GOVERNMENT OF THE SOUDAN LOAN GUARANTEE.

HC Deb 23 April 1913 vol 52 cc417-54

Considered in Committee.

[Mr. WHITLEY in the chair.]

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

I beg to move, "That it is expedient to authorise the Treasury to guarantee out of the Consolidated Fund the payment of interest at a rate not exceeding 3½ per cent. per annum on a loan to be raised by the Government of the Soudan, not exceeding an amount sufficient to raise three million pounds."

I move this Resolution which stands on the Paper in my name with a view to introducing a Bill in order to enable the Government to guarantee the interest on a loan of £3,000,000 to the Government of the Soudan. I thought it right, though it is not in accordance with what has been the usual practice, to place the Resolution upon the Paper in order that hon. Members might know exactly the form in which it was to be proposed. The Government of the Soudan applied some time ago for this loan for the purposes of irrigation and railway extension work in the Soudan, but mainly for developing the cultivation of cotton in that great country. They asked us to guarantee the interest of the loan, and the Government propose that Parliament should assent to that proposal. This country has a direct commercial interest in the transaction, especially Lancashire. We are the greatest exporters of cotton goods in the world, and we are the greatest consumer, therefore, of raw cotton, certainly in Europe, and, I think, come next to the United States of America in that respect. Any action tending to the increase of the raw cotton supply of the world directly, and beneficially, affects our greatest staple industry. My hon. Friend below the Gangway (Mr. Gill) was a member of a very remarkable deputation that came to the Prime Minister, the Foreign Secretary and myself, some months ago, on behalf of the cotton manufacturers and workmen of this country, to appeal to the Government to sanction this loan, and he pointed out then that during the course of the last six years—

Mr. GILL

Ten years.

6.0 P.M.

Mr. LLOYD GEORGE

In the course of the last ten years our export of cotton goods has increased from £70,500,000 to £122,500,000. Our interest is not merely in increasing the supply of the raw material of cotton, but we have a still greater interest in increasing the supply of the finest qualities of cotton. We have taken the lead in the manufacture of cotton, and we have got a still more distinct lead in the manufacture of the very best qualities of cotton goods, and for this purpose we necessarily have a greater interest in purchasing that quality of raw material which has the longest fibre. There has been, therefore, a movement from markets which supply the coarsest quality of raw material. Fifty years ago a very large portion of the supply of raw material came from the East Indies. Since then there has been a gradual movement going on from decade to decade in the purchase of the finer qualities of raw cotton. We therefore passed from the East Indies to America, and, during recent years, we have increased our purchases of Egyptian raw material, which I believe is of still finer quality than the American. I am informed, in regard to Egyptian cotton, that the price is at least 50 per cent. better It is better from the point of view of the manufacturer; it is better from the point of view of the article manufactured, and it is better from the point of view of the workmen especially; it is healthier, cleaner, and easier to work. I was given a very remarkable instance of that in connection with two mills in Lancashire. One mill manufactured cotton goods principally from Egyptian raw material; the other mill manufactured goods from American raw material. They had both the same capital, they employed the same number of hands, and paid the same wages. One consumes 13,000 lbs. a week of Egyptian raw cotton, and the other consumes 90,000 lbs. of American raw cotton. That shows the enormous difference between the two, and how superior the Egyptian raw material is to the American raw material. Latterly, I believe, there has been a slight deterioration in the quality of the Egyptian cotton owing purely to temporary causes, but I believe that steps are being taken to remove the trouble that had injuriously affected the quality of the material. At any rate, the interest of this country is a very direct one in increasing the area of production, and especially in increasing the area of production for the fine quality of cotton. After all, the cotton plant is not native to the United States, but it is indigenous to Africa and the Soudan, where there was formerly a very considerable trade in cotton. There is no doubt at all that the soil of the Soudan is specially fitted for the purpose of growing cotton. A few years ago, I think, the British Cotton Growing Association sent a deputation to the Soudan to investigate the subject, and Mr. J. Arthur Hutton, the chairman of that association, to whom the cotton industry of this country owes a deep debt of gratitude, gave a very remarkable and very graphic account of the cotton growing there to the Minister who received the deputation. He referred especially to the Gezira Plain, a tract of country which I believe is about the same area as the Egyptian Delta—that is, about 5,000,000 acres. He described the Gezira Plain as now barren, sterile, hardly anything growing on it, flat, with a general slope from east to west, especially suited for irrigation purposes, because the difficulty in irrigation is not merely getting the water on but also getting the water off afterwards, which operation costs almost as much as to get it on. Part of the trouble with some land is that it gets water-logged. Mr. Hutton pointed out that the Gezira Plain seemed to be naturally adapted to irrigation purposes, as there was a slope on it which would enable them to get the water off the land at very small expense. Then he pointed out that about two or three thousand acres of that land had already been irrigated, and there in that very barren, unproductive desert, pure desert, you suddenly came on this oasis, which was entirely due to the work done on that two or three thousand acres. On those acres he found the most wonderful cotton crop his eyes had ever looked at. He said it produced 550 lbs. average weight per acre, and that the Egyptian crop is generally 450 lbs. average per acre, while the United States crop is 200 lbs. average weight per acre. Thus you have those two thousand acres carved out of an absolute desert merely by this process of irrigation converted into something which you could hardly equal in any part of the world. I think it will be rather interesting to the House to hear what. Mr. Hutton said about this. He gives, first of all, the number of acres, and, talking about that wonderful oasis, says:— Practically every acre of it is capable of producing high-class cotton, such as I have Just described, and of a quality which Lancashire requires in larger and larger quantities every day. It is also a country which can be irrigated at a comparatively small expense. He points out that he tested the quality of the cotton, and that he was informed by one of the largest spinners of Egyptian cotton in Lancashire that the Soudan cotton sold to him by the British Cotton-Growers' Association was the most satisfactory spinning cotton he had ever seen. It was fine, exceptionally strong, made very little waste in spinning, and was vastly superior to the general type of cotton grown in the Egyptian Delta. The cotton of the Egyptian Delta is infinitely superior to the American cotton, while the report shows that the cotton grown in the Gezira Delta is superior to the Egyptian, and of very fine quality. I remember seeing Wingate Pasha, who was very confident as to the prospect of the Soudan in this respect. He went into the matter very carefully, and he was quite convinced that the Soudan would be one of the finest cotton-growing areas in the whole world. The report and the supply of cotton to the Lancashire firm fully confirm everything which he said in this respect. The idea is to spend about a million pounds upon the irrigation of the Gezira district. That would mean that five million acres of this wonderful soil would practically for the first time, or at any rate for a good many years, be gradually brought into cultivation for the purpose of growing cotton Then it is proposed in another area, perhaps not quite so fertile—that is, Tokar—should be brought into cultivation by the same means, and that in another area—Kassala—that perhaps a sum of £200.000 would be spent in bringing about a hundred thousand acres into cultivation. That is also a very fertile district, and the idea is that a very considerable quantity of first-class cotton can be produced in that area as well.

We consulted Lord Kitchener, who has taken a very great interest in this matter, and I had the pleasure of seeing him about this subject when he came to this country some months ago. He is very sanguine as to the prospects of cotton-growing in the Soudan. With regard to population, there are two difficulties, one is that the population was desolated and the country depopulated not merely by the slaughter by the Dervishes, but owing to the fact that they drove the people away in terror. The other difficulty is the nomadic habits of the population. They are not accustomed to settle down to labour. With regard to the figures as to population, and these are figures given by Lord Kitchener, before the Dervish occupation the population is estimated to have been 9,000,000 in the Soudan, and after long years of the Dervishes the population was reduced to 2,000,000. He estimates that the population last year was 3,000,000, and it is very rapidly rising. That increase is due not merely to the natural growth of the population, but through immigration. The people are flocking to the Soudan from surrounding countries now that they are enjoying settled government there and it is prosperous and profitable to work there. Lord Kitchener's estimate is, that through the natural growth of the population and still more through the immigration from the surrounding areas, the population in the Soudan in another five or six years will be 6,000,000. Another thing mentioned by Lord Kitchener was that the nomadic population are settling down and getting fitted for labour, and whenever there is a fair prospect that their labour will be remunerated there is no difficulty at all in inducing them to undertake steady work. Undoubtedly, if this loan is granted and the money spent on this purpose, there will soon be an industrial population with very good workmen to turn their hands to an industry of this kind.

