal of discussion nowadays about peace in industry. I suggest that with the enormous number of weekly wage earners who are employed by corporate bodies, and the large number of questions about wages and general conditions of labour which come up in connection with those bodies, that we are not going to get a reasonable basis for peace in industry unless the worker who is concerned in the negotiations can tell whether he is being played a straight game in the accounts of the people who employ him. It is impossible in the great majority of cases for those who are desiring better conditions, or even for the more expert people who negotiate on their behalf, to be able to ascertain whether the statements made as to the position of these companies are really correct.

I thank my hon. Friend; the case of the mining industry is a special one in point, if we are to get a better atmosphere into the discussions about peace in industry—and I have nothing to do with the particular discussion going on at the present time. I say quite frankly that the movement with which I am connected is not one which works for co-operation between capital and labour only, it aims to substitute the co-operation of the whole community for the co-operation of the two separate sections of capital and labour. If there is to be any better atmosphere in the discussions about peace in industry it is absolutely vital that the workers' side in those discussions should have a reasonable opportunity of knowing the financial position of those with whom they are dealing.

Those are the four general points I have to make, but I would like to put one or two detailed points in support of my case for the greater publicity for which the Opposition are asking. I said just now that I thought the Greene Committee had done some good, and there is no doubt the Amendments with regard to prospectuses and the like which the President mentioned will be of advantage and we are thankful for them, but I think even the question of prospectuses is not yet completely satisfactory. For example, we ought to make it compulsory to state in a prospectus the actual profits for each of the three years before the issue of the prospectus—if the company has been running for more than three years. I do not think hon. Members opposite will object to that. Any good company making an issue of capital does that already, and if it is possible in the case of a good company surely we ought to lay it down as standard for the protection of the general public.

The next point I come to relates to the actual form of the accounts. Unless the Bill lays down a really satisfactory form of accounts, we shall not get that publicity which is so desirable from our point of view. Lest it be said that we are asking something which is impossible, I will not put forward my own view alone, but I will give the view of one who, I think, will probably be regarded as an expert. I will quote from a paper read recently before a large and important body of accountants by the city editor of the "Daily Mail," Mr. Kissan; I am sure the views of such an authority will be accepted by hon. Members opposite. He said: who are engaged in wage negotiations are most suspicious. It leads to the hiding of secret reserves. For the life of me I cannot understand how any accountants can sign balance sheets as correct unless they can show to the public at the same time what is the actual reserve position. Under-statement of assets leaves the road open, in my judgment, for very improper action on the part of directors and people "in the know." Again I am most anxious that I should not be regarded as giving just a layman's view. I will quote Mr. Kissan again: Interruption. ] I am always prepared to take corrections on this matter from the hon. and gallant Member for the Everton Division (Colonel Woodcock) who, I know, has a very wide experience of dealing in stocks and shares, but I am persuaded from my reading of the financial columns of the Press, and watching the prices of shares in certain companies over a given number of months, that there are people with inside knowledge of the position who make very great profits out of that knowledge, a knowledge in which the whole investing public are entitled to share, and would share if proper publicity were given to the true state of the company's affairs.

I suggested that if they wanted to wrap it up no one could unwrap it.

On that I would like to say that it all depends on the auditor—and I may have a word to say about that—and the form of the certificate that would be required. So long as we allow accounts to be presented in the present form I agree that we could not stop dishonest directors or secretaries from concealing the true position, and that is why we complain that sufficient provision is not being made in the Bill to secure the publicity of all that is absolutely necessary in the interests of the public.

How does the hon. Member propose to stop this information, from getting out? Whatever legislative provisions we may make it will be impossible to stop all leakages.

I am asking that we should give proper publicity to all the information, instead of holding the information over for the sake of a privileged few, who are thus put in a position to unload their shares at the right time for their own profit. When hon. Members say that it is not possible to do this, and when the President of the Board of Trade talks about the difficulty of dealing with this matter because of the danger of interfering with legitimate business activities, I would refer them to the laws which compel the trading body with which I am connected to submit accounts of this kind. I have the actual form of accounts here, and I could put it in as an exhibit. This is a form of accounts which has to be submitted by societies who are dealing with a huge turnover, and conducting banking business, finance, and the production and distribution of goods up to a total of hundreds of millions a year, and there is not the slightest reason why any company which obtains the privilege of being incorporated under the company law should not be required to submit at least approximately as public a statement as that which has to be furnished by these other trading organisations.

Another point I wish to make is that I have been rather astonished to see that there is nothing in the Bill about the position of secret reserves, nor any attempt to prevent the hiding of information, because in the questionnaire which was sent to me, as it was sent, I suppose to all other witnesses before the Committee, this particular point was specifically referred to, and evidence was also taken on the point. Then I have a few words to say about profit-and-loss accounts. The presentation of a profit-and-loss account is made compulsory by Clause 33, but the information which is to be given is not defined. Why should it not 'be defined? Why should not we lay down the form of profit-and-loss account to be submitted for the information of shareholders? I have had a rather voluminous correspondence with accountants and other people who are interested in this particular matter, and one of them, wrote to me something like this:

That is not necessarily true, or advisable in the interests of the shareholders. It is the advice of one man.

I would like to know from the hon. and gallant Member why it is so impossible in the case of a number of companies dealing sometimes with only one, two or three commodities in the world's markets, when we are compelled to do it in the case of an organisation which has a turnover of £86,000,000 a year and covers every class of commodity and deals in almost every world market.

And going into every class of business whether they are members of your co-operative society or not, which is absolutely unfair trading.

That is quite an irrelevant point, and if I were to attempt to reply to it I fear that I should be ruled out of order. I am putting the point that an organisation with a turn over of £86,000,000 a year and engaging in banking, finance, shipping and every class of business—

No, that is the weakness of the hon. Member's case. His concern may trade all over the world, but it does not deal with every kind of business. There are immense numbers of very complicated and important businesses of which, if I may say so with respect, co-operators have never heard.

5.0 p.m.

I should like to know the exact type of business that I have never heard of! If there is any kind of business that co-operators have never heard about I should very much doubt whether they are businesses which will bear examination.

I am not speaking in a, hostile sense, because I sympathise with a great deal of what the hon. Gentleman has said. In spite of the magnitude of the co-operative business, I do not think co-operators have yet indulged in mining. [An HON. MKMBEE: "Yes, they have!"] I am referring to gold mining, which is a special kind of work, and it is very respectable and remunerative. There are other kinds of businesses which co-operators have not yet indulged in.

I should have thought that, judging from the experience of some companies in regard to gold mining, that the more publicity obtained about them the better it would be for everybody. Co-operators do own a coal mine, and they happen to hold a very considerable interest in another colliery company. In these cases we have to give the same information about that particular business as we have to do about the other branches of our trade. I think the President of the Board of Trade is quite wrong when he says that what I have suggested would interfere with the elasticity of business and the development of commerce, because we have proved conclusively that that is not the case.

We sometimes come across a case in which a man has deliberately joined the shareholders of another company so as to assist another company in which he has a large interest by raising agitations in the first company.

We have many applications of that kind, but that does not prevent us giving publicity to our accounts. We have to grapple with all these things and give full publicity, and in 999 cases out of 1,000 we show that a £1 share is worth a pound and not less and that is why the public feel safe in belonging to a concern which gives proper publicity to its accounts. In recent years there has been a reorganisaiton of the capital of certain public companies like Vickers and Armstrong, where very drastic capital levies have been made upon some of their investing shareholders, and I think much of that might have been avoided if there had been sufficient publicity in the accounts in early years because then the shareholders would have required earlier action to be taken.

We want this Bill to deal not only with the general publicity of accounts and the issuing of a proper statement showing profits and losses, but we want a proper public audit. Why should we not have balance sheets signed in the form used under the Industrial and Provident Societies Acts, which is as follows: Interruption. ]

I rather deprecate these continual interruptions on the Second Reading of the Bill.

I do not wish to run away from the point which has been raised. This is the kind of information I sometimes find on the auditor's certificate: draw attention to the question of inspection. There are certain provisions in the existing Companies Act and in this Bill with regard to inspections where it is suspected that things are going wrong. I cannot help thinking that if you would make the clauses and sections in the Companies Statute as strong in this respect as they are in the Industrial Insurance Act of 1923, or even as strong as they are in the Industrial Provident Societies Act of 1893, there would be a considerably increased safeguard for the shareholders. What happens? If you have shareholders who are suspicious about the position of the company, they will be very chary about asking for information or for an inquiry if they are likely to be mulcted in the costs of that inquiry. Any amount of frauds are allowed to slide simply because the people concerned do not want to take the responsibility of calling attention to them. I do not know that it is necessary to put in detail in the Bill that these cases must go to the Director of Public Prosecutions. I should have thought it would have been better to follow the ordinary way when the Department have decided to prosecute. If the Director of Prosecutions is to proceed only at the expense of the Board of Trade I do not think that will be satisfactory. In the case of the Industrial Assurance Act, you give full power to the Commissioner if he thinks malpractices exist to initiate an inquiry in the interest of the public, and he can, if he thinks it just, order the cost of the inquiry to be laid either upon the directors or officials of the company past or present. It makes a great deal of difference in that way whether the procedure for inspection is going to be efficient in cases where there are malpractices, or indeed undertaken.

Take the cases which have happened with regard to private companies. I hope that some of my hon. Friends who follow me in this Debate will deal more fully with the case of private companies. The inspections ordered under the Industrial Insurance Acts and the Industrial Provident Societies Acts have revealed malpractices under the Companies Act which would never have been revealed but for the powers of inspection given under those Acts, and what has been brought to light is that private companies are used with perhaps only two shareholders or thereabouts to cover the leakage of money subscribed under an Industrial and Provident Society. On this point I will quote from the London "Times" of the 12th November, 1927. This is a quotation from the report of Mr. John Fox on the House Coal Association:

I beg to second the Amendment.

I feel considerable diffidence in dealing with this very complicated subject, and I am quite sure that I shall have the indulgence of the House in attempting to cover a question so fraught with difficulty. In common with many other hon. Members I have studied this Bill and have considered it in connection with the existing Acts. I cannot pretend, however, that even after my study of this question I understand the position in all its details. Therefore if in the course of my remarks I err in regard to matters of fact I am sure I shall have the indulgence of hon. Members. Our objection on this side of the House to this Bill is that it fails to deal with the principal abuses which arise at the present time in the conduct of companies. There are 108 Clauses in this Bill and most of them deal with subsidiary questions. On the other hand there are large questions in which the interests of the shareholders are very often unfairly dealt with by those who control great companies and these questions are left entirely alone by this Bill.

The first point I want to mention is the case of directors trafficking in shares of their own companies from inside knowledge. My hon. Friend who so ably moved this Amendment dealt with the case of the imperfect information supplied in the balance-sheets, and I think he completely made out his case. I would only like to add that I have here a word or two from an auditor who is a great friend of mine who wrote me as follows:

It is quite obvious that some days—or it may be weeks, or even, in certain cases, months—before the facts of the company's trading during the year are made known to the shareholders, the directors, and particularly the managing director, have a very considerable knowledge of what is taking place, and some directors use that knowledge to their own advantage. They may have a large number of shares themselves, and they may unload them at a time when unfortunate information with regard to the company is not known; or, on the other hand, they may know that the figures are going to prove very much better, and may take that opportunity to buy shares. But what some directors do is very much worse than that. They carry out speculative manipulations on the Stock Exchange, not dealing with shares which they actually possess or with shares which they mean to buy, but hoping to profit by the rise or fall which they know will take place when the actual figures are disclosed. So far as I am aware, there is nothing in the Companies Acts which deals with that situation, and I see nothing in this Bill which in any way attempts to deal with it. It is a grave evil, and I venture to suggest that legislation should be passed for attacking it. The fact is, of course, that the directors of a company are really trustees for the shareholders, and, in so far as they attempt to feather their nests by manipulations and by trafficking in the shares from inside knowledge before the facts are made known, they are really committing a breach of trust, and I see no reason whatever why the law should not be strengthened to enable that breach of trust to be proved against them.

The second point to which I desire to direct attention is one to which reference has already been made by the President of the Board of Trade. I will deal with the question in two parts. The first is the differential voting rights of different classes of shareholders. The President of the Board of Trade seemed to think that the growing evil presented by that fact was met by insisting upon full disclosure in the prospectus. I venture to think that it is not, and I hold that view because I very much doubt whether the public can be fully seized of the facts from reading a very long prospectus. Within the last few hours, before I came down to this House, I have received, in common with a great number of other people up and down the country, two prospectuses, both dealing with preference shares and ordinary or deferred shares. In the one case there were preference shares of £1 each and ordinary shares of 5s. each; and in the other case the preference shares were £1 and the deferred shares were 2s. The ordinary person, reading that, might easily think that, in so far as there is the evil of differential voting rights for different classes, the 2s. share was the one which fell most within the category of evil; but, when these prospectuses are read carefully, it is found that in the first case the £1 preference shares and the 5s. ordinary shares were on a footing of equality in regard to voting, so that in that case the voting rights given to the ordinary shareholders were four times the rights given to the preference shareholders. In the case of the 2s. shares, on the other hand, five deferred shares were required to give a voting power equivalent to one preference share, so that it was actually 10s. against £1, and, therefore, it was only twice the amount in that case. I venture to think that the ordinary public will be completely confused unless additional guidance be given to them, and I do not think that the mere fact that it is necessary to state the precise particulars in the prospectus will be sufficient guidance for the public.

Of course, the real fact is that there is no limit to the extent to which this process of differential voting rights can be carried. I spoke just now of differential rights for ordinary or deferred shareholders amounting to four times the rights of the preference shareholders, but we know quite well that in many cases it goes far beyond that. It goes so far as to give to 1s. shares equal voting rights with £1 preference shares, and even that is not the limit. Unless there is going to be some legal protection for the votes of the preference shareholders, there is no reason why we should not have 1s. shares standing on an equality with £10 shares; and I know nothing to prevent, though perhaps I may be wrong, a prospectus ordaining non-voting shares. That may seem to some hon. Members a ridiculous proposition—

I accept the correction as to that, but, of course, hon. Members know quite well that in America for a very considerable time non-voting shares were quite common, and laws were passed in the United States to prohibit them. If I am assured that they are prohibited in this country—

That is my point, and I thank the hon. and learned Member for confirming it. I was not aware that non-voting shares were in actual existence in this country. I would ask the representative of the Board of Trade to say whether it is their intention to stop such a flagrant abuse as non-voting shares. It has been stopped, as I have pointed out, by legislation in America, and I should be glad to hear why, under the provisions of this Bill, such an extreme form of abuse as non-voting shares will be allowed to continue to exist. It would, of course, be perfectly easy to meet this point. It would be possible to go as far as insist-upon an ad valorem vote. I do not know if that would be going too far, but it would be very simple to insist upon either an ad valorem vote or, at any rate, a vote not far from the ad valorem figure.

Closely allied to this question of the differential voting rights of different classes is the differentiation of participation in profits. There, again, there is a very great distinction between different companies. There are many companies—one of which, a very large and almost national institution, will at once occur to the minds of hon. Members—in which there are holders of 7 per cent. and 8 per cent. preference shares, and, at the same time, ordinary shareholders. There are several millions of preference shares, and several millions of ordinary shares largely held by the original family which promoted the concern. It may not be unreasonable that, where the preference shareholders are protected by getting 7 or 8 per cent., any additional profits should fall to the millions of shares held by the ordinary shareholders, but what we are confronted with—

I prefer not to mention any names; I am speaking on general principles.

If the hon. Member was referring to Messrs. Lever, his last statement is hardly correct.

I will not go into names one way or the other; what I am trying to point out is that where the preference shares—whether they are confined to their 7 per cent. or whatever it may be, or whether they are participating—have behind them a really considerable block of ordinary shares, there is nothing particularly unreasonable in the position; but where the preference shares have behind them only a very small amount of ordinary shares, and the ordinary shareholders take all or a very large proportion of the profits after the fixed interest on the preference shares is met, then I venture to suggest that we have a very serious position. It may be argued that it is quite reasonable that the people who really control the business should take what is left over after paying the fixed interest to the preference shareholders, but I think it is forgotten that such a proceeding may very well produce quite undue action on the part of the controllers of the company. They are tempted to take utterly improper risks. If those risks fail, the amount of money that they lose is very small, but the amount of money that the preference shareholders lose is very large. If, on the other hand, these speculative risks succeed, the amount of money that the preference shareholders make is very moderate, and the amount that the holders of ordinary or deferred shares make is very considerable, and utterly out of proportion to the amount that they have subscribed. Shares of this kind are what used to be known as founders' shares, but founders' shares fell so much into disrepute that they are now known by another name. The principle, however, still exists, and I think provisions for dealing with it ought to have found a place in this Bill. It may be said, of course, caveat emptor —that the person subscribing to a company, with the facts before him in the prospectus, must take his own risks; but, in view of the great difficulty which the investing public must find in really understanding the full nature of the facts of the prospectus presented to them, I think the State ought to do more to protect the investing public against the unfair participation in profits which takes plane in such concerns as I have described.

There is another very large issue, which I do not think is adequately covered by this Bill, and that is the question of interlocking companies. So far as I can see, this Bill only deals with the position, in Clause 34, by insisting upon certain information with regard to the profit and loss of subsidiary companies, and it seems to me that something very much more than that is required. There are, as I see it, three different kinds of interlocking of companies which have to be guarded against. In the first place, there is the case of interlocking companies proper, where the shares of one company are actually held by another company. The danger of that is that the directors will manipulate the finances of the one company at the time of the balance sheet of the other, so as to present an improper picture of the situation.

Does the hon. Member mean where all the shares are held by another company?

Either all the shares or the principal proportion; I think the principle remains the same. They are able, where they hold a very large number of shares, to manipulate the price at which the shares, stand in the market at a given date—

The hon. and gallant Gentleman is mistaken. Where the bulk of the shares in one company are held by another company, and perhaps one or two private shareholders, it is perfectly possible, by arranging private transactions in the sale or purchase of shares, to get an artificial price. My contention is that, where companies hold one another's shares in this way, it is perfectly possible to rig the prices of the shares so as to present a favourable balance sheet of Company A by rigging the share values of Company B, and, when the time comes to present the balance sheet of Company B, to do the same kind of thing with regard to Company A.

Yes, window dressing at the different periods of the year at which the balance sheets of the different companies come under observation. That also, ought to be dealt with in the Bill. Then there is a kind of interlocking which is not strictly of the same nature, that is where the companies themselves are not interlocked, but the directors of one company are the same as the directors of another. I will not go as far as one of my hon. Friends behind with regard to directors holding directorships in different companies, but, at the same time, the point is in some respects an important one which cannot be altogether ignored, because if the directors of one company are also, directors of other companies, it is quite possible for them improperly to use their position in one company to affect their position in another.

I will give an illustration which came to my personal notice. A friend of mine has to supply certain requirements for a shipping company. He was instructed to supply certain furniture, and he was told he could get the material he would re- quire from another company. He did this for a time, and went forward with the contract, but he discovered that the price he was paying was very much above the market price. Thinking he was serving the interests of the shipping company he said, "If I am allowed to purchase my material elsewhere, I can very much reduce the price of the contract." He was told "You do what you are told." Why? Because the directors who were concerned with the shipping company were also concerned with the company from which the material was to be obtained, and they took care that he bought it very much above its market value. That is carried on to a large extent and it works both ways. One company supplies another, or some intermediate person, who supplies the other company, with material either above or below the market rate. A famous illustration to which we on this side are accustomed to draw attention is the selling of coal by a colliery company to another company often very much below the market price. It suits them to do this, because they are also directors of the companies that use the coal, and it makes no difference to them what the figure is, but it suits their purpose in order to effect the relationship with the miners.

A third class of what is in effect interlocking comes about not through the interlocking of the companies themselves, or even of the directors, but what is almost equivalent, through the servants of the company, managers who are not directors, and heads of departments. I am told that is very largely prevalent in the motoring industry. As the result of all this shady dealing, whether it comes about through the companies, through the directors, or through their servants, corruption has become prevalent, and all types of people take improper, corrupt action, thinking that where their masters and superiors are not above dealing improperly, they might take a similar course. This matter should have been dealt with in the Bill, and attention should have been paid to it instead of allowing it to go with the single reference in Clause 34.

