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Commons Chamber

Volume 232: debated on Wednesday 27 November 1929

House of Commons

Wednesday, November 27, 1929

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

Private Business

Ministry of Health Provisional Order (Gosport Extension) Bill,

As amended, considered; to be read the Third time To-morrow.

Ministry of Health Provisional Orders Confirmation (Bristol and Ross Water) Bill [ Lords ],

Ministry of Health Provisional Order Confirmation (Knebworth Water) Bill [ Lords ],

Ministry of Health Provisional Order Confirmation (Sheppey Water) Bill [ Lords ],

Read a Second time, and committed.

Oral Answers to Questions

Questions

British Subjects, China (Capture)

asked the Secretary of State for Foreign Affairs whether he has any particulars and can state the number of British subjects that have been captured by brigands and held to ransom in China during the previous three years?

So far as I can ascertain, 18 British subjects have been captured by brigands in China since the beginning of 1927, and five others have been killed.

Can the Foreign Secretary say whether they were held to ransom and whether any ransom has been paid.

Russia

British Relations

asked the Secretary of State for Foreign Affairs whether he will make it a condition, before full diplomatic relations are arrived at with the Soviet Government, that members of the Ogpu will not be permitted to enter this country?

Is the right hon. Gentleman aware that within the last few weeks the First Secretary of the Soviet Legation in Paris has had to break into adjoining premises in order to avoid capture, and does he think that it is desirable—

Seeing that the renewal of diplomatic relations with Russia is most passionately and enthusiastically advocated by the North Battersea Conservative Association, will the right hon. Gentleman make inquiries as to whether that body has become a branch of the Third Internationale?

asked the Secretary of State for Foreign Affairs whether he is yet in a position to state when the exchange of diplomatic representatives between this country and the Soviet Government of Russia will take place?

No, Sir. Arrangements are being completed as rapidly as possible, but I am not yet in a position to give the exact dates upon which the respective Ambassadors will enter upon their duties.

Will the right hon. Gentleman state whether any conversations are in progress with a view to eliciting an explanation from the Soviet Government of their declaration on the policy which he proposes to ratify?

asked the Secretary of State for Foreign Affairs if, in his discussions with the representatives of the Soviet Republic of Russia, any reference was made to financial assistance; and, if so, will he state the nature of those discussions?

United States Relations

asked the Secretary of State for Foreign Affairs if he has information as to the policy adopted by the United States of America towards the Soviet Republic of Russia; and is he aware of any recent change of policy?

I have no information on this point beyond that to be gathered from the pronouncements made at various times by members of the United States Government. I am not aware of any recent change in the policy of the United States Government towards the Union of Soviet Socialist Republics.

Does the right hon. Gentleman not think that he might follow with advantage the policy of the United States in order to secure more trade?

Diplomatic Privileges

asked the Secretary of State for Foreign Affairs whether members of the British Embassy at Moscow will enjoy the same diplomatic privileges as will be granted to members of the Soviet Embassy in this country?

The staff of His Majesty's Embassy at Moscow will enjoy the usual diplomatic privileges.

Will the right hon. Gentleman see that the servants of our previous representatives in Russia, who are now serving terms in Siberia, are granted their freedom?

I do not see how that matter arises on this question. In reply to a previous question by the ex-Foreign Secretary, I stated that the matter was being dealt with.

The right hon. Gentleman, in his reply, said that these servants would enjoy all the usual privileges in Moscow. Will he now say whether they will enjoy the same privileges as those who are in London?

They will enjoy the privileges which are usually extended in such circumstances.

British Embassy, Moscow

asked the Secretary of State for Foreign Affairs whether the Soviet Government is affording facilities at Moscow for the acquisition of accommodation for the British Embassy; and whether the accommodation provided will be self-contained or be in a building devoted in part to other purposes?

I am unable to make any comprehensive statement until I have received a report on the question from His Majesty's Ambassador after his arrival at Moscow, and his inspection of the present premises leased to His Majesty's Government.

Will the right hon. Gentleman insist upon the plate and other property, which was stolen from our previous Embassy, being restored?

League of Nations

Flag

asked the Secretary of State for Foreign Affairs whether he is prepared to support the adoption of a League flag by the League of Nations?

The question has never been raised officially, and I cannot say what would be the attitude of His Majesty's Government in such a hypothetical matter.

Is the Foreign Secretary aware that an international competition on this subject has been organised by the League of Nations societies of various countries, and will he give the matter sympathetic consideration when it does arise?

Latvia (Land Grants)

asked the Secretary of State for Foreign Affairs whether his attention has been called to the discrimination against the German minority being carried out in Latvia; and whether he will raise the matter at the next meeting of the Council of the League?

I presume my hon. Friend refers to the recent Latvian law, abolishing the right of former soldiers of the so-called "Landeswehr" to apply for grants of land. If this law can be regarded as infringing the provisions of the Minorities Treaties, as to which I express no opinion, a petition against it will doubtless be submitted to the Council of the League of Nations, and, as a member of that Council, I shall of course give it my most careful consideration.

Optional Clause

asked the Secretary of State for Foreign Affairs whether he has now decided to issue a White Paper explaining precisely the changes made in the rights and obligations of the United Kingdom by the Government's adherence to the optional clause?

Yes, Sir. His Majesty's Government have decided to Publish a White Paper on the subject, and the necessary steps are being taken, but I cannot at present state when the Paper will be issued.

Will the Foreign Secretary take care to publish the White Paper, not on the eve of the Debate, but a certain time before, so that hon. Members may see it?

I shall certainly undertake to publish it in good time before the Debate.

Schooner "I'm Alone" (Sinking)

asked the Secretary of State for Foreign Affairs whether he is able to state the amount of the compensation awarded to the officers and crew of the "I'm Alone," a vessel on the Canadian register, which was sunk outside territorial waters by an American Government vessel?

No, Sir. Under arrangements arrived at between His Majesty's Government in Canada and the Government of the United States, this case is to be submitted to arbitration under Article 4 of the Liquor Convention with the United States of 1924, but no hearing has yet taken place.

Has the right hon. Gentleman afforded any assistance to the Canadian Government in dealing with this apparently high-handed action?

British Embassy, Warsaw

asked the Secretary of State for. Foreign Affairs whether, now that His Majesty's representative at Warsaw has become an Ambassador, it is proposed to take any steps towards purchasing a suitable building as an embassy?

The present house is held on lease until 1935, and no change is contemplated in the meantime.

Naval Conference

asked the Secretary of State for Foreign Affairs on what date the British Ambassador in Rome communicated to Italy a list of the subjects to be discussed at the Naval Conference assembling on 21st January, in accordance with the Note of 7th October, inviting Italy to the Conference?

While no action in the sense outlined by the hon. and gallant Member has been taken by His Majesty's Ambassador at Rome, the Italian Ambassador in London was informed on the 12th November that His Majesty's Government in the United Kingdom were considering the question of the agenda of the London Naval Conference and that a statement on the subject would be communicated to the interested Powers as soon as possible.

Can the right hon. Gentleman say when any statement as to these matters will be communicated to this House?

Can the right hon. Gentleman say when the Italian Government were advised of the points that were going to be raised at the Conference; and is he not aware that it has been made the subject of complaint in the Italian Press that they were informed so late?

asked the Prime Minister the composition of the British and Empire representation at the forthcoming Five-Power Conference?

I would refer the hon. Member to the answer which I gave on Monday last in reply to a question by the hon. Member for the City of Chester (Sir C. Cayzer).

Great Britain and United States (Visa Fees)

asked the Secretary of State for Foreign Affairs whether he is aware that American tourists can now visit Italy, Switzerland, Germany, Denmark and France at a total cost of two dollars, while the cost of a visa to visit this country is eight dollars; and whether, seeing that this charge deters many visitors from coming to Great Britain, he can see his way to accept the suggestion of the United States of reciprocal abolition, or a reduction to a nominal figure, of visa fees on passports of visitors to and from the United States, thereby making this charge more uniform with those obtaining in other European countries?

I can only refer the hon. and gallant Member to the reply which I gave on the 18th November to the hon. Member for Kidderminster (Mr. Wardlaw-Milne). I hope shortly to be in a position to announce the decision of His Majesty's Government in this matter.

China and Russia

asked the Secretary of State for Foreign Affairs whether, seeing that certain hostile acts have been committed by the Union of Soviet Socialist Republics against the Republic of China, both parties having signed the Kellogg Pact, he will consider bringing this breach of the pact before the other Governments that have attached their signatures to the pact, with a view of bringing about a peaceful settlement?

The hon. Member will be aware that the Kellogg Pact provides no machinery for dealing with any case of infraction, or apparent infraction, of its terms, merely stating in the preamble that:

"Any Signatory Power which shall hereafter seek to promote its national interests by resort to war shall be denied the benefits furnished by this Treaty."

I understand that the Chinese Government may appeal to the League of Nations. The Covenant of the League provides machinery for dealing with such an appeal, and I think it will be best to await developments in this direction in the first place.

Can the right hon. Gentleman say whether any communications have passed between the United States Government and His Majesty's Government on this subject, and whether any suggestion was made by the United States Government for common representations to Russia against the breach of the Kellogg Pact?

In the early days of this matter, communications did pass, and, as I informed the House at the time, I replied intimating that we were prepared to participate in any joint action that would be calculated to bring this dispute to a peaceful termination. Since then no further communication has been received, but I think a communication has come through a telegram from another Government, and, if joint action can be taken, we are prepared to participate.

Will the right hon. Gentleman consider whether it would not be proper for His Majesty's Government to initiate further communications with the United States Government on this subject?

I can only say that the matter was under consideration this very morning, and, as I have intimated, we are prepared to take part in joint action. I will consider the right hon. Gentleman's suggestion as to whether I ought to initiate such action.

Is it not the case that one of the difficulties lies in the fact that Russia is not a member of the League of Nations, and that the same applies to America; and is it not possible through other machinery to take action?

The action that I was contemplating was not action associated with the League in the first in stance, but joint action by the signatories, of the Kellogg Pact, who include both Russia and America.

Is it not the fact that Chinese committed hostile acts against Soviet Russia, and are His Majesty's Government going to bring any pressure to bear on the Chinese Government?

Trade and Commerce

Great Britain and United States (Tariffs)

asked the Secretary of State for Foreign Affairs if he has made any representations to the Government of the United States of America in regard to the advisability of a tariff holiday; and with what result?

The answer to the first part of the question is in the negative, and the second part does not, therefore, arise.

Is not the right hon. Gentleman aware that the proposed increase in the United States tariff is calculated to do considerable injury to our export trade, and, consequently, to the employment of our people; and does he not consider it his duty to make representations on the matter?

The hon. Member should put his question to the proper Department, which is the Board of Trade.

Empire Marketing Board

asked the Undersecretary of State for the Colonies if he will consider the appointment to the Empire Marketing Board and some of its sub-committees of representatives of those employed in retail distribution?

My noble Friend does not feel able to add; to the membership of the Empire Marketing Board in the manner suggested, but he will consider carefully possible alternative methods for securing closer touch between the Board's work and those employed in retail distribution.

asked the Undersecretary of State for the Colonies if he will state the amount spent during each of the last three years by the Empire Marketing Board on entertaining, including lunches at the Savoy and other London hotels?

The total expenditure brought to account in each of the last three financial years in respect of entertainment provided by the Empire Marketing Board is £341 6s. 4d. in 1927– 28; £741 16s. 4d. in 1928–29; and £140 13s. 11d. in 1929–30. In all cases arrangements were made through the machinery of the Government Hospitality Fund.

Is very extravagant expenditure still going on under the present Government, or has there been any change?

Is it the case that only Empire food and wines are used on these occasions?

If the hon. Gentleman looks at the last figures, he will see that we are economising.

Imperial Preference

asked the Under-Secretary of State for Dominion Affairs if any communications have passed recently on the subject of Imperial preference between His Majesty's Government in the United Kingdom and His Majesty's Governments in the Dominions; and, if so, if it is intended to publish these communications?

I would refer the hon. Member to the answer which the Prime Minister gave on this subject to the right hon. Member for West Woolwich (Sir K. Wood) on 5th November.

Royal Navy

Pensions (Payment)

asked the First Lord of the Admiralty whether, in view of the inconvenience caused to the lower-deck pensioners by the fact that their pensions are paid quarterly, he can see his way to introduce regulations whereby these pensioners will receive their pensions at more regular intervals?

I would refer my hon. Friend to the reply given on the 6th November to the hon. Member for Gillingham (Sir R. Gower) [OFFICIAL REPORT, cols. 1025–26].

In view of the fact that these men have to pay their rent and purchase their goods weekly, cannot the Department consider making the same arrangements as other Government Departments?

In view of the fact that these pensions are paid in advance, would not the suggestion made in this question be generally unpopular?

Mates (Promotion)

asked the First Lord of the Admiralty whether the Board of Selection of candidates for the rank of mate includes an officer promoted through this channel; if not, will he consider the advisability of taking the necessary steps to provide for the inclusion of such an officer on this board; and is he aware that, of a total of 415 executive mates promoted, only three have been promoted to the rank or relative rank of commander?

With regard to the first part of the question, no such provision exists, nor am I convinced of its desirability, but, as I stated previously, the whole question of promotion from the Lower deck is under consideration. As regards the last part of the question, I would refer the hon. Member to the replies which I gave on the 6th November.

Does not the right hon. Gentleman think that the fact that, of 415 executive mates promoted, only three have been promoted to the rank of commander indicates that there is something radically wrong with the method of promotion?

I am afraid that my hon. Friend cannot have read carefully the answers given to previous questions on this subject. Otherwise, he would have seen that 231 of the 415 have been retired under special retirement schemes, and also that a large proportion of executive mates are still within the promotion zone.

If the right hon. Gentleman had looked at the question which I originally put, he would have found that I was perfectly correct.

Are not representations being constantly made to the right hon. Gentleman that the mate scheme is not working satisfactorily, and will he appoint a Committee to go into the matter thoroughly?

As I said in answer to a previous question, the question of promotion from the lower deck is under consideration, and there is no need, so far as I can see at present, to appoint another Committee. The facts are well known and are being considered.

Singapore Base

asked the First Lord of the Admiralty whether any considerable modifications were made in the plans for the new naval base and arsenal at Singapore since the scheme was inaugurated and prior to his recent decision to slow down work on the base; if so, can he state briefly what the modifications were; and when the Governments of the Dominions and Colonies concerned were consulted as to these previous modifications?

No considerable modification has taken place in the Singapore base scheme since its inception, but a modification of the programme of its development was announced when the Navy Estimates were introduced in 1927 (OFFICIAL REPORT, 14th March, 1927; column 1680). This was decided upon in 1926, after a prolonged investigation starting from the time that the late Government assumed office, and was duly laid before the Dominion Prime Ministers at the Imperial Conference in October of that year. There was no consultation with the Colonial Governments concerned. During the period of the investigation, preliminary work was being proceeded with, but it was found, when the situation was reviewed in 1927, that the date for completion of the base could not be adhered to without increased cost. A delay of up to two years was accepted by the late Government. No prior communication was made to the Dominions or Colonies in question.

Does that mean that the Dominion Prime Ministers were simply informed of the decision, and that their Governments were not asked to approve it or not?

asked the First Lord of the Admiralty whether any orders for material have been cancelled owing to the slowing down of work on the Singapore base, and what orders have been postponed?

The answer to the first part of the question is in the negative. The suspension of various items of work will result in certain orders for material not being placed at present.

Does that mean that there was a certain amount of work which would have given employment which is no longer being given?

That may be the case to a small degree, but a good deal of the work which will have to be suspended is work that would have been done in the East.

Does not the right hon. Gentleman think that useful work like engineering work for the Singapore Dock is better to stop unemployment than Bills for doles such as the Government have just brought in?

asked the First Lord of the Admiralty whether he can estimate the cost to the Exchequer of delaying the work recently in progress on the naval base at Singapore; and whether that cost will be borne exclusively by the Home Government?

I would refer the hon. and gallant Member to the replies which I gave on the 20th November [OFFICIAL REPORT, Column 463] to the hon. Members for East Willesden (Mr. D. G. Somerville) and Kingston-upon-Thames (Sir G. Penny).

I think that my previous answers cover that. It would be quite improper to give answers as to details of that kind before the negotiations which are taking place have been concluded.

Cannot the right hon. Gentleman at least give us an under- taking that the Government will not ask the Colonies and Dominions to pay for slowing down the work?

asked the First Lord of the Admiralty if, when contributions towards the Singapore naval base were promised by certain Colonies and Dominions, any conditions were attached by them to the grants?

The contribution promised by the Federated Malay States was intended to facilitate expeditious procedure with the necessary portions of the scheme as a whole, and was conditional upon the decision to proceed with the work on the base remaining unaltered. The contributions promised by the other Dominion and Colonial Governments concerned, namely, New Zealand and Hong Kong, were subject to no express conditions, but doubtless to an implied condition that the money would be spent on the development of the base. The presentation of the site for the base, which was given by the Government of the Straits Settlements, is the subject of a Trust under which, in the event of the land or any portion of it ceasing to be required for the purpose of a naval base, such land or portion of it is to revert to the Straits Settlements' Government, who would pay to the Admiralty the amount (if any) whereby the market value of the same, inclusive of all works, buildings and machinery executed or erected thereon, exceeds the estimated value of the land exclusive of the works, buildings and machinery.

Is it not quite clear that, when the Colonies and Dominions gave this grant, it was on the express understanding that the dock was to be completed, and are not the Government taking the money under false pretences?

The money that has been taken has been taken by the predecessors of the present Government. As to the future, I would refer the hon. Member to the answer already given by the Prime Minister.

Have any protests been received from any of the Dominons who have subscribed money towards the cost of the dock or not?

asked the Prime Minister whether the postponement of the work on the base at Singapore is being confined to the naval base; and whether there has been any change in policy in respect to work on the air base there?

The answer to the first part of the question is in the affirmative and to the second part in the negative.

Dockyard EmployæS (Establishment)

asked the First Lord of the Admiralty whether he will consider giving establishment to all dockyardsmen as a right after a period of probation not exceeding five years?

Does not the Admiralty think that it would be desirable to give security of employment to national civil servants in the dockyards, as in the Post Office?

Dockyards (Employment)

asked the First Lord of the Admiralty whether he has received any proposals from trade unions concerned with regard to the provision of alternative work in the dockyards; and what his attitude is towards these proposals?

Does that include private dockyards as well as Government dockyards?

asked the First Lord of the Admiralty whether he can now state the nature of the plans for dealing with unemployment in the royal dockyards as the result of the naval construction policy of the Government?

The volume of employment in the royal dockyards has not been reduced as a result of the naval construction policy of the Government. The hon. Member's question, therefore, does not arise.

Does that mean that the right hon. Gentleman is not foreseeing the situation that may arise?

I think my previous answer to a Member for a dockyard constituency covers that point.

Special Entry Cadets (Lower-Deck Candidates)

asked the First Lord of the Admiralty how many boys and young seamen have been given special education facilities since 1919 to enable them to compete at the examinations for special entry cadets; and what steps he proposes to take to increase these facilities for promotion when young from the lower deck?

I regret that no information is available as to the number of boys and young seamen given special facilities for the purpose mentioned. In view of the changes made in the mate scheme in 1920 and 1923, under which promotion at an earlier age was made possible, the Board decided that no extension in these facilities was necessary or desirable, and no reason is seen for altering, that decision.

Cadets (Training)

asked the First Lord of the Admiralty what period of time is required to train a cadet under the Osborne and Dartmouth scheme and under the special entry scheme, respectively; and what is the cost to the State of training a cadet under each scheme?

The approximate times required to train naval cadets entered through the Royal Naval College, Dartmouth, and the special entry are seven years, 10 months and four-and-a- half years respectively. The net cost of training a cadet at Dartmouth is about £650 for the full period of three years eight months, and that of training a special entry cadet in the Cadets' Training Ship about £356 for the 12 mouths. course. Particulars of the cost for the remainder of the training are not readily available, and could not be obtained without undue expenditure of time and labour, but the amount per head is approximately the same for both classes of cadets.

Admiral's Newspaper Articles

asked the First Lord of the Admiralty whether his attention has been drawn to two recent articles contributed to the "Times" newspaper by an admiral on the active list on smaller navies; were these articles submitted to the Admiralty before publication; and do they represent the views of the Admiralty?

On a point of Order. Is it in order for the name of a newspaper to appear in a question?

The answer to the first part of the question is in the affirmative, and to the second and third parts in the negative.

Does the article in question reflect the views of the Government, and will the right hon. Gentleman convey to the Prime Minister that, if views of that kind are put forward by our representatives at the forthcoming Conference, it will lead the country into nothing but danger and difficulty?

Is the right hon. Gentleman aware that the writer in question speaks for a very large section of naval opinion?

My answer to the second and third parts of the question was in the negative, that the view expressed is not the view of the Admiralty, nor of the Government.

We are quite well aware at the Admiralty of the views held by this Admiral.

Christmas Holidays (Dockyards)

asked the First Lord of the Admiralty what the intention of the Admiralty is regarding the Christmas holidays; whether the yards will be open on Friday and Saturday, 27th and 28th December; and whether employés may take any unexpired portion of their leave on these dates?

The reply to the first part of the question is that the yards will be closed on Christmas Day and Boxing Day, and to the second part is in the affirmative and to the third part also is in the affirmative, subject to the exigencies of the Service.

Federated Malay States

Tin Resources

asked the Under-Secretary of State for the Colonies whether he is aware that the Federated Malay States Government has decided, in order to conserve the resources of tin, that no further application for mining land will be considered; whether such a policy was inspired by, or has the approval of, His Majesty's Government; and whether the embargo will apply to prospecting licences?

The decision is substantially as described by the hon. Member. Rights under existing prospecting licences will not be affected. My Noble Friend took no part in this decision of the Federated Malay States Government, but, as at present advised, he sees no reason to disapprove.

Will the right hon. Gentleman take steps to uphold that decision, seeing that everyone in that part of the world thinks that it is a wise decision?

Fauna

asked the Undersecretary of State for the Colonies whether, in view of the fact that the fauna of the Federated Malay States is rapidly becoming scarcer owing to unrestricted shooting, he will take steps to see that restrictive measures are imposed to preserve and safeguard big game throughout Malaya?

Measures for the protection of the wild fauna of Malaya already exist. Apart from the game reserves there are forest reserves in the Federated Malay States exceeding one-fifth part of the whole country, which constitute a sanctuary for wild animals since indiscriminate shooting is not allowed in forest reserves.

Arising out of the reply, I should like to ask the hon. Gentleman if he will make inquiries, because the existing machinery is quite inadequate, and there is a great fear that the big game in that country will disappear altogether before long; and now that we have a new Governor will he make representations to him upon the subject?

Is the hon. Gentleman aware that it is not the reserves that are at fault, but that the machinery for effectively seeing that the law is carried out has broken down, and that more powers ought to be given to the game wardens?

If the measures already taken are not satisfactory, I will make some inquiry into the matter.

Palestine

Wailing Wall

37 and 38.

asked the Under-Secretary of State for the Colonies (1) whether, seeing that both Jews and Arabs have been asked to produce documents showing their ancient rights at the Wailing Wall and that the Arabs have produced documents showing their rights and that the Rabbinate has failed to be able to do so, he will take steps to see that the rights of the Arabs are safeguarded;

(2) whether, seeing that under the new instructions in regard to the use of the Wailing Wall the Jews may now bring a stand containing lamps, wash-basins, and at certain times tables and prayer-mats, that this has had the effect of turning this spot into an open-air synagogue, and that this temporary arrangement has caused great annoyance to the Arabs, he will take steps to revert to the status quo as soon as possible?

I cannot emphasise too strongly that the rights of the Moslems are in no danger. There is no foundation whatever for the suggestion that the temporary regulations turn the spot into a synagogue. Their object was merely to regulate procedure, on the basis of established practice, pending a final settlement of the whole question. For the rest, I would refer the hon. and gallant Member to my reply to him of 13th November.

Will not the hon. Gentleman revert to the status quo, which was agreeable to both parties, or is he now trying to shift the burden from the Colonial Office on to the League of Nations and getting them to judge the whole matter?

Is it not a fact that the status quo was not quite so agreeable to the Jews when they were being massacred?

I have stated clearly that the procedure was on the basis of established practice, and I think that answers the question until the matter has been settled by a Commission which could inquire into it, and, as it is now under consideration by the League of Nations we must leave it for the moment.

Is not the hon. Gentleman going to abide by the terms of the White Paper?

Jews and Arabs (Treatment)

asked the Under-Secretary of State for the Colonies whether he or the Government of Palestine will take steps to allay the anxieties in Transjordania, Syria, and Iraq at the present state of affairs in Palestine by giving absolute equality of treatment to both Jew and Arab in Palestine?

It is the policy of His Majesty's Government, and the constant endeavour of the Government of Palestine, to give equality of treatment to all inhabitants of the territory.

Will the hon. Gentleman give effect to the policy, either by permitting the Jewish population to carry arms or, alternatively, disarming the Arabs?

Is it not a fact that many of the Arabs were killed in these riots by gunshot wounds?

Emir Abdullah

asked the Under-Secretary of State for the Colonies what reply has been sent to the communication from the Emir Abdullah as to the conduct of affairs in Palestine; and will he lay Papers?

If my right hon. and gallant Friend will let me know to what communication he refers, I will look into the matter.

Mr. Luke's Evidence

asked the Under-Secretary of State for the Colonies why the evidence of Mr. Luke is being taken in camera; whether this involves the exclusion of the hon. and learned Member for the Rusholme Division and of his cross-examination; and will this evidence appear in the printed evidence to be communicated with the Report to this House?

The procedure adopted is a matter for the Commission. As regards the last part of the question, the Secretary of State will await the receipt of the full evidence and of the Report.

Is it open for a Member of this House to be engaged in an inquiry of which, ultimately, the Report is to be presented to the House of which he is a Member?

Sierra Leone

asked the Under-Secretary of State for the Colonies whether, seeing that Portuguese recruiting agents are obtaining labour from Liberia for the cocoa plantations of St. Thomé, he will see that none of the natives so recruited are taken from the territory of Sierra Leone?

Cyprus (Memorial)

asked the Under-Secretary of State for the Colonies whether he proposes to publish a reply to the points contained in a memorandum submitted to His Majesty's Government by a deputation of Cypriot Greeks, and recently circulated to Members of Parliament?

A full reply to the memorial presented to the Secretary of State on behalf of the Cypriot Greeks is now under preparation. The reply will be sent to the Governor of Cyprus for communication to the memorialists and will presumably be published in Cyprus.

Will the hon. Gentleman make sure that we can obtain copies of it, as we all had copies of the original memorandum?

If there is any general demand for publication, I see no reason why it should not be published.

Northern Rhodesia

asked the Under-Secretary of State for the Colonies whether His Majesty's Government still adhere to the decision to move the capital of Northern Rhodesia from Livingstone to some site nearer the new mining developments; whether a site for the new capital has been selected; and whether all further expenditure on Government offices and other buildings at Livingstone has now ceased?

The reply to the first part of the question is in the affirmative subject to consideration of any views which the Governor of Northern Rhodesia may express after further inquiry; the reply to the second part is in the negative. The building programme at Livingstone is being regulated by the assumption that administrative headquarters will shortly be removed.

Will the hon. Gentleman make representation to the Government of Northern Rhodesia to expedite a decision on this matter in view of the very rapid emigration and the rapid opening up of new mining areas?

I think that I am safe in saying that experts on engineering and sanitation are going out next month to consider the matter and advise the Government.

Royal Air Force

Miss Douglas Pennant

asked the Prime Minister whether he will agree to the setting up of an independent tribunal to investigate the charges against Miss Douglas Pennant which led to her dismissal from the Royal Air Force?

The answer is in the negative. I have given this case further attention and have submitted the papers to the Government's legal advisers. After full and sympathetic consideration the difficulties of having the matter reopened after so long a lapse of time were seen to be insuperable. In view of what is said to be the reason why this case should be reopened, I ought to add that there is no question of Miss Douglas Pennant's supersession having been due to any sort of neglect of duty on her part or to any cause which would in any way justify aspersions on her character.

May I give notice to the Prime Minister that I shall take the opportunity of raising this matter on the Adjournment?

Is the right hon. Gentleman aware that many of us have been looking forward to the advent of a Labour Government to do justice to this woman who has been so gravely wronged?

Will the right hon. Gentleman bear in mind that there are many of us who are thoroughly sick of the whole controversy?

Airship R 101

asked the Under-Secretary of State for Air whether any arrangements are contemplated in which facilities will be offered to the public for a trip in the airship R 101 in any of its future trips; and can he give particulars?

The answer is that no such arrangements are at present in contemplation.

May we assume that facilities will be given to Members of Parliament, and that last Saturday's trip (may merely be regarded as an instalment, like so much of our legislation?

The question upon the Order Paper is whether facilities will be offered for the public, and not for Members of this House.

I do not think that there is the slightest likelihood of the general public being invited to go on the first trial trip to Egypt.

asked the Undersecretary of State for Air whether the dinner supplied aboard the R 101 on Saturday, 23rd November, was included in the nominal charge of 7s. 6d. made to each Member of Parliament visiting the R 101?

No, Sir; no charge was made for refreshments. The charge of 7s. 6d. was for conveyance by motor-coach to Cardington.

Are we to understand that a charge was made for refreshment, and that each Member paid for what he had on the airship?

No. The answer to the supplementary question is that the lunch was an Air Ministry cost.

Is it not the custom under all Governments that a Minister giving such a reception, and not the Department, bears the cost? Is not that one of the arguments used for the big salaries which Ministers receive; and is not the course which was taken on this occasion a departure from the custom of the House?

Is not the hon. Member aware that a great many hon. Members visited Cardington on Saturday last in their own cars and, therefore, paid nothing, and that they recognised that they were the guests of the Air Ministry?

I desire to press this point, because it is better that the House should not be under any misunderstanding. It has been the custom, so far as I am informed—[HON. MEMBERS: "Speech!"] I want to ask the Minister whether he can deny the question that I have asked him?

May I ask whether it is the custom of any Government Department to pay for a reception?

The hon. Member must put that upon the Order Paper as a separate question.

Officers (Pay)

asked the Under-Secretary of State for Air if, in view of the fact that certain ranks of Royal Air Force officers engaged on active flying duties are paid less than their corresponding ranks of Army officers, and in view of the risks of flying and increased standards of technical knowledge and skill required for the Royal Air Force, the Air Ministry will consider recommending a revision of the basic rates of pay in respect of these ranks?

In considering this question it is necessary to have regard to the whole career which the service offers including the pay in all ranks and the opportunities for promotion. Whilst my noble Friend has the prospects and emoluments of Royal Air Force officers under constant review, he does not consider a revision of existing basic rates of pay is called for at the present time.

Is the hon. Member aware that a squadron leader after five years in the Royal Air Force gets £1 16s. a day and that a major in the Army, after five years, draws £1 17s. Does the hon. Member think that flying risk is equal to a shilling minus?

So far as those figures are comparable, I admit that there is a slight difference, but I think the reply that I gave in regard to promotion provides a set-off

Does not the hon. Member think that this case affords another reason for the co-ordination of the Forces?

Manston Station, Kent

asked the Under-Secretary of State for Air if it is proposed to retain the Royal Air Force station, Manston, Kent, as a permanent peace time station; if so, whether it is proposed to construct any additional married quarters for officers and other ranks in the near future; and if he will give an assurance that, so far as is practicable, local labour will be used for this and any other constructional works undertaken?

The answer to the first part of the question is in the affirmative; to the second, in the negative; the last part of the question does not, therefore, arise.

Is the hon. Member aware that many non-commissioned officers and men are living in 12-year old leaky huts on that station?

It is true that at the present moment there are not quite sufficient quarters available, but, as soon as the bombing squadron which is at present there leaves, the position will be normal.

Privy Council Appeals (Irish Free State)

asked the Prime Minister whether it is the intention of the Government to maintain the terms of the Irish Treaty and ensure that the position of the Judicial Committee of the Privy Council as the Supreme Court of Appeal for the Dominions, including the Irish Free State, should at all times be fully safeguarded?

When so much of the constitutional working of our Imperial machinery was altered in consequence of the resolutions passed by the Imperial Conference of 1926, the Privy Council position was left over for consideration by the next Imperial Conference, and until that has met the position remains where it was.

Has the right hon. Gentleman now made himself acquainted with the observations of the Minister of Finance in the Irish Free State Parliament, and can he say whether any communication has been made by the Irish Free State to the Government recently on the matter contained in the latter part of my question?

The Government have had no communication from the Irish Free State Government in this matter, and such a communication, and such a communication alone, will receive my official attention.

Arising out of the original reply, is it not the case, that unless, and until, the next Imperial Conference has made some alteration in the position as regards the Privy Council, the Treaty obligations of the Irish Free State remain as they were?

That is so, and I have never experienced from the Irish Free State any inclination to do anything except to observe its honourable undertakings.