The Committee would like to know, when we are guaranteeing a loan of this kind, what the condition of the Soudan is financially. Some years ago, of course, it was very bad. There was practically no revenue because there was no trade. The country had been devastated by the Dervishes, and, with the exception of the nomadic tribes there who possessed cattle, there was no steady agricultural work done in the country at all. The country was consequently poor and most of the population followed the army of the Mahdi. Trade has grown to such an extent during the last few years that in 1906 the exports amounted to £265,000. They included cereals. In the old days they used to import cereals, but the Soudan is now exporting them. In 1911 the exports amounted to £1,400,000, which shows the rapidity with which the Soudan is developing and increasing in wealth. The revenue stands thus: In 1898, which was, I think, the year of the battle of Omdur-man, the revenue was at its very lowest £35,000. In 1899 it rose to £127,000; in 1905 to £665,000; and in 1912, £1,424,000. I do not know that there is any country shows such a very rapid growth in real substantial development as does the Soudan. I think that up to the present year the Egyptian Government gave a very substantial subsidy to the Soudan Government in order to enable them to carry on the work of administration there. That was not by any means a loss to the Egyptian Government, which, as a matter of fact, substantially gained by the occupation of the Soudan, because prior to that occupation the Egyptian Government had to maintain a very considerable army there That was a very expensive undertaking, as they had to keep a very considerable army in order to protect the frontiers. The position now is that only a small army occupies the Soudan; Egypt feels perfectly secure from invasion, and gains financially a great deal in consequence of that. What appears to be a subsidy at the expense of Egypt has really been a relief to her finances. This year, for the first time, the accounts are square, and there is no subsidy except for the small contingent of Egyptian troops in occupation of the Soudan. The revenue is a very healthy one. It will interest some of my hon. Friends to know that the Land Taxes are very productive and that they are going up year by year. That is a proof of the agricultural prosperity of the country.

There they also have railway nationalisation, which is a source of revenue to the country. Receipts from the railway department alone have increased since 1909 from £336,000 to £505,000. That in itself indicates the growing prosperity. That is the position financially. I think that Lord Kitchener is perfectly justified, on the figures which I have quoted and others which I could have placed before the Committee, in coming to the conclusion that the Soudan can bear a burden of this kind, and not only that, but that the expenditure of a capital sum of this kind will enable them to bear this and other burdens much more easily than they could if money was not spent on development. There is no country in the world that pays better for development, because labour is of the best and the soil is so fertile. What it does suffer from is want of irrigation. Last year crops went down rather in consequence of drought. The difficulty is to get an abundant supply of water to irrigate the soil and bring out its fertile qualities. One difficulty that has always to be taken into account is that irrigation, unless the works are conducted in conjunction with those in charge of the Egyptian Government, whilst it profited the Soudan, might inflict very serious damage upon Egypt, because both countries are dependent upon the same river. What has been done in Egypt in the way of irrigation shows what a change is made in these countries by anything which provides an abundant supply of water to the soil. An hon. Friend of mine who knows a good deal about this subject has put into my hands figures showing what has happened in connection with the Assouan Dam. In 1899 the land there was worth 191,000,000, and the rent 16,250,000. In 1912 the same land was worth 488,000,000, and the rent was 37,750,000. I suppose those figures represent Egyptian pounds.

Mr. JOYNSON-HICKS

Piastres?

Mr. LLOYD GEORGE

I am not certain what the coin is; but whatever it is, the proportion is the same. It shows an enormous increase in the value of land caused by these irrigation works. I am told by those who know, that the land of the Soudan will show the same increased value, if not more even than the land in the Egyptian Delta, if we spend a reasonable sum on irrigation. It may be asked why a guarantee is necessary if the country is so rich. I think it is pretty obvious. One reason is that, although there has been an enormous increase in the revenue, the Soudan up to the present has not paid its way. It has now squared its accounts, and in a very short time it will pay its way. The danger is that if the Soudan went on its own account to the market it would have to pay a very high rate of interest, or, at any rate, a higher rate than it would do with an official guarantee. A high rate of interest might make all the difference between this undertaking being a burden and its being a profitable transaction for some years to come. Therefore, we are justified, I think, even from that point of view, in giving a guarantee. The second reason is that there is a direct commercial interest in developing the Soudan for cotton growing. As long as we are dependent almost entirely on the American crop, one knows from past experience what disasters may ensue to the trade of this country, and especially of Lancashire. One very serious disaster has happened already—it is true, many years ago—but from time to time, owing to the failure of the crop and fluctuations of that kind, the cotton industry in Lancashire is very seriously impaired. Not only that, but it is so dependent upon financial operations in America which deal with cotton that, even when there is an abundant crop, there is sometimes a scanty supply here, because of the attempts to corner the supply. It is of the highest importance that we should get a cotton supply over which we have some sort of control ourselves, and that will undoubtedly be effected if we develop a country which is under our dominion and control.

Another alternative is that we should put the liability upon Egypt. I do not think you can do that, for two or three reasons. One is that you are developing sources of supply which are rivals to those of the Egyptian fellaheen and asking them to increase the facilities of their own trade rivals at their own expense. I think that is rather too much to ask. The second reason is very largely political; we cannot do it without the consent of Turkey. I do not know what conditions Turkey might impose; at any rate, I had better leave it to the imagination, knowledge and intelligence of hon. Members, to think out for themselves the sort of reasons which impel us to prefer not to seek the consent of anybody else. I think it is important that we should take a direct hand in aiding the Soudan to develop its natural resources. Another suggestion is that the work should be left to private enterprise. There are special reasons why that cannot be done. One paramount reason is that you cannot leave a private company to deal with the Nile supply of water, because it is life to Egypt as well as to the Soudan. You might so manipulate the resources of water supply of the Nile for the Soudan as to inflict irreparable injury upon the whole of Egypt. One difficulty is to store the water at the beginning of the year when it is not required in Egypt. They had to make a special experiment in growing cotton at a period of the year when they could get the water without depriving Egypt, and it was a complete success. That shows the importance of keeping the control of the water supply of these two countries in the hands of the Governments of Egypt and the Soudan. There was some idea of distributing the water supply as between the two branches of the Nile, giving the Blue Nile to the Soudan and the White Nile to Egypt. How they have arranged the matter I am not quite sure. But the water supply of Egypt must be the paramount consideration, and I am glad to say that the Governments of Egypt and the Soudan have been able to arrive at an arrangement which will be satisfactory to both.

A portion of this money is to be devoted to railway extension in the Soudan. The railways in the Soudan at present are Government property. The system is a Government system. You cannot leave to private enterprise the extension of railways which are entirely Government railways. These railways are wanted, not merely for trade, but for strategic purposes. It is therefore important that they should be not in private hands, but entirely financed by the Government. The third reason is supplied by the very remarkable figures given by my hon. Friend as to the enormous increase in the value of land effected by irrigation. It is very important that the Government should keep control of the land and of the profit arising therefrom, because they need every penny for the development of this very remarkable country. These are the reasons which impel the Government to ask the sanction of the House to the guarantee of the interest on this loan. Our proposals are substantially these: The money is not to be raised all at once; it will be raised as required; it is to be paid by instalments. We guarantee only the interest, not the capital. There is to be a sinking fund to enable the Soudan to repay the loan in thirty years. The interest is not to exceed 3½ per cent. The purposes I have already indicated to the Committee are, for irrigation, £1,000,000 for the Gezira Delta, £100,000 for Tokar, and £200,000 for Kassala; £1,600,000 for railway extension; and £100,000 for contingencies; making £3,000,000 in all. I do not think there has ever been a financial proposition which I could commend with greater confidence to the judgment of this Committee.

Mr. DENNISS

I must congratulate the Chancellor of the Exchequer upon the great knowledge that he has shown of the condition of the cotton trade of this country, and the possibilities of the Soudan as a cotton-growing district. He has told us that whilst the price of Egyptian cotton is 50 per cent. more than that of other cotton, yet there has only been a slight deterioration in the cotton, due entirely to temporary causes. I think the House should know that that is scarcely so. The Egyptian cotton, upon which a very large part of the most valuable cotton trade of this country depends, has very much deteriorated in quality of late years, and the crop per acre has also very much decreased. It has deteriorated from various causes. It has deteriorated in quantity, first, because a great deal of the delta of the country where the cotton is grown has become water-logged. It has deteriorated in quality because the seed which is used in the country has become mixed, accidentally and fraudulently. The result is that a good deal of the seed sown produces an inferior class of cotton. The varieties of cotton which are being grown at the present time also seem to lose their virtue in the course of years, and the life of the best varieties is only about ten years. There is great need in Egypt and in the Soudan that new varieties of seed should be cultivated, and that great care should be taken that the seed is of the best kind and pure.