In the next place, I cannot help thinking that there is considerable latitude still left to directors to get off on the plea of ignorance. I notice the great number of cases in various Clauses where only wilful misrepresentation is punishable, and though I am aware the Companies Acts have tightened up the responsibility of directors, I think even further steps might be taken. The President of the Board of Trade said if you place further burdens upon directors no one will be willing to be director of company. I do not think that is altogether true. Directors do not serve for nothing. They make a very comfortable income out of their directorships, but I think they sometimes take their directorships too lightheartedly. They give their name and take their money, and perhaps are only consulted upon certain issues. They ought to be made even more responsible than they are by company law, and if it is desirable that people should be consulted who have not the time really to go fully into the whole transactions, they ought to be consulted not as directors but as consultants, or something of that kind. The public in that case, if they saw that some eminent man, whom they knew to be specially interested in some of the things in which the company deals, was a consultant, would not be misled to the extent they are when they read that he is a director and imagine that their affairs are safe in his hands. One word more with regard to disclosure generally. There is necessity for a great deal more disclosure than we have at present. In particular, there are the questions of the remuneration and expenses of directors and expenses of management and that kind of thing, and it is possible under the present rule to hide this away in a way I think quite indefensible. There is no real ground why a great deal more accurate information and more true disclosure might not be insisted upon.

In conclusion, I desire to make one general observation. When companies were first formed they were, of course, businesses grown a little too large for one man entirely to finance, but they were in effect still the business of two or three men clubbing together and pooling their resources. Time has gone on and the position of companies has almost entirely changed. Many of these concerns are national in extent and could not possibly be run except by the pooling of the resources of thousands and tens of thousands of people. The rules and regulations by which these companies must necessarily be guided and ordered are quite different from the rules which may have been adequate in the days when a few men clubbed together and were ultimately given the privilege of a limited joint stock company. That being so, I believe it is essential that we should impose a new set of regulations in order to safeguard the interests of the investing public, and the general public who are served by these companies. It may. be said, although I have pointed to a good number of evils, I have not suggested remedies in all cases. I think the House will appreciate in the first place that this is not the occasion to move Amendments. I have no doubt my friends will put down Amendments dealing with some, if not all of the points I have mentioned. Over and above that, there is this to be borne in mind. Our idea on this side is that the time is coming when many of the largest industries, which are really national in character, cannot continue to be run as private concerns, and they will ultimately have to be nationally controlled and nationally run. Hon. Members opposite for the most part dispute that and maintain that they can be run efficiently, honestly and satisfactorily under present conditions of private enterprise. Therefore, even if I were not prepared to show exactly how the dangers and abuses to which I have pointed can be met, I do not think hon. Members opposite could altogether object, because it is they who are defending this system of enterprise, and it is therefore up to them more than to us to demonstrate that a system can be produced in which these abuses do not arise.

I rise to support the Second Reading of the Bill. Whether we look at it from the point of view of shareholders, directors or other officers, or creditors of companies, or legal or other advisers of directors or other people, we ought to welcome it. We are fortunate, indeed, that it reaches us in such an advanced stage. The whole area of company legislation has been most carefully reviewed by the Departmental Committee. After the Bill was in draft, I believe, numerous representations were made to the Government by societies interested in it, and the Government had the advantage of those representations. Only last year, the Bill was considered in another place. As the result of those considerations, it comes to us in a very advanced condition. The study of it has been greatly facilitated by the marginal references which have been put into it, enabling us to find out very quickly where the Clauses originate. We are going to be helped in Committee by the White Paper showing exactly how the Sections of the existing Act are amended. To those who have approached the consideration of the question from the point of view of the recommendations of the Departmental Committee, it would have been considerable assistance to many of us if, either in the general Memorandum or in some White Paper, we could have had a list of the numbers of the paragraphs in which the Departmental Committees make their recommendations, with a corresponding list of the Clauses of the Bill, showing how those are carried out. I have gone through the Report of the Departmental Committee very carefully, and I confess—it may be my fault—that there are one or two of their recommendations which I have been unable to trace in the Bill. It might have saved some of us a great deal of trouble if we could have such a list as I suggest showing that certain recommendations are carried out in particular Clauses of the Bill, and that certain other recommendations are disregarded. Possibly, we may have something put before us before the Bill is in Committee.

The Amendment under discussion at the present moment draws attention to the extreme example of legislation by reference. What is the alternative? Either you can amend a particular Bill by setting down particular Amendments to it, or you can repeal the existing Act and substitute something fresh for it. Suppose the alternative suggestion had been adopted, and the Government had brought in a Bill repealing the existing Statutes, and put before us an entirely fresh Bill incorporating a very large number of Amendments. I venture to think that that would not have been a very convenient way of bringing those Amendments before the House. I cannot help feeling that the method which the Government have adopted, the putting down of Amendments in black and white, and the subsequent bringing in of a Consolidating Bill is far and away the more convenient course. It will enable those who are familiar with these questions, and who have to deal with them from day to day, to go into the various amendments of the law before the new Consolidation Bill actually comes into force.

The hon. Member who moved the Amendment drew attention to the need for publicity. I think there are many of us in all quarters of the House who would welcome a greater amount of publicity. The Bill which is now before us will give a very great deal of publicity. The particular instance to which the hon. Member drew attention was the case of prospectuses. He said he would have liked to have seen a statement in the prospectus showing the profits for the last three years. I think that was his point. The Bill which we are now considering requires the rates of dividend paid during the last three years to be disclosed to the public. It is a very small point indeed as to which is the more useful of the two. Personally, I think that the average applicant for shares is far more likely to be confused if he is given a number of figures and has to work them out himself. He wants to know what dividend he is likely to get. That information you can give by showing the capital and the rate of dividend paid upon it.

Is the hon. and gallant Gentleman aware that on many occasions the investing public have been misled by statements of dividends in prospectuses, because the dividend has been paid prior to the new issue out of reserves and not out of profits? Is it not fairer to put in the actual profits of the company?

That, I say, is a comparatively small point of detail which, no doubt, we shall go into very fully on the Committee stage of the Bill. There are arguments on both sides, I agree. The Amendment naively confesses that the method adopted will make the law more unintelligible. The intelligent criticisms we have had this afternoon give the lie to that part of the Amendment. The Bill proposes a very large number of Amendments of varying degrees of importance. There is only one Amendment that is to be put into force at once, and that is Clause 83. I cannot help feeling that perhaps it might have been wiser to put that Clause in a separate Bill, seeing that it is to come into force at once. However that may be, it is a comparatively small point. I do not want to go into any detail concerning what I may call some of the minor improvements contained in this Bill. For instance, such questions as the new form of special resolution, minimum subscription, abridged prospectuses—a very important question—and such questions as redeemable preference shares. The hon. Member for West Leicester (Mr. Pethick-Lawrence) drew attention to a number of points, with some at least of which I agree, which he thought might be improved. We shall look with interest to the cure which he will put before us in the form of Amendments. It is one thing to point out weaknesses in our company law, but it is quite another thing to provide means for dealing with them without doing a grave injustice to a number of honest men.

There are one or two entirely fresh questions dealt with by this Bill, and I think one of the most important is the question of subsidiary companies. There has been a great development in this type of company practice during the past few years, and this is the first attempt, I think, that has really been made to deal with this problem. We might have a holding company holding, let us say, all the shares in the subsidiary company, and it would be comparatively easy to amalgamate the balance sheets. But we might, perhaps, have the case of a company that holds all the ordinary but none of the preference shares. There, again, it is fairly easy to amalgamate the balance sheets, but it all depends on the extent to which the subsidiary company is profitable or not whether it is easy to give a fair picture by amalgamating balance sheets. In subsidiary companies, where there is a variety of different classes of shares, it is almost impossible, I think, to give any satisfactory amalgamated balance sheet. I am very glad, therefore, that the Departmental Committee turned down that particular suggestion.

One or two other Clauses deal with this important matter, which, I think, when we get to the Committee stage will require very careful investigation. The only other important point with which I would like to deal—I do not wish to trespass too long on the patience of the House—is the question of deferred shares which has recently become more import- ant. The hon. Member pointed out that it is by no means a new problem. We had it years ago in the form of founders' shares. There are two difficulties: first of all, the question of the division of profits, and, secondly, the question of voting rights. The question of voting rights is by far the more important. What happened in regard to the old founders' shares? They were very popular for a time, but gradually, as the public realised that the vendors were getting more and more greedy, the interest of the public in the other shares of such a company waned until it became almost impossible to issue founders' shares. They have recently been revived in the form of deferred shares, but there is not the least doubt that, as far as that is concerned, these, deferred shares, if carried on in that way, will become equally unpopular with the founders' shares. Either you can issue them entirely to the vendors or promoters, or you may issue them to applicants for ordinary or other shares in the proportion of one deferred share of a comparatively small amount in return for an application for a very large number of other shares; or you may use both methods.

We have to be very careful if we are going to deal with this problem at all. We have to remember what the Departmental Committee has pointed out, namely, that we do not want to interfere with honest transactions if we can possibly avoid it. It seems to me that if we are to deal with this problem, there are one or two things, at any rate, which are rather worth investigation. I will not put it higher than that at the moment. It is practically universal that these shares are of small nominal value. Though, of course, there is no objection to shares of a small nominal amount, I cannot help feeling, where these small nominal amount shares have got these. excessive rights, that it might possibly be a sufficient cure, or one of the cures, to provide that all the shares of the company should be of the same nominal value. It is difficult to see how that would really interfere with all honest transactions. It would interfere, I believe, very greatly with some of the evils of the old founders' share or deferred share. In many well-run companies that are prosperous, the preference shareholder has no right of voting as long as the preference dividend is paid up-to-date, or unless there is a special resolution for winding-up or for the disposition of the company's property in a general way. It seems to me that it might be possible to proceed on those lines. It is most important not to introduce any fresh principle in dealing with this matter. Unless and until shares ranking in priority to deferred or founders' shares have received a fixed dividend—if they are entitled to one—the owners of these fixed dividend shares should have a right to vote pound for pound with those carrying deferred rights. In the case of ordinary shares, unless and until they have received a dividend not less than the dividend of the shares ranking in priority they, too, should have, despite anything in the Articles of Association, the right to vote pound for pound with shares carrying deferred rights.

What does the hon. and gallant Member mean by "unless and until"? Does he mean that each year they should have this right, or when would the principle come into operation?

There is a question about the first year. But leaving that apart, I should say that whenever the dividend is not there, they should have this right notwithstanding the Articles of Association. I cannot help feeling that we ought to be very careful indeed in dealing with this new problem. The Bill as a whole is the biggest advance we have made in company legislation for a very long time past. I believe we are making a move forward in this Bill that will redound to the credit of the company system in this country, and I have much pleasure, therefore, in supporting the Second Reading.

Most of us, probably, are familiar with the type of man, who, when he is confronted with the task of performing a duty which can be accomplished in either of two ways—in a simple way and a difficult way—instinctively adopts the second. This House not infrequently finds itself compelled by the Government of the day, whatever may be their political complexion, to adopt a similar method. This Bill is the latest, although I do not think it will be the last, illustration of that position. When the ordinary person refers to this Bill he will find it absolutely incomprehensible. It is true that the White Paper which has been issued, and for which I, in common with other speakers, would like to thank the Government, has come to our rescue to a certain extent. But apart from that, when you look at this Bill you find references to at least four or five Acts of Parliament. In order to understand the provisions of this Bill you have to put yourself in a position where those Acts of Parliament are available, and, having put yourself in that position, you have to find the time to consult them in order to appreciate the provisions of the different Clauses of this Bill. In one Clause you find words saying that "after so-and-so" of such an Act of Parliament, there shall be inserted certain words.

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In the next Clause, you find that certain other words shall be substituted for the words which now occur in the Section of a previous Act of Parliament. It is most difficult for Members' of this House, and it takes up a great amount of time, to understand what are the provisions of a Bill of this character. This seems to be a difficult way of dealing with an easy thing. After studying the Bill and the Acts of Parliament which it seeks to amend, I believe that in regard to the main principle of the Bill the object is certainly simple in design, although it is not simple in detail. In the course of the last few days I believe there has been introduced, either into this House or into another place, a Bill for the protection of lapwings. The major part of this Bill might be described as a Bill for the Protection of Pigeons, which is the description applied in certain quarters to those of us who are investing our money and are more innocent than perhaps we ought to be, and certainly much more innocent than those who take our money from us.

In regard to that part of the Bill, I do not think there is any difference of opinion in the House. All sections of the House will support the Government in those parts of the Bill which are designed to protect a public which is credited with being innocent from unscrupulous and unfair attempts which are made to secure money from them. The House will agree with the President of the Board of Trade in expressing thanks to Mr. Greene and to the Wren-bury Committee for their valuable services. All who are acquainted with company law in this country have been for some years agreed that one of the great necessities of the times is consolidation of the various provisions affecting companies. I am sorry that the Government have not taken the course of introducing at this stage a consolidating Bill, and introducing into that Bill such amendments as they think necessary in the law as it stands at the present time. I observe that, according to Clause 103, the date at which this Bill is to come into operation, with the exception of Clause 83, is a date to be fixed by Order in Council. I am sorry that I was not in the House when the President of the Board of Trade referred to this particular matter, but I hope that the Parliamentary Secretary will be able to give us an assurance that should this Bill pass into law the Act shall not come into operation until a Consolidating Measure has been passed by both Houses of Parliament.

I am very glad to hear that. With regard to those Clauses which are designed to protect the public, the House will be in cordial agreement. Clauses 26 and 27 are of great value. Clause 28, among other things, requires that there shall be publication of the rates of dividends which have been earned by a company in respect of the three financial years immediately preceding the issue of a prospectus. The hon. and gallant Member who spoke last seemed to regard it as a comparatively trivial matter that the Clause should require information as to dividends rather than the profits of the company. If I may say so with respect, I do not think he has really appreciated the anxiety which is felt in regard to this matter by a considerable section of the public. What is feared is that the real profits of the company can be disguised, and that the dividends which are paid by a company may not have a true relevance to the profits. They may be obtained out of reserves or in other ways. What the public is anxious to secure is that they shall know not what rates of dividend have been paid by the company but how far those dividends are really representa- tive of the work which has been done by the company and the profits which have been earned by the company. That is a matter for the Committee stage, and I do not propose to say anything further about it beyond drawing the attention of the President of the Board of Trade to the fact that this is one of the matters which will require careful consideration.

There are many provisions of the Bill with which I am in very cordial agreement, and I associate myself with some of those hon. Members who have spoken and have drawn attention to certain matters which are omitted from the Bill and which we think might have been included. Two or three hon. Members have referred to the question of the shilling deferred share. I say, quite frankly, that I do not consider myself sufficiently acquainted with the question of investment to claim any decided opinion upon this matter, but there can be no doubt that there is considerable uneasiness about it and, as far as I can see, no small part of that uneasiness arises out of the fear that a greater amount of voting power is given to people who take up these shares than they are entitled to, when you consider the amount of money which they invest in the company as compared with the amount of money invested by other classes of shareholders. I should not like to express any decided opinion upon this matter, but I think it is one which requires very careful consideration and I would urge on the Government that they should acquire and give to the House and the public further information as to the way in which this thing operates, in order that we may be better qualified, irrespective of our prejudices and suspicions, to form a reliable opinion on the matter.

Another question of importance is that of the balance-sheets issued by companies. I am glad to find that Clause 34 does, to some extent, deal with this matter, but, in my submission, Clause 34 does not go very far. I would ask hon. Members to listen to the opening words of the Clause:

I regret in one connection the proviso of Clause 34 (5). If I understand that Sub-section aright, it has an excellent intention, but there is a good deal of suspicion throughout the country that when you are looking at the balance-sheets and accounts of a company you are not getting the true story, because that company may be concerned in what one hon. and learned Member described as interlocking companies, but which I would call subsidiary companies. I know that in South Wales, particularly in connection with the coal industry, there is a very active suspicion that the miners and the public do not know what is hap- pening from the balance-sheets of purely coal-mining companies, because they suspect that those companies, either as companies or through individuals, are very directly concerned with subsidiary companies. If you want the true story of the subsidiary companies you often find that whereas the man may be losing money on the swings, namely, the coal mines, he is gaining on the roundabouts, namely, the coal distributing. That is typical of what is happening not only in the coal industry but in every industry. Therefore I am glad that Sub-section (5) does provide that a company which holds shares in a subsidiary company shall annex a statement with the balance-sheet. I would like to know what is the meaning of the proviso in the Sub-section which says:

There is a tendency in this House and outside to regard this Bill as a Bill of more or less technical character. To a certain extent that is true, but although it may be in many respects technical in character it is a Bill which closely affects the whole industrial and commercial life of the country. It must be realised that a great part of the business of this country is done through public companies. The amount of money which is invested in public companies, and put into business, is colossal. The number of new companies registered every year is very large indeed. It is true that a certain number of these companies are wound up or stopped by the Board of Trade, but the fact remains that there is an enormous number of public companies in existence in this country, and that a tremendous part of the business of the country is carried on through these companies. For that reason the commercial success of the country depends to a certain extent on the way these companies are conducted. I am glad to find a statement in the Report of the Committee that a majority of limited companies are honestly and conscientiously managed. It is a great thing for us that this is so, but, unfortunately, the exceptions to the rule are larger than we should like to see, and because I think something could be done in a Bill of this character, I ask the Government to see whether they cannot strengthen its provisions so that the Measure, when it is consolidated, will do more to promote the commercial prosperity and integrity of the country.

I desire to support the Second Reading of the Bill. The speech of the hon. Member for Hills-borough (Mr. A. V. Alexander) contained much with which I am in agreement. It showed a deep knowledge of the subject; but I would respectfully ask him to remember the difficulty which faced the Departmental Committee. It was the real difficulty of trying to find a means of stopping the abuses, and at the same time do nothing to injure legitimate and honest business. We are at a stage in the country's history when it is of prime importance that nothing should be done to stop good and legitimate business from finding full play all over the world, in order that business and trade may be brought to this country. If I may say so, the speech of the hon. Member who seconded the Amendment savoured rather of an academic character, and did not show that practical work-a-day knowledge of company law with which some of us have to deal day by day. If this Bill does not go far enough for these two hon. Members, it is at least a real and sincere attempt to do something to bring company law up to date; it is a real attempt to keep the business of this country clean and good, and maintain our credit, which, again, at this time is very important to the trade and commerce of the country. I would say to the Opposition, that if the Bill does not go as far as they would like they should, at any rate, use all their powers to get as much as they can and assist the Government in putting it through.

I have risen, however, more especially to refer briefly to Clause 83 which, for want of a better word, deals with what is called share-pushing. That word has become Parliamentary, because when I handed in a Question on the subject two years ago I had some difficulty in getting it by the Table, but no other word was found, and I believe "share-pushing" is now a Parliamentary expression. I do not want to detain the House long, but it is important that hon. Members should know the extent to which this share-pushing has gone. I am a member of the London Stock Exchange, and in the course of my business it came to my knowledge that certain disgraceful things were being done, that poor people were being robbed, and I determined to take what steps I could to put a stop to it. I have in the precincts of this House a thick file of correspondence which I have received from all parts of the country, which has come to me as the outcome of one or two letters of warning which I wrote to the Press. Poor people are not only losing money as the result of this share-pushing but heart-breaking distress is being brought into the homes of many of our people. Let me quote one sentence to show the kind of appeal which determined me to do all I could to make the matter public. My correspondent said: It is estimated that the spoils of these share-pushers have run into millions; and all at the expense of innocent people. In considering the insertion of a Clause in this Bill to deal with these people, we have to remember the difficulty which confronted the Committee. They want to stop abuses, but, at the same time, not do anything to stop legitimate business. There are many outside brokers who do a, perfectly fair and honourable business and no one, I am sure, would want to stop them from carrying on the trade of the country. I hardly think it is necessary fox me to tell the House—

It has to do with Clause 83 of this Bill. It has been said that I have nothing to lose or gain by taking this action, but what I am anxious about is the good faith and good name of financial houses, the Stock Exchange and the big business centres of the country. When people of bad repute and bad motives come to London and do disgraceful business, it drags down the whole business of the country and causes honest businesses to suffer. I should like to thank the President of the Board of Trade for cutting through a good deal of red-tape and allowing Clause 83 to come into operation as soon as possible—and I thank him on behalf of many hundreds of people who have written to me.