Zambesi Bridge

asked the Under-Secretary of State for the Colonies what body of experts recommended the construction of the Zambesi bridge; was the Treasury represented on this body; whether their estimate of cost and revenue can be made public; whether Sir George Schuster has been consulted on the finances of the scheme; and does the approval of and responsibility for the scheme rest with the Colonial Office or the Lord Privy Seal?

I would refer my right hon. and gallant Friend to the Report recently published as Colonial Number 27. As a result of this and additional expert reports, including those of the consulting engineers who recently checked the plans on the spot, the Colonial Development Fund Committee has recommended the construction of the bridge. Details of the final estimate cannot be made public at present. Responsibility for the scheme rests with the Secretary of State, subject to Treasury approval. It has not been referred to Sir George Schuster since he took up his present post.

Can the hon. Gentleman say whether the Treasury approval has been given?

Without giving any exact date, can the hon. Gentleman tell the House when the Government hope that the Zambesi bridge will be completed?

Can the hon. Gentleman say when the bridge is going to be started?

Can the hon. Gentleman tell the House if this bridge across the Zambesi is going to be built by Sir William Arrol of Glasgow?

I said quite clearly that there has only been an estimate up to now, and even tenders have not been asked for.

Gambia (Labour Dispute)

asked the Undersecretary of State for the Colonies whether he has yet received the report from the Governor of Gambia concerning the recent labour dispute at Bathurst; and if he can state on what terms the settlement of the dispute has been negotiated?

A despatch has been received from the Governor, but it was sent before the settlement, as to the terms of which I have no information. With the hon. Member's permission, I will circulate a brief statement in the OFFICIAL REPORT.

Following is the statement:

"The Governor of the Gambia states that at the end of October a strike was declared among the outdoor employés of the shipping firms in Bathurst, the men demanding higher wages. The Government took no side in the dispute but the Governor received a deputation of strikers and warned them of the importance of keeping the peace. Negotiations were conducted peacefully until the 14th of November, when large crowds collected which threatened the police and any men remaining at work, and eventually proceeded to demonstrate against one of the employers and break the glass of his car with stones. The police were then turned out and dispersed the crowd. Fifteen persons were injured but only three—two police and one rioter—were detained in hospital and even those injuries are said to be slight. As a measure of precaution the Governor brought one platoon of troops into Bathurst, but it was not necessary to use them, and they returned to their barracks outside the town on the next day. The strike was settled on the 18th, by negotiation. The Commissioner of Police reports that though some of the police were armed with bayonets as a display of force they were not used and the police were at all times under control."

Port of Singapore

asked the Undersecretary of State for the Colonies whether he has received recommendations from Singapore that a committee should be appointed to consider the matter of charges and improvements in the Tanjong Pagar Dock; whether this step is favoured by the local government; and when effect will be given to it?

As the hon. Member is no doubt aware the Port of Singapore was the subject of a report by the Imperial Shipping Committee so recently as last year. My Noble Friend has received no recommendation for the appointment of a Committee to consider the matters mentioned by the hon. Member.

Is the hon. Gentleman aware that there is a great feeling out there as regards the excessive cost to shipping using the Government wharves, and can he make representations to see that harbour dues are charged to vessels using the port when they do not make use of the wharves? Also, will he consider the advisability and necessity of spreading the Sinking Fund over a longer period of years and so reduce the annual amounts now placed to same, which would lighten the burden now being placed upon shipping and industry?

There are feelings in this country about many things, but if we were to inquire always because of feelings that are expressed by individual Members, of which we have no information of an official character, we should never have done.

But surely the Government must realise that they have a great responsibility in seeing that questions affecting the financial and industrial welfare of Malaya are dealt with if brought to its attention by a Member of this House, and I again ask if the Government will make representations?

Aviation

Loss of Seaplane "City of Rome."

asked the Under-Secretary of State for Air whether the Air Ministry had any information that defects had been reported in the seaplane "City of Rome" prior to the loss of this aircraft off Spezia; what steps the Air Ministry took to satisfy itself that the "City of Rome" was in all respects in proper flying condition before it started on its journey; and whether it has made any later inquiries on this point, and with what result?

The answer to the first part of the question is in the negative. As regards the second part, the Air Ministry's regulations require a public transport aircraft to be inspected by a licensed ground engineer and certified as safe before each day's flight, and I am informed that this requirement was fulfilled in the present case. As regards the last part, there is every presumption that this aircraft was in proper flying condition; but my Noble Friend would wish to await the conclusion of the investigation which the Italian authorities are carrying out, in case anything should emerge on this point.

When the Report is received by the Under-Secretary, will Members of this House be allowed to see it?

Airship R100

asked the Under-Secretary of State for Air how many persons were used to assist, or will be used to assist, the launching of R100 at Howden; how many of these were supplied, or will be supplied, by the military authorities and how many from ordinary labour sources; whether any payment has been made or will be made by the airship company which has constructed R100 for the services of the soldiers or towards their expenses; and, if so, how much?

As regards the first two parts of the question, the handling party for R100 will consist of 400 to 450 soldiers, supplemented by 16 leading hands from the Royal Airship Works, Cardington. The answer to the third part of the question is in the negative, the removal of the airship from her shed being an Air Ministry responsibility under the contract, and the last part does not, therefore, arise.

Flying Boats, Malta (Harbour Protection)

asked the Under-Secretary of State for Air whether the Air Department will confer with the Admiralty to ascertain if any form of breakwater could be provided in one of the harbours to afford protection in bad weather to flying boats using Malta?

The hon. and gallant Member's suggestion will be carefully considered in conjunction with the Admiralty, but the information available strongly indicates that any substantial improvement of the facilities for the operation of flying boats at Malta by means of a breakwater could only be effected at a practically prohibitive cost.

Air Services (Genoa-Alexandria)

asked the Under-Secretary of State for Air how many seaplanes are employed on the Imperial Airways route from Genoa to Alexandria; how many pilots are available for this route; what rest period is arranged for these pilots; whether there have been any cases of sickness amongst the pilots during the last few months; and whether the Air Ministry takes any steps to assure itself that pilots in public aircraft are in good health before starting on a journey?

As the answer is of some length, I propose with my hon. Friend's permission, to circulate it in the OFFICIAL REPORT.

Following is the answer:

I assume that my hon. Friend is referring to the normal service which runs viâ Genoa. He is no doubt aware that that service has been temporarily suspended in the circumstances explained in my reply of 6th November to my hon. and gallant Friend, the Member for Central Hull (Lieut.-Commander Ken-worthy). For the normal route from Genoa to Alexandria three flying boats were employed and four pilots were available for the service. They were only engaged in flying duties on three days out of ten and I understand that there was not an undue amount of sickness among the pilots during the last few months. As regard the last part, under the existing regulations pilots of public aircraft are required to be medically examined at least every six months for the renewal of their licences, and in order to ensure the maintenance of their efficiency, they are also required to be re-examined and pronounced fit before resuming air duties ( a ) whenever they have performed a total of 125 hours flying as pilot within any period of 30 consecutive days since their last medical examination and ( b ) after illness or accident.

Transport

Horse Traffic, London

asked the Minister of Transport whether, in view of the increasing congestion of traffic in the West End and City of London, he will consider the advisability of prohibiting horse traffic from using the more congested streets in these areas between the hours of 9 a.m. and 6 p.m.?

This question has been considered on more than one occasion by the London Traffic Advisory Committee but in view of trade requirements and the conditions under which certain traffic is conducted the proposal to prohibit horse traffic as suggested by the hon. Member is not considered practicable.

Is the hon. Member aware that horse traffic is not permitted on the streets in the centre of Paris and New York during certain hours of the day, and does he not consider that some regulation preventing horse traffic would be useful in London?

My difficulty is that my jurisdiction does not extend to Paris and New York, and that I have to consider the condition of affairs in Great Britain.

Is the hon. Member aware that in the provinces of this country this congestion has been completely got over?

I beg to give notice that I shall raise this matter on the Adjournment of the House at an early date.

Canals

asked the Minister of Transport whether the Government will give support to the efforts being made by the canal owners of this country to amalgamate, rationalise and render independent of other interests their industry on a national basis?

I would refer the hon. Member to the reply I gave to him on this subject on the 20th November. It is my desire to encourage all useful schemes for the economic development of canals and other transport undertakings.

Ferry Service, Hull and Grimsby

asked the Minister of Transport whether his attention has been called to the bad service between Hull and Grimsby by way of the ferry over the Humber to New Holland and thence by train to Grimsby; if he is aware, for example, that on the 15th November passengers boarded the 2.30 p.m. ferry-boat at Hull and were there delayed on board until 9 o'clock, when the ferry-boat was despatched, arriving at New Holland at 9.30, where no arrangements had been made to deal with about 1,000 passengers, including many women and children, until 11.30 at night, when a train was available; that similar delays and inconveniences occur frequently; and whether, until such time as a better means of crossing the Humber by tunnel or bridge at present in course of preparation is completed, he will see that the railway company concerned improves the facilities?

I am informed by the London and North Eastern Railway Company that the delay referred to was caused by a dense fog which necessitated the suspension of the ferry service from 2.40 p.m. to 9.15 p.m. The Company have expressed their regret that a train was not available sooner for the passengers on the first ferry-boat arriving at New Holland after the resumption of the ferry service, and state that arrangements have been made to ensure that similar emergencies will be more satisfactorily dealt with in future.

May I ask whether, even in spite of the fog, it was not possible for the company to telephone over to Grimsby and have had a train waiting. Many of these unfortunate people had to seek lodgings for the night.

The railway company agree that the arrangements were not what they ought to have been. They have expressed their regret and will take special care in the future.

Is it the fact that the hon. and gallant Member who has asked the question was speaking at Hull on that day?

Lower Thames Tunnel

asked the Minister of Transport when he will be in a position to make his promised announcement about the Lower Thames tunnel?

I hope to be able to make a statement in the course of next month.

Heavy Motor Vehicles (Defective Tyres)

asked the Minister of Transport whether his attention has been drawn to the extensive damage which is being done to roads by heavy motor vehicles with defective tyres; and whether he will introduce legislation, at an early date, to enable local authorities to take proceedings against the owners of such vehicles?

I would refer the hon. Member to the answer which I gave on the 31st October to a similar question by the Member for the Abertillery Division (Mr. Daggar), of which I am sending him a copy.

Regulations

REMER asked the Minister of Transport if it is the intention of the Government to introduce legislation to regulate transport, as recommended by the Royal Commission on Transport?

The Road Traffic Bill is about to be introduced in another place, and will be available in a few days.

Palmers Green Railway Station

asked the Minister of Transport if, with reference to representations made to him in July by the London Safety First Council and to his correspondence with the London and North Eastern Railway Company as to raising the platform at Palmers Green Station, and the promise of the company that when the time arrives for carrying out renewals the question of raising the height of the platforms will be taken into consideration, and the fact that the company have now announced their intention to carry out renewals at certain stations, he will, in the interests of the public safety, urge the company to raise such platform to the normal height at the earliest opportunity?

I am in communication with the railway company in the matter and will in form the hon. Member of the result.

Electric Railway Scheme

asked the Minister of Transport whether, in connection with the Government's unemployment plans, steps have been, or are being, taken leading to the construction of an electric railway from Liverpool Street via Bethnal Green to Leyton and Waltham Cross, and to Ilford and Hainault Forest?

No proposals have yet been submitted to the Government by the railway company concerned for the construction of such railways.

Will the Minister of Transport take the initiative in drawing the attention of the railway company to the necessity and desirability of these schemes?

The hon. and gallant Member misjudges me. I have already done so. I have had consultations with the railway company and have urged the consideration of schemes similar to those he has suggested.

Motor Taxation (Publicly-Owned Vehicles)

asked the Minister of Transport whether His Majesty's Government has received representations from the Bethnal Green Borough Council and other local authorities that mechanically-propelled road vehicles owned and used by public authorities for highway construction, maintenance, or cleansing, or other public health services should be exempt from licence duty; and what action it is proposed to take upon such representations?

Representations to this effect have been received from many local authorities in the past but Parliament has not seen fit, to differentiate in the matter of licence duties between vehicles in the ownership of public authorities and similar vehicles otherwise owned, such duties being levied in respect of road user without reference to ownership.

Western Avenue

asked the Minister of Transport what progress has been made with the construction of the Western Avenue; in what year work commenced on this arterial road; what work will be carried out this year; and when the whole road will be completed?

A length of 5¾ miles of the Western Avenue has been constructed between Shepherd's Bush and Greenford and is open to traffic, and 7¼ miles remain to be constructed. The first section was commenced in 1920. Negotiations are proceeding with the Middlesex County Council with a view to the completion of the Western Avenue in that county at an early date, but it is doubtful whether it will be possible to commence the work until early next year. I am unable at present to forecast a date for the completion of the entire route.

Will the hon. Gentleman do his best to push on the construction of this road, as this matter has been going on for some nine years?

The hon. and gallant Member may be assured that I will do my best, so that the years which were lost before I came into office may be made up.

Tolls

asked the Minister of Transport how many toll bridges and toll gates exist on main and secondary roads in Great Britain; and if he is prepared to consider the ap- pointment of a Select Committee to report upon the best methods of abolishing them?

According to the latest information in my possession, there are 55 toll roads and 87 toll bridges in England and Wales. So far as I am aware, there are no tolls on public highways in Scotland. With regard to the second part of the question, I would refer the hon. Member to the answer which I gave him on the 11th July, 1929.

Is the Minister of Transport aware that the railway company charges a toll of 10s. on each car and 6d. for each passenger crossing the ferry at Connel?

I am not aware of that case, but, if those are the facts, it is probably one of the disadvantages of private enterprise.

Is it not a fact that the difficulties mentioned in this question will be met by the Bill which was considered by the Committee this week?

It is possible that many of the difficulties which do arise will be met by the Bill which the hon. and gallant Member has introduced, and on which I have been co-operating with him in the Standing Committee upstairs.

Cadogan Place Refuge

asked the Minister of Transport whether his attention has been called to the temporary island which has been erected in Sloane Street at the north-west corner of Cadogan Place; whether he will state how many times it has been knocked down by traffic; whether he is aware of the resultant damage done to persons and property; and what action he proposes to take to safeguard the lives of pedestrians and occupants of motor and other vehicles who are placed in danger owing to the erection of this island?

My attention had not previously been drawn to the number of accidents which have occurred at the refuge referred to, but having ascertained that it has been knocked down 10 times since its erection I have asked the highway authority to remove it.

Battersea Power Station

asked the Minister of Transport whether he is now in a position to make a further statement as to the projected Battersea power station particularly as to the Government's intentions on the interim report of the Government's chemists in relation to experiments on the prevention of the evolution of oxides of sulphur?

The interim report of the Committee presided over by the Government chemist has just been published, and it is proposed to await a further report.

Channel Tunnel

asked the Lord Privy Seal when he will be in a position to announce the Government's decision on the construction of the Channel Tunnel?

I have been asked to reply. I am not yet in a position to add anything to the reply which my right hon. Friend gave on the 4th November to the right hon. Member for West Woolwich (Sir K. Wood).

Unemployment (Electricity Undertakings)

asked the Lord Privy Seal whether in connection with His Majesty's Government's plans for the reduction of unemployment, he has taken, or proposes to take, any action to accelerate the carrying out of the work of the Electricity Commissioners?

The Electricity Commissioners in a circular recently issued have urged all electricity undertakings to accelerate their expenditure on development so as to provide increased work in the next two years. The Central Electricity Board have also been requested to continue to press on with all possible speed with their constructional work.

Gellyceidrim Coal Mine (Flooding)

( by Private Notice ) asked the Secretary for Mines whether he has any information regarding the inrush of water into the Gellyceidrim Mine on Saturday last, and whether he is satisfied that precautions are observed in the neighbourhood of abandoned mines containing accumulations of water?

I am certain that the House will be glad to know that no lives were lost in the inrush of water at the particular mine mentioned. I have now received a, report on this occurrence. Number 2 slant of this colliery passes under very old workings, and at a point about 100 yards from the mouth of the slant, water has always dropped from the roof in small quantity, ever since the slant was driven, about six years ago. It appears that the recent exceptionally heavy rains caused an accumulation of water in the old workings, and that owing to the pressure thus produced the channel by which the water found its way into the slant became enlarged, and the accumulated water drained rapidly through into the workings to the dip. In the opinion of my technical advisers, the previous provision for the drainage of the water was reasonable in the light of the knowledge then possessed, but, with a view to obviating any similar occurrence in the future, it is proposed to drive a road from the slant into the old workings. With regard to the second part of the question, it is part of the duty of His Majesty's Inspectors of Mines to see that suitable precautions are taken when there is any danger to be apprehended from accumulations of water, and they advise me that as a general rule proper care is exercised.

Arising out of the answer, has the Secretary for Mines any evidence as to the width of the barrier of coal which was left at this particular seam where the inrush of water took place; and is he aware that many colliery companies, when they abandon a mine, dismantle the pumping machinery which endangers adjoining mines which are at work, and what steps does he propose to take to minimise this danger in the future?

There is no suggested connection with the point raised by the hon. Member, and, if he desires any further information on the matter and will give me notice, I will answer the question later on.

Is the Minister not aware that miners in practically all these coalfields are going to work in many cases feeling very anxious as to whether or not they will come out alive the next day owing to the water in abandoned mines adjoining other mines?

Is the Minister aware that this is just another instance of the provision that is made in the Mines Act for boring in front of places where water is known to be?

Under-Secretaries of State (Indemnity Bill)

May I ask the Prime Minister when he proposes to bring in a Bill of Indemnity to cover the illegal act of the Government, during the last six months, in having seven Under-Secretaries of State sitting and voting in this House; is he aware that Bills of Indemnity have always been regarded as matters of urgency and that the Government discovered this matter some time ago; and is he further aware that Rills of this kind are nearly always passed through their First, Second and Third Readings in one sitting?

On a point of Order. May I ask if this is a Private Notice Question, because the hon. and gallant Member did not say so.

The hon. and gallant Member did give me notice of a question, but not of such a long question as that which he has now put.

It is perfectly true that I heard that something like this was going to be put, but I was informed that it was going to be put to you, Mr. Speaker, as a point of Order. I am quite willing, however, to answer the question although I have had no notice of it.

It is quite true, as the Prime Minister says, that notice was given to me that this was going to be put as a point of Order, and I might say, in answer, that no point of Order arises.

May I put this as a point of Order in regard to the votes of these seven Under-Secretaries? Erskine May's "Parliamentary Practice" clearly lays down that if—

I do not think that we can make this matter the excuse for a Debate. The question has been put to me, and I have said that no point of Order arises.

Would the Prime Minister be good enough to answer the question which was not put to him, but which he is willing to answer, namely, when will this Bill be introduced?

With great pleasure. I propose to have it introduced on Monday and taken on Tuesday. There have been a good deal of rather delicate and troublesome negotiations.

On the point of Order which I raised with you, Sir, Erskine May's "Parliamentary Practice," Webster's edition, clearly lays down that none of these Under-Secretaries, in these circumstances, shall be capable of voting or sitting in the House until the number has been reduced to the proper number. Surely, therefore, I am entitled to raise this question with you, Sir, who are the guardian of the liberties of this House and the law of this House.

No doubt the hon. and gallant Member would be entitled to raise that question with me, but I think the question was settled by the Prime Minister. When a question was put to the Prime Minister the other day on this matter, he informed the House that he proposed to introduce a Bill of Indemnity.

There is a point of Order on which I, at any rate, should like your Ruling, Sir, and that is whether, until this Bill is passed, the Under-Secretaries can continue to vote in this House.

I do not think the hon. and gallant Member can pursue the subject any further. Is there any other point of Order?

I think I am entitled to ask the Prime Minister this question. Has he complied with the law at this moment and reduced the number of Under-Secretaries to six?

I think the hon. and gallant Member will find all that provided for in the Bill when it is introduced. We are following precedent.

Personal Explanation

With your permission, Sir, and that of the House, I crave indulgence to make a personal statement which will be exceedingly brief and will not be in the nature of an apology. An hon. Member of this House thought fit yesterday evening, as I read in the OFFICIAL REPORT—unfortunately I was not in the Chamber at the time—to suggest that the proceedings of this House were being, week by week, disclosed by me over the wireless, and that this was a matter which caused him disquietude. I feel it due to the House to state the facts. The British Broadcasting Corporation, some weeks ago, arranged that three of the women Members of this House, representing the three political parties, should, in rotation, give a simple summary of the week's events in Parliament over the wireless. I am one of the three Members who have carried out that task, and the Noble Lady the Member for Perth and Kinross (Duchess of Atholl) and the hon. Lady who represents the Combined English Universities (Miss Rathbone) have alternated with me. Unless it be held, as it appears to be held by the hon. Member who made this statement, that

"Thrice is he arm'd that hath his quarrel just,"

it can hardly be maintained that one Member from the Government side enjoys an overwhelming advantage; and, surely, the point which he makes about disclosure of the proceedings of the House its hardly tenable. Representatives of the Press at the moment have access to our Debates. Those Debates are reported verbatim in the OFFICIAL REPORT, and a most prized right of the citizens of this country is that our Debates should be published. I would not have thought it necessary to trouble the House with regard to any statement made about myself personally, but I thought, and I am sure the House will think, that any statement made about a national institution ought to be made with a full knowledge of the facts. In order that the facts should be in the possession of the House, I crave your indulgence, Mr. Speaker, to make this brief statement.

As the Member in question, may I say that I do not think the remarks made by me last evening, when speaking on the Expiring Laws Continuance Bill, bear any resemblance to what the hon. Lady has just said. In the course of my remarks, I said this—

We cannot have a Debate on this matter. I allowed the hon. Lady to make a personal explanation, and all that the hon. Member can do is either to confirm what he said or withdraw it.

I am trying to convey to you, Sir, that what the hon. Lady has described me as saying is not what appears in the OFFICIAL REPORT this morning, and I wish to read from the OFFICIAL REPORT what I did say:

"I am not going to make any references to, or complaints about, the hon. Lady who is performing this function, but I do say that it is not for a member of a particular party, whether Conservative, Liberal or Labour, to come week after week and disclose the proceedings of this House."— [OFFICIAL REPORT, 26th November, 1929; col. 1323, Vol. 232.]

Therefore, I claim that I have nothing to withdraw in the remarks which I made. I was ruled out of order by the Chairman and was not allowed to complete them, and I submit that the impression which the hon. Lady—

Land Values Taxation (Scotland)

I beg to move, a land value assessment upon the capital values of land in the city or burgh. I would direct the attention of the House to the word "may" in the Clause, which shows that the Bill is enabling and permissive and is not in any way compulsory. In the second place the Bill provides that not more than 25 per cent. of the total revenue derived or derivable during the previous rating period shall be raised by land value assessment. It is thought better that, instead of fixing a limit with regard to the rate to be imposed, there ought to be a percentage limit to the rating revenue of a city or burgh. The House will observe that this provision shows that the imposition of the land value assessment is to be a gradual process. The city or burgh may begin by raising only 5 per cent. of its rating revenue of last year from land values assessment, and after the city or burgh has Learned the amount of revenue that can be raised, and the value of the process, then it can extend the process further.

The city or burgh must allocate the revenue collected by this assessment pro rata to the several accounts to which the present rates are applied. The persons who pay the rates are the proprietors of houses and factories and workshops and the land on which they stand, subject to these proprietors having the right to deduct the amounts which they have paid from the ground rents charged against them by the superiors of the land. They do so in proportion to the relation in which the ground rents stand to 5 per cent. of the capital land value.

Clause 3 of the Bill imposes a duty on the assessor of the city or burgh to fix the capital value of every area of land in the city under separate occupation, and to do so quite apart from the buildings or fixed machinery on the ground, and to do so also quite apart from the burdens or charges (except rates and taxes), and subject to any conditions that may be in the title. In the event of his having to deal with a tenement of houses built on one area of land, he will value the common solum, leaving the rate to be imposed to be allocated between the various proprietors of the houses in the tenement. The next important provision of the Bill is that the assessor is required to publish the capital values of the land in the city or burgh. It is most vital that there should be some source from which the public may know the capital value of every area of land in the city or burgh.

The underlying principle of the Bill is this: A certain number of people are in possession of the natural resources of this country, and it is right that they should be asked to make a contribution to the State in respect of those resources. The reason for that is that the value which is in their possession has been created by the community, by the presence of the community, and by the constant activities and enterprise of the community. At present, of course, those owners who are in possession of undeveloped land pay rates on the agricultural value of the land only. I maintain strongly that the land which they hold ought to be rated upon its full capital value.

The Bill voices a widespread demand in Scotland. There have been many resolutions passed in the cities and burghs in Scotland, from Glasgow in the West to Inverness and even as far North as Dornoch, and from Jedburgh in the South to Stonehaven in the North-East, the county town of the constituency that I have the honour to represent. Rating conferences in Scotland have also approved of the principle of the Bill. I would mention one point of which the House may not be aware—that the principles of the Bill have actually been in operation in Scotland for the past 40 years with regard to the crofters and small-holders, who are not rated upon their improvements. I suggest that the House ought to give an opportunity of extending the principles of the Bill farther in the same direction. The principles of the Bill have been applied in foreign countries like Denmark and throughout the Empire, in cities like Pretoria and Johannesburg and Durban, in the cities of Western Canada, and in Sydney and Brisbane. However little we may like the fiscal policy of the Colonies, we certainly could do worse than emulate them with regard to the taxation of land values.

There is only one more remark for which I have time. I would refer to a statement made by the Lord Privy Seal in a speech about a week ago when, in connection with increment value, he showed that he and his Department are feeling the strain of the land monopoly in connection with their efforts to find work for the unemployed. I say with every confidence that if the principles of this Bill were extended widely throughout the country, the application of them would do more to provide employment than the whole of the schemes of the Lord Privy Seal. An application of the principles of this Bill would set free the land, it would bring land into the market, it would make land cheaper, and in that way it would indirectly and inevitably provide work for all. It is on the principles of equity and justice that I beg to ask leave to bring in the Bill.

On a point of Order. Is it the practice that when a Bill is introduced under the Ten Minutes Rule and is opposed a Division must follow, or is an hon. Member entitled to speak against the Bill unless he proposes to press the matter to a Division?

Under the Ten Minutes Rule there are always two speakers allowed, one for and one in opposition to the Bill. I cannot say what happens after that. The House decides for itself whether a Division is taken or not.

I am surprised to hear any hon. Member supporting an old delusion. His leader, the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) took this matter up at one time, and badly burned his fingers over it. He spent, I believe, about £9,000,000 of the nation's money, but after a bitter experience abandoned his scheme. Yet today we have one of his callow followers coming here and advocating the old principle. He has told us that land owes its value, or the increase in its value, to the community. The right hon. Gentleman owes the fees which he earns in his solicitor's chambers to the community. If there were no community round about to employ him he would never get his fees. We are all indebted to the community. One of the opponents of the Measure which the right hon. Member for Carnarvon Boroughs introduced—it was at the time when Mr. Ure was Lord Advocate—asked what would be the value of a Scottish Lord Advocate on the top of a Welsh mountain. Of course he would be of no value at all. We are all linked up one with another, and this suggestion that we have to tax the capital value of land is nonsense. What is the capital value of any bit of land? It changes from day to day, from hour to hour, and from year to year. It is always changing. [HON. MEMBERS: "Always rising!"] It is not always rising. It is constantly changing.

If you adopted the principle of the Bill, long before the tax came into play the whole situation might have changed; the land may have become more or less valuable. The whole thing is a delusion. You tax income because the money is there, but you never can tax capital value because you do not know what it is. The valuation is a mere expression of opinion, often of a more or less unenlightened valuer. The suggestion that the city assessor, who is interested in collecting the tax, should fix the value on which he is after to levy the tax, is the most unjust proposal that could possibly be made. He is the man who is going to take the money, and he is to say how much he is to take. He is to be the judge in his own cause. Why not give the municipalities power to acquire land in the vicinity of the towns and to

"chance their hands" that it would become valuable?

Under the Bill for the construction of arterial roads the Minister of Transport has power to acquire the land alongside the road and to get the unearned increment, as it is called, which accrues from the increased value that is due to the construction of the road. But the Minister has found it far too difficult and risky and dangerous and expensive to put those powers into operation. The value of the land is its value before the road is constructed. This Bill is a proposal to put another burden on industry, factories and tenants. Many churches and trade unions have invested their funds in ground "annuals," and the Bill proposes to take away from many of these deserving people a portion of their investment. This proposal is so nebulous, so vague, and so unjust that I have no hesitation whatever in opposing the Bill as outlined by the hon. Member.

Question put,

"That leave be given to bring in a Bill to provide for the taxation for local purposes of land values by town councils of cities and burghs in Scotland."

The House divided: Ayes, 221; Noes, 105.

Division No. 52.]

AYES.

[4.16 p.m.

Adamson, Rt. Hon. W. (Fife, West)

Cocks, Frederick Seymour

Hamilton, Mary Agnes (Blackburn)

Adamson, W. M. (Staff., Cannock)

Compton, Joseph

Hamilton, Sir R. (Orkney & Zetland)

Addison, Rt. Hon. Dr. Christopher

Cove, William G.

Hardie, George D.

Alexander, Rt. Hon. A. V. (Hillsbro')

Cowan, D. M.

Harris, Percy A.

Alpass, J. H.

Dallas, George

Hartshorn, Rt. Hon. Vernon

Ammon, Charles George

Davies, Rhys John (Westhoughton)

Hastings, Dr. Somerville

Angell, Norman

Day, Harry

Haycock, A. W.

Arnott, John

Dickson, T.

Hayes, John Henry

Attlee, Clement Richard

Dudgeon, Major C. R.

Henderson, Right Hon. A. (Burnley)

Ayles, Walter

Duncan, Charles

Henderson, Thomas (Glasgow)

Barnes, Alfred John

Ede, James Chuter

Henderson, W. W. (Middx., Enfield)

Batey, Joseph

Edwards, C. (Monmouth, Bedwellty)

Herriotts, J.

Beckett, John (Camberwell, Peckham)

Edwards, E. (Morpeth)

Hirst, G. H. (York W. R. Wentworth)

Bellamy, Albert

Egan, W. H.

Hirst, W. (Bradford, South)

Bonn, Rt. Hon. Wedgwood

Elmley, Viscount

Hoffman, P. C.

Bennett, William (Battersea, South)

England, Colonel A.

Hollins, A.

Bentham, Dr. Ethel

Evans, Capt. Ernest (Welsh Univer.)

Hopkin, Daniel

Bondfield, Rt. Hon. Margaret

Foot, Isaac,

Hore-Belisha, Leslie

Bowen, J. W.

Forgan, Dr. Robert

Horrabin, J. F.

Bowerman, Rt. Hon. Charles W.

Gardner, B. W. (West Ham, Upton)

Hudson, James H. (Huddersfield)

Brockway, A. Fenner

Gardner, J. P. (Hammersmith, N.)

Hunter, Dr. Joseph

Bromley, J.

George, Major G. Lloyd (Pembroke)

Isaacs, George

Brooke, W.

Gill, T. H.

Jenkins, W. (Glamorgan, Neath)

Brothers, M.

Gosling, Harry

John, William (Rhondda, West)

Brown, C. W. E. (Notts, Mansfield)

Gould, F.

Jones, F. Llewellyn- (Flint)

Brown, W. J. (Wolverhampton, West)

Graham, Rt. Hon. Wm. (Edin., Cent.)

Jones, Rt. Hon. Leif (Camborne)

Buxton, C. R. (Yorks. W. R. Elland)

Granville, E.

Jones, T. I. Mardy (Pontypridd)

Buxton, Rt. Hon. Noel (Norfolk, N.)

Gray, Milner

Jowett, Rt. Hon. F. W.

Caine, Derwent Hall-

Grenfell, D. R. (Glamorgan)

Kelly, W. T.

Cameron, A. G.

Griffith, F. Kingsley (Middlesbro' W.)

Kennedy, Thomas

Cape, Thomas

Groves, Thomas E.

Kenworthy, Lt.-Com Hon. Joseph M.

Charleton, H. C.

Grundy, Thomas W.

Kinley, J.

Church, Major A. G.

Hall, F. (York, W.R., Normanton)

Kirkwood, D.

Cluse, W. S.

Hall, G. H. (Merthyr Tydvil)

Knight, Holford

Lansbury, Rt. Hon. George

Peters, Dr. Sidney John

Stamford, Thomas W.

Lathan, G.

Pethick-Lawrence, F. W.

Stephen, Campbell

Lawrence, Susan

Phillips, Dr. Marlon

Strauss, G. R.

Lawrie, Hugh Hartley (Stalybridge)

Pole, Major D. G.

Sullivan, J.

Lawson, John James

Potts, John S.

Sutton, J. E.

Lawther, W. (Barnard Castle)

Pybus, Percy John

Taylor, R. A. (Lincoln)

Lee, Jennie (Lanark, Northern)

Quibell, D. J. K.

