HC Deb 08 August 1904 vol 139 cc1470-9

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

MR. LOUGH (Islington, W.)

, in moving that the Bill be read a second time that day three months, said the Prime Minister had explained the object of the Bill as being to carry out an agreement into which the Government had entered. That was doubtless a correct description of the Bill, but if the matter were looked into it would be seen that it was hardly a satisfactory reason for accepting without scrutiny a measure with such far-reaching provisions. The Resolution upon which the Bill was based was passed in August last, but it was impossible for Parliament and the country to take in the essentials of so complicated an agreement from the short discussion which then took place. The Prime Minister had always been too fond of this hasty legislation. The Sugar Convention was another instance of the same sort of thing. It was the business of the House to study the terms of agreements into which the Government entered. The Bill was short, but the agreement itself was very far-reaching. Its object was to sanction a loan of £2,600,000 to a private company, the capital of which was not so large as the proposed loan, to enable the company to buy two ships for its own exclusive use. That was an extraordinary provision. Then the interest on the loan was to be 2¾ per cent. But the company could not borrow money at anything like that rate, and the Government itself would have to pay from 3 to 3½ per cent. Why should the Government pledge its credit and borrow money at a higher rate than it charged the company? Moreover, a huge annual subsidy, amounting to £250,000, was to be paid to the company, and whether the ships were lost at sea or captured the subsidy was still to be paid. In addition, the company were to receive a mail subsidy of £68,000 a year. A further provision gave the company a number of small pickings, and the whole of these onerous conditions were to be binding for twenty years. There were also other provisions enabling the Government to buy the ships at an extravagant price, and fixing the rates at which it could have the ships if necessary. The total amount of money to be paid to the company in the twenty years was no less than £6,966,000. He Protested against the House being hustled into such an agreement, under which this large sum was to be paid for practically no services whatever.

Two Government Departments, the Admiralty and the Post Office, were involved in this agreement. He submitted, however, that if the agreement had been entered into for the defence of the country it should be dealt with by the Admiralty exclusively, while if it was a Post Office matter it should come up on the Post Office Estimates with the other mail contracts. The ships were to be capable of a speed of twenty-four and a half knots, but since the agreement the Government had arranged for the building of eight ships with a speed of twenty-five knots. What use, therefore, would these particular ships be? The eight scouts which the Government had arranged for would do the work much more effectively, and at less cost, and in a more regular way. That proved that the agreement had not been properly thought out. One of the most remarkable aspects of the case was that the ships were to trade not with our own Colonies but with a foreign country. Why should we pay this huge sum annually simply to establish a better service with the United States? The principle of the agreement was thoroughly unsound. The recent Subsidies Committee advised the Government to hesitate before giving any more of these naval subsidies, and the Admiralty, acting on that advice, had decided to abandon many of the subsidies they had hitherto paid. No satisfactory defence of this proposal had been made; the agreement bristled with onerous conditions; it would set an extremely bad precedent; and the least that could have been done was to have allowed more competition in the matter. He hoped that even at this late hour the House would reconsider the question. The Government having chosen to adopt an abnormal method of procedure, had no right to expect their difficulties to be considered for a moment and the House should hold itself perfectly free to pronounce any decision it chose with regard to the merits of the agreement. He begged to move.

MR. McKENNA (Monmouthshire, N.)

, in seconding the Amendment, said that, although the principle of the Bill had been discussed on two occasions after midnight, he had not yet heard a single good reason put forward on behalf of the Government to show why on its merits this measure should be passed. All the House had been told was that they had already assented to the principle, and that therefore they ought now to accept the measure. That was not a fair argument. The preliminary stage passed in August of last year did not in the least bind the House. The Cunard Company knew very well that the agreement could not be carried into effect until a Bill had been passed through Parliament; consequently they were fully aware that the preliminary Resolution was not in any way binding. The Government might very well say that they, as a Government, were bound to do their utmost to pass the Bill, but the House as apart from the Government were absolutely free to discuss the question on its merits, and if they came to the conclusion that the Government had made a blunder the best thing that could be done for the country was that they should refuse to sanction the agreement. It was idle to say that the £2,600,000 was to be repaid. The Government would indeed receive £165,000 per annum in the form of sinking fund and interest, but they had to pay a subsidy of £150,000, and the difference of £15,000 was more than made up by the excess of the rate of interest they would have to pay over the rate at which they would lend to the company. As a matter of fact, the country would be £2,600,000 to the bad on the whole transaction, and he submitted that that was not such an agreement as the House should sanction. If all the great shipping companies were to have this example held up to them and were able to do this by a mere threat, millions of money would be extracted from the British Government and all security for economy in the future would vanish. He begged to second the Amendment.

