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

This is a Bill to amend the Industrial and Provident Societies Acts, 1893 to 1913. A similar Bill was previously before the House, received a Second Reading, and passed through all its Parliamentary stages, including the Committee stage; but, unfortunately, the election of 1924 cut short the further progress. The Bill which I am now submitting to the House is in a form almost identical with the previous Measure. I am sure there will be universal agreement with the proposals in the Bill, and that it is assured of a ready passage through all the different stages to the point at which it will receive the Royal Assent. I make no apology for connecting the co-operative movement with this Bill. The Bill has for one of its objects the gaining of some acknowledgment or recognition of the co-operative societies in order to facilitate the various activities of those societies. For the first time in legislation of this kind there is here the intention of giving a clear definition of a co-operative society.

The co-operative movement has been in existence for nearly a century, and as far back as 1834 the early friendly societies legislation laid down certain conditions limiting the scope of the activities of societies of that kind. About a dozen Acts have been passed since then, and in 1893 the previous Acts were consolidated. The word "co-operative" is not used in the Industrial and Provident Societies Act, 1893, but it is very well known that it is there we get the legal sanction for the activities of this very great movement. Hon Members are no doubt aware of the great growth of the co-operative movement. This wonderful organisation, built up by the common people of this country, is one of our greatest national assets. It is an organisation which, starting from very humble beginnings, now commands the support of over 5,000,000 members in this country, and has no less than £100,000,000 of savings, in the main provided by working people and people of moderate means. The annual turnover of business done by the organisation represents nearly £250,000,000. The movement is one of which the country has every reason to be proud.

In Clause 1 of the Bill we seek to give the word "co-operative" a clear and definite legal meaning in connection with the registration of companies. We make the claim that there is only one cooperative movement and only one set of co-operative principles, and we wish it to be acknowledged that the co-operative movement to which I refer has the right to that title. In making this claim we are not unmindful of the many spurious organisations which, recognising the value of the word "co-operative," have been making use of it for unworthy purposes. There has arisen in recent years spurious co-operative organisations to which I may be allowed to refer. I shall briefly sketch the activities of some of them in order that we may realise the danger to the public caused by the operations of such societies. There was a society calling itself the Cooperative Thrift Collecting Society. Its real name was the Stockport and District Finance Company Ltd. This Society collected a great deal of money from working class people in an area which for other purposes was being catered for by the Liverpool Co-operative Society. After two or three years of the operations of this Thrift Collecting Society, it was found that they had collected £40,000 on the pretence that the depositors would be given 7½ per cent. simple interest on their deposits after a certain amount had been collected. No interest was ever paid and the depositors found that they had been exploited by a company deliberately using the title "co-operative" because it was working in an area where the co-operative movement had a good reputation. A good many innocent working class people lent their money in the belief that they were depositing with the Liverpool Co-operative Society. No action was possible to indemnify the public in that case for the loss which they sustained.

Then came another society in another part of the country called the Co-operative Legal Collecting Society. This society operated in Cardiff, and in the course of five years collected £11,000 and then went into liquidation, and it was found that over £10,000 had been paid in expenses from the fund which was supposed to provide benefits for those who had paid in—a most dishonest and despicable exploitation of those who had placed their trust in the society. Then there was a Society called the City of London Co-operative Society. It will be seen that they are not confined to any one geographical area. This society combined a lottery business with money-lending and won the confidence of a number of people. It made a great deal of money from people who could not afford to lose the money. We then come to the National Co-operative Bank, also operating in London. In this case the Society having carried on for some years a business which was not at all commensurate with the title which it bore suspended operations, and a great deal of confusion and apprehension was caused in the minds of people who thought that it was the banking agency for the Wholesale Co-operative Society.

To come to more recent times, there has been established the Co-operative Radio Company, and more up-to-date still, the Totalisator Co-operative Society, Limited, which in a circular to the public states that the Totalisator Co-operative Society has been registered in view of the forthcoming boom in connection with the totalisator bona fide co-operative movement—this great national movement which ought to be the pride of every Englishman and every Britisher—that the proposals of the Bill are made. This movement has won for this country a great reputation and has made us the envy of other countries not in the fortunate position of possessing such a great popular movement. It is to protect the public against abuse of this title that is the purpose of Clause 1. Perhaps I may be permitted at this point to read Clause 1, which is not at all revolutionary and proposes no drastic change in principle. In Clause 1 we propose that: has already been given. Then we find that in an Act passed by this House last year, the Companies Act, 1928, special protection, almost in these words, has been provided. It is no new principle, and it is a protection which every reasonable man will agree is quite necessary in the circumstances.

Clause 2 of this Bill excludes building societies from registration as co-operative societies. There is no controversial point here, and I think hon. Members will find that building societies can be registered under the Building Societies Act with advantages to themselves and with less danger of being confused with the real co-operative societies. The intention of Clause 3 is to raise the limit of shares which may be held by individual shareholders. I daresay it has been very necessary in the past that co-operative societies should be debarred from making too heavy calls upon enthusiastic shareholders who invested their savings without the security which is enjoyed in these days by members of these societies all over the country. There were many occasions in former days when the cooperative societies, having enlisted all the zeal, the enthusiasm, and the faith, and all the organising power and capacity of these members, men and women, came to grief, and it was necessary to protect the shareholders from the very heavy risk that they ran in expending capital in their ventures in this way; and in 1893 a limit of £200 was placed upon the investment of the individual member. A share capital limit of £200 per person was imposed.

I want the House to examine what was intended then. The sum of £200 in 1893 was a fairly large sum for working people and for the class of people who usually became members of co-operative societies. That £200 to-day would be represented by a much larger nominal figure. The value of money has changed considerably in the last 36 years, and I think it is safe to say that it requires £400 now to represent the value of £200 in 1893; and what the societies ask for is that the individual shareholder's maximum amount of shares shall be raised from £200 to a limit of £400. Members are keen to support the co-operative principle. Unfortunately, I have not reached my limit, but I am investing as much as I can in the co-operative stores. All my savings have been there for many years— [An HON. MEMBER: "Capitalist!"]— and I am very anxious that when we should get in the fortunate position of being able to save £250, £300, £350 and up to £400, we should put our savings in a co-operative society, in which we believe they will be able to achieve the best ends.

We are helping to build up a very great commercial enterprise, which is a credit to our country, and we are encouraging national thrift. Hon. Members opposite insist very much on the development and encouragement of thrift. I know of no movement in this country which has given more stimulus and encouragement to thrift than the co-operative movement. Clause 4 is only a minor Amendment of a Section in the Industrial and Provident Societies Act, namely, the insertion of one sentence in order that the registered societies may know exactly what purpose the society has to carry out.

Will the hon. Member go back to Clause 2 and say a little more about that?

If the hon. and gallant Member believes that Clause 2 requires special attention from me, I may say that the building societies of this country do not operate on the principles outlined in Clause 1 for co-operative societies, and while we do not suggest that any society already registered shall be precluded from continuing its registration, we ask that a building society, operating on entirely different lines from the societies covered by Clause 1, shall not be allowed to register under the Industrial and Provident Societies Act, but shall be registered, very properly, under the Building Societies Act. There is no intention of discouraging building societies, but it is simply a matter of classification and proper registration, in order that they should not be included in the same registration as bona-fide co-operative societies which carry on their work in a different way.

Now I come to Clause 5, in which we ask that every society registered under the Industrial and Provident Societies Act shall have a registered office where communications may be received and where business can be transacted. One of the most disquieting features of the bogus companies that arise in this country from time to time is that it is quite impossible to get into touch with their registered offices. I once had occasion to go into the City of London to make inquiries regarding a company that had played upon the confidence of people in my own division and throughout the country. I went to an office in the City, not far from the Bank of England—I forget the name of the street—and I found a room, not more than 20 square feet in area, with a table and a chair, where possibly occasional calls were made by those who claimed to be carrying on business there. Without any prejudice or further knowledge of the company it at once conveyed the impression to me that this was a sham company with a sham register. We say that there should be properly registered business premises where communications can be received. That is a protection for the public which is very much required.

In Clause 6 we ask that there shall be audits by independent public auditors. This, I think, is an improvement for which the societies are very anxious. Clauses 7, 8 and 9 provide for the publication of annual reports. Clause 10 relates to the limit in regard to savings banks. Co-operative societies have their own savings banks, and at the present time single deposits are limited to 10s. We ask to have that figure raised to 20s., and the limit of total savings raised from £20 to £50. Clause 11 provides for the raising of the limit of the share capital transferable at death to the nominee of a member from a total of £100 to £200, in order that if the level of shareholding has been raised, it will be possible to transfer the larger sum of £200 to the nominees.

Does that mean one or more nominees?

There is no reason why there should not be more, but the custom is to have one. I pass over other Clauses, and come to Clause 16, which facilitates the amalgamation of societies, enabling societies to transfer their shares by resolution, without the expense and delay of conveyance. This is a provision very much in demand, and one which the societies are very keen about. There is no danger to anybody. No one's interest will be endangered by this Clause.

I shall not spend any more time on the details of the Bill—I have spent long enough—but I hope the House will agree with me that the case we are making is a worthy one. We hope to get the universal accord of the House with the main object of this Bill, and to get the Bill through Committee. I believe that co-operative societies all over the country will thank this House for enacting this Bill, and that Members of the House who are sensible of the interests of the societies are in agreement with the main provisions of the Bill.

I beg to second the Motion.

I want, in the first place, to congratulate my hon. Friend the Member for Gower (Mr. D. Grenfell) upon his very able presentation of the case in moving the Second Reading of this Bill. I will also take this opportunity, which, I think, is quite permissible in the circumstances, to say that the great co-operative movement outside this House, as well as those hon. Members who are directly or indirectly associated with the movement, would desire to convey our gratitude and our sense of appreciation of the hon. Member for Gower that he thought it desirable and expedient, when he was fortunate in the Ballot, to introduce this Bill. I am perfectly certain that our people who are in control of the movement throughout the country would wish that appreciation to be conveyed. An hon. Member on the other side of the House who is not now in his place interjected, when my hon. Friend was putting forward his claim in support of the Bill, that we were capitalists.

You are no worse for that.

We do not mind, for the sake of argument, admitting that we are in a sense capitalists, but there is a difference in capitalists. There are capitalists who desire to operate, not for the well-being of everybody in an organisation with which they are connected, but for themselves, and there is, it seems to me, a very superior advantage regarding our great co-operative organisation in that, whatever merits can be found for it, and there are many, whatever credit there may be secured to the members associated with it, each member proportionately to the interest he shows in the concern has his chance of sharing proportionately in the advantages. We would suggest that that is vastly different from what we understand is the present-day interpretation of capitalism. But, in seconding this Motion, I am not going to commence by getting into controversy with our friends across the way. We believe that the merits of the movement under whose auspices we are attempting to put forward our claims are substantial. The House of Commons accepted almost unanimously the proposals contained in the Bill brought forward by our hon. Friend the Member for South-East Ham (Mr. Barnes) in 1924. We are hopeful that history will repeat itself to-day, and that Members, not only on this side, but on every side, both above and below the Gangway, will unanimously agree to give a Second Reading to this Bill.

There are many discussions in this House regarding the general economic condition of the working-class people of this country, and one of the greatest claims that we can put forward in support and in commendation of this great co-operative organisation is that, at least, as regards those who are employed by it, they receive wages and enjoy general conditions of labour that are a credit to the movement. It is only three weeks ago to-day, as hon. Members will remember quite well, that we were engaged in discussing a Bill to institute the system of an annual holiday with pay, and I remember well listening to the hon. Member for Huddersfield (Mr. J. Hudson) second the Bill, and paying a tribute to our great co-operative organisation in support of the particular policy of a general holiday with pay. We, at least, do qualify under that heading.

In connection with Clause 1, I would like to submit that while the Clause itself suggests the restriction of the use of the word "co-operative" for reasons explained very fully by my hon. Friend, we do not ourselves personally prefer that the word "restriction" should be used. I think it is generally understood by the people who are promoting this Bill that they would like to see another word substituted for "restriction". That is a detail which may more readily be dealt with on the Committee stage of the Bill, which we hope that we shall have the opportunity of reaching. The democratic constitution of our movement ought to make some appeal, not only to Members on this side, but also to Members on the other side of the House, for the basic principle of it is one Member one vote. One might commend the utility of that practice to the Commission which is now considering the problem of electoral reform. I am an ardent advocate of the one man one vote principle. There are those, like myself, connected with societies in an administrative capacity, who would tell you that without exception those who hold the higher amounts of investments have no quarrel with the principle. At all our business meetings we have no difficulty about these people, who are considered to be the richest members, working side by side with the very modest members, who have only the holding which qualifies them for membership, on all the important matters which have to be adjudicated upon in the interests of the society concerned.

The alteration of the rate of interest is long overdue. Much higher rates of interest have been paid by industrial trading people outside during the past few years, while the Co-operative movement have been limited to 5 per cent. in accordance with the provisions of the Industrial and Provident Societies Act. One of the basic principles which govern the Co-operative organisation is that the surpluses, which are secured in the ordinary processes of trade, are divided up among members in accordance with the purchases that they have made. The interests of the organisation are not confined to trade alone. I remember reading a Debate during the 1924 Parliament, when the then President of the Board of Trade, who is now a member of another place, eulogised the Co-operative movement, and particularly mentioned that, in addition to their general trading activities, they were constantly endeavouring to promote educational activities. He went on to say that the social and recreative possibilities provided by this institution were commendable, and he mentioned that their educational activities were by no means competitive with local authorities. The Co-operative societies, however, could claim that in the days gone by they provided processes of education which were not then provided by local authorities. I can give an example which from one point of view shows a regrettable situation. I know an important provincial town of some 30,000 population which has not even a public library to-day, and that locality sends to this House a distinguished Member, who has sat here a good many years. The Co-operative Society in that town is providing the only possibility of studying from borrowed books. Such a situation shows that the movement is endeavouring to do something which is essentially useful.

Then we go into the international field, and we deserve some commendation for extending our activities abroad. I well remember on the fateful Sunday in 1914 when, as a representative on the council of the city from which I come, I spoke to some of our constituents, and put forward the view that, dark as the clouds were then—and it seemed well-nigh impossible for anything to happen to prevent war—one redeeming feature was the International Co-operative Alliance, a combination of countries in Europe, which, subscribing to the principles of co-operation, would, I hoped, safeguard against the possibility of war breaking out. One of the reasons for the failure of that combination was that it was in its infancy, and had not grown to anything like the dimensions which it has reached to-day. My hon. Friend said that there were 5,000,000 members in this country; as a matter of fact, up to June, there were 5,829,000, and I do not think that I am making an outside prophecy when I suggest that at the end of this year it will be found that we have turned the corner of 6,000,000. In the Co-operative Alliance we register, not 6,000,000 people, but 50,000,000, and, if only this House can encourage them by the promotion of this Bill, and the safeguarding of the interests which the organisation is trying to put forward, I am certain that this International Alliance will be a great safeguard in preventing the breaking out of hostilities.