I want to make an appeal from the Floor of the House to the Prees of the country. Whatever laws we pass here we cannot, as the President of the Board of Trade has said, protect the fool from his folly, but there are many people, and they are the very people for whom the share pushers go, who will never hear of the passing of this Bill. I appeal, therefore, to the newspapers, both of the Metropolis and the Provinces, again to take the opportunity of this Second Reading to bring before the public the dangers to which they are liable. I should like to add my humble tribute to the work of the Committee. I know what an immense amount of time and trouble was given to the question by them in order that this House might have before it the considered opinion of men who knew what they were talking about, and that we should be presented with a re- port upon which we could produce some necessary legislation.

There is only one other question to which I should like to draw attention, and that is the subject of shares of no par value. It has become the custom of late years to introduce into the London Stock Exchange shares which have no par value, and it is a point of interest to the Government themselves, and also to the country, that a share of no par value does not carry a revenue stamp. This practice is being extended, and I mention this now so that the President of the Board of Trade, if he thinks fit, may bring it to the notice of the Chancellor of the Exchequer and perhaps something can be done in this Bill to deal with the matter. I think the Bill is a real advance in our Company Law administration. There is an immense amount of work behind it, and I hope the House will speedily pass it into law.

Twenty years have gone by since the Companies Acts were consolidated in 1908, and it is not at all surprising that amendments are now required. The Government are certainly to be congratulated on having obtained the services of gentlemen of great experience and knowledge to serve on the Committee, especially the gentleman who served as Chairman. Anybody who has read the Report must be satisfied that they have given a very careful study to all the evidence brought before them, including the evidence of the hon. Member for Hillsborough (Mr. A. V. Alexander). The Committee at least had the advantage of hearing the views which he has expressed to-day. The Bill is based on the recommendations of the Committee, and it is, therefore, somewhat surprising to find the Opposition proposing an Amendment that it should not be proceeded with. One would have thought that it was a Bill which would be accepted by anyone who desired an improvement in the law. But while it is surprising to find the Opposition proposing that the Bill should not be proceeded with, the grounds on which they desire it to be thrown out are more surprising still.

In the first place, it is said that it is an extreme example of legislation by reference. The object of this Bill is to amend the existing law and, if you are going to amend the existing law, you must refer to it. There is no possibility of amending the Act of 1908 without referring to it, or of amending the Act of 1917 without referring to it. And these are the only references made in the Bill. On the contrary so far from this being an extreme example of legislation by reference, I suggest that the course which the Government have adopted is the course of greatest convenience and one which I hope will always be followed. The Government bring in a Bill containing the amendment to the existing law which they propose, and when that Bill has been passed but before it has been brought into operation, a consolidated Bill is brought in so that the Act which affects the public is the consolidated Act containing all the law on the subject. That certainly is most convenient. As to the objection raised by the hon. Member for Hillsborough with regard to Clause 83, the truth is that that Clause is not, properly speaking, a part of the Bill at all, and if the hon. Member's objection proves to be a serious objection I do not suppose there will be the slightest objection to having a separate Bill for Clause 83. The subject dealt with is really a separate matter. There is another objection made, that the Bill does not give sufficient publicity. I think we are all in favour of publicity. Certainly I am for one. But I am not very clear from the observations of the hon. Member for Hillsborough and the hon. Member for West Leicester (Mr. Pethick-Lawrence) whether they desire publicity from the point of view of the creditors of a company or the shareholders of a company.

I agree that both are entitled to the fullest publicity. The creditors of the company are entitled to know the financial position of the company and so are the shareholders; and they are entitled to know what the directors are doing. But, after all, the law provides that there must be an annual general meeting of the shareholders, and at that annual general meeting the accounts must be submitted, and if the shareholders do not like the accounts or think that they have not got sufficient information, then is the time and place to ask for the information, and if they do not get it they can refuse to pass the accounts.

Often. I agree that at some meetings the shareholders are like sheep, but not all, and they need not be ever. Anyhow the criticism of the hon. Members for Hills-borough and West Leicester are really criticisms which could very fairly be brought forward on the Committee stage of the Bill. Any amendment of the Bill which will secure proper publicity for creditors or shareholders will find support from some of us on this side of the House. There ought to be no sort of suspicion that anything is being kept back. There is one point I want to make, and I do not think it is open to the criticism that it is a Committee point. It is rather a point of principle. When the Companies Act of 1862, which is the foundation of all our company legislation, was passed, it was based upon the principle that in the case of a company limited by shares the shareholder must pay the full amount of his shares and that then he should be quit of all further liability. So at last the struggle that had been going on for 50 years as to how persons trading in partnership could obtain limited liability, was settled satisfactorily.

Since 1862 it has been a cardinal principle of the Companies Acts down to the present time that no share can be issued at a discount, but that for every £1 share 20s. must be paid in money or in money's worth. It is true that the Wren-bury Committee said that as a matter of fact business men often get round this provision and issue shares at a discount, and recommended that they should be allowed to do so. But when this question came before the Committee presided over by Mr. Greene, although they referred to the Report of the Wrenbury Committee, they abstained from making any recommendation in it favour; and whereas I think I am right in saying that for every other provision in this Bill the President of the Board of Trade can find a recommendation in the Committee's Report, for Clause 31 of the Bill, which for the first time allows shares to be issued at a discount, he will find no recommendation at all.

It is fair to say that while they do not specifically recommend, by implication they do. I think they do, because they say, assuming that this is to be done, we ought to vary some of the recommendations of the Wrenbury Committee.

I am much obliged for the interruption, but I should have read paragraph 19 of the Report in exactly a contrary sense. The Wrenbury Committee do propose that shares should be allowed to be issued at a discount, and then there comes this later Committee which expressly notices that recommendation and abstains from endorsing it. It is obvious that some of the Committee were in favour of it and others against it, and they agreed to make no recommendation. Whether they approved or not, I say it is an evil and unwise principle. Obviously it is convenient in certain cases, but the dangers which will arise when once directors are allowed to issue shares at a discount to suit their convenience, I think will be of a very serious character. That is a matter which obviously cannot be discussed on the Second Reading of the Bill, but I hope the Government will withdraw Clause 31. If they do not withdraw it I hope the Committee will accept an Amendment for its rejection.

The introduction of this Bill raises a matter of peculiar and special interest. I cannot remember any previous time when we have been discussing this new relation between the shareholder and the director of our public companies. This is the first time it has been recognised that there is or might be a divergence of interest between the director and the shareholder, and whereas my hon. Friend referred to this Bill as a Bill for the prevention of the plucking of pigeons, I think the Bill is really one for the protection of shareholders against directors. Although we know that the majority of directors are actuated solely by a desire to benefit their shareholders, there are now so many cases where the interest of directors and shareholders are contrary, that the State is obliged at last to recognise this divergence of interest and to seek to protect the interests of the shareholders as against directors who may be thinking of other interests. Ten years or 20 years ago, this matter had not become of real public interest, but to-day it is of great public interest. I undertake to say that more people will read this Debate to-morrow than have read our Debates for many a long day, because the question of directors versus shareholders is of interest to everyone who has invested £5 in any concern.

I want my colleagues to realise that even a Bill for the protection of shareholders from directors is of enormous interest also to the working classes who have no investments whatsoever. I do not know whether I have been more unfortunate in my investments than other people, but I have certainly "run up against it" over and over again. Naturally, I have felt that the interests of the shareholders and the directors were not as one. I have reduced my interests in industrial concerns in this country, and have attempted to invest my money instead in industrial concerns in India, or in America or elsewhere. I do not believe that my case is peculiar in the least. It is essential, if we are to have cheap money for industries in this country, that there should be in the mind of any intending investor the sense of security in the investment, If he feels that he is being a pigeon in putting his money in these concerns, that certain unscrupulous directors have got him directly he has invested his money, industry will not get the money. We want investment because we want cheap and plentiful money for British industries, therefore it is very important that we should seek to protect the interests of shareholders as against the queer directors. During the last few years the position of directors has become in many oases more markedly opposed to the interests of the shareholders. If you compare the fees of any big board of directors now with the fees as they were before the War, you will find that the fees have gone up three-fold.

If the hon. Member will tell me the company in which he is interested, I should be glad to invest in that company. There has been an enormous number of cases where the fees have gone up far beyond the increase in the cost of living. But that is not all. There is a modern tendency for amalgamations to take place and for subsidiary companies to be formed. In nearly every case the subsidiary companies are staffed by the directors of the mother company. When the amalgamations take place, the President of the Board of Trade knows as well as I do that one of the essential elements in the bargain that is being driven between the company that is being absorbed and the absorbing company, is not the question altogether of what price will be paid for the shares of the company that is to be swallowed, but what opportunities the directors will get for places on the board of the absorbing company, or what compensation will be paid to them if they do not get directors' posts. We are all conscious that there is a majority of honest directors who do not look at the question from that point of view, but there is a tendency to take a directorial point of view rather than a shareholders' point of view.

For that reason, it has been become imperative that a Bill such as this should be introduced to protect the shareholder if directors should go wrong. In doing so you must perhaps get on the toes sometimes of those directors who are not going wrong but are conducting companies solely in the interests of the shareholders. The question is, how far can we protect those interests without interfering with legitimate business? Everyone is agreed that that is what we have to seek in this Bill. My charge against the Bill is that, although it is a step in the right directions, it does not go far enough. The whole question is, can we improve it in Committee sufficiently to make it a reasonable safeguard for the British shareholder, so that British money can be attracted to investments in British industries? How can you secure this safeguard for shareholders? Generally speaking—taking an abstract point of view—you can do it in three ways. You can do it by prohibition on the directors. You can say to the directors, "You must not attempt to get money from the public unless you show in your prospectus the exact financial position of the industry which you acquire or set up." In this Bill something is done in that direction, but not enough.

I believe the right hon. Gentleman the President of the Board of Trade has been convinced by this Debate that it is desirable to show, not the three years' dividend of a company which is to be acquired, but the three years' profits of that company, in any prospectus involving the purchase of a company. Anybody can cook a dividend. There are questions of the valuation of stocks, of money taken from reserve, and so on, and if a company knows that in three years' time it is going to be bought up by another company, it is much more easy to arrange a dividend to suit the sale than it is to arrange real profits to suit the sale. Therefore, the first way in which you can give substantial protection to investors in this country is by saying that certain things must not be done. Pushing shares of course can be stopped easily, but that has little to do with the main subject of the Bill which is protecting the honest investor against the reckless but not dishonest—shall we say the slightly biased—director. You can do it in the case of prospectuses. You can do it in the case of shares issued at a discount; you can do it in the way of preventing any change in the rights of the different shareholders, and you can do it by making a number of things illegal and by making certain acts on the part of directors punishable.

You can also do it by giving the shareholders power to appeal to the Board of Trade or the Registrar—a power which they do not possess at the present time. Most hon. Members here, at one time or another, have attended annual meetings of companies in which they are interested, and they know it is only a fiction to say that shareholders have any control whatever over directors. No one who knows anything of modern company law or modern companies believes that the shareholders can possibly control the directors. I have a case in mind where we, shareholders, knowing that we had been "done," banded together and got a majority of the proxies in the company. When we came to the meeting we found that the directors had gone round the other shareholders after us, had got the proxies revoked in their favour and were in a majority. Thus, all our expense was thrown away and the directors were serenely confident in their majority. They told us before the meeting began that they had the majority and that we might shut up. After an experience like that, you ask yourself what is the good of protesting at a meeting, and undergoing the enormous expense which is thrown upon those people who take up the public-spirited duty of standing up for shareholders' rights. In this Bill you are making it possible for shareholders who have been "done" out of their rights on the reconstruction of a company, to get a court of appeal which is not very expensive.

Therefore, as I have said, the first method of protection is by making prohibitions and by making it a crime for the directors to do certain things, and the second is by giving the shareholders the right of appeal to a Government Department. In this way you can protect to some extent the interests of the shareholders. For instance, many people must have had the experience of a company being reconstructed in which the preference shareholders "stood all the racket," and everybody else seemed to come off all right. The preference shareholders in one company in which I was interested had to cancel their arrears of dividend and had their rate of interest reduced from 8½ to 7½ per cent. [HON. MEMBERS: "Very good!"] That is what the ordinary shareholders said, but we have not, as yet, seen that dividend, although the ordinary shareholders get off without any loss. In such a case it is useless to attempt to make any protest. This Bill does give the opportunity, if one can get 15 per cent. of the shareholders, of going to the Board of Trade and getting an inquiry—from which, I am glad to see, there is no appeal, though I am afraid the lawyers will not enjoy that provision. It is, however, an efficient way of getting a check by appeal upon some of the actions of some boards of directors.

In addition to making certain things crimes and facilitating an appeal by injured shareholders to the State, the third method of protecting the shareholder, and by far the most important, is the additional publicity which can be enforced for balance-sheets and prospectuses and the additional publicity which will be provided by means of the official auditor. That will be the greatest security of all for investors in this country. At the present moment there is a fiction that the auditor is appointed by the shareholders. As a matter of fact, the same officer is nominated year after year, and the shareholders simply take the nomination suggested by the directors. The auditor gives a certificate often saying that he certifies "In so far as the books have shown," or "In so far as information has been available," and in companies where they have business all over the globe, the audit is always excessively vague about the position of stocks in the overseas department. If we had real publicity for all balance-sheets and all profit and loss accounts; if we had the official certificate of an auditor approved by the Board of Trade, and if we had these in a form which would show, independently, various items which are so often amalgamated—goodwill, assets shown by buildings, assets shown by stock, and, above all, investments in subsidiary companies—then you would have the best possible check upon what is so often going on at the present time.

Over and over again one has suddenly found shares booming and rising week by week. Somebody knows why, but you cannot toll that they are going to rise from the last balance sheet or by comparing one balance sheet with another. Therefore these balance sheets ought to show all the facts and the auditor's certificate shoud be given in a form indicating the true position. Thus the ordinary shareholder would be in an infinitely better position to judge the value of his shares. As to subsidiary companies, that question has come up since the last Companies Act was passed. Subsidiaries are now to be found in nearly every balance-sheet, and in this Bill, in Clause 34, I think, we are enabled to insist on seeing the profits made by the subsidiaries. But the House will observe that where there are two or more subsidiaries, the aggregate of the profits and losses of those companies can be shown. I think a desirable Amendment in Committee would be to provide that the profits and losses of each subsidiary should be shown independently, and that they should not be lumped together. It is particularly desirable in a case where there are many subsidiaries to have an accurate statement as to each. Whether it is enought to show merely the profits and losses, or whether one should have as full a balance sheet for the subsidiary as for the parent company, I do not know, but some of the companies in which I am interested and which have subsidiaries, send their shareholders at the same time as the balance sheet of the parent company, an equally full balance sheet of the subsidiary company in order to indicate the exact position. I would like to see that done in nearly every case.

The fact of the matter is that until we get to Committee we cannot see what can be done with this Bill. Yet, on both sides of the House, I think it is realised that the more that can be put into this Bill to secure publicity for the balance sheets and the profit and loss accounts of the subsidiary as well as the parent companies, the better it will be in the interests of the shareholders. That means in the interests of the companies as a whole, because, unless the shareholders feel that they are free from the risk of being deceived to their own detriment by directors, who may or may not be acting in their interests, you will not get British money invested in these securities to assist British trade. I do not believe that there is the slightest disadvantage from publicity. It is said that rivals will be able to find out a company's business and undercut it, by reason of the fact that real profits and losses are shown, but it cuts both ways. You can see your rivals position just as he can see yours. The real reason while we often find all these items lumped together on the asset side is because there are so often accidental and serious losses, or accidental and beneficial profits, which would make the normal amount of profit in the business become abnormal. To get rid of these unnecessary ups and downs matters are lumped together and the profits averaged over a period of years.

All the best conducted companies that I know put away some of their profits to secret reserve year after year and hide them away in all sorts of corners in their balance sheets. I think that is done largely in order to conceal the fact that they are making profits from their customers. If these were put in every case to the reserve, as they ought to be; if they could not be concealed in any case, then, I believe, business would be run on more satisfactory lines. It would certainly be more easily understood by the shareholders, who would know more accurately the value of their shares. I do not think there is anything to be said for secrecy in accounts, and I hope before this Bill goes through, provision will be made in it that private companies shall have to deposit in Somerset House exactly the same kind of balance sheets as public companies. There can he no adequate reason for continuing indefinitely secrecy as to the accounts of private limited companies. As long as they have the advantage of the Limited Liability Act, their balance sheets ought to be deposited at Somerset House, in the same form as those of other companies.

These are all Amendments which can be made later on. The main point is that this Bill is a step in the right direction. It recognises for the first time that there is a certain rivalry of interest between the directors and the shareholders of companies, and that it is the business of the State to protect the shareholders. It has become recognised universally, that it is the business of the State to afford that adequate protection, and we have to decide whether we cannot work up this Bill in Committee and make it into a genuine protection for shareholders against rascals on boards of directors.

7.0 p.m.

Everybody connected with finance in any way and the public generally will, I feel sure, be delighted with the Bill which is now before the House. Even the last speaker agreed that this was a step in the right direction, and, if he agrees with anything, I think we may take it that we are doing the right thing. After the discussion to-day, everybody must be convinced that there are still many loopholes and that people who want to commit acts in connection with company work will be able to do so. There is one point I want to ask the Minister. In his opening speech he referred to companies trafficking in their own shares. I do not think I quite understood that, and several Members on the other side have referred to it. I believe a company cannot traffic in its own shares at the present time. If the right hon. Gentleman means indirectly, I am sure that neither this Bill nor any other is going to stop them if they mean to do it. With regard to Clause 26, the "offer of shares for sale" is a new thing which has grown up in the past few years. It is a post-War system of getting rid of shares. But the company does not dispose of those shares by offering them for sale. What the company is doing is to sell a block of shares to some person or financial company who then offer them for sale. I hope Clause 26 will be tightened up in Committee as much as possible.

If the hon. and gallant Gentleman will read the Clause, that is exactly to what the Clause is directed. In form the offer is made by somebody else, but in fact it is made on behalf of the company.

I take the Minister's word for that. I am referring to his opening remarks, when he said they were made on behalf of the company. I think the shares are sold in practice—

I said, made on behalf of companies, or may properly be deemed to he.

Still, the shares are sold by the financial companies who make the offer. The point I want to make is that when these shares are offered to the public, we should have every particular such as would be put in a prospectus if they were offered by the company itself. We want every particular given just as it would be given in the prospectus. That is the point I want to make with the Minister, because I think he rather led some Members of the House to believe that it was the company making the offer for sale of these shares. The right hon. Gentleman who spoke last referred to secret balances of subsidiary companies. Secret balances are not only put away in the form of profits. He should know that secret balances and reserves are usually put away by writing down stock, or buildings, or the value of shares in subsidiary companies. I know in some cases subsidiary company balance sheets are forwarded with the ordinary balance sheets, but the occasions are very few. Whether it would be desirable to do this in every case, I very much doubt. I hope that is one of the Amendments to the Bill which the right hon. Gentleman will not be able to get.

Another point which was raised by the hon. Member who seconded the Amendment was with regard to the differential voting rights and control of company. During the last year or so another phase has commenced in company promotion, namely, the shilling share or low value share. In many cases these have been given what is equal to a preponderating voting power in inverse ratio to capital, and in some cases that power has been five times as much as the power given to the ordinary shares. This Bill does not refer sufficiently to the preponderance of the voting power. At the present time there are many companies with preference shares which give no rights at all to the holders to attend any meeting or to receive a balance sheet or have any voting power unless the dividends are in arrears for so many months. I think it would be a very good thing if in future such shareholders had the right to receive a full balance sheet in the same way as the ordinary shareholders. It is the right of the shareholder. Whether he has the right to vote or not is another question. When he purchases shares or applies for them, his voting rights are set out in the prospectus as clearly as possible. He can see what those rights are, and if he does not agree to them he does not, of course, take up the shares. The value of these shares is far too small in relation to the bulk of the capital of the company, and they get a far greater preponderance of voting rights than the bulk of the ordinary capital. There is another point about share-pushing, which has been raised before and discussed a good deal in the House during the Debate. If we can do anything in this Bill to prevent people—probably for the most part foreigners—coming into this country and pushing shares, it will be a good thing. There is a great deal of damage done and money lost through shares that come from other parts of the world. American share pushers have done a great deal in this country, and if anything can be done to stop that, we shall be doing a great thing for this country.