One of the great causes of the deterioration of Egyptian cotton is that the small merchant who sells the seed to the small cotton grower is a moneylender. The small cotton growers are unable to pay cash, and the result is that the sellers give them an inferior and mixed seed, which is often fraudulently adulterated. I wish that I could agree that that was a slight deterioration due to temporary causes. I am afraid the cause lies deeper than that. I understand the Egyptian Government are tackling the question; but it will take time. Acting upon suggestions made by the Master Cotton Spinners and Manufacturers' Associations, seed has been sold on credit to the small growers, and in that way it is hoped to help to better the crop. The Government have also, I think, to a certain extent, encouraged scientific research with regard to the growing of new varieties. But what has been stated is not the only evil. Of late years—I have the figures somewhere—the amount grown per acre has fallen very much. I think it has gone down in quantity per acre, since 1897, from 5.60 per cent. to about 4.24 per cent., a difference of about 25 per cent. This, of course, is a very serious matter. If the cotton growers of Egypt could produce more cotton per acre than now they could afford to charge a lower price for it, and that 50 per cent. above all other cotton, mentioned by the Chancellor of the Exchequer, would be considerably reduced. Great importance therefore attaches to the point that, in the growing of cotton, as much per acre as possible should be produced. The price would be lowered, yet the extra amount grown would give a good return to the cotton grower.

The Chancellor of the Exchequer has said that Egypt has gained by the occupation of the Soudan. It may have indirectly, and in the way pointed out by him, but as a matter of fact all improvements carried out in the Soudan have been carried out by money which has come out of the fellaheen of Egypt. They have paid for everything there. This country has done nothing. Therefore it is not fair to call upon Egypt now to provide the money needed for cotton growing; it should be provided from other sources. I should like to make it clear to the House—the Chancellor has made it clear I think—but it is extremely important that the House should understand what the cotton trade of England is asking for is not capital to be provided by the Government for them to spend, but only that the interest on the capital should be guaranteed—nothing more. The British Government run no risk of losing any capital. All they have to do is to guarantee the interest. Every authority who is qualified to speak upon this question thinks that this is a most excellent business proposition, and one which will not cost this country a single penny. A good many of us think that if a very much larger sum could be spent or invested by the Government in the country itself it would become in time as valuable as the Suez Canal shares have proved to be. This is a question which I hope will not be made a party question. It is a national question. It is more than that. It is a national question because both employers and operatives want it. I have no doubt that presently the hon. Member for Bolton will tell us what the operatives have done; of the amount of money they have spent out of their own pockets towards increasing the cotton growing of the Empire. The question ought not to be treated as a party question. I trust that no party shibboleths of any kind will be introduced into the Debate. It is a world question. The cotton industry of the world is one which makes nations dependent upon one another more than any other industry that exists. The Foreign Secretary said a little while ago that when nations once came to recognise their real dependence upon one another universal peace would be secured. By no industry more than by the cotton industry could that be promoted, for the cotton industry is one of the most ancient of industries, and is spread over the four quarters of the globe. The striking fact to which I wish to call the attention of the House is, as I have already mentioned, the great falling off in quantity per acre and quality of Egyptian cotton.

The Lancashire cotton trade has changed very much of late years. Foreign competition, India, Japan, China itself, have filched from it the greater part of what is called technically its coarse trade. Every year the weaving and spinning of the finer cotton cloths has been increasing, until at the present time—I speak from memory—there are over 13,000,000 spindles spinning fine cotton to 35,000,000 spinning coarse American cotton. The 13,000,000 spindles are spinning Egyptian cotton, and the 35,000,000 spindles are spinning principally American cotton. The proportion between the two is constantly increasing in the direction of more spindles for spinning Egyptian cotton. The spinning of beautiful fine cloths and fabrics made every year and numbered for export is increasing. Lancashire is maintaining her preponderance in the markets of the world on account of the very fine quality of the cloth and yarns that she turns out. The falling off, therefore, of the crop in Egypt, in the direction I have indicated, and the possibility of still greater falling off in time, is very serious for that branch of the trade. In regard to the other branch of the trade, the coarser cloths, our dependence upon America is absolute. The Chancellor of the Exchequer did not mention what I believe is a fact that according to the report of the Secretary of the International Federation of Master Cotton Spinners and Manufacturers' Associations who was sent out to the Soudan, the southern part of the Soudan, is admirably adapted for the growing of American cotton, and the northern part of the Soudan for the growing of Egyptian cotton. In the north there is no rainfall practically. As you go further south in the northern portion of the southern part there is a rainfall of about 20 inches. As you go further south, the rainfall increases 40 inches, and you can grow cotton by the rainfall without any irrigation at all. There is an immense area—

The CHAIRMAN

The hon. Gentleman's observations are not being directed to the proposals now before the Committee. Where there is a rainfall we do not need irrigation. I think the Committee will desire to keep strictly to the purposes for which this guarantee on loan is desired.

Mr. DENNISS

I am very sorry, but there are railways as well as cotton growing for which the money is required; but I will leave the subject. In any case, the cotton supply of the world is of the utmost importance to this country, and the more cotton that can be grown in Egypt, the less our dependence upon the United States of America. The cotton industry, as the Chancellor has stated, is our greatest staple industry. Any movement for its development is of vital importance to the national welfare. Anything which injures or is likely to injure it would be a great affliction to this country. So far as I have been able to calculate, the yearly wages paid to the operatives in this trade amount to something like £30,000,000. About £600,000 are weekly spent in wages, and the spending power of that, of course, helps to keep up a very large number of tradespeople, so that whole communities are practically dependent upon the cotton trade. In my Constituency about 212,000 people absolutely depend upon the cotton trade. We know what a terrible thing it was when the war occurred between North and South America, and cotton practically ceased to be imported. The suffering in Lancashire was very terrible. Half of the operatives, some 250,000, went upon the Poor Law, and as many more had relief, though they were not actually made paupers. A few years ago, when there was a partial failure of the United States cotton crop, incalculable suffering was caused to many thousands of people and millions of money were lost. Sir Charles Macara, one of the greatest authorities, if not the greatest, upon the cotton question, tried to show the importance of increasing the world's supply by a very striking illustration. He says that a rise of 2½d. per pound in the price means a rise of £100,000,000 sterling upon the world's cotton crop. In regard to England, which takes about one-fifth of the world's supply, it would mean an extra expenditure on raw material of £20,000,000, and I think it is germane to say that in January, 1913, the price of cotton was 2d. more per pound than in 1912, so it cost this country something like £16,000,000 more for our raw material. Eighty per cent. of that being exported, one-fifth of £16,000,000 falls upon the people of this country for the cotton materials they wear. These high prices for cotton mean unemployment and more short time. Short time in 1910, due to the high prices of cotton, meant a loss of £2,000,000 or £3,000,000 in the wages of the artisan class, and anything like a prolonged period of short time would, of course, cost the country an immense sum of money.

The sources upon which we rely for our supplies of cotton outside America are extremely limited. Perhaps it is not generally known that out of the 3,000,000 bales of cotton produced in India, only the ridiculously small quantity of 40,000 bales comes to this country at all. We practically do not take any Indian cotton. From our British Possessions we only get a very small quantity now—about 30,000 bales—although the total production of our Possessions is 60,000 bales, so that we are left to depend for the great mass of our cotton upon the United States and Egypt. The United States send us 3,290,000 bales. In 1912 Egypt sent us 330,000 bales and the rest of the world sent us 105,000 bales, of which 30,000 comes from British Possessions. The world's consumption is increasing very rapidly. I find that there are 5,500,000 more spindles last year than in 1912.

The CHAIRMAN

I really do not think this is the occasion for a general review of the conditions of the cotton trade. The question is whether the Committee will authorise the introduction of a Bill to provide and guarantee this proposed loan for a particular purpose. Many hon. Members want to address themselves to that point, and I think the hon. Member should keep to that, and not travel into the wider review of the cotton trade.