The hon. Member has given some information about the number of people interested; can he give us some information about the expansion of the funds?

Perhaps some hon. Member who speaks later will contribute the information.

If we are going to have a lecture on the "co-op.", let us have the information.

I do not think that the hon. Member has any right to make an interruption of that kind. I have often sat here and listened very patiently to some of his lectures, and they have not sometimes been so entertaining as perhaps he intended.

I only ask for reasonable information.

Clause 3 is intended to raise the holding from £200 to £400, and we believe that the demand of a society for more capital is sufficient reason to give. I had a remarkable experience only two days ago when visiting a town of some 4,000 inhabitants where our co-operative movement is well established. In speaking to the chief official of that society I found that it had within its ranks a number of professional men—doctors, lawyers and other middle class people—and Ft was said that these people at least would desire to have the contribution figure raised and would be prepared to take full advantage of it if only the facilities existed. The growth of the movement is making it possible for men of the middle class to come into it in greater numbers than ever before. They are coming to realise, if I may say so without lack of courtesy, the common sense that is incorporated in the word "co-operation" and in the practice of co-operation, and that there can be no hope for a rising standard of citizenship until the spirit of co-operation is put into practice in every form of our national and international life. As regards the savings bank side of the movement, the main reason why the figure of 10s. for a single deposit should be raised to 20s. and the total holding raised from £20 to £50 is, we suggest, an opposite one from that which was advanced in support of the proposal to raise the figure of £200 to £400. The bulk of our members—I was almost going to say— are in the distressed financial position indicated by the hon. Member for Gower and have not been able to save the amount necessary to complete the present holding, but those poorer people are anxious to accumulate the money through our savings bank department by very small contributions, and we ask the House to be good enough to allow them to continue that practice to the extent suggested.

The Bill which engaged the attention of the House in 1924 had only eight Clauses. This has fifteen additional Clauses, but we do not suggest that they will raise any controversy or will militate against the passing of the present Measure. Clause 4, one of the added Clauses, seeks to give wider discretion to the registrar as to refusing to register societies where the name can be said to be spurious or misleading. I believe my hon. Friend dealt with Clause No. 5, which concerns a change of office. In Clause 6 we seek to strengthen the provisions regarding auditing, and speaking as the Chairman of a society in my own city, I think we cannot be too emphatic about the safeguards which should be established not only for securing honesty but as regards the auditor's report, which ought to be hung up in the office, so that members shall know exactly what is going on from the financial point of view. Turning to Clause 19, I would mention that we have had some unhappy experiences of the matter which is there dealt with in connection with the society with which I am associated. This Clause deals with people who have appropriated a society's profits with fradulent intent. We are seeking to make it possible that even where fraudulent intent is not proved we may secure a return of the properties or the moneys which have been misappropriated. Clause 20 is another added Clause. It will be within the knowledge of some hon. Members that proceedings cannot be taken after a period of six months has expired, and we are seeking to extend that period. The Clause now reads: satisfied himself that this is quite a legitimate Measure to ask for, the expediting of it will be regarded as a matter of urgency. We are well aware, as I believe the movement outside is aware that the Government are well loaded with present and prospective legislation, but we believe this Measure to be of substantial importance and as likely to render such great assistance to the movement that we ask the Minister and the Government to do all they possibly can for us; and, further, we would ask hon. Members to try to impress upon their respective parties the importance of helping us to place the Measure upon the Statute Book at an early date.

Perhaps it will be for the convenience of the House if I take an early opportunity of stating the position of the Government on this Bill. In its main Clauses it reproduces the Bill which came before the House in the Parliament of 1924. That Bill passed its Second Reading after quite a short debate and went upstairs to Committee. In Committee, certain criticisms were made against the provisions of the Bill, and to meet those criticisms certain minor changes were introduced, and it passed through its Committee stage, I understand, in a single sitting. Then the Bill came to the House again, but, owing to the early Dissolution of that Parliament, it was not passed into law. The present Bill differs from that of 1924 in two major respects. In the first place, the alterations which were made in Committee have been, I am told, entirely incorporated in the present Bill, and to that extent the criticisms made both upon the floor of the House and upstairs in Committee in the case of the earlier Bill have been met.

In the second place, the Bill is considerably longer than that introduced in 1924, and I will explain why the new Clauses have been introduced. The Bill was submitted to the Registrar of Friendly Societies, and, when it was known that it was coming before the House, it was indicated that certain provisions, which were, in his opinion, thought to be desirable, should be incorporated in the Bill. That is the reason why some 15 additional Clauses find their place in this Measure which were not in it originally, and were not in the Bill as amended in the year 1924. I understand that the promoters of this Measure share the Registrar's opinion that these additions are of value to the Bill; they have not, however, been inserted at their request but at the request of the Registrar, and they do not mind whether the Committee upstairs decides to include or reject those particular parts which now find a place in the Bill. The promoters feel that no serious objection can be taken to any of those Clauses, and they think that they will be found to be an additional protection. I think it will be the general opinion of the House that those additional Clauses are of a non-controversial character.

In 1924, the Government of the day expressed themselves favourably in the main to the proposals in the Bill. I am now in a position to say that the Government have examined the provisions of this Bill, and apart possibly from a few verbal alterations, we take no exception to any of its Clauses. I am prepared to go further and say that the Bill incorporates many improvements in the Law which time and experience have shown to be desirable, and we regard it as a valuable addition to the existing legislation on these subjects. With regard to the request made by the Seconder of the Bill that facilities should be afforded by the Government, I cannot say more than that it is a matter that will receive consideration.

12 n.

I do not propose to speak at any length with regard to some of the individual clauses. Clause 1, which provides a restriction of the use of the word "Co-operative," differs in an important particular from the Measure which was introduced into the House in 1924, because in that Bill there was no protection to organisations which had already the word "Co-operative" in their title. That is one of the points which was altered in the Committee upstairs. The present Bill, in accordance with the amendments made in the Committee upstairs, now recognises the right of societies which already have the word "Co-operative" in their title, to retain that word, and the restriction is to be confined to societies which have not yet come into existence. I think it is for the protection of the public that, when they take any part in a society which calls itself "co-operative," that word should have a definite meaning which the people can readily understand. Clause 2 is one of those Clauses put in at the instigation of the Registrar. All I wish to say about that proposal is that it has long been thought that the use of the term "Building Society Acts" which was imposed upon Companies by Section 17 (1, c ) of the Companies Acts of 1921, should be imposed on societies registered under the Industrial and Provident Societies Acts.

Does that apply to any society, and not only to building societies?

I cannot answer that question straight away, but it is a point which I am willing to look into, or it can be dealt with by somebody speaking on behalf of the Bill. Clause 3 deals with the limit of share holding, and I only need to say that it contains the same principle as Clause 6 of the original Bill which was thoroughly discussed and agreed to in 1924. Therefore, I imagine that there will not be any serious opposition to that principle at the present time. The alterations which Clauses 10 and 11 contain were fully considered during the passage of the original Bill through the House. Those alterations have the approval of the Government, and they deal with changes in money value between 1893 and the present time. In those circumstances, we do not imagine that Clause 10 will be the subject of any serious adverse criticism. Clause 11 is the original Clause 7 in a more concise form, and as, in this case also, the alterations were agreed to in 1924, here again I do not fancy that there will be any very serious opposition. That disposes of the smaller details of the Clauses in so far as it seems necessary for me to refer to them. There may be points on other Clauses raised during the Debate—

Can the hon. Gentleman say whether Clause 11 will involve any loss of Death Duties to the State?

I am not quite sure about that. I do not think it would, but I will have that point looked into, and it can be answered later in the Debate. I understand that the hon. Member for Farnham (Mr. A. M. Samuel), who in the late Government occupied the position which I now occupy, will follow me in this Debate, and no doubt he will explain his position and that of those who share many of his views with regard to this Measure. I hope that, following the precedent of the Occasion when this Bill was introduced in its earlier form, he will be able to give his general approval to the Measure subject to any criticism of details which he may choose to make, and which no doubt will be considered most carefully when the Bill goes to a Committee. I hope that there will not be any serious opposition to the Measure, but that it may get through its Second Reading at an early hour to-day and be sent to be discussed elsewhere.

As the Financial Secretary has invited me to indicate the line that I myself and my hon. Friends who are associated with me may take in regard to this Measure, perhaps I might say a word now. In the first place, let me say that I think the whole House is greatly indebted to the Mover and Seconder of this Bill for the lucid way in which they have introduced it. They have explained its very intricate Clauses, and I will follow their line, and will not embark upon an academic discussion about co-operative principles, but will just confine myself to the Clauses and the effect of the Bill. So far as this Bill will put a clog on the actions of dishonest persons, we join with hon. Members on the other side in being very anxious to help them in that respect. I think the examples of that nature which have been put forward are highly unworthy, and anything that we can do to put a stop to such things we may be depended upon to do. So far as industrial assurance societies and collecting societies are concerned, I do not think that this Bill will be necessary, although I hope it will be helpful, because, as the result of an inquiry several years ago in which I took part—I think it was in a committee upstairs, but I have forgotten its exact nature—measures were taken which will make it very difficult for dishonest persons to exploit and rob the poor in the way that was set forth by the hon. Member who moved this Bill.

We are all in favour of business being run by co-operative societies. Over and over again Members of the Conservative party have said that we regard business run on co-operative lines as a very great incentive to thrift and a healthy element in our national life, and, so far as we can help that legitimate movement, we are all for doing so. I should like here to pass aside and say that up to a point we are with hon. Members opposite in restricting, so far as it might be used dishonourably, the use of the word "co-operative," and also the use of the term "building society," just as we would like to prevent the words "Royal," "Imperial," "National," or "Bank," used for dishonest purposes and by dishonest persons. But this Bill goes a great deal further than that. I well remember listening 5 years ago to the debate in this House on the earlier Bill, when the clauses were exhaustively examined and analysed by my right hon. Friend Sir Leslie Scott, who, I think, was then one of the former Law Officers of the Crown, and also, if my memory serves me, to a long speech by the hon. Member for East Ham South (Mr. Barnes). The present Bill contains a large number of Clauses which were not in the earlier Bill and which are all more or less of a legal nature. On this account I think we ought have a Law Officer of the Crown here to explain them. I hope that the Financial Secretary will not take it amiss if I say that we do not expect him, with the best will in the world, to understand all the legal intricacies of this Bill.

If we give the Bill a sympathetic hearing, it must be understood that we reserve all our rights to improve it in committee. We shall probably give it a sympathetic hearing after hon. Gentlemen opposite have explained to us the ins and outs of the Clauses, and, as I have said, I hope a Law Officer of the Crown will be here to help in doing that. We should expect the interpretation of the word "co-operative" in the Bill to be much wider than is now provided. I do not like the word "restriction" in the marginal notes to Clauses 1 and 2, and we expect the scope of certain words in the Bill to be very much larger than is now provided. This Bill, if passed in its present form, could be used as a tyrannical Act of Parliament. It is an extraordinary thing that we, who are called the Tory party, as we are the Tory party, should have to tell hon. Gentlemen opposite who are now behind this Bill that they would be guilty, if they carried the Bill in its present form, of setting up a monopoly and a privilege. There is evidence, in two Clauses, of class legislation of almost the worst kind, and, if they were passed without amendment, they would be doing something to restrict the use of the words "co-operative" and "building society," which might have the effect of making their use a monopoly of existing concerns. That is privilege, that is monopoly, that is class legislation of the worst kind. I am sure that hon. Members opposite cannot realise that, and, that when they do realise it, they will see that the defect is put right in Committee.

I do not like the way in which support is given exclusively to the merits of trade by co-operative societies. As I have already said, we on this side are all for co-operative trading if it is run on proper lines, and, when that is the case, we think it is a healthy element in the national life. But I read the other day, I think in the "Economic Society's Journal," a very interesting article on the distributing trades. There are 500,000 shopkeepers in this country—honest, hard-working, useful, valuable elements in our national life; and we must see that the private shopkeepers are not hurt by any monopolistic Act of Parliament of a kind, which, if passed, would injure them by giving to another set of traders privileges which they have not. I am bound to say that, if there is any slight opposition to this Bill by non-co-operative traders, co-operative societies and co-operative supporters have only themselves to thank. From time to time I have heard those identified with the co-operative movement take the patronizing, goody-goody, the "Eric, or Little by Little" attitude of intimating that all the virtues are on their side and that the retail shopkeeper has none. That is not the case. There is no more useful, honest, honourable or industrious man in this country than the ordinary shopkeeper, and we on these Benches must and will certainly see that nothing is done to injure him or place him in a position of unfair disadvantage.

I should like now to ask a few questions on the Clauses of the Bill, and perhaps, as the Debate proceeds, either hon. Members opposite or the Law Officers of the Crown will give the information which I think my hon. Friends on this side will require. In the first Clause I do not like the restriction on the use of the word "co-operative." On page 2 it says regarded, I hope, as respectable men, desire to form a small building society to use money to help people living in slum property in Westminster to buy new houses and so clear up the slum difficulty. We may not henceforward call ourselves a building society although our efforts might be of the most praiseworthy and honourable kind. It is plain that the wording of this Clause cannot stand as it is.

In the illustration which the right hon. Gentleman has given they would not desire to legislate under the Industrial and Provident Societies Act.

They might so desire and you should not restrict them. They ought to have the right to do it and if there is that difficulty in it some greater margin of power to use the words Building Society should be given. I am perfectly with the hon. Gentleman that no-one should be allowed to use a building society to defraud people but in the instance that I have given if people desire to set up a new building society with any such praiseworthy object we should not prevent the use of the word. There is another point which seems to me to lack foresight. It goes on to say:

"no interest or bonus shall be paid or credited on the paid up share capital at a rate exceeding six per centum per annum."

You cannot stock a shop unless you have the capital to buy the goods with and you require to offer interest to attract capital. How do you think people will take the risk of starting a new co-operative undertaking with the hope of getting only 6 per cent. They can get without risk very nearly 6 per cent. in first-class and proved undertakings and although you may say you do not wish to pay more than 6 per cent. and that you want to keep the rate of interest low, after all you need to get money to start your undertaking. You will not tempt money to be put into it if you offer a rate of interest less than the ruling rate yielded by old, proved concerns at the time you offer it.

I suggest that where speculation begins co-operation ends.

