§ Mr. MITCHELL-THOMSON
I desire to take this opportunity of calling the attention of the House to the action which His Majesty's Government have intimated they are going to take before the 1st September next with regard to the Brussels Sugar Convention. Last Thursday the 3225 Government announced they intended to give notice to terminate the Convention before 1st September. That statement was received with considerable applause from hon. Gentlemen who sit on the benches opposite. I confess, when I listened to that chorus of approval, I could not help reflecting that there are a great many of what I may call erroneous ideas both with regard to the nature and the working of the Convention, and some of these ideas appear to be held even by hon. Gentlemen opposite. There is the idea, for instance, that the Convention—I have seen it described in an interview with the right hon. Gentleman, whom I should have thought would have known a little better—is a sort of secret junta which sits at Brussels with the sole object of raising the price of sugar to the British consumer. I think that is a somewhat erroneous view of the situation to take, and I should like to begin by asking the House for a moment to consider what has been the history of this matter within the last few years. About seven or eight years before 1902 there grew up on the Continent of Europe a system of giving bounties either by means of combinations among the different sugar producers themselves or by the Governments of the different countries concerned, either by means of these cartels or bounties a bonus was given on the production of beet sugar.
The producers of beet sugar were therefore enabled to place it on the market at a price which was artificially pressed below the cost of production. It came into competition with what, for the sake of argument, I will call natural sugar, sugar sold at a price based on the actual cost of production. That sort of competition between bounty-fed sugar, on the one hand, and natural sugar, on the other, could only have one end. Sooner or later the sugar which enjoyed the artificial aid was bound to crush out the natural sugar. That is no new phase of commercial war; it is what always happens. It is the regular course of operations of every single Trust which has existed since the commercial world began to recognise such things. The first act of every Trust is always to squeeze out competition by cutting rates, and then, when competition has been squeezed out, it is in a position to raise the price to any figure it likes to the consumer. That was the actual position on the Continent before 1902. Competition by natural sugar producers was being very 3226 largely eliminated by the growth of this system of bounty fed production. Then came the Convention of 1902, which was designed to place natural sugar once more upon a firm footing, and which had two main sets of provisions. The signatories of that Convention, on the one hand, bound themselves to abstain from giving bounties, and, on the other, they bound themselves to prohibit the introduction into their countries of bounty fed sugar.
I want to say quite frankly that, regarded as an instrument for securing the abolition of the bounty system, I have never myself extolled the Convention as being the best possible instrument. I think it was a roundabout and somewhat clumsy instrument. I think it was a concession to fiscal views which at that time obtained much more largely in this country than they do to-day. I have always said, and I say now, that when it became a question of abolishing bounties, it is a pity we did it in such a roundabout way as this and did not take the simple and direct course of saying we were going to impose a countervailing duty on the imports of bounty fed sugar into this country. I think that would have been a simpler and more straightforward and easier course. Unfortunately, at the moment the fiscal faith of the country was not in that state which I believe it is at the present moment, and such a course could not indeed be proposed. The Convention of 1902 was therefore entered into. It lasted until 1907, when the Government of the day gave notice that they were going to adhere to a new Convention which was to last five years, from 1908 to 1913, without adhering to the penal clauses of that Convention. They were going to adhere to the Convention, but they were not going to bind themselves to prohibit the importation of bounty fed sugar into this country. I said at the time, and I still think, that course was both unwise and absurd. I think it was exceedingly absurd, and I am sure on reflection hon. Gentlemen opposite will agree. It is exceedingly absurd to find you had arrived at a state of things in which Russia, herself a bounty giving country, was going to be admitted a member of a Convention, the object of which was the suppression of bounties.
I remember the right hon. Gentleman the Member for Islington (Mr. Lough) bitterly attacking the Government for having tied themselves down to any restriction 3227 upon Russian exports, but I think the right hon. Gentleman was a little less than just even to the Government at the time, because, so far as the Government were concerned, they said then that our ports were perfectly free to Russian sugar. I think they were wrong in saying that, but that is what they said. So little importance did the Russian sugar producers attach to our market that, having our ports free to them, they voluntarily entered into an agreement with the other Continental signatories and tied themselves down to an export of not more than 300,000 tons the first year of the second 1908–13 Convention, and 200,000 tons in each of the subsequent years. That shows the value which Russia attached for the moment at all events to their freedom to the market of this country. Then came the great drought in 1911 and the consequent rise in the price of sugar and the shortage of supply. There followed the new Convention in 1912, which is to run from September, 1913 to 1918, and it is to that new and third phase of the original Convention that I understand the Government are now refusing to give their adherence. Russia is a party to that new Convention, and she is a party to it on the terms that she is to be allowed to export westward in any year the 200,000 tons which were allowed to her under the second Convention, and in the year 1911–12 an extra 150,000 tons and in 1912–13 and 1913–14 an extra 50,000 tons, each year respectively. That is the condition of Russia's adhesion to this new Convention. I apologise for troubling the House with these figures, but I thought it rather necessary to have a clear understanding as to what had happened before we began to consider what was going to happen.
I want the House to consider what is going to be the future course of events. The British Government has given notice to withdraw from the Convention. One of two things may clearly happen: either the Convention will break up altogether or it will go on without the adhesion of Great Britain. I want to look at the question from both points of view. Take, first, the hypothesis that the Convention will unanimously decide to break up. I say "unanimously," because it is quite clear it must be a unanimous decision of the Powers concerned, as otherwise the Convention is bound to continue in existence until 1918, the signatories having bound themselves by protocol to continue in the Convention until the 1st September 3228 of that year. It can only break up by the mutual consent of all the signatories. I do not think that unanimity is likely to be reached. But, at the same time, I must consider the hypothesis, because I know there are some Members of this House, among them the right hon. Gentleman opposite, who hold the view that it is possible that the Convention may end before 1918. No doubt that will not be a source of sorrow to the right hon. Gentleman the Member for West Islington (Mr. Lough). He has always been perfectly consistent and perfectly straightforward in his objection to the Convention. He has attacked it on two broad grounds. He has attacked it, first, because it is an infraction, in his opinion, of Free Trade ideals, and he has also attacked it because, he says, it has had the effect of unduly raising the price of sugar in this country. Let me say a word or two with regard to these two suggestions which are made in opposition to the Convention.
I will deal first with the suggestion that it is an infraction of Free Trade. It is quite clear that any policy which is going to be for the commercial advantage of this country may be attacked because it is contrary to certain economic principles, but if it is going to be a commercial advantage that fact remains, whatever particular economic brand you attach to it. When the right hon. Gentleman says that the Convention was an infraction of Free Trade, I would remind him of statesmen in the past whose conceptions of Free Trade were at least as pure as his own, and whose expositions of their ideal of Free Trade were at least as authoritative as the expositions of the right hon. Gentleman himself. The statesmen in the past repeatedly asserted that a system whereby any product introduced into Great Britain was sold at a price artifically depressed and unnaturally low was not only not in accordance with the principles of Free Trade, but actually in violation of them. As far as I have observed, looking only the other day, as I naturally did, to see what the various Liberal newspapers were saying about the proposed action of the Government, I noticed the following illuminative sentence in the "Daily Chronicle," which I would commend to the right hon. Gentleman, who thinks it an infraction of Free Trade:—Bounties, of course, whether on production or export, violate the canons of Free Trade.I have referred to statesmen of the past. May I call the attention of the right hon. 3229 Gentleman to the views of Mr. Gladstone as described in the same paper:—Sir. Gladstone as a whole-hearted opponent of the bounty system. Writing in 1881 he expressed his views as follows. He said: 'I do not regard with any satisfaction a system under which an artificial advantage is given in our markets to the products of foreign labour, the principle to be observed being that of equality. Home people say it is a good thing because the consumer gets the benefit of it, but I do not see any benefit that either inequality or injustice can bring even to the consumer.'Mr. Cobden also held strong views on this subject of bounties. He said:—We do not seek Free Trade primarily for the purpose of purchasing at a cheaper money rate. We require the natural prices of the wages market. Whether it becomes dearer by Free Trade or cheaper mutters not to us, provided that the people of this country have it at its natural price.That was the view of Mr. Cobden with regard to Free Trade ideals, and, under the circumstances, I do not think it can be wondered at if I do not altogether accept the right hon. Gentleman's suggestion that the Convention was undesirable, because it was an infraction of Free Trade. Then I come to the second suggestion, that it was undesirable because it unduly raised prices. I say "unduly raised prices" because it is quite clear that, so long as the price of the world's sugar is based on beetroot and not on cane, the natural price must be higher than the bounty price. As I explained at the outset of my observations, the county price is a price artificially depressed below the real cost of production; therefore, it is quite clear the natural price must be higher than the artificially low price. The basis of the world's sugar trade at the present moment is 88 per cent, beet f.o.b. I have satisfied myself, and I Tiave consulted some very good authorities, that the natural price of 88 per cent, beet, with the average cost of production in a normal year, cannot be put at less than 9s. 3d. f.o.b. Hamburg, without taking into account any charge for interest or amortisation of capital. Tf you put the ordinary prices at, roughly speaking, somewhere about 9s. 3d., you are reaching a price which may be taken as the natural basic price for 88 per cent, beet sugar. Of course, I shall be told that the operation of the Convention has resulted m very considerably enhanced prices in this country, as compared with the prices which obtained in the years before it came into operation. All sorts of figures are given. I read with amusement the figures which the right hon. Gentleman gives regarding the loss to the consumer, and how it varies from day to day. On Monday it is put at £8,000,000. Before the end of the week it 3230 becomes £10,000,000, and I noticed an interview with the right hon. Gentleman the other day in which he put it at £12,000,000. I would like to ask the House to examine into the exact condition of prices, and to see what has been the history of prices since the Convention came into operation.
Before I give them, I would like the House to bear in mind that I am making comparisons which bear hardly against the case I am arguing, because since 1902 the sugar industry has been singularly unfortunate in climatic conditions. There has been a singular number of years in which there has been a serious shortage somewhere in the sugar world. For instance, in 1904–5, the shortage in Europe was about 1,200,000 tons; in 1908, Cuba was 500,000 tons short; in 1909–10, Europe was 400,000 tons short; immediately afterwards Cuba was 300,000 tons short; and in 1910–11, Europe was nearly 1,800,000 tons short. All those climatic facts make comparisons between the years before the Sugar Convention was entered into, and subsequent years bear rather hardly against the subsequent years. But it is a significant point, to which I call the attention of the House, that even taking all these facts into consideration, remembering that in the years 1905, 1908, and 1910–11 there was a serious shortage of sugar somewhere among the producers of the world, yet the figures of prices are so remarkable and so completely destroy the position taken up by hon. Gentlemen opposite that they are worth recalling. Since 1902, when the Convention was entered into, nine full years have elapsed. I compare the prices in those nine full years with the prices in the nine full years before 1902. The result is very remarkable. In the nine years before 1902 the average price of 88 per cent. beet, f.o.b. Hamburg—worked out on the returns presented to this House which happen to bear my name—is 10.29 shillings per cwt. In the nine years subsequent to 1902, notwithstanding all the climatic difficulties of which I have spoken, the average price is only 10.41 shillings per cwt., a difference of 11 of a shilling, or something less than ½d. a lb. It is a remarkable thing that those figures should come out as I have stated, and not as has been suggested by hon. Members opposite.
The case does not stop there. I want the House to consider what the price would have been in a year of shortage, such as last year, if the Convention of 1902 3231 had never been entered into. If the Convention had never been entered into, the process which was going on then by which natural sugar, that is to say, cane sugar, and beet sugar not enjoying bounties, was gradually being crushed out by the competition of bounty fed sugar would have continued. I believe that sugar production in the West Indies would have ceased, and that British sugar production in the Mauritius would have almost entirely ceased, and we are told by one of the greatest authorities on East India sugar that sugar production in Java would also have gone under. I tell those who make complaints about the operation of the Convention that if it had not been for the Convention of 1902 prices last year would not have been up to a maximum of 17s. for 88 per cent. beet, but somewhere nearer 27s. or 37s. If the Convention does collapse, and bounties and cartels are revived, you will be exchanging what I think is a healthy commercial process for an unhealthy one. You will be exchanging a state of things under which this country was coming to depend for its supplies more and more on production scattered all over the world, and less and less on production which took place in one particular little corner of the world. This country was coming more and more, under the operation of the Convention, to depend for supplies on cane sugar, which is grown in all tropical parts of the world, and less on beet sugar, which is grown in a particular corner of Europe. That was a healthy process, but if the Convention collapses it will be reversed. I will tell the House why it is a healthy process. It is a healthy process—I have no particular interest myself one way or the other—for the reason that if you are drawing your supplies from widely scattered parts of the world you are much less liable to have all over the world at one particular moment a bad climatic season. If you are drawing cane sugar from all over the world it is unlikely that there will be a bad season all over the cane sugar world, but if you are drawing your sugar from one particular corner of Europe—the beet corner—you are bound to have higher prices. [HON. MEMBERS: "Hear, hear."] I am glad to meet with that measure of assent from hon. Gentlemen opposite.