With regard to balance sheets, the hon. Member for Hillsborough (Mr. A. V. Alexander), who spoke on the subject, knew a great deal about this class of work. I am afraid he was comparing the Companies Act too much with his cooperative business. His co-operative business is on a totally different footing from that under Company Law. For instance, he mentioned among other things the question of auditors' certificates. There is a certain certificate which has to be given by a company's auditors under the Act of Parliament. The Companies Act states the things which that certificate must show. The hon. Gentleman's co-operative certificate was a much longer one, but it did not contain a single word more than was covered by the ordinary certificate of a company public accountant. If a public accountant says he has seen all the books and certifies that he has seen everything, and that all information has been placed at his disposal, he is complying with the Act of Parliament just as much as the hon. Member's co-operative accountants would have done.

The hon. Member for Hillsborough, in moving his Amendment, spoke of secret reserves. A company can arrange this quite as much for the good of the share-holders. If you are going to display every point in a balance sheet, you must remember that you are opening your company's trade affairs to its competitors.

They ought to tell the shareholders sufficient to safeguard their rights so that they are fully protected, but they do not want to tell things in the balance sheet which are going to take away their prospects of doing business in competition with their competitors. You must always safeguard that. I could not make out the point of the Proposer of the Amendment when he talked about secret reserves upsetting the wage-earners. I thought the wage-earners and the shareholders were two very different people. The trade unions will see that the wage-earners are well looked after. [An HON. MEMBER: "Do they?"] Certainly they do. This Bill is to protect the poor shareholder and his rights. I am sure hon. Members opposite are capable of looking after the wage-earners. How the secret reserves have anything to do with that I could not make out. Then the hon. Member referred to the leakage of information by company directors, officials or employés. Is there any sphere in this life where you can reserve the right of friends tell- ing other friends any information they have? You complain about company directors telling other directors to buy shares and traffic in them. Directors do not traffic in shares in that way. If they are clever enough to traffic in shares, they will do it not in their own name but in another way which is known to every hon. Member. Leakage of information is a very easy thing.

I shall be pleased to tell the hon. Member anything privately. Leakage of information, whether it applies to a company, trade union or racing stable, or any gamble, can never be restricted. You cannot blame directors and managers if information gets out and shares are purchased in that way. Unfortunately for some of us, information leaks out which does not profit us, and we should have been very glad if some information had not leaked out at all. I do not think this traffic in shares by the directors exists very much. It may be done, but not to any great extent. I want to impress on hon. Members that this Bill endeavours to protect shareholders and people from investing in companies which are not sound, which will not give full particulars and which do not give a fair deal to people who want to invest in them. I do not think the Bill should make restrictions which would hamper companies in business and commercial work. We should remember that it is through limited liability companies that the great business and commerce of this nation for generations past have been built up. I only hope that when this Bill becomes an Act, it will lead to the protection of people who are investing, and to the promotion of trade and commerce in this country.

The hon. and gallant Member who has just sat down made as his last point some play at the expense of the hon. Member for Hillsborough (Mr. A. V. Alexander) and he said, among other things, that the interest of shareholders and wage-earners had nothing in common. He then went on to tell us that this Bill was entirely to protect the interests of shareholders against those who were fraudulent directors. I do the right hon. Gentleman and the Govern- ment the compliment of hoping that it does a little more than that. I hope that the Bill is an attempt to bring Company Law into proper relation with modern developments not only in company, but in industrial life generally. The right hon. Gentleman said you could take a horse to the water but you could not make him drink. His point in saying that was to show that you might provide safeguards for the investing public, but you. Could not make them take advantage of them unless they wanted to do so.

The object of the intervention which I made while the right hon. Gentleman, was speaking was to try to get him to tell us a litle bit more as to the intentions of the Government. I asked him if it was intended to go on with the Consolidation Bill immediately this was concluded, and he said it was the intention of the Government to do so. If that be so, I will ask the Government if they cannot take this opportunity of trying to make the Bill a little wider in its scope than it is at present. If, as the hon. and learned Member for Londonderry (Sir M. Macnaghten) said, there was a consolidating Act in 1908, we may fairly assume that a period of something like 20 years will elapse again before there is any substantial amendment of this Bill, when it becomes an Act. I would, therefore, ask the right hon. Gentleman, with whose Bill I think the whole House is in complete sympathy as far as it goes, if he cannot make an effort to widen its scope so as to make it even more useful than it promises to be. Although some of us may wish there were more in it, I, for my part, having given it as much study as I could, welcome the Bill very much. I think there is a great deal of good in it, and I hope that no opposition will prevent it passing into law. That being my attitude, I hope the right hon. Gentleman will not mind my making a few small suggestions with the idea of trying to make it a more useful Measure.

A friend of mine who has had very considerable experience of business matters has often said to me that he thought it would be useful if Parliament passed an Act making it impossible for industrial shares of any less denomination than £10 to be put on the market. He has said that there is a tendency to-day for a much larger class of persons to invest in industrial securities, and that there are so many opportunities of their being robbed that the Government ought to protect them by stopping them from investing at all. That is not the view that we take. I believe the right hon. Gentleman and Members opposite, and a good many Members above the Gangway on this side, like those on these benches, welcome a wider investing of money by people who are not very well off, so that they shall acquire certain capital issues in industry, and so that the interests of the various classes engaged in industry may become more closely allied. I think we all welcome an increase in the numbers of the investing public. If that be so, and in these days of large concerns, with subsidiary companies and holding-companies, with interests allied and bound up and interwoven one with another, and with the enormous power that those who direct these big concerns have, I think we ought to try to make this Bill as effective as possible in defending two classes of people, namely, first of all, those who have already got their money invested in industrial concerns, and, secondly, the investing public generally, who are invited to support industry by investing their savings.

We have been told by the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood) that this Bill is primarily concerned with protecting shareholders against directors, and we were told from the opposite side that shareholders could always ask questions at an annual meeting. That is true, and it is true too to say that if I invest a certain amount of money in a public company, and I take 6 per cent. or 7 per cent. on my preference shares, the company has fulfilled its side of the bargain, but I think there is more in it than that. If a preference shareholder, by subscribing the larger part of the capital, has really given the basis on which the prosperity of a company is built up, I think he is entitled to a little bit more than the bare bones of the bargain which he made. You often find that in a concern which has been very prosperous, and which perhaps is eventually sold in order to be floated on a larger basis, a preference shareholder who is entitled to 6 per cent. or 7 per cent. on the trading returns of the company has his security safeguarded five or six times, because of the amount of profit earned, but in the reconstruction that additional safeguard disappears, and by the new arrangement, with interest paid on a much larger amount of capital, the additional security to which his original investment contributed goes by the board. I think that is a very good reason for the right hon. Gentleman going again, into the question of the preponderance of voting power given to the people who own a comparatively small amount of the capital.

I will also ask the right hon. Gentleman if it is not possible to have a little closer supervision of reconstruction when the capital of a company is enlarged or when a company is floated on a larger basis. We know that the shareholders can ask questions, but the occasions when shareholders get together and bring the directors of a company to book almost always take place when the mischief has been done and when some drastic reconstruction or reduction of capital or security has brought home to the shareholders that they ought to have been in a position to safeguard their interests long ago. The hon. Member for Chislehurst (Mr. Smithers) has referred to the shilling share. It seems to me that the people who first invented the shilling share were very clever students of psychology. As I was told the other day by a person who collects on behalf of charity, it is much easier to get someone to buy 10 shilling tickets in a raffle than it is to get someone to buy one 10s. ticket, and the shilling share has too often been used by those who use the machinery of the Stock Exchange and who explore the weaknesses of company law in order to invite the public to subscribe, not to legitimate business, but to a business which they are going to use purely for having a share gamble or flutter on the Stock Exchange, and then get out, ridding themselves of their responsibility and liability when the shares are standing at a much higher value than any business which the company is likely to do can possibly justify.

It is that kind of exploitation against which I hope the right hon. Gentleman will see his way to guard a little more specifically. The right hon. Gentleman's colleague shakes his head, and I know these questions are difficult, but if this is going to be our opportunity of bettering the company law of this country for the next 20 years, let us at any rate do our best. Probably? the majority of Members of this House know far more about this matter than I do, but may I suggest to the right hon. Gentleman that he may possibly find, in some of the company law on the continent of Europe, one or two hints that may be helpful? I believe, for instance, that in Belgium the promoters of a company are not able to rid themselves legally of their liability for a period which I think is five years after the company has been established and has started business. Another provision which might be useful is this, that when a company is reconstructed there should be a minimum period before the shares of that company can be quoted on the Stock Exchange and dealt in. That, at any rate, allows the public and the people who invest their money in the company a certain amount of time to investigate its soundness and to find out what likelihood there is of it being permanently profitable.

Those are, I think, fairly substantial points, and in general what I would like the Government to do between now and the period when the Committee stage of this Bill begins is to see whether they cannot take some additional measures, not to protect the fool entirely from his folly, but, by so tightening our legal machinery, to say to the great body of investors, who cannot possibly know all that they should know about the concerns in which they are asked to invest, "We have done what we can to protect you against the consequences of your folly."

I am very sorry the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood) has just left the House. We listen always with interest to what ho says, and very often with intense approbation, particularly when he gives vent to those good, sound, Tory principles which we know are at the bottom of his heart. I should like to have said to him—and I hope some of his Friends will put it to him—how we shall look forward to his protecting, not only shareholders against directors, but holders of Government stock and Government loans against Governments or Members of Governments who may, to use his words, be not dishonest but slightly biased. I am going to avoid, if I can, making any reference to Commit- tee points, but I would like to say that I think the right hon. Gentleman who introduced this Bill was more justified than a Minister very often is when he claimed that the Government had made the Bill a fairly happy medium between the two interests which they had to consider and the two different points of view which they had to try and reconcile. I would like to express the debt which I think this House owes, not only to the Committee which has been referred to already, but to the Members of another place, who worked very hard on this Bill during last Session, and I should like to thank the President of the Board of Trade and his Department, on behalf of the Council of the Law Society, for the kind consideration which they gave to the suggestions made by that body and for the fact that very largely they were embodied in the Amendments which were made in the Bill during last Session.

We are not yet quite satisfied, and there are several points on which we shall strive hard, and I hope with success, to get some alterations to be agreed on by the Government. I will not go into these now, but I want to say a word upon a question of principle which is involved in all these cases where we are asked to protect some more or less foolish class of individuals against a cleverer and dishonest class. We cannot protect a fool beyond a certain point, and we cannot make a knave honest. The best that can be done by law is to give a person of ordinary intelligence the opportunity of protecting himself either by his own investigations or by getting the advice and assistance of those better calculated to judge these matters.

In matters connected with what could perhaps best be described as a high standard in finance, commerce and company dealings, we want something more than bare honesty. We want a high standard, and that is a thing which cannot be enforced by Acts of Parliament. What we have to do is to trust very largely to assisting public opinion to set up a standard of honesty, a standard of publicity, let us say, in regard to company matters, and a standard of conduct which will enable people to judge fairly easily whether a company may be regarded as a respectable company or not. This Bill, although no doubt long overdue, is, to some extent, the result of —or at any rate the commencement of it synchronise with—a great scandal in the company world in connection with certain insurance companies, which resulted in a man who held a high position in the company world having to go to prison. In legislation initiated either as a result, or just at the time of, some particular scandal of that kind, there is a strong tendency to exaggerate that particular side of it and to exaggerate the legislation itself. Some of the worst failings of the present Company Acts, which are remedied to some extent by this Bill, have nothing whatever to do with that particular scandal. I hope that in the Committee stage hon. Members on the other side, whose assistance we on this side will certainly welcome, will believe that we have as much interest as they have in protecting, as far as reasonable, the comparatively incapable and unintelligent people who are apt to lose their money; I hope that they will also feel with us the real necessity of not putting obstacles in the way of genuine and honest business, which is very complicated and difficult in these days.

The hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) must be forgiven, and we do forgive him with pleasure, for any laudatory remarks which he may have made about the Co-operative Societies, but it would never do for this House to attempt to impose upon companies generally the peculiar restrictions and the particular methods which are applicable to Co-operative Societies. We may make particular rules or have special methods for making a mechanical or mathematical drawing of a machine, but it is hopeless to attempt to apply this to the painting of a beautiful work of art. We may have simple rules with regard to the mixing of a rice pudding but it is a very different thing from the production of a well made omelette. If the hon. Member for Hillsborough thinks too much about the virtues of his Co-operative Societies when we come to discuss these matters in Committee, his views, which ought to be most valuable, will not be quite so useful.

Reference has been made to the question of issuing shares at a discount and the payment of commission on raising capital. Here I differ from the view of my hon. and learned Friend the Member for Londonderry (Sir M. Macnaghten). There are undoubtedly cases in which, in order to raise money for the legitimate purposes of industrial or merchant ventures, commissions have to be paid and shares have to be issued at a discount. We have to see that when that is done it is done in an honest way, and in such a way as not to mislead those who have already had, or in future will have, dealings with these companies. The Bill has been drawn on right lines in regard to these matters, but I am not sure that it is quite satisfactory in points of detail, and I hope that the President of the Board of Trade, as I feel sure he will, will give every possible weight and consideration to representations which will be made to him, not only by lawyers, but from the City of London and others engaged in this business.

I should like to put in a plea in regard to a matter which affects in this case my own profession, and in other cases many other professions, particularly the medical profession. I refer to the question of privilege and the privacy which should be protected between a solicitor and his clients. I am not sure whether there are not cases in this Bill, even as it stands, where that right of a solicitor to treat communications made to him in confidence by his clients as absolutely privileged, are not to some extent interfered with, and I feel sure that, if it is necessary, under that heading also we shall receive sympathy from the Government on the Committee stage.

I welcome this Bill as a whole, and I hope that the party opposite, having done their duty by formally opposing, as an Opposition, will not find it necessary to press their Amendment to a Division. The objection to this Bill as a bad case of legislation by reference has already been dealt with by several speakers, but I think this phrase in regard to the evil of legislation by reference—and it is a great evil—has got to a stage when it has become a phrase which is flung about by people who do not understand it. Where you have complicated and difficult law, as you have here in regard to the Company Law of this country, and you want to amend it substantially, the only reasonable way of doing it is to go through all our law and make the various Amendments and include them in what you call a schedule of Amendments, which in fact is what this Bill is, discuss them on that, and then, before you bring, them actually into operation as the law, introduce a consolidating and codifying Bill, and bring that into operation. It is all very well for hon. Members to say that they cannot understand this Bill without referring to other Acts. No hon. Member and no one outside is competent to discuss this Bill at all unless he does refer to all the many Companies Acts which already exist, and unless he has already got something more than an elementary knowledge of the law and of the many decisions of the Courts on the points that have been before them. This is the precedent which was adopted in the, case of the great reform in our law of real property, originally known as the Birken-head Act, and I suggest to hon. Members who have raised this objection to the present Bill that it is really the only way in which you can satisfactorily discuss and bring about the wholesale amendment of a body of lengthy and complicated and important law.

I do not propose to deal with this Bill as a whole, but only with the observations of the hon. Member who has just sat down. I agree that the method of dealing with this matter is, first of all, to amend the Bill as is here being done, and then to bring in a Consolidating Bill; but when this Bill was presented to us we had no reason to suppose that a Consolidating Bill was going to follow. We had nothing before us but the Bill now in our hands, which, if it were not subsequently to be consolidated, is extremely unsatisfactory. If this were to remain the law, and if it were to be placed in the hands of shareholders and directors, and there were to be no consolidation, the phrasing of our Amendment that it would make the law unintelligible, would have been a fair observation.

I am not the Mover of the Amendment, and it does not lie with me. I only point out that it may be only because this Amendment has been placed on the Paper that the Government have now for the first time promised a Consolidating Bill. There is nothing in the Bill to indicate that there is going to be any subsequent consolidation. The Clause dealing with the appointed day certainly says that it shall be such and such a day as may be fixed, but it does not suggest that anything at all may be done by way of consolidation If it be understood that every time that we get one of these Bills we are subsequently to have a Consolidating Bill, we shall all be fully satisfied. At any rate, we have got to this point now, that we have a pledge from the Government that this legislation is to be consolidated, and that has been done largely by the party on this side of the House by their action in putting down their Amendment.

While I heartily support the Bill, I venture, in no hostile spirit, to make one or two criticisms. The last speaker has referred to the fact that this is legislation by reference. In particular cases, legislation by reference can be unobjectionable, but in this particular case we have a form of legislation by reference which is novel and which appears to be undesirable. We have, first of all, an Amendment of existing Sections of the Companies (Consolidation) Act, 1908, and in addition we have in substitution for various provisions in the Companies (Consolidation) Act, 1908, new provisions, and I suppose, by way of extra lucidity, we have the relevant Sections of the Companies (Consolidation) Act, 1908, interpreted by the inclusion of the marginal notes against the different sections. By way of explanation, let me refer to Section 9 of the Bill, the first few lines of which read: In that case the interpretation is not given; and if hon. Members are sufficiently interested to look through the Bill they will find that in certain cases the interpretation is given and in other cases it is not. Another Clause deals with Section 81 of the principal Act—a most important Section—and there, I think, it might be useful that the interpretation should be given. It is not given. In some cases, for no particular reason, the marginal note is given, and in other cases it is not. If this course is to be pursued the marginal note should be always given with strict and meticulous accuracy. That is not the case. I will give the House one illustration. Clause 25 of this Bill says:

One other matter to which I wish to refer is of a novel character and was introduced for the first time in the Amendment of the Law of Property Act, 1925. It will be seen that in Clause 84 of this Bill certain things which are called minor Amendments are introduced, and are apparently—at any rate, this may well follow from this course—to be put into a Schedule. As they are called "minor Amendments," those who are considering this Act may not realise the real importance of some of the things which are being enacted. Among these minor Amendments will be found on page 101 an Amendment of a Section of the principal Act which imposes for the first time a penalty upon a company which defaults in its compliance with the requirements of Clause 90. It is a penalty of no less than £5 for every day during which the default continues. Again, there is an amendment of Section 91 which imposes a penalty of not less than £50 for a first offence. I am surprised, too, that Scottish Members have not directed attention to the fact that on pages 100 and 101 certain alterations are made in the law of Scotland; apparently Scottish Members are prepared to allow them to be called "minor Amendments." In directing the attention of the House to these points, I suggest that if it is considered desirable that these interpretations should follow the references to the various Sections of the principal Act the interpretations should be given consistently throughout and should be strictly accurate; and I think, too, that the novel course—followed in this instance for the second time only—of putting substantial Amendments into a Schedule under the description of "minor Amendments" ought not to be taken as a precedent for other cases.

I think we ought not to end this useful and instructive Debate on this complicated Measure without a few more words. I wish to express my sense of the value of the Report of what we have called the Greene Committee, on which the Bill is founded. When I was at the Board of Trade the Committee had not been appointed. It had been decided that it should be appointed, and it was only the difficulty of securing the right chairman, which took a certain amount of time, that necessitated my leaving the appointment of the Committee to my successor. I congratulate him, and I congratulate also the Committee on the very useful work that it has done, and especially on the manner in which it has put forward its suggested amendments, which must have saved the Government draftsman trouble. I have not actually compared the Bill with the recommendations, but I understand that it follows precisely and exactly the recommendations made by the Committee.

So far as its Report goes, I think the Committee did its work in a way which, speaking without any expert knowledge, seems to be remarkably able. But I regret that it took a view of its reference which I thought when I read its Report, and still more when I read the evidence, was rather limited. That is to say, it did not examine the problem from the general point of what the public interest required, but applied its mind to devising amendments of the company law which had been called for by various cases which have arisen under that law. More than once in the course of the evidence the Committee declined to consider whether that law was, on the whole, framed in the public interest generally. For instance, the Committee did not apply its mind to the question whether greater or less secrecy would be good for the public interest, or whether the scope of the existing company law secured sufficient publicity for the affairs of a company, or whether it would be expedient to secure greater publicity. That question was left open, but I think the House ought to consider before parting with the Bill how much publicity should be required of a company to which the privileges of limited liability and of a good deal of anonymity are given.

One other word about the Report. The Committee drafted its proposed amendments in precise form, and for that we owe it our gratitude. But it did not go into the question of whether it would have been more convenient to present a Consolidation Bill at the same time. It has now been explained by the President of the Board of Trade that this Bill is not to come into operation until a Consolidation Bill has been passed by the House. That is a welcome statement, and, if we had had it before, I think the need for that portion of our Amendment dealing with legislation by reference would not have arisen. Clause 83, a very important one, dealing with share pushing and share hawking, is to come into operation at once. That is a long and important Clause, and I think it will require a good deal of consideration in Committee. I am not at all satisfied that it prevents hawking from house to house, as it purports to do, because the word "house" excludes a business office. Therefore, as I understand it, the Bill would allow of share hawking from office to office, and possibly from shop to shop. On that I am not quite clear, but, unless the right hon. Gentleman means to permit share hawking from office to office, which I do not think he does, those words will require a little amendment.