Those trite statements may sound all right, but they do not work in practice. There are certain unproved businesses, co-operative or not, which may run the risk of paying or not, and because a concern is a co-operative society it does not follow that it will pay. There is always the risk that it may fail, and the consequence is that you have to offer to those whom you ask to subscribe the original capital a rate of interest commensurate with the risk of loss which they may run. [ Interruption. ] I may be wrong, but I am entitled to express my views. Hon. Members may take exception to my point of view. I shall probably not divide against the Bill; I am rather looking benevolently on its provisions and flaws, and these are points which will have to be cleared up. There may be nothing in them. I will not be dogmatic in dealing with a highly technical Bill. But these are points that need inquiry and we want an assurance from the Financial Secretary or the Law Officer that he will consider these points and see that the objections we make are fairly dealt with. With regard to Clause 3, dealing with the limit of shareholding, I note that the Financial Secretary put the point that the purchasing value of money had fallen, and therefore he would support £400 instead of £200. I do not take any great objection to £400 rather than £200, but I should very much prefer the figure £300, because an increase of 62 per cent. above pre-war cost of living brings the figure up to about £320 rather than £400. [ Interruption. ] I do not see why the hon. Gentleman should go back to 1893. You should take the present index as compared with 1913. As the hon. Gentleman said, there is a difference in the value of money, and I ask him to consider what the date basis is and what index figure you start with.

The Act that is being amended is the Act of 1893.

That may be an answer. I will consider its validity. Then in Clause 5: meaning, but it is cryptic at present, and I shall be glad to have its purport explained.

I want to get to a point in Clause 6. I see the First Lord of the Admiralty, who, I believe, took part in the Debate on the earlier Bill five or six years ago. In this Clause there is the reference to an "audit." He and I have had in years past a good many talks about the word "audit," and we ought to have the definition cleared up here. For the most part the stocks-in-trade of co-operative societies will consist of what the lawyers call chattels: a bald audit of chattels may be absolutely valueless. If an undertaking has a large number and variety of chattels in stock and an audit is made based upon what appears in books drawn up by persons other than the auditors, of what value is it? The accounts have to be submitted to a public auditor appointed under the provisions of the principal Act. How do they know that the assets they are certifying represent the value they state? How can such auditors value chattels? Impossible. Yet what good is an audit based on hearsay or untested as to value by the auditors themselves? Such an audit may be a solemn legal farce and based upon an impossibility.

The Co-operative societies' certificate will probably say, "As represented by the books of the Society." You do not except the public auditor to go and value 3 lbs. of cheese, six pairs of boots, and 50 doz. bootlaces. We all know that. None the less, an audit taken in circumstances such as are provided here, where chattels are dealt with, merely registers information at second hand. The amount based on evidence, "as shown by the books of the company," is as "the soldier said," and is not real evidence as proof of value of assets; it is not worth the paper it is written upon. When we come in Committee to make provision as to what kind of audit should be used, we must consider further how this audit of chattel-stock-goods shall be made effective. I do not know whether I have made this point clear to hon. Members, although I am in accord with the provision of the Clause that there should be an audit by one or more of the public auditors appointed. I am perfectly agreeable to that. I should support that view, but I should like to know the kind of audit he is going to make. I think that the great stores in the Co-operative movement should take the lead by having a better form of chattel audit than is provided for under this Bill.

I come next to Clause 10, which goes with Clause 3, and as the Financial Secretary explained, reflects the difference between money values of 1893 and now. I must let it go at that. Clause 11 raises the question of Death Duties, and the Financial Secretary did not give a reply on that point. If there is property transferred under this Bill of a larger amount by nomination than was previously the case, and a person holding the right to make that nomination dies, there will be less money brought into the Probate duty returns. And to that extent the Treasury or Exchequer figures will be affected. The Financial Secretary must, therefore, take into consideration the fact that if he loses money in Death Duties in respect of the aggregated differences between £100 and £200—it may not amount to much—there will be indeed a difference in the returns from Estate Duty. The next point is the curious wording of Clause 15, which reads—

Is it that the thirteenth day will give the same day of the week a fortnight hence?

That is so.

Clause 16 is the most difficult of all the Clauses in the Bill to analyse. I hope that we shall have one of the Law Officers to explain it. I have received in respect to this Clause a Memorandum from the National Chamber of Trade representing one hundred thousand traders. We are bound to give and we shall give consideration to a perfectly reasonable and courteous protest from a body of men who play an active part in the trade of the country and are good and useful citizens. I will read what they say.

"Co-operative trading societies already enjoy many privileges which limited lia- bility companies and private traders do not possess. These give the societies a distinctly unfair advantage in their competition against private enterprise. This is notably so in respect of taxation as was clearly demonstrated in the majority report of the Royal Commission on Income Tax. That report recommended that a co-operative society should be treated exactly as a limited liability company trading in similar circumstances and under similar conditions. It was pointed out that if this proposal was acted upon it would be necessary to amend the law in so far as it confers the special exemption. Unfortunately, the law in this respect is still unaltered, which is one of the main reasons that justifies opposition to the Bill now before Parliament."

The House cannot justly disregard this protest. The House must remember that under the system of taxation which now exists we raise, by Income Tax, revenue from the taxable field. There has been a small area taken off under the co-operative system of trading which should pay Income Tax under Schedule D and does not. I am not arguing the rights and wrongs of the matter but merely pointing out that the originally small area taken off by Co-operative societies does not pay Income Tax under Schedule D. That area has become a great deal larger, and the result is that the whole of the remaining taxable area under Schedule D is covered by those who are not in the Co-operative society movement. The result is that they are not fairly treated, inasmuch that when Co-operative societies take over businesses which have hitherto paid Income Tax under Schedule D those. Co-operative societies obtain and share in the general benefits of the country without contributing under Schedule D towards them on the same lines as private traders. [An HON. MEMBER: "It is not true."] An hon. Member says that it is not true. It is true. Under Schedule D the Co-operative societies pay no Income Tax. If they were a limited liability company Income Tax under Schedule D would be paid. What is the result? Co-operative societies have the benefit of all social and national and defence services, and they pay nothing towards them under Schedule D, whereas a similar undertaking trading as a limited liability company or private concern would contribute, as far as it was liable, under Schedule D. Co-operative trade benefits at the expense of non-co-operative trade.

Individuals would pay.

Under Schedule D co-operative societies do not pay Income Tax.

I am quite sure that the hon. Member for Farnham (Mr. A. M. Samuel) does not want to mislead the House on an important question of fact. From the hon. Gentleman's answers given in this House many times during the last Session of Parliament it ought to be perfectly plain that the only difference is that there is no assessment of the co-operative society at the source. That difference is well recognised. But every member of a co-operative society is liable to pay full rate of tax on incomes from co-operative share capital.

That is not the point I was making. That is quite beside the mark. The point I was making is, and I repeat it, that Co-operative Societies do not pay Income Tax under Schedule D, and you cannot get away from that fact.

Subsection (2 of Clause 16 says— offences. We ought to have that matter cleared up. That brings the House back to Clause 1, Sub-section (5). Under that Sub-section it is provided that:

I have very little more to say. I have indicated the line of inquiry which will be followed by other hon. Members. We shall give sympathetic consideration to the Bill. We do not propose to oppose the Bill on the Second Reading, but I must make it perfectly plain that we shall require assurances that any reasonable proposals we may bring forward in Committee will receive sympathetic consideration from hon. Members opposite. I make this claim on behalf of the shop-keeping and trading class to which I myself belong. We cannot and will not allow this valuable section of our citizens to be put into a position where the scales are weighted against them by a monopoly or privilege granted to other concerns. The Bill must be framed in Committee in such a form, with the scales held justly and evenly that non-co-operative traders will not suffer.

On several occasions I have interjected remarks in this House whilst other hon. Members were addressing it. Some of those remarks have been favourable, others have been unfavourable, but I can assure the House that as a result of rising to address it for the first time this afternoon my feelings are such that in the future I shall have much greater sympathy with other hon. Members who addressed the House. I rise to support the Bill for three main reasons. First, because I believe it will amend the present law and bring it more into line with present money values and the need for extending the organisation. Secondly, because it will put a stop to the use of the name co-operative by bogus concerns, whose desire is to mislead and defraud the public. Thirdly, because it strengthens the hands of the Registrar of Friendly Societies and gives him greater authority; and with that strength and greater authority thereby gives greater protection to the millions of co-operators in the country.

It will be agreed on all sides of the House that the amount of money required to do a given amount of business is considerably larger to-day than was the case 35 years ago when the Act under which these societies are now operating was passed, and, therefore, for that reason alone there is a good case for the Clause of the Bill which allows the maximum shareholding of an individual to be increased from £200 to £400. It is not only on account of that provision that I support that particular Clause, and also the Clause which allows the maximum individual holding in either a penny bank or a savings bank to be increased front £20 to £50, but rather because I believe these changes will be an inducement to thrift so far as a great number of the people of this country are concerned. Hon. Members opposite very often pay tribute and express a desire that there might be an extension of this thrift spirit and thrift habit, as far as a great number of people are concerned. I suggest to them that one of the best practical examples they can give of their desires in that direction will be to support the Bill now before the House. Speaking from a personal knowledge, the savings which have been accumulated by ordinary people through the co-operative movement as a result of the surplus arising out of their trading with that movement has been the means of providing money for the rainy day in hundreds and thousands of homes in this country. The extension from £200 to £400 will not only mean that that good work can he continued, but it will provide a wider avenue of investment for some of those who are a little more fortunately situated and are able to make savings beyond the present maximum of £200. If I may speak again from personal experience, which is usually worth a ton of theory, as a result of allowing the surplus of my trading with the co-operative movement to remain in it and accumulate at interest it was possible for me to get the nucleus by which I was able to purchase my own house.

I speak, therefore, with a little feeling and knowledge of the valuable services which this movement is giving to many hundreds and thousands of men and women. I suggest that, taking into account the present value of money and the opportunities which the movement gives for an extension of the thrift spirit, those who are interested in this question and desire to support the idea should support this Bill whole-heartedly. I do not want to suggest, as a result of my knowledge of the movement, that this Clause is absolutely imperative in order to finance the movement, or, in other words, that the co-operative movement is actually short of capital or liquid reserves. But there is one section of the movement which could be helped even in that direction. I refer more particularly to the agricultural co-operative trading societies. Although at the present time I am interested in an industrial constituency, my earlier years were spent in the country, where I was closely identified with the agricultural industry, and my interests still continue in that industry. I believe that one of the solutions of the problems that are at present facing that industry is an increase in the co-operative spirit and idea, and the bringing into being of more of these agricultural co-operative societies. In that direction I am satisfied that the increase of the £200 to £400 will be of real help.

With reference to my second point, as to the use of the name "Co-operative," I think that sufficient has been said to impress upon the House the necessity for something to be done, not merely to protect the co-operative movement, but even more to protect the public. The instances that have been given must have impressed all who heard of them. I shall only say, in passing, that in so far as the name "Co-operative" has been used by these bogus concerns, whilst it is a compliment to the co-operative movement—because it is a recognition of the fact that the word means something in the nature of stability, honesty and fair dealing, so far as the public are concerned—we do feel that the public should be protected from these concerns.

I would like to say a few words with reference to the difficulty mentioned by the hon. Gentleman who spoke last, and the instance that he gave of co-operative nursing associations. I do not want the House to be misled. Whilst there may be co-operative nursing associations working on the lines to which the hon. Gentleman referred, I know of co-operative nursing associations which are certainly not working on lines of that kind. There are several co-operative nursing associations in London, and the only co-operation is that of the one or two individuals who are running the concerns. The nurses associated with those concerns are sent here and there by the controlling individual, but when there is no work for them, there is no pay for them and they have to provide their own lodgings and food from day to day. There is nothing co-operative in principle in the concerns at all. They merely have the name "co-operative nursing associations." The nurses are sent to work, and a commission of 2s. or 3s. or 4s. in the pound is taken out of the money that they receive, by the people who are running the concerns.

I understand that no fewer than 15 of the Clauses of the Bill have either been suggested or put forward by the Registrar of Friendly Societies. The fact that these Clauses have been accepted by the promoters of the Bill is the best possible evidence that their main desire is to protect the interests of the individual co-operator. I hope that the result of this Bill will be in that direction. I support it whole-heartedly and trust that it will ensure that this great movement shall continue to fulfil its useful purpose and be a benefit to millions of men and women in this country.

1 p.m.

The Bill has for its principal object the continuance and enlargement of certain privileges which are enjoyed by co-operative societies, and in particular, I think everyone will agree, by a certain large and powerful organisation. I am one of those who realise that that organisation has been successful, that it has conferred many benefits on working men and women, in giving them facilities for purchasing goods at reasonable prices and for the saving of money. I do not doubt that when that society was started it needed certain facilities, as a young plant, to enable it to grow stronger, but I am sure that to-day the society is quite able to hold its own and to face any competition that it may meet. I cannot see that there is any justifiable reason to-day for according that organisation special privileges as against other organisations, many of which are not notably dissimilar.

During the Debate, Schedule D of the Income Tax has been mentioned. I want to say something about that, because the subject frequently comes up in this House when the Budget is discussed and generally we do not get very far with it. We hear that the amount of money which the Budget loses owing to the privileges of the cooperative societies, is a comparatively small one. Furthermore, one must admit that it would be, and is, very undesirable that investors of email amounts of money should have Income Tax deducted at the source when they are not liable for it and when they would afterwards have to reclaim it. I imagine that very large sums are deducted through property and shares that belong to small investors who are not liable to Income Tax, and are not able, either through lack of knowledge or facilities, to obtain repayment. I have no doubt that many small investors lose large sums of money, in the aggregate, every year in this way.

The point about the advantage which the co-operative society enjoys is this: It is not that there are many members of the co-operative societies who are not paying the tax, but it is that solely by investing or lending their money to a co-operative society, with one other exception which I shall mention, the small investor can make sure of receiving his full interest without the deduction of tax. That is a very great privilege, and it is very largely because of that privilege that the finances of the co-operative societies have grown so strong in recent years. The only other case that I know of where a small investor can invest his money on similar lines and not have Income Tax deducted, is investment in war loan or the placing of money in the Savings Bank.

In other words, you give a special privilege to this co-operative movement, which has become a very big movement and looks like growing even bigger and which is at present directly competing with the State for the savings of the people—on unequal terms because the majority of the loans made by the State are not on these terms I have indicated. I have always thought that it is desirable that some form of legislation should be passed at an early date to remedy that state of things and enable investors in other forms of securities and in other directions, now liable to tax to be able to receive their interest or their dividends without having the tax deducted. But that is clearly a matter which I ought not to discuss at any length today. The real point which I wish to make is that this privilege of being able to pay interest and dividend, without deduction at source, is an immensely valuable privilege and is one of the main reasons for the financial prosperity of the co-operative societies. Arising from that point, I think we are entitled to consider whether there is any special justification or any special reason why the great co-operative societies should enjoy this special privilege to-day. As I have said, most of us approve of their work and we realise the ability with which, in the main, they are conducted. But there are other organisations in this country, not so dissimilar, which do not enjoy these advantages. Take some of the gas companies for instance. How are their profits divided? Their profits go partly in dividend, partly in reduction of the price to the consumer, and partly in profit-sharing schemes in which the workers participate. It seems to me that an organisation of that kind is as much entitled to privileges, if there are to be privileges, as a co-operative society.