Let me try to give figures to prove what I have said about the dependence of this country more and more on cane sugar and less and less on beet sugar. I 3232 have taken the figures of the production of sugar and worked them out at a four years' average. The two contrasting periods that I have taken are the four years before 1902 and the last four years which are given in the Returns presented to this House, 1907 to 1910, inclusive. I find that the average production all over the world of beet sugar in the first of those periods was 5,420,000 tons. In the second period beet had risen from 5,420,000 to 6,922,000 tons. That is a sufficient increase. But cane sugar, which was 5,535,000 tons in the first of those periods, was no less than 7,845,000 tons in the second period. In other words, the average production in the last four years of cane sugar has, for the first time since the bounty period, outstripped beet sugar, and actually the average production for that period was rather more of cane sugar than of beet sugar. Of course the objection may be and has been made, and it sounds as if it had a good deal behind it, that the effect of the Convention has been to dry up the supplies of European beet. That is not the fact. I will give the House the actual figures, taking again the same periods, the immediately pre-Convention period and the last period for which the figures are available. The production of European beet in the first of these periods was 5,364,000 lbs. and in the last period it was 6,500,000 lbs. That is including Russia. If you exclude Russia the figures are 4,560,000 lbs. and 4,951,000 lbs. So that so far from the Convention drying up the supply of European beet, as a matter of fact under that and under the knowledge that fair trade and genuine free trade in sugar was assured, the beet crop of the Continent has actually grown, and, more remarkable still, the beet production of Russia has actually grown since the Convention.
§ Mr. MITCHELL-THOMSON
No, they kept to their cartel, and the growth which has taken place in Russia has been very considerable. I will deal with another suggestion which is sometimes made when one talks about this change which has taken place in the world's dependence upon beet sugar, and how it was coming under the operation of the Convention more and more to depend on cane and less and less on its supplies of beet. We are told sometimes that the Convention has failed in its main object—that it has failed to increase the supply 3233 of cane sugar. It is quite true that cane sugar has increased all over the world, say hon. Gentlemen opposite, but that increase has not been due to the Convention, but to other causes. It has been due to the tariff policy of the United States, to preference in Cuba and Porto Rico, and to the tariff policy of Japan. That is very interesting in its way as an objection, and I take note of the admission, which appears again in this interview which I have referred to, that a scientific tariff can favourably influence an industry in any particular country.
§ Mr. MITCHELL-THOMSON
I remember the right hon. Gentleman quarrelling with me on a previous occasion because he said I was counting in Cuban sugar, Porto Rico sugar and Japanese sugar in my periods of increase of cane.
§ Mr. MITCHELL-THOMSON
I quite agree the right hon. Gentleman did not say that, but he said I was inaccurate in commenting on the growth of cane sugar all over the world, because he said I was leaving out of account the fact that a good deal of the increase came from Cuba and Porto Rico and Japan, and the increase there was due to the tariff policy of those countries. He did not say whether it was scientific or not, and if he says I am misrepresenting him I will quite gladly withdraw that. The statement has been made from his side of the House repeatedly, and I was only commenting on the admission. The statement that there has been no increase of cane sugar, except in Cuba, Porto Rico and Japan, is quite inaccurate. I have been at some trouble to take out the exact cane figures for the whole British Empire, but if I gave them I should be accused of including India, which has long ago adopted the policy which this country refused to adopt. It has a system of countervailing duties which absolutely prohibit the import of bounty fed beet sugar, and, therefore, I will not include India in the Empire figures. Here again, in the first of the periods the cane production of the British Empire, excluding India, was 617,200 lbs., and in the second period it had risen to 1,149,000 lbs., and a large part of that increase has resulted in a greater influx of cane sugar into this 3234 country. In 1901, the year before the Convention, the import of cane sugar into this country was 169,000 tons, or 12 per cent. of the total import. In 1910 that had risen to 650,000 tons, or 36½ per cent. of the total import of sugar.
It is objected again that the Convention has been a great burden on the refining and confectionery industries in this country. With regard to the confectioners, the burden does not seem to have made itself as manifest as one would have expected, if it had really been as serious as it is represented to be. The rise in price on the average of nine years before and nine years after has been a purely illusory idea, which exists only in the mind of hon. Gentlemen opposite. If you take the export of confectionery, it becomes apparent at once that the confectionery trade cannot at all events be said, so far as its export branch is concerned, to be depressed, because the exports of confectionery, jams, and preserves have risen from 606,000 lbs. in 1900 to 1,580,000 lbs. in 1910; and I am told that leading industries in the confectionery world have had no difficulty in making very substantial profits in the period which has elapsed since the operation of the Convention. Whatever may be the case as regards the confectionery industry, there is no doubt at all as to the attitude of the refiners. There is no doubt as to the feeling of the people of Greenock and the refiners of London and Liverpool in regard to the matter. They know perfectly well that if the Convention were to collapse it would mean disaster to them. They know perfectly well that their industry was only saved by the Convention, and the fruit of that is to be found on examination of the figures. Here, for instance, is the percentage of sugar consumed in this country which was British refined. In 1885, 95 per cent. of the sugar which we used in this country was refined in this country. In 1902 it had fallen to 39 per cent. In 1906 it had increased again to 45 per cent. That is to say that having gone down to 29 per cent., it increased again under the operation of the Convention to 45 per cent., and therefore I do not think it is to be wondered at that the refiners have complained of the threatened action of the Government.
There remain still, on this hypothesis, the British Colonies. I have stated repeatedly what I think is the duty which the House owes to our Colonial possessions. If the Convention were to 3235 collapse, or even if you had the fear of the Convention collapsing, you would have such a feeling of insecurity and such a loss of confidence as would mean ruin, in many cases, to the industries of some of our smaller Colonial possessions. Mauritius, under the supposition of the Convention collapsing, if it got through at all, would only get through because it sends a considerable proportion of its output to India, where, as I say, the market is protected. I may remind the House that it is not very long since the Prime Minister was saying kind things about the West Indies, both in this House and at a dinner of the West Indian planters. I remember he pointed out at that dinner, in a speech of much eloquence, how hard the planters had worked, and how they had taken advantage of the kindness of Providence, not to dissipate any profits they had made, but to put them back in the land and to improve their factories. I think the right hon. Gentleman will not wonder if the British West Indies somewhat resent the attitude the Government have taken after language of that kind by the Prime Minister, because we can only suppose that if it leads to a revival of bounties it would mean the absolute ruin of the West Indies. [HON. MEMBERS: "No."] Perhaps I put it too high in saying it would mean absolute ruin. I am referring to the sugar industry. The sugar industry of the British West Indies can look at the future more hopefully and without the absolute despair which would have possessed them two or three months ago. In the last two or three months the situation has been very materially changed, thanks to the coming establishment of a system of preference between the West Indies and Canada. The West Indies are, at all events, assured for a considerable proportion of their sugar product, and in time to come, as regards a great portion of the sugar crop, they have a preference which nobody can take away from them. That is a position which certainly materially improves the West Indies, even if the whole Convention were to collapse. But it is no thanks to the right hon. Gentleman or the Government. As to these British Colonies the net result of the Government's operations is that, whatever happens to the Colonies, whatever be the success or failure that awaits them, the Government have not stretched out a finger to help them, but have left them to help themselves.
3236 I do not think that really what is going to happen is that which some people think will happen. The Convention will go on with Russia a party to it, and without Great Britain a party to it. What is going to be the effect of our withdrawal on British consumers and on British industries? As regards the effect on the price of sugar to British consumers of our withdrawal from the Convention, I think it will be absolutely nil. It will make no difference whatever, and I will tell the House why. There are most erroneous ideas about this. There is a sort of idea in the Liberal Press that now for the first time Great Britain is going to be free in getting into this country enormous stocks of Russian sugar which have been unable to come before. The real truth is, as regards Russian sugar stocks, that we are just as free as we have been since 1907, and no freer, except in regard to a small point, the figures respecting which I will explain in a moment. Since 1907 Russia has been free to send us a yearly average in four years of 225,000 tons a year. She actually has sent us yearly an average, not of 225,000 tons, but only 47,485 tons. Now she has bound herself down not to export in 1913 and 1914 more than 250,000 tons. That is the ostensible reason the Government have given for withdrawing from the Convention. I wish the House to bear that in mind, because I am going to call attention to the language of the Foreign Secretary on this matter. The last time there was a Debate on this subject was in 1908. It will be remembered that the position then was that Russia was binding herself down to send only 200,000 tons of sugar, and not 250,000 tons, as is the case at present. The Foreign Secretary said on 3rd June, 1908:—I do not believe any reasonable man would say that the probability of the economic effect of the limitation to 200,000 tons when Russia was in previous years in the habit of sending an average of only 40,000 tons—I do not believe any reasonable man would say that we should have made that a reason for breaking off the Convention altogether.That is exactly what the Government have done. They have made the figure of 250,000 tons an excuse for doing what the Foreign Secretary said no reasonable man would do. I think in regard to that matter the Government have stultified their position without putting the consumer in a position in which he will be a penny better off. As regards the effect on industry, I have already spoken about the refiners. The only other industry, besides confectionery, which is cramped and unsettled by this action is the new industry 3237 of British beet growing. That new industry is attempted to be started in this country to provide more work for those who live on the land, and to provide better remuneration for farming, and it is an industry which for its output employs a large amount of labour. That industry is going to be cramped and unsettled, and a feeling of uncertainty is going to be raised by the action which the Government have taken. It is all very well to go and talk about "Back to the land" at by-elections, but they are paying far more regard by their present action to the Russian than to the British labourer. What is to be the effect of the withdrawal from the Convention on the confectionery trade? I think the result is going to be a most unexpected one. If there is one thing more certain than another it is that the first result of the Government's withdrawal is going to be that foreign countries, signatories to the Convention, are going to impose, if not prohibitive, at any rate, very strong retaliatory duties on all confectionery imported by them from this country. [An HON. MEMBER: "Why"?] I will tell the House. The Foreign Secretary explained this clearly in 1908. Assuming that we had denounced the Convention of 1908, he says:—What would have happened would have been the continuance of the Convention, with Russia a party to it and possibly other States.That is exactly what has happened—Anyhow, the Convention would have been continued without us, and it would have been a condition of the Convention into which they must have entered that they would impose either prohibition or retaliatory duties on sugar exports from this country… It would have been contended that it was a violation of the Most-Favoured-Nation Clause to place retaliatory duties on bounty fed sugar, and you would undoubtedly have had this, that not only would the Convention have been continued without us, but it would have been continued in such a form that the other countries would impose retaliatory duties on British sugar products.That was what the Foreign Secretary anticipated in 1908, and that is exactly what I anticipate today. I am perfectly certain that the result is going to be that confectioners, or the more short-sighted of those in the confection industry who have grasped at the shadow of cheap sugar which they are not going to get, are going to lose the real substance of their export trade to foreign countries. The net result apparently is that while the consumer is not going to benefit, it is perfectly certain that the British beet industry and British refiners and confectioners are going to lose through the action of the Government. I do not think that that is a result 3238 which they can contemplate with very much satisfaction.
I may now say a word as to the manner in which the announcement was made to the House of Commons. It was made not as a statement volunteered by the Government, but in answer to a question, and whatever the merits or demerits of the action of the Government, I do not think that there is a single man in the House who really regards the manner of making this announcement as treating the House of Commons fairly. This is another case of what is constantly happening now under this Government, which is always professing its attachment to democracy. The power of the Government is constantly being used to the detriment of the liberties of this House. More than that, the action of the Government is a direct breach of a Parliamentary pledge. That pledge was given in the following terms by the Prime Minister on the 14th December last:—The Government would keep a free hand until the House of Commons had had an opportunity of reviewing the result of the negotiations.3.0 P.M.