Taylor, W. B. (Norfolk, S.W.)

Lewis, T. (Southampton)

Ramsay, T. B. Wilson

Thurtle, Ernest

Lindley, Fred W.

Rathbone, Eleanor

Tinker, John Joseph

Lloyd, C. Ellis

Richards, R.

Toole, Joseph

Longbottom, A. W.

Richardson, R. (Houghton-le-Spring)

Tout, W. J.

Longden, F.

Riley, Ben (Dewsbury)

Townend, A. E.

Lovat-Fraser, J. A.

Roberts, Rt. Hon. F. O. (W. Bromwich)

Trevelyan, Rt. Hon. Sir Charles

Lowth, Thomas

Romeril, H. G.

Turner, B.

Macdonald, Gordon (Ince)

Rosbotham, D. S. T.

Viant, S. P.

McElwee, A.

Rothschild, J. de

Walker, J.

Mackinder, W.

Rowson, Guy

Wallhead, Richard C.

MacNeill-Weir, L.

Runciman, Rt. Hon. Walter

Watkins, F. C.

Macpherson, Rt. Hon. James I.

Salter, Dr. Alfred

Watson, W. M. (Dunfermline)

Malone, C. L'Estrange (N'thampton)

Samuel, Rt. Hon. Sir H. (Darwen)

Watts-Morgan, Lt.-Col. D. (Rhondda)

Mander Geoffrey le M.

Samuel, H. W. (Swansea, West)

Wedgwood, Rt. Hon. Josiah

March, S.

Sanders, W. S.

Wellock, Wilfred

Marcus, M.

Sandham, E.

Welsh, James (Paisley)

Markham, S. F.

Sawyer, G. F.

West, F. R.

Mathers, George

Scrymgeour, E.

Westwood, Joseph

Maxton, James.

Scurr, John

White, H. G

Millar, J. D.

Shakespeare, Geoffrey H.

Whiteley, Wilfrid (Birm., Ladywood)

Mills, J. E.

Shaw, Rt. Hon. Thomas (Preston)

Whiteley, William (Blaydon)

Milner. J.

Sherwood, G. H.

Wilkinson, Ellen C.

Morley, Ralph

Shield, George William

Williams, David (Swansea, East)

Mort, D. L.

Shillaker, J. F.

Williams, Dr. J. H. (Llanelly)

Moses, J. J. H.

Sinclair, Sir A. (Caithness)

Williams, T. (York, Don Valley)

Nathan, Major H. L.

Sitch, Charles H.

Wilson, C. H. (Sheffield, Attercliffe)

Noel Baker, P. J.

Smith, Alfred (Sunderland)

Wilson R. J. (Jarrow)

Oliver, George Harold (Ilkeston)

Smith, Frank (Nuneaton)

Winterton, G. E.(Leicester, Loughb'gh)

Oliver, P. M. (Man., Blackley)

Smith, H. B. Lees (Keighley)

Wood, Major McKenzie (Banff)

Owen, Major G. (Carnarvon)

Smith, Tom (Pontefract)

Wright, W. (Rutherglen)

Palin, John Henry

Smith, W. R. (Norwich)

Paling, Wilfrid

Snowden, Rt. Hon. Philip

TELLERS FOR THE AYES—

Palmer, E. T.

Sorensen, R.

Mr. J. Scott and Mr. Ernest Brown.

Perry, S. F.

Spero, Dr. G. E.

NOES.

Albery, Irving James

Hartington, Marquess of

Rodd, Rt. Hon. Sir James Rennell

Amery, Rt. Hon. Leopold C. M. S.

Haslam, Henry C.

Ross, Major Ronald D.

Atholl, Duchess of

Heneage, Lieut.-Colonel Arthur P.

Ruggles-Brise, Lieut.-Colonel E. A.

Atkinson, C.

Hennessy, Major Sir G. R. J.

Russell, Alexander West (Tynemouth)

Beamish, Rear-Admiral T. P. H.

Howard-Bury, Colonel C. K.

Samuel, A. M. (Surrey, Farnham)

Beaumont M. W.

Hudson, Capt. A. U. M. (Hackney, N.)

Sandeman, Sir N. Stewart

Bellairs, Commander Carlyon

Hurd, Percy A.

Savery, S. S.

Benson, G.

Hurst, Sir Gerald B.

Shepperson, Sir Ernest Whittome

Berry, Sir George

King, Commodore Rt. Hon. Henry D.

Simms, Dr. John M. (Co. Down)

Birchall, Major Sir John Dearman

Lane Fox, Rt. Hon. George R.

Skelton, A. N.

Bourne, Captain Robert Croft

Law, Sir Alfred (Derby, High Peak)

Smith, R. W.(Aberd'n & Kinc'dine, C.)

Bowyer, Captain Sir George E. W.

Leighton, Major B. E. P.

Smith-Carington, Neville W.

Boyce, H. L.

Locker-Lampson, Rt. Hon. Godfrey

Smithers, Waldron

Brown, Col. D. C. (N'th'l'd., Hexham)

Long, Major Eric

Somerset, Thomas

Brown, Brig.-Gen. H. C.(Berks, Newb'y)

Lymington, Viscount

Somerville, A. A. (Windsor)

Buckingham, Sir H.

McConnell, Sir Joseph

Somerville, D. G. (Willesden, East)

Carver, Major W. H.

Macdonald, Capt. P. D. (I. of W.)

Southby, Commander A. R. J.

Cautley, Sir Henry S.

Margesson, Captain H. D.

Stanley, Maj. Hon. O. (W'morland)

Cayzer, Sir C. (Chester, City)

Mitchell, Sir W. Lane (Streatham)

Sueter, Rear-Admiral M. F.

Cazalet, Captain Victor A.

Mitchell-Thomson, Rt. Hon. Sir W.

Titchfield, Major the Marquess of

Crichton-Stuart, Lord C.

Monsell, Eyres, Com. Rt. Hon. Sir B.

Todd, Capt. A. J.

Crookshank, Cpt. H.(Lindsey, Gainsbro)

Moore, Sir Newton J. (Richmond)

Train, J.

Davies, Dr. Vernon

Morrison Hugh (Wilts, Salisbury)

Vaughan-Morgan, Sir Kenyon

Davison, Sir W. H. (Kensington, S.)

Morrison, W. S. (Glos., Cirencester)

Wallace, Capt. D. E. (Hornsey)

Elliot, Major Walter E.

Muirhead, A. J.

Ward, Lt.-Col. A. L.(Kingston-on-Hull)

Erskine, Lord (Somerset, Weston-s. M.)

Newman, Sir R. H. S. D. L. (Exeter)

Warrender, Sir Victor

Everard, W. Lindsay

Newton, Sir D. G. C. (Cambridge)

Williams. Com. C. (Devon, Torquay)

Falle, Sir Bertram G.

Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)

Wilson, G. H. A. (Cambridge U.)

Fermoy, Lord

Nield, Rt. Hon. Sir Herbert

Windsor-Clive, Lieut.-Colonel George

Fielden, E. B.

Oman, Sir Charles William C.

Winterton, Rt. Hon. Earl

Forestier-Walker, Sir L.

Penny, Sir George

Womersley, W. J.

Graham, Fergus (Cumberland, N.)

Power, Sir John Cecil

Wood, Rt. Hon. Sir Kingsley

Grattan-Doyle, Sir N.

Pownall, Sir Assheton

Wright, Brig.-Gen. W. D. (Tavist'k)

Gretton, Colonel Rt. Hon. John

Remer, John R.

Hall, Lieut.-Col. Sir F. (Dulwich)

Rentoul, Sir Gervais S.

TELLERS FOR THE NOES.—

Hammersley, S. S.

Reynolds, Col. Sir James

Mr. Macquisten and Major Colfox.

Bill ordered to be brought in by Mr. Scott, Sir Robert Hamilton, Mr. Duncan

Millar, Major McKenzie Wood, Mr. Hardie, and Mr. Watson.

Land Values Taxation (Scotland) Bill,

"to provide for the taxation for local purposes of land values by town councils of cities and burghs in Scotland," presented accordingly, and read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 82.]

Live Stock Clubs

I beg to move,

Clause 1 of the Bill gives power to any six registered parliamentary electors— which is following the precedent of the Allotments Act of 1887—to inform the parish council that there is a demand by the labouring population for livestock clubs in the parish, and it is the council's duty then to inquire into the demand. Clause 2 would give power to the county council' to act should the parish council refuse to do so. Clause 3 defines that the club shall consist of members resident in a parish belonging to the labouring classes, and the definition of labouring classes is given a very wide meaning. Indeed, the definition given is possibly the widest that has ever been given to this term. A club, when formed, must either be registered under the Industrial and Provident Societies Act or not. The reason for the latter is that it is quite impossible to expect many labourers to fill up the necessary forms, and that is one of the reasons why the registration system under the Agricultural Credits Act of 1923 has not been as successful as was expected. Clause 4 declares that there shall be rules and regulations to provide for various necessary matters arising under the Act, such as name and address of club, the payment of an entrance fee and a premium of insurance upon the livestock, the payment and repayment of the loan or loans, the holding of meetings, the keeping of accurate accounts, the election, rejection or expulsion of members, appointment of officials, power to revise or rescind rules, and so on.

Clause 5 provides that there may be honorary members, and that these should have no financial connection with the club. This will facilitate, in rural areas, the admission of various people of all classes who like to take a lead in helping the cottagers. All hon. Members know that there are such people in rural communities. I know the case of a very decent Justice of the Peace who is a railwayman, and who takes a keen interest in all the affairs of his rural community. Clause 5 also provides that a decision of the club is to be final in respect of all applications. Hon. Members will appreciate that this is desirable, especially in a club which is founded on absolutely democratic lines. To obtain a loan, a member first gets the consent of his club, and then, if the club agrees, the consent of the parish council. Clause 6 provides that a sum of £50,000 each year for 10 years shall be provided, and that not more than £2,000 in any one year may be advanced to any one county council for the purposes of the Bill.

Clauses 7 and 8 provide that the expense shall not fall on the rates; indeed, there is no expense whatever to the rates. The expense will fall on the small holdings account, or, if there is no such account in any county, it will fall on the development fund. Moreover, the whole of the money loaned to the cottagers is repayable, so that, in fact, not a penny falls either on the rates or upon the Imperial Exchequer. Clause 9 provides for separate accounts each year and reports to the county council and parish council. Clause 10 provides that the operations of a club may be extended, by the consent of the Ministry of Agriculture, to include not more than three parishes in a rural district. Clauses 11 and 12 are definition clauses.

Last year I had the honour of being chairman of a meeting at which were present the Minister of Agriculture, the right hon. Gentleman the Member for St. Ives (Mr. Runciman), and the late Minister of Agriculture, and I remember the enthusiasm which was created by a request that there should be a contribution from all political parties to the solution of the agricultural problem, in however small a way. I am glad that the Minister of Agriculture is present this afternoon, and he will no doubt remember the occurrence. We who are backing this Bill are making a contribution such as private Members can make, and we hope that it will receive the unanimous consent of the House, and that the Government will provide facilities for its further progress.

Question put, and agreed to.

Bill ordered to be brought in by Lieut.-Colonel Heneage, Mr. Haslam, Sir Ernest Shepperson, Mr. Everard, Brigadier-General Clifton Brown, Major Glyn, Lieut. Colonel Ruggles-Brise, Major Long, Mr. Hurd, and Major Harvey.

Live Stock Clubs Bill

"To facilitate the provision of small live stock clubs for the labouring classes in rural districts," presented accordingly, and read the First time; to be read a Second time upon Tuesday next, and to be printed. [Bill 83.]

Fairs Bill

Order for Second Reading upon Tuesday 17th December read, and discharged; Bill withdrawn.

Over-Capitalisation in Industry

I beg to move,

The Balfour Committee lent their authority to the statement that about 210 cotton undertakings changed hands at grossly inflated values, and that about eight times the fully paid-up capital of those undertakings were paid for them. If an industry is prosperous when there is a certain measure of artificial prosperity, it is certain that when a boom crashes, and the prosperity passes, industry cannot possibly be said to be successful if it carries a capital repre- senting eight times its real value. This is borne out by the fact that in these 210 companies the dividend paid on the capital invested from 1920 to 1927 represented only 1.3 per cent., whereas, in 65 other companies which were not reconstructed at all, the dividend was 8.9 per cent. Something more than a coincidence is to be found in those facts. That condition of things applies not only to the cotton industry, but to the steel industry and other basic industries. Some attempt at reconstruction has been resorted to in the steel industry.

I want to call the attention of the House to a section of another basic industry with which I am a little conversant, namely, the anthracite coal industry. The anthracite coalfield is carrying at least three times the amount of capital that it could carry in prosperous and normal times. To a large extent, that coalfield has become substantially the monopoly of the Amalgamated Anthracite Combine, and at the present moment the amount of fully-paid up capital sunk in the coalfield, represented by this Combine to the extent of 80 per cent. of that field, is about £9,000,000. It has found considerable difficulty in carrying on. Of late, it has not been prosperous at all, and it has had to add to its debit £3,500,000 by way of debentures and charges upon the industry generally. The value of that coalfield, as represented by this Combine at the present time, does not exist, even if it is of the value of £3,500,000 which represents the amount of debentures. It follows from that that the time must inevitably come when, because of the difficulties with which such an undertaking has to contend, reconstruction will have to take place, as it has taken place in other sections of industry. The people who will undoubtedly suffer as a result will be the ordinary people in the street who have invested their savings at the behest of those people who now control that particular industry. In the long run, they are bound to lose their savings which they have invested.

That is one of the disquieting features of this question. Prominent gentlemen who occupy leading positions in our national commerce lend themselves to propositions, and eventually find themselves undertaking concerns of this character; and the ordinary man, relying upon the fact that a given individual is connected with a given industry, attaches importance to it. He is often advised by his stockbroker that this is a particularly good thing, and that, if he wants only 200 shares, he should make sure of getting them by applying for 1,000, and, to the man's discomfort, he finds that he has been allotted 1,000. Referring again to the Anthracite Combine, I know of a number of people who have taken some hundreds of shares in it, and, having invested their savings, find that although the £1 share was issued at a premium of 1s., the present market price is a little under 7s. As I said, this is occupying the attention not only of hon. Members on this side of the House but of hon. Members opposite also. I see the Leader of the Opposition is in his place, and I want to refer to what he said on this particular subject at Manchester on 16th May, 1928. He was speaking at a luncheon given to him by Lord Derby and the British Cotton Growing Association:

May I say that is remarkably good sense. I had forgotten those words.

I am glad that I had the opportunity to remind the right hon. Gentleman of the truths he uttered in March of last year, and if I may respectfully say so, and I am sure he will allow me to say so, I want to identify myself absolutely with those sentiments. I started by saying that it is the ordinary investor who is hit in the first place. Much has been said in this House of how the trade of the country is suffering because there is no capital for the development of trade. There is much capital available if it were only directed in the proper channels. By reason of the reconstruction of companies along the lines I have indicated, much of the capital that was available has not been used primarily for developing industrial undertakings; it has gone into other pockets, and, if I may with submission say so, been squandered not on the development of industrial undertakings but on other purposes having no connection therewith.

We come now to the question of wages. An industry is carried on, we are told, especially from the other side of the House, largely in the hope of reward for the ordinary shareholder in particular. We are reminded constantly that the impelling incentive in business life and in society generally is the hope of reward at the end of it. If that be true, and I am assuming that it is true in so far as industrial undertakings are concerned, when industry is overloaded with capital to the extent I have indicated, and when those who control industry know full well that there is very little hope of its providing a fair amount of interest upon the capital which has been sunk in it, and bearing in mind, after all, that the people controlling it are merely human like ourselves, then, if they see that there is no hope of reward at the end of it, can it be wondered that many of our great industries have become depressed to the extent indicated by the right hon. Gentleman himself? It is imperative, from that standpoint, that profit should be made, in order to provide interest on the capital; but there is always the danger of finding that interest at the expense of putting nothing to reserve with which to meet depreciation and to provide further working capital. Therefore, businesses find themselves in the situation that further capital is wanted to work them successfully and provide for depreciation, because they have not got it in reserve, and they resort to the banks or someone else to lend them money on the undertaking by way of debentures. If, after that, the depreciation continues, those who have lent the money are entitled, under the terms of the debentures, to come in and appoint receivers, and the industry remains distressed and depressed, and, naturally, in the long run, those who are employed in it suffer.

Look at what is happening in South Wales. A big merger is about to take place in South Wales. Again I speak with a little knowledge with regard to it. It is proposed to acquire about 69 collieries in South Wales and to float a company with a capital of £10,000,000 in order to do so. I venture to say, on the Floor of this House, and knowing my responsibility in saying it, that at least 75 per cent. of those collieries are suffering very badly from senility. They have been in existence for a long number of years, and I venture to say that they do not represent accurately a sum which is anything the equivalent of £10,000,000. So the game goes on of exploiting the investor to the detriment, eventually, of the persons who are employed in industry. Therefore, I say, the time has come when the suggestions made by the Leader of the Opposition should be adopted by those in charge of our great industrial undertakings. He says that no one can do anything along those lines except those in charge of the undertakings. I am not so sure that the Government could not encourage them on a much greater scale than they are doing at the present moment.

Before a company can reduce its capital it has to go to Court and secure the sanction of the Court. It has to satisfy the Court that it is in the national interest and in the interest of the shareholders that the capital should be reduced, and if it be satisfied on those points the Court will sanction the re- duction. Why should not the converse hold good? The converse of that proceeding is to be found in the Mining Industries Act, passed by the Conservative Government in 1926. Ordinarily, any number of businesses can bring about a merger on a voluntary basis, as has been done in the case of the company I dealt with earlier in my speech, but that Act makes it possible for an application to be made to the Railway and Canal Commission to confirm the mutual agreement among themselves. They are induced to do this—I would remind hon. Members that this applies only to the mining industry—because in that case they will be exempt from Stamp Duties. The first application of that sort was made on behalf of the Denaby Main Company, now known as the Yorkshire Collieries, Ltd., and there they saved in Stamp Duties at least £76,000. Why those people should be given that concession I do not understand. The national income is suffering that loss of £76,000. The Amalgamated Anthracite Company saved at least £120,000 in Stamp Duties as a result of making a similar application to the Court. They had to satisfy the Court that the amalgamation was in the national interest. In the first instance the application was unopposed; but in the second instance, that made by the anthracite combine, it was opposed, but not substantially opposed. It was opposed by a gentleman formerly in their employment who was aggrieved as the result of treatment that had been meted out to him.

The point I want to make is this: That in the Mining Industry Act we have embodied a procedure which makes it at least permissive for those who want to bring about amalgamation to go to Court and save the expense involved in stamp duties if the Court approves of the amalgamation. Why not make it compulsory for every undertaking in the country? The time has now come, as the result of the exploitation of the situation by people not particularly interested in any industrial undertaking, to make it compulsory upon undertakings to go to Court and satisfy the Court that it is in the national interest that the amalgamation should take place. As it is imperative to go to the Courts for permission to bring about a reduction of capital, it ought to be compulsory upon people who want to bring about amalgamation to go to the Courts, as representing the public of this country, and satisfy them that the amalgamation would be in the public interest. I throw that out as a suggestion. It is certain that the time will come when society will take steps to prevent national undertakings being exploited by individuals, not for the sake of the undertakings and not in the interests of the nation, but merely and primarly for their own selfish greed. It is in that spirit that I move the Motion which stands in my name.

5.0 p.m.

I beg to second the Motion. In doing so it falls to my lot to congratulate the hon. Member for West Swansea (Mr. H. W. Samuel), although I myself have only once before spoken in this House, and I can assure him that I do it with the very greatest pleasure. We have listened with interest to the arguments which he has put forward so lucidly and clearly, and I am sure we shall all look forward to hearing him very often in the future. I should second this Motion with more enthusiasm if I knew that we were discussing a Motion by which something definite would be accomplished as an outcome of this Debate. Personally, I believe that the Motion carries within itself the seeds of the method to be adopted for the solution of a great many of our industrial problems. Over-capitalisation applies to public limited companies, which represent a large and probably an increasing portion of the total capital invested in British industry. This Motion is not making a general attack upon industrialists as a whole. There are many industrial companies which are in the unfortunate position of finding themselves over-capitalised by the operation of forces over which they have no control; but I want it to be fully understood that, as I understand the Motion, it is a very definite attack upon a section of the community which exploits the cupidity and ignorance of the investing public. If we cast our minds back to the period which immediately followed the cessation of hostilities, we shall recollect that there was passing over this country a wave of very earnest desire on the part of some people to get rich, and to get rich very quickly, and that there was an almost mad haste on the part of people to invest their money in different concerns.

The effect of that is apparent to everybody. We have large basic industries such as steel, coal, and particularly cotton, which are to-day in such a parlous condition that we as a nation are suffering as the result, and a lot of the people concerned in those industries, on the managerial and investing sides and in the capacity of workers, are suffering as the result. Having been a worker for many years, and being interested in wage negotiations, I fully realise the effect which over-capitalisation has upon the representatives of trade unionists when they meet the employers of labour with a view to getting an increase in wages. Very often we have had placed before us-evidence of what has appeared to be a very parlous condition of affairs in an industry, but the condition of that industry could not be judged accurately by the small profit which was supposed to have been made by the industry, because that industry was over-capitalised, and its real position was not shown by the figures which were presented to us.

The effects become apparent not only to the people who are concerned with the national life, but also to the people who are directly involved in the industry. What I mean is that there is a section of the industrial population of this country, on the managerial side and on the investing side, who view with alarm the tendency, which has reached such huge proportions in this country, to look upon industry as the happy hunting ground of the person who wants to live without rendering any service to the community. We have records, which I will not weary the House by reading, of companies which have written off huge sums of capital since the War, and we have also records of the same companies having, in previous years, given enormous share bonuses to their shareholders, while they were at the same time meeting the workmen who were employed in those industries and contending that it was not possible to deal with them as justly as the workers considered they should be dealt with.

I do not want to infringe the rights of the hon. Member for Penistone (Mr. Rennie Smith), who is to move the next Motion on the Order Paper, but I represent a Lancashire constituency, and I should like to refer shortly to the posi- tion in Lancashire. It provides, I think, the classical example of financial and industrial folly. I think everyone now realises that the cotton industry in Lancashire is in its present state because we have allowed to exist in this country a system of financing industry which is neither sound nor reasonable. I would like to quote from a paper read before the Royal Statistical Society by Professor Daniels and Mr. John Jewkes on 17th June, 1928, in which, speaking of the Lancashire cotton industry, they said:

Before I finish I would like to anticipate an argument which may possibly be raised, as to whether we in this House have any business to interfere with those things which are happening in the industrial life of our country. Personally, I hold the opinion very strongly that it is not only a very wise policy, but is in fact a policy which will have to be adopted in the near future, and that the Government of this country will have to go into business whether we like it or not. Why should we, as a Parliament, be allowed to deal only with the evil effects of a certain industrial policy? That we are supposed to do. The industrialists of this country, and the right hon. and hon. Members of this House, who contend that industry will be better if left alone, surely must of necessity come to this point of view: that if industry is left alone in the first instance, we cannot, as a Parliament, allow the full effects of a certain policy operating in industrial life to be left alone. We as a Parliament have got to deal with the effects of the financial system which is operating in Lancashire; we as a Parliament have to vote money in order to deal with things which have happened there as the result of the adoption of this false policy.

I am encouraged in my view by the fact that on all sides of the House we now have very significant indications that a very distinct step has been made in this direction. Hon. Members sitting on the Liberal Benches have paid great attention to this great question of industry. Lately I have had very great pleasure in reading a book which has been written by four hon. Members who sit in that part of the House, called "Industry and the State," in which it was proved that we cannot stand aloof, as it is contended by many hon. Members and by many people outside we should do. Personally, I believe that the Government of this land should direct, and that we should not only be prepared to deal with the evil effects of a bad financial policy, but should in the first stages, as was suggested by the hon. Member for West Swansea (Mr. H. W. Samuel) in moving this Motion, take steps to see that these things which have such a detrimental effect upon the industries of this country, are not done.

I have to-day been reading an article referring to the steel trade of this country, and I find that some of the leaders in the steel trade are now appealing to the Government for assistance. The writer of that article says: effects in its train." I close as I began: I am sorry that it is not possible for us to do something more as the outcome of this Debate, but, for the reasons which I have just stated, I have very great pleasure in seconding the Motion.

May I crave the indulgence of the House for a few moments while I deal briefly with the subject under discussion? This is the first time I have attempted to speak in this House, and had it not been that this particular subject was being discussed, it is questionable whether I would have done so for some time to come. The question of the inflation of capital in its final aspect I do not propose to deal with to-day, but coming, as I do, from Lancashire, and having been for over 20 years a trade union secretary in the spinning section of the textile trade, I may claim some personal knowledge of the evil effects of the over-capitalisation of 1919–20. It is rather a coincidence that cotton should be a subject for consideration to-day. I think that in the past the cotton people have not put their piece goods into their shops, but I believe that if this Debate does nothing else, it would at least show the country that there is a cotton trade. I do not think any trade has suffered to the same extent as we have in Lancashire. When I consider the conditions before and the conditions after, I am astounded that people were so foolish as to invest their money in the cotton trade; but nevertheless it is there.

I have no hesitation in saying that the present deplorable condition of the cotton industry is due in a large measure to the inflation of capital which took place during the period which I have mentioned. Four-fifths of the American spinning companies, and in a lesser degree Egyptian spinners and cotton weaving firms, are now in a very deplorable condition owing to recapitalisation. In 1913 the share capital per spindle was 8s. 6d. share and 5s. 6d. loan, making a total of 14s. per spindle. In 1929 the share capital was 31s. 5d. and the loan capital 12s. 4d., making a total of 43s. 9d. The estimated total share and loan capital for the whole industry in 1913 at 14s. per spindle would have been equal to £39,450,000. The corresponding figure for 1927 at 43s. 9d. per spindle would be £125,000,000. The Master Cotton Spinners Association, on page 6 of their printed statement, gives 96 original companies showing that the average balance sheet value of buildings and plant stands at 16s. 2d. per spindle; and 213 companies "turnover" or "reconstructed" companies show an average balance sheet value of 53s. per spindle.

In the formation of these companies the idea has got abroad that somebody from outside puts money into the business and then other people follow their example by putting more money into the business. I would like to cite one case which is typical of the financial condition of many of the mills in Lancashire. In the case I am referring to a particular individual whom I know very well put £50 in a company. The directors, by a resolution, increased the value of their mill 100 per cent. without adding one extra card or spindle. The company was then refloated and the holder of the £50 received £780 for his investment. How can we expect a recapitalised company to be successful when £50, which is the true value of the share, is foisted on the trade at £780. This kind of thing brings with it increased overhead charges; there must be an increase in the amount of depreciation and all these things add to the cost of production.

We are often told that we cannot compete with other countries owing to the low wages which are paid to the workers abroad, and then our employers ask the workers to agree to a reduction in wages. In the cotton trade the people are working short time owing to the loss of trade. There is also a great amount of underemployment and a considerable amount of unemployment. I cannot see how we are going to get out of our present state unless we tackle this subject in a bold and comprehensive manner. The banks to-day, without doubt, have a stranglehold on the Lancashire cotton industry. The mills must run regardless of making a profit on the turnover. They are obliged to keep running in order to meet the bank interest, and I think that the Government should exercise some authority when these companies are being promoted and the real value of the concerns ought to be stated in the prospectus instead of an artificial value.

Not only are the Lancashire people affected by unemployment but, unfortunately, many of them have been persuaded to put their life savings into these mills, in fact their savings have almost been demanded in order that they may retain their employment. I hold in my hand the balance sheet of a large company dated September, 1929. I know people who have invested their money in the £5 shares of this particular company and they have paid up £2 10s. Of course they do not understand the liabilities which are placed upon them and those shareholders, who have paid all the calls in full, will receive approximately 43s. 2d. for each £100 of their present holding. I do not propose to deal with the reconstruction of the cotton trade because, as a result of the cotton trade unions—

The hon. Member has just stated that he is not going to deal with the reconstruction of the cotton trade. I would like to remind the hon. Member that there is another Motion down on the Order Paper which deals with that subject. The Motion which we are now discussing deals only with over-capitalisation in industry.

I am new to the House, but I prepared my notes so that if I did not get in on the first Motion I might get in on the second, and I was rather trying to take time by the forelock. I apologise to you, Mr. Deputy Speaker, and I will not pursue that point any further. I support this Motion.

May I take this opportunity of congratulating the hon. Member for Bolton (Mr. Brothers) upon his admirable maiden speech. I have risen to try and remove a little misapprehension. The last speaker has indicated that in his view the main responsibility for the difficulties in which Lancashire finds itself at the present time is over-capitalisation. I would like to point out to the House that Lancashire has not suffered from over-capitalisation but from under-capitalisation. There is a great misapprehension as to what is capital. Lancashire is suffering because she has a large amount of borrowed money invested in the cotton industry, but that is not capital.

I cannot understand on what principles hon. Members opposite proceed. Are they anxious to preserve the shareholders or the industry? We all sympathise with the shareholders who have lost their money. Lancashire is suffering from the fact that during a boom period the cotton industry over-borrowed. There is no method whereby borrowed money can be written off, and consequently it has become a burden unlike share capital. The industry has to pay its legitimate amount of interest, or else the concerns must go into liquidation. Mr. G. W. Armitage, in a pamphlet entitled "The Problem of the Cotton Trade," points out that no greater fallacy has even been put before the country than the fallacy that the loss of capital in the cotton trade has prevented the cotton industry from selling even a single pound of yarn. Mr. Armitage says:

In making my first effort in this Parliament, I crave the indulgence of the House. I should not intervene if it were not that it gives me the opportunity, which I might not otherwise have, of putting before the House what is taking place in connection with the distributive trades of this country. It is not generally known that the distributive trades are practically the largest occupation of any that we have. We are still, as Napoleon declared, a nation of shopkeepers. In 1922 there were insured under the National Health Insurance Acts 996,000 employés in wholesale and retail distribution. In July, 1929, that number had increased to 1,646,000, an increase of 650,000 in seven years. When one adds to these figures those who are under 16 years of age and are not insurable, and those who are in receipt of more than £250 a year, it gives us a total of 1,750,000. To these must be added the small shopkeepers who employ no labour, and whom I estimate as numbering about 150,000. That gives us 1,900,000 people engaged in the wholesale and retail distributive trades. One in 23 of the population is engaged in handing over goods to the other 22. There are no Factory Acts and no regulations in connection with distribution, except the Shops Act, which only just touches the fringe of the question. The employés are unorganised; only something like 2 per cent. of those engaged in retail trades have any organisation. From that point of view they are quite ineffective. Here you have an occupation which is competitive, with no State regulation, with no beastly trade unions interfering with the industry—the kind of occupation, indeed, which should be very dear to hon. Gentlemen opposite, and should prove, if anything could prove, that competition is the best, or can be the best, for the community.

What are the facts? If you look at the "Times" wholesale index figures, and compare them with the Ministry of Labour Gazette, which gives the retail figures, you find that as regards food— general commodities are not comparable —if you take food alone, while wholesale costs stand at the index of 139, retail costs stand at 159. In other words, it costs more by 20 per cent. to distribute in the retail trade than in the wholesale trade. This matter is exercising the community, and it is exercising the minds of the Government. Financial papers like the "Economist" and others are taking the matter up and going into this question of retail prices. I have gone to the trouble of getting out some figures— taking them as they come, and not selecting at all—regarding 100 retail firms. The "Economist" gives their profits. I turn to the Stock Exchange Year-Book to get their capital, and I find that the capital of these 100 firms, excluding debentures, stood at £106,000,000. Their net profits, excluding debenture interest, stood at £13,500,000. A veritable Tom Tiddler's ground! No regulations; plenty of profit to be had; and there enters upon this scene predatory finance —just within these last few years, that is all. I do not go back far, because all this is recent. As far as finance companies and investment trusts are concerned, in connection with distribution they are a matter of the last three or four years. Of these 100 firms, 43 of them with a capital of £51,000,000, have issued bonus shares to their shareholders to the amount of £12,000,000. In other words, at the present moment nearly 25 per cent. of their capital is due to bonus shares which have been given to the shareholders.

I have a long list of examples here; I will give one or two. Here is one, with a capital of £1,462,000, which has issued £862,000 of bonus shares. There is another with £400,000 of capital, which has issued £200,000 of bonus shares; another, with £446,000 of capital, has issued £365,000 of bonus shares; another, with £820,000 of capital, has issued £648,000 of bonus shares. What is the effect of the issue of these bonus shares, which I contend constitute over-capitalisation? Do not forget that these bonus shares, which are taken from undivided profits, have come out of the price which the consumer has paid. The consumer has paid for them in the goods bought over the counter. Handsome dividends have been paid for the risks of capital, these sums are put aside, and, instead of the development going on out of these reserves—instead of its going on without being made a capital charge— they are made a capital charge, putting a permanent burden upon the firm concerned. They do more; they cover up the actual profits earned and the percentage of profit on invested capital. Let me give one instance of a firm in which, if I had invested £100 in 1927, I should to-day have standing to my credit, as ordinary shares, £240 at 20 per cent. interest, and £240 of preference shares at 6 per cent. interest. I should be drawing each year 52 per cent. interest upon the £100 that I invested, and there would be standing to my credit £480 worth of capital.