Mr. DENNISS

I will leave that branch of the question altogether. I only wish to point out in one sentence that, while the world's spindles are increasing enormously, the raw cotton supply is not increasing in any such proportion, and therefore we may find ourselves in great difficulty, and that it is necessary for us to increase our supply in the Soudan. I was going to give some striking figures, but I will not do so now. I should like to say a word about the Soudan. The area includes Gezira, Kassala, and Tokar. Gezira lies between the Blue and White Niles. It can produce cotton superior to the very finest Egyptian cotton. The transport is already provided, there is an excellent system of railways provided by the Government, and there is an excellent harbour, Port Sudan, so that if this money is granted and well spent we shall be able to provide our cotton industry with the very finest quality of raw material for a class of work which is increasing most rapidly and upon which its permanent success must ultimately depend. I think we should be able by the new railway to supply this country with American cotton as well. The population, I am told, although small, is one of the finest populations in the world. Cotton growing in the Soudan is not a new industry; it was grown there for centuries. The Soudan exported 20,000 bales last year, so that it is not an experiment at all, but a well-assured industry, merely requiring water for the irrigation of the growth and railways for transport. If this money is guaranteed and properly spent, and other assistance is given by the Government, you have there an area which in the course of some years can supply enough cotton, both Egyptian and American, for the whole of Lancashire. I also think we should be very thankful to the Government for encouraging the Cotton Spinners and Manufacturers in the efforts they have made to increase the cotton supply to the world. Of course, it will not all come to England, but the more there is in the world the cheaper the price is, the less danger there is of a cotton famine, and in a way to the great staple trade of England and the people who depend upon it.

Mr. T. M. HEALY

The Chancellor of the Exchequer yesterday invited the House of Commons to be specially vigilant in regard to the Budget proposals, and in regard to finance, and then when it came to eight o'clock he moved to report Progress, so that he truncated the discussion upon his own proposals upon the very first night by something like three hours. To-night the right hon. Geneltman has made a proposal, which I did not rise as he imagines, for the purpose of opposing or even criticising. On the contrary, I believe it is perhaps, as I said upon a former occasion, really a measure of protection and a measure of bounty, and I think it was extremely generous of the hon. Member for Oldham to have asked the Opposition not to make this a party question. For my part I never regarded the Chancellor as a Free Trader, and I regard his statements on this subject as boldly proclaiming that he is going to enable Lancashire to compete with America by enlarging the markets of this country and enabling cotton to be produced in British Possessions better than in any other country, and I regard that as what I may call protection in excelsis, and therefore I warmly commend the scheme which he has initiated. I said on another occasion, and I repeat it now, that I do not believe there is a single Member of the Government a Free Trader. Perhaps we will have another opportunity of developing that when we come to the Fish Branding Bill, introduced by the Minister of Agriculture, which is intended for the purpose of depriving Ireland and Scotland of the small advantage they get in the markets. It is an extraordinry fact that the Treasury now adopt its present attitude. For the first time the Chancellor of the Exchequer poses as a sort of fairy godmother of the Empire. Hitherto the Chancellor of the Exchequer was supposed to stand in front of the Treasury with a flaming sword, warning off any person who tried to secure money, but now, and not for the first time by any means, we find he is a most approachable Chancellor, and if any of his colleagues in the Cabinet with whom he is in sympathy approach him, he is quite willing to grant their demand. Last year we found that was the case in regard to the Colonial Secretary in reference to Uganda, and now it is the Foreign Secretary that has managed to attract his sympathy, and at once the Chancellor of the Exchequer gives a million, or a half a million, for the purpose he champions.

7.0 P.M.

I raise this question of procedure, and I congratulate the Chancellor upon having adopted this procedure, but I want to know what has he to say about his procedure of last year. Have we now entered upon the normal and constitutional course upon this point? Last year Uganda got half a million upon the Estimates without a Bill. The year before Uganda—the same country—got half a million by Statute, and that was put into the Budget Act. I think it is of the highest importance when we are invited by the right hon. Gentleman to be strict, if not censorious, in our treatment of him, on money questions, that we should now ask if we are back upon the normal course of Treasury procedure. If we sanction this, will he next year come down for a million for the Soudan, and propose it by way of the Estimates, and tell us that the Appropriation Bill is the solvent for further constitutional difficulties? The right hon. Gentleman said a moment ago he was taking an unusual course. I deny that. I say he is taking a constitutional course. We had different courses taken for three years running, and I want to ask which is the constitutional course. We are now in 1913, and he proposes, as I understand, a special Bill to make a loan for the Soudan. I approve of that course. Last year he wanted to give half a million to Uganda, and he did it by the Appropriation Act. The year before he had another half a million to give to Uganda, and he did it by the Budget. I therefore welcome this Bill. I thought it was strange that the right hon. Gentleman did not say one word in outlining these proposals on the question of procedure. I think he said he was taking an unusual course.

Mr. LLOYD GEORGE

I said that I was taking an unusual course in putting this Resolution on the Order Paper. No previous Chancellors of the Exchequer have done this. Recently I have adopted the course of putting the exact words of the Resolution on the Paper.

Mr. T. M. HEALY

I accept the explanation of the right hon. Gentleman. He is claiming that instead of letting us hear by the mouth of Mr. Whitley the Resolution that is to be proceeded with in Committee, he has put it on the Paper. That is not a very great concession. Why did he do so? Because this matter was conceived to be of sufficient importance to put into the King's Speech. It is very unusual to put a notice of a loan in the King's Speech, and the reason this has been given the bulge and prominence on the Notice Paper is that the Government, in introducing it into His Majesty's Speech, conceived it to be of sufficient importance to put it before the country as something they were going to do in the interests of Lancashire cotton-growing and the Empire. I am not quarrelling with that. What I am asking is whether the Government has now entered upon a normal course of procedure. I would like to know what is the legal position of the Soudan. Is the Soudan to be considered in the position of a country annexed and united to the Crown as part of His Majesty's Dominions? That is a matter which may explain why a Statute is necessary in a case of this kind. I should conceive it a very different matter to be voting money to a foreign country as a loan to voting money to those whom we consider our fellow subjects. Accordingly, when the right hon. Gentleman assumes the position which hitherto I had supposed was the rôle of the Foreign Secretary, I am entitled to know to whom we are lending this money. How is the Soudan governed? Is it governed as a purely British Possession or as a part of Egypt over which we exercise suzerainty? These are matters on which I think we are entitled to have some explanation. I rose not for the purpose of offering any objection in any way to this measure, because I think the proposals of the Government are right and sound. I do claim, however, that in considering this matter we ought to have fully explained to us what the position is. I think the right hon. Gentleman stated the length of the loan.

Mr. LLOYD GEORGE

Thirty years.

Mr. T. M. HEALY

I think that is quite a reasonable period, and therefore it is not upon any such ground that I take my point. I think we are entitled to a statement from the Government that they will abandon the vicious practice of putting these loans or grants into the Appropria- tion Bill, and I hope we shall be told that we have now entered upon a normal and proper constitutional procedure.

Mr. GILL

I will not attempt to enter into the question of procedure in a matter of this description. Interested as I am mostly in the cotton trade of Lancashire, and more especially with the operative section, I want to support the Resolution before the House at the present time. I look upon it that this cannot be confined to a question of providing cotton for Lancashire, because it is also a question of the development of the Soudan, although I know that the cotton provided will come mostly to Lancashire. I have been connected for some years with the British Cotton Growing Association as the representative of the Operatives Association, and it was necessary that something should be done to increase the supply of the raw material on account of the failure of the crops in America and elsewhere from time to time. I know that something has been done with regard to our own Colonies. I look upon it as the duty of any Government which may be in power in this country that, if they begin to colonise, they ought to see to it that those countries are developed, whether they are Colonies or Protectorates. As far as that is concerned something has been done in that respect. The West Indies are growing a very superior cotton in very large quantities, and also in East and West Africa a quality is being grown equal to the American cotton. On this particular question the employers of Lancashire and the employed are at one, and there is no dispute in regard to the growing of cotton. Although there are times when we enter into sharp conflict on different matters, happily there is no such question as that now.