That means the negotiations in January. This is what the Government call keeping a free hand. They come to the House and in reply to a question say, "We have decided to withdraw from the Convention," and the only opportunity we get of discussing it is on the last day or the second last day of the Session. If this is what the Government call keeping a free hand and giving the House of Commons an opportunity of reviewing the negotiations, it is a breach of a Parliamentary understanding, and is not treating the House of Commons fairly. We have asked for the date at which the Government arrived at this decision, and it has been refused. I now ask one single straight question: Was the decision to withdraw arrived at before or after the announcement of a vacancy in Manchester?
§ The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Acland)
The hon. Member will see in the White Paper that it was arrived at last year.
§ Mr. AUSTEN CHAMBERLAIN
The Prime Minister told us the other day that it has been arrived at quite recently.
§ Mr. ACLAND
It was stated in our instructions to our representative at the meeting of the Committee, I think in January, that if Russia was not allowed to send an extra 300,000 tons we would withdraw. 3239 That was when the decision was taken which is now being acted upon, simply because now we have to give the notice which we then said we would give unless certain conditions were arrived at.
§ Mr. ACLAND
He did not say the contrary. If notice were to be given, the decision to give it would have to be arrived at before the time when the year's notice would have to be given. The decision was that unless we could get this extra 300,000 tons we must withdraw. That decision was arrived at last December, and anything which has happened since has been the natural and inevitable result of that decision.
§ Mr. MITCHELL-THOMSON
The hon. Gentleman makes a statement which, I think, on comparison, he will find somewhat at variance with the Prime Minister's words, and he does not really touch the point as to what I want to know: When was the decision formally to give notice arrived at? Was it before or after the announcement of the Manchester vacancy? If it was before the announcement of the Manchester vacancy, why was it not communicated to the House? Why did the Government wait until Supply was closed, and until the only Vote on which we could discuss the instructions given to the representative of the Government at the Convention was passed? And why, if the decision was taken before the Manchester vacancy was announced, why did not the Government communicate it to the House? If, on the other hand, it was taken after the Manchester vacancy, how can they say that this is not the first time a similar coincidence has happened? I remember the by-election in Dundee, when by a singular coincidence it was decided to reduce the Sugar Duty. Personally, I may say that if this is intended as a bit of electioneering. I do not think that it is very good electioneering, because Manchester and Lancashire have very good customers in the Colonial cane-producing countries, and anything which hurts the purchasing powers of those countries will hurt Manchester and Lancashire. The mean of the exports to the British West Indies from this country during the last, four years was over £500,000. In British Guiana it was £116,000. In Mauritius it was £85,000. In Cuba, Peru, and Java the figures were very much larger. 3240 Java alone took over £2,500,000 from Lancashire. Anything which hurts the cane-producing countries will not in the long run benefit Lancashire. Though it may appear somewhat offensive to the susceptibilities of hon. Gentlemen opposite, I cannot help thinking that this has a very strong electioneering flavour about it. I am confirmed in that when I read the article which appeared in the "Star" on 2nd August. In the last sentence, in which leader writers usually put into a crisp sentence the pith of what they want to say, the writer in the "Star" says:—The decision of the Government"—He does not say it is going to benefit the country—ought to win many votes for Mr. Gordon Hewart.A great man is Mr. Gordon Hewart. The claims of national honour, the considerations of national interest, and the claims on this country of other countries are all as dust in the balance beside him and his votes. I think and I hope that the Government steps are going to be in vain, and that they are going to add another proof to the long list of proofs already given, that the confidence of the country has been withdrawn from them largely because they persist in treating great national problems like this alone in the light of their own party interests.
§ Mr. LOUGH
I think everyone who sits on this side of the House will approach this question in a spirit different from that which has been exhibited by the hon. Member who has just sat down. We are all heartily glad and desire to thank the Prime Minister and Members of the Cabinet for the decision which they have arrived at with regard to this important matter. I do not think the hon. Gentleman is at all just or fair to those who know, as well as he does, the difficulties of this matter. The decision to withdraw from the Convention was arrived at, as my hon. Friend below me has just said, some time ago. The Convention itself was agreed to by the Government in March, 1902; it was not previously communicated to the House, which was only asked in November following to discuss and sanction the entering into that Convention. In 1907 our own Government, I admit, in that case, completed the renewal of the Convention, which was not discussed until June, 1908. I say that the course which has been taken in this matter is entirely in accordance with precedent, and that, in fact, no charge can be made against the Government. In regard to 3241 the Foreign Secretary to whom the hon. Member referred in his closing sentences on this subjects the right hon. Gentleman did make it perfectly clear on the 7th of December last, in a Paper which was circulated, that the Government would take this action, and therefore no complaint can be made. The Foreign Secretary used these words:—In no circumstances will Great Britain continue to remain a party to the Convention after the expiry of the present period for which it has been prolonged unless Russia is allowed permission to export Westward during the current year at least 500,000 tons of sugar, in place of 200,000 tons to which she has been restricted.The hon. Member asked when the Government arrived at its decision. It arrived at its decision in December last, and the decision is strictly in accordance with the pledge which the Foreign Secretary gave in 1908, when we agreed to the renewal of the Convention.
§ Mr. MITCHELL-THOMSON
If that was so, why did the right hon. Gentleman keep putting questions on the Paper asking the Government at what decision they had arrived?
§ Mr. LOUGH
I will explain that. In June, 1908, my right hon. Friend said:—The economic interests of this country are in our view bound up in having complete liberty with regard to the import of sugar. We cannot compromise that liberty. Oar ports remain open.Those were the words of the right hon. Gentleman when agreeing to the renewal of the Convention. We had no evidence before us that sugar was shut out in this country, and the answer of the great Powers was to agree to the Russian demand, and my right hon. Friend had good ground for believing that it would be acceded to. The negotiations continued through January, February, and March, until at last the astounding decision was arrived at that Russia would only be allowed to export about half the amount of sugar that was intended. No charge can be brought against the Government in regard to this matter. With regard to my own part in this matter, if it is of any importance to the hon. Gentleman opposite, I may state that I take a somewhat strong view upon it. I opposed the Convention originally. I thought that the Liberal Government should have taken the earliest opportunity of getting out of it. But perhaps as an unofficial Member I did not know all the difficulties that might impede the Government in taking that step. Therefore, today, it is not for me to complain, but to express my gratitude 3242 to the Government. What they have done is in accordance with their pledges in this matter, and their dealing with the Convention now is in accordance with the dual policy of Free Trade and open ports, to which every Member on this side of the House is absolutely pledged. For a long hour the hon. Member has been dealing in half-truths and incomplete statements, and he has never dealt with the points of the price or production of sugar in the world. He has dealt with a number of abstractions of which no man knows the meaning. He spoke of the natural price. Nobody knows anything about the natural price. People pay what is asked for the article at the moment, and if there were any argument about the natural price the customer might regard the man as a thief and go to some other shop. When the hon. Member came to deal with the price of sugar at present, I did expect that he would give us something bearing upon the ease, but he did not mention the price of sugar.
§ Mr. LOUGH
I beg the hon. Member's pardon. He said he took the average of ten years now and compared that average with the average of the ten years previous. There is no such thing as this average price, either over the present ten years or the preceding ten years. There is a definite price paid for sugar. The hon. Gentleman mentioned the price of 9s. 3d., and immediately afterwards appeared to withdraw it. He said that allowance would have to be made for amortisation when he mentioned the price of 9s. 3d. But the price was 12s. and 15s. Can he show me a word in the Convention to keep the price of 9s. 3d.? There is not a word; there is no restriction on the price, which might be 18s. or 27s. Dealing with this question of prices, the hon. Member said that the Convention has existed through a very unfortunate period. He said there had been droughts, and that there was a falling off in the production of sugar. He did not quote figures to show that there was a falling off. He spoke of a falling off in 1910, There was no falling off. He spoke of a great falling off in 1911. There was no falling off whatever. The production of sugar in 1911 was greater than it had ever been before, yet, notwithstanding that fact, we had sugar put up to famine prices.
§ Mr. MITCHELL-THOMSON
As the right hon. Gentleman challenges me, I may say that I mentioned the fact that there was a shortage of 1,700,000 tons of beet sugar.
§ Mr. LOUGH
I have said nothing against that. It is another example of the childish fallacies with which the House has constantly to deal in such a matter as this. The hon. Member may say that in this country or that there was a shortage, but that proves nothing. If we are suffering when beet sugar is short and when cane sugar is abundant, that proves that we would not have suffered at all if the ports had been open, and it is only this wretched Convention which enables us to be cheated even in the most favourable circumstances. I am going to give accurate figures for the last four years from the hon. Member's own return. The total world production of sugar was 14,600,000 tons in 1907; 14,300,000 tons in 1908—only a reduction of 300,000 tons; 14,800,000 tons in 1909; 15,300,000 tons in 1910; and 16,800,000 tons in 1911. The truth is that there has been a steady increase of production of sugar in the world. I have quoted from the hon. Member's own return, and he knew those figures, yet he played with the House, and with these thin fallacies about average prices and shortages at Timbuctoo, or countries like that, instead of giving the House the simple facts.
I would like to take the House back to realities for a few moments. The hon. Member gave us some history of this Convention, and I would like to supplement it. What was the object of this Sugar Convention? It had four objects, three of which were alleged and one of which was the real object. The first alleged object was to get rid of bounties. It did get rid of the bounties; but that was not the object those countries had in view. Those countries gave bounties only because they were for their own advantage, and they only wanted to get rid of them for their own advantage, and they had quite a different object in this Convention. The real object of the Convention was to substitute for free competition, which would have reduced it, a combine to raise the price of food to the poor people throughout all the countries of Europe and of the world. Let us look at the matter of bounties. The hon. Gentleman has dealt with my arguments in his speech, and has thrown at me the great authority of Mr. Cobden and Mr. Gladstone. I have 3244 great respect for those names; but we have got to fight our own battles in our own way in these days, and I never believed that this country should sacrifice one penny to prevent foreign countries giving bounties. What did Mr. Gladstone do. He urged arguments against bounties, and he proved that he should not give them. And he was quite right, and I would oppose any Gentleman on the Front Bench giving bounties. It is quite a different thing for us to go to foreign countries to make great sacrifices at the expense of our people to induce them to abolish bounties, while we leave untouched their whole protectice system except the bounties. If we look at a protective system where tariffs exist, and bounties are granted, the bounties are the only redeeming feature of the system, especially in the case of the production of food, as they stimulate the production of that which all the people want. Bounties are, of course, not desirable, but tariffs are the real evil, and, therefore, when we went to those foreign countries and did nothing to get rid of their protective system, and simply induced them or helped them to abolish bounties, we were really taking a step very foolish and costly for ourselves.
I said that there were four reasons and the second was to improve the condition of the West Indian Islands. I expected the hon. Member opposite to deal with the question of those Islands, but he made as vague and general references to the West Indian Islands as to the questions of price and quantity and everything else. I will give the House the facts. We were told that those Islands would practically supply us with sugar if we went into the Convention. When the Convention was set up they sent us about 4 per cent, of our sugar and now they send us only 2½ per cent. The hon. Member may, of course, say that the condition of the Islands has improved. It has, but it has improved because they took the advice we gave them ten years ago. We told them not to rely on sugar but to cultivate other things, and to send out a variety of products, and they have been doing so. Barbadoes and the other Islands have greatly improved because they have ceased to rely on sugar. Let us deal with sugar. The total production and export of sugar in the Islands has gone down in ten years by 25 per cent. It is 25 per cent, less today then it was when we went into this Convention. The Convention we were told was intended to benefit the West Indian Islands. It has entirely 3245 failed to do so and the proportion of sugar they send us now is smaller than it was then.
§ Mr. LOUGH
That is a thin question. No one knows better than the hon. Member that there is nothing so faked in the world as these protests. We have a thick White Paper circulated today, and I believe I could get up such a White Paper in three months if I liked. It is simply a protest of greedy planters who have known how to induce little groups of trades in the Islands, just as I read that Greenock has made a protest that it would be destroyed. We have to take a broader view of the matter than is taken in Barbadoes, Trinidad, and Jamaica. Greenock, I think, has about a couple or three thousand men engaged in sugar refining, and this Imperial Parliament has got to think of the interests of the 45,000,000 of people, and therefore very different reasons appeal to us. I have dealt sufficiently with the West Indies, and let me say a word about sugar refining. We were told, in eloquent tones by the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain), that sugar refining would become a great industry if we went into the Convention, and that it would employ tens and hundreds of thousands of workmen in this country. What is the truth? The refineries have decreased from fifteen to thirteen, and sugar refining would not give employment to more than a few thousand men. But I do not admit at all that refining will be injured now that the Government has decided to go out of the Convention. The Convention was an arrangement in favour of the European beet-producing countries. Those countries now send us refined sugar. France used to send us the very best refined sugar. To-day France sends us nothing, and we draw our supplies of unrefined sugar in great quantities from countries in different parts of the world. I believe that the refineries, instead of suffering, will do a better business when the natural state of things is restored.