Amendment proposed— To leave out the word 'now' and at the end of the Question to add the words 'upon this day three months.'"—(Mr. Lough.)

Question proposed, "That the word 'now' stand part of the Question."


said that this was a naval subsidy pure and simple,and would appear in the Naval Estimates. It was given only on the ground of exceptional ocean-steaming speed, as recommended by the Shipping Subsidies Committee. It was the measure of the loss which this company expected from running these two high-speed vessels for commercial purposes. That was what it substantially amounted to. The steamship company were responsible for the building of the ships and for producing a speed of twenty-four and a half knots, and the company took the whole of the risk. The House had definitely approved the agreement, and thereupon the company had ordered the ships which were now being built, one on the Tyne and the other on the Clyde. With regard to the point raised by the hon. Member for Islington, he wished to remind him that a speed of twenty-five knots an hour in vessels of the scout class was a totally different thing to the continuous ocean speed required in these ocean steamers. The reason why it was necessary for this country to have vessels of this character was hat there were existing several great ocean steamships not belonging to this country which had a speed of twenty-two and twenty-three knots, and in time of war we would have nothing which could compete with them in speed. It was solely to meet that state of things that this subsidy was granted.

MR. CALDWELL (Lanarkshire, Mid.)

said the proposal of the Government was to have two fast vessels. If it was necessary for this country to have fast steamers the Government were not justified in being satisfied with the building of two ships only. If Germany was so much in advance of us, why did we stop with two ships? If the principle of this agreement was correct, why did not the Government begin to build more? Why should we confine ourselves to the ships of the Cunard Company? Were there not other British steamship companies that would gladly build on the same terms? The effect of this agreement would be to give an advantage to one British line of steamers in the Atlantic trade. If the policy was to protect British shipping, twenty fast ships would not be too many if consideration was given to the enormous volume of British sea commerce in comparison with the commerce of foreign countries. Obviously this policy was too limited to do any good. What subsidy did the German ships get? They did not get a penny, and the ships were run on mercantile principles. He was aware that German ships running to other places got subsidies, but those engaged in the service to America did not get a penny. If the German companies could do this as a mercantile transaction, why should not the Cunard Company be able to do it? Nobody would think of going by the Cunard service if they could go by a German line. Therefore, so far as the Cunard Company was concerned, this was an attempt to bolster up one company in order to compete with other British shipowners who were to have no subsidy. He thought that in this matter the Government should not confine themselves to one British company.

MR. RUNCIMAN (Dewsbury)

said he was interested to hear the Secretary to the Admiralty say that the subsidy was a naval subsidy pure and simple. Did he intend to convey to the House that this was a naval project pure and simple? If that was so it did not tally with the statement made last year by the right hon. Gentleman the Secretary of State for War, who was then at the Admiralty. He stated quite emphatically that this was partly a business arrangement. One of the justifications put forward for the proposal was that it would relieve a state of purely commercial panic, and support was given to it throughout the debate on the ground that the agreement would combine a commercial advantage with a naval advantage. The truth was that but for the Morgan Combine they would have heard nothing whatever about it. The Secretary to the Admiralty had said that the subsidy was a purely naval subsidy. The right hon. Gentleman who was in charge of the Department stated that it was to preserve our prestige on the Atlantic as well as for naval purposes. To come down now and say that it was a purely naval subsidy was to mislead the House. The Secretary to the Admiralty was asked two or three specific Questions with regard to the functions of these vessels. He was asked whether they were to be merchant cruisers, scouts, or despatch vessels. To these Questions they had had absolutely no reply. He doubted very much whether the hon. Gentleman and the Admiralty had made up their minds as to the definite work on which these vessels would be used in future. It was a peculiar fact that at the very time that the Admiralty embarked on this enormously costly scheme, they were wiping out the old merchant cruiser subsidies and they had laid down something like eight scouts, part of whose work certainly might have been undertaken by these two vessels. Now they understood that these vessels were to go beyond the duties of mere scouts; they were to range over a much greater area and to a certain extent they were to do scouting work. He presumed that was so. Did the Secretary to the Admiralty go so far as to say that the new vessels would be used as merchant cruisers?


That is one of the duties which they will be able to perform if required.


said that last year in the Memorandum of the First Lord of the Admiralty that Minister declared emphatically that the use of merchant cruisers was now abandoned by the Admiralty. How on earth were they to square that with the statement that had now fallen from the Secretary to the Admiralty? But, take it on the basis of the statement the hon. Gentleman had made, did he mean to say that the exact function which those vessels were supposed to perform could only be performed by vessels of 30,000 tons and costing £1,300,000 a piece? The cost to the country of running each of these vessels would be £75,000 a year. But the total cost of running a battleship, which we had entirely in our own hands and under our own control and specially fitted for the purpose for which she was required, only came to something like £100,000 per annum.