I think this loan ought to be guaranteed, because it will develop the Soudan and will improve the people in that country, and because when the cotton is grown there is certain to be a market for it. There are in connection with the Lancashire cotton trade nearly 630,000 people directly engaged in it, but that is not the whole of the influence that it has, because, directly and indirectly, there are no less than 10,000,000 affected by the cotton trade itself. The operatives' associations and individuals have shown their willingness and earnestness in dealing with this question of cotton growing by subscribing no less a sum than £54,000 to assist cotton growing in the Empire. The expansion of the cotton trade has been very rapid, and in the Manchester districts alone there has been an increase in the number of spindles during the last five years of no less than 20 per cent. When I say that the exports of cotton goods are equal to about one-fourth of the total exports of the United Kingdom, and have risen since 1902 from £72,500,000 to £122,250,000 in 1912, I think that may be looked upon as having been such a great expansion that it is necessary something should be done for the purpose of providing a great quantity of cotton. The trade has extended largely in other countries as well as our own, and we have to get the raw material in competition with them. We have no desire whatever to interfere with that competition, but we want to have a greater number of fields of supply. With regard to the world's number of spindles we have in England 55,000,000 out of a total of 134,000,000 for the whole world, and it will be seen at once we ought to look after increasing our cotton supply as much as possible.

In the past we have been almost entirely dependent upon America, Egypt and India, but chiefly upon America. It used to be the case, not many years ago, that the American cotton crop amounted to only 9,000,000 or 10,000,000 bales and 5,000,000 cantars of Egyptian cotton. As the hon. Member for Oldham says, perhaps the yield per acre of the cotton in Egypt has been rather less, but that does not mean that the growth of Egyptian cotton has been less. Where we used to get 5,000,000 cantars we now get from 7,000,000 to 7,500,000 cantars per year, and this is all absorbed, and the American crop has gone up from 14,000,000 to 16,000,000 bales. With the rapid extension of the industry we need to have a much greater quantity and more fields than we have had. It is true, as the hon. Member for Oldham says, that with the extension of trade we are gradually getting finer qualities of yarn, and we are producing better qualities of goods. Ours is the finer and more expensive quality, and the qualities that absorb a great deal more labour than the coarser qualities. The class of cotton we require most is one that can be grown in the Soudan. That is the class we use in Manchester, Bolton, and those districts that spin the finer qualities. Therefore, it can hardly be looked upon in the nature of an experiment to begin growing cotton in the Soudan, because it has been grown for a large number of years, and practic- ally 20,000 bales were exported last year. It has been proved conclusively by the experts who have visited the Soudan that everything is suitable for the purposes of growing cotton in considerable quantities.

The Chancellor of the Exchequer referred to the Gezira Plain in which there are 5,000,000 acres of good land entirely suitable to the growth of this fine fibre. Only 2,000 acres are now being used, and that is producing a very largo quantity indeed, varying from 450 lbs. to 480 lbs. per acre, which is double the quantity that is grown per acre in America. The climate and the soil is entirely suitable to the growing of this fine fibre, and experts tell us that we may look to very large quantities of cotton being grown in this particular area. We depend on Egypt and the West Indies for the finest cotton that is grown. Certainly the West Indies grow a finer quality than Egypt, but that is not wanted in such large quantities as the Egyptian, cotton, and the quality grown in the Soudan is equal to the best Egyptian that is grown. It has been proved by those who have examined the cotton and tested its quality that the production on the spindles has been larger. The failure of the crop in any part of the world means a very serious thing for Lancashire, because it means short time, privation, and operatives will have to go something short. We have had some experience a few years ago of the failure of the crop in America, and advantage was taken of it to corner the market, with the result that there was serious distress in Lancashire. Wherever we have an opportunity of urging the British Government to increase the supply of cotton, then we ought to do it. There may be failure in one particular country in any particular year, while at the same period perhaps the other countries may be successful. The result would be that we should be better able to keep our spindles going than we should otherwise be. The hon. Member for Cork (Mr. T. M. Healy) said this was Protection. The Lancashire cotton trade wants no Protection. I want to know what duty is going to be put on this cotton or any other cotton coming into Lancashire. It will be sold and imported exactly in the same way as any other cotton, and I expect it will be open to be purchased by the different countries on the Continent of Europe just the same as American cotton. We do not want any Protection in any way whatever, the only thing we want is a good supply of raw material. That is the only thing for which we ask. We ask that the country that can grow cotton and with which the British Government has any influence should be developed for the purpose of assisting the people there as well as for the purpose of finding a market for the goods they produce. Under these circumstances, I think we shall be doing right in supporting the guarantee of this loan and repudiating anything in the nature of Protection.

Mr. BAIRD

Nobody who knows the Soudan can possibly vote against this measure, but I think we are entitled to rather a more detailed explanation than that which was furnished by the Chancellor of the Exchequer. The greater part of his speech obviously came out of the recent report of Lord Kitchener on the Soudan. The Chancellor of the Exchequer shakes his head, but he could not go to a better source.

Mr. LLOYD GEORGE

I agree.

Mr. BAIRD

Indeed, I think it is the best source to which he could go, and I hope it did come out of that report. If it came from anywhere else it might be suspect. I cannot understand exactly where this money is going to be spent. I am bound to confess that it is only curiosity which prompts one to ask, because one may be perfectly certain if Lord Kitchener and Sir Reginald Wingate have settled where the money is wanted, it will be well spent; but, as a matter of principle, since we are letting ourselves in for £105,000 of the taxpayers' money every year, I think we might have had a rather more detailed account of what is precisely going to be done. In Lord Kitchener's last report there is a communication to this effect:— In regard to the Gezira project, a suitable site for the Sennar Dam has been located. The cost of the works contemplated as necessary for the irrigation of the area of 500,000 feddans in the Gezira, which could be developed in the next ten to fifteen years, is estimated at £3,000,000. I wondered whether that was the scheme, but when there is a question of the development of Kassala and Tokar that cannot be so. I suppose this is a Grant-in-Aid to the Soudan for the development of its resources. We could not possibly spend the money better. It is very fortunate for the Soudanese that their interests are not only advocated by so powerful a man as Lord Kitchener, but that they happen to coincide with the interests of the electors of this country. The more money we spend like this the better it will be for the Empire, and the less likely are we who are keen Imperialists to be called Jingoes. With regard to this project, I think the Chancellor of the Exchequer indicated that it was desirable we should maintain control over the source of the raw material. What control are we going to have? It would be very interesting to know whether it is a fact, as stated by the hon. Member who last spoke (Mr. Gill), that the whole world is coming in to buy this cotton or whether we are, in fact, going to use this money to develop the Soudan for the benefit of our own people. I hope that is so. The hon. and learned Member for Cork (Mr. T. M. Healy) asked what is the position of the Soudan. The Under-Secretary of State for Foreign Affairs (Mr. Acland) no doubt will explain, but the position of the Soudan is like everything else along the banks of the Nile; it is a paradox. It is the one country in the world where you have the British and Egyptian flags flying side by side, and British officers, wearing the Egyptian uniform, giving orders in Turkish. It works extremely well, and you have a prosperous and contented population. I am glad to think that we are going to assist them by this loan.

The Chancellor of the Exchequer referred to the advantages of having work of this kind done by the Government rather than by private individuals. I think the arguments advanced are perfectly sound and entirely justify the course of action he proposes. He will recollect the analogous case of the Assouan dam. That work has repaid itself one-hundred fold, but there is no doubt that if it had been possible to carry that work out in the same sort of way as this is going to be done, the benefit to Egypt would have been very much larger. The Chancellor of the Exchequer talks about the advantage which is going to accrue from the Government keeping the land in its own hands, but I rather think that the Government have first got to get the land. I do not believe that the land which is going to be benefited by this irrigation scheme, or by the railway, or by the development which will take place in consequence of the various works, by any means belongs to the Government. A certain amount of it does, but the last report of Lord Kitchener is full of instances of the extension of the work of registration. I suppose it is a register of title deeds of the present occupiers of the land, and I am afraid the right hon. Gentleman will find that he is helping the landlords of the Soudan to a very large extent. Incidentally, he is also helping the cotton spinners in Lancashire and the fellaheen in Egypt, and no doubt it will be all right, but the Soudanese landlord is in a better position in the eyes of the Chancellor of the Exchequer than the Scotch landlord. If the Chancellor of the Exchequer is under the impression that this is Government land—

Mr. LLOYD GEORGE

No, not all of it.