Those are the three alleged reasons which were given, and all of which were false reasons and had nothing to do with the matter. The real reason, which was not put forward so openly, and yet could be found in the documents for the Sugar Convention, was to effectively protect the industries of the sugar-producing countries, and to raise the price that the 3246 British people Would have to pay for their sugar. I want to recall to the House one or two prophecies that were made by the Prime Minister at the time when the Convention was entered into—I mean the right hon. Gentleman the Member for the City of London (Mr. Balfour)—and it was that the price of sugar would not be raised by the Convention. In fact, he said it would be reduced. That was the sort of prophecy we had from the Prime Minister on the last night of the Debate when they pressed through the Convention Act. Let us look at the question of price. I will not give average prices for ten years before, or ten years afterwards, which have no existence and which do not affect the person who buys a pound of sugar. I will give the exact prices. I will take the same standard as the hon. Gentleman opposite, namely, that of the price of 88 per cent. beet at Hamburg. In 1902 the average price for the whole year was 6s. 8½d. per hundredweight. That was the year in which the Convention was signed. That price of course never became the price in this country, as it must have added to it freight and duty and other matters, but still it is the standard price that everybody accepts. In 1903, it was 8s. 3½d. Coming events were casting their shadows before. In 1904, it was 10s. 4d.; 1905, 11s. 1½d.; 1906, 8s. 8d.; 1907, 9s. 6d.; 1908, 10s. 5½d.; 1909, 11s. 0½d.; 1910, 12s. 6½d. 1911, 12s. 10½d.; and this year so far, taking the seven months, 13s. 2d. Some hon. Members may think those figures small, and that they are only a matter of shillings and pence, but let me explain that one shilling in the price of sugar means a tax of £1,500,000 on the people of this country. Therefore it might be assumed that the effect of this Convention was to put up the price of sugar by 5s. a cwt., which is a tax of £7,500,000 on the people of this country. That has been a burden not easy to be borne in the days that have gone by. The thing was palmed off on this House by its being said that if the people of this country made that great sacrifice, it would go to our own Colonists and help them in their dire emergency. Nothing of the kind. Most of it went to Germany, and perhaps helped the Germans to pay for those great battleships which they have been building against us. I should think the House will be pretty Well satisfied by those figures as to the harm done to British commerce.
I want to allude to one or two other aspects of the question to make the matter still clearer. This question of sugar is one 3247 of intense interest, to the people of this country. Although the industry of sugar-working has not the romantic character of the cotton or woollen industry, yet the history of the sugar industry in this country is really a splendid chapter in our commercial experience. In the year 1842 we used about 15 lbs. of sugar per head of the inhabitants. That was the same as in France and Germany. Then France and Germany began to grow sugar. We grew none, but we adopted Free Trade; we opened our ports, received sugar from France and Germany, and made that sugar into a multitude of industries, of which a good deal has been heard in these Debates in past times. Our consumption of sugar rose from 15 lbs. per head in 1842, to 60 lbs. in 1870, and to 86 lbs. in 1902. For sixty years before the Convention was entered into our consumption of sugar rose steadily by an average of about 1¼ lbs. per annum. What have we found since? We have found that, as with an iron hand, as if we had been conquered by a foreign foe, all the progress of that great British industry has been stopped. In the ten years which have passed our consumption has not only not increased, but it has diminished. I will give the figures: The total imports of sugar in 1901, were 1,596,000 tons; in 1911, they were 1,622,000 tons—that is an increase of 26,000 tons. But we have 4,000,000 more people. Therefore it means a decrease per head of the population I will now give the figures per head of the population. In 1901, it was 86.07 lbs.; I could give the figures for every year, but I will simply say that in 1911 it was 80.20 lbs. There has been a fall; we have made no progress in the consumption. Contrast our rivals, Germany and France. In France in 1901 the consumption of sugar per head of the population was 24 lbs.; in 1911 it had increased to 38.63 lbs., so that the French consumption has increased by 60 per cent, or 70 per cent, per head of the population. In Germany the consumption in 1901 was 26.54 lbs.; in 1911 it was 41.63 lbs.
The House can now see what a blow was given to our great industries by this Convention. We have this extraordinary phenomenon: sugar has been made dearer to us and cheaper to our rivals in France and Germany. The House will ask how that can be. There is no magic about bounties. They could be paid only to certain firms, and so, when bounties were created, a duty was laid upon the sugar 3248 consumers in France and Germany to enable them to be paid. In Germany in 1900 the price of sugar was 4¼d. a lb. and the duty was 3.23d. Immediately the Convention was passed the duty was reduced to 1.44d. and the reduction of 1¾d. went straight into the pockets of the German people. In the same way in France the duty was 2.18d., and when the bounties were abolished it was reduced to 1.02d. The result was that the consumption of sugar in those countries bounded up, our industries were taken away from us, and the figures which I have given to the House, were the result.
§ Mr. LOUGH
I am alluding to the sugar industries. Supposing the progress in the consumption of sugar had continued in this country, an increased consumption of 1 lb. per head of the population represents 20,000 tons per year. At the beginning of the Convention we were consuming more sugar in this country than all the beet-sugar producing countries in Europe. We were not consuming it in the sense of eating it, but by making it into a variety of manufactures, at which a deadly blow has been struck by this Convention. The right hon. Gentleman asks what industries? The first industry is the carrying industry. The carrying of 20,000 tons of sugar would employ British shipping and British workmen. If the increase in the consumption had gone on, so that we were using ten or twelve pounds more per head than in 1901, we should be consuming 240,000 tons a year more to-day than we are now consuming. The right hon. Gentleman asks what industries have been endangered? Every industry.
§ Mr. AUSTEN CHAMBERLAIN
The right hon. Gentleman said, "Our industries have been taken away." I asked him what industries have been taken away. I am still waiting for the answer.
§ Mr. LOUGH
Any industry that we lose is taken away. There is the shipping industry, for one thing, and all the variety of uses to which sugar is applied. Before the Convention a little child could buy two ounces of sugar for a halfpenny. [Several HON. MEMBERS: "That is not an industry."] Hon. Members laugh, but sugar is a most important article of food to the people of this country. It is far more important than meat to the young. Sugar is used in the making of biscuits 3249 and confectionery, and in fifty industries that I could mention. I cannot detain the House by going into too much detail, but I think I have satisfied Members that our industries must have received a very serious blow when the growth of consumption was stopped and the progress which had been made for sixty years was checked. I want to take another point. The hon. Member opposite spoke of the effect of the Convention on the production of sugar throughout the world. As far as I could understand him he said that the effect of the Convention had been to increase the production of sugar and to put the industry on a stable basis. I took from the "Times" newspaper a very interesting article dealing with this matter some six months ago. My calculation is based upon these Returns. The article took eighteen years in three periods of six years. The first six years was 1890–6, the second period 1897–1903, and the third period 1904–10. If the House will consider for a moment it will see that one of these periods, in fact the first two, were well before the Convention, and the last period was after the Convention. The increase of the second period over the first in cane-produced sugar, in the production of sugar throughout the world, was SO per cent, and of beet sugar 32 per cent; but the increase of the third period in cane sugar was only 20 per cent, and in beet 15 per cent. I say that is the broad argument, not based on any country, and the best proof that the effect, of the Convention was not to increase the production of sugar, but rather to set it back. It must be so. At any rate, all we who sit on this side of the House believe that Free Trade and the open port, that the leaving of our industries unshackled by any arrangements of this kind is the way to develop business. I think that experience has proved that that is so.
There is one other aspect of the case that I would like to refer to. Supposing the Convention is denounced, what effect might it have on the production of beet sugar in this country? I think it would not be a very calamitous effect. Everyone sitting here must welcome any new industry in any part of the United Kingdom, but let it be established on a fair basis. There was a Debate in another place with regard to this setting up of the beet sugar industry, and it was asked there that no Excise Duty should be levied on beet sugar produced in this country. This House could not assent to such a principle as that. If 3250 we extended protection to sugar, why not to cheese, corn, and every other article of food produced in this country? Indeed part of the silliness of this Convention, one of the great elements of folly in it, which has been embedded in it from first to last, is that it helps no British industry. We could understand Protection if honestly—I do not mean that term opprobriously—but boldly introduced from the opposite side of the House. But the idea of protecting an industry like sugar which we have to obtain from abroad, the idea of making the British people pay that the Germans may get rich, is an idea so foolish that I could almost appeal to hon. Gentlemen opposite for once to desert their side and to give a vote in favour of the wise step we are now taking.
I am reminded of a most interesting incident in connection with this matter. One of the greatest Protectionists in this House before the present day was a namesake of your own, Mr. Speaker, Mr. Lowther, who represented the Isle of Thanet. When we were fighting the Sugar Convention in its early stages Mr. Lowther used to vote with us. He was a man greatly respected and esteemed, and he said to me on more than one occasion, "I cannot understand the fellows on my side voting the way they do on this sugar question. Give me corn, cheese, butter, bacon, eggs, and I will give any of them any protection you like, but the idea of making us pay more for our sugar is as bad as making us pay more for our tea." I quote that Gentleman on the other side as a sort of last appeal to hon. Gentlemen opposite to put themselves right on this matter before it is too late. I want to touch upon only one other subject. What are we doing to-day? I commence by thanking my right hon. Friends for withdrawing from this Convention. What effect will this withdrawal have? I should like to say that this is only the first step in the campaign. Personally I am not satisfied with the mere withdrawal. I hope my hon. Friends on this side of the House will not be satisfied either, or, for the matter of that, the Government. We want to get rid of the Sugar Convention Act of 1903. If we do not get rid of it, then supposing this Government is defeated at the polls, and hon. Gentlemen opposite come in. They would renew this wretched Convention. We want to make a clean job of it, and to get rid of the whole thing at once. 3251 As to the effect of withdrawal, my first answer is that I think we may now begin what I may call a sane policy. Having first withdrawn from the Convention we will open our ports in every way; we will get rid of the Sugar Convention Act, and will return to the safe paths of Free Trade which we have deserted for a short time. Supposing we do that, how will it affect our sugar supply? I would like to say that notwithstanding the high prices which the Convention has produced, the great consumption that has sprung up in France and Germany has to a large extent solved that question. Now we get from Germany 25 per cent, less sugar than we got in 1901, the reason being that the German home consumption has increased so much that really I believe a few years hence Germany will use almost all her sugar at home. France is already in that position. I know nothing about Cabinet secrets, but I think that in 1607—the hon. Gentleman below me will tell us, for he knows everything—the real reason the right hen. Gentleman renewed the Convention for a few years was at the request of France. In 1902, we imported from France 3,975,000 cwts. of sugar; in 1911, we only imported 121,000 cwts.
§ Mr. LOUGH
I agree, but does the hon. Gentleman know that cane sugar and beet sugar have exactly the same chemical constituents? I do not believe he knows when he puts a lump of sugar in his tea whether it is cane or beet. It does not matter a straw to us whether it is cane or beet, so long as we get good sugar at a low price. As to the fallacy that 1911 was a drought year, let my hon. Friend go to Mincing Lane and consult the sugar market. The Convention means that more money has been taken out of the pockets of the innocent British people. I can assure hon. Members that the quantity of sugar we take from both Germany and France is rapidly decreasing. Where are we to turn to then for our sugar? In the first place, with regard to Russia, in 1902 we only took from her 6,000 cwts. In 1911 the quantity was 2,219,000 cwts. 3252 Russia has a wide field for the cultivation of sugar, and I hope that that great country will in every sense follow our example, and withdraw from the Convention. Then I think a mighty trade will spring up between this country and Russia in sugar. But apart from European countries, there are other countries to which we can look for sugar. In 1902, we got no sugar from Java; in 1911, we got 3,337 cwts. In 1902, we got none from Cuba; in 1910, nearly 2,000,000 cwts. Came from Cuba. From Peru we get a very large quantity; and finally we have ten times as large an importation from India as we had in 1902. I only mentioned that to show the House that we can get abundant supplies from other countries. We are not tied up to this Combine that has been established in Brussels. The hon. Member opposite said in the early part of his speech that I had made a charge against the Convention. The one charge that I made against the Convention was that it was a secret body. Can he deny it? He does not deny it.