They have a monopoly.

My complaint at the moment is that in some sense the co-operative societies have a monopoly. [HON. MEMBERS: "No!"] Let us consider the advantages which the co-operative societies are able to offer to-day. They offer what the ordinary working purchaser regards as useful competition, which enables him, frequently, to buy articles at a reasonable price. They also offer him useful facilities in the way of investments but one cannot ignore the fact—and I do not want to introduce controversy into a Debate which up to the present has been strictly on what I may call technical lines—that this great organisation which has this valuable privilege is to-day allied to a political party and subscribes to party funds. In my own town the other day the co-operative society passed a resolution in favour of subscribing to the Labour party funds. I do not see why it should not do so. The people who are in that society have a right to do what they like with their money. At the same time, I do not think that Parliament has any right to confer special privileges on organisations which are linked up with political parties. Undoubtedly, the co-operative movement, as far as I know is definitely allied for the moment to a political party in the State and I think that alone is a sufficient reason for this House refusing to confer privileges of a kind which have not been conferred in other directions. In those circumstances I must say I regret the attitude taken up by the hon. Gentleman on the Front Opposition Bench. I do not think this is a matter on which we ought to be lukewarm, and I have no hesitation in saying, that if any members of the House go to a Division against the Second Reading I shall join them.

May I on my own behalf and on behalf of those associated with me thank the hon. Member for Farnham (Mr. A. M. Samuel) for his kindly reception of the Bill, his constructive Criticism on some points and his offer of assistance in Committee if the House should be good enough to give the Bill a Second Reading. That assistance we shall very cordially welcome. It has been pointed out that the main Clauses of this Bill are exactly the same as those of the Bill which passed through the Committee stage in 1924, but which we were unable to proceed with on account of the Dissolution. It is true that the Bill has been increased by another 15 Clauses but those have been added at the request of the Registrar of Friendly Societies with whom I have had the pleasure of consulting on these matters. We are assured by him that these Clauses are necessary for administrative purposes, and as he says quite frankly that he is not wedded to the particular form of words here proposed, we would welcome any assistance in that respect during the Committee stage.

It is not my duty now—nor do I think this is the place—to attempt to deliver a lecture on the development of the co-operative movement. There are few Members of the House who have not an inti-intimate knowledge of the growth of the co-operative movement and I think most hon. Members will join us in asking, not merely that the interests of the co-operative movement should be safeguarded but, what is even more important, that the interests of the public should be safeguarded in regard to the use of the word "co-operative." The hon. Member for Gravesend (Mr. Albery) introduced a point, which may possibly be supplemented by other hon. Members opposite, regarding certain political issues. I thought we should have been able to discuss the Bill without bringing in these outside issues, but I content myself for the moment by saying that I know something of the conditions in Gravesend and I would remind the hon. Member of the position regarding co-operative societies taking part in political activities. No society may take part in political action or spend a penny of its funds in that way, unless it is provided for in the registered rules of the society and those rules must be adopted by the general meeting of the society. To secure full democratic control we act on the principle of one man one vote or one woman one vote; and the member who holds a £1 share has the same right and power of voting as the member who has the full £200 to his or her credit in the society. So the members have full power to alter or amend the rules as they think fit.

I did not complain of any society, within its rules, subscribing to a political party. The only point I made was that it was not desirable for this House, which represents the country as a whole, to give special privileges to any body which happens to be allied to the political party.

I would join issue with the hon. Member on the question of whether we are asking for any special privileges or not, and whether any legislation has ever been passed which confers special privileges upon the co-operative movement?

There is the privilege in regard to Income Tax.

I am not going to endeavour to explain that matter at this stage. I would only say in regard to the point raised by the hon. Member for Gravesend that, in addition to the safeguard which I have mentioned, there is the further safeguard that a proposal of that kind must be introduced by special resolution and must be adopted by a members' meeting before such action as has been suggested can be taken. I would remind the hon. Member that the question of political activities is not confined, so far as the co-operative societies are concerned, to one political party, and I happen to have in my possession many letters issued by the party of which he is such a distinguished member appealing to their supporters to take part in this particular section of co-operative activities.

I want to attempt to deal with some of the objections which have been raised. The hon. Member for Farnham referred to the word "Restriction" in the marginal heading to Clause 1, and I want to say quite frankly that we are not particularly wedded to that word and that if, on the Committee stage, we can find a happier word, we shall be very glad to introduce it. If the House will give us a Second Reading for this Bill, we shall welcome the co-operation during the Committee stage of those who have taken part or who intend to take part in this Debate. Another point was raised in regard to offences. I understand that under the Summary Offences Act pro- ceedings cannot be taken after the expiration of six months. In the Registrar's view it is very desirable that if persons are guilty of committing offences, some opportunity should be provided of prosecuting them after the expiration of six months, and I understand that this particular Clause will extend it to a period of 12 months.

A very important question has been raised affecting building societies in Clause 2. I would remind the hon Member for Farnham that his own Government, only last year, in their Companies Act, laid down the restriction that building societies should in future be registered under the Building Societies Act, largely, I believe, on account of the large sums of money that are now being handled by these organisations. The Building Societies Act, it was thought, would tighten them up more than would be the case under the Industrial and Provident Societies Act. This is a Clause introduced at the request of the Registrar. Another point was made with regard to Clause 5, and the words:

What is the reason for the differentiation between the two words "will" and "shall"? Why is "will" used and not "shall" in the sentence "at which they will be received"?

If my memory serves me aright, the point under consideration was that if we put in the word "shall," it would compel some officer to attend the office on a particular day or at a par- ticular hour. It was felt that that was going too far, though, of course, the word "will" may not go far enough.

Is not the word "will" permissive? Does it not give a loophole in this respect, that letters may, or may not, be received there? Is it not too loose and too optional? Does not the word "will" convey too optional a meaning?

I think I can concede a great deal on that point, but the difficulty was to differentiate between the words "will" and "shall." I have no legal training, but I would be happy to receive any suggestion from those with experience to overcome the Registrar's difficulty on that point. A point was raised with regard to Clause 16, an important Clause dealing with amalgamations. Many hon. Members will have recognised the tendency of modern industry towards mergers or rationalisation, and our Co-operative movement is going through exactly the same experience. Small societies are finding it to their advantage to merge with other small societies and form larger organisations, but we have found technical difficulties in the way of the desires of the members in putting a transfer into actual operation, and this Clause proposes to make the procedure for amalgamation a bit more simple.

The hon. Member for Farnham raised a question as to the loss of revenue to the State on account of no Stamp Duty being payable. I am assured by the Registrar that in all these cases of amalgamation a fee has to be paid to the Registrar on account of the transfer.

But not Stamp Duty.

Money received from a fee would be just as acceptable as money received from Stamp Duty, I should think.

Is it not a fact that these societies get a benefit which is not given to those which do not come under this exemption, and that they are exempted from Stamp Duties which would otherwise be payable by them?

I must concede the point in regard to Stamp Duties, but if a fee has to be paid and the State receives a revenue from the transaction, I do not think the Financial Secretary to the Treasury will quarrel about what it is called. As to the point which was raised about the Central Office, the rules always lay down that there shall be a central office, a registered office, at which all communications can be received and all communications from the Registrar can be dealt with. I am rather surprised that the hon. Member for Farnham should have introduced the question of the position of the co-operative societies in regard to Income Tax. I want to assure hon. Members that we shall be quite prepared to meet them and to discuss our position on that matter at the proper time and place; and, indeed, an opportunity may be provided on the Finance Bill of next year.

Again, the hon. Member for Farnham was very concerned as to what effect amalgamations would have upon small shopkeepers. I do not think there is anybody in this House who has more sympathy with the small shopkeepers than have those of us who are associated with the Co-operative movement, but we must recognise the changing conditions of the times. Just as in productive industry you are having amalgamations, so, I believe, in the distributive industry the same process is going on, and every merger of your industrial or distributive concerns in London, every extension of your combines in the distribution of food stuffs, is having just as disastrous an effect on the small shopkeeper as any legitimate extension of our Co-operative movement could be thought to have. Further, in our co-operative organisations we have hundreds of members who are themselves, in turn, small shopkeepers, which is rather a striking tribute to the Co-operative movement.

I am glad the hon. Member for Farnham dealt with the question of audits. As one who has had some painful experiences of what an inefficient audit may mean to a co-operative society, I am glad he raised the point. The hon. Member for Royton (Dr. Davies) will probably recognise that my home is not very far from his constituency; and in the old days, when I was chairman of a big co-operative society just outside Manchester, one of our employés thought he had more right to £11,000 of our money than we had, and went off with it. We had to have a thorough re- organisation and investigation of the society's affairs, and we found that we were carrying on, in those old days of lay auditors, with men who were following their ordinary work during the day and attempting to audit the books of the society at night. We, in this movement, welcome the restriction that there shall be at least public auditors appointed by the Treasury, and I say quite frankly that some of us would go even further than that.

Why did the hon. Member refer to me particularly in this connection?

I have a close regard for anybody who comes within striking distance of my home.

I was not aware of the case.

Before the hon. Gentleman leaves the auditors, will he tell us what he proposes? I am not speaking in any hostile way; I am trying to help him to prevent fraud. What type of audit do the co-operative societies propose, and does he not think that the way in which audits and stock-takings have been commonly carried out in the remote past should receive some improvement? What improvement has he in mind for the audits to be carried out so that they are not a secondhand audit, and not dependent upon what people or other person's books tell the auditors? Is it proposed by those who are in charge of this important Bill to provide that those who in future make audit shall personally assure themselves that the figures and values for which they are vouching are correct in their own knowledge and not from secondhand knowledge?

I was trying to explain that, in my own judgment, the particular case to which I had referred was due very largely to the fact that in those days we had as auditors of the society two men who were following their ordinary occupation during the day, and attended to audit the accounts of the society in the evening. That is impossible, and I welcome the steps previously taken that we shall have at least auditors appointed by the Treasury. I think I would go further, and, in regard to qualified accountants, speaking from some inside knowledge of the method of stock-taking, I think our practice may be compared with that of an ordinary joint stock company. Stock is often taken by an ordinary employé and then checked by the directors of the society and then certified by the independent stock-takers. As one who has spent most of his life in the cotton trade, and knows something of what took place two or three years ago, I think the audit of stocks is just as much desirable as a thorough investigation of a society's accounts. I have attempted very hurriedly, and perhaps disjointedly, to deal with some of the points raised, but I would beg the House, in giving a Second Reading to this Bill, to accept our assurance that any co-operation and suggestions to improve the Bill will be heartily welcomed in the Committee stage.

I think my hon. Friend the Member for Farnham (Mr. A. M. Samuel) was absolutely right when he asked us to consider the trading background from which this Bill emerges; in other words, to be very careful that in the constant competition between the small trader and the co-operative society we do not tilt the balance against the small trader, whose disadvantages are so great. He has to face the competition of the co-operative society with its privileges with regard to taxation and its very large capital resources, and, at the same time, has to meet the equally acute competition of the multiple shops. If I thought that the effect of this Bill was to tilt the balance unfairly against the small trader, I should certainly be among those who oppose it, but I take the view, which, I think, will commend itself to everyone in this House, that as far as the main provisions of this Bill are concerned, there is nothing which, excepting one or two points that I will raise later, affects adversely the small trader. The bulk of the provisions have really to be decided by the co-operators themselves. They deal mainly with the internal mechanism and routine of co-operative societies, which are, obviously, the best judges as to whether or not the improvements are necessary. Looking back upon the long history of the co-operative movement since 1844, from time to time it has been necessary to come to Parliament, as in 1893 and 1913, to have the Statute law brought up-to-date, having regard to the increased responsibilities and increased commitments of co-operative societies. We must all recognise that since 1913 the progress of these societies has been so great that it is high time the technique and the legal procedure relating to co-operative societies were brought up-to-date.

There are two points only in this Bill which seem to me to go outside the internal economy of the co-operative society, and which may possibly impinge upon public rights. First of all, with regard to the monopoly given by Clause 1 to the word "co-operative," I think that, on the whole, the claim to monopoly by this time is well founded. At the same time, I do suggest that Sub-section (3) ought to be more liberally couched. Companies or bodies which are already incorporated or registered under any Statute or by Royal Charter may continue to call themselves co-operative, and their rights to continue the use of the word are reserved. But there is no reason for differentiating a limited company from an unincorporated body of traders when for years past they have been trading perfectly legally with the use of the word "co-operative." I suggest that where unincorporated bodies have been trading under that name, which is associated with them at the present time in their own locality, the term "co-operative" should not be taken away from them by virtue of this legislation. Apart from that criticism, I think we could conceive, at this stage of our industrial history, that the primary meaning of the word "co-operative" in the popular mind now is associated with the industrial and provident societies, and that, therefore, the claim is well founded.

The objection to Clause 2 is not quite the objection that some hon. Friends opposite think we are taking to-day. It is not that we object to bogus building societies being disabled from calling themselves building societies. The objection we take is to the actual language of Clause 2. As that Clause now stands, it says: not think any hon. Member on this side would object. As it stands at present it would prevent a society registering as a building society which is, of course, entirely remote from the intention of the promoters of the Bill, and I have no doubt hon. Members to whom we are indebted for the Bill will make it clear by the insertion of some words such as I have suggested, when the Bill gets into Committee.

Having said that, I turn to the one controversial point which I would like to put before the House to-day. This Bill is intended to amend the existing law relating to industrial and provident societies in any such way as amendment is required. There is a gap in the Bill as we have it to-day. I submit that the time has come when provision should be made in the Acts for the prevention of the application of co-operative funds for political purposes. The co-operative societies include something like 6,000,000 people at the present time. Of these 6,000,000, a very large number have no connection at all with the Socialist party; in fact the members belong to all the political parties within the State. At present, where the rules do not absolutely exclude it, and where the majority of a society is in favour of applying the resources of that society to political purposes, the minorities have no remedy. It is a well-known fact in our political history that, during the last few years, the tendency to apply the funds of an essentially non-political society for political purposes is increasing.

Perhaps the hon. and learned Member is aware that some societies, which subscribe for political objects, make provision for those who do not agree, not to pay.

I am glad to hear that. At the same time, there is a real grievance among a great many co-operators—and I have a large number in my Division—that, not only the resources, but the prestige, the halls, the shops and the services of employés of Co-operative societies are used by the prevailing majority of a local branch for the purposes of furthering partisan propaganda. Hon. Members who know what electioneering in the North of England is like, will realise that what I am saying is true. I saw it in my own Division when I had against me a gentleman who was standing as a Co-operative and Socialist candidate. This is resented very much by the Conservative and non-party members of the Co-operative society. I realise the point that the hon. Member for Kettering (Mr. Perry) has made, and I see no reason why, where members of a Co-operative society desire to subscribe to political purposes, they should be disabled from doing so; but that is not the same thing as forcing a minority to see the resources, the prestige and the influence of their local branch used for one political party. I hope that when the Bill goes to Committee, the promoters and the Government will not be hostile to the insertion of a Clause safeguarding the rights of the minority against the use of the great Co-operative movement for partisan political purposes.