Let me give another instance. Here is a firm that goes to the Courts for reconstruction, and in the course of the proceedings it transpires that the owners of 20 £1 founders' shares were to take from the undivided profits £285,000 in shares. Mr. Justice Eve, before whom the application was made said—and this will be interesting to right hon. Gentlemen opposite—

Now I come to one other form of over-capitalisation in distribution. I stated that there was a number of predatory finance companies, who have been—I hope I shall not be misunderstood or considered to be using wrong language— ill-using the distributive trade of this country. The Austin Friars Trust, which is under examination at the present moment, launched the Drapery Trust. The Drapery Trust ordinary shares are now controlled by Debenhams, Limited, and altogether it has a total invested capital of £30,000,000, in a very large number of grouped drapery establishments and stores. It is impossible to find out the prices that have been paid for these individual stores in order that the Drapery Trust might secure control over them. One does know that, when Debenhams purchased the 1,500,000 ordinary shares of the Drapery Trust through the Austin Friars Trust they paid 44s. for each £1 share. That immediately puts an additional capital charge on this business of £1,800,000.

There is one notorious example which is not generally known, but which I will give here. It is a well-known drapery establishment in the West End of London. In 1920, Harrods Stores purchased the shares of this firm, which stood at £97,127, for £678,000. In December, 1926, they sold those shares to the Charterhouse Investment Trust for £1,000,000. Three weeks later, the Charterhouse Investment Trust sold them to the Drapery Trust for £1,250,000, and in February, 1927, there was a public flotation of £1,600,000. That is what I mean by over-capitalisation. Here the employés will have to work, the directors will have to work, the buyers and others will have to work exceedingly hard in order to try to earn dividends on nearly 1¾ millions of capital instead of nearly £100,000.

To give another instance of what is taking place, in October, 1928, the Charterhouse Investment Trust purchased 715,000 £l shares of Freeman, Hardy and Willis for £3,596,958, including £320,000 to five directors for loss of office. A few weeks later, the Trueform Boot Company purchased these shares for over £4,000,000, and there has recently been a public issue in that case. I will give another case. The Charterhouse Investment Trust purchased recently 3,400,000 5s. shares of the International Tea Stores, for some price that has never been disclosed, and they sold those shares to the public as 5s. shares for 25s. There a permanent capital charge is placed upon that business of nearly £3,500,000, not a farthing of which has gone into the development of the company. Here is another drapery establishment. In July, 1922, it was sold for £25,000. It was passed over to a company in August for £30,000, and in the same month the public were asked to subscribe £55,000 for it. Five years afterwards the public were asked to subscribe £520,000 for it.

I contend that I have given sufficient examples to show over-capitalisation, by which I mean either that bonus shares have been given to the shareholders for which they have done nothing, and which have been taken out of the price the consumer pays, or you have had the buying and selling of businesses, which adds to the capital charge without a farthing going into development. I submit that my case in regard to distribution is proved. Indeed, if I wanted any more information I need only go to the managing director of the Charterhouse Investment Trust who, whilst that transaction was on with Freeman, Hardy and Willis, was temporary chairman of the firm, and who, at the only shareholders' meeting he ever attended, said:

It is not easy under present conditions to suggest what should be done, but a method by which I think it could be done was suggested by my hon. Friend who moved the Motion. I see that the Charterhouse Investment Trust, with a capital of £1,000,000, handles cash transactions of £3,000,000 and £4,000,000. I look behind to find who is aiding and abetting in this piling up of capital charges upon these industries. The answer is the banks. I saw this morning that a representative of one of the banks had joined the board of this very investment trust. The banks are aiding and abetting in the piling up of the capital charge upon industry. They are directing the way in which the stream of investment shall flow. If the banks can do it, so can the State.

There ought to be set up a supervisory board before which all new flotations should go, and they should decide whether the money asked for is right and in the public interest or not. If that were done, some check at least could be placed on what is going on. With regard to the other additional bonus shares, either they should be made directly illegal or the reserves of these companies, some of which are hidden so that you cannot tell where the money comes from for this purpose, should be declared and, what is more, they ought to be subject to Income Tax under Schedule A. If that were done, even under present circumstances that would be at least some check upon what is going on. These things are not in the public interest. So far as the distributive trade is concerned, obviously they cannot be in the public interest. What is likely to happen is that the employés' just demand for improved conditions is put in the background. The public expectation of a reduction in prices is put in the background. The price the people pay for their goods, because it enters into the standard of life, enters into the calculation of the wages the workers should receive, and, therefore, enters into the whole costs of production. You cannot separate productive costs from distributive prices, and I urge that the Government should investigate the question.

I hope the House will extend to me the usual indulgence that is given to a maiden speaker. I am not sure, having asked for that indulgence, whether I should say what I had intended to say, that is, how profoundly disappointed I am with the speeches I have listened to for the last hour or so. As far as I can see, practically none of them had any relation whatever to the Motion. What reference has there been to trade and employment except by an hon. Member opposite? It must have astonished hon. Members opposite to hear the steady stream of speeches deploring the loss of profits and share capital which has come from this side of the House. When I listened to it, I was not quite sure if I was on the right side of the House or not. What is the situation with regard to over-capitalisation? There have been references to Lancashire. It has been suggested that cotton, and other industries, are suffering in trade from the effects of over-capitalisation. No one has attempted to show how over-capitalisation in any way hampers industry or production. As a matter of fact, over-capitalisation, so-called, is a common phenomenon. If you take up any newspaper, you will find the quotations of a thousand and one different limited companies. You will find them quoted on the Stock Exchange according to what the ordinary investor assumes is their earning power. I take, for example, purely at haphazard from the "Manchester Guardian" this morning, Bovril £l shares at 37s., the 6s. 8d. shares of Dunlop at 15s., which were last year 28s., as I know to my cost, and Sherwood Star Mine 5s. shares at 24s. There are two forms of over-capitalisation. There is the over-capitalisation that takes place on the stock market by the writing up of share values, examples of which I have just given, in which, however, the capital of the company in the company's books is not written up. The other form takes place usually when there is a financial reconstruction, in which the capital in the books of the company is written up. It may have two or three noughts put against it, but it depends entirely on what the earning capacity of the company is what the quotation on the Stock Exchange is going to be. If I want to buy a share, I have to pay the market price for it, and I expect a dividend from it. The people who paid these fantastic prices for Lancashire cotton factories in the big boom paid them because they anticipated that there was going to be dividends or profits in ratio to the price they paid. They made a mistake, as the people who bought Dunlops at 28s, made a mistake.

I do not see how it is possible to regulate over-capitalisation in the reconstruction of companies unless at the same time you are going to take powers to regulate the over-capitalisation in Stock Exchange quotations, and that is impossible. Personally, I think both are. With regard to the effect of over-capitalisation upon industry in Lancashire, we may have side by side, in the same town and in the same street, two mills, one of which may have its capital written up ten times what it was pre-War. The other, possibly a private company, was not refloated, and the capital remains in the books what it was pre-War. Does anyone mean to tell me that the spindles in the company which had its capital written up are any less efficient than those in the private Company? I am a Lancashire man, though I do not represent a Lancashire constituency. Is anyone going to tell me that, merely because the directors, or shareholders, have put three noughts on to the end of their capital figure one mill can charge a farthing a pound more for its yarn? Of course it cannot. So far as I can see, the only effect of over-capitalisation is upon the people who are foolish enough to put their money into over-capitalised concerns, but as it is a case of caveat emptor I do not see what the House can do.

Only one way has been shown in which over-capitalisation may react upon industry, and that is where, owing to the need for paying high dividends, the reserves that ought to be built up have not been built up, and the company, having an enormous capital, instead of putting money to reserve, pays it out in dividends. The result is that it is crippled in the matter of new machinery. The hon. Member who has just spoken is going to prevent the construction of reserves. He cannot have it both ways. If a company builds up reserves it naturally anticipates the payment of dividend on those reserves. It is futile to call actual saving over-capitalisation. Over-capitalisation is the writing up fictitiously of capital which is not there, and that has no effect upon industry so far as interfering with trade or employment is concerned.

6.0 p.m.

I should not have intervened had it not been for the speech of the hon. Member for Central Sheffield (Mr. Hoffman), who dealt with the effects of over-capitalisation as he saw them upon the distributive trades. The hon. Member who has just spoken, whom I should like to congratulate on a most interesting maiden speech, has really disposed of the whole of the case that has been put forward. Up to the moment that he spoke, there seemed to be a very curious lack of comprehension of the difference between reserves in industry used for production, and reserves as used for distribution in money. The position is perfectly simple. If a company makes profits and issues bonus shares, those bonus shares do not affect the actual results of the working of that company in any way. They do not increase the price that it can get from the public if it is engaged in a competitive industry. Boots and shoes—I think that that was the illustration which the hon. Gentleman opposite particularly gave—still have to be sold by the company with bonus shares in competition with the boots and shoes produced by some other company which has not issued such shares. Presumably the public will pay no more for boots and shoes bought from the first company than they will for those produced by the second company. The fact of the matter is, that whatever amount of money a company may distribute in bonus shares, it does not in any way affect its services to the public. What it does affect and may affect very seriously is the money which the public may invest in the purchase of the shares at what we describe as inflated prices. I quite appreciate—and I think there is a good deal to be said for the point mentioned by the hon. Member—the necessity for some form of scrutiny—I do not say a State scrutiny—but a very careful scrutiny of the particulars put forward in the prospectuses and Offers for Sale made by public companies. But as a matter of fact that scrutiny does take place. It takes place by a large number of organisations which guide and constitute public opinion in financial affairs, and the results of mistakes in their views and the difficulties of their task are seen by the fact that many of those companies with inflated capital have made colossal failures of their affairs.

Turning to the cotton industry, I want to emphasise very clearly what was said by my hon. Friend the Member for Stock-port (Mr. Hammersley). It is that all this over-capitalisation in the days of the boom in the cotton industry has nothing whatever to do with the difficulties which the cotton industry is passing through. The fact that a large number of people have lost money may be a matter for regret, but it has nothing whatever to do with the facts, which are, that the cotton industry at the present moment is not prosperous because it is undercut by competition from other countries working under different conditions altogether. I have a certain amount of experience of the cotton trade in other parts of the world, and I can assure hon. Members that day by day Lancashire is being undercut by other countries which are producing under a lower standard of living. That is the real trouble Lancashire has to face. For a series of years Lancashire millowners were able to meet these conditions to some extent by the fact that they had the advantage of long knowledge and great experience and highly trained operatives. This enabled them to produce high class cotton goods, fancies and other better class goods with which the competing countries were not able to compete. As years have gone by Japan and other countries have been producing more and more of these finer goods and the result to-day is that Lancashire is facing the fact that it has to produce and sell goods in lands far distant from Lancashire in competition with other countries which are producing those goods under a lower standard of living, longer hours and poor wages. I hope it will be possible that some day there may be an international convention or agreement regarding hours which will tend to help us in that respect.

It is no use blaming over-capitalisation for the difficulties of Lancashire. The fact that you may call the market value of any particular mill £500,000 instead of £100,000 has nothing whatever to do with it. It simply means that the people who have put up that additional £400,000 have lost their money. As the House knows a very large number of concerns in Lancashire are not making money at all and are not earning enough to pay interest upon their debenture loans. It is estimated that a sum of over £200,000,000 has been invested in the iron and steel industry in this country and that of this £200,000,000 over 50 per cent. has already been entirely lost. That is not inflated capital. It is the capital originally invested in the industry—and over 50 per cent. of it has gone. Taking all the ordinary shares of the iron and steel companies together it is estimated that 75 per cent. of the money so invested has been lost, and in preference shares between 25 and 30 per cent., and it is pointed out to me that this is an increasing loss as, of course, it must be under present condtions. But if, by this Motion, the wage earner's point of view is to be specially considered, surely this loss is not a matter for him to find any fault with. It is the capitalist who has lost that money. It is the capitalist who has lost money in all these ordinary shares; it is the capitalist who has lost the money in these preference shares. At first sight surely this is not a matter which need cause the wage earner any special personal concern, although it must in the end seriously affect him. If you cannot get capital, and the industry is not prosperous, nobody is prosperous in it. Anyone who really knows the position realises that employer and employed must be equally prosperous or industry cannot go on, and there is no real antagonism between those concerned in industry.

It has been asserted that over-capitalisation is harmful to industry. Presumably the argument of the hon. Gentleman opposite would be that the capitalist should be replaced by a system of Socialism and that the State should provide the money. If, as I have made clear by these figures, it is the fact that in the great industries of this country a large amount of the capital and savings of the people have been lost, what use is it going to be if you put the State in the position of the capitalistic investor? You may take the money out of the pockets of the people by taxation instead of by inducement, but it does not make industry prosperous. Somebody has to provide the money. The claim that the over-capitalisation of industry has been harmful to industry is based upon no facts whatever. If anything, the fact that capital has been freely risked in this way has possibly given us a better outfit in competition with other countries in the world than we would otherwise have had. It is extremely doubtful, and nobody can really believe that the State would take the risks which individuals have taken and which have unfortunately resulted in this immense loss in some cases. It is inconceivable that if any of us were here to administer the State control of the iron and steel industry, for example, we would have taken the risks which private enterprise has taken. Under a system in which we were so curtailed we might not have been able to compete with other countries. I suggest that there is no basis for the proposal in this Motion put before the House this afternoon.

I do not want to detain the House more than a moment longer. It seems to me that when dealing with over-capitalisation of industry it is essential that those who suggest that such has been harmful to the State, harmful to the wage-earner and harmful to the consumer, would have to show us quite definitely that all these people who have put money into industry have gained enormously—that they have gained large profits at the expense of the wage-earner or, what is much more important, at the expense of the consumer. But the facts are quite the re- verse. Apart from certain concerns which have made and are making very large profits, and they are the exceptions, everybody knows that throughout the great basic industries of this country there are continuous losses and little or no return to the investor, and consequently it cannot possibly be claimed that the amount of capital provided for industry has caused loss to the wage-earner or has prevented us from, at any rate, endeavouring under unfair handicaps to compete with countries abroad.

I wish to support the Motion on the very broadest grounds, principally because overcapitalisation is injurious to those for whom, after all, I am most concerned— the community. The history of overcapitalisation as a phenomenon in industry can be traced quite clearly and definitely, and has been traced by eminent writers, British and American. The father of over-capitalisation was the late Mr. Pierpont Morgan, and the first instance of successful capitalisation was that of the United States Steel Company. The financier who put through that great merger raised the sum of 50,000,000 dollars, not a penny of which was represented by any assets whatever. As we know, Mr. Andrew Carnegie got in the shape of 6 per cent. loan bonds a fortune which enabled him to dispense much generosity in this country. That wonderful example of the success of overcapitalisation was quickly copied in America, and then by many means, good and bad, it came into this country, and you had large commercial concerns merging themselves, vastly overcapitalised, and you have had private concerns becoming limited liability companies, also largely over-capitalised.

As my hon. Friend pointed out, one of the results of over-capitalisation is that an increased amount of money is required to pay dividends and a definite amount of profits has to be made in order to provide those dividends. Overcapitalisation produces that intense pressure for dividends which is quite a modern phenomenon both in America and in this country. Every effort was made to secure large profits by these combines and over-capitalised services. How could dividends be secured? How could large profits be obtained? The first thing that was done was to sabotage competition. Both in England and in America the over-capitalisation of large concerns was followed by the sabotage of competition. Rings and combines were formed. Concerns were forced into the combines. Weaker firms were marked down, undersold, and compelled to come into the combines, and in that way competition was sabotaged and reduced.

The next thing to be done was to reduce production. The large concerns found that it was much more profitable to curtail production than to increase production. The sabotage of competition was followed by the restriction of production. Having secured a reduction of competition, prices were raised against the community. Prices were raised so as to secure the profits which were required to pay the dividends of the overcapitalised concerns. Prices having been raised, wages were lowered. Workmen whose wages ought to have been increased found that their wages were not increased, and in other cases bodies of workmen found that their wages were reduced. There you see the overcapitalisation of industry injuring the public in the increase of prices, injuring the workers in the reduction of wages and bringing about, to a very large extent, the financial and industrial conditions of the present time with which we of the Labour party are much disappointed. Over-capitalisation injures the community in the way that I have described.

I am glad to have had the opportunity of taking part in the discussion and to express my opposition to this evil phenomenon. I am not blaming the managers and directors of big companies and stores, who have to resort to every kind of method to increase dividends and profits. They are merely the creatures of a system, and if their companies find that they are not getting dividends they lose their position. It is all part of a system to which the Labour party are intensely opposed. I do not think any suggestion which has been made by hon. Members opposite has been of any substantial value. The one way to deal with this great evil, with its increase of prices, its reduction of wages and the sabotage of competition, is to alter our industrial system on the lines which the Labour party advocates, and secure for the nation and the workers peaceful conditions under which they can live.

I rise to support the Motion, and I do so with great pleasure. It is certainly very moderate in tone. It does not say anything very definite, but merely requires the Government to include within the scope of its inquiry this question of over-capitalisation. I have listened with great interest to the Debate. It is one of the most interesting I have ever heard in this House, and it has been conducted with an entire absence of heat and a real endeavour to get at the root of the economic question at issue. I want to disagree profoundly with the Mover of the Motion when he accepted the speech of the Leader of the Opposition. In that speech, the late Prime Minister came to a decision or a conclusion that it was impossible to do anything in this matter; that nothing could be done; that Governments were quite hopeless in the matter. The only way in which this matter can be tackled is by the Government itself, and I agree with the suggestion that the time has come when it is most necessary that we should have a national investment board with some form of control over limited liability companies, the issue of shares and the issue of bonus shares.

I do not know how many hon. Members read the annual report on limited liability companies prepared by the Registrar of Companies, but I find it most interesting reading. Since the passage of the Companies Act in 1862, not so very long ago, within the lifetime of many now living, the investing classes of this country have invested in these companies a sum of no less than £10,394,962,560. Over £10,000,000,000 have been invested in these companies by the public, and the capital to-day stands at £4,974,000,000, proving that what the hon. Member has said about iron and steel is equally true about the whole of these limited liability companies. Over 50 per cent. of the hard earned savings of the thrifty people of this country has gone. What greater indictment could there be against the capitalist system than that? I feel that the only friends of the investing public are the Socialists.

Hon. Members opposite say that we have not proved that this over-capitalisation and waste have any effect on unemployment in this country. I maintain that the tremendous waste of useful capital, which is absolutely necessary in the interests of this country, has had the tremendous effect upon employment, wages and industry. Indeed, I know of nothing that has had a greater effect on industry and employment than this overcapitalisation. This £4,000,000,000 which is invested in industry demands a return, and gets it, to something like 10 per cent. per annum. Between £400,000,000 and £500,000,000 is paid out in interest and dividends every year on this capital. These are not my figures. Some of these companies make a loss, some pay a small interest and others a larger interest, but together they make this demand on the public of the country.

Take the case of the railways and the amount of money which is invested in them. Every time you require an improvement or new invention, or electrification, more capital is added to the already tremendous burden of capital which is carried by the railway companies to-day. At the present moment, railway companies have to find interest on the money which was paid for the acquisition of the land over which the railways run; thousands of pounds per mile. If we had had a Socialist Government in those days the same law precisely would have been passed in regard to them as was passed in regard to the Battersea Electricity Works—namely, that if you borrow money for a public service you must inaugurate a Sinking Fund for the repayment of the capital. If there had been a Socialist Government in office at that time there would now be no capital in the railway companies demanding interest, because the whole of the capital would have been repaid during all these years, and the money so saved could have been used in reducing freight charges and in increasing the consuming power of the employés. No more inestimable benefit could be conferred on the industries of this country and the people of this country, than a reduction in the charges of transport companies. It would mean increased employment, increased wages, and the only way it can be done is the Socialist way. We say that you shall borrow your money at a fixed rate of interest, a low rate of interest, and shall repay the whole of that money by means of a sinking fund over a certain period of years. That is the only way it can be done, and it is right and proper for the State to say to the Battersea Town Council, or any other municipal undertaking, that they must have a sinking fund in order to decapitalise the industry and pay back the whole of the money they have borrowed.

This should have been done in the case of this £400,000,000, which is demanded on the plea that it is a loan to industry, and that by means of that loan capital increases the output of industry—which is simply nonsense. In every case it is a permanent imposition on industry and commerce. It has kept this country back and hampered it in competition with other countries. Hon. Members opposite endorse the capitalist system because they have not understood what it really means. It means absolute waste and the throwing away of the hard earned savings of the people up to 50 per cent. It means that money which should have gone into industry to develop it in the best interest of the nation is wasted, stolen and thrown away. You have a loan which is dragging down your factories, your transport and every other form of industry, and the remedy is only in the hands of the State, in the hands of Parliament and in the hands of the community as a whole. Hon. Members have been taunting us in this Parliament from the first day, when the right hon. Member for Oxford University (Lord H. Cecil) made his speech, with having broken promises and made pledges which we could not possibly redeem.

For 35 years I have been making this speech, and I have never on a single occasion made a promise like that. Every time I have said the same thing. The man who hopes to cure unemployment, and promises to cure unemployment, under a capitalist system is leading the people of the nation up the garden; he is deceiving them. You cannot cure unemployment, you cannot hope to provide a decent living wage in any one single industry, until you are prepared to sit down and take each industry in turn, cotton, iron and steel, and agriculture, and reorganise it on an abso- lutely new basis, the basis of Socialism, which is in active operation in every municipality in this country under the control of boards and councils most of whom are Conservative in character without a single Labour or Socialist representative. It is only by co-operation that it can be done. To-day I have heard the biggest indictment of capitalism that I have ever heard in the waste which has been going on for the last 30 or 40 years

The burden of the attack upon the capitalist system which was made by the hon. Member who has just addressed the House rests more against the system of limited liability companies. His whole conception has been that money has not been kept in those companies and used in the companies so that the cost of produce might be cheaper, but I would point out that if the business of the country was done entirely by private enterprise and the limited liability system did not exist, his arguments fall to the ground. He says that the country can only compete on a Socialistic basis, and that we are in our present parlous condition on account of the capitalist system. Then how does he explain the prosperity of other nations, such as America and France, which compete very severely with us in every direction, and which are based entirely upon the capitalistic system?

It seems to me that this Debate is running into the Debate that will take place on the next Motion, and it is very difficult for hon. Members to know into which Debate to intervene. If I refer to matters connected with the cotton trade I shall be intervening in the next Motion, but as so much has been said about the cotton trade on this Motion possibly a few words on that subject will not be out of place. I have been deeply interested in the past in the cotton trade, and I deplore, like every hon. Member opposite and every hon. Member on this side of the House, that such an enormous amount of money has been lost in the cotton trade. That came about through a very clear cause. The cotton trade in the period from 1919 to 1920 has been referred to. It was then in a condition of boom. Profits were made on the basis of 50 to 60 per cent., whereas before that time profits of 5 per cent. would have been considered very satisfactory results from many mills.

The result of that condition of things was that everybody lost their heads. They thought that the cotton trade, because it was in that condition and because there seemed no end to the demand for goods in Manchester, would continue for many years to make profits of 50 per cent. to 60 per cent. Therefore, financiers were prepared, because they were not longheaded enough, to buy up the shares of concerns at 300 to 400 and sometimes 500 per cent. advance on prices. They said to themselves: "At all events, we shall be getting a 10 per cent. return on our money." That turned out to be wrong so far as those buyers were concerned, and they lost their money. If the speculations had been confined to shares there would have been no question of damaging the industry. In fact, the expansion of the share capital of many of these concerns made not the slightest difference: it made no difference whether you paid 30 per cent. on £100,000, or 15 per cent. on £200,000. Therefore, that made no difference to anybody, much less to the workers.

Lancashire has suffered, as was pointed out by the hon. Member for Stockport (Mr. Hammersley), because, owing to continuous losses, the concerns have been charged with bank advances, mortgages, and debentures, and these moneys have demanded payment year after year. Those concerns would have been in jeopardy if those sums were not paid. The result has been that arrangements have had to be made for the Lancashire mills in order to meet these permanent yearly demands, which were contractual. A great deal of the trouble in Lancashire has arisen from a cause which has not been mentioned to-day, namely, the enormous sum of money that was taken out of the industry when it was prosperous by the Excess Profits Duty. Enormous sums went out which in the ordinary course of trade would have been reserved in the business, and would have been there for the rainy day. But it was taken out, and the misery of the thing was that the Excess Profits Duty continued about three years after the cessation of the War and advanced from 40 per cent. to 60 per cent., when everybody connected with the trade thought that it would go from 40 to nothing. In consequence, a great many people who had their money in the Lancashire industry were entirely deceived. They found that large sums had to be taken away for taxation purposes, which moneys would have been enormously valuable to-day if they had been in the Lancashire cotton industry, and would have saved the mills from falling into their present state, owing to the lack of ready money.

The absence of ready money and the straightened conditions of these mills has not caused the price of yarn and cloth to go up. The prices of cloth and yarn have gone down, because these commodities have had to be sold at any price to bring money in to keep the wheels turning round. Had the mills been more prosperous, prices would have been more firmly held, the prices of yarn and cloth would have been higher and the public would have had to pay more. So far as the buying public and the co-operative societies are concerned, they have gained by the Lancashire trouble rather than lost. As regards the workmen, I have seen mills which were running full time throughout the whole boom, and are running full time to-day, without making one penny of profit to the shareholders, either ordinary or preference. The money that has been made has had to go to pay bank interest and prior charges, money which might otherwise have been available for dividends. Those who bought shares in such concerns have lost on their money, but the operatives have not suffered; they have continued full time in employment.

I agree with the hon. Member for Stockport that the major cause of the disastrous condition of the Lancashire cotton trade is the economic position of this country under which we are labouring as against the competition of other countries, owing to the rise in the price of labour, but, more than anything else, owing to the rate of exchange, which enables countries with a depreciated currency to bring their goods into our Free Trade country and sell their produce at the rate of exchange which our £1 sterling demands. Those who have studied the conditions in continental countries and in Japan, especially continental, will agree that the work that is done in those countries costs less than the representation of that money in its exchange with our £1 sterling. For instance, in France the rate of exchange is 124 francs, but the goods are made on the basis of about 80. Therefore, there are some 24 points to the good for the French person who exports to this country. That is to their definite advantage all the time as against us, because having exported to this country they get 124 francs to the £1, and that money remains in this country in the shape of credits to compete with this country in the purchase of raw materials, from whatever country they may come. In that way we are labouring at a permanent disadvantage.

The condition of our trade will not be put right by any inquiry into the overcapitalisation of the mills. It will be improved by a change in our fiscal system and by some arrangement whereby our industry can be protected from foreign competition. The cleaning up of Lancashire is going on very rapidly now. The combinations that are taking place are enabling the mills which can be worked satisfactorily to work full time instead of three-quarters time on one particular count and quality of goods, and those mills that cannot be run satisfactorily will stop.

I mentioned that the Motions ran into one another, and Lancashire has been mentioned so freely that I did not know where to stop. I have nothing more to say on the matter.

Perhaps this may be an opportune moment for me to say a few words upon the Motion before the House. We have had an interesting though a somewhat one-sided Debate. The Motion has two points. The first one is that the House is asked to deplore the ill-effects of over-capitalisation of industrial undertakings upon trade and employment, and the second urges that the Government should keep these effects in mind in connection with the various inquiries into industry and finance which have been instituted. I should like to express my great appreciation and congratulation to the Mover of the Resolution for the very excellent way in which he presented it to the House. He stated that this was the first occasion on which he had addressed the House, although this is the second Parliament in which he has sat. In listening to him, I wondered why he had waited so long to make his maiden speech, because certainly he showed a readiness in debate and a command of his subject that makes it difficult for one to understand his delay. I hope we may have opportunities of hearing him in the future, because I am sure he can make very able contributions to our Debates.

He rather emphasised the cause and the effects of over-capitalisation upon the investing public, and also the effect in regard to the dislocation of industry. I think he substantiated those two points. Certainly, this over-capitalisation, this floating and re-floating and reconstituting of companies must be in its very nature, in a large way, artificial, and in the end it brings very bad results to the investor who understands little or nothing of what may be termed high finance. I think it is equally true, and can be readily shown, that it does have an effect in dislocating industry, which must be harmful to the general interests of the community.

The seconder of the Motion, in a very able speech, emphasised the effects of over-capitalisation upon wages. There again, I think it can be very easily shown that over-capitalisation in certain circumstances does create conditions which bring in their train industrial unrest and industrial difficulties which perhaps have the result of forcing down wages or of preventing what otherwise might be a reasonable demand for wage increases. There has been a great deal of argument used against these combinations in the speeches that have been made, apart from one delivered by the hon. Member for the Chesterfield division (Mr. Benson) who argued that overcapitalisation in itself had no evil effects upon the community, apart from the fact that it might be a very bad thing for the investor who bought shares at the wrong moment.

I think it is possible to exaggerate the results of over-capitalisation. I do not think that it would be fair to assume that all the evils from which society is suffering to-day, and the industrial depression through which we have been passing for so many years, are entirely due to over-capitalisation. Those who sit on these benches recognise—in fact the hon. Member for North Battersea (Mr. Bennett) emphasised the point— that the evil is deep-rooted in the system. As we know, trade before the War used to work in cycles, going up to a boom point and then down to a period of depression. Unemployment and dislocation of trade and industry are more or less natural results of the present form of society. While it may be true that overcapitalisation is not the sole cause of our difficulties, I think it would be equally wrong to assume that it has no effect and is not in any way responsible for the difficulties which we have to face and the depression which we have experienced.

I do not think that the subject can be brushed to one side in that way. There is the question of what may be termed sound and unsound finance. Those who understand financial matters more deeply than I can claim to understand them, might argue that in some cases what is termed over-capitalisation is really a sound financial provision, having regard to the existing circumstances, and perhaps that point may be readily conceded. I think there comes a point in the productivity of a business where it increases rapidly, and where the capital of the company naturally has to be increased in order to meet that circumstance. The difficulty is in being able to judge exactly how long that period of prosperity will last. Therefore, great caution and sound judgment ought to be exercised in meeting such a situation.

I believe that in the minds of those responsible for this Motion is not the proper adjustment of capital to meet circumstances such as I have indicated, but what may be termed gambling in shares —buying and selling and re-capitalising companies and concerns in a way which I think we can describe as artificial. Because such companies are re-capitalised, largely on an artificial basis, the capital of the company is out of all regard to the normal earning capacity of the business, apart from, perhaps, limited boom periods, and in such periods, instead of putting all into shares, reasonable provision ought to be made to contend with the difficulties of the periods of depression. Companies of that kind are the first to feel the difficulties of a depression when it comes and by force of circumstances are compelled to do things which intensify the evil and the problem of the depression which inevitably follows a boom.

The Motion, in asking the Government to consider the effects of that kind of thing on the wider interests of the community, in any investigation which they may have to make into these matters, is very right and proper, and I think I can say in connection with those inquiries which are now going on, first in regard to iron and steel and cotton, and also to finance and industry generally, that it will be impossible for those committees to consider those subjects without having proper and due regard to the question of over-capitalisation. Let me touch on one point which illustrates the evils arising from such a policy. Reference has been made to the railways, and I have always understood, and it has been accepted as a sound theory, that if the railways had not been compelled to raise so much capital to meet excessive charges in the acquisition of land and expenditure on legal fees in obtaining their powers they would be in a much sounder financial position to-day and better able to meet the strain which has ultimately come upon them. They provide a ready illustration of how industry and the community can suffer from overcapitalisation. Had the railways been spared a great deal of the expenditure to which I refer, their earning capacity would have been much greater in relation to their invested capital and they would have been better able to meet the changed circumstances which have arisen.

We are often told in this House that one of the things most necessary to-day is confidence. If by over-capitalisation we produce an artificial condition of things, surely that must destroy confidence. When depression first came along, one of the things which happened to many businesses was forced sales. If a company, because of its financial arrangements, could not meet the storm and strain which comes with depression, it-was forced into an artificial state of things, and I know that in many industries firms were compelled to dispose of stocks, on account of the difficulties in which they were placed. Once goods are placed on the market at artificial prices, a lack of confidence in industry and business is created, and the problems and the difficulties of a period of depression are intensified.

Therefore, although, as I said at the beginning, it may be possible to exaggerate the results of over-capitalisation, I think it can be shown that real difficulties and problems arise from the artificial state of things produced by unwise financial arrangements and the buying and selling and re-capitalising of concerns. I think, from the wider point of view, that the community is, by sheer necessity, compelled to take note of these things. Investigations which have for their purpose bringing clearly to the public mind the facts and problems associated with trade and finance are bound to take note of this matter and, as far as the Government are concerned, I can only say, in regard to the second part of the Motion, that it is inevitable and absolutely necessary that, in the inquiries which they are making into different matters affecting industry, this question of over-capitalisation should be considered.