§ Mr. LOUGH
A secret body sitting for the purpose of raising the price of sugar. We call it Vehmgericht in 1902, and now, after ten years, it is Vehmgericht still. There has been only one sitting of the Convention during the last ten years, one on which some light of public opinion was let in. And that was the last sitting. The first meeting in this connection was held on 22nd October, and that meeting was about a very simple point, whether Russia should be allowed to send us 400,000 more tons of sugar. You would have thought the question would have been answered in a moment. The Convention felt that. They said we assent to the principle, but they postponed the matter until December, and they postponed it in order to put money in the pockets of their own producers, because Germany and other Powers knew that every month and week that they put off this permission they were reaping a rich harvest out of the British public. The Convention met again in December, and they postponed the matter until the 27th January. On the 27th January they again met, and they discussed the matter for thirteen days. What were they talking about during these thirteen days? I wish we knew. I wish we knew what bribe was offered to Russia to withdraw 3253 her demand. Is Russian sugar to be destroyed. On the 13th February they had not arrived at a decision, and after adjourning till the 17th March, which was a Sunday, they decided, after six months, to allow Russia to export about one-third of what she was asked for. And then our Government, seeing that further truckling with this Convention was not in the interests of this country, ultimately came to a decision. I heartily congratulate them upon that decision, and I believe it will be approved by the people of this country, and I believe it will be an example to other nations to have no further truck with any arrangement of this kind.
§ Mr. ACLAND
I think it will be for the convenience of the House and for the discussion of this matter that a statement should be made to the House at this stage as to the actual decision arrived at, and as to what the position will be so far as we can judge in the future. I shall try to make that statement without going into any controversial matters, for really if we were to begin to discuss this question as portion of the fiscal question our discussion may well be endless, and even though we were to rise at the end of that discussion and meet again on the 7th of October, I do not think we should have so long a holiday as we expect. I think this matter can be discussed with very much less heat if dealt with apart from the fiscal controversy altogether. There were only two points raised in the speeches to which we have just listened to which I want to refer at the beginning. I must correct the view of my right hon. Friend that this is a secret body which issues no Reports. I have in my hand a series of Reports which have been laid before Parliament in the form of White Papers recording one after another what happened in each of the important meetings of the Sugar Convention which have taken place. The proceedings are fairly fully reported in a number of documents, and I think my right hon. Friend must acquit us of the charge of trying to keep secret the proceedings of the Convention when we were parties to it.
§ Mr. ACLAND
I quite agree, if my right hon. Friend wants to find evidence as to how much money some one put into his pocket as a result of each decision, that is not information he will find in the Report. But so far as recording the real proceedings we have done our best to lay before Parliament what has actually occurred. The only other point of controversy arises out of the first speech we heard to-day. I agree with a great deal of that speech and I shall perhaps throw a light upon some of the matter mentioned in that speech. But I must really protest against the attack that we have suddenly produced our decision on this matter in order to influence a certain by-election. Really that is not justified. The suggestion seems to be that, believing no doubt we were very likely to lose North-East Manchester, we sat down and thought what can we rake up in order to save that election. Really I cannot accept that, and I think it rather unworthy of the rest of the speech which the hon. Gentleman made. Surely the facts of this particular matter are very well known. We wanted to get as much Russian sugar out as we could. We decided in December last that unless we could get out a certain amount of sugar we would be bound to give notice after I September, when the five years had elapsed, and that was known to all the important interests concerned, ever since the White Paper was laid in January, this year, they all knew perfectly well that we were going to give notice of withdrawal. There has been nothing now. All the people who count—namely, those engaged in industries connected with the sugar trade knew, although the matter would be summarised as the time approached when a decision would have to be come to. But to say that it was a sudden decision taken to influence a by-election is not justified. It was the inevitable and only outcome of the decision taken months before. What would hon. Members opposite say if, as we might have done, we had not given notice of withdrawal until the House adjourned for the holidays. There surely would have been a great deal of denunciation of our attitude.
These are the only two controversial questions I want to touch upon, because it is right that the House should know how the position stands at the present time. But the question of the effect of our withdrawal of course depends almost entirely upon the prospects of the revival of the system of giving bounties upon the export 3255 of sugar by European countries. If these bounties are restored, we may have on our side an unending vista of cheap sugar for our own people, which, from the point of view of many persons, will be a very pleasing development, and, on the other hand, there may be a great disturbance of legitimate trade interests at home and abroad which may be disastrous, but unless and until you can say whether these bounties are likely to be revived or not, you cannot really tell what the result of our withdrawal will be. The question whether the bounties will revive depends upon our understanding what the bounties originally were and what was the effect of the bounties on the agreement. The bounties were different in different countries. In France, for instance, the bounties cost about three millions a year, and arose from this cause. France gave a remission of the Excise Duty on any refined sugar which might be made from home-grown beet. The remission of the duty was calculated on a scale of which the basis was a unit of beet sugar treated, and the actual amount of refined sugar which was made from the unit of beet became very much greater than had been expected when the unit was fixed. And therefore the claim for repayment of excise very much exceeded the original excise paid upon the units of beet treated. So it became a very burdensome matter to the French Government, and they were very glad to get rid of that system, and we may be perfectly certain that no system of that kind will ever be restored. In countries like Austria and Germany, bounties were rather different and they were higher. Bounties depend primarily upon the difference between Customs Duty and Excise Duty. Under a high surtax it is to the advantage of the home producer of sugar to force up the price for internal consumption by a high surtax, and that system encourages an artificial amount of production in the countries so protected.
If all that is produced is put upon the internal market the cartel operating under the operation of the surtax, it is likely to be broken; it cannot be allowed to rot in the country, and it is in order that the price may be kept high or internal consumption in the interests of the producers may be met, that the surplus over the internal consumption have to be forced out, which is done either by State bounties or more commonly by the bounties given by the cartels themselves, 3256 in which they use and share the high profits made to force outwards the surplus of production. One of the principal points of agreement in the Convention was that the surtax in future instead of being 10s. or more per hundredweight, should never exceed 2s. 6d. per hundredweight, and that broke the monopolies in Germany and Austria, because they could not secure a high price for sugar. That broke the bounty system. It was not possible or desirable to go on giving bounties when once this tax had been dropped. The result of the consmption of sugar in those countries was really very interesting. France, Germany, Austria, Hungary, Belgium, and Holland had previously altogether been consuming about as much sugar annually as the United Kingdom. Since then the price of sugar, as well as the consumption, has slightly increased. While the total increase of import into this country has only been 8 per cent., the increase of consumption in those countries I have named averages 40 per cent, and 50 per cent. The total consumption in the foreign countries I have named went up from about 1,600,000 lbs. to 2,400,000 lbs. last year. I wish to call attention particularly to this point, because it is an outstanding matter of importance in deciding what the probable result of our action will be. Foreign countries have, on the whole, because of what followed the formation of this Convention, become accustomed to reasonably cheap sugar, and when once people have really become accustomed to getting cheap sugar, and treating it as a necessity rather than a luxury, it is humanly speaking impossible that they can be forced back under the regime of high sugar under a high surtax and a high profit of cartels in those countries. The conclusion I draw is that foreign countries having got Cheap sugar, there is little prospect of the bounties being restored, because they result in a high surtax, and no one in those countries could now reimpose the high surtax which resulted in dear sugar. Besides that, we have the fact that those countries have actually agreed, although they knew we were going to withdraw from the Convention, to prolong the Convention for another five years, thus securing the continuance of reasonably cheap sugar, and preventing the imposition of a high surtax. It should be remembered that if the Convention were to come to an end, the 3257 surtax in Germany would rise automatically from 2s. 6d. to 10s. a cwt.; and it is to avoid the great difficulty that would arise that the German Government have come to the conclusion that it is clearly in their interests to keep the Convention going and to keep sugar reasonably cheap in that country. What follows? If I am right in thinking that there is every prospect of the Convention continuing, so far as Continental countries are concerned, it follows that we must practically face the certainty that nothing we can do now, so far as we can see as to what is likely to happen in the future, will provide this country with artificially bounty fed sugar. I do not think we shall get that by our withdrawal, even if all the countries agreed to break away from the Convention, because I do not think those countries could maintain their position under the dear sugar regime which alone makes the bounty system possible.
If there will not be a revival of bounties, it also follows that the cane-producing industry has every security and every chance of gradually increasing its production, as it has been doing in the last few years. I do not believe that there need be any anxiety felt by any persons who are interested in the production of cane sugar in any part of the world. They will not be artificially under-cut by bounty fed beet, and, as long as that is so, they will get a perfectly good profit on whatever cane sugar they produce. I say that, with a special view to our own industries interested in the manufacture for machinery for treating cane sugar, of which no less than £2,000,000 worth was sent out last year. There is naturally, or would be, great anxiety in that industry if it were to be thought that bounties would be restored, but, as things are, I believe that industry can be perfectly certain that the steady demand for their machinery from England which has developed in recent years ought to continue, and I hope it will. Another result that follows is that those who are interested in home-grown beet sugar need have no anxiety. I have been interested in this matter in my own Constituency, and I believe, and the producers of beet believe, that they can make quite a good thing out of the home-grown beet sugar unless they are undercut by bounty beet from the Continent Given a fair field, just as is the case with cane production, the producers of beet in this country need have no anxiety if they are given an equal chance and compete on equal terms. 3258 Under those circumstances they will be able to do reasonably well.
Having therefore looked at this matter simply from the one point of view that the Convention will continue, and the bounties will not be restored, and that being the view which I very strongly hold, I must at any rate say something on the other hand in regard to the possibility that I am quite wrong, and that the bounties might be revived. I want to say on that point that the action that we have at present taken will not prejudice or prejudge the future policy which we might have to adopt if and when bounties were to be restored. I do not think that is in anyway likely, but it is right to say our hands would not be tied if it were to happen. Now I come to the special point dealt with by both speakers in the Debate. It is the position of Russia and the desire to get more sugar from Russia which has been the direct cause of our announcement that we should have to withdraw from the Convention. It must be remembered that ever since 1907 we have said if Russia or any other country chose to send us bounty fed sugar we should certainly take it. That has been our position, and nothing that has happened, or seems likely to happen, makes it seem at all probable we should desire to alter that position. But in spite of our having definitely said, as one of the terms of our continuing to be one of the parties to the Convention, that we would take all the sugar Russia or any other country would send to us, we did not get Russia to break away from the terms under which they joined the Convention, namely, that they were to be allowed to retain their high surtax and to export a certain amount of bounty fed sugar, that export of bounty fed sugar to be very definitely limited. In most years there has not been such an excess of production in Russia as to result in any great demand there that they should send out a great quantity of sugar. In most years they have not reached, perhaps not really reached, the extra 200,000 tons they are allowed to send out, but, of course, last year was very, very exceptional. It is a fact, no doubt, as my right hon. Friend says, that the total crop of the world was greater. I have not got the exact figures.
§ Mr. ACLAND
But, of course, as my right hon. Friend will admit, and as the hon. Member said, the production of beet sugar on the Continent was very short, 3259 owing to the quite exceptional drought that we had last year. It was not so in Russia, partly because Russia had a better crop, and partly because Russia had been piling up a surplus for years. There was undoubtedly a large surplus of Russian sugar which Russia wished to send us. That Russian surplus, it should be noted, is not quite a natural surplus. It is an unnatural surplus due to the high surtax which Russia puts on and which has the effect of unnaturally inflating the production in Russia, because their system, as I understand it, is that each producer shall be allowed to put on the market only a certain proportion of the sugar which he produces in a particular year. That naturally makes each producer try to produce the very maximum he can in order that the amount he may put on the internal market, and on which he will get a large profit, may be as big as possible. But whether it be there has been an unnatural surplus of sugar accumulating in Russia because of a forced production by reason of the high surtax, or because in Russia the beet crop last year was much less of a failure than it was in Austria, Germany, or France, there is no doubt Russia had about 400,000 tons extra of sugar they wanted to export, over the 200,000 tons they were allowed to export. We did say from the beginning that, as this state of things had arisen, and as we wanted this sugar to cut down the very high price there threatened to be in our country, we would not continue to remain parties to the Convention unless Russia were to be allowed not only to send out an extra 300,000 tons in the sugar season 1911–12, but unless also a reasonable arrangement were made for the future whenever Russia had an excess of sugar which they wished to send out. That, of course, was the strongest action we could take, and other countries were so anxious we should not leave the Convention that to a large extent they took up our demand. Long negotiations took place, which are all recorded in the White Papers that have been presented.