Mr. BAIRD

I think the great majority of it is not. There is this to be said: The value of the land undoubtedly, as in the case of Egypt, will be enormously increased, and consequently the yield of taxes will be very much larger. He is perfectly entitled, therefore, to anticipate a very much larger increase in the value of the works to the Government without introducing the pernicious system of land nationalisation. This scheme has been thoroughly justified by the remarks that have been made by hon. Members in all parts of the House with regard to the importance of developing the cotton-growing capacities of the Soudan. It is not only cotton, but a thousand and one things that have to be developed, and in particular this growing and important market, not only for cotton, but for all our produce, is going to receive very great assistance from this loan. I think the present Government, who are the political successors of the Government which was responsible for the evacuation of the Soudan, and the years of misery under Dervish rule which resulted therefrom must be doubly pleased at this opportunity of doing one more good turn to the people of that now fortunate country.

Mr. MORRELL

I would like to join in the congratulations which have been addressed to the Chancellor of the Exchequer from all parts of the House on a project which I am sure will be welcomed all through the country and nowhere more than in Lancashire as an admirable project. I could not help being amused at the fact that so admirable does the project seem to the advocates of the dying cause of Protection that they are anxious to annex it in favour of their policy. The hon. and learned Member for Cork (Mr. T. M. Healy) went so far as to claim all the Members on the Treasury Bench as converts to the Protectionist policy.

Mr. T. M. HEALY

They were always Protectionists.

Mr. MORRELL

That is a more interesting announcement still. But I was glad to notice that, at any rate, the hon. Gentleman the Member for Oldham (Mr. Denniss) did not trouble to try and drag this Tariff Reform red herring across this Debate. He, in fact, went so far as to quote Cobden in support of this proposal. There are some Gentlemen I know who are always ready to find out Protection unless the Government pursue a policy of absolute laissez faire in everything. What is the real analogy for this action with regard to the Soudan? We are acting, of course, upon the analogy of the Development Fund in this country. In 1909 we put aside a fund for the development of agriculture and fisheries in this country, and in the course of the two years up to 31st March, 1912, I find that the Development Commissioners had actually sanctioned in loans and Grants, mainly Grants, a sum of something like half a million of money—£424,000. All that money ultimately comes out of the taxpayers of this country, and not one penny is of any use to the cotton trade in Lancashire. What they want is the development of cotton growing in the Soudan, and this it seems to me is a very fair compensation to them, a very fair quid pro quo for what has gone to the agricultural interests of this country. The hon. Member opposite (Mr. Baird) said that we are going to spend £105,000 a year on interest, but he must be aware that this is only a guarantee and, as far as we can tell from the figures, it is very improbable that the British taxpayers will be called upon at all.

Mr. BAIRD

If we undertake the guarantee, we must provide for it.

Mr. MORRELL

It is a liability we may have to meet, but there is no actual cash to be provided until we are called upon to meet it, until the Government of Soudan say they are unable to pay the interest. I believe we shall find that among the good deeds of the Government, none will be more remembered than this loan to the Soudan. It will be one of the most efficient means of developing and aiding the greatest British industry, and I think the hon. Member opposite did very well to try and keep the party spirit out of this Debate and to suggest that this will be welcomed, as I believe it will be, by men of all parties as an admirable project on the part of the Government.

Sir F. BANBURY

One of the hon. Members who has spoken made the statement that Lancashire did not want Protection, but was prepared to do everything she required under the Free Trade system. He also went on to say that this was not Protection. Suppose the Chancellor of the Exchequer had come down and offered to vote money for the cotton mills in Lancashire. That, it would be said, was not Protection. Then, the only conclusion I can draw is that when bounties are given for the benefit of Lancashire, it is not Protection, but if they are given elsewhere, they constitute the worst form of Protection. It only illustrates what one frequently finds out in the course of a long life, that circumstances alter cases. What is a very bad thing when you are going to get nothing out of it yourself wears quite a different aspect when you are going to reap the benefit. The hon. Member who last spoke, talked about the Development Fund, and stated that a certain amount of money had been spent upon agriculture and other industries in England. I have always been opposed to the Development Fund. I have always felt that money spent in that way was wasted on official salaries, and on a variety of fads and experiments which did no good to anyone. In my part of the world, all that has happened as a result of the Development Fund, is that they have tarred the roads, and as I still have horses and not a motorcar, I cannot get to the railway station without the risk of my horses falling. Consequently the tarring of the roads has made me use bad language at times.

I am rather surprised that hon. Gentlemen opposite are apparently going to support this proposal. A short time ago, we heard them strenuously denouncing doles to landlords and other people. Now this is a dole to Lancashire, and if it passes—I am not at all sure that it will—it must be so described. I am against doles of all sorts. I voted with hon. Gentlemen opposite last Friday. I shall vote against this to-day, and I shall expect hon. Gentlemen opposite to be against this Bill. But apparently circumstances alter cases. With regard to whether or not this particular measure is going to have the effect which hon. Gentlemen below the Gangway seem to think it will have, may I ask one question? When this cotton is produced in the Soudan, it will have to be sold. What guarantee is there that it will be sold to Lancashire? It will be disposed of in the open market. It will go to the highest bidder, and the result may unfortunately be that the money which is contributed by England will go to assisting France or some other country which has cotton manufactures.

Mr. STEPHEN WALSH

In that case where does Protection come in?

Sir F. BANBURY

It will not come in in that case, but the attempt will remain, and it will have been a very bad attempt to establish a bad system of Protection. It will have been done in an unbusiness-like way, and when things are done in that way they generally fail, and they will continue to fail, as they deserve to. I think I have shown we are embarking upon a policy which may not lead to the results anticipated by the promoters of the Resolution and by hon. Gentlemen below the Gangway. Next I come to the statement made by the hon. Member for Burnley (Mr. Morrell), that no money was going to pass. That may be so or not. I really do not know. It depends upon whether the industry is successful, and whether the Soudanese are able to pay the interest on the loan. But that does not alter the fact that we are liable for a sum of £105,000 a year. We have backed the bill. I believe some young men are foolish enough to think that if they put their names on the back of a bill it does not matter, and that they will never be injured because the person who asked them to do so will provide the money when the bill falls due. But they are often deceived, and it is quite possible that the Chancellor of the Exchequer may himself be deceived, and that when the time comes we shall have to find a certain portion, if not the whole, of this money. At any rate, the Soudanese could not get the loan without the English guarantee, and, therefore, we are losing our credit for this particular purpose. I was not here when the Chancellor of the Exchequer made his speech, but I want to ask him one question; perhaps he will forgive me if he did deal with the point in my absence. Something was said that the loan would terminate in thirty years. I do not know where the sinking fund is to come from except from the Soudanese—I assume it will come from them. Of course, 3½ per cent. will not provide both sinking fund and interest at the rate at which we shall have to borrow. I want to know if there is some special way of providing for the sinking fund in addition to the 3½ per cent.?

Mr. LLOYD GEORGE

There is.

Sir F. BANBURY

Then I need say no more on that point. But it seems to me that with an expenditure of £195,000,000 a year this is the wrong time to enter into, shall I say, a speculation in foreign countries—a speculation which may be to the advantage of Lancashire but which may not. Lancashire is such a disciple of Free Trade that it would have been better if we waited a little until we came to more prosperous times owing to Free Trade before we embarked upon this expenditure of money. I have always endeavoured to restrict expenditure on whichever side of the House it has been advocated—unless, indeed, it was for Imperial defence. I have not changed by opinion. The longer I live in the world, the longer I listen to the Budget statements of the right hon. Gentleman, the more I am convinced that if we are to maintain our position the first thing we have to do is to retrench. I see no signs of retrenching in this particular policy, and if there is a Division I shall vote against the Resolution.

Mr. BARTON

I was astonished to hear the observation that the Chancellor of the Exchequer could no longer be described as a Free Trader, as this was a proposal in the direction of Protection. But I have long since learned that a Free Trader is not necessarily a fool, and that it is quite within the sphere of the operations of a Free Trade system to take every reasonable and proper measure for the development and expansion of your trade. This is a proposal which would tend to insure the trade of Lancashire. I cannot see myself that, apart from that great interest, it is at all likely we should have had such a Resolution as this put forward merely in the interests of the Soudan. Here we have a great industry; we claim for it that next to agriculture it is the greatest of our industries. It has a great prospect before it, but it is always open to a great danger, and that danger arises from the narrow limits of supply of its raw material. I do not think that anybody interested in the trade of Lancashire has any serious fear of our power to compete in all the great markets of the world, but I do believe that many entertain a fear based upon the restricted nature of the area of supply of the raw material. We have this proposition tending to remedy that very great danger, and I am quite convinced that, on all sides, there will be a realisation that this is a sound business proposal. I believe it will be accepted by men of all shades of opinion, both on tariff and on politics as a sound and wise decision of the Government. From that point of view I desire to thank the Government for the step they have taken, but I have a grievance against the Chancellor of the Exchequer. He made a speech so clear and covered the ground so fully that everything since then has been mere redundancy, and, therefore, I must content myself with thanking the Government for this proposal.