The representative of the Board of Trade finished his speech with the very sensible remark that no investigation into the state of trade and finance would be complete without some inquiry into the subject of over-capitalisation. I hope, however, that before he sets the task to any committees which he has in mind, he will be so good as to tell them what he means by over-capitalisation. As I followed his speech, he at one time used the term in the sense of a considerable addition, say to the nominal capital of a concern which had either been sold or bought by company promoters. Then again he used it as another term for over-production. I do not know in which sense the hon. Gentleman would put the matter to his committee who are to examine into these questions, but it is necessary that there should be a little clear thinking as to what is meant by over-capitalisation before we can arrive at any decision as to the evils which have accrued to trade and employment—the two things mentioned in the Motion—from the over-capitalisation of public companies.

I think a curious development of our discussions in this Parliament has been the defence which has been put up for the investor, and particularly the small investor, from the Socialist Benches. My hon. Friend the Member for West Swansea (Mr. H. W. Samuel) and I have had controversies in the past, and I never expected to find him standing up in the House of Commons to defend the interests of shareholders in public companies. He has adopted a new role, and I need hardly say that I listened to what he said this afternoon with profound interest. In some of the concerns which he discussed the shareholders have already had to register very considerable losses, and the money which they have put into those concerns is well known both to him and to me. We are not unconscious of the fact that the shareholders have lost by bad investment, but is not that really almost the sum total of what can be said about over-capitalisation? It has extraordinarily little to do with trade or employment until the companies have to go into the market and obtain fresh capital. That is the point where it actually touches trade and employment, but up to that time it is purely the concern of the shareholders, generally the ordinary shareholders, who are members of these public companies.

We have only to remember how capital is provided for public companies to see how true that is. The common form is for a company to have its capital provided by ordinary shares, preference shares and debentures. Sometimes there are deferred shares and founders' shares, but they are in a class by themselves. There may be evils concerned with both which do not appear on the surface, but, on the whole, until you come to the stage of that company requiring more capital, trade and employment are not affected one way or the other, whether you call the capital £50,000 or £500,000 or £5,000,000. What does matter is the productive capacity of the company. It does matter to the state of employment in the coal trade whether a colliery is properly equipped, whether they have the natural qualities which would enable a company to bring coal to the surface, and the commercial arrangements by which they can sell it at home or abroad. Those are things which matter and not the mere question of how many naughts yon have at the end of the ordinary capital of that particular company. Wherein have the companies mentioned by my hon. Friend opposite suffered from over-capitalisation?

I dealt with the fact that such companies failed to provide reserves, and, because they failed to provide reserves, they had to float debentures, and, they had to provide the interest on the debentures, otherwise the banks which lent the money would come in, as a natural consequence.

I am quite aware of the natural history by which they have reached that point, but a great many of these concerns have not been driven to float debentures in order to save themselves from the calamities which surround them. A good many have debentures floated in the first instance.

Even this year, a concern which I mentioned registered £3,500,000 by way of debentures, and the company was originally floated without any.

7.0 p.m.

I cannot draw a general conclusion from one individual concern. I am saying that it is the general practice nowadays for these three classes of shares, namely, debentures sometimes and preference shares and ordinary shares to be the way in which these concerns are owned and I emphasise the point that it does not matter at all, as far as the sale of commodities is concerned, whether the nominal capital is high or low. What does matter is the productive capacity of the concern. My hon. Friend says that if there are very large debentures that is a burden on the whole concern. I agree that if ever you fall into the hands of a mortgagee, you find it a very serious burden on your productive capacity, but that is not a question of capitalisation. Capitalisation refers to the preference and ordinary shares. The matter of debentures is not one with which the bankers are necessarily concerned, except in so far as they may have advanced their customers' money to facilitate keeping alive or develope businesses, and they have to look to debentures as a security for some of the money they have advanced. But debentures, as a whole, are the last resort, and, where they are, they bear no relation to the profits made by the company promoters. They have no relation to such concerns as the Drapery Trust, which has been described to us by an hon. Member with great knowledge and experience of these matters. He described to us what happened in the buying and selling of the stores that we know quite well, in the West End of London.

Nobody who has the interests of industry at heart believes that the buying and selling of businesses with the idea of making a hundred or two hundred thousand or half a million profit really helps industry and commerce. That kind of company promotion has been the curse of the joint stock system. We can all condemn it whole-heartedly. The people who will suffer are the silly people who have invested their money without reading the prospectus. [An HON. MEMBER: "And the employés!"] I am not sure that the employés are not sometimes the victims, and that is why I say it is detrimental. New directors come along with no hearts of compassion or personal connection with the servants in the past, who have no idea of what has been contributed by managers and departmental managers to the success of the stores, so out they go. They have regard only to reducing the working charges and making a good show in the prospectus, but in making that good show they do not interfere with the ordinary procedure; the buying and selling go on, and what happens is that some poor simpletons are taken in by the short notices in the paper giving the profits in the last four or five years and perhaps including the boom years of 1919–20. Then come along all sorts of investors, great and small, to take up such shares. Those who take them up in such circumstances are fools and suffer according to their folly.

I do not see what the Parliamentary Secretary to the Board of Trade is going to do to prevent that. His Department had a Committee at work on the operations of company law for many months, or it may have been years, and what was the result? We have the amended Companies Act, which came into operation on 1st November. Let us see whether the Companies Act will put a stop to some abuses. I know that some things which ought to appear in a prospectus are now tucked away in he smallest possible type and are not read by the general public. The company promoter has only to tell the printers to put things in small enough type and they might just as well not be there. There are some things required by the Companies Act which are very proper, such as the amount paid by way of commission to those who place shares on the market —an example which might be followed by the Government itself—there must be a disclosure of interests and how much any individual director is interested in the buying and selling of the concern. These are excellent safeguards. Is the Parliamentary Secretary going to ask for another Committee to extend the Companies Act so as to prevent the selling of a company? No President of the Board of Trade will do that.

Everybody who has examined these things or conies in contact with business in the City or elsewhere realises that the joint stock company system is liable to very grave abuses. I am not at all sure that some great industries in this country have not suffered severely in passing into the hands of companies and out of the hands of private firms. I have a very kindly feeling for the private firms. They were controlled by human beings, whose whole interest was bound up in them, and they took a lively interest in the workpeople. Now it often happens that these concerns fall into the hands of people who have no care for the employés, who hold their meetings in the City and never go to the Provinces or the business parts of London. The result has been that not only have you eliminated that human element which is of the greatest possible value, but you have incorporated the worst sides of stock exchange life into our company system. Far be it from me to say that the Stock Exchange does not represent a valuable and essential part of our commercial system. You cannot do without it, and the control of the Stock Exchange Committee is a safeguard against abuses. But it does lead to a great deal of gambling. The spirit of adventure, I hope, is present in all of us, certainly in anybody who is worth anything at all, and it sometimes takes the form of gambling in company shares, and sometimes by those who ought to know better. New shares are sometimes taken up by people who know very little about the concern and its proper value. There are brokers who get off as many shares as they can. I do not blame them, but it facilitates an evil against which the public ought to be guarded.

It would be a useful thing if the right hon. Gentleman would set up in his Department, which is almost large enough, a small branch to look after the interests of the small investor. When you have a smash such as that which led to the reconstruction of Armstrongs in the north and south of Lancashire, who suffered most? The bigger people. But they had a very good buffer on which to rest. Every workman in the North liked to have a little in Armstrongs and they suffered; when the blue pencil of the great chartered accountants went through the figures, it was they who suffered, and I suggest to the President of the Board of Trade that he might devote a little attention to the interests of the small investor who unfortunately has not the same knowledge of these matters as have those engaged in great affairs.

Do not let us be led away by the idea that British trade and commerce are under the control of big company promoters. Gambling in company shares is an unfortunate feature of modern life, not only here but everywhere, but it does not express the real essence of the British industrial and commercial system. The great mass of business is under the control of firms which hate gambling. They may give a fillip to business by issuing bonus shares, but they issue them from the reserves which the Parliamentary Secretary to the Board of Trade says are an essential part of our industrial organisation. But for the building up of great reserves out of profits it would be impossible for a large number of our concerns to have weathered the storm in recent years. Do not let us do anything that will stop that tendency. The building up of reserves is not only essential to the firms themselves, but it helps the subsidiaries, the children who may be their support in years to come.

In saying a word for reserves let me refer to the system of bonus shares. They are being issued out of the accumulated profits of the past, and they are issued in that form because under our present taxation system bonus shares thus received do not come into assessment for Income Tax or Super-tax. That explains to a large extent their issue. But what happens to trade and commerce? It does not make them operate on a smaller basis. I do not think it makes them operate on a wider basis, but it means that they are not able to lodge at their banks or in their safes such a large number of securities as before. Their current account may be on a smaller basis, or they may have sold out shares in subsidiary companies to do it. When you have done the whole thing, what do the shareholders do with their dividend? They do not blow it away, so that it is not used again. It goes into the banks, and the chances are that it is used in the fertilisation of industry. The trouble is not over-capitalisation but shortage of real capital. We have capital of the highest class in our factories, mills and workshops. We need not worry about company finance, which will take care of itself. The first interest of our time is profitable industry.

I should like to join in the congratulations to the hon. Member who moved the Resolution. I should like to congratulate him on the restraint which allowed him to be a Member of the Parliament of 1924 and of this Parliament, and yet the House until this afternoon had not heard him at all. I could almost wish, in my short experience, that that restraint were exercised in some other quarters. I had a lively recollection of some speaking last night which was a weariness to the flesh. The hon. Member for Wirral (Mr. Grace)—

I had not got far enough to show the relevance of my remarks, but I bow to your ruling. I also want to offer my congratulations to the right hon. Member for St. Ives (Mr. Runciman). We have seen some of the acerbities in Wales rather assuaged by the friendly interchanges between that right hon. Gentleman, the former Member for West Swansea, and the present Member for that constituency (Mr. H. W. Samuel). I shall not attempt to traverse any of the arguments advanced by either of those two Members. I want rather to suggest that this problem is in a very large sense a question of the misdirection of capital, and I am going to fortify my argument in that respect by taking one instance only of the very glaring over-capitalisation of a form of industry where capital apparently is not needed at all.

I have been examining a journal with which the right hon. Member for St. Ives is acquainted, namely, the "Economist," and I find the most illuminating description of the finance of the safety glass which is used in connection with motor cars. The first company which dealt with the invention of safety glass calculated that only about 3,000,000 to 4,000,000 square feet of glass would be normally required by the industry, but unfortunately they showed a profit of something like 20 per cent. on their operations in 1928, and that immediately brought into the field other people, who started businesses for producing safety glass. As a matter of fact, seven different companies, each with an invention of its own, entered this field of production, and their prospectuses, which do not always tell the essential facts—I am not quite sure that I sympathise altogether with the animadversions of the right hon. Gentleman about the poor fools who are trapped so much as I reprehend the wiles by which these prospectuses trap these people—their prospectuses, I was saying, held out the suggestion that by their operations they could in a single year provide for nearly 7,000,000 square feet of glass.

Obviously, they were setting themselves out to produce practically twice as much as the trade could absorb. There, it seems to me, is a very important light upon the problem, which will have to be examined by anyone who inquires into the question of over-capitalisation. The result, of course, was that the fine promises in the prospectuses were not carried out, and instead of showing the large profits which were estimated it was found that it had been suggested that there was a need for twice as much glass as was actually needed, and the shares of these companies, which only this year had a capital of nearly £2,000,000 between them, have a present value of £375,000. There has been something said on the question of the cotton industry and other basic industries of this country, and our complaint on these benches is that, while our staple industries are suf- fering from insufficient capital to bring them up-to-date and make them efficient, people with money to burn are being beguiled into undertakings where there is no possibility of any productive enterprise being sustained. What is true of this particular industry is true also of the film industry, the gramophone industry, and many other speculative industries of that kind. Therefore, I cannot agree entirely that this over-capitalisation of industries which deserve it and need it the least has no effect upon the employés in other industries.

The hon. Member for Exchange Division of Liverpool (Sir J. Reynolds) suggested that there had been no detriment to the workpeople as a result of the financial operations in the cotton industry. Is his memory so short that he does not know that in the last three months cotton operatives have had to accept a reduction in wages? I suggest to him that this waste of available capital in order to give high dividends to shareholders is an injury to the working people and a detriment to their employment, inasmuch as capital is attracted to undesirable uses, to the neglect of more deserving industries. I hope the Government will give every kind of encouragement to the fullest possible inquiry into the capitalisation of industry in this country, not only through its special inquiries, but I hope the suggestion of the right hon. Member for St. Ives will be adopted and that a special department will look after the interests of the small investor. We are faced in this country with the fact that we have plenty of floating and available capital, but while wealth accumulates, men decay, and we, on these benches, are concerned not so much that we should accumulate wealth in material things, but that along with this accumulation of material goods there should be added the possibility of work, employment, happiness, for the great majority of the people of these islands.

Question put, and agreed to.

Resolved,

"That this House deplores the ill-effects of over-capitalisation of industrial undertakings upon trade and employment, and urges the Government to keep these effects in mind in connection with the various inquiries into industry and finance which they have instituted."

Cotton Industry

I beg to move,

I could wish that the privilege of opening the discussion had fallen to someone with a far greater experience of the trade than I possess. I can only say, by way of apology in opening this subject, that when I was a youngster 11 years old, I occupied a position in the industry which was at that time regarded as perhaps the most important one in the whole of the industry. I was a half-timer, and I have been led to believe that it was the contribution of the multitude of boys and girls in their capacity of half-timers which played no small part in building up those surplus values which have been the strength and the glory of the industry. I hope that about the facts concerning the misfortunes of the cotton industry there will be no occasion for disagreement.

For nine years now the industry has been, as we say in the North, in a bad way, second only in trouble to the mining industry itself. Roughly speaking, the industry, which depends more than any other in this country on its export trade, has fallen away in 10 years to the extent of about 30 per cent. We have the spectacle of an industry which is even now, after 10 years of rough weather, still equipped to export some six thousand million yards of cloth, an industry which on an average, year by year, is only able to export in fact something like six thousand million yards. This is to say, roughly speaking, the British cotton industry is only about two-thirds occupied in respect of its effective working capital. This does not mean that there has been a general decline in the cotton industry of the world. I believe many people are apt to suppose that changes in fashion and the coming in of new kinds of textiles, like artificial silk, are changes which in themselves have led to an absolute decline in the cotton industry throughout the world. Such, however, is not the fact.

In getting a bird's-eye view of the problem, we have to admit that the total amount of cotton used in the industry of the world to-day is larger than it was in the days before the world war broke out. I think the following figures will not be questioned in any part of the House. In 1912–13, the world's cotton-mill consumption was 22,932,000 running bales. In 1926–27, the consumption was 25,882,000 running bales. This shows that, notwithstanding all the revolutionary changes in taste which have affected this industry, there has been a steady growth in the amount of raw cotton actually used by the cotton industry of the world. The fact is that we have witnessed in the last decade or two, and particularly since 1914, a world-wide expansion of the cotton industry, which has created a new set of problems and conditions for the industry at home.

Take the situation from the point of view of the consumption of raw material in the industry. In 1912–13 our own industry was consuming 4,274,000 running bales; in 1926–27 that figure had fallen to 3,010,000; Japan in 1912–13 was consuming only 1,589,000 running bales, whereas in 1926–27 that figure had mounted to 2,851,000. For British India the figure before the War was 2,177,000, and in 1926–27 it was 2,601,000. I am unable to give the figure for China before the War, but it is a striking fact that in 1926–27 China, notwithstanding all the internal problems with which she is unhappily still confronted, was using no fewer than 1,920,000 running bales of raw cotton. The same position emerges if we take the figures with regard to spindles and looms. Since 1913 there has been only a very slight increase in the number of spindles available for the industry. The figure has mounted from roughly 65,000,000 in 1913 to 57,000,000 in 1927. In India the figure of spindles has gone up from 6,400,000 to 8,700,000; in Japan from 2,250,000 to more than 5,500,000. In China, assisted largely by Japanese capital, the figures have mounted from 1,200,000 to something like 3,400,000 over a period of 14 years. I will not trouble the House by quoting the figures for looms, but the increases in parts of the world other than Great Britain show that there has been a wide creation of the textile industry outside Great Britain, and we are confronted in the post-War period with a situation which is entirely novel.

I do not want in any way to minimise the importance of the events of the War upon the misfortunes of the cotton industry. It is plain that without the world war the industry in Lancashire would be much better equipped and relatively much more prosperous, but after everything has been said that can be said about the damaging consequences of the world war upon the British textile trades—the break up of markets, the anarchy in the monetary systems of the world, the diminution of the effective purchasing power of the masses of people throughout the world—we have to admit that the main elements of the present problem in the cotton industry in this country would still have been present.

It is time that we disabused ourselves of the theory that all our troubles, either in the cotton industry or in any other, sprang from the tragedy of 1914 to 1918. The real problem therefore, from the point of view of the British cotton industry, is how it can make an adjustment to what is a new industrial environment; in particular, how we can best accommodate ourselves to the situation which arises out of the fact that the new textiles industries in Japan, in China and in India, have taken from us since 1914 roughly one-third of our export trade. If we can in some way imagine the recovery of any large part of the trade which has gone to these three countries, we should see again Lancashire happily as busy as it was in the days before the War. Take the situation with regard to China.

I gather, after consultation with reliable authorities, that in the days immediately before the War, we supplied China, in respect of quantity, with no less than 68 per cent. of her imports of goods, and in respect of value 72 per cent. In 1925 we exported to China only 26 per cent. in terms of quantity, and 33 per cent. in terms of value. In that same period, Japan's share in the trade of China went up from 23 per cent. in quantity to 74 per cent.; and from 18 per cent. in value to 67 per cent. The figures in regard to India show a very similar position. In 1913–14 for example, we were in the enviable position of having 65 per cent. of Indian yarn imports in our hands, and as much as 97 per cent.—showing that we had virtually a monopoly—of the piece goods. Japan, however sent only 2 per cent. of the yarn that went to India, and the quantity of piece goods was negligible. Turning to 1925– 26, we find that Lancashire yarns imported into India fell from 67 per cent. to 31 per cent., and piece goods dropped down to 82.3 per cent. On the other hand, the Japanese import trade into India has mounted, in the case of yarn to 65 per cent. of the total yarn trade, and 13.9 per cent. of the piece goods trade.

I want, therefore, to address myself to the practical problem of the ways and means whereby the British textile trade can adjust itself to a profoundly changed industrial situation—a situation which was emphasised by the world war, but was not created by the War—for, until we can in some measure effectively solve the problem, we have no hopes of ever again seeing prosperity in the Palatine County of Lancaster. I must confess that when I try to get a bird's eye view of the industry, with which my boyhood was associated, I find that it presents in many ways just as higgledy-piggledy a picture as our contemporary coalmining industry. There are a very large number of organs which have not very much relation to one another. The tools with which we are to begin this job seem very blunt, and in many ways unrelated to one another for the task that we have in hand. I am told that, until recently, there were 350 separate cotton-broking and merchanting firms, 1,800 separate spinning and weaving companies, and no fewer than 950 merchant shippers.

In dealing with the practical question of how to find an improved position for ourselves in the world's markets, I do not for a moment want to minimise the already important steps which have been taken by the trade itself. I am one of those who has frequently confessed to some admiration of the late Prime Minister, and I think that one of the most useful of the many useful speeches which he made during the lifetime of the late Government, was the one which he delivered in Manchester a little more than a year ago. That speech, in a sense, makes a date in the industry. I have no wish to minimise the steps which have already been taken in the industry, and the efforts which organised capital in the industry is making to deal with their peculiar problems. The creation of the Lancashire Cotton Corporation in January of this year is a development of the greatest importance. The reorganisation which is taking place on the Egyptian side of the trade is a movement in the right direction. It is only to be regretted that in the weaving department of the trade there seems to be so little sign of a thorough-going effort to appreciate the perilous position in which, after nine years, the industry finds itself.

I want to emphasise, therefore, that if I discuss certain elements of public control, I do not want to be accused of presenting a certain number of slogans. We want to see what we can do in the way of relating the State or any other public organisation to the industry, and that can be done only in relation to the existing situation; and I would wish the discussion to be above all fruitful to an industry which is in peril, and which needs all the help that the wit of man can bring to bear upon it. Certain developments are taking place in the direction of rationalising the industry. On the spinning side, that has been particularly noticeable in the course of this year, but the weaving department remains backward. I would, however, draw attention to the fact that on the finishing side of the industry, there has been a real attempt at rationalisation in the sense of amalgamation throughout the whole period of depression. I draw attention to the finishing side, because it illustrates that a piecemeal approach to the problem of amalgamation, combination and rationalisation will not, of itself, get us out of the wood.

I have read a number of statements by leading authorities in the industry which have suggested that it is the internecine competition of the various sections of industry—the unrelatedness of the various factors, the absence of a common ground in facing problems of marketing and production—which is the main problem that confronts the industry. However, there is, on the other hand, the important commentary that one part of the industry which has stemmed that competition within its own borders, the finishing section, has made very great profits for itself throughout the whole of that period. I want to use that side of the industry in order to illustrate the dangers of the piecemeal pursuit of amalgamation and combination in the industry. I do not suppose any hon. Member will quarrel with the statement that although the finishing trades have, since the days before the War, been handling less material, they have, in fact, been making a more handsome profit throughout the whole of these eight years of depression. The "Manchester Guardian" in 1924, I recall, went so far as to say of the finishing side of the cotton trade that it was difficult to resist the conclusion that the present policy of the finishing sections of the trades was one of increasing their earnings while reducing their output.

I suggest that, in so far as that may be said to be a reasonable statement of policy, it is, in its very essence, antisocial, and constitutes a profound reason for bringing in the over-riding principle of a public polity to checkmate this antisocial tendency. I was deeply interested to discover that in 1927, when the trade as a whole was in such a desperate plight, the Bleachers' Association, a very effective combination in the finishing trade, was able to register 12.2 per cent. profit, that the British Cotton and Wool Dyers Association made a dividend of 17.9 per cent., and that the Calico Printers made 13.5 per cent. The five leading companies on the finishing side of the trade—I admit they partly overlap into the woollen industry—were able to make in 1928 £2,000,000 of profit; and in the nine years of slump, the nine years since the depression set in, those five companies were able to make net profits equal to more than the whole of their paid-up capital, with their bonus shares included.

I suggest that the principle upon which the whole of those profits were realised during those nine years is inimical to the recovery of the trade, and constitutes the profoundest justification for the advocacy of a public polity and public control if we are to achieve the ends we are seeking. As I understand rationalisation, it does mean in its essence that we are seeking to get the maximum amount of production by the wisest possible co-ordination of all the factors involved, and, when it comes to the selling side, that we are seeking to get the best gain based upon maximum turnover. For business men who are concerned with mass production to set up, in 1929, the principle of the largest gain on the smallest turnover is openly to advocate what is a profound anti-social policy; and I do not think any stronger argument than the actual practice of the finishing industry can be advanced in favour of some over-riding principle of public control, and a wider approach to the problems of the industry.

If I am asked what is to be the nature of the public control, and the forms that control can properly take at the present time, I say, in the first place, that I do not think we can find a way out of the difficulties of the textile industry unless we approach the problem as a whole and by means of some kind of representative authority which, because of its character, will be able to deal with the problem of the industry as a whole. I am well aware that the Lancashire Cotton Corporation has made important developments in this direction since its inception. I have referred already to several other amalgamations in the industry, but there is no single body in existence at the present time which can really claim to be studying the problems of the industry as a whole and preparing the way for the treatment of the problems which concern the industry as a whole. I suggest there is no authority which can summon such a body into existence except the State, and therefore one line of development in the direction of public control should be an invitation to the Government to summon a body which would be representative of all sides of the trade, representative of the consumers and representative of the State itself.

In the second place, I have no objection to the suggestion that, as regards the provision of raw materials, the State might add to the power and to the influence which it has already exerted in that direction in so beneficent a manner. The British Cotton Growing Association and the Empire Cotton Growing Association have played a very beneficent part in recent years in preparing better conditions for the supply of raw material for the Lancashire and other sections of the cotton industry. I see no reason why these two bodies should not be further developed, under State guidance, so that they can, in a real sense, take control and exercise a predominant part in the purchasing of and provision of the whole of the raw material required for the industry.

In the third place, I suggest there is a part for the State to play in the building up of a central selling agency to coordinate the whole selling policy of the cotton industry. Here I would emphasise the importance of the voluntary bodies which have been set up to deal, particularly, with the Eastern trade, and I suggest that in this State co-operation in a selling policy a larger part might perhaps be played by representatives of the Government abroad than has hitherto been the case. I am thinking particularly of our Legations in various parts of the world. Some weeks ago I was in the Balkan countries, and had occasion to visit one or two textile factories and to inquire as to the position of the British textile industry in that part of Europe. I was not surprised to learn that in the Balkans, as in so many other parts of the world, British trade had relatively declined since 1914. Stories were told to me, even, of the use by British houses of German commission agents to try to sell Lancashire textiles. It has always been said of the German that he suffers from an undue amount of patriotism, but even if he were as cosmopolitan as we on these benches are sometimes deemed to be I cannot conceive any large sale of British textiles being secured under those conditions.

I suggest, therefore, that the time has come when we should try a forward economic policy through our Legations, that there should be a much more intimate co-operation between the Legations on the one hand and a national selling organisation in this country. I was much impressed by many complaints of the absence of the principals of the cotton industry from the Balkan countries. I found that Czechoslovakian trade was making headway, that Italian trade was making headway, that Polish trade and German trade were making headway, and I even found some suggestion of America making progress in the textile trade. When I pressed my inquiries, I was told again and again that British principals have no direct contact, and do not take enough trouble in their endeavours to sell their goods. There is not enough effective co-ordination between our Legations and the productive side of the industry at home. Although public control may not be capable of being put into a formula, I think, from the point of view of public polity, there is a great field for the linking up of the Legations with some kind of national selling organisation, encouraged by the State, at home.

Next, I would like to tread upon the somewhat delicate ground of finance, and suggest that there may be a real part for the State to play in the reorganisation of the Lancashire textile industry in its endeavour to make itself more efficient for the tremendous battle which lies ahead of it in the next 20 or 25 years. It has been a matter of great satisfaction that the banks of this country supported the formation of the Lancashire Cotton Corporation in the way they did, and I would suggest that there is a case for the State to consider sympathetically the possibility of helping the industry, either with a credit facilities scheme or in other ways, with the deliberate object of encouraging this new constructive policy for the industry which we have in mind.

Finally, I want to put forward the view, taking a survey of the last nine years, that we shall not obtain the initiative for the development which is necessary in the cotton industry apart from definite leadership from the side of the State. I repeat that the sectional developments which have taken place after nine long years are a matter for congratulation both to the industry and the nation, but no one who surveys the cotton industry tonight can feel content with the progress towards reconstituting the industry which has been made in this purely voluntary way. Therefore, I press the view, as is stated in the Motion, that some form of public initiative, some form of public control and guidance, is indispensable if we are to find our feet in the profoundly changed conditions of the post-War textile world.

8.0. p.m.

Referring to Ireland in a speech the other night, a Member of the House said no one looking back 40 years could fail to reflect that it would have been better if the programme which Mr. Gladstone then outlined for Ireland had been carried into effect. I am wondering how many Members there are in the House to-night who have not the same feeling with regard to the coal-mining industry, and wish that the recommendations made by Lord Justice Sankey in 1919 had been then adopted, or even the constructive proposal made by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) later in 1926, to approach the problem from a specifically national point of view and to build into the industry the drive and the initiative which can only come when an organisation like that of the State puts its power behind it. Why should we wait for all the bitter fruits of experience, for years and years of social trouble and misery, before we begin to pull together, one industry after another? Have we not had enough experience in the coal-mining industry to be convinced of the futility of relegating the State, as the organised community, into the 'background, and waiting for salvation upon the rough and ready pragmatical methods of voluntaryism between capital and labour in the industry itself?

I therefore want to base my argument in favour of this Motion for a measure of public control, public guidance, and public initiative in this industry, on the actual results of nine years of sorry experience in the textile trade, and on the confessed fact that this nation, in dealing with a sister industry, the mining indus- try, is being driven, as hon. Members in all parts of the House without exception are being driven, to admit that without a large measure of State co-operation and State initiative, we cannot redeem that industry and put it on its feet. I therefore invite this House to support the Motion which I venture to move, and to ask His Majesty's Government that, fortified by the experience of the coal-mining industry, they will take the initiative so to co-operate with the textile industry in its desperate plight, that Lancashire, which has to-night 100,000 superfluous men and women in its industry, may have greater hope of to-morrow.

I beg to second the Motion.

Speaking as a cotton operative, I want to express to the hon. Member for Penistone (Mr. Rennie Smith) the thanks of the cotton operatives of Lancashire for the very able, and I hope convincing, speech to which we have just listened. There is no doubt that there was, and is, very great need for the inquiry which has been instituted; and, speaking again as a cotton operative, I welcome that inquiry; and I welcome this Motion too. Much though I regret the need for it, I yet welcome it because of the opportunity which the Motion affords this House to discuss a problem which is affecting over 500,000 people directly, and millions of other people, and, if I may say so, the whole nation.

The hon. Member for Penistone has made my task comparatively easy. The array of informative statistics to which we have listened has, I think, put this House in possession of most of the salient facts which are affecting the industry today. We have long thought that the industry has been over-sectionalised. It has been built up, or has grown up, under a policy of drift. There are about a dozen sections in the industry; there are the buying, spinning, weaving, finishing, and marketing sections; and some of these sections are in turn divided into smaller sections. There is no affinity between any two of these sections; there is no co-ordination or co-relation between any two sections; and the resultant effect has been that always, right up to now, the spinning section has been a law unto itself, the weaving section has been a law unto itself, the finishing sections have considered the finishing sections alone; and we get this result. Taking 100 as the price of the finished commodity, we can bring the raw cotton from the cotton fields of America across the Atlantic, shock it, take it to the card room and through the spinning room, bring it from the card room through the preparatory department of the manufacturing side, weave it, and put it on the warehouse table of the weaving shed, for 47¼. When it leaves the warehouse table and goes to the finishing section, that costs on the average 52¾ of the 100. We want this inquiry in order to find, if we can, why it is that after the cloth is actually woven there is more than 50 per cent. added to its cost, and we hope that the inquiry will reveal that reason.

Up to now, with the exception of the experiments which the hon. Member for Penistone mentioned in his speech, it would appear that the only policy of the employers in the industry in any attempt to revive that industry, has been attacks on the wages of the workpeople; and, although I said a few minutes ago that there was no affinity between the various sections of the industry on the employers' side, we do find that whenever there is an attack on wages, they are able to get together, and they do in fact show some affinity and take concerted action when they are attacking the wages of the workpeople. This policy of wage reductions—and they have been very steep in their gradient—has not improved the industry one bit. The industry to-day, after all the tremendous reductions in wages which have been imposed upon the operative, is not one bit better, neither is there any more employment than there was when wages were at their highest. That is another reason why we welcome this inquiry. We are hoping that, as a result of the inquiry, indications will be given to the employers, a policy will be pointed out to the employers, and a course will be opened to them, enabling them to encourage any revival of the industry along more human and improved lines than mere reductions in wages.

It can never be said that the reason for the declension in the industry has been the high wages which the cotton operative has received. I say here quite definitely that the cotton trade never has paid to its workpeople a reasonable wage, and that the cotton industry is not pay- ing a reasonable wage to its workpeople to-day. May I give an indication of what those wages are? I know that the Board of Trade Gazette, immediately prior to the last reduction in wages, told us that the average wage of Lancashire cotton operatives was 36s. 10d. per week. Speaking with some direct knowledge of, and association with, the industry, I think that is a fairly reasonable figure for the Board of Trade to state, but in order to fortify myself as well as I could upon this point of wages, I have made a few inquiries within the last few weeks. We have in the cotton industry, on the weaving side at any rate—and that employs more than half the total number of cotton operatives—a practice of paying a substitute at a rate determined by the employer. If a weaver gets off his or her work for a day or two, the employer almost invariably indicates what the substitute must be paid, and the rate is generally fixed at a figure slightly higher than the average earning. This is what I found: that 9d. per hour is the rate to be paid by a regular weaver to anyone who substitutes him on his loom for a day or two, and that gives an average of 36s. per week. I think I am entitled to say, and I think I am entitled to ask this House to agree with me, that the wages are already too low, and that some other means must be found, if the cotton trade has to be improved, than wage reduction.