At the end we did not succeed in our full demands, and the inevitable consequence followed. Russia preferred not to reduce her surtax which would have enabled her to export as much as she liked. Russia, being under the control and influence of the producer rather than of the consumer, preferred to retain her high surtax and her high prices for internal 3260 consumption, with a limit to the amount which she might, export. The opposition to the proposal which we made and which other countries were ready to agree to, came very largely from Germany, and the result of the long negotiations which took place was that instead of getting an extra 300,000 tons last, year with reasonable provision for the future, we shall only receive 150,000 tons, with an extra 50,000 tons in the two years following, and no more definite condition for the future than is embraced in these conditions. It is the opinion of those who represented us at these meetings that it is only because of the strong line taken, only because we said so definitely, "if you will not do this Great Britain will have to withdraw," that we succeeded even to the extent of liberating an extra quarter of a million tons of Russian sugar, and this has been liberated largely owing to the action we took. That is of course the justification for our action. We wanted it, and we asked that Russia should send us at least as much as possible. We wanted to be sure, if there were a scarcity in the beet crop, that as Russia had a large surplus, nothing should be left undone to secure that Russian surplus if Russia chose to send it to us. The only thing we could say was: "If you will not liberate this sugar we must withdraw from the Convention." The sugar was not liberated, and, therefore, the withdrawal was bound to follow.
That is not quite the whole story, and I may finish the description of the present position in order that the whole story may be put before the House. I have tried to make two points, first, that there is no likelihood of a revival of the bounty system, and therefore our industries, which depend on not having competition with cheap, bounty-fed sugar, may be perfectly safe for the future. Secondly, that our action had considerable effect in getting this considerable gain of an extra 250,000 tons of Russian sugar, which we might not have obtained at all had we not taken the action we did. But other things followed. By withdrawal from the Convention, we, of course, are technically allowed to do many things which, while remaining a party to the Convention, we could not do. We are allowed to give a bounty on the export of sugar, and, if we please, to give a preference to cane sugar over beet sugar, or we can give a preference to sugar coming from the Colonies or other places. On the other hand, if we take that sort of action, other countries have a weapon which they will 3261 use against us, and it has been suggested that other countries, and particularly France, would take that opportunity, if we acted on our freedom in this way, of putting a very high duty on the sugar products which we send them. The value of the sugar products which we send to France and other countries is not very great, but still, of course, it would be hard upon the manufacturers of those sugar products, if they had very high duties to pay upon them owing to any action on our part. Therefore we have thought it right to say, in the notice of withdrawal which is being sent to the countries which are parties to the Convention, that this Government has no intention of giving bounties on the export of sugar, or of giving preference to cane sugar over beet, or of giving a particular form of that preference, a preference to sugar from the Colonies, or of imposing a higher Customs Duty on beet sugar than on cane.
§ Mr. AUSTEN CHAMBERLAIN
May I ask the hon. Gentleman one question? I am not certain that the case about which I am going to ask him is a careful omission or a careless one, but he said nothing about giving a bounty to the home growers of sugar. Has the Government made any statement on that point?
§ Mr. ACLAND
We could give, as I understand it, a remission of the Excise Duty on home-grown sugar to the extent of 2s. 6d. a cwt. My point on that would be, that if we only did what we should have been justified in doing under the Convention, no country could take exception to the use we made of our freedom because of our departure from the Convention. We could not do more than give that reduction in the Excise Duty of 2s. 6d. a cwt., compared with our Customs Duty, without other countries saying to us, "You have done something because of your freedom which you could not have done while you were parties to the Convention, and therefore we will take retaliatory action."
§ Mr. AUSTEN CHAMBERLAIN
I quite understand what the hon. Gentleman has said, but it does not quite answer ray question. He is explaining that we could give a preference to homegrown sugar of 2s. 6d a cwt., under the Convention, and that we could do it still. What I wanted to ask was whether the Government have made any statement as to giving bounties to sugar growers? Have they precluded, for instance, or have they considered, whether 3262 the Development Commission should now be authorised to give a bounty to start the industry.
§ Mr. ACLAND
I think the simplest thing I can do is to read exactly what we have said:—His Majesty's Government has, therefore, no intention of departing from the fundamental principles of the Convention by themselves giving bounties on the export of sugar or by giving a preference to sugar produced within the British Empire on importation into the United Kingdom, or by imposing a higher Customs Duty on beet sugar than on cane sugar. They will, moreover, be prepared to maintain the present system of giving Customs certificates to any refiners or exporters of sugar not using bounty-fed materials who may desire such certificate with a view to enabling those sugars to be imported into the countries of the Sugar Union at the lowest possible tariff. His Majesty's Government will not depart in any particular from the policy laid down by them without giving due notice through the usual channels to the other states of the Sugar Union.That is the letter which is now being conveyed to the countries which are parties to the Sugar Convention.
§ Mr. HEWINS asked a question which was not heard in the Gallery.
§ Mr. ACLAND
We had a pretty clear intimation that consequences would ensue if we did not make it clear that we did not intend to do the things which legitimately might entail the consequences.
§ Mr. ACLAND
The consideration is obvious. We believe that, as we have no intention whatever of giving a preference to the Colonies, and no intention whatever of giving bounties, we are not departing from the policy which this Government, at any rate, would be absolutely certain to follow, and therefore we are not tying our hands in any way whatever, and in return for that we shall hope to effect this—that these countries will not do what they would be entitled to do otherwise and that is to put heavy retaliatory duties on our exports of sugar and sugar products. The right hon. Gentleman (Mr. Lough) asks what business we have to give pledges of that kind to other countries and not to this House? We have guarded ourselves in that matter by saying so definitely as we have (hat it is not a pledge. We say we have no intention at present. If the House were to decide that it ought to give a preference to the Colonies, or ought to give a bounty on sugar production or sugar exports, we have made it quite clear that we should not do so without intimating that fact to the countries whose policy might be influenced 3263 by our action. Of course, it is open at a moment's notice for this House to change the policy which this Government has announced as its policy, and in that case the other countries could not find fault, and no Government would find itself pledged in any way, because we have only said, "This is our intention, and we will let you know as soon as our intention changes." Therefore the House is not fettered either from the point of view of what my right hon. Friend might want to do or the right hon. Gentleman opposite might want to do. Having made this declaration of our intentions, it is cur hope, and we have good hopes, that no other country will take the line which they would be justified in taking on the mere fact that we have given notice of withdrawal, of penalising our sugar products. This letter from the Foreign Office giving instructions to our representative at Brussels was only dated 2nd August. That was, I think, the same day on which the announcement was made. We did not think it was courteous to the other countries, at any rate, not immediately to give those countries the notice of withdrawal that we had announced in this House. That letter will have been sent by our representative in Brussels through the Government there to the other countries concerned, but clearly we have not had time to receive any answers at all as to what view the other countries concerned take of the matter. The representatives on the Sugar Commission of the other countries have aways known that it was not our intention to break away in order to give a preference to the Colonies, or in order to give a bounty on exports, and they have been quite ready to act accordingly, and not to penalise our sugar manufacturers.
I have only, in conclusion, to say that the action that has been taken is justified. We believe that in the main the position of things in future will be summarised in the phrase "as you were." The Convention will continue, the bounties will not revive, the cane sugar industry will not be disturbed, and the beet sugar growing in this country will have just as good a chance as it has now, but we were bound, when there was an extra 400,000 tons of Russian sugar going that we wanted, with the price going up month after month against our people, to do everything we could to obtain that sugar, and it is undoubted that the announcement of our intention to withdraw had a real effect, and 3264 did obtain for us far more of that Russian sugar than would otherwise have been the case. As, of course, it has been our policy ever since 1908 to say that if any country will send bounty fed sugar we will be glad to take that sugar, we were only following out that policy in the ordinary direct course in making our position in that matter even more certain than before by clearing out altogether. It makes it quite clear to all the world that if we can get cheap sugar, wherever it comes from, we shall be glad to receive it.
§ Mr. ACLAND
No; I do not know that that is any part of our policy. It is bur contention that the Convention is going to maintain itself quite independently of what this Government may or may not do.
§ Mr. ACLAND
It has recently agreed to prolong itself for another five years, knowing as they did that we were going to go out. Indeed, foreign countries knew perfectly well when they agreed to continue the Convention for another five years that we must withdraw. The actual announcement of withdrawal was only a formal step made necessary by announcements previously made. The question of our policy with regard to the Convention does not arise, for the reason that the Convention will continue, and, as it will continue, bounties will not be restored. There are two questions with respect to the matter of policy. You may say that if we could get back to the system by which we could get cheap sugar from France and Germany, that would be an advantage. On the other hand, it is equally true to say that under any system there is no security for continuing from year to year to get bounty fed sugar at the expense of other countries. I would only add that, whatever we do, or do not do the Convention will continue, and therefore, whether we like it or not, and whether it is on the whole better for our industries or our people that they should have artificially cheap sugar, we are not going to get artificially cheap sugar, but sugar at the natural price.
§ Mr. AUSTEN CHAMBERLAIN
The matter has been simplified by the speech we have had from the Under-Secretary. Whether it is as satisfactory to the hon. Member for West Islington (Mr. Lough) as 3265 it is to myself and friends, that is not for me to say. I wish to make one criticism as to the time and manner the Government have announced their decision. I asked the Prime Minister on Thursday last, when he made an announcement of the Government's intention, why we had not been told earlier. He gave two answers. He said it was the first time, since the Government made up their minds, that any Member had asked the question. I think the House has a right to demand in a matter of this importance, on which the Government have been frequently questioned, that when they came to a decision they should spontaneously communicate it to the House. The second answer was that he could not give earlier information to the House because the Government had only come to that conclusion. There was—I do not say a passage of arms, but a passage of argument between the lion. Gentleman opposite and myself, as to whether what he said in the course of the speech was compatible with what the Prime Minister had said.
The Prime Minister has said that he could not communicate the decision to the House because it was not taken until just before; exactly when, I do not know, and he would not tell us. The lion. Gentleman tells us that the decision was practically taken last December. It follows inevitably from what was then said that if the Conference did not relase the sugar, therefore, our decision to withdraw followed automatically and necessarily on what had passed in December. But when did they finally refuse to permit all Russian sugar to come out? In the month of March last. Since then no new fact has arisen which could modify the decision of the Government in any way. Therefore, if it be true, as I think it was, as stated by the Under-Secretary, that the decision to withdraw followed necessarily from what they had said in December, it at once became known in March, when the other Powers would not agree to their terms, and there was no earthly reason why the Government should not have made up their minds or taken a formal decision on all that was required in the month of March, or at any rate in the month of April. Why was not that decision announced then? It is the flimsiest of flimsy excuses for the Prime Minister to say he could not make any announcement to the House because the Government had not made up their minds. They had made up their minds 3266 at this time, though they had not formally recorded their decision either in the Cabinet or in the Foreign Office or elsewhere.
The result is that the only opportunity which the House has for the consideration of this most important question is the last week of the Session, and as far as this House is concerned the last day. That is not fair treatment of the House. The Government, to more than one interest, to the West Indies, the refiners and others, said that they should have ample opportunity of making representations before the Government committed them. The Government have forgotten this undertaking, and they only allow us to bring on the question on the very last-day of the Session; and then neither the Prime Minister, nor the Foreign Minister, nor the President of the Board of Trade, nor a single Cabinet Minister, nor the head of any of the Departments primarily concerned, thinks it worth his while to attend the discussion. If it had been the Chancellor of the Exchequer, who, like others of us, had to sit up until four o'clock on Tuesday morning and three o'clock this morning, who was absent, or if there was some cause like that, I could make every excuse for their absence.
But I think there is no excuse for the absence of any responsible Minister from a very important Debate of this kind. It is simply because it is the last day of the Session, and this is the only day on which they dare to do it. They could not have dared on any other day of the Session to leave the House to discuss this matter without the assistance of the presence of a Cabinet Minister. I come now to the merits of the question. The position of the right hon. Gentleman the Member for West Islington (Mr. Lough) is quite clear. He thought the Convention bad from the beginning, because he thought it" object was a wrong one. The right hon. Gentleman, in the name of Free Trade, demands, not the free exchange of commodities at their natural price, but the admission of goods at artificially low prices to this country without any free exchange on their part for the goods shipped that we send out. What that has to do with Free Trade I cannot conceive. The view that the admission of bounty fed products is a necessary part of Free Trade was repudiated by all the great Free Trade statesmen. Mr. Gladstone, Mr. Cobden himself, and I believe every one of the leaders of the 3267 Free Trade movement denounced the bounty system. It is only this latter-day representative of the movement, the right hon. Gentleman the Member for Islington (Mr. Lough) who really believes that Free Trade is served by the encouragement of bounties in other countries.