I was surprised that the hon. Member for Farnham (Mr. A. M. Samuel) should say that this is legislation along class lines. It is true that it is legislation dealing with an institution with a membership of nearly 6,000,000 who, with their families, make up at least half the nation; but I fail to see that that is any reason for terming this measure legislation on class lines. Its sole purpose is to deal with anomalies inside the Society, and with the deception and fraud on the public, and in some cases on the Society, which is going on. Cases have been quoted of societies which have robbed the public of thousands of pounds simply by using the word "co-operative" as a trading term. That word has such an influence on great numbers in the working classes that the very use of it suggests honesty and honour. We have also had instances where individuals have thought it advisable to misappropriate the funds of the Society. Clause 1 deals with the former class, and Clause 6 with the latter class. I agree with the suggestion of the hon. Member for Moss Side (Sir G. Hurst) that the greatest possible latitude should be given to the Committees in respect of any Amendments, but I should except those which in any way interfere with the fundamental purposes of the Bill.

I have had a communication from private traders, who naturally want to safeguard their interests, but I feel that they are suffering under a wrong concep- tion of the position. They summarise some of the reasons why we should oppose the Second Reading of this Bill. The first reason they give is— Committee, and we can allow a wider definition there. The sole point is that this Bill is a step in the right direction. It does not endanger the private trader except in so far as the trader is endangered by the existence of the Co-operative movement, and as this Bill may make the movement a greater danger than it is at present. I can see the argument that the Co-operative movement is a danger to the private trader, but I submit that it is no more a danger than is the multiple shop movement; it is even a less danger, because it provides far fairer competition. After all, the Co-operative movement does make adequate provisions for its employés. It pays better wages than most multiple shops; it pays better wages for work under better conditions than most shops.

My final point is this: The sole purpose of this Bill can be achieved and yet leave the relationship between the Co-operative movement and the private trader exactly what it is. The number of people employed by the Co-operative movement indicates that the movement will be watched from the employés' side as well as from the consumers' side. For the year 1928 the number of persons employed by the movement was just over 239,000, and the wages paid amounted to £30,414,000. The fact that the Bill is brought forward to enable the movement to conduct its business in a better way and to prevent attempts at defrauding and deluding the public cannot be a reason for opposing its Second reading, and I would add that I am pleased to note that the opposition from the other side is of a constructive and not of a destructive character.

I think the hon. Member who has just sat down has been rather guilty of what may be called special pleading. This Bill appears to have a twofold object: first, to enable co-operative societies to carry on business more efficiently and to extend their business; and, secondly, to prevent the fraudulent use of the name "co-operative," with which all of us on this side are in entire agreement. With regard to the position of the individual trader, for whom we on this side of the House try to speak, there is no doubt that if Co-operative societies become more efficient and extend their business they will come into keener competition with the individual trader, and that is where we feel a little doubtful. If the Co-operative societies confined their business entirely to trading, to shopkeeping, and so on, and would not come into the political arena, I do not think that either the individual traders or ourselves would have the tendency which undoubtedly we have rather to mistrust the "co-op."

There is a Clause in the Bill which says Interruption ]. An hon. Member points out to me that under the rules they may make a subscription. It is the balance of profit after provision has been made for any other obligation or payment authorised by the rules to be made out of the profits that is to be divided. If only we could alter that so as to make it illegal for any Co-operative society to subscribe to political funds, whether Tory funds or Socialist funds matters not—though I do not know that we get very many large subscriptions from the "co-ops."—we should be quite prepared to fall in with such an alteration and I think that alteration should be made in Committee.

Our fear about the Bill is that it will enhance the activities of the co-operative societies, and increase the competition with our friends the private traders. After all the private trader has risked all his money and has given up his whole life to his little business in the town in which he lives, he is always the best citizen in that town, he is always willing to help the poor and to allow their small accounts to run on for a considerable time when he thinks they are only in temporary difficulties. That man or women—that family, in fact—is the real backbone of our English citizenship in our towns, and we on this side do feel that those people ought to have more consideration. [ Interruption. ] The hon. Member who is interrupting me is outside the House. Perhaps he will control himself. We also feel that the larger and more efficient these co-operative societies become the more the ordinary private trader will have to find in income tax, because the co-operative societies do this enormous trade without sharing in full the charges which fall upon private traders and the large multiple shops as income tax and super-tax on their profits. I am quite prepared to see a Second Reading given to this Bill, but I hope that in Committee it will receive very careful consideration and that some amendments will be inserted to protect the private trader.

It is pretty clear that the opposition to this Bill is not marked by ill-feeling. The reception of the Bill has been a very fair one. It would be wrong of me or others to assume that there are no arguments against a Measure of this kind from the point of view of the private trader; but let us see where we are. In the first place the objects of the promoters of the Bill are substantially the same as they were in the case of the Bill presented in 1924, but the Measure has been amended by the addition of 15 Clauses to meet alterations suggested by the Registrar himself. That shows that the Registrar recognises the substance of the Bill, provided these amendments are made, and recognises that it will enable him to prevent fraud and deception. The Bill is designed to protect, first, the masses of small people of the lower middle and working classes whom the small trader could not, cannot and never will be able to protect.

Secondly, the Bill is designed to protect the special basis of co-operation as seen in what is called the Rochdale plan. Hon. Members on the Opposition benches have referred to the idea that the co-operator is naturally a capitalist. That is one of the many misconceptions held by our Opposition friends. After all, to be a capitalist we must be of capitalistism in outlook. Capitalism means the power to exploit others through a monopoly of the tools of production. There is no conceivable way in which a small number of people can exploit the rest of the community through a Co-operative society. That is the fundamental conception of the whole scheme which we propound. That is what is meant by the Co-operative movement. The plan of the Rochdale pioneers is clearly based on a generous scheme of equity. For instance, every member of a Co-operative society has his shareholding power limited, and no member can have more than one vote. The interest returned on capital holdings is necessarily limited at the most to 5 per cent. and the interest allowed under this Bill would be 6 per cent. In Ontario, the Co-operative Societies Act provides for 8 per cent. return to Co-operative members.

This movement offers privileges to every member of the community that you cannot conceive as being offered in any other institution within the State. Every member of the community could conceivably and practically become a member of the Co-operative movement. Upon becoming a member every person has a right to attend the society's meetings, whether quarterly or half-yearly, by merely paying an entrance fee, and they can debate such important matters as the election of their management board, and the members of their different committees, as well as matters affecting wages, prices, qualities, hours, and so on. Within the co-operative movement you cannot conceive of any licensed, speculative rights like those which apply to private trading companies. There is no gambling in shares; there is no possibility of commanding blocks of shares in the interests of one, two or three holders. There is no room for excess profiteering or the producing of rich men—Hooleys, Bottomleys, Hatrys, the Vesteys or any people of that kind —nor can it produce poor men. Obviously, as has been admitted by the Opposition, the Co-operative movement should command the extra protection which is asked for in this Bill if only on the grounds that I have just stated. The Co-operative movement provides what private trading does not provide—it provides stability in the matter of markets, wages, hours, prices, and quality, and it certainly bases all its transactions upon honest trading in every degree.

2.0 p.m.

Those are the grounds on which we have a right to demand this extra protection. It is a definition of that kind, and the general basis of honesty of trading and limited rights, that I should suggest if I were asked whether a society should be entitled to the name of "co-operative." Before saying that a certain society should be entitled to use the word "Co-operative" I should ask myself, "Does this society tally with the constitution aims and practice of the Rochdale plan?" If we do not narrow our definition down to something of that kind, it is obvious that this Bill is not going to preserve us against fraudulent encroachments. These encroachments and impositions were seen in the instances quoted by the Mover of the Second Reading of this Bill. There is the case of the Co-operative Thrift Society, the Legal Co-operative Collecting Society (Cardiff), the City of London Co-operative Society, the National Co-operative Bank, Limited, the Cooperative Radio Company and the Totalisator Co-operative Society. All these, obviously, are not Co-operative societies in any honest and clean sense. That is why I believe the Registrar in his suggested Clause 4 of this Bill, looked forward to providing greater powers to prevent misleading and bogus companies coming into existence. After all, these provisions would naturally protect the interests, not only of members of the Co-operative movement, but also of people outside represented so well by Members of the Opposition this afternoon who are not members of the Co-operative movement, but who are interested in clean trading all round.

It seems to me that the framers of the original legislation on this question did not contemplate great modern developments. These have been mentioned in matters of financial accumulation and the ever-narrowing of the number of banks. Former legislation did not contemplate the standards of living as we know them to-day nor the increased cost of living, and it certainly did not contemplate the gigantic and wonderful devel- opment of this movement, which needs more and more accumulations of capital if it is to advance further along the same lines. Clause 1 increases the shareholding of a member from £200 to £400. The mass of co-operators are poor and live on weekly earnings. These people could not live for the rest of their lives on £200 or £400, nor on the interest from their investments. After all, members of the Co-operative movement should have the right to place their little savings in their own bank rather than in the hands of banks who lend the money in turn to the competitors of the Cooperative movement. Clause 10 is useful to enable people who have small savings in the penny bank and small savings deposit department to increase their instalments from 10s. to 20s., with, in addition, holdings of from £20 to £50. This would enable the poorer members of the Co-operative movement to see to the extra needs in regard to education for their children, preparation for industrial apprenticeship, and so on, and would naturally encourage their children in what hon. Members on the Opposition benches usually term thrift, often, however, misusing the term.

Clause 11 naturally demands the right, on the decease of a man with property in the Co-operative movement, to hand over that property, to an increased amount of £200, to his nominees. Clause 16 has been clarified very well. Amalgamations and the right to transfer agreements should be made possible without all the intricacies of deeds of conveyance, which people find very troublesome. Clause 19, as was well said by my hon. Friend the Member for Kettering (Mr. Perry), protects us against fraud on the part of members or officials holding property or documents which they refuse to hand over. Clauses 5, 6, and 7 demand something which, it seems, is desired by the Registrar. Obviously, we must have a registered office, to be used for honourable purposes. It has already been stated that there are companies floated for divers reasons in the interests of a handful of people. Instead of asking, as in the principal Act, for a balance sheet showing the receipts, expenditure and effects of the society, this Bill would ask that there should be sent to the Registrar an annual return of the accounts of the society. That would be clearer, and the Registrar would be able to publish it, so that the accounts might be known, and it might be known that there was no concealment of returns by the society.

My final point is pretty clear. I have here a circular from the Birmingham Chamber of Commerce, and, in summing up the statements on Clauses 3, 10, 11 and 16 of the Bill, this circular says that they

The other point is that hon. Members opposite are very much concerned about party relationships. Like the hon. Member for Kettering I wish that hon. Members opposite had left out that phase. Clearly, what applies to the co-operative movement might well apply to the trade union movement. There are many in the trade union movement who vote Tory and Liberal, but the privilege of paying political levy in the trade union movement is identical with the privilege in the co-operative movement, and, therefore, the rights are preserved. There is no time to expose in this House the fact that the capitalist undertakings of this country have always been very well represented on the benches opposite. That is merely a matter of history, of quotations from representatives like the hon. Member for Salford, who himself, during the discussion on the question of Cash on Delivery, told the House quite clearly that he re- presented 215,000 retailers in the provinces, not necessarily the co-operative movement, or other undertakings, or the people who sent him here. Hon. Members opposite look at society with an altogether different conception. Representation is as clear on this side of the House as on the other side, and I hope that, with the rather good-natured attitude of hon. Members opposite, this Bill will receive a Second Reading to-day.

I am sure we have all listened with very great interest to the speech of the hon. Member for Deritend (Mr. Longden), and with most of the points that he raised I could agree. I noticed that, when the hon. Member referred to "the hon. Member for Sal-ford," he looked directly at me, as if he had mistaken my constituency. I am bound to say that, during the discussion on the Cash on Delivery question, I did state that I was speaking on that occasion on behalf of an organisation which represented over 200,000 shopkeepers in the country; but I want it to be clearly understood that that did not mean that I was here as their representative in the same sense as is meant in speaking of representatives of the co-operative movement or of the trade unions in this House. Surely, any Member of the House has a right to speak on behalf of any organisation that has approached him and put its case before him, without its being suggested in any way that he was directly responsible for it. I am in rather a peculiar position with regard to this Bill. Strong representations have been made to me by the co-operative society in my constituency—in favour of the Bill, of course; and strong representations have been made to me by the private traders in my constituency, against it. My reply to both was that I would consider the Bill with an impartial mind and listen patiently to the discussion upon it, taking part in it myself if I thought fit, and then I should vote for or against the Bill according to what I decided in my own mind as to the fairness of it or otherwise.

At the outset I desire to say that I shall certainly vote for the Second Reading of the Bill, if it goes to a vote, although that does not appear likely. I want also to say that I consider that many features of the Bill require amendment. I should also like to say, as a private trader myself, that, although I personally do not fear the competition either of the co-operative societies or of the multiple shops, nevertheless I can quite understand the fear that is in the minds of many of our smaller traders with regard to the effect that the Bill may have upon the competition that they may have to meet from the co-operative societies. Let me give one or two reasons for that fear which is in their minds. In the first place, it is no use disguising the fact that, as, indeed, was said by the hon. Member who spoke last, we have gone far from the days of the Rochdale pioneers, and gone far in advance of what they set down as the guiding rule for the co-operative movement in those days. I agree with him, and that is the reason why so many private traders are afraid of the co-operative movement. The private trader is afraid of the fact that the Co-operative movement has gone outside mutual trading between one another and has gone in for big contracts, competing with private firms in the open market. The idea of it being a movement dealing with purely working class people is ridiculous. I am sure the hon. Member for South Bradford (Mr. Hirst) can take me into the central store of the society he so ably presides over and show me fur coats at from 50 to 200 guineas and supply a motor car, or anything that rich people require to buy.

I agree with him that it is not now merely a question of the ordinary wage earner. They are getting the middle class in, and even the wealthy class. It is not because of the philanthropic or educational side of the business at all. It is because of the dividends. It is no use trying to convince me that it is not so. When I was quite a youth, a certain public hall was taken for the annual meeting of the Co-operative society of Bradford. They had dropped their dividend from 3s. 3d. in the £ to 2s. 6d., and there was a riot because the members objected to that 9d. coming off. That hall was never let for a Co-operative meeting after that. I mention that to show that the dividend idea is at the back of it all. When they talk to me about it being a philanthropic or educational institution I say surely not. It is surely and simply a trading organisa- tion, and let us regard it as that in dealing with such a Bill as this.