8.0 p.m.

Then there is the question of publicity, which is the major question underlying the whole of this Bill and any consideration of company law. Once or twice in the course of these Debates hon. Members have suggested that it is very important to preserve secrecy, and they have argued that it would be a dreadful thing if a company had to reveal the precise amount of its reserves, or the profit which it is making. Some hon. Members regard it as being hostile to business that there should be any more revelation in these respects than there is at the present time. It has also been contended that there should be a good deal less publicity. I would remind those who take that view that there is a difference between a limited liability company and a private concern dealing with its own money. I do not rest my argument on that difference. When we are considering the way in which business is carried on in this country we must not forget that the whole object is service. I am quite sure hon. Members will admit in their heart of hearts that there is no justification for business unless it promotes the public interest, or serves the public in some way or another. If it is suggested that secrecy improves the amount or quality of the service which a company is rendering, that is a good argument for secrecy, and that should be the guide as to the measure of secrecy. Let public companies have just that amount of secrecy which can be justified on the ground that less of that secrecy would militate against the service rendered by the public company to the community. Other claims in reference to secrecy have been based on the supposition that it would diminish the profit and not the service which the company is giving, but that is not a valid reason for secrecy and there is no public interest in profit. The public interest is in the service rendered by the company.

It may be held that as things are at the present time you cannot get the service without the profits, but I have never heard anybody argue that the measure of the service was the amount of the profits. The service is one thing, and the profit is quite another thing. It may be necessary to have profit, but I have never heard any sane and intelligent person argue that the greater the profits the greater the service. In my opinion, there is something to be said to the contrary. I suggest that profit is like lubricating oil in the motor car. You must have some lubricating oil, but anything more than the necessary minimum is waste, and too much lubricating oil is not only waste, but it stops the machine. There is no justification for maintaining secrecy in business except in so far as it can be argued that that secrecy is necessary to the service which the business has to render. I am aware that Government Departments hold that secrecy is necessary in some cases and the business man and the company should be allowed the same latitude. I should be very sorry to see more secrecy allowed merely because it was supposed to increase the profits. I think this Bill fails as an amendment to the company law because it does not deal adequately with the desirability of greater publicity in regard to limited companies.

On the point of secrecy, the Bill fails in other respects. There is one respect in what has been very much abused and that is in regard to the position of a private company. As a matter of fact, a company is now an entirely different thing from what it was in the 60's when the Joint Stock Companies Act was passed. At that time, public companies came under certain obligations with reference to publicity to which the individual was not subjected. Later on similar privileges were applied to private companies which were allowed to be formed without giving the public any particulars at all. In the early days the private companies were usually private firms which, for family or other reasons, wished to turn themselves into a company in order to get the privileges of limited liability companies without giving any further publicity. At the present time, private companies completely swamp the public companies. The latest figures which are available show that out of 85,000 joint stock companies 75,000 are private companies, and only a miserable 10,000 are public companies. It must not be supposed that the private companies are merely small concerns, because some of the largest concerns are private companies, and the average capital of the private companies is now as great as the average capital of the public companies. I suggest that, had we been considering this question anew and drafting a Joint Stock Companies Bill for the first time, we should have had to begin with the private companies, and consider what safeguards and what amount of publicity would be required in the case of the private companies before we came to deal with the comparatively small remnant of public companies.

We seem to have gone the other way about and framed our laws almost entirely in reference to the requirements of public companies, and we have ignored the safeguards required in regard to private companies. At the present moment, the private company has, to a large extent, superseded the public company as the vehicle for organisation. One special form is the interlocked company. The danger is that a large part of this interlocking has taken place in the case of private companies, and especially the subsidiary company. The President of the Board of Trade knows very well that a large part of the anxieties associated with the coal-mining industry have arisen out of the very legitimate suspicion which has been felt that the colliery companies, to a very considerable extent, have been concealing from the public and from their own workmen the actual condition of their accounts and the amount of their profits. I am not making an unfounded accusation when I make that statement, because hon. Members are aware that the Report of the Royal Commission appointed by the present Government used language which implied that the men were being cheated. There is nothing in this Bill to prevent that abuse. We know it is laid down that certain things must be done by subsidiary companies, but there is a proviso that those companies need not declare their profits. I think it is futile to say that a joint stock company shall publish its balance-sheet and declare its profits and losses, and then to allow its subsidiary companies to escape without giving any of this kind of information. That is reducing the law to an absurdity, and it will be a disgrace if this Bill is allowed to pass in its present form, because in this respect it is a sheer evasion of the intention of the law which is that a public company should give full particulars as to its profits, its reserves and its losses.

There are other forms of secrecy which ought to be dealt with in this Bill. The provision as to the form of the accounts which a company is required to keep is quite insufficient. It is true that you cannot by any legal enactment compel a company any more than a private individual to tell "the truth, the whole truth, and nothing but the truth." A year or two ago one great captain of industry said it was well known that the public balance-sheets issued by limited liability companies were very far from giving a true account of their financial position. In a Measure like this, it is our duty to prescribe the form of the accounts, and that is our business. I know that there is a long list of things which a company has to do, but that list is not put in the precise form which will ensure that the necessary particulars are given. It has been said that it would be irksome, difficult, and injurious to lay down a form of accounts which a company should be required to adopt. I do not agree with that statement. We could prescribe each heading and then each of those headings might be divided into innumerable other sub-heads, and the companies could go into as much detail as they like. All companies should give the accounts of the subsidiary companies as well as those of the main business, and this could be done without any detriment to the other requirements.

As a matter of fact, that practice has already been adopted by the Legislature with regard to other organisations. At the present moment a building society is one of the safest and soundest forms of investment. There was a time in my memory when building societies very nearly crashed, and a large number of them became bankrupt and failed to meet their obligations. After that, Par- liament demanded a very elaborate statement of accounts from them in regard to their liabilities, particulars as to the kind of buildings they acquired, the amount spent on these buildings, and whether the mortgages were in arrear more than a year. The particulars required from building societies are very elaborate, and are much more elaborate than those required from companies generally. I am only using that as an instance to show that Parliament has not hesitated to impose, upon bodies which are of the nature of joint stock companies, detailed obligations as to what accounts they should render. The gain to building societies since that came into force has been almost incalculable, and I believe, as I have said, that they are now one of the soundest forms of investment. Before that Act, however, they were very much the reverse. I believe it would be a great advantage if in the case of joint stock companies a definite, specified form of accounts were insisted upon as a minimum.

My hon. Friend who moved the Amendment has already mentioned the co-operative movement, the magnitude and variety of whose business some hon. Members do not seem to realise. They look upon it merely as a matter of selling goods over a counter, forgetting that it is one of the largest manufacturing concerns in this country, that it has foreign business, that it has import and export business with some 20 different nations, that it has its own ships on the sea, its own bank, and so on; and it renders its accounts with great elaboration and completeness, quite willingly, because those who control it believe in publicity. That is an example which joint stock companies would do well to imitate. As I have said, the aim and object of the cooperative movement is service. If joint stock companies are not prepared to accept the test of service, and the fact that that is their purpose in the community, and if they fall back on the line that they are going to get as much profit as they can individually, and want that profit protected, they are, of course, earning condemnation on the part not only of people on this side of the House, but of all those who believe in public service and in the fact that the end of all this work is service, profit being only the lubricant to the machine.

There is more than that. I am not quite sure that the Bank of England is a joint stock company in the sense in which we are now using that term; I am not sure whether it comes under the Companies Acts or not; but surely it is common knowledge that the accounts rendered by the Bank of England are complained of very seriously, not by factious people, but by eminent financiers and economic authorities, as being altogether insufficient in the amount of information that they give. Moreover, they are so rendered as to be utterly unintelligible even to people who have the greatest possible financial knowledge. The accounts rendered by the Bank of England are a model of what ought to be avoided in laying down the requirements in this regard. It is interesting to notice that the other banks are turning one by one to this view, and are themselves spontaneously improving, in the direction of greater publicity and greater intelligibility, their balance-sheets, profit and loss accounts, and statements of receipts and expenditure.

I believe that English business would be sounder, better and safer if there were greater publicity. References have been made to leakage of information, but there would be no leakage if information were given publicly. That is the way to stop leakage. I quite agree that in all probability leakage cannot be stopped unless that is done, and the evil of leakage is not the leakage itself, but the fact that it means that some individuals connected with the company are making an illegitimate profit at the expense of other individuals outside. If I might avail myself of my privilege as a Member of this House to use plain language, I should say that that is of the nature of robbery. At any rate, it is outside the morality of every decent man. Again, in addition to the form of accounts, there is the question of the form of the audit. At the present time there is practically no useful requirement under the Companies Acts with regard to audit. It is not at all clear what the audit ought to be, what the auditor ought to require, what the auditor is not only entitled to require, but should, in the public interest, be made to require. He is in the position, at the present time, of being chosen by the directors—even though, nominally, he is elected—and paid by the directors, and the continuance of his business de- pends upon the directors. I am glad to say that, for the sake of the larger interest and the larger view, he desires to maintain a reputation, and, consequently, I am bringing no indictment against auditors; but what a support it would give to the auditor if the Act specified the kind of things which the auditor had to require! He could then say to the directors, "I am very sorry, but the Act requires me to ask for this information." We want to see specified the information which the auditor must require, and the form of the certificate which he must give. That, I believe, has been done in the case of banks—if it has not, it should be—and it ought to be done in regard to companies generally.

This Bill fails altogether to provide for the evil of what are called "shilling shares." That is only a shorthand expression for an evil which has many ramifications. It is possible so to distribute the capital of a company between debentures, preferred and ordinary stock, and so on, and to distribute the voting powers and the sharing of the net profit among those different classes, as to play into the hands of the people who are going to use the company as a gambling counter. If it turns out well, they will be rich beyond the dreams of avarice; if it does not turn out well, the public will have to pay for the whole loss. It may seem difficult to interfere with the way in which a promoter chooses to arrange the capital of his projected company in different clases of stock, but I would suggest to the President of the Board of Trade that there are precedents. I have not looked them up, and am speaking entirely from memory; possibly I am wrong; but I believe that a railway company is not allowed to have more than certain proportions of its capital in preference shares, debentures and ordinary stock. There is some prescription in that respect, and there might very well be similar prescriptions for other classes of companies. At any rate, there seem to be strong reasons for such prescriptions in regard to the voting rights in a company. There can be no harm in giving publicity to the accounts of a company, and in sending them to preference shareholders and also to debenture holders as a matter of course. Would any honest company object to that? If anyone does object, is there any public ground on which he can rest his objection? I think it might be provided that the accounts of the company, which go to the ordinary shareholders, should go to the holders of all classes of capital in the company, and something might also be said as to the distribution of voting rights, if not as to the distribution of profits.

It has been said that this Bill is a Bill to protect the shareholders and investors, as though they were the only people concerned, but that is not the ground on which the Companies Acts have proceeded. The Companies Acts are not and ought not to be regarded as for the protection of shareholders and investors, wholly or even mainly. The State has a right to insist that a company should comply with certain requirements and that there must be complete publicity. This Bill does not secure complete publicity. After it passes there will be 75,000 companies which will not be required to publish their balance-sheets, and the public will not know what their assets are; yet they will be companies indistinguishable from public companies.

There is another public interest. We are entitled as a community to know the people with whom we are dealing and what is the financial standing of any group of people of that sort. We are entitled to know what is the character of the people with whom we are dealing. The name of a company does not help us. Surely we are entitled to be able to ascertain who are the people behind the name of the company and their financial standing and whether we can trust them or not. For instance, when a colliery company, or any other company that is an employer of labour, enters into negotiations with its men and urges that its profits are very low, or that it is making losses, and uses that as an argument why wages should be reduced or why the Chancellor of the Exchequer should diminish Income Tax or a tax on a particular commodity, we are entitled to ask that the whole of the facts should be published. If it is a private company it need give no information at all, but even if it is a public company it may be merely the centre of a planetary system with a number of subsidiary companies of which it does not give particulars and does not bring into account the profits that are being made, and a number of these subsidiary companies may be private companies, so that you do not even know what they are doing. This Bill does nothing to rectify that great evil Further, directors may actually be buying things, perhaps components, from other companies—private companies—and the shareholders have no means of knowing. I have known dozens of such cases where the directors have made little pockets, supplying components, and putting into their pockets profits which really belong to the shareholders at large. Does anyone defend that? Does anyone deny that it has happened and is happening to-day? What sort of Bill is that which purports to improve the Company Law and deliberately avoids dealing with that matter? That is a failure of publicity which thoroughly justifies the complaints we are making. Then there is the other side of that question. I have talked about directors buying from these companies. They also sell to these little subsidiary companies, still, like Ananias keeping back part of the price. The Bill makes no attempt to deal with that matter. Good as far as it goes, it is an utter failure from the point of view of statesmanship. It fails to deal with obvious and gross evils of the joint stock company system. The Committee deliberately did not think it part of its duty to go into this question, and the President of the Board of Trade has drafted a Bill on the Committee's recommendations, forgetting that the Committee thought it was not its duty to go into that. It left that to the Board of Trade, and I can only express my regret that its statesmanship has not proved equal to producing a Bill which would have made our Company Law a model for the world.

I have listened to the Debate with great care, and I have come to the conclusion that no one has any objection to what is in the Bill with the exception of the hon. and learned Gentleman the Member for Londonderry (Sir M. Macnaghten), who wanted one of the Clauses left out. I am glad that it has met with such general acceptance. I have listened with great interest and respect to the eloquent speech we have just heard, and I gather that there is nothing in the Bill to which the right hon. Gentleman takes exception. His excep- tions are purely to omissions from the Bill. It already runs to 110 pages. It is a substantial contribution to the legislation of the country. I find it a little difficult to deal with the points raised by the right hon. Gentleman, because obviously they are in the main a series of Committee points. Like the hon. Gentleman who opened the Debate, he wants more publicity. The Bill provides for more publicity than there is at present. The right hon. Gentleman and his hon. colleague want more publicity. Other hon. Members have referred to publicity; some want more and some think what the Bill proposes is adequate. Essentially it is a question of degree, and the place for discussing the matter is not on Second Reading, but in Committee, when we can weigh up the respective merits of each particular proposal. For instance, the question whether the disclosure in prospectuses should be as to the dividends or the profits of the last two years, or possibly both, is one of detail which may be properly argued out in Committee and is difficult to discuss now.

I realise that the difficulty of everyone who has been taking part in the Debate is that we are dealing with a very heavy Bill which has no obvious principle running through it, because it is not a Bill giving sanction to any new principle. It is a periodical redecoration of the edifice known as the company law of the country. Some parts of it want altering in some way and some in another, so that what we have had to-day are not ordinary Second Reading speeches but what are in the nature of Committee speeches. It is difficult therefore to reply without taking up undue time. I should like, however, to mention that it was an original part of the proposal that there should be a consolidation scheme. Consolidation ultimately is the most convenient, in fact the only practical way, of dealing with the problem.

What we should like to know—I am glad to see the Prime Minister present—is whether we are going to get a promise of a Consolidation Bill in this Parliament?

It is quite evident that whether consolidation takes place this Session or next is something to which no reply could be given at this moment. If the Bill obtains its Second Reading to-night, and proceeds to a Committee, and the Committee is conducted in a businesslike way, without obstruction of any kind, but proceeds with reasonable expedition, having regard to the complications of the Bill, and the subsequent proceedings in another place are brief, having regard to the fact that it was discussed there at length last Session, it is conceivable that the Bill may receive the Royal Assent at such an early date that the work of consolidation can be put in hand quickly. From the point of view of drafting, the work of consolidation will be easy. In that case, the consolidating Bill will become an Act at a very early date. It is an obvious probability at any rate that it will become an Act before the end of the present Parliament, at any rate before the Bill comes into operation, which is the material point.

It seems to me that the bulk of the Members who have taken part in the Debate to-day and have indulged in criticism have ignored the fact that this Bill is based on the Report of a Committee of very able gentlemen who spent a lot of time, examined a lot of witnesses, and arrived at a number of conclusions, the bulk of which they state very definitely. The Bill as presented to the House is based upon that Report. I am not going to weary the House with a lot of quotations, but may I just read a few words from the introductory part of the Report of the Committee: take to do so. I think I should be wearying a House that has already become wearied after a discussion of a Bill—[HON. MEMBERS: "No, no!"] I should, at any rate, weary a good many Members of the House if I spoke at great length upon a Bill, which, however important, does of necessity tend to be somewhat dull, because it deals with a whole series of details. I hope that the right hon. Gentleman the Member for Seaham (Mr. S. Webb) and the hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander), who take such a keen interest in this matter, if they think there are certain matters which ought to be amended—and they are only pressing Amendments to certain Clauses; there is no proposal that a number of new Clauses should be inserted—will bring forward their Amendments.

The hon. Member must not be under any misapprehension. We have said that we welcome company reform, and he is quite right in saying that we do not object to the principle of the Bill, but the Title of the Bill is wide, and he must expect that we shall make certain definite proposals of a wide nature.

I have listened very carefully to the various speeches, and it seems to me that the points raised in to-day's Debate, except possibly the proposal to make limited companies similar in character to co-operative societies represents a very big change and which might, conceivably, be outside the scope of the Bill, could be met by Amendments to the Clauses of the Bill.

Can an Amendment dealing with the non-voting share be included in one of the Clauses of the Bill?

I am not a Law Officer of the Crown, or sufficiently expert in Parliamentary procedure to be able to give a definite answer, but I see no reason why an Amendment on that point could not quite properly be brought in, though possibly, it might involve a new Clause. The bulk of things discussed to-day were not fundamental questions but questions of detail. Everything with regard to publicity which is asked for can be brought into the Bill by Amendments on, I think, Clauses 28 and 34. That being the case, and since we are going to discuss in detail the respective merits and relative degrees of the Bill, and are obviously going to consider a variety of alternative proposals put forward from different quarters, is it worth while to have extensive arguments now as to the respective merits of the various proposals until we have seen them? Up to now the statement is that there has been a general demand for more publicity. When it is considered in detail it will be a question of more publicity by various devices, and argument must take place on the respective merits of those devices, and upon the effect of those devices on the well-being of the companies and of the shareholders. It seems to me that it would be very foolish and a waste of time for me now to indulge in a lengthy argument with regard to the respective merits of publicity when we are not dealing with the general issue.

Question, "That the words proposed to be left out stand part of the Question," put, and agreed to.

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

Patents and Designs (Convention) Bill

Order for Second Reading read.

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

It is curious that I should be addressing the House twice in succession on the first occasion that I am called upon to speak from this Box, but I will be very brief in asking the House to give a Second Reading to this Bill. The purpose of it is to make such changes in the law as will enable His Majesty's Government to ratify a Convention which was signed on behalf of His Majesty at the Hague on 6th November, 1925. That Convention is a revised Convention for the Protection of Industrial Property including such matters as patents and trade marks. The original Convention is some 44 years old, and there are 37 countries now signatory to it. It is necessary for the Government to be in a position to ratify the Convention before the 1st May of this year. For that reason, I hope that the proceedings on the Bill will be rapid. I think there is no reason why they should not be rapid, because, I understand, there is no particular controversy involved.

The first Clause of the Bill is a little bit of legislation by reference which may be criticised, and the purpose of it is to remedy the situation created by a decision given by the hon. and learned Member for South-East Leeds (Sir Henry Slesser) when he was Solicitor-General in the late Government acting as a Court of Appeal in matters of patents. He was compelled to give an interpretation of the law which disturbed the views previously taken, and the object of Clause 1, which, I am glad to say, he was good enough to tell me met the point, is to restore the lawful position to that which it was intended to be. It is necessary in order that we should be in a position to ratify this Convention.

Clause 2 deals with the point of the period of grace which is allowed to a foreigner who has obtained a patent in this country. At the present time, four years is allowed from the date of the patent, and the date of the patent is not the date on which it is granted but the date on which application is made. It is proposed under the Convention to make it three years from the date of the grant of a patent. Sometimes the period between application and grant may be as much, I believe, as 18 months or it may be very much less. On balance the periods are about the same. It is believed that three years is better, because, after all, the real exploitation of a patent cannot commence until it is known that it has been obtained. Clause 3 refers to protection in the case of inventions which may happen to be on aircraft or land vehicles temporarily, or accidentally, in a foreign country or in this country. At the present time, such inventions on ships are protected, but they are not protected on aircraft and land vehicles, and Clause 3 alters the law so as to afford protection.