Mr. MONTAGUE BARLOW

I congratulate the Chancellor of the Exchequer on his rather refreshing experience in introducing a scheme to the House which has met with universal approval. My hon. Friend on my right says "No." I suppose, therefore, he is going to criticise the right hon. Gentleman's proposal. But the fact remains that, as regards the general outline, there appears to be a large measure of agreement throughout the House as to the advisability of this proposal. We are told that all the evidence goes to show that on its pure business side it is an excellent proposition. We have had figures showing good trade in the Soudan, excellent harbour facilities, and cotton already growing; therefore, it is clear we are not embarking on a mere experiment. It is proved that the place has a capacity for cotton production, but the main question is as to the apportionment of the money. When a deputation waited on the Prime Minister earlier in the year, figures were given as to the apportionment, and £1,000,000 out of the £3,000,000 was, we were told, to go to the Gezira Plain. Now only 2,000 acres are to be brought into cultivation out of something like 5,000,000 acres. Not only is this soil capable of irrigation, but it can be irrigated without great difficulty. It is not waterlogged, and the irrigation problem is a simple one. The assurances given by the Prime Minister to the deputation have now fructified in this proposal by the Chancellor of the Exchequer. The masters are in favour of the proposal. The Cotton Growing Association has backed it for many years. You have this most remarkable fact that both the Trades Union and the great Co-operative bodies in Lancashire have themselves subscribed large sums—in the case of the Trades Union £41,000, and in the case of the Co-operative Society £13,000—towards these objects. Therefore, so far as Lancashire is concerned, there can be no question as to the desire to secure this great object. As to the person mainly concerned in this proposal, so far as the guarantee goes, the British taxpayer, I am not at all certain that, if his wishes were more eloquently voiced here, he might not have something more to say upon this subject.

It is clear that the proposal was well received in Lancashire, and as one who has the honour to sit for a Lancashire seat I should be the last person to find fault with it on that score. It is approved of in Lancashire, and I have no doubt it is approved of in the Soudan, because it is going to assist in the development of that country. But the proposal must be looked at as a business proposal from the point of view of the British taxpayer, and when we do so look at it, it seems to me that we have a little bit of difficulty if we accept the pure Free Trade point of view. The Chancellor of the Exchequer gave us a reason, a very admirable reason, why it was not desirable that this work should be undertaken by a purely commercial company. He said that if a commercial company undertook it you might run the risk of tapping the source of Egypt's prosperity, namely, the Nile. But suppose you had Lancashire capital involved in a large measure of development in Egypt, as you might easily have, you would have the security which under the present arrangement you have not, namely, that Lancashire herself would derive an advantage from the expenditure. We all know that the spinning and weaving of cotton is going ahead very fast in India. We have heard of the proposal to take off the 3½ per cent. duty, which would cause more commotion in Lancashire than the present proposal would cause joy. Spindles are rapidly going up in Japan, and what you might very well be doing as a result of this arrangement is producing cotton of which Lancashire would receive very little indeed. Under the plan I suggest you would have this security, that your growers who put capital into the Soudan would see that the cotton produced went into their own mills in Lancashire. Nothing of that kind is proposed. We are told that the cotton is to be sold in the open market, and that nothing in the way of an option to purchase at a price is to be arranged. Therefore the British taxpayer has no security that when this money has been sunk and this advantage has been given to the Soudan, you are going to secure a very substantial advantage to Lancashire.

The last speaker said that any money sunk by the Government in the development of trade was a sound thing. Would the hon. Member or the Chancellor of the Exchequer go so far as to say, supposing you found cotton-growing areas suddenly developed in America or in Argentina, that the Government of this country should use the taxpayers' money to develop the growing of cotton under a foreign flag and on foreign soil. The arguments they used certainly go so far as that. If you say that all money sunk for the development of a raw material is going to be good for British trade, or is a sound investment, then you cannot discriminate between money sunk for the growing of cotton in Egypt or the Soudan, and money sunk in America, or under a foreign flag for the same purpose. If you do discriminate—and I should personally do so, because I do not take the Free Trade ground—you can only do it on the ground that there is a community of interests between various parts of the Empire. That is a sound ground, but it is not taken by hon. Gentlemen opposite. They must therefore be prepared to face this: that the expenditure would be just as justifiable if the money were expended on a foreign soil. It is a proposal which, under the present conditions and with Lancashire requiring this kind of cotton, will certainly for the time be advantageous to the great commercial industry with which so many of us are directly or indirectly connected, and in which all who sit for Lancashire seats are immediately concerned, but it is very easy to conceive circumstances where money sunk in this way will not produce that beneficial effect to English industries. You are sinking it under conditions, as you think, of Free Trade, but you are getting no security that the benefit shall accrue. In these circumstances I am sorry that better care is not taken to see that the taxpayers' money is sunk in a way that will benefit British industries.

Mr. T. M. HEALY

Should I be in order, Sir, in moving to insert before the word "Government" the word "British," so that this money shall be lent to the British Government of the Soudan, and not to a foreign Government?

The CHAIRMAN

I could not take that, because there is no British Government in the Soudan, it is a condominium.

Sir FREDERICK CAWLEY

I only rise because of the remarks of the hon. Member for South Salford (Mr. Montague Barlow). I really did not know at what he was driving. This is an excellent proposition for developing the Empire.

Mr. T. M. HEALY

It is not the Empire.

Sir F. CAWLEY

It is an option of the Empire. I think it is really part of the soil of the Empire.

Mr. T. M. HEALY

The Chairman says not.

Sir F. CAWLEY

I dare say the hon. and learned Member knows as much about that as anybody else. This is not a selfish proposition on the part of Lancashire. If the Chancellor of the Exchequer had come forward with this proposal and had left Lancashire out altogether, or if it were proposed to grow some other product in the Soudan which would equally benefit the Soudan, I believe hon. Members opposite would all support him. Dragging Lancashire in as if it were the suggestion entirely of Lancashire, is not quite fair. The thing is a proposition from the Empire point of view, and, whatever was grown in the Soudan, I should be in favour of guaranteeing this loan to develop the trade of the Soudan. Incidentally, of course, it helps Lancashire, because we want cotton. We do not want a monopoly in cotton; we are quite willing to let Japan and America and every country in the world come and buy cotton. Lancashire can afford to give as good a price for cotton as any country in the world, and if we cannot afford to give the price asked for it we will not have it. The last speaker seemed to think that, because we guarantee a loan in the Soudan, therefore we ought to compel the Soudanese to sell us the cotton at a lower price than we get it elsewhere. If you confine the cotton grown in the Soudan to Lancashire it means that you are going to protect Lancashire and sell the cotton to Lancashire at a lower price. We want the Soudanese to do the very best for their country, and we are going to help them by guaranteeing the loan. That is all this amounts to, and I think it is a very excellent proposal. A great deal has been said about Lancashire wanting Egyptian cotton. No doubt we do want it. If we can develop the Empire by guaranteeing a loan to the Soudan, and so increase and enlarge trade there with a growing population, it will be a splendid thing, not only for the cotton trade, but for every trade in the country. If we can incidentally help the cotton trade, no one ought to complain.