It is often said that the trade unions, not merely in the cotton trade but in other trades as well, are opposed to assisting the employers in carrying out experiments. So far as the section to which I am attached is concerned, we have never been opposed to co-operation with the employers in seeking to bring about rationalisation from within. Having said that, let me definitely express my agreement with what was said on this point by the hon. Member for Penistone, that if there is to be effective rationalisation in the cotton industry, it must be rationalisation that knits together the various sections. You cannot have rationalisation in spinning, weaving, and finishing with any hope of improving the industry. By that method, you would get three more effective organisations warring against each other. They would be three highly-organised bodies, using the strength of their organisation in order to get as much out of the other sections as they possibly could. The finishing section of the industry has been increasing its profits with greatly reduced work. In and around where the finishing industry operates, it has often been said that the industry went on half-time in order that it could bleed the other sections of the industry.

Rationalisation along sectional lines is no use, nor would it be in the least degree effective in improving the industry. I have here a letter from an employer. Perhaps I ought to say that cotton operatives have never alleged that any one reason has been responsible for the declension of the industry, but quite a number of factors are operating. In the letter to which I have referred the employer tries to prove, and partially succeeds in proving, that the policy of the late Government in returning to the gold standard handicapped all our exporting industries, and very heavily handicapped the cotton trade. I have here a document which was presented to the present Prime Minister. It was prepared by a number of captains of industry in their representative capacity, and it was signed by a number of men who have an interest in the industry as representing what is generally accepted as a fixed opinion upon this point. There is a paragraph in that document which says: contribute to the same contention. If we have an inquiry and it is thoroughly conducted, as I hope it will be, as a result we may find to what extent our monetary policy has affected and is responsible for the desperate condition of the cotton industry. I agree with the terms of the Resolution. I see that there are some Amendments standing in the names of a few hon. Members of this House. I want to anticipate those Amendments, or rather the moving of them, by reading from the official statement on behalf of the operatives, as submitted to the present Board of Inquiry, because it indicates the extent and degree of public control that we are not only asking for but hoping to secure. This is what the official document says: extent and degree of public control that we are asking for. Therefore, I hope that hon. Members who have attached their names to Amendments because of this very slight request that we are making will not press those Amendments too far. With the first part of the Motion everybody, I know, can agree. The second part, which seeks to implement the effect or results of the inquiry, is just as essential as the first part.

I listened to the earlier discussion to-day on the problem of over-capitalisation. There may be something in the contention that was urged from the other side, and, I believe, by one speaker on this side, but, when faced with figures such as these, one cannot help thinking, however plausibly our contentions are criticised, that, if an industry is loaded with capital that may be unremunerative, it is handicapping that industry; and when I remember the figures that were, I think, given this afternoon, showing that, while in 1913 the total capital per spindle stood at 14s., in 1927 the capital per spindle stood at 43s. 9d., it does not matter very much to me how much people may discredit the contention that that imposes a handicap on the industry, I cannot help feeling that it does, in fact, impose that handicap.

I was travelling in the train the other day with an employer of labour, and he recited these facts to me. They own a mill which cost £120,000; that is the total capital outlay that they have made on this mill. Some time ago they had an offer of £380,000 for that mill, the intention being to float it for £500,000. A condition of the sale was that the three brothers who now own the mill should continue to work it in the interests of the new shareholders. They refused to accept that obligation, because, said he, "We should have had to try to make a profit with a capital £500,000 out of an actual capital outlay of £120,000." However much you may discount our contention that over-capitalisation has had something to do with it, some of us cannot help thinking that it has. We want that inquired into, and we hope that the Committee will not overlook that point.

Another thing that we should like very carefully inquired into is the method of buying the raw material. I have here a book that was sent to me at the beginning of 1928. It was written and sent to me by Sir Charles Macara. Personally, I regret his passing. I think that Sir Charles would have been very helpful in any national attempt to reorganise the cotton industry, and I will read what he said on that point in an interview on the 20th September, 1927. Dealing with the present bewildering situation caused by persistent gambling in the cotton crop, he pointed out that

In addition to this abuse in the purchasing of the raw material, we are of opinion that the cotton industry is overridden by middlemen. We have a feeling, as we walk the streets of Liverpool and Manchester, as we see the trains disgorge their human freight at the stations of these two places, that there are far too many families living on the back of the cotton industry, and we are hoping that the inquiry will be able to determine whether it will not be possible to have a more economical method, not merely of buying our raw material, but of transferring the yarn to the manufacturer of the finished cloth and to those who need it for the uses to which they can put it. I have here an article from the "Manchester Evening News" describing the process of a piece of cloth after it is woven and before it reaches the ultimate purchaser. The Lancashire manufacturer or producer sells to the Manchester shipper, who sells to an English merchanting house in Bombay, who sells to an Indian merchant in Bombay, who sells to an up-country broker, who sells to an up-country bazaar dealer, who sells to the retailer or pedlar, who finally sells to the ultimate customer. At each stage a commission, or profit, is added, which in the aggregate adds 50 per cent. to 100 per cent. to the price.

We want, if we can, to find a better method of delivering our goods, a less expensive method, a method which sells the cloth at a cheaper price and gives to the maker a better wage, and there is no objection to the employer having a better profit than he has been having during the last eight or nine years. There is not a cotton employer in Lancashire who, when he sees his own goods in a shop window, is not amazed at the difference between the price that the shopkeeper charges and the price that he himself gets. All of them complain about this. All of them know all about it. I could never understand how it was, in view of this tremendous disparity between the cost to the consumer and the price the employer gets, that the employers themselves were opposed to an inquiry. One of our employers in my own town was telling me some time ago that he makes a bedspread at a cost of 18s. He sends it away for special embroidery work and pays another 17s. for it.

I can give you the employer's statement. I asked him to write it down for me, and he did.

There are three yards of cotton sheeting at 6s. a yard. I will give you good linen for that.

This was his statement to me. He paid 17s. for some embroidery work done on it.

If the hon. Member himself is anxious to take part in the Debate, by interrupting so often he is hindering his chance of doing it.

The employer sells the bedspread for 35s., and if he wants to buy it from a shop he has to pay £5 12s. 6d. for it. I think we have at least been able to persuade the House that there is need for an inquiry into the cotton industry. There is a tremendous feeling of unrest amongst the workers. They have seen their wages slipping from them from year to year—wages slipping, under-employment rife—and they are looking to this inquiry to find some way out of their difficulty. All we ask is full work for our people. They are prepared to work full time in order to get full wages. There is no better body of workpeople in the whole world than the Lancashire cotton operatives, and it is not enough, when we are pleading for them on the Floor of the House, that hon. Members opposite think it funny that we should be talking about the Lancashire cotton operative and his work. He wants work, and he is looking to the House to provide him with it. Find him the work and he will do it. I hope the House will unanimously pass the Resolution.

I beg to move, in line 2, to leave out from the word "industry," to the end of the Question, and to add instead thereof the words a quarter of an hour. We are all very grateful to the hon. Member for Penistone (Mr. Rennie Smith) for having introduced this subject and for ventilating an issue which is of vital importance to the people in Lancashire. We are also grateful to him because we have now heard at some length and in some detail what the Socialist policy of public control means in the case of the cotton industry. The hon. Member for Penistone has stated that he believes in the over-riding principle of public policy, and he talked a. good deal about rationalisation. We want to know what rationalisation means when it is described alternatively as public control. Mr. Holroyd, president of the Master Cotton Spinners' Federation, in July, wrote something, which I think is very true, of rationalisation. He said: for a year, and now it takes one silkworm, and that one is artificial. That has affected the cotton trade, too. It is probable that to-day there is too much capital and too much labour in the cotton trade just as there is in the cotton manufacturing industry in the United States of America. It is a difficulty which is analogous to the difficulty in the coal trade.

Undoubtedly what we have to do is not to go at great length over the causes of depression or to deplore the depression, but to approach the question with a view of ascertaining whether there are any ways in which Parliament or the State can help. In my submission, there are only two ways in which the State can be of assistance to the cotton industry. First of all, it is vital that the State must be economical. Two of the factors which have helped trade to carry on during the last year have been the de-rating scheme of the last Government, which has undoubtedly lifted a great load from our productive industries, and, latterly, the unhappy but necessary reduction of wages to which the hon. Member for Sowerby (Mr. Tout) referred.

There still remains over the whole country the great burden of high taxation. The vital fact that the cost of our social services in England has increased from £22,000,000 in 1901 to £366,000,00 in 1928 must have its effect on productive industry. It has been calculated that on one yard of printed cloth 326 of a penny represents the standing annual charge for social services—five-sixteenths of a penny—at a time when one-eighth of a penny in the cost of a yard may make all the difference as to whether you are going to sell your goods or not. The incidence of this heavy burden of taxation is one to which the State ought to have regard. Without wishing to raise controversial issues, I suggest that it is a disastrous thing for any Government in this country week after week to embark upon fresh outlays of public money in the shape of subsidies, doles, pensions, or what you will, at a time when above all else industry craves for the lightening of its heavy burden of taxation. That is one way in which the State can help. The second way is by the development of the Empire. There is no doubt that our best markets are within the Empire, and the best source of our raw materials in many industries, and an important source of raw materials in the cotton industry, is the Empire. Therefore, what the State can do to develop the Empire's productive capacity and to develop its wealth so that it buys more from the Lancashire cotton manufacturers is obviously in the best interests of our trade.

There is another point to which I should like to draw the attention of the President of the Board of Trade. It is the question of Japanese competition in the African Dependencies. There is at the present time a tremendous amount of piracy of British designs by Japanese traders. At the present time, the protection afforded to British designs in these African Dependencies is insignificant. In answer to a question of mine on the 11th November, I was told by the Undersecretary of State for the Colonies that in only two British Dependencies in Africa—the Gold Coast and British Somaliland, is there provision for the automatic registration of designs as registered in the United Kingdom. In most of these Dependencies you can only register a design on payment of a fee of 10s., and in some cases more. Of course, out of a thousand designs probably only half a dozen are successful—that is to say, a great many do not catch the public fancy—so that for every design so registered the expense would be very considerable. It is desirable that those connected with this industry should be able to secure the proper protection of their designs in these African Dependencies. That is one way, and not an unimportant way, in which something should be done to help the Lancashire trade in our overseas possessions, particularly in Africa, against unfair foreign competition. These are ways in which, I suggest, the State can be of use to the cotton industry.

Let us turn to what the hon. Member has suggested. He mentioned three ways in which he was hopeful that public control would help the cotton industry. First of all, he suggested that there should be a representative body, including the consumers, to discuss the position; that there should be a sort of Parliament of the cotton trade on which consumers would be represented. This has been talked about and written about for years, and the time has now come for action and initiative on the part of the traders. Any talk which may take place in a Parliament of that sort can have no influence whatever on the difficulties of the trade. The second suggestion was that there should be State control over the supply of raw material. I suppose that the idea is that it should be collected and then rationed by the State as in the case of certain industries from time to time during the War. I have no doubt whatever that that is antagonistic to the views of everybody actually engaged in the industry. Each concern uses its own special type of cotton, and it knows where to find it and how much to pay for it, and I do not think that they would tolerate for a moment the idea of a State monopoly. His third idea is a central selling agency. He called it a national selling organisation. I really ask the House to show little regard to a project which is going to supersede all the merchanting which has been carried on for generation by traders in Lancashire, and which has won the foothold which our trade enjoys in every corner of the world. Where individuals who know the language and customs and habits of the different countries have failed, is it likely that success will be obtained by some organisation of a Government Department controlling all the manufactures of Lancashire and doling them out to customers through selling agencies?

The hon. Member who spoke last said that there were far too many middlemen, and that he would like to see them destroyed. My constituency happens to be not entirely but very largely concerned with the operations of middlemen—clerks in business houses, carriers or packers. These men are not producers, but the idea that they should be eliminated strikes me with horror. The House must remember that the division of labour makes ultimately for cheapness, and it is by this division of labour, whereby you can have the greatest expert skill in every branch of the trade, that Lancashire has gained its position in the world.

There is no magic in such phrases as rationalisation and combination. The Mover of the Resolution rightly alluded to the rise in prices caused by the combinations of bleachers, finishers, printers and dyers. That has not been of any help to the spinner and it has not been of any help to the merchant. At the present time there are in Lancashire all sorts of voluntary associations pursuing avenues which they think are best devised for enabling Lancashire to emerge from bad times. The joint committee of cotton trade organisations is hard at work and there is already a process of large scale production; also some manufacturers are going direct to the foreign consumer, and there is also a growth of combinations amongst employers in various sections of the industry. They will ultimately find their solution of these difficulties, as in past times. The difficulties are to some extent world difficulties. They are due very largely to causes which no organisation could have controlled or could have overthrown.

The Amendment which I move is one which substitutes for the references to public control, but welcomes the inquiry into the cotton industry It is because I believe that those qualities, and not State control or State interference, which have won for Lancashire and its people and its trade their wealth and fortune, are the qualities, and the qualities alone, that will make for the future welfare of the cotton industry, that I move the Amendment.

I beg to second the Amendment.

9.0 p.m.

All of us who are interested in the Lancashire cotton trade must be grateful to the hon. Member for Penistone (Mr. Rennie Smith) for having put down his Motion, and we must also be grateful to him for having introduced it in a thoughtful and moderate speech which clearly outlined the situation in Lancashire. The Lancashire cotton trade is an unnatural trade. We bring our raw material over many thousands of miles across the seas, we spin it, weave it, dye it, finish it and pack it, and then we send it back again over many thousands of miles, frequently to the same places whence the raw cotton originally came. It is a trade which in the past was founded upon efficiency; a trade which maintained its position in the world to a great extent on monopoly, until the War. When the War came, our great markets could not find a means of supplying themselves and were put to the necessity of considering the making of cotton goods for themselves. In these circumstances, when the War was finished these new producers of cotton goods maintained their markets and we found ourselves with new competitors, with a productive machinery which is capable of making 6,000,000,000 yards of cloth, with only an output of 4,000,000,000 yards of cloth. We are, therefore, faced with a situation in which we are producing only two-thirds of what we ought to produce.

In spite of the depressed condition of the cotton industry, the House ought to bear in mind the fact that of that reduced quantity of production we are exporting 80 per cent. of the total volume of our production. It is, therefore, to the export market that we must look if we are to get a solution of our problem. We cannot expect to find by any considerable increase in the purchasing power of the home market a means whereby the Lancashire production can be maintained at its proper level. It is to the export market that we must look to find a solution of our problems. Why is it that we are not exporting abroad the quantity of manufactured materials that we did? There is one reason, and one main reason only, and that is the question of price. We have to produce goods at a lower price if we are to sell in competition with protected countries in the neutral markets of the world. I should like to quote from the Senior British Trade Commissioner in India regarding the increase in the imports into India of Japanese products. He says:

The point is emphasised by an examination of the position of competitive producers. The mover of the Motion told us something of what has been happening in competitive producing countries like Japan, China, Italy and Czechoslovakia. In Japan, up to June of this year, the hours worked per day were 20, worked in two shifts. But in June of this year, due to the restriction of night work, there was an alteration in the hours of employment. One would reasonably expect that by a reduction of the hours worked you would see an increase in the cost per unit of production. Nothing of that kind has taken place. In spite of a reduction in the hours worked they have increased the number of spindles, and they have done another extraordinary thing; they have reduced the number of operatives. In Japan, as the result of a decrease in the hours worked there has been an increase in production per unit of person and an increase in production per spindle, a state of affairs which should make us realise that our competitors are efficient, and are increasing their efficiency as time goes by. In China it is sufficient to quote the Report of the Commercial Secretary at Shanghai, dated the 25th September, 1929: organisation is being turned from a national asset into a national liability, this House by directing its attention to the subject can advance the cause of reorganisation, and I think, in fact, we shall have done a great deal of good in that direction.

I am coming to that. Hon. Members opposite, I understand, are asking for rationalisation. Many speeches have been made with which I have not time to deal, but some of them indicate that there is a little misapprehension as to what rationalisation means. Rationalisation is not combination. I am with hon. Members opposite in their desire for rationalisation. In my view the method by which rationalisation ought to be attacked, is by large scale amalgamations, linking up the horizontal sections in the industry, linking up the vertical sections and by the creation of a general staff for the whole industry. As far as the Motion goes to that extent I agree, but the objective of rationalisation must be appreciated, otherwise rationalisation will be useless. The objective is to put into the markets of the world Lancashire goods at a lower price than they are being sold to-day. That is the internal factor.

There are other factors connected with the trade, concerning which this House is much more competent to deal, with which Lancashire cannot deal—external factors. Consider the markets, India, Egypt and China, the great markets of the East. India, on the basis of a protective tariff, is making more and more of her own production. In Egypt there is a demand for nationalisation, and a great danger that she too may decide to take some steps which will greatly interfere with Lancashire production. In China there is now complete tariff autonomy. The imports into India before the War from the United Kingdom were 97 per cent., and from Japan a negligible quantity altogether. Now the imports from the United Kingdom are 78 per cent. and from Japan they have risen to 16 per cent. Italy has increased her imports into India during the last three years by over 100 per cent. This House, on whom the responsibility rests for giving increased powers to backward nations, must bear in mind when making these generous gestures to nations of this character, suggesting that they should have tariff autonomy, that whilst we are helping them, or imagining we are helping them, we may be creating unemployment and destitution in Lancashire.

These are factors which the House of Commons ought to bear in mind. It has been said that the solution of our problem may be found, apart from these great world markets, by increasing our exports to Empire markets. I, personally, would like to regard that expectation hopefully, but I am afraid the facts rather belie the expectation. Australia, our greatest Dominion market, is contemplating an increase of 50 per cent. on the tariff against Lancashire cotton cloth. She has been for three years dallying with the idea of a tariff of 20 per cent. against cotton yarn, and we do not know from day to day when that tariff is going to be imposed, or whether it is ever going to be imposed. In circumstances like these, it is difficult to consider that these great Dominion markets are, in fact, going to be consumers of the great volume of production which Lancashire must deal with if she is to return to full prosperity. Canada before the War used to take 80 per cent. of imports from us and 20 per cent. from the United States, but now the situation is nearly reversed, and she takes 37 per cent. from us, and 63 per cent. from the United States. She is contemplating imposing conditions of preference which will be very onerous on the Lancashire manufacturers, which will make it almost impossible for us to utilise American cotton, and which will react to the betterment of the United States and against Lancashire. Therefore, anxious as one is to consider this outlook for the extension of our trade with the Empire, one cannot think that the great Dominions will be able in any considerable way to make up for any failure on the part of the great markets of the Far East,

There are one or two other external factors which the House ought to bear in mind. We have had some reference to the national overhead costs imposed by Parliament. When you have to make a commodity, which has to be sold at a competitive price in the international markets of the world, it is ridiculous to ignore the fact that in the manufacture of those goods one is affected by overhead costs nationally imposed, which cannot be carried forward to the consumer. If you are going to consider the further export of Lancashire cotton you must consider the question in relation to the volume of overhead national costs which this industry can bear. I do not want to introduce extraneous matters, but I would like to say a word or two on what I regard as an extremely important matter with reference to the International Bank which I understand is going to be set up in Switzerland. Here we have the suggestion that we manufacturers who have to sell our goods at an international price level, are going to have national costs imposed upon us, and the ability to deal with those national costs is going to be controlled by an International Central Bank. It seems to me a most astonishing thing to have a Central bank. for central banks instituted and backed up by the Socialist party—a party which definitely undertakes—it has undertaken many things in the past and we have yet to see those undertakings carried out—to look after the interests of the workpeople in this country as a producing community. That party is, in fact, passing legislation which in my view it will be extremely difficult for this country to deal with owing to the fact that we must consider ourselves a producing community.

I turn from that point to the second external factor, which is the question of financial policy. We have had many references to the "boom" period, and I do not want to say any more than this, that during the "boom" period the Lancashire cotton trade contracted very great debts—debts which, by the financial policy of the Government, have been increased in value something like 70 per cent. If attempts at rationalisation are to be tied up with attempts to liquidate those debts, then I do not think we shall get that unity of policy without which no rationalised system can go forward. I realise the anxiety of other hon. Members to speak, and I will be as brief as possible, but I wish to refer to the question of the whole credit system on which our country's financial system is based. I do not believe that that credit system is suitable for the restoration of the Lancashire cotton trade. Last year we lost £.38,000,000 of gold, and America gained £70,000,000, and France gamed £70,000,000. Our credit system is based on those gold reserves, and it does not seem to me that there is anything in the industrial history of these nations which ought, in fact, to have made it more difficult—as was the case—for Lancashire cotton goodie to be produced, and more easy for cotton goods to be produced in France. That is a matter which is under inquiry and which this Parliament has a definite responsibility to deal with.

My conclusion is that you must rationalise; that this House must be careful in regard to the powers with which it invests the undeveloped peoples of the Far East, and that the Government must see to it that the financial policy of the country is helpful to producers and is not designed merely to assist the rentier class. On the matter of public control dealt with in the Motion, I think the proposal that the Lancashire cotton trade should be given over to public control is extremely unfortunate. I do not think that any trade could have been selected which is more unsuited to any measure of public control. I know of no trade union leader in the Lancashire cotton trade who has expressed himself in favour of any kind of outside interference in the trade, and I know of many who have expressed themselves in the opposite way.

The hon. Member incites me to quote. Mr. H. Boothman, Mr. J. Crinion, the late Mr. E. Judson and Mr. W. Mullin were responsible for this statement—

I agree, and I mentioned the fact that it was "the late Mr. Judson." Mr. Boothman is well known as a leader of the operative spinners.

The statement of these gentlemen was:

"On the subject of arbitration the operative leaders pointed out that in the past when disputes had been referred to arbitration, they had not received the consideration to which they thought themselves entitled. It did not, they said, require much ability to divide by two the amounts which separated the operatives' demand from the employers' offer. That was usually the result of arbitration."

The late Member for Oldham, who has himself advocated some kind of public control in the cotton trade, had recently a very unfortunate example of outside interference. It may be remembered that there was a demand for a reduction in wages, and the organisation which he represented stated that it desired arbitration. The employers and the spinners were not entirely of that view, but because there is such a moral force behind the word "arbitration" they fell into line. The result was that, although it would be admitted by those who know the details of the subject that, on the whole, there was a better case for a greater reduction in the spinners' wages than in the weavers', they got an all-round reduction in wages, and the weavers have been dissatisfied ever since. In these circumstances it seems to me extremely significant that those who know most about it realise that the Lancashire cotton trade is absolutely unsuited to external interference and that any measure of public control would turn over the industry from being, as it is now, not in full production but still giving good employment to a large number of people—into a devastated area.

Whatever difference of opinion there may be in this House on the matters which have been brought forward this evening, I think we shall all be agreed that hon. Members opposite have put to good purpose the fortune of the ballot in bringing before the House of Commons a question of such great importance as this. The industrial prosperity of Lancashire was always deemed the strength and the pride of England. It has diffused wealth and well-being throughout the whole nation. But now the cotton towns, such as that which I have the honour to represent, have long been in the trough of depression. A third of their productive power is shut down. The wages of the workers—none too high, far from it—are reduced by short time and part working, and in many cases they are a miserable pittance. Large numbers of mills are closed or working part time. Only a few days ago I was in a large public hall in the town of Darwen which had been taken over by the Employment Exchange in order to accommodate the crowds of unemployed women who every Friday are obliged to present themselves for unemployment benefit. Mills are put up for sale, but they find no buyers. Some sections of the industry, it is true, are still prosperous, working full time and making fair profits, but these are exceptional. Over Lancashire as a whole there has been resting for years a cloud of depression more gloomy even than the smoky skies.

These facts are not due only to the orgy of speculation which swept over a large part of the industry in 1920. The House heard this afternoon a great deal about over-capitalisation. It has undoubtedly worked much evil in the cotton trade and has seriously impaired the financial soundness of a large part of the industry, but it is not the sole, or even the main, cause of the depression which prevails. That is proved by one very simple fact. A number of mills which were not "turned over" and subjected to financial reorganisation are themselves seriously depressed and find it impossible to make profits. Others that have ended their inflation and written down their capital to a minimum, still find themselves unable to make profits. The direct causes are very simple and have been expressed in various ways by hon. Members who have already spoken. Put at its briefest, the principal cause is this: Lancashire has always been an exporting county. The cotton trade is an exporting industry. Four-fifths of the produce is now, and always has been, sent abroad. In 1913, the year before the War, Lancashire sent abroad six and a-half thousand million yards. Last year Lancashire sent four thousand million yards. One-third of the trade has gone.

The hon. Member for Moss Side (Sir G. Hurst) said there were world difficulties that affected the cotton trade. The position would not be so serious from a national point of view if it were really the case that all the world is being affected equally. It is not so, because in that period world consumption of cotton goods has increased by 10 per cent., and yet, at the same time, we in Britain have lost one-third of our trade. One-half of this loss has been in one single market, namely in India. Of that great reduction which I have men-mentioned, 1,200,000,000 yards have been lost in India alone. The duties on British goods entering India were at the rate of 2½ per cent. and now they are 11½ per cent. The consequence of that one change has been that the imports from Britain have gone down by over 1,200,000,000 yards, and the production in India has gone up by 1,200,000,000 yards. At the same time the increasing demand of the Indian people has been supplied by Japan, which has come in with an importation of 240,000,000 yards. In China our trade has been knocked to pieces by Japan. The Japanese are producing standard cloths by mass production methods. Their production is on a very cheap basis, and they are able to permeate into the up-country markets of the kindred race in a very efficient manner, and thereby they have largely replaced British products in China.

That, then, is very briefly, a description of the present situation and its main cause. Now the House has been addressing its mind to possible remedies. I was wondering whether anyone would mention de-rating. The hon. Member for Moss Side did mention it and indeed said it had lifted a great load from British industry. Let us see how much of a load has in fact been lifted. In order to bring the matter in a concrete fashion to the minds of hon. Members, instead of dealing with millions, let us deal with a particular mill. I will take one mill with which I am well acquainted, a mill of moderate size. Its annual product is worth about £250,000, and the relief to the rates from that mill, which is a typical mill in a email Lancashire town, is £214—that is to say, £214 relief to facilitate the sale of £250,000 worth of goods.

Might I inform the right hon. Gentleman, in support of the advantages of de-rating, that for the average spinning in Bolton and Oldham, which is roughly about 100,000 spindles, the advantage in rating is from £1,200 to £1,500 in a year?

I think I should be correct in saying that if you could take de-rating from the raw material to the finished article, the result is a decrease in the cost of production of something in the neighbourhod of 3 per cent.

That is very surprising, and I should desire to see it very well proved before it could be accepted. If you take a particular mill and the charge for a particular article produced in that mill, in the one that I am thinking of now, each loom, I am informed by the manufacturer, produces a product of the value of about £5 a week, and the amount of de-rating is rather less than 1d. per week. That is the ratio so far as he, as a manufacturer, is concerned on £5 worth of product, to get relief to the extent of about 1d., at the cost of the rest of the community.

Hon. Members opposite have pinned their faith to an inquiry. We, on these benches, do not oppose an inquiry. Inquiries are often very useful, and I am not one of those who criticise the present Government for setting up all these various Committees. It is frequently, in fact usually, most desirable before attempting legislation to have a subject thoroughly explored by means of competent investigators, and one inquiry in particular which has been set up by the Government may be of immense importance in relation to this very question of the cotton industry, namely, the inquiry into currency and finance, a matter which is undoubtedly of vital importance to the whole of this issue. But, with regard to the general conditions of the cotton industry, I do not know that there is very much to be inquired into. The facts are pretty well known. It is frequently a maxim with Governments, "When in doubt, set up a Committee," and I rather suspect that that is what has been done in the case of the cotton industry.

In 1924, when unemployment was rife, and everyone was clamouring to them for a policy, they set up a Committee, the Balfour Committee, and the Balfour Committee ambled on from then until this year, and issued its report on the cotton industry in February, 1929, after four and a-half years of inquiry; and the outcome has not been any effective recommendation of any kind whatsoever. But this inquiry into the cotton industry which is being set up now is of an unusual kind, for it is an inquiry presided over by one Cabinet Minister, my right hon. Friend the President of the Board of Trade, assisted, I think, by one of his Cabinet colleagues, and by several others. Cabinet Ministers are exceedingly busy men, and how is it possible that members of the Cabinet, charged as right hon. Members are, can sit down day after day and week after week to a highly elaborate and technical inquiry into all the facts of the cotton industry, and issue a report something like that of a Royal Commission? I much fear that the inquiry will suffer through the inevitable pre-occupations of its leading members. The right hon. Gentleman is already staggering under a coal sack, and now, on to that, is to be laid a bale of cotton.

Then, lastly, I would say about the inquiry—and I put it in all candour to hon. Members opposite—suppose for a moment that the present condition was prevailing in the cotton industry, and a Conservative Government was sitting on those benches, or even, if I may stretch hon. Members' imagination so far, a Liberal Government was sitting on those benches, and that Government had said, "The way in which we are going to deal with the cotton problem is to appoint an inquiry." [An HON. MEMBER: "We asked for it."]—I know, anticipating that you had nothing else to offer. I can imagine the storm of derision and indeed of obloquy that would fall on that bench at the notion that Parliament could be put off by a mere inquiry, which should proceed on its dilatory course for a year or two possibly, until the acuteness of the question had perhaps diminished.

This Motion goes further than an inquiry. It suggests also some measure of public control. I listened with great attention to hear what form the public control was to take. The mover of the Motion, the hon. Member for Penistone (Mr. Rennie Smith), in a speech which was admirable in intention but, I must say, vague in the extreme, gave us very little enlightenment. He mentioned three points: First, that the State should encourage the Empire Cotton Growing Association. We all agree about that, but that is not State control. It has existed already, that State encouragement of the Empire Cotton Growing Association. Secondly, he suggested that the State should set up a selling agency with the help of the Legations in different parts of the world, in order to promote British trade. That is not exactly control, and, on merits, I doubt greatly whether that suggestion would command the assent either of this House or of the country. At a time when we constantly hear criticisms of our business men for being lacking in keenness, and push, and energy in travelling over the world and placing their goods here and there, the suggestion is that we should relegate the whole matter to the State, to be worked through some organisation like the Consulates, and it is by those means that we should be able to dispose of our cotton products in an increasing degree in all the continents of the earth.

The hon. Member's third suggestion was that the State should give financial facilities, but it is not financing that the cotton industry needs; it is profits. [An HON. MEMBER: "Oh!"] I mean the possibility of earning profits. If an industry is conducted at a loss, it obviously cannot provide employment or continue indefinitely, and, when I say that it needs profits, I mean that, in order to promote its prosperity, there must he the possibility of selling the goods that are produced on a large scale in a remunerative way. For the State merely to provide finance might indeed, at considerable risk, give capital at 1 per cent. or something more below what it could otherwise be obtained at, a risk which I think the State ought not to bear, but in any case that measure certainly could not convert the present depression into any degree of prosperity. The hon. Member said finally that the State ought to give definite leadership to the industry. I am afraid that the leadership which was given in his own observations can hardly claim that characteristic.

The Seconder of the Motion, the hon. Member for Sowerby (Mr. Tout), again referred to financial assistance, and then he proceeded to suggest that the State control should take the form of compulsory reorganisation. How is the compulsion to be applied? I do not want to delay the House by going into details, but I feel certain that if he would try to draft into a Bill, or even to draft into the outline of a Bill, what he calls compulsory reorganisation, he would find it impracticable to frame legislation on those lines. His only other suggestion—I do not think I am omitting any definite suggestion—was that the State ought to go into the market and buy the raw material for the industry. There, again, it is extremely unlikely that State purchase of cotton all over the world, in the rapidly fluctuating markets of America and elsewhere, would be likely to serve the industry better than the present methods of purchase. For our part, we do not accept any of these proposals. We do not believe in the substitution of political management for business management in the conduct of a great changing, keenly competitive industry such as this. If this is the issue before the House, I shall find myself obliged to vote against that proposal. Of other methods of remedy, there is the Amendment which has been put down by the Protectionists. I confess that I am a little surprised to find that the Protectionists should have entered upon the scene when the cotton industry was under discussion, but the hon. and gallant Member for Bournemouth (Sir H. Croft) is never lacking in courage, however much some of us may think that he is lacking in political wisdom.

If the right hon. Gentleman will forgive me, I may shorten his speech by saying that there is very little Protection in my Amendment, but, as he has told us that India has made her cotton trade prosper by Protection, there may perhaps be something to be said for it.

Very much at the expense of the consumer. As for the little Protection that there is in his Amendment, I am sure that the hon. and gallant Member has put in all that he dare. He is asking, in the first place, that, for the sake of the cotton industry, the State should give security in the home market. There is security in the home market. The importation of cotton manufactured goods is perfectly negligible, and of no importance whatever. Then he suggests that the Government ought to negotiate for fairer terms for our products in the other markets of the world. Certainly, if we can, but there is no Protectionist country which is able to get better terms in the markets of the world than we can. Their use of the tariff instrument has proved perfectly ineffective to secure any better conditions of entry into these markets than we, an almost free trade country, are able to get. The development of Empire markets, undoubtedly, would be a great advantage, and we hope that whatever efforts may be possible will be used in order to secure that aim. In the meantime, the hon. and gallant Member and his friends would, in our opinion, strike a deadly blow at the Lancashire cotton trade by putting a barrier of duties round these shores, checking the imports that come into this country. Our cotton exports are not given away. Lancashire does not send out her goods for nothing. They must be paid for, and they can be paid for mainly or almost entirely, by the goods that come in. If you put duties on the goods that come in here, you hinder the cotton goods of Lancashire from being paid for. That is one of the reasons why we regard Protection as futile.