That does not include repairs.


How much did that amount to? Last year the amount spent on repairs for the whole Fleet was only £175,000. Really, if they took it on the financial basis alone, the Government had made an extremely bad bargain for themselves. The only reply made to the comparison he had offered was that these vessels running in the Atlantic trade would always be running, and therefore they would always be able to get the maximum speed out of them. If that was the case there was something seriously wrong with the Admiralty control if they could not get the maximum speed out of their vessels, whether battleships or cruisers. What they were entitled to know was, "How far did the Admiralty intend to go with the scheme?" Really if it was justified for two vessels it must certainly be justified for four; and if two were sufficient to compete with the German four, what would happen if the Germans in a few years constructed vessels which, instead of steaming twenty-three-and-a-half knots, would steam twenty-five? Would the Admiralty come down and ask them for vessels of twenty-five-and-a-half knots?

Then the Secretary to the Admiralty had made absolutely no reply to the charge that in entering the purchase price of the vessels in the agreement, they entered prices largely in excess of the value of the vessels concerned. He understood that the view taken by the Secretary to the Admiralty was that the reason they had to have inflated prices in this agreement, whether for purchase or hire, was that the agreement being compulsory, they must of necessity pay more than if it were voluntary. That was a reasonable argument, but there surely must be limits even to the amount that they would put on compulsory purchase. The amounts put down for the vessels named in the agreement was far in excess of their value at the time it was made, and even if they knocked off the 6 per cent. per annum it was enormously in excess of their value at

the present time. The vessels were estimated at something like £18 a ton on their total tonnage, and no steamship company would ever for one moment believe that the Cunard fleet named in this agreement was worth an average price of £18 a ton, The Secretary to the Admiralty made no reply to that. He had not justified either the scheme itself or the figures contained in the scheme, and the only defence he had produced so far in the House in respect of the agreement was that the bargain turned out to be a hard one for the Cunard Company. What they had to decide in that House was not whether the Cunard Company had made a bad agreement or not, but whether the Government had made a bad bargain; and looked at from any point of view they had made an extraordinarily bad bargain. They had not justified the policy, and they had certainly not justified the figures. He suggested to the Admiralty that this should be the last transaction of the kind into which they should enter. Last year the scheme was brought down for the approval of the House on the 12th August, just before the House rose, and there was no full discussion on it, though, in a matter involving £2,600,000, the Government should have obtained the well - considered approval of the House before entering into a binding agreement. They should not have entered into the agreement out of pure panic, which those who knew more about the details laughed at at the time. The naval justification for the agreement was extremely thin, and he challenged the Secretary to the Admiralty to get up and say that either Sir George Clarke or Sir John Fisher had a word to say in approval of the bargain which he had made.

Question put.

The House divided:—Ayes, 138; Noes; 34. (Division List No. 315.)