Those who are members of the Co-operative movement have the business instinct, too. I know of cases where ladies who are keen shoppers note the price of certain articles and, if there is a lower price at a private store, they buy the cheaper article. If it is at the same price at the Co-operative store, they will buy it there and look for the dividend. An hon. Member said just now that where co-operation ended speculation began. I am at a loss to understand that in view of the history of the last few years. We all know of speculations which have been made by Co-operative societies in tea and rubber, in running farms, even in running a colliery, and they have not always proved successful. We must realise that we are dealing with a purely trading organisation, and we have to treat this Bill in the same way as a Bill brought forward by any other trading organisation and give it fair play and fair assistance where they require it in a right and proper way.

The point at issue really is this: The private trader has the opinion, rightly or wrongly, that by Clause 1, which means increasing the amount of capital that can be invested, you are going to do something which will really damage him. There is no doubt that the co-operative movement is well organised financially, because whatever they lack as regards their funds locally, they have always that very powerful organisation at the back of them, the Co-operative Wholesale Society. If a society is weak and wants assistance, they have an organisation there which will give them all the assistance in the world, but on terms, and those terms are that they trade with the wholesale society and do not buy from any private trader outside. They have created a big monopoly. That is one of the reasons why the private trade is a little concerned about this, bearing in mind also the vast membership. We have heard a figure of something over 5,000,000, which will possibly be 6,000,000 before the year is out. If only 1,000,000 out of that 6,000,000 people are in a position to invest the extra money, think of the enormous amount of capital that will be placed at the disposal of those who have openly said they are out to crush the private trader and private enterprise. They are proving that by the way they are operating. They are accumulating capital and buying up businesses which are now providing revenue to help to keep the country going, whereas the co-operative society has the privilege of protection as regards Schedule D. The private trader really feels perturbed in his own mind about that increase of capital that will be allowed. The suggestion that there is a difference in money values compared with the time when the Act was placed on the Statute Book is a reasonable one, but there is a good deal in the suggestion that to jump it down to £400 is rather more than can be justified by that argument.

There is one point that I want to stress pretty strongly on which representations have been made to me by my own constituency, and that is the question of the monopoly of the title Co-operative. In the fishing industry we have a good deal of co-operation, which is not exactly the same as the industrial societies we are dealing with. We have a co-operative ice company, which is really a collection of owners of vessels who think it is far better to co-operate and manufacture their ice and distribute it to the members, and they find they can do it more cheaply. They ought not to be deprived of the privilege of calling the organisation "Co-operative." I can mention many others that we have in our town dealing with the purchase of coal, the manufacture of ropes, and so on. There are all kinds of co-operative organisations which do not come under the Industrial and Provident Societies Acts. The cases that have been given of dishonest concerns are very few compared with the vast number of concerns throughout the country trading as cooperative organisations which do not come under this Act. If this Clause means that they are going to be prohibited from using that term, that will be one of the points hon. Members will have to fight very tenaciously if they stick to it.

I should like to make one or two remarks on the question of transfer of share capital. It was said by the last speaker that in a circular that he had received from the Birmingham Chamber of Commerce—I have had a similar circular from my own Chamber of trade—they take grave exception to this point. It is not just a question of the private trader taking exception, and we ought to consider the matter from a purely public point of view, and from a reverse point of view also, because the Bill proposes to double the amount whereby the nominee can transfer. Under the present Act, as I understand it, in that transference you do not pay duty. There are no legal charges and, therefore, it is a very easy transaction. That is a privilege which no one else enjoys. If I have shares in a limited liability company—only a few— and I transfer them, I have to pay fees, Stamp Duty, and so on. Those who have this privilege, even to the extent of £100, ought not to ask for that amount to be doubled. The necessary revenue for the country has to be obtained from one source or another. It is all very well for hon. Gentlemen opposite to say, "Oh, there is plenty of money to be got if you go to the right spot." If you go carefully into public accounts, you will find that an enormous amount of the money which goes to make up the revenue of this country comes from very small men indeed and from people of small means. I say that to give one particular organisation the right to transfer without paying fees of any description is not fair to the rest of the community. I am positive that even those who represent the great Co-operative movement do not want privileges which the ordinary citizen does not enjoy. When we come to the Committee stage something will have to be done in that direction.

There are many Clauses in the Bill of which I heartily approve, and, speaking on behalf of those of my constituents who are co-operators, I should like to see those particular Clauses passed into law. I agree with hon. Members opposite that the Clause relating to audit is a very necessary one. I also agree with the hon. Member who, speaking about the Co-operative movement, said that at any rate it had not produced, I think he said, a Bottomley or a Hatry, and he mentioned other names. They have not produced men who have been able to operate on a gigantic scale, like some whom the hon. Member has mentioned, but it is evident that there is still a little human nature in the Co-operative movement or otherwise the hon. Members promoting this Bill would not have had to insert a Clause to protect themselves against dishonest people. I do not want it to go out that dishonest people only exist among one section of society in this country, or in one section of the trading community; you have them in all sections of society, and you want reasonable protection against them, and, therefore, I approve of the Clause dealing with audits.

I also agree with the Clause dealing with the question of annual returns. Although in the past I have had to fight elections against "Co-operative" money, I do not owe Co-operators a grudge on that account. But I wish we could make universal throughout the movement that which we are told by certain hon. Members is a fact in some particular parts of the country, namely, that a person belonging to a Co-operative movement could contract out in regard to any sum of money paid away in political expenses in respect of any candidate, whether it be for municipal or for Parliamentary honours. I should be satisfied if that were the case. If a person wants to subscribe to any particular candidate's election expenses, let him do so by all means. If he wants to subscribe that money, either through the Co-operative movement or a trade union, let him do so by all means, but do not let us have a sum voted out of the funds of these organisations without the member having a say as to whether it shall be done or not. I know how this sort of thing is done. It is called an education fund in some cases. A certain sum of money is set apart for education, they hold meetings and carry on propaganda, and they make grants of so much money towards election expenses. As I have said, although I have had to face that sort of competition, I do not owe Co-operators a grudge on that account.

I am prepared to do everything I can to assist this Bill with the object of making it a good Bill. If it goes to a Committee—as I am sure it will—I shall put down Amendments which I think are right and desirable. I hope that these Amendments will not be regarded as being opposed to the Co-operative movement, and that they will give some protection to the private trader. I hope that the promoters of the Bill will regard them in a favourable light and give them due consideration. I shall vote for the Second Reading of the Bill, and reserve the right to deal with Amendments in Committee.

I should not have intervened in this debate were it not for the many references which have been made on the other side with regard to political activities being characteristic of the Co-operative movement. Those references were quite natural, and I do not believe that they would be contended very much on this side of the House, but I do not see how it can be expected that political activities in these days can be eradicated from any movement or groups of movements. Indeed, I think it is one of the best features of the day to find that our people—groups of people, or individuals—are beginning to look at things from the political aspect. One gathered from some of the remarks made by hon. Members on the other side of the House that political activities, apart from political parties, have been confined to the Co-operative movement. I find it difficult to take that view. In the election campaign which I have just fought, the most powerful opposition with which I had to deal came directly from one of the most powerful private trading concerns in the Kingdom. It was a direct interposition, by the biggest trading concern, I should imagine, in the Kingdom, into the particular campaign in which I was engaged.

Will the hon. Member give us the name?

I will tell the hon. and gallant Gentleman privately and prove it. To expect that you are going to escape political activities in such a movement as the co-operative society is to expect too much from human nature. At the same time the development in the co-operative society sooner or later is bound to run up against the necessity of deciding whether it will extend its operations beyond the mere circle of trading. The hon. Gentleman the Member for Grimsby (Mr. Womersley), made a point that the trading activities of the co-operative movement to-day are very different from what they were at the origination of the movement. Of course, they are. I should imagine that any extensive movement, either trading or anything else, which decided that it would never extend would have been wiped out long ago. The co-operative movement was bound to extend its activities. It was bound to pass out of the comparatively small circle of trading.

The reference which the hon. Gentleman the Member for Grimsby made to the many phases of the movement expressed in its educational activities seemed to have just a little of the unfair atmosphere about it. There is, after all, a great deal of activity in the co-operative movement which is educative. The society is doing a very great deal of work in that respect, and it does not always bear a political colour. Much of the work which has been done is purely and distinctively educational. I am quite sure that occasionally political colour enters into it, but I do not know of any considerable society which engages in educative work to-day which does not at some time and in some respect bear a political colour. It is bound to do so. If it were permissible, I could mention one or two organisations—[An HON. MEMBER: "It is permissible."]—in which some hon. Members are closely interested. [An HON. MEMBER: "Let us have them."]

The co-operative movement generally, as I understand it, is a group of people combined together for the purpose of helping themselves, and improving themselves, and so on. That was the original intention of the society, and it has extended a very great deal. That ideal has been encouraged, and it has been encouraged recently. There is one phase of that ideal which has received the sanction and encouragement of this House during the last few years. I refer to the allotment movement. That movement began in a very simple way. I remember the time when the allotment movement, which is purely a movement of self-help, was a very puny infant. To-day that movement in quite an important thing, bound up by federations of small societies, county associations and national associations, until it represents a very great and active movement throughout the country. The sole idea is that the people who become members of these societies should help themselves. A few years ago this House felt that it was right to help that movement and passed a law which empowers local authorities to spend public money in developing it. That has a bearing upon this question of co-operative societies; the main difference is in the extent of the two societies. I have listened with great interest to the speeches, I have examined the Bill and I hope that the House will agree to a Second Reading.

I am definitely in favour of co-operative effort and of co-operative societies, but that is a very different thing from saying that I am in favour of giving them unlimited powers to trade under privileged conditions from the ordinary trader. In so far as the Bill seeks to do that, we shall seek to amend it when it comes before the Committee. The hon. Member who has just spoken said that he considered that the references to the political nature of co-operative societies were quite natural. I am glad that he thinks that is natural. The co-operative society next to the trade unions has been the most useful organisation to the Labour party of all the organisations in this country, and if this Bill is going to be of benefit to co-operative societies, one may perhaps wonder why there are not more hon. Members on the benches opposite, anxious to support the claims of a society which has been so useful to them. The hon. Member gave to the House a most useful piece of information. He said that if we would approach him afterwards he would be good enough to tell us of a body, I think he said that it was a body of private traders, who were willing and anxious to pay the expenses of Conservative Members of Parliament.

No, I did not say that.

What did the Hon. Member say?

I was referring to political activity, and I introduced that reference as a case of political activity, but I said nothing whatever about paying Parliamentary expenses.

I am glad to be put right, but I am sorry to hear that things are not quite so hopeful as at first they appeared to be, because I have found the very greatest difficulty in getting even the smallest subscription from any company. Company directors take the line, and very properly, that they are trustees for their shareholders, that their shareholders are composed of Liberals, Socialists and Conservatives and that it would be improper for them to subscribe to any one party from the fund of their company. I think that is an attitude which should be endorsed by everyone in this House, and I can only wish that the co-operative societies and the representatives of Co-operative Societies who control the movement, would take the same line when they considered their duties towards co-operators.

The Financial Secretary to the Treasury said that out of the 23 Clauses in the Bill 15 have been added mainly on the recommendation of the Registrar. The Registrar is a Treasury official. If the Registrar wants 15 alterations made in the law, and if he looks very kindly on the other 8 Clauses in the Bill, it would not be unreasonable to ask the Financial Secretary to introduce a Bill, and not to leave it to a Private Member. It is always difficult in this House to consider Private Member legislation on matters affecting cardinal Acts on the Statute Book. This is very much legislation by reference. It is making a considerable number of alterations of importance in a number of Statutes, and I think it would have been wiser and more dignified for the Government to have introduced a Measure than to have left it to be piloted through by a Private Member, because there is always better advice behind a Government Measure than any Private Member can possibly have.

The hon. Member who opened the Debate mentioned the Stockport Thrift Society as an example of a Society which raised £40,000, largely under false pretences, left the members of this society without either cash or credit, and went into liquidation. One always regrets that sort of thing, but while one wants in principle to get the maximum of daylight into the transaction of companies and corporations applying for popular support, one wants also to remember that one cannot keep the fool and his money together. We want to stop the honest man from making an honest mistake, if we can, but if a man is going to invest without looking properly into his investments, he must take the consequences. A man puts his money into a co-operative society for a perfectly good reason. He is not concerned so much about getting 5 per cent. or so; he wants 2s. 6d. or 3s. 3d. in the pound discount. He puts his money into a co-operative society because he thinks that he is going to get a great deal more than 5, 6 or 7 per cent. If he was going to be content with 5 or 6 per cent., he could find it in a building society, such as the Abbey Road Society, or in Government securities, and there would be no need for him to support a co-operative society.

The hon. Member mentioned in the same category as the. Stockport society, a society which called itself, I think, the Starting Prices Co-operative Society. I do not see why a body of men should not get together and be their own bookmakers, and I do not see why they should be sneered at. It is perfectly right and proper that these people should form a co-operative society, and I do not think the hon. Member was wise or fair in grouping them with a thrift society which defrauded its members of their savings.

The title "Industrial and Provident Societies (Amendment) Bill" is not quite honest. A better description would be Industrial and Provident Societies (Monopoly) Bill. It creates an absolute monopoly in building societies and a very large form of monopoly in cooperative societies. The hon. Member who seconded the Second Reading of the Bill said that he was an ardent advocate of the principle of one man one vote. Why did he put that in his Bill I Why should the co-operative society limit its members to one man one vote? On what moral ground, or grounds of wise and ripe experience, can we say definitely that the principle of one man one vote is sound? Will hon. Members opposite say unanimously that they would be willing to have the whole of their arrangements carried out under the principle of one man one vote? Will they go so far as to say that this country is better governed to-day when we have almost got to that position than it was when we had an extensive system of plural voting? I do not follow the argument at all, and I am not prepared to subscribe to the principle of one man one vote. In that direction I am an un-repentent reactionary.

I suggest not that a vote should be on the basis of investments or entirely on the basis of purchasing power, but that a woman—and I believe the women do most of the purchasing at these co-operative societies—who puts her all into a society does deserve a great deal more representation in the management of the society than the woman who occasionally goes in after she has been round all the other shops and carefully found out which is the cheapest. I think there will be agreement in the House that that is the sort of point we must consider in Committee upstairs. Then there is the question of the interest on capital. That really matters very little. People do not join these societies because of the interest on their capital, but because of the bonus they hope to get. Then there is the provision:

Many of them do.

I know; but many of them do not, and I know that some people who work for a co-operative society consider that they are under very hard, ruthless and inhuman masters. From time to time we hear of strikes in the co-operative society. I do not say they are general; but this would be a very apt gesture and would make the Bill more acceptable to many people who believe that industry must develop on the lines of the employé being given a greater share in the benefits of his work than he is getting at the moment. Are these provisions suitable to an agricultural co-operative society and to the farmers? I do not think they are. You are going to debar any farmers' society from assuming this very desirable name. In Denmark the bulk of the trade in buying and selling is done by the Farmers' Co-operative Society, and I look forward to the time when we in this country, to an increased degree, shall buy and sell our farm produce by means of such societies. Therefore, do not let us tighten up the designation so as to debar potential co-operative societies from coming under this Bill. Clause 2, I think, is a monstrous proposal.