In Clause 4 what is known as the priority period in respect of protection for a design or trade mark is altered from four months to six months. When trade marks are registered abroad they are protected here for a period of four months subsequent to the date of the application abroad, within which time application may be made in this country. The period of four months is rather short, having regard to the time which it takes letters to come from different parts of the world. Therefore, we provide for a period of six months. Clause 5 applies to patents granted and applications for and specifications relating to patents made and deposited before, as well as after, the passing of this Act. The Clause will meet with general satisfaction because, following the precedent of the 1919 Act, it provides for consolidation and printing in one Act.

I feel myself in a very curious, not to say a unique position in regard to this Bill, because the first Clause is intended to reverse a decision which I had to give when I was hearing appeals as Solicitor-General. On the law as it then stood I do not think that I had any choice in the interpretation of the law which I then gave, an interpretation which I agree has produced rather unfortunate results. I do not think it was the intention of the Act of 1919 to produce the result which I was bound to construe as I did. This Bill now reverses my decision and puts back the law into the position in which I think it was intended to be by the Act of 1919. As regards the rest of the Measure, it carries out a Convention which has been signed among many nations. I only wish that in the matter of the Eight Hours and other international Conventions the Government would be as sensitive as they are in regard to this Patent Laws Convention. However that may be, as supporters of international agreements and the carrying out of Conventions to which we have put our hands, we have no objection to raise to the Bill.

I wish to deal with this legislation from the point of view of the man who may buy the Bill and read it; the man who has an idea of his genius and who wants to form his views of the new law. From his point of view, I want the Bill to be made simple. Let us take line 5 of the Preamble:

"Whereas it is expedient to make such amendments in the Patents and Designs Act, 1907, as amended by the Patents and Designs Act, 1919 (which Act as so amended is hereinafter referred to as the principal Act), as may be necessary to enable effect to be given, to the said revised convention."

Would it not be much better and clearer to show which is meant as the principal Act? When we turn to Clause 5, we find that Sub-section (1) states:

"This Act may be cited as the Patents and Designs (Convention) Act, 1928 and the Patents and Designs Acts, 1907 and 1919, the Patents and Designs Act, 1914, and this Act may be cited together as the Patents and Designs Acts, 1907 to 1928."

In the case of a man who does not trust a patent agent or who has not the money to employ such an agent, I want this Act to be of service to him, and I want him to understand it, because we have to look to such men as the outlet for the brain power of the country. I suggest that it would be better to give the date of the principal Act, whether it be 1907 or 1919, because the Bill as it stands is not clear.

As soon as Clause 5 is carried out, the regular practice will be followed and this Act will be incorporated in a single document, which will be the whole Consolidation Act. We have under our powers the right to consolidate Acts as they are passed, and that will be done in this case. The criticism of the hon. Member might be relevant to other Acts of Parliament, but it cannot be applied in this case, because the subsequent Acts are consolidated as they are passed.

Suppose you begin with the Act of 1883, and then you come to the Act of 1907 and the Act of 1919, the man outside who does not know about these things will not know that the 1833 Act has been repealed. The simple insertion of some words would make it much more clear. It is on the ground of clarity that I am appealing. On the general grounds, I would like to know whether all the conditons defined in this Bill will apply to all the other countries concerned in the Convention. Are they making the same conditions, and are they using the same language as in this Bill? In Clause 5 (4) we find the words:

"A reference in any Act of Parliament or other instrument to the principal Act shall, unless the context otherwise requires, be construed to refer to the principal Act as amended by this Act."

The President of the Board of Trade has told us that they have the power to consolidate and to print in one volume. What will happen to the man who reads Clause 5 (4)? He will be confused as to the principal Act. There is need for clarity in order that we should not have to depend upon so much reference back. Legislation by reference is unfortunate. References are made in the Bill to inventions on vessels, aircraft, etc., but there are a great many other complications still in existence, and I did think that those complications would have been dealt with in this Bill. As far as it goes, the Bill is fairly good, but so far as the patent laws are concerned we might have gone a great deal further and have had a much more effective Bill.

I cannot understand the reference throughout the Bill to the United Kingdom. What is intended by the use of that phrase?

Does that apply to the reference to the Isle of Man, which has its separate Legislature. I hope the right hon. Gentleman will explain why we have this reference in this Bill when at the same time the Isle of Man deals with these questions of patents itself?

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for To-morrow.—[ Sir P. Cunliffe-Lister. ]

Industrial and Provident Societies (Amendment) Bill

Order for Second Reading read.

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

This is a small, non-contentious Measure designed to amend Section 22 of the Industrial and Provident Societies Act, 1893. A defect in the Act of 1893 has recently come to light under which members of registered societies may, without their consent or knowledge, be subject to increased liabilities which, I am sorry to say, in some cases have brought some members to liquidation. Anyone who reads Clause 1 of this Bill will see at once what we are aiming at. Let me read to the House the words of Clause 1:

9.0 p.m.

This Bill, while it appears to cover very little ground, raises a question of great importance in the agricultural world. In a day or two we are to deal with a Supplementary Estimate for a sum which has to be found in order to get over the difficulties of certain co-operative societies; and this Bill is required to deal with the same point. The Supplementary Estimate would not have arisen if the law had been as it will be when this Bill is passed. If the law had been in accordance with the Bill now before the House the obligation on the State, which will have to be met by a Supplementary Estimate, would not have arisen at all. The law undoubtedly requires amendment in regard to agricultural co-operative societies. These societies have been hampered in various ways other than that dealt with by this Bill, and I hope the Government will find an opportunity to bring in legislation to amend the law so as to give agricultural co-operative societies full opportunity. Everyone knows that the side on which agriculture needs to be assisted is the marketing side. Our production is good, but in marketing we form an extraordinary exception to the practice and progress in agriculture in every other country of the world. The Financial Secretary will no doubt agree with me that our agricultural co-operative societies are in a difficulty on two or three legal grounds.

I cannot understand how this can be brought into the Second Reading Debate and within the title of the Bill.

I bow to your ruling very readily and pass on to urge that the difficulty we are dealing with is one which has only lately come to light owing to a decision in the House of Lords, which has shown that an obligation to take up shares may be incurred without the deliberate consent of the party concerned. We on this side of the House are conspicuous in our belief in the need for encouraging co-operative agricultural societies and all believers in that movement must be in favour of this Bill; and the subsidy which is associated with it. The reason for this Measure is the very great importance attaching to the encouragement of co-operative societies in agriculture. Happily, to-day, advocacy of this form of co-operation is common ground. Not very long ago jeering at agricultural co-operation was quite fashionable with hon. Members on the other side of the House, and I have often heard with astonishment the argument usel against agricultural co-operation, that industrial co-operative societies have tried their hands at farming and have not made it pay. There is no connection between the two, but the fact that the argument was used is evidence that there was a prejudice against encouraging agricultural co-operation by hon. Members opposite. That, happily, appears to have passed away, and an important incident in the history of the matter was the undertaking of co-operation in farming by the National Farmers' Union.

This particular Clause deals solely with the rules of industrial and provident societies.

I submit that the need for this Bill depends on the importance which the House attaches to the cause of agricultural co-operation, and I will be very careful to keep to an argument which is relevant to the Measure. It appears to me that the time of the House need not be occupied with this Bill unless great importance is attached to the object in view, which is, to put agricultural co-operative societies on a satisfactory legal footing. I think it is necessary, in order to establish the im- portance of the Clause, to remind the House what has happened in regard to agricultural co-operation, because we are in a very serious position in regard to it in this country. In other countries it has for a generation been taken for granted that it is one of the primary features of agricultural life, but here it has not done much more than take root, and there is great leeway still to be made up. It is on that ground that this legislation is required. I have a very special interest in it, because I was one of the early members of the Committee of the Agricultural Organisation Society, and by some of its members, though not by me, very great financial sacrifices were made in founding the very body, the Agricultural Wholesale Society, which has had to go into liquidation and whose affairs have led to this Bill. Sir Francis Acland and others devoted themselves with extraordinary energy and immense self-sacrifice to the task of trying to make a central body for the trading, chiefly the purchasing, of the various co-operative societies.

After the War great progress was made with the help of subsidies from the Government, which in one year amounted to no less than £51,000. But by the time that the Labour Government came into office these subsidies had dropped and the co-operative societies were languishing. It therefore became all the more important that the State should place the whole affair on a sound footing and that some other body should undertake to promote the formation of societies. As hon. Members know, the Agricultural Organisation Society ceased to work, and it was part of my duty when I was Minister to accept the willing offer of the National Fanners' Union to take over the propaganda from them. We did what we could to help farmers anxious to form societies by agreeing to lend them money on very favourable terms for undertakings such as bacon factories. Perhaps, in this connection, the Minister will be able to tell us how those societies are going on, because he mentioned the other day the amount of money—

The whole of this Bill is contained in the provision in the first Clause, that individual members of any Industrial and Provident Society shall not, without their consent in writing having been obtained, be bound to subscribe for more shares, and so forth. I really do not see how the whole history of a particular agricultural society, which may or may not be affected by this provision, can be in order.

I should like to know whether the Debate is necessarily to be confined strictly to Section 22 of the Industrial and Provident Societies Act, or whether any other Section can be introduced into the Debate.

Certainly not. The Title of the Bill is

"A Bill to amend Section 22 of the Industrial and Provident Societies Act, 1893."

Obviously, discussion must be confined to Section 22.

I hope you will allow me, keeping strictly to the point of the urgency of amending this Section to proceed with another matter. The country now knows, very largely through the books of the Marketing Department of the Ministry of Agriculture, that there is very great urgency attaching to this legislation. But it would not be necessary to introduce this Bill if it were not for the fact that, in spite of the progress made, not more than 10 per cent. of the farmers of the country are yet enrolled in co-operative societies. In regard to marketing not more than 2½ per cent. of the total agricultural output is marketed through agricultural societies. If you would allow me, it would be valuable, I think, to bring out the opinions of the Agricultural Tribunal instituted by the Conservative Government of 1923, which concurred in the vital importance to agriculture of arriving at a more fully organised co-operation. The tribunal urges legislation of this kind, where it says:

"We do not hesitate to state that the comparative failure as yet to achieve a widespread co-operative system is one of the contributory causes of the depression of British agriculture."

This is a Bill to amend Section 22 of the Act of 1893. It is a very limited Bill, and the right hon. Gentleman cannot base on it a general argument about agricultural co-operation.

I accept your ruling, though I did think you would regard the subject I raised as relevant to the question whether the House should pass this Bill. I must be content with having reminded the House that we have very great work to do, that we are extraordinarily behind other countries, that the Farmers' Union is anxious to remove deterrent causes from the outlook of the farmer, that it is on the basis of this legislation that all our experts urge that we must improve our marketing, and that in this Bill we are taking a step towards an advance which is really of prime importance to our agricultural industry.

There is one point relevant to the Bill on which I should like an explanation. I am not quite certain whether the Bill is retrospective, whether in the case of a society which is formed under the Industrial Societies Act and is calling up the amount of money which this Bill says they shall not call up, it can be called up because the company is in liquidation at the time of the passing of the Bill.

The answer is quite clear in the Bill itself. If my hon. and gallant Friend will look at line 14 of Clause 1, he will see the words, in reference to shares,

"the number held by him at the date of registration of the Amendment."

I cannot say that. The Clause is definite:

"At the date of registration of the Amendment."

The hon. and gallant Member can draw his own conclusions.

I do not think the House is fully aware of the reason for this Bill. My right hon. Friend the Member for Northern Norfolk (Mr. Buxton) referred to it, but the Financial Secretary to the Treasury did not refer to it. He endeavoured to explain the English of this Clause but not the reason for it. With great respect to the ruling which has been given from the Chair, and which, of course, must be observed, there is something to be said about the general question which comes within the four corners of Clause 1 of the Bill. As the Minister of Agriculture probably knows better than the Financial Secretary to the Treasury, this matter arises from a decision in the House of Lords. That decision came as a bombshell to some of us who have been interested in industrial and provident societies for years. At the same time it should be-made clear that, in regard to the practice of the great majority of industrial and provident societies engaged in industrial business, what is secured by the operation of this Measure, has already been carried out wherever there has been sound advice. In the case of the industrial side of the movement, which is covered by this class of legislation, we took counsel's opinion nearly 30 years ago as to what were the actual effects of Section 22 of the Act of 1893 and, as a matter of fact, the Chief Registrar of Friendly Societies has approved of hundreds of sets of rules which are perfectly binding under Section 22 of the 1893 Act and which would, in every case prevent the society from increasing—whether at a special or general meeting—the liability of existing shareholders.

It is obvious, if that practice has been found to be sound in the case of all these hundreds of industrial societies, it ought to have been found sound by the Agricultural Wholesale Society, the liquidation of which was responsible for the legal decision in another place some two or three years ago. But the importance of the Bill is not so much that a Statute should be amended or that the general practice laid down under the rules of the society should become binding by Statute. What is important is that we should arrest, by the passing of the Bill, a great feeling of mistrust and suspicion throughout the agricultural world about having anything to do with industrial and provident societies. I had a conversation last summer with an old friend of mine in Somerset who had been, not actually involved in the losses of the Agricultural Wholesale Society, but in those of other societies, in respect of cases, all of which would have gone to legal decision but for the House of Lords case. I found there a very large number of men. engaged in farming, who have been putting their capital into the industry and who have been most severely hit by the calling up of capital with hardly any warning, when they had never given any personal consent or authority. I found, just at the moment when agriculture was most depressed and when these men were finding it most difficult to carry on, that the other societies, which, of course, were able to make demands upon them, because of the precedent established by the House of Lords in the Biddulph case, were pressing for very large sums to be paid by farmers.

Unfortunately, in so far as the amending of a Statute is concerned, as the Financial Secretary has indicated to the hon. and gallant Gentleman the Member for Pembroke (Major Price), there is no possibility of making the amendment of the law retrospective and none of us likes to advocate retrospective legislation. But it is, I think, relevant to this Debate to say that, not only this Bill, but the other proposals of the Government to make some financial contribution to the societies which have been so severely hit in this respect, will help to re-establish that confidence which is so essential to-day. For the last two and a half years, in whatever time I have been able to give to it—and that has not been very much because it has been a busy period—I have tried to establish a closer contact between the organised co-operative consumer in this country and the organised farmer all along the line. We have had two answers to this proposal. There is, first, the answer given by my farmer friends in Somerset last: year that they are very doubtful indeed about having anything to do with a Co-operative society which may repeat their experience in losses of this kind. Secondly, they say to us: "You had better show us that you yourselves can farm a little more successfully than your accounts at present show." I have the same opinion on that subject, as others of my right hon. and hon. Friends here, but that is beside the point—

That matter does not appear to arise in relation to the amendment of Section 22 of the Act of 1893.

I was afraid, Sir, that your keen attention to this Debate would catch me on that point, and, of course I shall not press it, but I submit my first point is one of substance in relation to this Bill. What I am concerned about is to ask this question. As this legislation is not retrospective, do the Government propose to introduce anything of a supplementary nature which will be of assistance to the indi- vidual farmers who have made losses, not only in the Biddulph case, but in the other cases? Do the Government propose to do anything for the individual farmers who lost so heavily by the various calls which have been made on them? Is it the Government's intention to stop at this Bill, and to offer nothing else but a comparatively small Estimate to reimburse certain agricultural societies without doing anything for the individual farmers?

As far as I can see, Clause 1 of the Bill is retrospective. The Amendment to which reference has been made is not to the Act, but to the rules of the society. If we read Clause 1 we find:

"Notwithstanding anything in section twenty-two of the Industrial and Provident Societies Act, 1893, a member of a society registered under that Act shall not without his consent in writing having been first obtained be bound by any amendment of rules registered after he became a member."

If we pass this Bill, then in cases where the farmer has become a member of a society, where the rules have been amended so that his share has been increased or he has been made to take up two shares where he held one, and, where, on the strength of that, the committee have under their guarantees, got money from the bank to carry on the society, that committee will not now be able to go back upon the members and call up on their shares. I think we should make quite clear the position of those societies and the point as to whether any help is going to be given to the guarantors to enable them to meet the obligations which they have incurred.

By the leave of the House, I think I can meet my hon. and gallant Friend's point. If he will take line 11 of the Clause, after the word "member," he will see that if the words

"and after the commencement of this Act."

are inserted they will cover his point. I should be willing to put those words in at the Committee stage. I think that covers it entirely. As to the question raised by the hon. Gentleman opposite, I think that might be dealt with better on the Supplementary Estimates. I do not think it would be order now. It is a question of policy which would have to be considered, and I suggest it should be raised on the Supplementary Estimates, when it can be dealt with.

The hon. Gentleman, in producing this Bill, made the statement that it was a small and non-contentious Measure. I speak not as an expert in the law of co-operative institutions, but as an ordinary member of a retail co-operative society; and, really, I feel sure that this Bill does very much more than the hon. Gentleman indicated. The whole of the discussion up to now has turned round cases of bankruptcy in connection with agricultural co-operative organisations. I am not at all familiar with those cases. The House ought to have been given a few more details as to what actually has happened under the existing law. It would seem that in order to remedy a defect in the law in relation to a few agricultural co-operative societies we are to bind at least 5,000,000 people, members of consumers' organisations, of which I am one, and of which I hope all Members on the other side are members, too. I do not hear any assent to that proposition. Most Members, if not all, on this side are members of such consumers' co-operative societies, and we are very much concerned, therefore, as to anything which may be done in connection with altering the law in regard to those institutions.

The hon. Gentleman was good enough to read to the House the words of the new Clause in this Bill. It would have been better if he had also read the words of Clause 22 of the original Act on which the Amendment is based. As I have already said, everybody who has spoken, so far has confined his attention to the agricultural situation. As a matter of fact, the 5,000,000 or 6,000,000 members of retail co-operative societies up and down the country know very little at all about these failures in the agricultural world which have been referred to. In fact, the strange thing about co-operative organisations in the industrial centres of this country is that there has hardly been a bankruptcy at all in recent years. Cases in connection with the consumers' co-operative societies have been rare. As a matter of fact, when urban councils and boards of guardians are finding themselves in financial difficulties in distressed areas, consumers' co-operative societies are able to hold up their heads in spite of all the difficulties. Consequently, I say, speaking without very much knowledge of the agricultural co- operative movement, that it does appear to me that this Bill is just like using a steam-hammer to crack a nut. That is what it amounts to. What actually is the case? Section 22 of the Act of 1893 reads: when the quarterly meetings to amend the rules take place. Must I give my signature to an amendment of the rules of my society on each occasion that it amends the rules, merely because this Bill is passed into law?

No. I take it that it is only when a liability is put on to increase the liability at present existing. I take it that that liability cannot be put on you unless you signify your intentions in writing.

Will the hon. Gentleman carry the point a stage further? There are two separate accounts in a co-operative society called the loan and share accounts respectively. I speak subject to the correction of experts around me, but I always understood that co-operative societies establish both loan and share accounts. I should like to know whether, if I put £10 in the loan account of my society, and £10 in the share account, which of these two accounts will be affected by this new Amendment, if either. I think the hon. Gentleman will probably be able to give a reply. If I put £10 in the loan account, all my liability in respect of that £10 ought to be already covered; but in respect of the share account, which fluctuates owing to amounts which have been accruing, will this Amendment affect that? Will it affect either the loan or share accounts, or both?

It will affect the liability of the hon. Gentleman. Whatever liability upon him exists, no liability can be put on him, nor can any liability which exists be increased unless he gives his approval in writing.

Take the 50,000 members of the society to which I belong. Is the hon. Gentleman asking the House to pass an Amendment to the law calling upon the 50,000 members of our society to put their signatures to a document in order to meet a case of that kind?

What we are trying to do is to protect those members from having a liability put on them or incurred without their signing their approval.