Agg-Gardner, James Tynte Balcarres, Lord Bingham, Lord
Anson, Sir William Reynell Balfour, Rt.Hn. A. J. (Manch'r Blundell, Colonel Henry
Arkwright, John Stanhope Balfour, RtHnGeraldW.(Leeds Bond, Edward
Arnold-Forster,Rt.Hn. HughO Balfour, Kenneth R. (Christch. Boscawen, Arthur Griffith
Atkinson, Rt. Hon. John Banbury, Sir Frederick George Brassey, Albert
Bain, Colonel James Robert Bigwood, James Brodrick, Rt. Hon. St. John
Butcher, John George Hudson, George Bickersteth Powell, Sir Francis Sharp
Carson, Rt. Hn. Sir Edward H. Hunt, Rowland Pretyman, Ernest George
Cavendish, V.C.W.(Derbyshire Jeffreys, Rt. Hon. Arthur Fred Pryce-Jones, Lt.-Col. Edward
Cecil, Evelyn (Aston Manor) Keswick, William Pym, C. Guy
Cecil, Lord Hugh (Greenwich) Knowles, Sir Lees Reid, James (Greenock)
Chamberlain,RtHn.J.A. (Wore Law, Andrew Bonar (Glasgow) Renwick, George
Chapman, Edward Lawrence, Wm. F. (Liverpool Ridley, Hon. M.W.(Stalybridge
Charrington, Spencer Lee,Arthur H (Hants, Fareham Roberts, John Bryn (Eifion)
Cochrane,Hon. Thos. H. A. E. Legge, Col. Hon. Heneage Roberts, Samuel (Sheffield)
Coghill, Douglas Harry Llewellyn, Evan Henry Robertson, Herbert (Hackney
Colomb,Rt.Hn. Sir John C. R. Long,Col. Charles W.(Evesham Round, Rt. Hon. James
Compton, Lord Alwyne Long,Rt.Hn.Walter(Bristol, S. Royds, Clement Molyneux
Corbett, T. L. (Down North) Lonsdale, John Brownlee Rutherford, W. W. (Liverpool)
Craig,Charles Curtis (Antrim, S Lowe, Francis William Sackville, Col. S. G. Stopford
Crossley, Rt. Hon. Sir Savile Lucas,Col. Francis (Lowestoft Samuel, S. M. (Whitechapel)
Dalkeith, Earl of Lucas, Reginald J.(Portsmouth Sandys,Lieut Col.Thos.Myles
Davenport, William Bromley Lyttelton, Rt. Hon. Alfred Scott, Sir S (Marylebone, W.)
Dickson, Charles Scott Macdona, John Cumming Skewes-Cox, Thomas
Disraeli, Coningsby Ralph MacIver, David (Liverpool) Sloan, Thomas Henry
Douglas, Rt. Hon. A. Akers- Maconochie, A. W. Smith,Abel H. (Hertford, East
Doxford, Sir William Theodore M'Arthur, Charles (Liverpool) Smith, Hon. W. F. D. (Strand)
Durning-Lawrence, Sir Edwin Majendie, James A. H. Stanley, Rt. Hon. Lord (Lancs.
Dyke,Rt.Hon. Sir WilliamHart Malcolm, Ian Talbot, Lord E. (Chichester)
Fergusson,Rt. Hn Sir J.(Manc'r Massey-Mainwaring, Hn. W. F. Talbot,Rt.Hn. J.G.(Oxf'd Univ
Finlay, Sir Robert Bannatyne Montagu, G. (Huntingdon) Thornton, Percy M.
Fisher, William Hayes Moon, Edward Robert Pacy Tomlinson, Sir Wm. Edw. M.
Forster, Henry William Morgar,DavidJ.(Walthamstow Tuff, Charles
Galloway, William Johnson Morpeth, Viscount Ure, Alexander
Gardner, Ernest Morrell, George Herbert Valentia, Viscount
Gordon, J. (Londonderry, S.) Mount, William Arthur Walker, Col. William Hall
Gray, Ernest (West Ham) Muntz, Sir Philip A. Warde, Colonel C. E.
Green,Walford D(Wednesbury Murray,RtHn.A Graham(Bute Webb, Colonel William George
Greene, Henry D. (Shrewsbury Murray, Charles J. (Coventry Wilson,A.Stanley (York, E. R.
Greene, W. Raymond (Cambs. Murray, Col. Wyndham (Bath Wylie, Alexander
Gretton, John Newdegate, Francis A. N. Wyndham, Rt. Hon. George
Hall, Edward Marshall Nicholson, William Graham Yerburgh, Robert Armstrong
Hambro, Charles Eric O'Neill, Hon. Robert Torrens
Hamilton,Marq.of(L'nd'nderry Palmer, Sir Walter (Salisbury TELLERS FOR THE AYES—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.
Hay, Hon. Claude George Parkes, Ebenezer
Heath, James (Staffords, N.W. Percy, Earl
Hermon-Hodge, Sir Robert T. Platt-Higgins, Frederick
Hope, J.F (Sheffied,Brightside Plummer, Sir Walter R.
Boland, John Helme, Norval Watson Slack, John Bamford
Brigg, John Higham, John Sharpe Sullivan, Donal
Bright, Allan Heywood Hobhouse, C. E. H. (Bristol, E. Thomas,David Alfred (Merthyr
Buxton, Sydney Charles Horniman, Frederick John Toulmin, George
Caldwell, James Jones David Brynmor(Swansea Warner, Thomas Courtenay T.
Churchill, Winston Spencer Jones,William (Carnarvonshire White, Luke (York, E. R.)
Delany, William Kennedy VincentP. (Cavan, W. Whitley, J. H. (Halifax)
Dilke, Rt. Hon. Sir Charles Kilbride, Denis Wilson, Henry J. York, W.R.)
Doogan, P. C. Layland-Barratt, Francis
Elibank, Master of O'Brien, Kendal(Tipperary Mid TELLERS FOR THE NOES—Mr.Lough and Mr. M'Kenna.
Ffrench, Peter Reckitt, Harold James
Flavin, Michael Joseph Roberts, John H. (Denbighs.)
Fuller, J. M. F. Samuel,Herbert L.(Cleveland)

Bill read a second time and committed for to-morrow.