Mr. CHARLES BATHURST

I hope I shall not be deemed unpatriotic if I join issue with some of my hon. Friends on this side of the Committee in their attitude towards this Resolution. Only two hon. Gentlemen, other than the Chancellor of the Exchequer, have addressed the Committee who did not hail from Lancashire. Both those hon. Gentlemen have protested against the Resolution. Therefore I think the hon. Member for South Salford, when he said there was general agreement in what he is pleased to call the House, on the subject of this Resolution, will see that there is only general agreement, because those who have not been marshalled in force this evening to support this locally interesting Resolution are waiting presently to support by their votes a Resolution the provisions of which they know very little about, and because those who do not happen to be Lancashire Members have had little opportunity of stating their views. I should like to offer my opinion, for what it is worth, on the subject of whether or not this is protection either to an English industry or to a Soudanese industry. What I would say with regard to that is that if this is to promote the artificial production of an artificially cheap raw material, and the production of that raw material is going to be promoted by a loan of money at less than the current market value of that money, it is clearly protection. It is not only protection, but I suggest it is a preference of a most undesirable kind. It is a preference to one particular British industry, and I would ask why should other British industries be left out in the cold? It is also protection for the Soudanese agricultural industry, which the agricultural industry in this country does not enjoy. The Chancellor of the Exchequer doubts the soundness of that criticism. Reference has been made to the Development Fund, and I have no doubt the right hon. Gentleman has that in mind, but I venture to remind him that Grants out of the Development Fund are not made directly towards the promotion of any branch of the agricultural industry in this country.

Mr. MORRELL

What about horse breeding?

8.0 P. M.

Mr. C. BATHURST

Assuming that light horse breeding is a branch of the agricultural industry, about which I have my doubts, if the hon. Member means the sort of horses that are encouraged by this particular Grant, I will only say the supposed object of that is to provide horses for the Army, an object which, by the way, is by no means being secured. I still suggest to the Chancellor of the Exchequer that the Development Fund is not applied, and is never intended to be applied, towards the direct promotion of the agricultural industry, which would involve individual agriculturists, as a direct result, being better off than they were before the Grants. In any case, why is this preference given to one particular British industry? Why should other British industries, many of which are far less prosperous than the cotton industry, be left out in the cold? Let me give the Chancellor of the Exchequer an illustration—which, by the way, he forgot in the course of his Budget speech yesterday—the tinplate trade. The tinplate trade is suffering from a very severe depression to-day, and one reason of that is that it has to pay exceptionally high prices for its raw material. In this particular case the Chancellor of the Exchequer is enabling the cotton industry to get its raw material cheaper than it has been possible to produce it before. It is the gambling of Indian Rajahs in tin which has sent up the price of tin to something like five times its proper market value. I happen to know something about the subject, as I help in controlling the largest tinplate works in this country.

Mr. LLOYD GEORGE

It is the trouble in the Balkans. Some of our very best customers at present are not in a position to buy and are not giving orders.

Mr. C. BATHURST

I admit that that is one of the reasons, but it is a far less important reason than at least three others, of which I have stated one. But I should soon get out of order if I started a long discussion on the reasons for the depression in the tinplate trade. What I chiefly want to impress upon the Chancellor and on the Committee is that charity should begin at home, and by this particular Bill, on his own admission, he is providing money at a cheap rate of interest to promote, by irrigation and otherwise, the agricultural industry of the Soudan. The great curse of agricultural industry to-day in this country is the lack of cheap money. If the right hon. Gentleman is prepared to provide cheap money for the agricultural industry in Egypt, why does he not provide some public money—considerably less than £3,000,000 would be acceptable—to provide, either through the medium of agricultural credit banks or otherwise, cheaper money to ensure the development of rural industry in Great Britain? I should also like to ask, in connection with a branch of agricultural industry in respect of which we are clamouring for public money to-day, why he is not prepared to give it similar support—namely, the development of the sugar beet industry.

Mr. T. M. HEALY

The Prime Minister has promised that.

Mr. C. BATHURST

If that is so, I hope that we shall have some confirmation from the right hon. Gentleman. I suggest that we have no definite promise whatever in respect of a Grant—call it bounty or not, as you like—towards the development of sugar beetgrowing in this country. Assuming that there is, I would ask whether a Grant should not be forthcoming towards the promotion of a far more important industry than any that has been mentioned, namely, corn growing? I am afraid I differ from some of my hon. Friends around me in holding that a bounty is not only a proper form of Protection, but is a form of Protection which is essentially necessary for the development of agriculture in this country. Assuming that a bounty is to be granted towards the promotion of any agricultural industry, I should like to ask why a bounty of a similar sort is not forthcoming which would enable English agriculturists to grow wheat at a certain profit to themselves, and so do something to ensure the national security, which is so severely imperilled to-day by the fact that four-fifths of its wheat supply comes from across the seas and may be interfered with in time of war? I regret that at a time when taxation is so onerous as it is to-day the Chancellor should ask the House to find £3,000,000 towards the preferential stimulus of one industry out of many in this country and by no means the most important, and towards the development of the agricultural industry in a foreign country—because it is a foreign country, even although we co-operate in its control —when no such support is given to the far more important agricultural industry of Great Britain.

Mr. LLOYD GEORGE

May I make an appeal to the Committee now to let us get this Resolution, to enable us to introduce the Bill? There will be a Report stage, and the two stages together are tantamount really to a First Reading stage. There will be an opportunity for hon. Members to discuss it.

Mr. T. M. HEALY

Answer some of the criticisms now.

Mr. LLOYD GEORGE

If the Committee would prefer me to occupy the remaining ten minutes in answering criticisms, I shall be happy to do so. The criticism of the hon. and learned Gentleman (Mr. T. M. Healy) was getting into a very controversial discussion upon this procedure which is not strictly relevant to this, but would have been relevant to another issue which was disposed of last year. The hon. and learned Gentleman wants to know why I did not take the same course with regard to Uganda. This is a loan of which we are simply guaranteeing the interest. In the other case the money was actually advanced.

Mr. T. M. HEALY

In 1911 you put it into a Bill—into the Budget Bill.

Mr. LLOYD GEORGE

I do not quite recollect. In 1910 that also was the case where we were advancing the money. I am certain I have not proposed anything of this kind before. The only case of this kind has been the guaranteeing of the Transvaal Loan by the late Government, where I think there was a guarantee of interest. The two cases given by the hon. and learned Gentleman are cases where we actually advanced the money, and we advanced it in both cases out of a surplus. My hon. and learned Friend also asked me about the legal position of the Soudan. At present there is a condominium. Its position in reference to this country is a very anomalous one. Lord Kitchener is purely a Consul. He exercises very great authority there, but it is a very anomalous position. We have a joint authority with Egypt over the Soudan. I should be very sorry to enter into anything like a disquisition as to the actual relation of this country to the Soudan, and I am not sure it would be desirable to do it.

Mr. T. M. HEALY

To what Government are we going to give the guarantee—the Egyptian Government?

Mr. LLOYD GEORGE

To the Government of the Soudan.

Mr. STANIER

Who are the landlords of this land that is to be taken? Are they syndicates or are they the Soudanese Government?

Mr. LLOYD GEORGE

I think a very considerable part is owned by the natives, but there is a part which I think belong to the Government as well. There are no syndicates at all; they are purely native owners of the land, and if assistance be given them by way of irrigation it will be on such terms as Sir Reginald Wingate will make, and it will undoubtedly be a source of revenue to which we are looking forward to pay interest on the loan. It will be worth their while paying very considerable dues or tolls to the Soudan Government in return for the very great services rendered to them by the canal. With regard to what has fallen from the hon. Member (Mr. C. Bathurst) I think he is the very last man in the world who should criticise this. He has been a very strong advocate of grants of money to the agricultural community of this country. The first Government that put on the Estimates anything in the nature of a development Grant to the agricultural industry is the present Government, and the hon. Member has always recognised that. I remember setting aside £400,000 in the Budget of 1909 for the purposes of development in this country. Probably he knows better than I do how much of that money has been voted at present for these purposes. He may say they are not purposes of which he on the whole approves, but they are purposes which the agricultural community have themselves sanctioned. They have asked for more money—that is natural; every interest does that—and I hope gradually they will get more assistance from time to time. Take one of the purposes which we then had in mind in connection with that Grant. Take afforestation—re-afforestation of waste land. That corresponds very largely with the purpose of this loan. I do not believe any portion of this will fall on the British taxpayer at all. In the other case a very considerable sum is falling annually upon the British taxpayer in the way of assistance to the agricultural community to develop the resources of the soil in this country, and I do not grudge a penny of it. It is a purpose which is well within the principles of Free Trade—the kind of work Free Traders can do very effectively. I hope the agricultural community will not set the very bad example of resisting a Grant of this kind for the development of the resources of the Empire elsewhere.

Question put, and agreed to. Resolution to be reported to-morrow (Thursday).