I think we are getting a little information bit by bit from the hon. Gentleman. It is typical of this Government. They give you information in pieces; they never give it in full. That is the custom of all Tory Governments. Let me ask another question. The hon. Gentleman has told us that this Amendment of the law means that the Government are going to protect members of these societies practically against their will. That is what it means. I should like to ask a question which has puzzled me. If this is a Measure designed to protect members of co-operative societies, why does it not apply to Northern Ireland? Whenever we have a Bill in this House it always includes Northern Ireland, unless I am mistaken. The hon. Gentleman is apparently not aware of this Clause:

I am still in a quandary with regard to these words "without his consent in writing having been first obtained." Does it mean that the entrance form for membership of a co-operative society must have words to cover this issue? It seems to me that unless the application form contains words to absolve a member from any liability under it, the Bill will be useless. It is all very well for the hon. Gentleman to put down these words in legal vocabulary, but he has to understand that he has to deal with about six million people in this connection; and if they are going to be absolved from any liability consequent upon a cooperative society becoming bankrupt, every one of them ought to have given his consent in writing beforehand under this new Clause.

Some co-operative societies hold their quarterly meetings in districts. For instance, the society of which I am a member has its headquarters in Manchester, where most people think it rains more than anywhere else, but it does not; the rain takes longer to come down, that is all. That society has district meetings at Altrinoham, Didsbury and Levenshulme, and its tentacles are spread out over 20 miles round the City of Manchester. It holds its quarterly meetings in each district in turn, concluding its series of gatherings by a quarterly meeting in the centre. Go-operative societies' gatherings are attended fairly well on the whole. My society, with 50,000 members, gets about 2,000 to attend, and it is there that amendments to rules are generally carried. My hon. Friends who represent the co-operative movement here will agree, I am sure, that every amendment to a rule is passed at the quarterly meetings of the members of the co-operative societies, and the amendments are sanctioned by those members who care to attend the meetings. The decision of about 2,000 who attend out of the 50,000 is always binding on the whole of the members. I would like to know, therefore, as one who takes a keen interest in the co-operative movement, whether these five or six million people, in order to safeguard themselves, are going to be called upon to sign a notice in writing so that they will be absolved from any liability that might accrue if the society of which they are members becomes bankrupt; because if it does not mean that, this Bill is of no avail at all.

I hardly think the House has been treated quite courteously, even by speakers on my own side, who have suggested that it deals with co-operative agricultural organisations only; for what we decide to-night in respect of those organisations must apply to the six million co-operators, of whom a goodly number are on this side of the House. I say, therefore, that members of co-operative societies in industrial areas ought to be safeguarded in this connection, too.

What is the position of the Co-operative Wholesale Society? That society is not made up of individual members at all, but of affiliated co-operative societies. I would' like to know if the retail cooperative society in Doncaster, Rochdale, or Manchester, affiliated to the Wholesale Co-operative Society, is in the same position as an individual member. Take the case of a retail society like the Woolwich or London Society, which are attached to the Co-operative Wholesale Society. Nothing by way of bankruptcy can happen to the Co-operative Wholesale Society; but if this Bill is to be carried to its logical conclusion, we ought to know whether the Woolwich and the London Societies are to sign a form absolving them from the possibility of the bankruptcy of the society to which they are affiliated. I say, therefore, that this Bill is very much more far-reaching than the hon. Gentleman has tried to make out.

The Bill applies only to "a member of a society," and I do not think the masculine singular is usually used of a society. Therefore, the Bill does not apply to a society.

That is exactly the point upon which I hope the hon. Gentleman will give me some enlightenment, because this is a very important matter. I quite agree that the language here would imply that it covers merely individual persons; but if I remember rightly the rules, an organisation affiliated to the Co-operative Wholesale Society is a legal entity. We have made out a case which shows that we should be very careful before passing this Bill in its present form because, after all, the Act of 1893 was the great charter of the industrial and provident societies of this country. They have grown tremendously under its provisions; and I am sure that no sensible person of any party in this House will want to do anything to prevent the progress of these great consumers' organisations.

The speech of the hon. Member for Westhoughton (Mr. Rhys Davies) has filled me with alarm as to the possibilities contained in this Bill. I also am a member of a co-operative society, and the minimum holding entitling one to become a member is a £1 share. Supposing a man or woman had a £1 share, and the society decided to raise it to 30s. or £2, would all those members who were members before this Bill came into operation have to signify their willingness to the alteration before they could be called upon to pay the increase?

I will give a concrete case which will explain what the hon. Member wishes to know. Take the case of a member of a co-operative society or of a co-operative society which was a member of a co-operative wholesale society, holding a £20 share. Let us suppose that suddenly, without any notice, the society says that the members must in future pay £80 more, because a rule has been passed to that effect. As the law stands, the member could be called upon to pay that £80, although he had had no previous knowledge of it or agreed to it. He may never have agreed to it, and yet he may be called upon to pay the £80 and so put to great loss. Further, if after the society receives the £80, it passes a rule saying that they are going to reduce the £100 shares, on account of loss, to £33 6s. 8d., they could call upon the member to pay a further £66 13s. 4d. to make the shares fully paid. The consequence, is that instead of the £20 which the member originally paid, he will have been called upon to pay a total of £166 13s. 4d., whereas his original wish was to pay only £20. This Bill prevents a member of a society being put in a position of being called upon to find more money in that way unless he has given his consent in writing.

I agree that in cases of that kind it is a real hardship, but it seems to me that the Bill will make the machinery very cumbersome. Suppose the society decides to increase its minimum share from £1 to £2, and it has a membership of 25,000; the average attendance at its business meeting is 1,000; the increase is passed, and all the 25,000 have to signify their willingness to the increase, before they can be called upon to pay it.

They need not pay it unless they like. The concern may be in low water, then they need not pay unless they signify their consent; if it is a good concern they can pay up and they will get benefit from the payment. Payment is optional and not, as at present, compulsory.

Ten thousand members might refuse to pay, and they could not be made to pay, but all the new members who come in after the decision to increase the shares and after this Act has passed will have to pay the £2, so that you will have in the society 10,000 members who because of the passing of this Bill, will remain members with full voting powers whereas everybody else who came in afterwards will have to pay the £2. It appears to me that it will work in that direction. I have no intention of voting against the Bill, but if it is going to work in that way it is going to be very cumbersome.

The Bill is directed simply to protect the innocent and the hon. Member for Hillsborough (Mr. A. V. Alexander) will assure hon. Members that that is the only object of the Bill.

While that may be the object of the Government when they introduce what is after all a very desirable Bill, the actual results may be very different. It is true according to the terms of the Bill, that the individual member of any industrial provident society will not be liable to any increased payment unless his signature is obtained, but there is another side, apart from the question submited by my hon. Friend the Member for Doncaster (Mr. Paling). I am inclined to agree with him, that in trying to do a wholesome thing the Government are going to impose limitless difficulties on societies that are performing a valuable work, co-operative societies in particular. While it is true that the individual member cannot have his liability increased unless he definitely attaches his signature expressing his willingness to it, there is nothing in this Clause which will retain for the individual member the value of his original investment.

Let me submit a case. A member of an industrial and provident society holds £10. There would be nothing to prevent the society from doubling their capital without securing his signature, thereby reducing the" value of the original investment of £10. There is nothing to preserve for the individual member the value of his original holding. While I readily concede that it is the intention of the right hon. Gentleman to do what he conceives to be a desirable thing, he is only half doing it by means of this one-Clause Bill, and there are many dangers lurking ahead. It may be that by closing one door, he is going to open many others which will cause unnecessary irritation among members of provident societies. We have already had some experience of a similar Measure that was passed in 1927, under which all' members of any society who wanted to indulge in certain objects have to sign a particular form, and if I felt that this was going to result in anything like that Measure I should feel disposed to oppose it. I hope the hon. Gentleman will intimate to the House that should real difficulties be discovered between now and the Committee stage he" will be willing to deal with them.

I think the fears expressed so loudly in the last three-quarters of an hour ought to be disposed of. May I point out to hon. Members of the Labour party that what is proposed to be done by this Bill in the case of agricultural societies is already done now under the rules of ordinary societies, and has been done for the last 30 years.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for To-morrow.—[ Mr. Samuel. ]

Rabbits Bill

Order for Second Reading read.

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

10.0 p.m.

The object of the Rabbits Bill—[HON. MEMBERS: "Rooks!"]—is to revive the right which was enjoyed by the occupier of land both under the Defence of the Realm Regulations and, afterwards, under the Corn Production Act, to be protected from the depradations of his neighbour's rabbits. We propose to re-enact those powers in a slightly different form. Instead of the Ministry of Agriculture being charged with the duty of seeing to this, we suggest that the occupier should be allowed to call in the county council to prevent or abate damage caused to his crops by rabbits. In the ordinary way, no doubt, as soon as representations are made to an owner he will abate the nuisance without further trouble, and it will only be in extreme cases that the county council will have to exercise their power of ordering the rabbits to be destroyed. Several attempts have been made by previous Governments, by this Government and by private Members to revive these powers, and I need not go into the history of that, but last year we brought forward in another place a Bill which would have revived the whole of the "D.O.R.A." powers not only for rabbits but for rooks. The House of Lords referred the Measure to a Select Committee. They showed that they specially objected to the provisions regarding rooks, but they reported against the Bill as a whole, and for that reason we were deprived of any opportunity of amending it to meet their criticisms. This year we have met the main criticisms which were urged before the Select Committee, and have limited the Bill to rabbits.

The evidence against rabbits given in another place was very strong. The Select Committee sum it up thus:

The only point where we have not been able to agree with the Select Committee is in their view that compensation would he a better method than destruction. We believe that legal action is in itself undesirable, and that it is much better to get these cases dealt with by representation and by negotiation rather than by going to law. There was overwhelming evidence before the Select Committee that legal action was not desired. Speaking for the County Councils'. Association, the hon. Baronet the Member for Thirsk (Sir E. Turton) said that people did not like to set the machinery of the law in motion; and there was other evidence that it is much better to prevent damage by rabbits than to get compensation for wasted crops. It was also shown that it would be very difficult to give satisfactory proof in a Law Court of damage by rabbits, and difficult to assess accurately the damage, and that the attempt to do so would be likely to cause very much friction.

I think those who have criticised these proposals in former Sessions have overestimated the frequency of the cases where destruction by a public authority would become necessary. Considerable experience was gained during the War period and under the Corn Production Act, and that showed that it was very rarely that action in this form had to be taken. It may be that sometimes the nuisance is deliberately encouraged by shooting syndicates, or by people who have no great interest in local agriculture, but more generally the depredations of rabbits are due to the carelessness of people in not keeping their numbers down. In most cases it will be found, I think, that when the local authority begins to make inquiries, in consequence of representations, the owner of the rabbits will find it to his interest to deal with the matter, and not to leave it to the local authority to intervene.

After all, we have various precedents for powers being given to the local authority to go on to a man's land to abate a nuisance which becomes intolerable to his neighbour. If a man by default causes his neighbour's land to be flooded, there is power to step in and clean out the drain. I think where a man, after due notice, deliberately refrains from abating a nuisance caused by rabbits which live on his land, it is entirely right that the county council should be able to step in and abate the nuisance. Farmers to-day are suffering from very great depression in agriculture, and there are very few ways in which Parliament can direct developments. In many parts of the country there is a great demand for legislation of this kind, and by passing this Bill I believe Parliament will enable the farmers to avoid a great amount of foodstuffs being wasted. I think what is proposed in this Bill can be carried out without inflicting any undue hardship upon the landowner.

There is no question that this Bill is badly wanted. There in nothing more melancholy to me than to see a nice crop of swedes or mangolds showing a little way off a different colour because so many of them have been gnawed by rabbits. The Bill will do a great deal, although it will not settle the rabbits nuisance. I do not see how the damage done by rabbits in this country will ever be adequately tackled while you have private owners desirous of having a good many rabbits on their land either for themselves or for a sporting tenant who pays a good rent, and consequently it is to the advantage of the owner to put a mild pressure on his tenants not to kill the rabbits too strictly. The Bill is very badly wanted, and in many parts of the country it will do a great deal of good.

There are only two points to make in regard to the Bill; one is that it is a useful Measure, and the other is that it represents the most wonderful anticlimax in the Government record in regard to agriculture. The Government came into office after having secured the votes of practically all rural voters by the promise that they were going to add one million acres to the arable area of the country. We now find that all the Government is able to do for the farmers is to bring in a Bill to deal with rabbits. That is the way the Government propose to redeem their promise to agriculture. When land is urgently calling for drainage, when more land is going out of cultivation, when a sort of hæmorrhage of the countryside is taking place, that is the time the Minister of Agriculture brings in a Rabbits Bill.

Last year we had an Insect Pests Bill, and this year the mountain has been in labour and has produced, not a mouse, but a rabbit. [An HON. MEMBER: "What did your Government produce?"] I think the Minister of Agriculture has acted rightly in dropping the Rooks Bill. The rooks were killed under the operation of D.O.R.A., and I think it is now established that the diligent killing of rooks under D.O.R.A. produced an insect plague in some parts of the country. As to rabbits, we have a rather peculiar situation. It has always struck me as being most extraordinary that on the Continent there are so few rabbits. In Jutland they carried out a rabbit war and totally exterminated them.

I am glad the Minister has followed the Report of the Select Committee in one important particular. That Committee advised him not to alter the power to allow county councils to send a competent person on to the land to destroy the rabbits. I think that is a sound proposal to put into the Bill. My only fear is that the restrictions of that right may be found in practice to be too great. If the complainants are to be charged for making complaints under Clause 1, the question is whether they will make them as freely as they ought to do. Under Clause 2 the rights of appeal seem to be unnecessarily elaborated, and I hope the Minister of Agriculture will be willing in Committee to provide that the rights of appeal will not be too elaborate and will not cause too much delay in the working of the Measure. I think the farmers will welcome this Bill because it is the only crumb which falls from their master's table, for which I hope they will be grateful. Having got that crumb I hope they will ask for more.

I oppose this Bill. It is not such a harmless Measure as is suggested. Some time ago I invited the Government to furnish a return of the number of people engaged in the skin trade, and I was given figures showing that 33,000 people were so engaged. Not content with that, I consulted the Census returns, and I found that the number was 63,000 and over. This is a very serious matter. I am bound to take up some of the time of the House in order to prove, if possible, that this Bill will not be a remedy, but that what it proposes to do will be to set up an intolerable tyranny, and our last state will be worse than the first. I wonder how many Members of this House know that, whereas rabbits cannot be produced out of a hat, hats are produced out of rabbits. The chief headdress that I know of is the silk hat. That is the fur of the rabbit blown on to glue and fixed on a frame. The "chummy" or bowler hat is the shaved skin of the rabbit; the velour hat is the skin of the hare. The hare invades the root crops just as the rabbit does, but there is no proposal in this Bill in regard to hares, although, of course, they do not multiply to the same extent as rabbits.

When I tell the House that I am concerned with a firm in Leeds who export 6,000,000 of these skins in a year, the House will understand that it is a great proposition. All over the country there are motor oars collecting these skins, and the machinery for dealing with the matter is huge. I wish to see more employment rather than less, and, nominally, this House does also, but it sometimes has peculiar ways of carrying out that view. This is one of them. I shall presently attack the drafting of the Bill, but I want, if I may, to deal first with its commercial side. There are over 63,000 people engaged in the skin trade, most of them dealing with these small skins. If we cannot get sufficient raw material, that will affect the cost of living, because presently the price of silk hats will go up. It will also affect hon. Members who belong to the Labour party, because people will be thrown out of employment. I have seen whole bodies of them thrown out of employment because some of the processes are not very nice, and the skins have been sent abroad to be dressed. I do not desire to see work sent abroad in that way. It is perfectly true that in, for instance, the process of drying, you would not like to go near some of the places because of the smell; and you may discover, also, that the skins in the process of drying form a fine habitat for the maggots of bluebottles to breed in. When those maggots are hatched out in millions, you will get out of their way as quickly as possible, or they will descend upon you like waves on the seashore. We sell those maggots by millions to fishermen for bait. This is not a fairy tale; it is an absolute statement of fact.

I do not want to see this Bill go forward in its present form. I understood the Minister of Agriculture to say last year that he was agreeable to the use of the County Court procedure, but the very first proposal in Clause 1 of the Bill is that someone shall be a common informer. In other words, we shall have scores of such common informers throughout the country. I say that that will be a state of affairs not to be tolerated for a moment. This is not a landlords' and tenants' question; there are now large numbers of farmers of the class who in earlier days were termed yeomen—men owning and tilling their own land. Nothing will be easier than to set this machinery in motion, and what does it mean? It has to be proved to the satisfaction of the county council. Is the county council to sit as a Court and hear evidence? This is the worst drawn Clause that I have ever seen in any Bill before this House. Moreover, you ought not to accept proof from one side alone, but that is what is suggested in this Clause. It will allow the county council to order men to go on to other people's land. You cannot go into a man's house without a warrant, as the law stands at present, and you cannot do as you like with his land without going through certain procedure, but the county council are to be authorised to send men into the hedges. The Bill itself prevents them from trapping the rabbits in the holes, which is the present method, and against which there is nothing much to be said provided that the traps are cleared reasonably quickly. That, however, is forbidden in this Bill. How are the rabbits going to be destroyed? You cannot shoot them, because if you shoot one rabbit you will not see another for an hour. [ Interruption. ]

I am speaking from actual experience. I happen to be a farmer; I happen to be a member of a shooting syndicate; I happen to be a landlord, and I happen to be a member of a great council. I do not trust the councils. I have been a member of one for 40 years, and most of them do not know the difference between a rabbit and a hare. Indeed, I should doubt whether some Members of this House would know the difference between a rack and a mite. I understood that last year the Minister was favourable to the adoption of the procedure of a Court of summary jurisdiction. At the present time his disputes and mine go to a Court of summary jurisdiction. The county councils are not fit to be set up as Courts, and there is plenty to do without anything of this wretched kind. If there is a dispute, let it go to the Courts in the ordinary way; if there is damage—and I am not going to argue that there is not—let it be assessed and paid for, as other damage is assessed and paid for.

This thing is hateful. If you send men on to my land or any one else's to take the rabbits out of the hedges you destroy the hedges. They go away and leave them there, and there is no compensation for the man whose hedges are destroyed. The whole thing is one-sided and badly drawn, and the intention is not good. There are only one or two little things in it that are worth noticing. The 21 days' notice is incorporated now. That is something, but there would be that notice if they went to the County Court. The whole Bill is a re-hash of the deceased Rabbits and Rooks Bill. I have opposed it for four Sessions and I only regret I have not the staying power to talk it out, or I would. This will stir up bad blood in all directions. It is not the sort of thing that is wanted by any reasonable person. During the War, the farmers found it was a Godsend to be able to tap a great source of revenue and a food supply. The skins of these rabbits rose to 1s. 8d. each. Now probably they are running at about a farthing.

Look at the difference it makes to poor people. A rabbit at 10d. a lb. is the best value that can be got, and we have here, not merely raw material for the production of hats—and I see nothing to take its place—but you have a food supply. During the War shiploads of these rabbits came from Australia and New Zealand, and then we had not enough raw material. The raw material is falling off and we do not want to deplete it. It will become necessary, if we do not mind, to use certain lands for nothing but the cultivation of rabbits. If we look at it from the point of view of supplying raw material for a great trade alone I ask the House to pause and not let the Bill go through. The procedure is bad. If it was a question of an ordinary complaint and a proper notice to attend I should have nothing more to say. We trust the County Court But we do not trust the county council. A county council of 70 does not operate in the matter. Its committee does not operate. Sooner or later it is boiled down to an official, and what do officials know of agriculture? They may know something in the counties but in the county boroughs they know very little

I should like to say something about the suggestion as to shooting syndicates. Shooting syndicates cannot grow rabbits as they like. They have to get the shooting from someone else. They could not let it if there were not some rabbits on it. The syndicates go all over the country. You talk about back to the land. Whom do you want to go back to the land? Not the tramp who has not a penny in his pocket, but the man who has some money and goes into the villages, as I have done many a time, and spends some money there. The shooting syndicates first of all have to pay for their licence. They have to get their guns, their ammunition and their dogs, and they have to be billeted and to be fed in their billets. Also there is their transport, and a licence again to pay for their transport.

It is a question of paying and continuously paying. What for? Not for profit. No one can make a profit out of shooting. If you start rearing pheasants it will cost you 11s. a head, and you will sell them for about half-a-crown. The old story, up goes a guinea, bang goes 2d., and down comes half-a-crown, is not a bad description of what happens with regard to pheasant rearing. Here is a certain food supply. I have shot over nearly the whole county of Yorkshire. There are as many acres in the county as there are letters in the Bible, and there is no difficulty about this matter at all. Why should there be? Let us take in the killing of rabbits and hares at any time of the year. The only variation in regard to hares is that people cannot sell them between the first of February and a later date. They are not prevented from killing them during that period. They can kill them and eat them, but they cannot offer them for sale to the public. If that be the case, anybody who has too many can reduce the number. Who is going to say how many rabbits there shall be to the acre, either in woodlands or fields, or on arable or grassland. The whole thing is preposterous, as preposterous as it was to talk about destroying the rabbits in this country. They cannot be destroyed, and another place discovered that. When the matter was discussed in another place, I offered to give evidence in favour of the rabbits. As soon as they caught sight of me, they did not want us.