"No society shall after the commencement of this Act be registered with a name or adopt a name which contains the words 'building society.'"

It says "no society," and in this connection the word "society" I presume will mean company, so that no company or society may call itself a building society in the future. I do not think that is the intention of the promoters of the Bill. At any rate, it is a provision which I shall resist with all the power I have. In my own constituency in the last two months a body of private and enthusiastic gentlemen have got together with a view of doing something for housing. I am a vice-president of the society and the Financial Secretary to the Treasury is also a vice-president. It calls itself the Leicester Housing Association, but if it had desired to call itself the Leicester Building Society it could not have done so.

That is wrong.

It only shows what a pity it is that the Financial Secretary has allowed this intricate and important Bill to be drafted by private Members and did not draft it himself with the aid of his advisers. Clause 7 deals with savings banks. The object of that Clause is to increase the amount which anyone may have in these banks from £20 to £50. What is the object of a savings bank? It is to enable people to save in small quantities, their pennies and their shillings, and eventually get a sufficient amount of money which will be useful in time of sickness and unemployment, and old age. The object of the maximum of £50 is that savings banks shall not accumlate great funds, which may come into the financial market, and it is not unfair to say that when the savings of any individual are above £20 they might invest it, or remove it to one of the large joint stock banks, where as depositors they can get terms almost as favourable as they can in one of these savings banks. They would still be able to keep their account in the savings banks and, having saved up to the maximum again, can transfer it. I cannot see that it is desirable to increase this maximum, any more than it is desirable to increase the maximum of investments from £200 to £400. Clause 16 has been dealt with by other speakers. The words:

"all property of such societies shall become vested in the amalgamated society without any form of conveyance,"

seem to me, although I am not a lawyer, to seek to give to these societies facilities which are not enjoyed by any private firm and are not necessary for the proper conduct of business. For all these reasons it is apparent that we shall have to scrutinise the Bill very carefully indeed when it reaches the Committee stage. We shall have to look at it from the point of view of the co-operator himself; we shall have to look at it from the point of view of the private trader; and, above all, we shall have to look at it from the point of view of the general public. It is the general public who to-day are often quite forgotten when we are considering this and kindred Measures, but the interests of the general public far transcend those of the 5,000,000 co-operators.

Are not the co-operators part of the general public?

They are a part, but the part is not the whole, though sometimes it is more noisy, as we have seen during this week. It is to the whole that we must look and not to the part, and it is to the interest of the whole that this House owes every bit of energy and talent that it can put into the consideration of this Bill.

It is not my purpose to enter into the details of the Bill, which have been dealt with very ably by the Mover and Seconder of the Second Reading and succeeding speakers. The reception of the Bill from the opposite side of the House has been very favourable on the whole. There are two points to which I would refer. The hon. Member for Gravesend (Mr. Albery) said that there would be something in the nature of a concession or privilege given to the co-operative societies if this Bill were passed. There are plenty of precedents; it is not the first time that this House has given very valuable considerations to companies and corporations operating outside, and very often, I regret to say, in circumstances that would not bear full investigation. I am sure that the hon. Member would be willing to concede that point after consideration. The hon. Member for Farnham (Mr. A. M. Samuel) put forward the proposition that it would be wrong to limit the amount of interest, though in the next breath he said that it would be right and proper to limit the amount of investment. I suggest that that statement is quite illogical. To limit the amount of investment and not limit the interest is not a tenable position.

3.0 p.m.

The town that I have the honour of representing has a population of 160,000. In that town the co-operative society has a membership of 36,000. If you take the figure of four for a family—father, mother and two children—you find that about 120,000 of the population are affected by the operations of the co-operative society. I suggest that that is not singular, but is a position that would probably be found to exist in almost every town in the country to-day in proportion to the size of its population. This particular society is composed of people of all shades of political thought, Conservatives, Liberals and Labour. But it is a business matter affecting the interests of a great trading concern, and political controversy has not been, and should not be, brought into the discussion of it. I support the Bill because I believe that it is a good Measure which will benefit the trading interests of the country. I have been very much impressed by the friendly reception that has been given to everything said from this side of the House. Objection to proposals in the Bill have been raised by hon. Members opposite, but they can be dealt with at a later stage and can be met in the spirit in which they are offered. I hope that the House will give the Bill a Second Reading.

I can sympathise with the hon. Member who has just spoken in the suggestion that political considerations should not be imported into the discussion. I do not think they would be introduced, were it not that many of us feel that the co-operative societies do tend to spend certain funds upon political objects—sums which we should not object to their spending pro- vided that they had the unanimous assent of their members. Nor should we object if they were not in some senses societies that are privileged and protected by Statute. But I shall follow the suggestion of the hon. Member and not introduce political considerations, because I want to do nothing that will detract from the atmosphere of benevolence which the hon. Member for Farnham (Mr. A. M. Samuel) very rightly introduced into the Debate. I think many Members must have been somewhat surprised and disappointed that this Bill was not introduced by the Government. Because of the very large interests involved—we are told that there are something like 5,000,000 co-operative society members and there must be many millions of money involved—the subject is one of national importance, and co-operators had some right to expect that the Government would have taken the Bill in hand. As far as I am aware, in the history of industrial and provident society legislation practically all Measures of importance have been Government Measures. If this had been a Government Bill certain mistakes in it to which reference has been made would have been avoided.

I do not propose to go in detail into the Clauses of the Bill, but there is one point that I want to make. That relates to Clause 3, which provides for the increase of a holding from £200 to £400. I suppose that that is a Clause to which hon. Members opposite attach a good deal of importance. I suggest, however, that in the interests of the Bill it would be wise to reconsider the Clause, which is not necessary for the objects that the promoters of the Bill have in view. On the other hand, the increased shareholdings demanded by co-operative societies will be a stumbling block in the view of many small traders. It is well known that there is a certain amount of jealousy and hostility between the small traders and the co-operative societies. I am not arguing as to the rights or wrongs of that attitude to-day, but if the promoters of the Bill can see their way to remove possible stumbling blocks and rocks of offence, they would be well advised to do so. For instance, it is said that this proposed increase is based upon the difference in the value of money, but in that case, strictly speaking, the increase should only be to about £300 and not £400. But is that a really strong reason or the only reason for this proposal? In 1913 when a proposal was made to increase the holdings from £200 to £300 a very well known co-operator, Mr. George Barnes, said in the course of the Debate: our law now, we may be in this Clause grafting a singular exception on to it. I should be glad if some hon. and learned Member would inform me on that point. Otherwise the bulk of the Clauses are machinery Clauses to tighten up and improve the administration of these societies and, subject to consideration of the points which I have mentioned, I hope the Bill will receive a Second Reading.

We who support this Bill are very pleased at the friendly reception which it has had in this Debate. I should think that at a time like this, when we have so much trouble everywhere, the idea of co-operation would appeal to every section of the community and to every political party, because it is drawing people closer together than they otherwise would be. The object of this Bill is to make it possible for the cooperative societies to get more capital, a very necessary proceeding, in view of the fact that they are extending their premises and taking up new ventures, and that money values have altered completely since the Act was originally passed. The idea of increasing the individual holding from £200 to £400 is one which should commend itself to the House, and while it may not be possible for all to avail themselves of it to the full extent, yet we would like to give facilities to members so that in the course of time they could get this amount of capital. It is urgently essential for the well-being of the co-operative societies that they should have money in, and we want to make it as easy as possible for members who can save to add to their funds in that direction.

Everybody advocates the policy of thrift. As a virtue, I think it is sometimes misused, but at any rate the cooperative societies are trying to teach their membership and the young children the necessity of trying to save. They save up to, say, £20, and it has been suggested that the money should be transferred at that point into some joint stock bank, but we would much rather that the money was kept in the movement in which it was saved, because it would help the societies in their work. Several hon. Members have referred to the Clause in regard to amalgamations. This is an age of amalgamations, and this House will shortly be passing Measures, in connection with the coal trade, to make it easier for one firm to amalgamate with another. The amalgamation of co-operative societies probably cuts out a certain amount of competition, and it should be much better for everybody in the country. Keeping these things in view, I think that on the whole the criticism has been very friendly, and I would appeal to Hon. Members opposite, who have been discussing this Bill in a fair way, to give the Bill a chance in Committee, because it is asked for by a very important section of the people of this country.

To judge by the tone and temper of the speeches we have heard in this Debate, in particular from the benches opposite, one might suppose we had before us a Bill which contained nothing but good for this country, and really, looking at the Cooperative movement, I must confess that it is a magnificent achievement, a monument of enterprise, and that it does wield a power for good, if also a force for evil, in this country that is not possible by any other society of people that we have in our population. Having said that, there are undoubtedly in this Bill certain things that are fraught with great danger to the political life and the general life of the people of this country.

To mention a minor point, but still one of some importance, I notice early in the Bill that it is intended that the word "Co-operative" shall be restricted entirely to the use of associations concerned with the Co-operative movement. But why? I can see no conceivable reason why the party opposite—because, after all, this movement is to a very great extent allied politically and in every other way with that party—should arrogate to themselves the use of a particular word of this kind, when the term "to co-operate" means to work together to the same end. Is anybody going to tell me that the Co-operative movement in this country is the only movement, mercantile, social or otherwise, which can be described as co-operative? It seems to me to be an utter negation of common-sense to suggest any such thing. I see that later on the same thing is to be said about building societies. What are we to get to if we allow various organisations and societies in this country to select for themselves parts of the English language which are to be denied to other equally good and equally beneficent movements in this country? It seems to me to be utterly ridiculous.

As I have said before, I am very much impressed by the atmosphere of what has been said from that side, and I need not repeat my very high opinion of the Co-operative movement, but when I am asked, by an hon. Member who spoke below the Gangway, to leave out political considerations and not to refer to them, because in some way or another they might make for retardation of progress in such an important matter, then I simply cannot consent. My own experience in this matter has been that certain Co-operative societies in the South of England—in Sussex—have publicly—and very properly publicly—published the fact that they are subscribing certain sums of money towards the political activities and advancement of Socialist candidates for Parliament. I know that that money was paid, and I know that that money was used in order to do what was possible to prevent me from becoming a Member of Parliament. I do not mind how much money is spent by anybody in trying to achieve that object, which is, perhaps, a good one; but it seems a dishonourable thing for anyone to accept money from a society of persons of mixed political opinions when a majority of that society has voted it for a definite political object. No individual in the House can say that that is a straightforward or a right or proper thing to do. It is not, and, as far as I am personally concerned, if a society of any kind made an offer to help in my political campaign by providing me with money—I have societies of various kinds who think a good deal of me in my constituency—if they said to me, "We want to help you with your political campaign," and I was to say to them, "What! Are you all of one political mind?" and the official said, "No, but we voted it by a majority," can anyone in this House conceive that I would accept this money? Is there anybody on the opposite benches who would do a thing so dishonourable, to my mind, as to accept money in such circumstances? All I can say is that until the standard of morality in this country reaches the pitch I have endeavoured to describe, that party can never be a national force. I ask hon. Members to think over what I have said, and realise whether it is not perfectly true.

Another point is the question of privilege in regard to Income Tax. I am not going deeply into that, but there, again, I say that this Bill is intended to continue and to exaggerate a monopoly which exists at the present time. That is one of the privileges. Another one is to continue this question of the non-payment of Income Tax at the source. That principle has created the gravest possible dislike among a big section in the country, and until the Co-operative movement is put upon a comparable basis with limited liability companies, we shall be pursuing what is a wrong and quite improper course in giving this privilege to a great and splendid movement like the Co-operative movement. I ask hon. Members opposite to realise that that is so, and not to press for such a thing as the non-payment of Income Tax in the way that I have described. We must do what we can to further the interests of the Co-operative movement, but it must be purged of the one or two things of which I have spoken because it is so great and splendid a national movement, that it deserves the support of every right-minded citizen in the country. I oppose implacably, however, the details which I have put before the House, and I trust that I may have the honour of serving on the Committee which considers the Bill with a view to continuing that opposition.

The hon. Gentleman who moved the Second Reading of this Bill must feel gratified at the response which the Bill has received, a response which is evidenced by the desire of hon. Members to do what they can to forward the Measure. I am interested in it, to some extent, because of associations in my constituency. The Co-operative movement was started in Rochdale. I lived in that district for many years, and I have an intimate acquaintance with many in the district who are Co-operators, so that I have a great deal of sympathy with the remarks made by the hon. Member for Grimsby (Mr. Womersley). I know from my own experience that what he said about trading and so on by the Co-operative societies is true. The course of this Debate has to a certain extent followed the course of the history of the Co-operative movement. Originally, the movement was formed for mutual trading, and the members were anxious to increase capital and to extend here, there and everywhere in order to spread the benefits of their organisation to a larger number of people, and to extend their educational facilities. The debate went on for a considerable time before the word "politics" was mentioned. It was the same in the Cooperative movement, for only in recent years has politics begun to be a living force in it.

It is from that point of view that we on this side have to approach the subject. There can be no doubt that politics is becoming more and more a vital principle in the Co-operative movement. Many Members on this side of the House have said that they see no objection to that, but I suggest that there are certain dangers associated with that attitude. Is the Co-operative movement a trading organisation working for the good of its members, educationally and financially, or is it, in addition, endeavouring, by joining a particular political party, to become a political force in this country, and therefore to obtain a political power which it would otherwise not be likely to obtain? That is the question which must be faced. Let us look back to the intervention into politics of some of the other great trade organisations. Let us think of the miners. The miners, by great organisation, by, I dare say, a certain amount of sacrifice, have been enabled to subscribe money to send to Westminster a definite number of members who have had a very definite political influence in this House. I would ask hon. Members on all sides, Has the introduction of politics into the mining question been to the advantage of the industry or the miners? Many people would doubt it. Some people may say it has been an advantage, but many people honestly think the introduction of politics into the mining situation has not been to the advantage either of the industry or of the workers. Take, again, the Co-operative societies.

Take the doctors!

In the first place, doctors have not a trade union. [HON. MEMBERS: "Oh!"] I expected that. We should have very much greater power of we had. Hon. Members should bear in mind that there is not a single medical man in this House who is subsidised or paid or helped by the medical profession. Can that be said of the miners or of the co-operators? I make no accusation, I make no complaint, but I understand that there are members in the House who are here through the assistance of the Co-operative movement and definitely with the idea of looking after Co-operative interests. That may be right or it may be wrong, but it gives hon. Members opposite no occasion to make a charge against the medical profession, who are not in that position. What I would ask co-operators themselves to bear in mind is this: Is this going to be for the benefit of the Co-operative movement?