§ Mr. AUSTEN CHAMBERLAIN
The right hon. Gentleman said he was convinced that Free Trade strikes at the bounty system. I say the contrary is the fact, and that the bounty system strikes at Free Trade, and is the negation of Free Trade. But I am not going to pursue that further, because it is not necessary. What is interesting is the right hon. Gentleman's object, namely, to preserve the bounties. He thinks this country pursued a suicidal course when it did anything to bring the bounties to an end, and when they entered into the Convention with the result of bringing them to an end. I do not wonder when the Under-Secretary sat down that the right hon. Gentleman asked him what is the view of the Government about that. I never heard a better defence than that which was made by the Under-Secretary for Foreign Affairs, and I am content to rest the case on the view which the Government took of his speech. He does not argue, as Members of his party have habitually done, that it was wrong to abolish the bounties because that produced dearer sugar, and to denounce the Convention because that would give us cheaper sugar. That is not the contention of the Under-Secretary. But it continues to be the contention of hon. Members opposite on the platform. The argument of the hon. Gentleman's Friends is wholly inconsistent with what he advanced. His defence of the action of the Government is that the Convention had not itself worked well, and that they now withdraw from it without any fear that the bounties can be, or will be, imposed again. That really leads me to another and damaging criticism of the attitude of the Government. The right hon. Gentleman opposite said that if we had not had the weapon of threatening to leave the Convention unless Russian sugar were let 3268 out, we never would have got permission for Russia to export in the last three years the additional 250,000 tons. You used that threat for all it was worth. What you hoped to get was permission for her to export 400,000 tons.
§ Mr. AUSTEN CHAMBERLAIN
I thought the hon. Gentleman spoke of 400,000 tons. But I will take any figure he likes. He never hoped to get more. If they had not used the threat they would have got nothing. They used the threat, and extorted a compromise by which they got 250,000 tons. But it is hoped that at a future time they may get more, yet they have deprived themselves of the power ever to use the weapon by which alone they got anything. When next the question arises the Government will not be represented in this Convention, and the threat to leave the Convention will have no terrors for the other Powers, and instead of getting 250,000 tons through our position in the Convention, we will get nothing at all because we have gone out of it. As far as there is any justification for the action of the Government given us by the Under-Secretary of State for Foreign Affairs, it is that the Convention did its work so well and so thoroughly that not only did it kill the bounties for the time we have been parlies to it, but that it dealt them a permanent blow from which they will never recover. What more justification do you want, and what then is to be said of the Convention? It did not decrease the growth of beet; on the contrary, the growth of sugar beet has increased. It did not decrease the growth of cane; on the contrary, it increased the growth of cane. It increased the refining business in this country. It increased the very important trade in the export of sugar machinery for the plantations in the West Indies and elsewhere, and which amounted last year to no less a sum than £2,000,000. It did not decrease the export of confectionery. The right hon. Gentleman the Member for West Islington talked loosely of the industries of the country, but he could not make that out in the case of confectionery, the export of which has steadily increased under this Convention.
All those things increased. Stability was given to the West Indies, which was the one thing they lacked. They needed capital, and as long as you had the uncertainty, the bounty system, they could 3269 not get capital, and they were going from bad to worse, and this House was often forced, year after year, to pass Grants-in-Aid of the expenses of their administration. The Convention restored confidence and caused improved machinery to be set up and improved methods to be employed, and put the industry in the West Indies on a sound footing and relieved this country absolutely of any necessity for giving Grants-in-Aid. That is what the Convention has secured. What is the cost of the Convention? It did that without any real appreciable rise in the price of sugar. The price of sugar fluctuates. When you have a bad crop under the Convention, it sends prices up, just as when you have had a bad crop without the Convention, prices will go up, and the right hon. Gentleman the Member for West Islington has still got to find a means of keeping prices down when there is a scarcity of the article.
§ Mr. AUSTEN CHAMBERLAIN
If you take the five years before the Convention and the five years after the Convention, there is only a difference of a few pence in the average price of standard sugar f.o.b at Hamburg. Take the result of the ten years working of the Convention, and take the whole arguments advanced by the Under-Secretary that, whilst producing these results in the ten years it has once and for all killed the bounty system, and I say I want no better defence of the Convention. I do not quite understand even now the attitude of His Majesty's Government. The first great blow to bounties was struck not by this country but by the Indian Government. It is curious that the people who have attacked it most and who have been most conspicuous have been Free Traders before all things. The first blow was struck not by this Government, but by Lord George Hamilton when he authorised and carried through the imposition of countervailing duties upon bounty fed sugar in India. What are the Government going to do about countervailing duties in India? Are they going to carry pedantry to the point of repealing them? Perhaps they have not considered that question. I think we are entitled to know what they intend to do. If they contemplate repealing the countervailing duties, are they going to give the Councils in India, as far as they are representative of public opinion, the Chamber of Commerce there, and others 3270 interested, an opportunity of expressing their opinion on the subject before any action is taken? If they do, I venture to say that they will find, if they repeal those countervailing duties, which would be the natural consequence of the action they are now taking, they will have against them the whole of Indian public opinion, whether native-Indian or Anglo-Indian. More than that I cannot say until I know the intentions of the Government. If the expectations of the Government, as explained by the Under-Secretary, are fulfilled, if, as is probable, Russia and the other countries being bound, we get no more Russian sugar than we could have got under the Convention, and we have no bounties any more than we should have had if we had remained in the Convention, then, although I think our Government will be playing a rather shabby part in this transaction, and one which will not enhance our reputation in the eyes of other nations, still no harm is done. The Undersecretary of State for Foreign Affairs even says that there are some advantages. We are now free to give a preference to our Colonies, which we were not under the Convention. We are as free now as we were under the Convention to give a preference to the home grower if it does not exceed 2s. 6d. a cwt. We are free, as I understand, to give bounties to our own producers also; but whether the Government mean to give bounties or not I could not elicit from the hon. Gentleman. The matter is one upon which I should really like to know the mind of the Government, because one of their organs in the Press, in an article on this subject, said that the matter was of the very greatest importance; the matter which was, above all others, of value in the action of the Government in denouncing the Convention was that they would now be free to give bounties on the growth of home-grown sugar beet. Do the Government intend to give those bounties, or do they not? No doubt a bounty is one form of preference; but, in my opinion, if you want to give a preference it is the worst form in which to give it. It is more liable and more likely to lead to corruption than any other form of encouragement that you might give. I observe that Members on the Treasury Bench agree with me. Since I am happy to have their assent on that point, I must observe that it is singularly curious that a Government who hold that view should have abolished the preference on Irish tobacco, and substituted for it a bounty paid by the Development Commissioners. 3271 It only shows in what watertight compartments the Government works. The Prime Minister continued the preference and refused a bounty; but his successor who is more sensitive to the appeals from Gentlemen behind him, who said that it was a preference and therefore very heterodox, cancelled the preference, and immediately gave back in the form of a bounty what he had taken away in the form of a preference. In other words, he adopted, as the Prime Minister agrees, the worst possible form of preference, and the form which is most likely to lead to political corruption.
Mr. WILLIAM REDMOND
Not at all. Perhaps the right hon. Gentleman will allow me. The right hon. Gentleman himself was, I remember very well, responsible for giving a rebate of duty on Irish tobacco; but I am afraid his Protectionist principles would object to the new arrangement, which is just twice as good as the old one.
§ Mr. AUSTEN CHAMBERLAIN
I think I see what exactly the hon. Gentleman means. I think perhaps it has some bearing upon the size of the bounty. He has got just twice as much money under another name from the Government.
§ Mr. AUSTEN CHAMBERLAIN
That is too thin. But let me return to this Convention. If we had to use bounty fed sugar in this country I do not think that it will innure to the advantage of the confectioners and the other manufacturers doing export trade, about whom the Member for West Islington (Mr. Lough) is so anxious. The Under-Secretary for Foreign Affairs announced that the Government had volunteered the statement that they had no intention of giving bounties on exports in any form. He was asked what consideration he had got, and he replied that the Government wanted no consideration and had received none. He was asked why the Government had volunteered these assurances, and he said that it was intimated pretty clearly to His Majesty's Government that if these assurances were not forthcoming disagreeable consequences would ensue. I am not going to develop this point. I merely wish to draw the attention of the House to the immediate consequences produced, even 3272 in a Free Trade country, by the slightest threat of retaliation. Down the Government come with a run and volunteered assurances of the most satisfactory kind, which they are asked for under threats. They give up at once.
§ Mr. AUSTEN CHAMBERLAIN
You gave up your freedom. You gave it up because you were threatened with retaliation if you did not. There is some value in retaliation after all. The Under-Secretary for Foreign Affairs has made a speech for which we on this side of the House will, I think, feel more sincere gratitude than my right hon. Friend the Member for West Islington.
§ The PRIME MINISTER (Mr. Asquith)
I am sure the right hon. Gentleman opposite will not think it was from any want of respect that I did not take an earlier part in the Debate. I do not propose to say more than two or three words upon the question of our withdrawal from the Convention, the importance of which is greatly exaggerated both upon the one point and upon the other. I do not know that it will have very much effect for practical purposes on the policy of this country. The really important step, in which I think a new departure was taken, when we might really have become amenable to criticism from those who were responsible for the authorship of this Convention, was four years ago. Four years ago we were taking a decisive step when we were entering upon a renewal of the Convention, and when we said that so far as we were concerned we were not indisposed to remain parties to the Convention provided that from that time onward our ports should remain perfectly open, and since the year 1908 sugar, from whatever quarter of the world it has come, or to whatever bounties it was subject, has had perfectly free entrance into the ports of the United Kingdom. That was a really important step, and, to my mind, the real objection—I will not say the only objection, but the most formidable objection—was our agreement to unite with other Powers who were parties to the Convention either by contravailing duties, or bounties, restricting our own sources of supply in regard to one of the most important articles, and an article which is one of the necessaries of life, and the raw material of several important industries.
3273 I have never been a defender of the Convention. I have taken part in this controversy for a great many years, and I am sure nobody can ever produce a statement or speech of mine in support of the policy of bounties. It is a suicidal policy on the part of any country which pursues it, and I do not think in the long run it is of advantage to the world, and so far as the destruction of bounties are concerned I should never shed a tear. But I did think and do think it is a most serious thing for this country to enter into a Convention which places it at the discretion of the vote of a majority of Powers to say whether or not we are to freely import into our own country for the purposes of our own markets one of the necessaries of life. And when we got rid of that, in 1908, which to my mind was the vicious, and far and away the most vicious, feature of the Convention, I look upon this as comparatively unimportant. The right hon. Gentleman opposite asked why we are now withdrawing. We are withdrawing in pursuance of the most definite and specific undertaking given in the autumn of last year, of which Parliament and the country had the fullest possible cognisance for months past that if the Conference by which the Convention was amended refused to place at the disposal of the markets of Europe the surplus supplies of Russia we should no longer be parties to that restricted instrument.
The conditions of last year were extraordinary and anomalous, and almost unique. There was a shortage of sugar supplies in most of the sugar-producing countries. There was a very large surplus supply in Russia. The prices of sugar ran up—I forget for the moment precisely how much—and there was this large surplus stock in Russia capable of being used in the other markets of the world. But, through the operations of this Convention, that sugar was not available for the purposes for which it ought to be available. I think we were not only entitled, but we were bound, with these conditions to say, unless you set free, and fully set free, this surplus Russian supply we can no longer be parties to what is a protecting and restricting instrument. We made that perfectly plain, and the Powers had it under their consideration for months. It was perfectly well known to Parliament. In the result the most inadequate response was made to our appeal. We should be violating the undertaking we had given, and I think, further, we should have made 3274 ourselves parties, and active parties, to a restricting policy had we in these circumstances any longer remained parties to the Convention. I will not go into the side topics which the right hon. Gentleman has alluded to in his speech, such as the question of Irish tobacco. I followed his policy in that respect.
§ 5.0 P.M.