But in no trade is Protection so futile as in the three great industries which now supply the greatest number of unemployed. The great bulk of our unemployed are in the three industries of cotton, coal and building. [An HON. MEMBER: "And shipbuilding!"] Shipbuilding also is a great industry which is seriously depressed. None of them in any appreciable degree could be benefited directly or even indirectly by protective tariffs. What then can be done? Nothing is more annoying than for hon. Members to devote themselves entirely to negative criticism, and not to suggest their own proposals, and I would very briefly mention several courses which we on these benches think should receive the closest attention of the House and of the Government. In the first place, we all agree that the principal measures of amelioration for the cotton industry must come from within the trade itself. Efficiency of production, including research, and efficiency of marketing are of enormous importance. There is also the better organisation of the industry generally, which is usually called rationalisation. The Amendment which is now before the House would strike out the references in the Motion to this most important factor, and therefore I am afraid that we shall not be able to vote for it.

Re-organisation is proceeding to some extent in Lancashire, but the extent is far from being adequate. We ought not to suggest amalgamation of the whole of the industry into large mass production units, because the Lancashire trade is highly diversified, and there are many parts of it which are still prosperous, which are specialised, and which appeal to particular markets. It would be a profound error to sweep them all into a few single units, which would probably depreciate the standard of efficiency of the industry as a whole. Unquestionably in the eyes of most observers, both from within the trade and from without, there is need for combining a number of the old-fashioned producing units, which are not suited to the modern world, and for creating far more powerful units of production, more powerful in their capacity for research, for efficient production, and for successful marketing.

There is no danger that monopolies will be established, for the competition both abroad and at home will certainly be too keen. In one branch of the trade, however, a monopoly has been established. A complete combination has been effected in the finishing end, in the bleaching and dyeing industry. I do not think that we should be wise to wish to prevent or to destroy combinations of that kind. They may be most efficient, but they have their dangers, and they may be oppressive. There are many complaints in the cotton trade with regard to the bleaching and dyeing industry. Opinions differ, defences are offered, but it is a technical question, and I should not venture to express a personal opinion. The fact remains, however, that there are widespread complaints in the cotton trade among manufacturers with regard to the finishing end of the trade.

I am one of those who believe that the State cannot with a spirit of indifference leave all monopolies to act as they choose. There must be a measure of public control, and where it can be shown that an industry has assumed a monopoly, or a quasi-monopoly, over the whole or the greater part of some industry or service covering the whole country or an important part of it, there should be, in our judgment, statutory powers in the hands of the Board of Trade to insist that such a corporation—which we would term a public corporation—should work with a very large measure of publicity, so that the consumer should be able to know its profits, and should be able to form an opinion whether they are exces- sive or not, so that, if it is alleged that they are excessive, it should be lawful for special inquiries to be held, and, in the last resort, for control to be exercised over the prices that are charged. All these suggestions have been worked out very carefully by some of my hon. Friends and myself, and have been laid before the public some time ago, and we nope to have an opportunity of bringing them before Parliament. Measures of that character should be applied to the finishing industry of the cotton trade, as well as to petrol, milk, tobacco or whatever form the monopoly may take.

The next point is this. In 1920 the Dyestuffs Act was passed. Until then a manufacturer could obtain his dyes from any part of the world, wherever he could get them cheapest and best. Now they can only be imported with a Government permit, and the dyeing of cloth and yarn is, it is believed, appreciably dearer now than it would have been. [HON. MEMBERS: "No!"] Lancashire protested to the late Government and sent a deputation on this very point, but the late Government turned a deaf ear. The Act comes to an end in January, 1931, and I would suggest to the right hon. Gentlemen opposite, or to their successors, that they should consider very carefully whether the Act should not be allowed to terminate.

Reference has been made to the production of cotton within the Empire. That is being done already, through the efforts of the cotton trade, and with great success. That is the way to develop your Empire, not by means of artificial stimulants and larger tariffs, but by energy, education, enterprise and careful and prudent investment, so that great industries are developed for the advantage of the outlying portions of the Empire and the Mother Country as well. A few weeks ago I put a question in the House to ascertain the facts, and I was informed that whereas 20 years ago this country drew £1,000,000 worth of raw cotton from Empire countries it is now drawing £8,000,000 worth. Then we got one-fiftieth of our supplies from the Empire; now we get one-ninth of our supplies from the Empire—and we may hope that the figure will continually increase; and in exchange we are able to send out manufactured goods of our own to pay for the raw material imported.

Next—I am dealing with these points as compactly as I can—I suggest that the Government should not be slow to seize every opportunity to co-operate with other nations in raising the international standards of labour. I do not think any reference has yet been made to that point to-night, but I regard it as of great importance. The more the labour conditions in other countries can be raised to our level the better it must be both for their working people and for our own country. By a speedy ratification of the Washington Convention on Hours—with such amendments as may be found to be necessary—the Government will be doing much to assist the cotton trade in securing a fairer competition among the various countries of the world.

My last two points are of a more general character but even of greater importance than those I have mentioned. At the Economic Conference at Geneva two years ago, where 50 countries were represented, a resolution was passed with unanimity stating:

My other point is this: Every effort should be made by every Government to lighten the burden of taxation which is our inheritance from the War, and presses so heavily upon all industry. By lightening the burden of taxation you would cheapen the cost of living. I think the present administration should pay more scrupulous regard to the importance of this matter to all industries, the cotton industry amongst others, in their administration of national affairs, as one means by which they may help our country to reach a condition in which the standard of life of the people shall be raised and at the same time the cost of production of its manufactures should be lowered. The two are not incompatible with each other. Both aims ought to be pursued—to raise the standard of life of the population and at the same time lower the cost of the products which we send into the markets of the world. That can only be done by intense national effort in many directions, through good education, through high national efficiency, good communications, lighter taxation and a free exchange of commodities. That is the general policy which I suggest it is wise for States to adopt, and under which all our industries will benefit, our great cotton industry not least of all.

10.0 p.m.

Though I have had considerable experience as a public speaker I find it somewhat of an ordeal to address this House for the first time. Were it not for the fact that I know the House treats a maiden speech with courtesy and consideration I should find it a very trying ordeal. In considering the Motion moved by the hon. Member for Penistone (Mr. Rennie Smith), it is well to keep in mind that we are considering not only the interests of Lancashire but the interests of Britain as a whole. Britain lives by importing raw material, manufacturing it and exporting it, and in pre-War days our greatest export was cotton. The fact that we in Lancashire have lost one-third of our export trade hits the entire country, although it hits Lancashire worst. I think it was the hon. Member for Moss Side (Sir G. Hurst) who said the loss was due to foreign competition, to low wages in Japan and long hours in Japan. I would remind the House that the Cotton Yarn Association, in statistical reports already issued, state that in India labour costs per piece are higher than in Lancashire, that in China labour costs per piece are higher than in Lancashire, and that in Japan labour costs per piece are certainly not lower and are probably higher. That report from the Cotton Yarn Association, composed of employers, is backed by a report issued from the workers' side, after investigations had been made by a deputation sent to Asia, of which the hon. Member for Bolton was a member. In that report it was stated that owing to the low production of native labour, labour costs in Lancashire are considerably below those in Asiatic countries. I note that in their report, both the Cotton Yarn Association and the members of the deputation from the United Textile Factory Workers' Association agreed that it was extremely difficult to make comparisons, but after their investigations they were convinced that their report conveyed the true aspect of the labour costs in a competitive sense. If that is true—and both sides are agreed upon it—then surely low wages and long hours are not the competitive factor which has lost us the cotton trade in India and in China, and has taken that cotton trade to Japan. Surely there is some other factor which accounts for it? I know full well, and so does everybody else who have given considerations to the cotton trade, that there is more than one factor which accounts for the present state of the Lancashire trade, but the main factor in the loss of our export trade was the recapitalisation of the cotton industry in 1919 and 1920—a factor which cannot be overcome merely by talking about reorganisation, or even by-carrying it out. Much of the dead wood of the finance of the cotton trade, as Sir Charles Macara well said, will have to be cut away before the cotton trade can recover from its present depressed position.

The organisation of the cotton trade, apart from the financial arrangements, is another factor which largely accounts for the present depressed condition of the cotton industry. The hon. Member for the Sowerby Division (Mr. Tout) pointed out, quoting from Sir Charles Macara, that speculators had added £300,000,000 to the cost of raw cotton; but Sir Charles Macara went further, and brought that addition to the bale. He said that the speculators at Liverpool and New York had added 12s. to the price of the bale, without contributing a single penny piece of value. That is one factor which accounts very largely for the present condition of the cotton industry. When we come from the raw cotton to the spinning and manufacturing, we find that the whole industry is in a state of chaos; there is no organisation at all. There are more than 450 companies managing the industry, quite independent of each other, without any cohesion or consultation, controlling the production of cotton cloth in Lancashire. Considering those 450 companies, may I quote from Professor J. M. Keynes, who wrote in the Journal of the Royal Statistical Society in 1928. In dealing with the number of companies which control the cotton industry he pointed to the huge and useless army of directors which the cotton industry has to carry, and said:

In the "finishing" of the cotton industry matters are even worse from the worker's point of view; and after all, the worker has just as much interest in the well-being of this industry as has any shareholder who has put capital into it, or any bank which has lent money on mortgage. The finishing end of the industry has been well rationalised and well combined. Five combines control the entire finishing end; and what is the result? Mr. F. S. Winterbottom, writing in a series of articles for the Sunday "Observer"—Mr. Winterbottom is connected with the Manchester University and is well known in the cotton industry—said: that they were incorrect; but no one did, so presumably, in view of the fact that the Cotton Yarn Association allowed those figures to go without challenge, they are worthy of acceptance.

But from the workers' point of view there is something worse in the finishing end of the trade than just that part of it. One of those combines has a large mill in the constituency which I represent in this House. They are making huge profits, as was pointed out by the hon. Member for Penistone. They have managed to distribute, during the last five or six years, bonus shares equal to one-fifth of their total capital; they have managed to make profits which have ranged from 12 per cent. to 20 per cent.; and yet now the workers employed by one of those combines in Stalybridge are working, and have for several years past been working, three or four days per week—sometimes three and sometimes four. If the effect of rationalising and organising the cotton industry is going to be to put the worker on short time, worse even than that which he has been suffering, I am afraid that organisation and rationalisation will not, from the workers' point of view, solve the problem.

Before I leave that topic, may I add that Professor Daniels and Mr. Jewkes, in a series of articles which they contributed to the "Manchester Guardian," stated that if the cotton industry of Lancashire were properly organised, there would be 100,000 surplus workers. I am not looking with pleasurable anticipation to organising the cotton trade in such a fashion that it will merely turn into another coal problem. If the industry is to be organised—and it must be organised—if the cotton trade is to be rationalised—and it must be rationalised—then these things must be done in the best sense, with the object of giving to the worker the fruits of that organisation in the shape of more leisure and better wages.

I would like to commence by congratulating the hon. Member for Stalybridge (Mr. Lawrie) upon having made such an excellent and thoughtful maiden speech, and upon taking such a keen interest in one of the great industries of our country. May I add my thanks to the Mover of the Motion for giving us an opportunity of debating such an extremely important subject. May I also say that perhaps the best way in which hon. Members can express their appreciation of this opportunity is by cutting short their speeches in order that a larger number of hon. Members may take part in the Debate. The subjects raised by private Members' Motions are those which touch very closely the interests of our constituents. I know that a large number of hon. Members desire to put forward their points of view. I find myself rather in agreement with the right hon. Gentleman the Member for Darwen (Sir H. Samuel) who spoke from the Liberal Benches. I should have preferred the last Amendment to this Motion on the Paper, because the one we are discussing undoubtedly cuts out much of the original Motion with which we are in agreement.

The original Motion welcomes the setting up of an inquiry. I do not know that we can go so far as to use the word "welcome." If the Government feel that they are in need of some education on this subject, it would be ill-befitting us to prevent them having this opportunity. I do not know whether the President of the Board of Trade is going to wind up the Debate, but we should like to hear exactly on what lines this committee is going to work. Is it going to inquire only into the causes of distress in the cotton industry, or is it going to inquire into the best way of improving the conditions of that industry. I do not think that we want an inquiry into the causes of the distress in the cotton industry. Everybody knows that the main cause is the increase of production in what used to be our consuming countries. The War accelerated that state of things. Take, for example, Japan and other countries. During the War they could not import as much as they wanted from England, because we could not find the ships and that tended to accelerate their own production. The trouble was that at the end of the War the cotton trade found itself faced with a dual attack from both directions. One can stand a frontal attack, but when you are also attacked from the flank your difficulties are greatly increased.

After the War, the Lancashire cotton industry found itself faced with a great increase of cheap production of cotton goods abroad, and at the same time with a great rise in costs at home. The whole deplorable state of the industry at the present time is summed up on the one word "price." The real reason why we are not able to employ as many men as we did, and to pay the same wages, is that we are unable to sell the goods; and the reason for that is not their quality, but simply that the price is too high for our old customers to pay.

With the next sentence of the Motion I think the whole House will be in complete agreement, namely, as to the need for a comprehensive reorganisation of production, distribution and marketing. It is the production side in which I am most interested, if by production is meant the actual production of the raw cotton. I can assure any hon. Members who take an interest in this industry that it would well repay them to study the activities of the British Cotton Growing Association and of the Empire Cotton Growing Corporation. They are carrying on extremely good and extremely interesting work, but it would be unwise to expect too great an increase in their activities. In the first place, we have to train the natives in agriculture, and that cannot be done in a short time; it takes two or three years to wean them from their old habits, to train them in the art of growing cotton, and to persuade them that cotton is going to be a remunerative crop. Then we always have to face the difficulties of plant diseases and of the ravages of nature—too much or too little rain, and so on—and also the possible failure of a crop in one year. That has a very bad effect on the moral of the natives, and it probably takes a long time to persuade them to grow cotton again and give it another trial.

If by production is meant the production of the manufactured article, there again we are in complete agreement. We know that a great deal of reorganisation is needed in the industry. To one who, like myself, is really only an observer, and is not closely connected with either the employers' or the trade union side, it is a matter of amazement that an industry can be carried on with so many watertight compartments—that in the one industry of cotton there are to be found five or six separate industries, all comprising different stages through which the cotton has to go, all being carried on in their own way by different organisations having no relation one to the other. Inquiry in that direction would not only be welcome to this House, but, to my mind, is absolutely essential. I am glad that the Mover of the Motion called attention to the speech that was made by the leader of the party to which I belong, at a meeting in Manchester about 18 months ago, when he impressed upon the cotton industry the need for cutting out the dead wood. I really believe that that speech was the starting point for a lot of the movement towards reorganisation or rationalisation of the industry which is now taking place. At the same time, if we have reorganisation from the employers' side, I think we might ask, perhaps, for a little more elasticity in some of the trade union rules and regulations.

I now turn to the subject of marketing. That, again, is a direction in which careful inquiries need to be made. Of course we look first of all to our home market. An increase in our home market can only come about by a return of general prosperity to the country. That is a subject which it would take too long to deal with to-night. Let us turn rather to the chance of finding new markets. I think that the first places to look for are those districts where we ourselves are producing cotton. I cannot help feeling that our manufacturers are neglecting their opportunities in Africa, where, owing to the growing of cotton, the natives have now more money to spend than they had before, and, unfortunately, foreign manufacturers are getting the advantage of it and not British manufacturers. It used to be said that trade follows the flag. I am not sure that that is as sound to-day as it used to be. At the end of the War I was serving in Italy, and after the Armistice, a great number of returned Italian prisoners, who had been captured at Caparetto, came back, some hundreds of thousands of them. The Italians had no idea how to cope with them. They had not either food, clothing, rations or preparations of any kind for them, so they asked the Allies to help them. I cannot remember what the French did, but the English sent a good many convoys of food and clothing. The Americans only sent up one lorry, and that was full of American flags. That may be bad philanthropy, but it is certainly very good business. We rather go in the other direction. We incline to have good philanthropy and bad business, and anything the Empire Marketing Board or the Government can do towards turning the activities of British manufacturers in the direction of finding new markets in Africa and places of that kind would, I am sure, be a step in the right direction.

So far we have been in complete agreement, but the sting of the Motion comes in the tail of it, where it ask for public control. Surely this old shibboleth of the Socialist party is becoming rather threadbare. We want to know much more of what you mean by public control. Do you mean that you want to have the ownership of the cotton industry? If you do that, you come right up against the opinion of the Minister of Transport, who said he did not want to take over any concern that was not successful. Does this mean that the Socialist party are only prepared to take over the successful mills, leaving the others to look after themselves? If it does not mean that, what does it mean? Or does it only mean that they want a certain amount of Government guidance? That is obviously necessary in any industry, but it would be a very difficult thing to incorporate in a Bill.

There are many things which the Government can do. They can help in research, they can help in finding new markets, and they can help by using their moral persuasion and influence to improve working conditions in other countries which are manufacturing in rivalry with us. One thing that has to be freely recognised is that you can never go back to the conditions of the cotton industry before the War. We are now going through the fire, but there is no reason, having gone through the fire, why the industry should not rise again, possibly in a less extensive form but anyhow built up on a foundation which will be able to withstand the vicissitudes of fortune and the fierce foreign competition which we are always likely to encounter. The right hon. Gentleman on the Liberal benches, following the example of his leader, spent the whole of his time in opposing the main part of the Motion, that is the question of the public control of the industry, but with the same ingenuity as his leader he found in the end a technical way by which he could advise his party to abstain from voting for the Conservative Amendment.

I hope, at any rate, the Conservative party will show by their vote that they will do everything that they can, while furthering the interests of the cotton industry in every direction, to prevent any idea of public control of that or any other industry.

It is sometimes suggested, in view of the great volume of unemployment in this country, that we should devote as much of our Parliamentary time as possible to a review of our leading industries, and that altogether we should seek to put into the common pool every suggestion we possibly can for the removal of unemployment and industrial depression. I join in congratulating my hon. Friend for using the opportunity that he secured in the ballot for discussing the position of the Lancashire cotton industry, and I also congratulate hon. Members who have made their maiden speeches in this Debate. The position of the Government is, of course, perfectly clear, because very soon after we came into office we responded to requests made to us prior to the election for the appointment of a committee which would expeditiously and thoroughly review the position of this problem. It is quite true, as my right hon. Friend the Member for Darwen (Sir H. Samuel) pointed out, that there has been a prolonged inquiry or review of British industries, the textile industry included, by the Balfour Committee appointed in 1924. While it may be suggested that definite or final conclusions or recommendations were not offered, the manner in which evidence and facts were collected on this particular problem was, I think, of the highest value to the State.

When we came into office we had to consider whether the circumstances in Lancashire required the appointment of a Royal Commission or a Departmental or Select Committee or whether we should proceed by way of a Sub-committee of the Committee of Civil Research in order most efficiently to attain the end that we had in view. As I announced to Parliament at the time, our decision was in favour of the appointment of a Sub-committee of the Committee of Civil Research, which was set up in due course and is now undertaking part of its work. I readily respond to the friendly criticism made by the right hon. Gentleman and also to the question that was asked by the Noble Lord as to the scope of this inquiry. It is admitted that Cabinet Ministers are in all Governments mostly overworked. It is also true that there is the coal problem at the present time; but I can tell my right hon. Friend that the inquiry by this Sub-committee will not suffer on that account, and that apart from the Cabinet Members there are two very capable representatives of different parts of industry and a very distinguished chartered accountant, and that the analysis is being made on the most faithful lines, and it will, I trust, in due course be productive of results Moreover, it is not intended that the inquiry should occupy an abnormal period. After all we have all the evidence tendered to the Balfour Committee at our disposal. We have also at our disposal a great deal of material which has been gathered by distinguished officials in this industry. As far as this Sub-committee can do so, that will be taken as read and they will look not so much to the past and to the recrimination which inevitably arises upon this controversy, but rather to the future, with a view to finding a constructive solution of the great and serious problem which confronts Lancashire at the present time.

On the point raised by the Noble Lord, I may say that the Committee is very comprehensive in its character. It can take evidence bearing upon any feature of the trade, or anything which can be related to it. I will give a very good illustration. It is open to witnesses who take a strong line on matters of credit and currency as bearing upon cotton manufacture and its export to tender their evidence to the Committee. It is open to my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) and those who agree with him on tariffs, on Safeguarding or Protectionist lines or, in this case, the use of tariff weapons for safeguards in other markets, as they think, to tender evidence on those lines. There is no restriction at all. We shall be perfectly satisfied if, within the limits of a brief period and, of course, in terms of proficiency, evidence is tendered by anyone who thinks that he or she can make a contribution to the solution of this problem.

From these remarks it will be perfectly plain to the House that I cannot to-night indicate what the policy of the Government will be. It would be improper to try to forecast the outcome of the Committee's work. All that I can promise is that, as soon as possible after it has reported the Government will consider the report, and present their views to the House of Commons. Subject to that inevitable reservation, I should like to make a few general remarks on the speeches which have been made, because, by common consent, they have raised some of the fundamental economic and industrial problems of this country. No one disputes the plight of the cotton industry. The figures are substantially as given by hon. Members, namely, that in the period immediately preceding the War we exported very nearly seven thousand million yards of cotton piece goods, and that at the present time we are exporting four thousand million yards. That is a very heavy and very serious reduction. I should like to inform the House, although we must not make too much of the fact, that for the first ascertained months of the present year, compared with the corresponding period of 1928, there has been a slight drop, not more than that, in the export of cotton goods. That is the state of affairs.

It is also true, as was pointed out by hon. Members, that while the War made an inevitable dislocation in this industry, as in other industries, probably changes would have taken place, apart from the War—such as the development of the growth of manufacture in other countries, India, Japan and the Far East, and the presence of new forms of competition of a very acute character. All these considerations will be before the Committee. May I refer to some of the suggestions and proposals which have been made to-night? There is the large subject of rationalisation. The problem was never better illustrated than in two speeches, one delivered by the hon. Member for Stock-port (Mr. Hammersley), and the other by the right hon. Member for Darwen (Sir H. Samuel). The hon. Member for Stockport referred to necessity for rationalisation, and denied the need of any kind of central body or authority to apply statesmanship to the cotton problems of Lancashire. Then though still a member of the party of individualists my right hon. Friend (Sir H. Samuel) refers to the finishing side of the cotton industry and he says that the industry is in such a state that there is a likelihood that some form of public corporation might be necessary. I am making no comment at the moment on this, but I imagine that a very large number of industries in this country are moving in whole or in part towards a state of affairs such as he describes, and the moment my right hon. Friend used the term public corporation, I felt moved to indicate to him how narrow is the floor which separates us and what an enthusiastic welcome he would receive on this side of the House.

The right hon. Gentleman is not such a student as I could have wished of Liberal publications, otherwise he would have known that similar statements have been made for years past.

I hope I have read the great majority of such publications. Of course, these are precisely matters for a Committee of this kind and it has to consider every proposition of rationalisation that is put up. Speaking on the wide question I entirely agree that a great deal of what has passed under the name of rationalisation is really an evasion of the term. In some of these industries there is a good deal of paper combination, there is a good deal of fresh capitalisation on terms which cannot be effective, and will not be in the interests of the industry. I hope, when the problem is tackled by the Lancashire cotton trade, when it is examined by this Committee, that these features will be kept very clearly in mind. Another hon. Member referred to the great cost of social services and the marked manner in which they have increased as compared with pre-War times, and the burden which this class of expenditure involves, particularly for exporting industries. While there is no doubt whatever that that is true up to a point, one of the saddest features of our post-War experience, and particularly since these pro- blems were aggravated, is that we are moving in a kind of vicious circle. You have a grave state of affairs in iron and steel, in shipbuilding, in the heavy industries, in coal and in cotton. There has been a painful endeavour on the part of millions of our fellowmen to maintain wage rates in keeping with the great increase in the cost of living and the balance of economic argument is to the effect that none of these wage increases precedes an increase in prices, but that prices rise and there is this painful process of toiling up after prices and trying to keep pace with their change. All this has been analysed by two brilliant economists in the report they presented in 1924, but it is true today that the real measure of the purchasing power of a very considerable section of our people has suffered and, that being so, we have to face frankly the situation.

I do not see any hope in any recommendations which are made for further wage reductions. I would rather pin my faith to that definite reorganisation and improvement of methods of production, which all the leading industries in this country must face and out of the results of which there will be a fair return for all who depend upon industry. That is the spirit in which we have to face this problem. Reference has been made to social services, and I would only point out that these social services have been rendered necessary, to a very large extent—and the fact has been recognised by all Governments irrespective of parties—by industrial needs. But, although I believe these services to be essential, and although we must make the fullest provision for the people, I fully admit that they are not a cure, and we have never represented them as being a cure, of the industrial problem. We have always held that something fundamental in the ownership and control of industry at large was required.

Regarding rationalisation and social services, while it is quite true that we in this House are divided on the Socialistic issue into two schools of thought, one in favour of public ownership and another in favour of private ownership and control. I have always said quite frankly to my friends, and I do not think there can be any real dis- pute about it, that a great deal of this improvement to which I have referred is inevitable, whatever the system of ownership. It must be undertaken, and I have sometimes even argued that it is a necessary preliminary to any change in ownership in order to squeeze out of industry the uneconomic and wasteful elements which are now in it. I do not think however that we need worry about fundamentals at the moment, provided that we are definite and clear as to the necessities of the immediate problem involved in the questions of rationalisation and the social services. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) raised an important point when he said that we ought to concentrate as much as possible on improving the standard of labour on international lines, and that we ought to look for a solution of at least part of the problem of competition on those lines. We are doing everything in our power to that end, but, anxiously and sincerely as the Government are working, the House must recognise that it is a comparatively slow process. There is the greatest difficulty in getting agreement, even to broad principles, and even when you have got agreement, there is evasion, as we all know, on the part of certain countries, or failure to observe rules or else such exceptions are driven into the rule that a nominal agreement becomes a very unreal one. That is a state of affairs with which every student of this problem is famliar. Whatever Government may be in power, if it succeeds in getting international agreement as to hours and the rest then so much the better as regards a very important part of this problem.

Reference has also been made to the importance of the free intercourse and trade which was recommended by the Economic Conference in 1927. This gives me the opportunity, since we are discussing this matter, of correcting certain errors—not made by my right hon. Friend opposite but contained in other speeches on this subject—as to the recent discussion at Geneva. The Conference of 1927 did not recommend Free Trade, but it certainly did recommend freer trade and it was hoped that, from that point onwards, there would be a definite movement in that direction by all the countries of the world. It is perfectly true that, in a sense, the results up to the present have been disappointing but that does not indicate for a moment that we ought to abandon our attitude.

I went to Geneva and suggested what has been loosely called a tariff holiday. The plea was not only that these great countries should agree not to increase their tariffs and that we were to resolve not to increase such tariffs as we applied; it was to be a positive effort to try and give practical effect to the Resolution of 1927. In other words, in regard to specific commodities or groups of commodities, an effort for progress would be made along those lines. We were trying to secure the basis for a convention which would be ratified in due course and as rapidly as possible by as many countries as we could get to sign it. The raising of this subject to-night gives me the opportunity to say that that end will be pursued. I recognise that there are Members in various parts of the House who doubt whether anything will be achieved. I should be sorry to believe that a pessimistic note of that kind is likely to be justified, but even if it were correct, I might well suggest that very great value in Europe and the world to-day attaches to this effort, if we can arrest the upward movement in the way of tariff restrictions.

Other speakers have referred to what has been mentioned over and over again in Lancashire and Scotland during this period. They have gone to the very roots of British credit in referring to the return to the gold standard. They have suggested that that return has placed this country at a manifest disadvantage with its competitors. I do not want to embark on that controversy to-night. Nothing which can be said on that point is relatively material to this Debate. There has always been the widest difference of opinion as to whether this country did not return too rapidly and too strictly to the gold standard and whether the process might not with perfect safety have been spread over a longer period without any disadvantage to British trade and possibly with a certain ease for important sections of the community. Who could pronounce as to the validity of that argument? The idea at that time was that we, who were the great financial centre of the world, would set an example which would be followed by other countries who would bring their currencies into line, and that they would thus be deprived of the great export advantage based upon a depreciated currency which was dealing almost destruction to, and certainly making very great difficulties for, important sections of industry in this country following the War. That was the idea, and of course up to a point it has been realised, because the decline of the exchange has been arrested, and slowly, and perhaps with difficulty, the world is settling down in these currency matters.

The hon. Member for Stockport (Mr. Hammersley) referred to another matter. While it is true that there has been that return to the gold standard, the consideration of the problem of the gold reserves should take account of the international position. The hon. Member raised the question as to what would be the consequences of the new Bank for International Settlements, assuming that the Young Report is adopted. It is common property that two of the ideas in the establishment of that Bank were, first of all, the effective regulation of reparation payments and annuities, so long as they continued, including deliveries in kind, and also the establishment of some kind of international centre by which, in terms of the Brussels Conference following the War, there would be international economy in the gold reserve. How far that will be achieved I cannot say to-night, but, of course, it is an important consideration for all industries, certainly for the cotton industry, and it is quite material to this Debate. I can say for my right hon. Friend the Chancellor of the Exchequer that it will be very, very carefully considered, not only on its financial side, but also on its industrial side, and I am grateful to the hon. Member for having mentioned it.

I think I have said sufficient on the main issues and have reassured the House that they will all, so far as they are relevant—and the bulk of them are relevant—be considered by this Committee. I believe that in a very short space of time, though I cannot, of course, specify the actual period, it will present its report. I should like to look forward to a very free and frank discussion of any proposals the Government may have to make based on that report, when the-time comes, because we recognise that here you have the largest exporting industry in the country and that you have it in a state bordering on despair, and it is plain to all of us that some very drastic remedy may be required. It is our duty to put our minds into that task, and I am not without hope that when the time comes, based on that report and on our common good will as stewards and trustees for millions of our fellow men, we shall find an effective solution.

I only rise for two minutes in order to reply to the attack, of a very kindly character, which my right hon. Friend the Member for Darwen (Sir H. Samuel) made upon myself. Ho made one or two astounding remarks, and as he is a Member for Lancashire, when he tells this House that the imports of foreign cotton manufactures into this country are negligible, I think I may be permitted to tell him that they amounted last year to £10,333,000, and had they been manufactured in this country, they would have given employment to some 30,000 or 40,000 persons in Lancashire, to whom he has referred this evening as walking the streets. May I also remind the right hon. Gentleman that we have heard in the course of this Debate a great many references, from himself in particular, to the fact that we have been driven out of all those foreign markets

in the matter of sales of cotton manufacturers, and when he spoke, as he did with reference to myself, I ask him, Who is driving us out? Has it not in every case been a protected country?

Lastly, I would like to say that when the right hon. Gentleman the President of the Board of Trade made his admirable speech, with his usual lucid arguments, the House was interested to hear that his proposal with regard to a tariff holiday or truce is not a negative proposal. Does that then mean that we are not going to consent to a stabilising of tariffs which will prevent this country defending itself against the high tariffs of the rest of the world? What people in this country have been most alarmed at is this, that the right hon. Gentleman gave the impression that we were to permit all foreign countries still to crush our industries and drive our people on to the streets of this country, and deprive ourselves of all weapons with which we could bring them to terms. I gather that the right hon. Gentleman has abandoned that position, and if that is the case, I am very glad to hear it.

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

The House divided: Ayes, 158; Noes, 86.

Division No. 53.]

AYES.

[11.0 p.m.

Adamson, W. M. (Staff., Cannock)

Duncan, Charles

Law, A. (Rosendale)

Addison, Rt. Hon. Dr. Christopher

Ede, James Chuter

Lawrie, Hugh Hartley (Stalybridge)

Alpass, J. H.

Edwards, C. (Monmouth, Bedwellty)

Lawther, W. (Barnard Castle)

Arnott, John

Gardner, B. W. (West Ham, Upton)

Leach, W.

Attlee, Clement Richard

Gill, T. H.

Lee, Jennie (Lanark, Northern)

Ayles, Walter

Gossling, A. G.

Lees, J.

Barnes, Alfred John

Gould, F.

Lewis, T. (Southampton)

Batey, Joseph

Graham, D. M. (Lanark, Hamilton)

Lindley, Fred W.

Beckett, John (Camberwell, Peckham)

Griffiths, T, (Monmouth, Pontypool)

Lloyd, C. Ellis

Bellamy, Albert

Groves, Thomas E.