Of course.

Well, let us look at it from another standpoint. In my particular constituency the Co-operative movement is naturally very flourishing— at least not so flourishing as extensive. It extends to every town and every village and up to some time ago it was making a very good profit; but the slump in the cotton trade has affected Cooperative societies more than the private traders because, I think, their prices generally were higher. As the hon. Member for Grimsby (Mr. Womersley) said, people look at the price of commodities at the Co-operative stores and at the shops of private traders and buy where they are the cheaper. Otherwise, the private traders could not live. A few years ago we began to find that the Cooperative societies in my district were gradually becoming more and more Socialist and were beginning to support the Socialist party. Hon. Members may say they are entitled to do that, and I grant that they are; but what happened? We took alarm. We said, "No, we cannot allow the Socialist party to capture the Co-operative societies," and we started in and we have practically cleared the Socialist party out of our Co-operative society. That is the danger you have to face. I would say to Co-operators, if this is to be made a political question, you will find the Conservative party will fight you and I dare say the Liberal party will fight you.

Was it the object of the originators of the Co-operative movement when it was founded in 1844 that this great trading society which has been of so much benefit to millions of people should degenerate into a political movement in definite and effective opposition to the other political parties? Experience has shown that this influence is detrimental to the Co-operative society. This political aspect has taken root in my constituency, and we are determined that no Socialists shall be elected on the co-operative committee if we can keep them off. I do not think that this political aspect of Co-operation is for the benefit of the Co-operative societies. I know there are very capable men among the Socialists, and I know Socialists whose services on a Co-operative committee would be of great advantage to the society if they confined themselves to the business interests of the members and left politics out. Naturally, when the Socialists made this a party question, we were obliged to accept their challenge.

The hon. Member for South East Ham (Mr. Barnes) is an authority on Co-operation; we know that he has the best interest of the movement at heart, and I ask him to consider whether it is worth while for the Co-operative movement today definitely to enter into politics in the same way as the miners have done? I would like to know whether those who have the interests of the Co-operative movement at heart have fully weighed the advantages and disadvantages of taking such a course. Have the leaders of the movement concluded that the only way to further their interests is by becoming a definite political force. If that is their decision, they should be honest and say so. They should make this clear to their members; they should inform Co-operative societies that they exist for mutual trading, and also to advance their movement by political methods. They ought to be honest, and say: "We shall support the Socialist party, and we expect all our members to support them." I am looking at this matter from the point of view of a Member of Parliament with an anxiety that the people in my constituency should be given the best possible terms. Although I fully recognise the benefits of the Cooperative movement, I do not want that movement to develop into a danger. The political aspect of Co-operation is spreading all over the country, and, if you are going to try to strengthen your position by political action, then you should be honest and state your intention plainly both in this House and in the country. The supporters of this Measure should be honest and say: "We are going to do what the trade unions have done, and we are going to become a Co-operative party. By means of our membership and the money which we are asking you to subscribe, we are simply going to force our wishes, our desires, and our demands upon the people of this country."

The hon. Member who introduced this Bill should be gratified with the reception which this Measure has received. During the course of the Debate a number of questions have been submitted by the hon. Gentleman the hon. Member for Farnham (Mr. A. M. Samuel), to which I would like to reply. It seems to me that this is a suitable opportunity to reply to some of the points which have been raised. In the first place, I should like to say that I have no intention to enter the controversy with regard either to taxation under Schedule D or to the political problem of the Co-operative movement; I feel that those issues can be far more fully and adequately discussed on some future occasion. The question whether co-operators are meeting their legitimate obligation to the State could be discussed, I think, more suitably on the Finance Bill than on a Bill to amend an Act of Parliament for which Conservative and Liberal Governments have been responsible in the past.

I should like to say at the commencement that the co-operative movement recognises that the present Industrial and Provident Societies Acts, under which our movement originated and developed, have been passed, so far, largely by Conservative and Liberal administrations, and we are very gratified that to-day, apparently, we shall receive support from all parties in the House for an amendment of those Acts to bring them into conformity with modern conditions. One difficulty that has called forth comment from the hon. Member for Farnham and other hon. Members is the restrictive character of Clauses 1 and 2. I recog- nise that this House should scan very closely any legislation that has a restrictive character, but I think we ought not to fall into the error of assuming that this Measure, which has reference to the co-operative movement, is the first restrictive legislation that has been sanctioned in this House. Nearly all the professions have been given the protection of restrictive legislation, and many of them operate under restrictive legislation such as we are dealing with in Clauses 1 and 2 of this Bill. There is quite a large range of patent legislation governing patent rights, which protects the names of particular articles or particular commodities.

All that we are doing, really, in these two Clauses is, not to alter the character or the privileges of a co-operative society, but merely endeavouring to keep to the original purpose of Parliament. Obviously, when Parliament passed the Industrial and Provident Societies Act, it desired that only a certain type of business or society should come under the provisions of that Act, but experience has taught us that under the Industrial and Provident Societies Act a fraudulent type of business has developed from time to time, which Parliament, obviously, did not desire to protect by that form of legislation. The only purpose of the cooperative movement, of the promoters of this Bill, and, I am sure, of the Registrar's Department, is to avoid the fraudulent type of society. My hon. Friend the Financial Secretary has authorised me to say that we approach this Clause in the broadest possible manner, and if in Committee it can be shown that it is too restrictive or narrow in character, we shall be prepared to discuss with the Committee any form of Amendment which will achieve the object we desire, namely, the cutting out of the fraudulent type of societies without unduly restricting any others. I would remind hon. Members that really this Clause does not prevent any body from using the title "Co-operative," provided that it conforms to certain governing principles which Parliament desired to cover in the Industrial and Provident Societies Act.

Clause 2, which deals with building societies, does not really affect building societies at all; all that it does is to classify and differentiate between a, building society and a consumers' or an agricultural co-operative society. A building society does not operate on the same plan or perform the same functions as an ordinary co-operative society, and all that this Clause really does is to remove building societies to the Building Societies Act, and keep the co-operative societies under the Industrial and Provident Societies Act. But, again, my hon. Friend says that, if it can be proved in Committee that Clause 2, in removing building societies to the Building Societies Act, is at all loosely worded, we shall welcome any Amendment or alteration for the purpose of achieving our desire.

The hon. Member for Farnham wished to know whether the system of auditing that prevails in the co-operative movement carries any security to the members and shareholders with regard to the value and quality of the stock. I have yet to see any system of auditing which can get down to every detailed article that is valued, particularly where thousands of articles are involved, but I know of no similar business in which the precautions to avoid fraud or falsification of stock accounts ate more complete than in the co-operative movement.

Are the people who take audits in these societies entirely independent of the concerns themselves, or are the figures obtained merely from the figures given by the stock-keepers and stock-takers? I am aware that professional auditors cannot value up goods, but there should be some system of independent auditing to make it certain that the value of perishable articles, for example, is put at the proper figure.

Although our accounts now are adequately safeguarded by an efficient public audit, the average cooperative society does not depend upon the professional audit at all. The general custom—and you can have no safer practice—is that a Committee of management, or the members themselves, make provision whereby individual members, or individual shareholders of the society, check the actual stocks and the quality and price of the stocks, and when the co-operative society takes its stock, as a rule twice a year, into the grocer's shop, the butcher's shop or the baker's shop will walk a member of the society, authorised by the rules of the society to see every piece of drapery or every piece of furniture, or every case of goods for the purpose of checking that side of the accounts. So, in fact, more or less there is a dual checking of the chattels of a co-operative society.

With regard to Clause 11, dealing with nomination, the revenue will not suffer in any respect. It merely provides an opportunity of a more simple nomination form covering the larger accounts. Many persons are able to save £200 in a cooperative society, not by direct contribution of capital but by the accumulation of dividends, possibly over a lifetime, and it is always a matter of anxiety and agitation to members of the working class when they have to deal with legal matters affecting a sum of that kind. We merely wish to make it more easy for the transfer of those sums which we find to the credit of a deceased person, but the revenue will not suffer in any way. Neither will the revenue suffer from Clause 16, dealing with amalgamation and transfer. The Clause alters the present law in only one limited respect. You will get two societies wishing to join together—to rationalise or amalgamate. If they are of equal size and equal conditions, probably the process will be what is known as amalgamation. That means that both societies put a proposal to amalgamate before their respective members, and then, when the voting has confirmed it, the legal transfer takes place.

You get another type of amalgamation. You might get a very large co-operative society operating in one of our large industrial towns. In that town there might be a small, separate society. On the fringe of the town or in the suburbs, there might be a small weak struggling co-operative society in a very difficult position and unable to maintain a prosperous and successful condition alongside that large co-operative society. Eventually, the members of the small cooperative society might express a desire to come into the larger business organisation so as to obtain all the facilities provided by such a society. It is quite unfair and unreasonable to expect a large co-operative society, when, possibly, it means only the transfer of a few hundred co-operative members, to be put to the expense and inconvenience of holding a lot of special meetings of its members in order to accept the membership of a few hundred persons. Possibly in one week, or even in a day, that large co-operative society might make more new members by the ordinary processes of members entering the society than the transfer of the small society's engagements would represent.

All that this Clause, in effect, will accomplish is to enable the smaller cooperative society in that case to consult its members and to go through all the procedure of applying for amalgamation, and, providing its own members agreed to all the legal requirements, to hand over all the property, liabilities and everything else, to the larger organisation without putting the larger body to inconvenience. I think I have answered the bulk of the points put to me by the hon. Member for Farnham. I, and many other hon. Members, have been associated with the co-operative movement for a number of years, and in any large organisation of that kind it stands to reason that a changing period such as has existed for the last 20 or 30 years—the changing character of industry—is bound to make the Acts of Parliament which were passed to govern the early days of an organisation like ours fall out of date.

Hon. Members have referred to the fact that the co-operative movement has begun to develop a political function. I would remind the House that it was 1893 before the last Act of Parliament was passed by this House giving greater freedom and greater opportunities to the co-operative movement to expand and to move more easily into new functions according to the changing economic conditions. I would ask hon. Gentlemen to remember that in any economic system of society, in any industrial system, whether it is limited or extensive, especially in a country like ours, where Parliament is the machinery through which we operate and to which we must conform, it is impossible to have any measure of economic development proceeding outside without it has some relationship and contact with this House of Commons. The system which we know as Capitalism to-day is extensive and more or less universal. Therefore, it gets its representation here in a general way. But the co-operative movement at the present moment is limited to special functions, and, as we have not been able to obtain from this House in the past an opportunity for developing such as we feel we ought to have, we believe that it is desirable we should have our spokesmen here, so that we can appeal for fair play from the British nation through its accredited representatives on the Floor of the House of Commons. I am very glad this afternoon that this Measure appears to be going through with general support. I am confident that we can meet any criticism in the Committee stage, and, if we meet criticism there and overcome it, I hope that hon. Members will assist us to get the Bill through the remaining stages of Report and Third Reading.

Regardless of party politics, I think it is a good thing that, from time to time, the position of the Co-operative movement should be reviewed by this House. On that ground I welcome the introduction of this Bill, although I do not profess to agree with all its provisions. The hon. Member who has just spoken has indicated the willingness of the promoters of the Bill to accept certain Amendments which appear to me to be necessary. Amendments are particularly required in Clause 2. There are other Clauses which are quite good. I do not want to go into the political aspect of the case, because that is an aspect which can best be dealt with outside the walls of this House. The present position of the Co-operative movement has been built up by men and women of all shades of political opinion, and it is well to consider the motives which actuated those who were responsible for the foundation of the movement. It will be accepted in all quarters that the motive for the formation of the cooperative movement was that of mutual financial aid, and it was not in any sense regarded as having any relation to party colour.

There is one matter which seems to be the subject of misapprehension on the part of a good many private traders. Many private traders are definitely of the opinion that because Co-operative societies are not taxed, that is an unfair position so far as they are concerned. In point of fact, that is not the case. If you tax Co-operative societies upon the whole of their profits you would be taxing a large number of people who are under the Income Tax limit, and who ought not to be taxed. There is something to be said for adopting the principle which is now in operation in regard to building societies, where you have a similar type of member. The majority of members of building societies are people whose income is below the Income Tax limit, and I believe there is in existence in connection with building societies a form of taxation which provides that they should be taxed on one-third of their income or one-third of their profits. That arrangement has been deemed to be fair as between the Treasury, the building societies and the members. It has the advantage of avoiding difficulty in administration, in that the Treasury are not bothered with claims for the repayment of taxation from a large number of people.

I hope that there will be certain alterations made in the details of the Bill. Speaking as a member of a professional body of accountants, I would like to see provision made that the auditors should be men who are members of one or other of the recognised public bodies. I am sure that the Bill will be considered not in any political light but rather from the point of view that the Committee as a whole are anxious that the Bill shall represent a real help towards the proper development of the co-operative movement.

Question put, and agreed to.

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

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

This is considered as a very important Measure in the mining areas. It contains the main provisions of the definite recommendations made by the Royal Commission on Mining Subsidence which eat from the year 1923 up to the year 1927. The Bill proposes to entitle the owners of small dwellings, up to a rateable value of not more than £40 a year, to compensation for any damage done to their house property arising out of subsidences due to the working of minerals near the house, and which is obviously due to such subsidence. It also contains a provision for the householder to make his claim in writing and serve the person who is working the minerals, or who worked the minerals last, with his claim, and the person so served must, within three months, notify the householder whether he admits liability; whether he admits liability but disputes the amount of the claim; and whether he denies liability. In cases of dispute they are to be referred to arbitration under the Arbitration Act, 1889. The important provision, which was strongly recommended by the Royal Commission, is that all such disputes must be settled in the County Court. Clause 2 gives the worker of minerals, that is, the coalowner, the right to take precautions at his own expense to limit the risk of damage to house property by subsidences due to the working of minerals. It is only reasonable to give coalowners an opportunity in this direction. Clause 3 of the Bill makes provision where two or more householders claim compensation for damage to property due to the same subsidence. In these cases the Judge of the County Court is to apportion the share of compensation due to each of the householders. Clause 4 defines what is meant by an owner, and limits the right to compensation to a householder whose dwelling does not exceed a rateable value of £40. That is why it comes under the definition "small dwellings." The Bill is limited in its application to England and Wales. All the recommendations contained in the Bill are recommendations which the Royal Commission itself very definitely made. The matter is one of the utmost importance to the mining population, because 20 and 30 per cent., in some cases 50 per cent., of the miners own their own houses, and a large proportion of these houses are damaged as a result of these subsidences. I beg to move.

I beg to second the Motion.

This is an interesting but complicated Bill, and no doubt it meets a demand which is required in some directions. In some respects it is a good Bill, but in the very limited time that is at our disposal this afternoon—

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

Debate to be resumed upon Friday next, 13th December.

The remaining Order was read, and postponed.

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

Adjourned at One Minute after Four o'Clock until Monday next, 9th December.