Will the hon. Gentleman kindly tell us the name of the country to which so many thousands of rabbits from this one firm are exported?

Yes, I will, and I will tell the House more about it. I have not finished by any means. The question is a fair question, and I will answer it. The two main countries are Belgium and France. What happens to them there? They are made into your silk and bowler hats and you pay a high price for them; and they are made by foreign labour. I want to see them produced and made into hats in this country. It does not stop there. The hon. Lady's fur cloak is lined with a cheaper fur. [ Laughter ]. J I am glad to see that the House is in such good humour, but I am undoubtedly in earnest in this matter. In New York there are two firms, John B. Stetson, and the New York Hatters Fur Exchange, and each firm employs 10,000 persons in the making of hats. There is nothing like it in this country. I want to see our own firms grow to that great size, with our own money and our own material. If you destroy the raw material that hope is gone for ever. Take the costlier cloaks—the Chinchilla, one of the finest. It is merely a rabbit. I am telling the House what I know. One skin of the New Zealand red rabbit, a very small animal, is to-day worth about 10s.

This House does not know what is involved in this great problem. It does not know what is bound up in it. I am very much desirous of asking the Minister of Agriculture to drop the Bill. I do not desire to set up mischief throughout the country. I took particular notice of the right hon. Gentleman's suave tones, and that there would be no necessity to do this, that or the other. Give these powers to the county councils, and my experience of county councils is that they will operate them, I will not say without fear or favour, but regardless of the feelings of other people. Reference has been made to the hon. Member for Thirsk and Malton (Sir E. Turton)—the Division in which I was born. He offered me, a long time ago, some thousands of acres on which to cultivate rabbits. I should have thought more of him if he had cultivated them himself, but he does not understand business, to take the view that he does. That is my complaint against the Minister of Agriculture. He does not understand business.

Are we to overlook the fact that the supply from abroad is diminishing, and are we going to endanger our home supply? Reference has been made to poachers. I have dealt with poachers in my time; I have succeeded in catching them and in having them prosecuted and fined. These men will go to take the rabbits. The law is peculiar. Such men can be arrested on the public highway, under the Poaching (Prevention) Act, by a policeman if they are found in possession of unlawful weapons. What will this Bill do? The whole of the drafting is the most wretched imaginable. It is provided that you shall go to the County Court at the finish; why not at the start? If the Minister of Agriculture will simplify the procedure and send this thing, whatever it may be, to a Court of Summary Jurisdiction, in which we have faith, he might have some chance of making a workable Measure, but this is not a workable Measure.

Nobody can say who is to settle what is to be done under the first Clause. Fences may be destroyed, but there is no remedy and no compensation. This Bill is calculated to make confusion worse confounded. I do not want to see anything done which will reduce the raw material for a great trade dealing with over 63,000 people. I do not want to see any more bad blood set up between the farmers. It is true that the Farmers' Union, representing one-sixth of the whole, want something to be done. If I were to shoot all the rabbits on my lands, the first people to complain would be my tenants. They have their rights under the Ground Game Act, and they can take a rabbit when they want one, and can give a licence to men in their own employ. Moreover, they want to shoot a rabbit when they like, in order to give the rabbit to a friend when he calls.

I wonder if any hon. Member present knows anything about the old rook shooting days. I have attended some of the finest gatherings among farmers on the occasion of rook shooting; an excellent occasion for making good blood all round. I do not intend to talk the Measure out, but I do hope that the Minister of Agriculture will agree that the procedure should be amended and that recourse should be had to the Courts of summary jurisdiction. If he does that, he will do away with a great objection to the Bill. I am afraid that if the Bill passes in its present form and becomes an Act it will be another dead letter. I hope he will not proceed with the Bill.

With no part of this Bill do I agree except the title. The title is: adjacent woods or coverts belonging to Mr. A. I complain to him; but he does nothing. I go to the county council and they make an order for someone to come and kill off the rabbits.

How is he going to do it at the time when the rabbits are doing the damage? Is he going to turn ferrets into their holes, with all the young rabbits about? Is that the idea of the Minister of Agriculture? Of course, he knows nothing about it. Is that what the representative of the county council is going to do? Is it suggested that he is to shoot them? How can he shoot them at a time of the year when all vegetation is nearly at its full growth? It cannot be done. There is no game-keeper or anybody who has any knowledge at all of dealing with these pests who will say that you cannot deal with rabbits at the time when they are doing the damage, that is, in May or June, or later in the season. The only time to keep them down is, in the winter when you can trap and shoot them. The only way of killing rabbits is by trapping, shooting and ferreting them in the winter, and any owner of an estate and every tenant farmer realises this and does it in the winter. That is the only time when it can be done humanely. If you propose to catch them in the summer or early spring, when they are doing the damage, the only possible way, apart from ferreting them in the cruel way I have described, is by setting steel traps, which this Bill expressly prohibits. I entirely agree with the hon. Member for Central Leeds that the procedure in this Bill is perfectly impossible of effecting the objects desired. It is childish. The Bill is pure eyewash and it will not do the slightest good. There is a great deal in the statement that it will breed bad blood and bad feeling, whereas what we really want is a Measure which will simply give the owners of the damaged crops the right of civil action against the owner of the rabbits.

When I saw the title of the Bill I wondered what it meant, but after hearing the Minister I take it that rabbits are regarded as a pest and a nuisance. If that be so, I ask him his opinion about a particular case. Last week in St. Helens County Police Court two men were fined £10 and £5 respectively for taking three rabbits from a certain piece of land. If this Bill becomes law will it alter the position in regard to that class of case? If rabbits are a pest and a nuisance, and the right time to destroy them is in the winter, what objection can there be to two poor colliers, who are hard up, going on the land and helping themselves, doing some good to the State, and, according to the Government, helping the farmer also? If the Bill becomes law will it prevent such a prosecution taking place in future? My own view is that the so-called poaching of rabbits does not do any harm at all. I am in agreement with the Bill if it will help such men out of a difficulty. A question will be asked this week whether the fine in the case I have mentioned can be lowered or remitted, and I take this opportunity of letting the House know what a bench of magistrates can do in a case like this at a period of the year when the taking of rabbits is advocated and they are said to be a nuisance. I consider that the two men mentioned have done some duty towards the State.

There are in the Bill one or two points which I think the Minister and his advisers have not taken into full consideration. I wish, first of all, to associate myself entirely with what was said by the hon. Member for Central Leeds (Sir C. Wilson) and the hon. and learned Member for East Grin-stead (Sir H. Cautley). I am opposed to this Bill because I think it unnecessary, but if it be necessary it is drafted in a quite unintelligible manner, and it will certainly be looked upon as another of those dead letter Acts that we are accustomed to in the present generation—Acts introduced by every Government during the last 20 years. I would like to ask the Minister what are to be the qualifications of the man sent on to the land, in the first instance, by the county council to see whether there too many rabbits on the land or not? We know that every county council, every town council—every council of any kind—has men allotted to fill different posts, and I should like to know of any man in this House, or, indeed, in this country, who would undertake to go haphazard on to any farm, evening or morning, at any time of the year and say whether there are too many rabbits on that farm or not. You might have a fine balmy Spring evening, with the sun shining, and the birds chirping before they go to bed, and 100 per cent. of the rabbits on that farm would be browsing on the young grass and enjoying themselves. You might have a dismal, dark October evening, when the year is waning, when the sun is waning, and when your spirits are waning, and all the rabbits will be where you are going shortly—that is under the ground. A man going on to the farm in such circumstances would see two or three rabbits, and would say, "There are no rabbits on this farm. This is a frivolous complaint," and the informer would be fined. But if he came on that fine Spring evening, when 100 per cent. of the rabbits were about, he would declare that the place was swarming, that the complaint was a logical one, and he would proceed according to his instructions.

I defy anyone to go on to a given piece of land at any time of the year, and say whether that land had too many rabbits on it or not. There is another point which is more important, as to the methods to be used in the destruction of the rabbits. Supposing that the procedure laid down in the Bill has been complied with, that an application has been made and refused by the Court, and that, finally, the county council authorise their servant to invade the occupier's land and destroy the rabbits. How is he going to do it? The method of trapping is prohibited. It can be done by poisoning, but, I take it, no one suggests that poison is to be laid about all over the land where it can be picked up by those animals which do not come under the vindictive hostility of the Minister. Two methods remain. Either you are going to shoot the rabbits or else you are going to dig them out. If you are going to shoot them, what is to be the procedure? Will the members of the county council seize the opportunity of having a little free shooting by organising a shooting party? As far as I can see, under the Bill they would be perfectly entitled to do so. They can destroy the rabbits in any way they think fit, and I can understand the gusto with which a county council would receive the motion, "That this House do now adjourn to Farmer Giles' land in order to shoot rabbits."

There is also the method of ferreting out the rabbits. Anyone who has a knowledge of ferreting knows that it is a very slow and cold game. Ferrets have a peculiar habit, once they get inside the hole, of staying there—frequently for many long hours, so that one has to go home in the dark and leave them to their feast of rabbits underground. Then who is going to produce the ferrets? If there to tie, first, a rabbit-catcher, appointed by the county council, and then an under rabbit-catcher to be in charge of the ferrets? Furthermore, ferrets are dangerous and ferocious animals and very apt to bite the hand which, not only feeds them, but throws them into the holes. Therefore, you will require one or more assistant ferreters to replace casualties when these hands are bitten. Thus in a large county like the broad county of Yorkshire, which we have heard about, you will have ferreters appointed by the county councils of the three Ridings; you will also have sub-ferreters and you will require to have medical officers in attendance to dress the wounds of the ferreters. I think in all seriousness that the Minister has not realised that he is embarking upon a very large business if he is going to make every county council employ more medical officers and rabbit catchers, ferreters and more ferrets.

From where are these ferrets to come? There is always a difficulty in getting reliable ferrets, and there will either have to be a national ferret stud farm or else a county council stud farm. That will mean a serious inroad on the expenditure which a county council is authorised to make, and it will mean a Supplementary Estimate. You will have to come to this House and ask that unfortunate gentleman who is always being asked for something, namely, the Chancellor of the Exchequer, to give a subsidy to start a national ferert stud farm. It is not feasible. I think the Bill ought to be withdrawn and re-drafted after the Minister has consulted some of the people who do know something about destroying rabbits in the country in an authorised and proper manner.

As I wish to support the Bill, I do not propose to speak very long, because I think it would be disaster from this side to have it talked out. The case for the Bill has been very forcibly put by the Minister. I should like to make a few remarks upon what has been said by other speakers. I am not supporting the Bill for myself only, but for organised agriculture. Whether organised agriculture and its desire for the proper carrying on of the industry is a subject for mirth or not I leave to the House. I simply say that this Bill is asked for by the whole of agriculture, and I think it should receive, at any rate, reasonable consideration and not too much levity. Reference was made to the large number of people who were employed in the skin trade, but the hon. Member for Central Leeds (Sir C. Wilson) did not tell us whether those who were engaged in the trade were employed on skins produced from rabbits grown in this country, or skins from imported rabbits, or skins imported as skins.

I said the greater part of them were employed on small skins. The rabbit skins that are imported are only 300,000, and when I say that one firm exports 6,000,000, the imported skins are not worth talking about.

My point is that if these people are employed in working up skins produced in this country that is the best proof I want that rabbits are in excess, if it takes all these 63,000 people to work up skins very largely produced in this country.

With regard to the hat trade, I do not want to say one word in discouragement of any trade, but it is far more important that people (should have food produced in this country to eat than hats for them to wear. Then reference was made to the common informer. If the hon. Member would read the Bill he would see 10 lines down that the informer must be a person who is the occupier of the land. Then he referred to shooting and said that you could not shoot all these rabbits. The Bill does not say they must all be shot, and if the hon. Member's record is only one rabbit per hour they will not all be shot. He said there is damage being done, but that the remedy lay in compensation. I hope this House will agree to the process in this Bill and not to the process of granting compensation, for if there is one thing which all agriculturists wish to preserve it is good feeling between landlord and tenant, and if you are to have damage done and then go to the Court for compensation, it is not nearly so likely that you will retain the good feeling between the two parties interested in agriculture as if you have a process under which you can prevent the damage being done.

I do not think there is a single Member here who realises the great amount of loss of food there is through the damage done by rabbits. A man may spend any amount of money and time in the proper cultivation of his land and in sowing a crop, and almost in one night, if there are rabbits in excess, they will spoil the whole of that useful labour. It is not only a loss to the man in question but to the country as a whole, and if hon. Members have no sympathy for the farmers, I hope they will have for themselves. Something has been said about the rabbit farmer, but there is not a word here which says that a man shall not have a rabbit farm. It only says that if he farms rabbits, he must feed them on his own farm and not on somebody else's. There has been a reference to shooting syndicates. I do not object to them, but I do object to a landlord letting his land to a man to cultivate it for food and then using his influence for a second crop to be sold to a second individual. If a man takes land to produce food, he should have an opportunity of producing food and should not have it let to another man to shoot game at the expense of the man who is cultivating it. The hon. and learned Member for East Grinstead (Sir H. Cautley) said the farmer kills his own rabbits. Yes, he does, if he is a good farmer, but he cannot kill rabbits which come on to his own holding.

Then I hope the hon. and learned Member will give us this extra power. I plead with the House to give this Measure, small as it may be, a Second Reading. It is of far more importance to agriculture than I can express in the short time at my disposal. I represent organised occupiers of land, who, it has been said, are very few in number, hut there are 1,000 branches, with 200,000 members, and from each one of those branches they make not only a request, but nearly a demand; and I compliment the Minister on having brought the Bill forward and hope it will get a Second Reading to-night.

As I come from a county where rabbits are a considerable part of the output and of very great interest to all the farmers there, I have read this Bill very carefully. I have never heard of a single tenant farmer in my district make any complaint which is dealt with by this Bill. They are quite prepared to look after their own rabbits and to see that their own rabbits are on their holdings in a proportion which they think will not do them damage. When I found that the Bill appeared to be blessed only from the Front Opposition Bench, with the exception of the hon. Member for Stone (Mr. Lamb), I naturally regarded it with some suspicion, and I found that the right hon. Gentleman opposite, while blessing the Measure, took occasion to damn the Government, and that is what one would expect. When the hon. Member for Stone says there is a unanimous demand for the Bill from all tenant farmers in the country, I venture entirely to differ from him, because I have never heard a whisper of a suggestion that this Bill was demanded by the tenant farmers in my constituency or in any part of Devonshire.

It being Eleven of the Clock, the Debate stood adjourned.

Debate to be resumed to-morrow.

Rating (Scotland) Amendment [Consolidated Fund]

Considered in Committee under Standing Order No. 71A.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed,

"That it is expedient to amend The Rating (Scotland) Act, 1926, with respect to the ascertainment of the amount of the additional annual grant for Scotland under The Agricultural Bates Act, 1923, and the payments to rating authorities in respect of that grant and in certain other respects, and to charge on the Consolidated Fund such sums as would have become payable in respect of the additional annual grant for Scotland but for sub-section (3) of section thirteen of the first-mentioned Act."—( King's Recommendation signified. )

This Motion is preliminary to the introduction of a short Bill to deal with an error which was made in the drafting of the Rating (Scotland) Act, 1926. Under the Acts of 1896 and 1923, provision was made for the rating of agricultural land and heritages in Scotland on a reduced annual value, and for the payment of Exchequer grants to rating authorities to meet the deficiency thereby caused in the produce of the rates. It has been discovered that owing to a regrettable slip in drafting the Exchequer grant which has been payable to the local authorities to replace the loss of the rating value caused by the relief given to agricultural land, to an amount of something like £22,500, cannot be paid to the authorities in Scotland. It was never the intention of Parliament, and it certainly was not the intention of the Government, to make any alteration in this relief to local authorities which has gone on for a number of years, and it is to correct this slip in the legislation that I ask the House to pass this Resolution to authorise the introduction of a Bill which will be quite short, and which is intended solely to remedy this mistake.

We were anticipating that the Secretary of State would have explained wherein this slip lay. What was the mistake in drafting which has occasioned this loss to Scotland? He did not give us any indication where it exists. Sub-section (3) of Section 13 of the Act is an exceedingly involved Section, and difficult to understand, and we cannot see where the error has arisen. We see that the Section provides for relieving an owner of one half of his rates on agricultural land, and we want to be assured that there is going to be no change in the direction of giving him further relief. We want to see that the balance which was so carefully preserved by the Government in Committee upstairs is not disturbed by any proposals which may now be made. I see that when this Clause came up in the Scottish Grand Committee no one moved an Amendment, and that there were no speeches on it. This huge involved Clause appears to have been the only one which passed without observations from any Member. The Secretary of State seems rather to add to the mystery; when he says that owing to a mistake Scotland is losing £22,500 I think he ought to explain where the slip occurred and what was the mistake in drafting; and further he should give the Committee the assurance that there will be no change whatever in the relief which owners of agricultural land receive under the Rating (Scotland) Act, 1926, or under the Act of 1923.

Perhaps I may explain how the slip has arisen. The Committee will remember that under the 1896 Act relief was given to the occupiers of agricultural land. Under the 1923 Act relief was given both to the occupiers and to the owners. Relief was given in this way—I am putting it as shortly as I can: 50 per cent. relief to the owners and 50 per cent. relief to the occupiers; it also gave the occupiers the right to get from the owners 26 per cent. out of the 50 per cent. the owners had received, so that in effect the occupiers got 75 per cent. relief—I mean of their half—and the owners got 25 per cent. relief of their half. A Treasury grant had been given to make up to the local authorities the gap in the rates caused under the Act of 1896.

Under the Act of 1923 an additional Treasury grant was given to make up the further gap caused by the new arrangements of the Act of 1923; and there was a scheme for the calculation of that further grant prescribed in the 1923 Act. When we came to the 1926 Act, which was purely a rating Act, and was not intended to alter the relief at all, it was found more convenient, instead of having the old system of the tenant getting back some of his relief from the landlord, to prescribe simply that there should be one-fourth relief to the landlord and three-fourths to the tenant. That was an alteration in the scheme of rating, and therefore you require an alteration with regard to the calculation of the grant. Under the original calculation of the grant, it was necessary to find out the owners' portion of the total rates raised in order to get the agricultural owners' proportion. The grant under the Act of 1923 was three-eighths of the agricultural owners' portion. The Secretary of State has from time to time to ascertain the actual proportion. We understood, in 1926, on the passing of the Rating Act, that in fact the owners' proportion of the total rate was about one-half.

We adopted what we thought was a simplification by saying that the owners' portion should be one-half of the total rate, but as a matter of fact it has turned out that the owners' share of the total rate raised is more than one-half. The reason for that is that the old deficiency had to be charged as an additional rate, and it fell on all the owners and all the occupiers; and agricultural occupiers only paid three-eighths as their share. It is the rating for that deficiency that causes the difference between the 1923 and the 1926 basis, and the amount is £22,500. Nobody intended to alter the 1923 provision with regard to this grant, but we find in fact that we have got away from the 1923 basis, because of the wording of the 1926 Act. The loss to Scotland was £22,500, and the effect of the Bill which we propose to introduce will be merely to bring it back to the 1923 basis, and not to alter the 1923 basis. It is to get back to the original basis in order to put matters right. I hope that that has made matters a little clearer.

The Lord Advocate's statement has made the matter much clearer, but I should like to ask one question. A sum was voted by this House in relief of the rates during 1926–27. Is it proposed to secure an additional sum, or does it mean that the sum allotted from the Treasury is merely to be re-allocated?

It is an additional sum. The Treasury have paid since 1923 an additional sum of £22,500, but when the 1926 Act comes into operation that Treasury grant will drop. We do not want it to drop, and we are still in time to set the matter right.

Question put, and agreed to.

Resolution to be reported To-morrow.

The remaining Orders were read, and postponed.

Adjournment

Resolved, "That this House do now adjourn."—[ Major Sir George Hennessy. ]

Adjourned accordingly at Fifteen Minutes after Eleven o'Clock.