Longden, F.

Bennett, William (Battersea, South)

Hall, F. (York, W. R., Normanton)

Lowth, Thomas

Benson, G.

Hall, G. H. (Merthyr Tydvil)

Macdonald, Gordon (Ince)

Bentham, Dr. Ethel

Hall, Capt. W. P. (Portsmouth, C.)

McElwee, A.

Bevan, Aneurin (Ebbw Vale)

Hamilton, Mary Agnes (Blackburn)

McEntee, V. L.

Bowen, J. W.

Hayday, Arthur

Mackinder, W.

Bowerman, Rt. Hon. Charles W.

Hayes, John Henry

McKinlay, A.

Broad, Francis Alfred

Henderson, Arthur, junr. (Cardiff, S.)

Marcus, M.

Brockway, A. Fenner

Henderson, Thomas (Glasgow)

Markham, S. F.

Bromley, J.

Henderson, W. W. (Middx., Enfield)

Mathers, George

Brothers, M.

Hirst, W. (Bradford, South)

Melville, Sir James

Brown, W. J. (Wolverhampton, West)

Horrabin, J. F.

Messer, Fred

Buchanan, G.

Hudson, James H. (Huddersfield)

Middleton, G.

Burgess, F. G.

Jenkins, W. (Glamorgan, Neath)

Milner, J.

Buxton, C. R. (Yorks. W. R. Elland)

John, William (Rhondda, West)

Morgan, Dr. H. B.

Caine, Derwent Hall-

Jones, T. I. Mardy (Pontypridd)

Morley, Ralph

Cameron, A. G.

Jowett, Rt. Hon. F. W.

Morrison, Robert C. (Tottenham, N.)

Charleton, H. C.

Kelly, W. T.

Mort, D. L.

Chater, Daniel

Kennedy, Thomas

Moses, J. J. H.

Clarke, J. S.

Kenworthy, Lt.-Com. Hon. Joseph M.

Murnin, Hugh

Cocks, Frederick Seymour

Kinley, J.

Naylor, T. E.

Daggar, George

Kirkwood, D.

Noel Baker, P. J.

Dallas, George

Lang, Gordon

Palin, John Henry

Denman, Hon. H. D.

Lathan, G.

Paling, Wilfrid

Dickson, T.

Law, Albert (Bolton)

Perry, S. F.

Phillips, Dr. Marlon

Smith, Alfred (Sunderland)

Watson, W. M. (Dunfermilne)

Potts, John S.

Smith, Frank (Nuneaton)

Wellock, Wilfred

Price, M. P.

Smith, W. R. (Norwich)

Welsh, James (Paisley)

Quibell, D. J. K.

Stamford, Thomas W.

Welsh, James C. (Coatbridge)

Raynes. W. R.

Stephen, Campbell

Westwood, Joseph

Richardson, R. (Houghton-le-Spring)

Stewart, J. (St. Rollox)

Whiteley, Wilfrid (Birm., Ladywood)

Riley, Ben (Dewsbury)

Strachey, E. J. St. Loe

Whiteley, William (Blaydon)

Ritson, J.

Strauss, G. R.

Wilkinson, Ellen C.

Romeril, H. G.

Sullivan, J.

Williams David (Swansea, East)

Rosbotham, D. S. T.

Sutton, J. E.

Williams, Dr. J. H. (Llanelly)

Rowson, Guy

Taylor, W. B. (Norfolk, S. W.)

Williams, T. (York, Don Valley)

Samuel, H. W. (Swansea, West)

Tillett, Ben

Wilson, C. H. (Sheffield, Attercliffe)

Sanders, W. S.

Tinker, John Joseph

Wilson, J. (Oldham)

Sandham, E.

Townend, A. E.

Wilson R. J. (Jarrow)

Sawyer, G. F.

Turner, B.

Wise, E. F.

Scurr, John

Vaughan, D. J.

Young, R. S. (Islington, North)

Sexton, James

Viant, S. P.

Shaw, Rt. Hon. Thomas (Preston)

Walker, J.

TELLERS FOR THE AYES.—

Shepherd, Arthur Lewis

Wallace, H. W.

Mr. Rennie Smith and Mr. Tout.

Shillaker, J. F.

Watkins, F. C.

NOES.

Ainsworth, Lieut.-Col. Charles

Glyn, Major R. G. C.

Penny, Sir George

Alexander, Sir Wm, (Glasgow, Cent'l)

Gower, Sir Robert

Pybus, Percy John

Amery, Rt. Hon. Leopold C. M. S.

Graham, Fergus (Cumberland, N.)

Ramsay, T. B. Wilson

Aske, Sir Robert

Greene, W. P. Crawford

Reynolds, Col. Sir James

Atholl, Duchess of

Griffith, F. Kingsley (Middlesbro' W.)

Russell, Richard John (Eddisbury)

Atkinson, C.

Hacking, Rt. Hon. Douglas H.

Samuel, Rt. Hon. Sir H. (Darwen)

Blindell, James

Hennessy, Major Sir G. R. J.

Sandeman, Sir N. Stewart

Bourne, Captain Robert Croft

Hudson, Capt. A. U. M. (Hackney, N.)

Savory, S. S.

Bowater, Col. Sir T. Vansittart

Jones, F. Llewellyn- (Flint)

Scott, James

Bowyer, Captain Sir George E. W.

Jones, Rt. Hon. Leif (Camborne)

Shakespeare, Geoffrey H.

Bracken, B.

Leighton, Major B. E. P.

Smith, Louis W. (Sheffield, Hallam)

Brown, Col. D. C. (N'th'l'd., Hexham)

Little, Dr. E. Graham

Smith, R. W. (Aberd'n & Kinc'dine, C.)

Brown, Ernest (Leith)

Long, Major Eric

Smith-Carington, Neville W.

Burgin, Dr. E. L.

McConnell, Sir Joseph

Somerset, Thomas

Carver, Major W. H.

Macdonald, Sir M. (Inverness)

Somerville, A. A. (Windsor)

Conway, Sir W. Martin

Macdonald, Capt. P. D. (I. of W.)

Somerville, D. G. (Willesden, East)

Crichton-Stuart, Lord C.

Mander, Geoffrey le M.

Stanley, Lord (Fylde)

Croft, Brigadier-General Sir H.

Margesson, Captain H. D.

Titchfield, Major the Marquess of

Crookshank, Cpt. H. (Lindsey, Gainsbro)

Mason, Colonel Glyn K.

Train, J.

Croom-Johnson, R. P.

Mitchell-Thomson, Rt. Hon. Sir W.

Vaughan-Morgan, Sir Kenyon

Davies, Dr. Vernon

Mond, Hon. Henry

Ward, Lt.-Col. A. L. (Kingston-on-Hull)

Duckworth, G. A. V.

Monsell, Eyres, Com. Rt. Hon. Sir B.

Wells, Sydney R.

Edmondson, Major A. J.

Moore, Sir Newton J. (Richmond)

Williams, Com. C. (Devon, Torquay)

Elliot, Major Walter E.

Moore, Lieut.-Colonel T. C. R. (Ayr)

Wilson, G. H. A. (Cambridge U.)

Elmley, Viscount

Muirhead, A. J.

Windsor-Clive, Lieut.-Colonel George

Erskine, Lord (Somerset, Weston-S. M.)

Nathan, Major H. L.

Womersley, W. J.

Foot, Isaac,

Oliver, P. M. (Man., Blackley)

Fremantle, Lieut.-Colonel Francis E.

Oman, Sir Charles William C.

TELLERS FOR THE NOES.—

Ganzoni, Sir John

O'Neill, Sir H.

Mr. Hammersley and Sir Gerald

Gault, Lieut.-Col. Andrew Hamilton

Owen, H. F. (Hereford)

Hurst

Main Question again proposed.

rose

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

Merchandise Mark Acts, 1926

I beg to move, I realise that the Act of Parliament is on the Statute Book, and though I am conscious of its effects, and did my best to prevent it becoming law, I realise that it is the business of the Government of the day to carry out an Act of Parliament as it is; and so far as I am concerned, I am not going to take any exception to a pair of socks being branded with the name of its country of origin, or to Portland cement being described as coming from Germany, France, or some other country; but I submit, and I think I can convince the House, that this particular Section of the Act relating to scientific glassware is not only largely against the spirit of the Act itself, but is likely to be injurious to trade and industry throughout the country. Section 3 of the Merchandise Marks Act puts upon the Depart- ment concerned, the Board of Trade, the responsibility, if it can be shown by the people who object that they are likely to be injured, of modifying or varying the Order. It is suggested, I understand, that it is the business of the President of the Board of Trade to wait until the Order is in operation. I take another view; I believe it is within his power to prevent the damage being done, and that at this early stage it is for the President to exercise his prerogative to modify the Order in the way I suggest. Section 7 gives this House itself the valuable privilege of presenting an Address, and provides that thereupon no further proceedings shall be taken under the Order. I would suggest that if the Department is unreasonable or unsympathetic, and is not prepared to listen to reason, the House will take the law into its own hands under the power conferred by this Act, and petition His Majesty to overrule the Department.

I remember that when the Act, as it now is, was going through Committee, Section 10 was fully discussed, and it was deliberately intended that under the operation of this Act raw material, construed in a very broad sense, should not be subjected to branding. The words used are:

This scientific glassware is used in almost every branch of industry. The most important line is the volumetric measure, which, as the House knows, is used in every foundry, in every steelworks, by almost every manufacturer of chemicals, and by large food producers. The article has to be produced in large quantities, and cheapness is essential. It is found that the raw material, or blank, as it is called—the plain glass before it is scientifically prepared—can be bought very much more cheaply on the Continent. In my desire to understand this kind of thing, I thought it wise to arm myself with the plain imported lines which arrive in this country—it is called the blank. I am told the cost is 3s. 7d. per dozen. It is a plain piece of glass with no mark on it—nothing underneath, nothing on the top. I have here a glass volumetric measure 100 cubic centimetres, and it has gone through the hands of many highly-skilled English mechanics. The plain glass value is 3s. 7d. a dozen. It is engraved in this country, and the price has now gone up to 21s. Is it not reasonable to suggest that the plain glass from Germany is as much the raw material of these manufactures as cotton is the raw material for cloth? These are made in England, but a monopoly cannot exist in regard to them, because they are free imports. The cost is 6s. 3d. in England, which is very nearly double. There is a very small amount of labour used on the blanks, which are turned out in Germany at the rate of 200 an hour, while the finished product here can only be turned out at the rate of three or four per hour. They are finished with a machine with costs £300. We do the skilled part of the job in this country, but the unprofitable part is done by the foreigner. Under this Act, the Government are going to insist that this highly finished glass is to be marked "made in Germany." Does that seem reasonable? This article is the work of highly-paid mechanics, and it is not fair to the English manufacturer that this glass should be marked "made in Germany" because the blanks, the raw material, come from there.

The English manufacturer already gets protection, since both of these kinds of glass are subject to the key industry duty. Whether it comes in as a raw material or as a finished product, there is a duty on it of 33⅓ per cent., so I suggest that the English manufacturer is already reasonably protected, and might very well be left to look after himself. But I do not want to be unreasonable. I want to help the British manufacturers, but I want to get a concession from the Government. I appreciate the fact that the Act has to be carried out, but it allows a variety of marking. Under this Order the mark has to be indelibly engraved, at great expense, on the bottle; but there is an alternative—the container may be engraved. We got a small concession. If hon. Members will study the schedule they will find, on the list of articles to be marked with their country of origin, glass eyes. The idea apparently is that it is very wrong to import glass eyes without the country of origin being known to the buyer, but, as a concession, it is not to be indelibly branded on the glass, but only the container has to be branded. The Act has to be carried out, but here is a case in which the very spirit of the Act is being offended against, and an injury will be inflicted on an important and useful industry which is developing and employing skilled men at very good wages. I am told that, if this glass has to be branded as foreign, it will prejudice its good reputation, and I would remind the House that most of this glass has to be passed by the National Physical Laboratory at Teddington, where it has to go through very severe tests, which is one of the reasons why it is in such good repute all over the world. It would be most unfortunate if, by advertising this glass as foreign, this trade, which employs highly skilled labour in this country, were diverted to foreign competitors.

I beg to second the Motion.

I am sure that hon. Members on the other side will appreciate what we believe to be the folly of taking crude work that enters this country, putting it through delicate processes in this country and turning out a very beautiful piece of work, and then sending it out with the advertisement, not of this country, but of a foreign country. If we do produce this work, which has to a certain extent established a supremacy throughout the world, the stamp that ought to be on it when it goes to other parts of the world is the stamp of this country, where it has been raised from something of comparatively small value to something of very high value. I am told that sometimes the price is three and four times as high for the finished article as for the original one. Under the Merchandise Marks Act, where there is a substantial difference between the imported raw material and the finished article the name can be removed, but the name cannot be removed from this glass, because it has to be indelibly stamped, and the implied power given by the Act is taken away.

I am told that one of the further difficulties is that composite scientific glass articles sometimes consist of as many as 50, 60 or 70 different parts, and what this will mean will be that the several parts will have to be examined by the Customs officials, not for the purpose of putting on revenue, because there is no revenue in this at all, but the work will have to be held up while the parts are examined, and the merchants here will have to wait while the Customs officials decide whether it comes within the category of the Order or not. Instead, therefore, of the products coming, as before, in a space of six, seven or 14 days, they will be delayed—and already there have been delays of as long as two and three months—while these questions are being fought out. The Minister who represents the Board of Trade has already gained distinction, during his short term of office, by his efforts at Geneva and elsewhere to break down barriers between one country and another. I hope he will respond to the Prayer which is now being made, and will not sanction these petty barriers and divisions. I will pass on to his representative here to-day what was said a very long time ago, and ought to be inscribed on the walls of the Board of Trade: There is unconscionable delay, there is irritation, there is the interference with our trade, and no corresponding advantage. Although the inquiry has been made and the Committee has gone into it, I ask that this very reasonable Prayer shall receive the answer that it ought to receive from those who have taken a very decided stand in the interests of a free exchange between one nation and another.

I do not think I can complain of the tone of either the Mover or Seconder in submitting this Prayer. This is not an occasion when one has to defend the principles of the Act in question. I have to start from the standpoint that it is an Act upon the Statute Book which it is the duty of the Department with which I am associated to administer. My only duty lies within the terms of the Act and the different Sections which may give certain powers to the Department. The hon. Member has mentioned that this glassware that comes in is submitted to very elaborate treatment and very much changed in its character. I do not know whether it can be reasonably argued that that change is a "substantial change" within the meaning of the Section, because the form is not changed but merely a form of marking added to the glass, and, therefore, it might be argued that that is in very large measure outside the terms of the Act itself. Of course, the main argument that is put forward is that the price of the article when it is sold is out of all proportion to the price when it is received in this country.

The hon. Member mentioned the difference between the price of the imported article and that produced in this country and the difference here is about 3s. per dozen. I am not arguing whether those figures are exact or not. If they are sold at a very high figure afterwards, I would submit to the House that the difference of 3s. a dozen is not very great compared with the final price at which the article is sold. One is bound to point that out in dealing with the matter. My position really is that of having to administer an Act which this House placed upon the Statute Book. I would like to say that this particular case has received up to the present time more consideration and a closer examination than any other case which has been dealt with under this Act. When the Committee had reported that there was a demand or request from the manufacturers of these articles on this side to be heard in opposition to an Order being made, and the Minister for the first time in the history of this Act received a deputation—I received them myself—of those who were opposing the Order. I spent some time with them, and the point I was bound to put to them was whether they had brought forward or were submitting to me any point that was not before the Committee and submitted to a close examination when the inquiry was held. I have the right under the Act of taking away from the Order if I choose. The Department has that authority under the Act. We cannot add to the Order, but we can take away from it. I would like to put this fact to the House. It is a very difficult position for any Minister to be called upon to act as a kind of Court of Appeal in respect of a Committee which has carried out duties and investigations under an Act of Parliament. The only way one could function in that respect would be to conduct another inquiry and hear all the evidence afresh, and I do not think that this House would desire to put the Minister in that position.

Obviously, as the hon. Member has already stated, the proceedings to-night are absolutely in accordance with the procedure under the Act. When I met the deputation, they all appreciated the position, and they did not wish to put me in the position of having to act, as it were, as a Court of Appeal against the decision. I asked them whether any of the points which they had submitted to me as far as their views on the question were concerned were new ones, or were not points submitted at the time that the inquiry was held. They agreed that all these points had been submitted to the Committee and were not new ones. I felt, owing to the way that they had attended and represented the industry and the way that they had put their case, that it was a matter I was entitled to carry a little further as far as my investi- gations were concerned. I therefore adopted the course of asking the Chairman of the Committee to come and see me, and I put to him the whole of the points submitted by the deputation and asked him whether he could satisfy me that they were points which were clearly before the Committee and were fully and properly examined by that body at the time of the inquiry. He assured me that they were, and therefore I felt bound to come to the conclusion that I had no reasonable grounds to interfere with the Order having regard to those facts and circumstances.

I did, however, endeavour to meet the deputation in one direction. There are a number of very small glass articles, the question of which they raised and of which they brought samples to show me, which, they suggested, it would be impossible to mark, and I agreed that a number of them previously included should be excluded from the Order. The further question arose as to how far this point of foreign trade could be met. It is provided under the Act that if an export article constitutes a difficulty, it shall receive consideration. In that respect the point was made that the marking of an article with the country of origin would prejudice the trade of this country, because the calibrating can be done more effectively by British labour than by foreign labour. I submitted to them that it might be possible in selling the article to sell it as an article that was foreign glass, but was calibrated in this country. I did not think that there was any difficulty in carrying out that suggestion. I went further. There is another Section in the Act which makes it possible for some special arrangements to be made with the Customs authorities whereby the blanks that come in, if they are to be used for the export trade can, under the arrangements, be brought into the country without any mark upon them. I offered to give them the fullest help in that matter.

They say that is not practicable. There is a tremendous variety of lines, and they have to keep their skilled workers for both the import trade and the export trade.

I am explaining to the House to show that this particular sub- ject has been most carefully considered before the Order was laid. As I suggested to them, the Department has offered to assist them in any way possible to facilitate this procedure being adopted, whereby the articles that would be ultimately exported after they had been calibrated, and which come into this country in the form of blanks, should be brought in exempt from a mark upon them. The Act allows for that. Evidently, that has not been sufficient for those concerned. They have brought the question to the House and they have asked the House to annul the Order. As hon. Members have pointed out, that is one of the possibilities under the Act. That is a difficulty, but I would like to make a suggestion as to a better way out. There is another Section of the Act which provides that if after an Order is made hardship or injury arises to the trade that may be affected by the Order, the Department have power to eliminate from the Order the particular article so affected. That Section in the Act is not a dead letter; it is a live Section and has been given effect to in regard to other articles. If, when the Order has become operative, assuming that the House passes the Order to-night, and if submission is made to my Department that it inflicts hardship and injury upon the industry in regard to these sections of goods, the matter will be as sympathetically considered as possible. This is not a matter, so far as I am concerned, where one's individual opinions can entirely be exercised. I am placed in the position of having to administer an Act of Parliament, and I think I have shown in this particular case that I have exercised all the possibility of investigation. The fullest opportunity was given to all parties at the inquiry. It was public and each of the parties were represented by counsel so that the deputation could not say that any one of the points they submitted was not fully considered.

It frequently happens that the difficulties we anticipate cease to be difficulties the nearer we approach them, and that may prove to be the case in this instance; but if representations are made to the Department that any hardship is inflicted, I promise that the matter shall be carefully and sympathetically considered and dealt with under the provisions of the Act. This is not a matter which is quite so easy as hon. Members suggest. I have had numbers of letters from chemists and men with high qualifications who have to use these articles after they have been calibrated in this country, and they make the definite statement that it is important to them as scientists that they should know where the glass comes from. Calibration is not the most important consideration. The glass is important, and if the work of those who have to use these instruments is to be as effective as it should be for its purpose, they should be able to have as much guarantee as possible as to the origin and source of the glass. I have letters from 13 or 14 highly-skilled persons who assure me that it is not an unimportant matter as far as the glass itself is concerned. I hope, with this explanation, that the House will allow the Order to pass, on the distinct understanding that any representations which are made on the ground of injury or hardship will receive the fullest sympathetic consideration.

The explanation the hon. Member has given is, as far as hon. Members on this side are concerned, entirely satisfactory. I do not need to say anything on the merits of the Motion, except to say that the speeches of the two hon. Members in support of it had very little relevancy to the Motion itself. It is concerned with scientific glass generally; the speeches were concerned, not to show that prejudice was created in the glassware generally, but that in the case of glass imported into this country and then re-exported, not having gone through the process of marking, it might be thought that an article was foreign made when, as a matter of fact, the greater part of the cost of the making was subsequently added in this country. That can be easily met as in the case of razor blades which are made in America and imported into this country, by a device showing that the article is actually made in this country, though part of it may be foreign. The Parliamentary Secretary has pointed out that the marking is of value to scientists abroad as well as in this country. Surely there is small possibility that damage will be sustained by the exporting trade by marking part of the article, and there is no justification for the complete exemption of the whole of this category from the provisions of the Act. I do not think, if I may adapt the words of the Seconder of the Motion, that these teasing little Motions are going to advance the cause of Free Trade.

I am afraid I cannot agree with the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) that the reply from the Treasury Bench has been very convincing. The Parliamentary Secretary said that certain scientists in this country thought it desirable to know where this glass was manufactured but that end can be attained by the method adopted already in the case of glass eyes, by marking them on the lids. In this case the containers can be marked and the scientist who wishes to know where the glass was manufactured, in order to know its composition, can thus have the information which he requires. The Parliamentary Secretary said that if manufacturers wished to have "blanks" which were afterwards going to be exported, unmarked, he would arrange that that should be done. But that gives away the whole case.

That is one of the provisions of the Act. I was simply referring to facilities which the Act provides.

If it can be done in the one case, it can be done in the other. If it is right that an article should be regarded as British, when it has been engraved in a certain way and afterwards exported, it is also right that the article should be regarded as British when it is sold here at home. The Act says that goods shall not be included within its scope, if they have undergone in the United Kingdom any treatment or process resulting in a substantial change in the goods. Those are the governing words. If a glass article comes in which is worth one penny and it is worked upon by skilled artisans and until it becomes an entirely different article, namely a measure when previously it had been merely a container, and if it is sold at ten times its original price, that unquestionably is a substantial change. The marking may not be conspicuous as though it had been stamped all over, but the effect is a substantial change in the character of the article. It is capable of being used for a purpose for which it could not have been used before, and there is a very substantial change in its value. I have here a list of the prices of articles, some of them important, which shows the change. For instance the price, including the duty, of one article as imported is 3s. 1½d. when the retail price of the finished article is 16s. 3d. In another case 4s. 3d. becomes 21s. 6d., and in another 6s. becomes 26s. and so on down the whole list. It seems to me that the Board of Trade have been falling short of their duty in permitting these articles to be included within the Act at all, since the Act clearly intended to exclude them, as articles which have been substantially changed here by a process of manufacture.

These are the only prices which I have had furnished to me but let me point out that the imported price includes the duty which, in itself, is 33⅓ per cent. of the original price of the article. The Parliamentary Secretary says that he is bound to take the course which he has taken, because of the report of the Committee. We have heard much of late about "the new despotism," but here we are asked to allow this trade to be handed over to a Committee and apparently the Minister does not regard himself as being in any way a court of appeal from that Committee. The Committee decides, and, even if a mistake is made, nothing can be done, and no one has the right to intervene.

I do not think that is the point. I have pointed out that, not only did I receive a deputation, but I specially put it to them as to whether any of the points which they submitted then had not been before the Committee, and they said "No." Further, I had a special interview with the Chairman to make certain that the matter had been subjected to the fullest examination. Therefore, the possibility of an error or mistake would appear to be rather a remote one.

I do not think so. The hon. Gentleman is really confusing two points. One is whether all the facts were before the Committee, and the other is whether on those facts they arrived at the right judgment. The hon. Gentleman may be perfectly right in saying that he could not intervene to upset their judgment on the ground that they had left out important considerations, but if, having taken into account all considerations, they had come to a wrong conclusion, it seems to me that he ought to have intervened and, indeed, further than that, that the case ought never to have been submitted to them, having been excluded under the Act. The only redress is in this House, which ought to express its view. This Order ought not to go through, seeing that the whole purpose of the Act is to give aid to our own manufacturers. Here we have our own manufacturers coming and saying, "You are not aiding us; you are hindering us," and we are told that Parliament cannot intervene to come to their rescue. In these circumstances, I think the House ought not to allow itself to be used as the means of advertising German goods all over the world and in this country, because they are not really German goods, but are, as respects four-fifths, or whatever it may be, British goods, and ought to be so treated under the Act.

I cannot help feeling that there is a difference of tone between the speech which the right hon. Gentleman has just delivered and that which he delivered on the Widows', Orphans', and Old Age Contributory Pensions Bill. It was then argued from the Government Front Bench that they ought to retain the right of appeal from the Committee in certain cases. The right hon. Gentleman opposite then said, "Oh! no; the Committee must have the power and must decide, and their decision must be final." Now we are told that in this case there ought to be a right of appeal, and that the Minister ought to alter what has been decided. That is not a very logical attitude.

We ought to have two tribunals in this matter. It does not matter very much which comes first.

In the case of the widows' pensions it was said that the Minister should have control. In this case, the Minister says, "I accept the Committee's decision as final." The right hon. Gentleman opposite thought that was a dreadful thing. I have a certain amount of sympathy with the view that the Committee's decision should not be final, but that should apply all round. The right hon. Gentleman has been very inconsistent in these two cases.

That criticism can be answered in one sentence. The Pensions Bill was a new Bill, but in this case we are dealing with an Act passed against our will.

I hope the Minister will not be influenced by the suggestion that, because an article at present may be a little bit dearer if produced in this country with decent wages than if produced in another country under sweated wages, it necessarily means that this condition will continue. Taking the whole realm of scientific instruments, you will find that it is one of the most progressive industries in this country. Employment in that industry, since it was first given some security, has increased from 12,000 to 24,000, and—

I want to explain, Mr. Speaker, that an attack was made

on the efficiency of the British worker in making this article, which was presumed to be more expensive, and I pointed out that this group of industries is expanding at an enormous rate in this country and has become one of the most valuable industries in the country. The answer to the hon. Member opposite is this, that his party believe in maintenance; that the Liberal party believe in free imports of every description and are against merchandise marks of any description, because they believe in free imports, for which the maintenance policy of the party opposite is necessary; and that we, on these benches, believe in work and wages, and that is the difference.

We are asking, not the Minister, but the House itself, to decide this question, and I appeal to the Minister to leave the House free to decide it and not to put on the Government Whips.

Question put,

"That an humble Address be presented to His Majesty praying that so much of the Draft Order in Council, presented to this House on the 5th day of November, 1929, as relates to the making of scientific glassware, be annulled."

The House divided: Ayes, 32; Noes, 132.

Division No. 54.]

AYES.

[11.58 p.m.

Aske, Sir Robert

Jones, T. I. Mardy (Pontypridd)

Pybus, Percy John

Bevan, Aneurin (Ebbw Vale)

Kelly, W. T.

Ramsay, T. B. Wilson

Blinded, James

Macdonald, Sir M. (Inverness)

Rosbotham, D. S. T.

Brown, Ernest (Leith)

Mander, Geoffrey le M.

Russell, Richard John (Eddisbury)

Burgin, Dr. E. L.

Markham, S. F.

Samuel, Rt. Hon. Sir H. (Darwen)

Elmley, Viscount

Messer, Fred

Scott, James

Granville, E.

Morgan, Dr. H. B.

Shakespeare, Geoffrey H.

Griffith, F. Kingsley (Middlesbro' W.)

Moses, J. J. H.

Vaughan, D. J.

Henderson, W. W. (Middx., Enfield)

Nathan, Major H. L.

Hunter, Dr. Joseph

Oliver, P. M. (Man., Blackley)

TELLERS FOR THE AYES.—

Jones, Rt. Hon. Leif (Camborne)

Owen, H. F. (Hereford)

Mr. Harris and Mr. Foot.

Jones, F. Llewellyn- (Flint)

Peters, Dr. Sidney John

NOES.

Adamson, W. M. (Staff., Cannock)

Briscoe, Richard George

Duckworth, G. A. V.

Ainsworth, Lieut.-Col. Charles

Brockway, A. Fenner

Duncan, Charles

Alpass, J. H.

Bromley, J.

Ede, James Chuter

Amery, Rt. Hon. Leopold C. M. S.

Brothers, M.

Edmondson, Major A. J.

Arnott, John

Brown, W. J. (Wolverhampton, West)

Edwards, C. (Monmouth, Bedwellty)

Atholl, Duchess of

Buchanan, G.

Elliot, Major Walter E.

Atkinson, C.

Burgess, F. G.

Everard, W. Lindsay

Ayles, Walter

Cameron, A. G.

Fremantle, Lieut.-Colonel Francis E.

Beamish, Rear-Admiral T. P. H.

Carver, Major W. H.

Gardner, B. W. (West Ham, Upton)

Bellamy, Albert

Charleton, H. C.

Gault, Lieut.-Col. Andrew Hamilton

Benn, Rt. Hon. Wedgwood

Clarke, J. S.

Gill, T. H.

Bennett, William (Battersea, South)

Colman, N. C. D.

Glyn, Major R. G. C.

Bentham, Dr. Ethel

Croft, Brigadier-General Sir H.

Gossling, A. G.

Bourne, Captain Robert Croft

Crookshank, Cpt. H. (Lindsey, Gainsbro)

Gould, F.

Bowater, Col. Sir T. Vansittart

Croom-Johnson, R. P.

Gower, Sir Robert

Bowen, J. W.

Daggar, George

Graham, Fergus (Cumberland, N.)

Bowyer, Captain Sir George E. W.

Dallas, George

Greene, W. P. Crawford

Bracken, B.

Dickson, T.

Groves, Thomas E.

Hall, G. H. (Merthyr Tydvil)

Mathers, George

Smith, Alfred (Sunderland)

Hall, Capt. W. P. (Portsmouth, C.)

Maxton, James

Smith, Frank (Nuneaton)

Hamilton, Mary Agnes (Blackburn)

Melville, Sir James

Smith, Louis W. (Sheffield, Hallam)

Hennessy, Major Sir G. R. J.

Middleton, G.

Smith, Rennie (Penistone)

Hirst, W. (Bradford, South)

Milner, J.

Smith, R. W. (Aberd'n & Kinc'dine, C.)

Hudson, Capt. A. U. M. (Hackney, N.)

Mond, Hon. Henry

Smith, W. R. (Norwich)

Hudson, James H. (Huddersfield)

Monsell, Eyres, Com. Rt. Hon. Sir B.

Smith-Carington, Neville W.

Jenkins, W. (Glamorgan, Neath)

Morley, Ralph

Somerville, D. G. (Willesden, East)

John, William (Rhondda, West)

Morrison, W. S. (Glos., Cirencester)

Stephen, Campbell

Kinley, J.

Mort, D. L.

Strachey, E. J. St. Loe

Kirkwood, D.

Muirhead, A. J.

Strauss, G. R.

Lang, Gordon

Murnin, Hugh

Titchfield, Major the Marquess of

Lathan, G.

O'Neill, Sir H.

Tout, W. J.

Lawrie, Hugh Hartley (Stalybridge)

Palin, John Henry

Vaughan-Morgan, Sir Kenyon

Lawther, W. (Barnard Castle)

Penny, Sir George

Walker, J.

Leach, W.

Phillips, Dr. Marion

Wallace, H. W.

Lee, Jennie (Lanark, Northern)

Potts, John S.

Ward, Lt'.-Col. A. L. (Kingston-on-Hull)

Leighton, Major B. E. P.

Price, M. P.

Wells, Sydney R.

Lewis, T. (Southampton)

Richardson, R. (Houghton-le-Spring)

Welsh, James (Paisley)

Lloyd, C. Ellis

Ritson, J.

Whiteley, Wilfrid (Birm., Lady wood)

Long, Major Eric

Romeril, H. G.

Williams, Com. C. (Devon, Torquay)

McConnell, Sir Joseph

Samuel, H. W. (Swansea, West)

Wilson, R. J. (Jarrow)

Macdonald, Capt. P. D. (I. of W.)

Sandeman, Sir N. Stewart

Womersley, W. J.

McElwee, A.

Savery, S. S.

Mackinder, W.

Sawyer, G. K.

TELLERS FOR THE NOES.—

McKinlay, A.

Scurr, John

Mr. William Whiteley and Mr.

Marcus. M.

Sherwood, G. H.

Wilfred Paling.

Margesson, Captain H. D.

The Orders of the Day were read, and postponed.

It being after Half-past Eleven of the Clock upon Wednesday evening, Mr. SPEAKER adjourned the Souse, without Question put, pursuant to the Standing Order.

Adjourned at Five Minutes after Twelve o'Clock.