§ The PRIME MINISTER
I am not at all sure that he and I were wrong; but my successor took a different view. I do not think any matter of real principle was involved in that. I am glad to hear that the development of the Irish tobacco industry is proceeding apace. As regards the cultivation of beet in this country the withdrawal from the Convention leaves our hands—and that is an important matter from my point of view—perfectly free. It will enable the British Government, if so minded, to give a preference to the products of our own Colonies. That is one of the results, but everybody must agree that that would be a result in the direction of which I need not say His Majesty's present advisers do not intend to advance. In regard to the cultivation of beet sugar in this country, I agree with the right hon. Gentleman that giving bounties is not the form in which it should be encouraged, but I see no reason why this nascent industry—I am expressing no opinion of my own—should not receive assistance from our development fund in its early stages. Whether that would be I described as a bounty or not by foreign countries I do not know. Of course it may be, and without expressing any opinion of my own, and still less without giving any pledge, I should think that it I would be a monstrous thing that the Government of this country should have its hands tied with regard to the development of a domestic and local industry by an arrangement with foreign countries. What we want and what we have got by the withdrawal from the Convention is complete economic freedom, and we have sacrificed nothing. Four years ago we opened our ports to the absolutely unrestricted importation of sugar from whatever source it might come, or under whatever domestic conditions it might be grown. That was a real gain from the position of comparative servitude which the Convention itself imposed, and whatever has followed afterwards is relatively unimportant.
§ Mr. BONAR LAW
I am inclined to agree with the right hon. Gentleman that the net results of the steps the Government are now taking are not very important. Certainly I do not understand, and certainly the right hon. Gentleman has said nothing to explain, why it was necessary for them to take this step. What do they gain by it? From any possible point of view what could be gained. The Undersecretary for Foreign Affairs, whose speech the Prime Minister had not the advantage of hearing, gave as a recommendation of the course taken that things were precisely as they were. The right hon. Gentleman speaks about the gain of freedom for our markets. After all nobody feels more strongly than he does that in a practical question of this kind it is not freedom in the air, it is not sugar in the air, but sugar in the country. He cannot contend, and no one can contend, that as a result of what they are doing they can by any possibility get one ton more sugar in this country than they get under the Convention so long as the other parties adhere to it. We gain nothing, but have we not run the risk of losing something? I do not think the right hon. Gentleman realises that. Under the Convention as I remember it, and I used to take a great interest in it at the time it was started, the nations which are parties to it would feel themselves free to penalise not only sugar but the products of sugar coming from any country which did not adhere to the principles of the Convention. In order to meet that difficulty the Undersecretary told us that they have done the very reverse of that which the Prime Minister claims they have done: that they have given up with one hand the freedom which they have obtained with the other, and have come under an obligation that they will do none of the things the Prime Minister says they have a right to do. More than that, by taking the course they have taken, they have only the hope—they cannot say they have the assurance—that our sugar products will not be penalised in those countries which are parties to the Convention. What do they gain? They have not gained one ton more sugar for this country, and they cannot by any possibility lower the price of sugar by what they have done. They run the risk, however, that these countries may say to our confectioners and others, "You are not parties to the Convention; we will put penalties on your sugar products when they come to our country." The hon. Member 3276 cannot tell us he has any assurance that a a step of that kind will not be taken.
What have they gained? They have gained something which the right hon. Gentleman did not mention. They have gained freedom on the platforms to shout again, "We have abolished the Convention and given you the hope of cheap sugar." That is all they have gained. I would like to say I was greatly interested in what the right hon. Gentleman said about the growing of beet sugar in this country. I have long felt that as a nation we have been acting foolishly in not encouraging the growth of beet sugar in this country. It has been proved to demonstration that it is within our power to grow it at least as well as any other country in Europe, and it is the one kind of industry needed in this country more than any other. It has two sides to it: it is agriculture, and at the same time it gives employment to people on the land. It is the one thing we ought to do. Why have we not done it? I know people say, "If it can succeed, why is it necessary to have any special measures to ensure its success?" The. Prime Minister has himself given the reason. In a case of this kind where a nascent industry is competing with a full-grown industry, and where the cost of transit is so small, it is obvious that that industry cannot successfully compete until it is firmly established. That has been proved in another way.
The Under-Secretary incidentally mentioned the very striking fact that the amount of sugar extracted from beet increases to the extent of nearly 100 per cent, as the result of experience in growing it. It is perfectly obvious we cannot in starting this industry step in where France and Germany have ended. Our experiments must be made here, and we must judge different soils and treat them in different ways. Whilst that experience is being gained, it is utterly impossible that our industry can compete with those industries which are fully developed. I am very glad the right hon. Gentleman thinks it is an industry which is worth fostering. I am quite sure he would not have said what he did say if he was merely expressing a pious opinion and unless he means in some way to encourage the industry. I do not much care what form the encouragement is to take, but the right hon. Gentleman is quite mistaken in supposing we were not free to do it under the Convention. We could have put no Excise Duty on home-grown sugar while 3277 having a duty upon imported sugar. That would have been at least as effective as any grant of money from the Development Fund. It would have had this great advantage, that if you are going to encourage native industries in that way it is far better to have the largest possible amount of freedom, and, if the encouragement takes the form of freedom from duty which is paid by foreign sugar, everyone is on a footing of equality; there is complete freedom and complete confidence, and the best possible results follow for the country. I think that would be the better way. I am perfectly certain that agriculturists all over the country will be delighted to read the statement made by the Prime Minister today that in one way or other a serious attempt will be made to establish this great industry in this country.
§ Mr. GODFREY COLLINS
I am sure my Constituents will gladly read the declaration made by the Leader of the Opposition that he does not anticipate any real disadvantage from this step, but I want to enter a protest, with all respect, against the method of the Government when they made their statement last week in this House. No attention was drawn to the fact that foreign countries had signed an agreement in 1907 to renew the Convention until 1918, and, as a consequence, the impression got abroad that the bounty system, as we knew it in the past, may be renewed in the future. As we have heard this afternoon, it is anticipated by all sides of the House that the position of the sugar industry for the next six years will be exactly the same as it has been during the last four years. This agreement was signed on 17th March without the signature of Great Britain, thereby showing that all these countries came to a voluntary agreement among themselves, which they are very unlikely to go back upon. Fear has been expressed that the bounties may be revived in the future, but there seem to be good reasons why they will not be revived.
The first is that the people abroad today are able to purchase cheap sugar and appreciate the benefits of cheap sugar in comparison with the higher prices of the past. They are, therefore, very unlikely to press their Governments to go back to I the old bounty days. The second reason is that the Governments of foreign countries have discarded the system of bounties. It may be said they have thrown over the yoke and bondage of bounties, and are not likely to place their necks 3278 under that yoke again. The system was well described by the right hon. Gentleman the Member for West Birmingham in a dispatch he wrote in 1897, when he said it was a system under which, out of the pockets of the foreign taxpayer, the British public were provided with cheap sugar. The foreign Governments now know this fact, and they are not likely to go back to the system of bounties. Another reason is that Governments are increasing rapidly their burden for armaments, and, therefore, they are unlikely to seek out fresh channels of expenditure, having once appreciated the benefit of the discarded system. My Constituency has suffered from the bounty system, and they were afraid when they read the notice last week that that system might be revived. I have come to this House pledged to maintain the Convention of 1907, which was the Liberal attitude of that year, and I regret that this question will not go to a Division so that I can record my vote against the Government upon this matter. But, after what has been said this afternoon, I believe the fears that have arisen will be dispelled when they read the different speeches made in this House.
§ Mr. BIGLAND
The speech of the Under-Secretary for Foreign Affairs was really a plea for "cheap, cheap, cheap sugar." I am one of those who years ago spoke on the exchanges, whore enormous quantities of sugar are handled, and declared that the policy of bounty fed sugar was one which we as an honourable trading people should resent. It always appeared to me that importing bounty fed articles into this country was to a certain extent on the same lines as importing convict made goods. I look upon it from a moral aspect. If a foreign Government pays sufficient money to enable workmen to be fed and housed the importation of the product of their labour into this country is a thing trade unionists will not allow, and we generally will not allow. What Germany actually did was to pay roughly one-fifth of the cost of feeding and housing a great number of workmen. Therefore to that extent bounty fed sugar was in the same category as convict-made goods. There is behind this bounty system a moral question that we have the right to examine. What the late Government did was to abolish a bribe over a commercial transaction. I consider that sugar bounties were in the nature of the hugest international bribery ever committed. The Under-Secretary stated that 3279 France paid £3,000,000 a year. We were parties to that bribe. It was given by the foreign Governments of Europe, and accepted by the people of this country. The foreign Governments gave it, first of all, to encourage the industry at home. I do not think that when they gave it they thought they were wilfully taking away the means of subsistence from people in the tropical parts of the world, who were their only competitors in sugar, but they practically bribed England and closed her ears by offering something below cost. As the right hon. Gentleman the Member for West Islington (Mr. Lough) said, it drove the price of sugar down to 6s. 8d. a cwt. in the Hamburg market.
At that time it was impossible, with the high rate of freights, for cane sugar to be advantageously grown and shipped to this country. When we took that bribe we were wilfully injuring tens of thousands of innocent people in different parts of the world, who according to our system of Free Trade had a right to expect from us equality of treatment. The first country that realised the morality of this question was the country which has always been spoken of as having no conscience beyond the almighty dollar. The United States was the first nation to say that if any country gave bounties on sugar they would raise their duties on sugar which was imported to an amount equal to the bounty that was given, so that the effect of it should be nil. India followed the same policy, and put on a countervailing duty equal to any bounty which might be paid. We recognise the moral position with regard to this matter, and our Government are now trying to force England to take anotherbribe, because the only country that is now a bounty paying country in Europe is Russia, and they are breaking up this Convention in order to enable the people of England to be bribed again, and there is no knowing but what in that vast territory, if Russia likes to go on bribing, she may produce enough sugar to send us the bulk of our requirements. How then can we hope for the advance of the West Indies and other cane-growing sugar countries?
The next point I want to show is what the right hon. Gentleman (Mr. Lough) would not allow for a moment, and that is that a scientific tariff increases production. When America fought Spain, and Cuba was made a Sovereign State, the duty between Cuba and the United States 3280 was arranged in this way. It was a bargain. The Americans said to Cuba, "if you will take our manufactured goods at 40 per cent, less than Great Britain and Germany we will pay you £2 a ton more for your sugar in that we will make our duty on sugar £2 less per ton for Cuban sugar than for German, British, or any other. The result of that was that it gave enormous confidence in Cuba for them to develop that industry, and they developed it from about that time. The average quantity of exported sugar from Cuba prior to the war was 600,000 tons. This year it will amount to 1,600,000 tons, which is an evidence that if any great buying Power will give a preference to a country well adapted to produce an article it will in the long run procure for itself a large increase in the trade, and that is what we on this side of the House claim in regard to this and other articles, that if we will give a preference to parts of the world adapted to the growing of any article it will give confidence; it will draw capital and labour into the industry; it will increase the total average production; and when you get the world's average production increased you get a stability of price; you get a reasonable price, and therefore are doing the very best you possibly can for the people who are at home requiring that article. My common-sense view of the business would be rather to give, now that we are free to do it, a preference to cane as against beet. The right hon. Gentleman talked about our shipping. If we gave a preference to cane, we should carry our sugar 6,000 miles on the average instead of 600. Would that be no advantage when you consider that we want practically 4,000 tons of sugar a day? If you say to our shippers, "We are going to give you a 7,000 mile haul instead of a short haul across from Hamburg," you will see at once that you are giving to the shipping industry an enormous increase of employment.
From the moral aspect we are right to stop this bounty, and from the Colonial and Imperial aspect we have a right to encourage those parts of the world, and, from another point of view, not being able ever to become manufacturers, these must always be buyers of manufactured goods in exchange for money and work given to them. If we transfer £10,000,000 a year from the beet growing countries, all of which are keen competitors of ours, to people who do not manufacture for themselves, and we pay them £10,000,000 a 3281 year, the reflex action of our industrial life here at home would be very marked. There is no doubt that if you give a preference to cane sugar, the increase in the demand for plant bought in this country would be enormous. An expert friend of mine said that if we made the change, we would have orders for £40,000,000 worth of plant in order to carry out the crushing and concentrating in the tropical countries where the cane is grown. Therefore, I say while our withdrawing from this Convention has some good points about it, there are other points which I think are rather to be deprecated, particularly the admission into this country of any bounty fed sugar. I do hope, shall I say, that a moral feeling will pervade the people of this country, that they will not accept a bribe, but that they will put a countervailing duty on any sugar coming from any country in the world where bounties are paid in order to build up their own export trade at the expense of the natural courses of business, which would leave cane sugar to fight its way in British importing centres.