HC Deb 31 July 1913 vol 56 cc905-26

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."—[Mr. Hobhouse.]

Mr. POLLOCK

I desire to ask the right hon Gentleman who moved the Second Reading certain questions, because the Bill is one which has aroused considerable interest amongst my Constituents and a number of constituencies represented by other hon. Members on both sides. I therefore endeavoured to look into the Bill to see what are the parts which apparently give rise to misgiving and what are the parts of it which seem to be quite unexceptional in their nature. As to portions of the Clauses of this Bill, I feel quite sure that all Members on both sides of the House would wish to see them passed into law. A great number of Clauses seem to be concerned simply with what I might call the domestic working of the co-operative societies, and so far as those Clauses are designed to smooth the working of the co-operative societies, the industrial provident societies, I am quite sure that they will awaken a ready response from all quarters of the House. This movement has been in operation for a considerable number of years. It is now fully twenty years since the Consolidating Act of 1893 was passed and it remains the principal Act and is so referred to in this Bill, and may be referred to, I think, as the Charter of the system of industrial and provident societies. On looking at these Clauses, I find that a considerable number? of them are intended to remedy certain difficulties which have arisen. In illustration of that I may refer to the somewhat long and difficult Clause which stands as Clause 6, with the side-note "Amendment of the principal Act as to nomination."

It will be perhaps in the recollection of Members that a case was decided, the Eccles case, in which a controversy arose, as to the period of time at which a limit which obtains under the principal Act should be considered. There is the power to nominate for the purpose of transference on death, by the living holder of shares, a certain person who is to represent him and have his shares after his death. That nomination could be made at the time when the holder of the shares held not a larger amount than £100. The question that arose in the case was whether the time you were to look for the possession of the £100 was at the time of nomination or the time of death. It was decided if I recollect rightly that the time of nomination must be looked on. Whether it was time of nomination or death is really what I may call a domestic matter which concerns the co-operatives and their holdings, and I feel quite certain that if Clause 6 of the Bill is an Amendment which would be acceptable to those who are both shareholders and otherwise interested in the societies, it is a Clause to which no exception can be taken by any Member of this House. I desire at once to point out on my own behalf, and I speak naturally entirely on my own behalf, that I have no desire to endeavour to put the clock back, or to cause any sort of difficulty to the fair working of what may be called the industrial and provident system. It has done much good in the past, and offers facilities to a number of persons to obtain their goods at cheap rates. So far as it is used for the purpose for which it was intended, it has undoubtedly established its right to sympathy and to the facilities required by an amending Act.

I come to the other side, which causes considerable misgiving amongst people who also are entitled to have their views put before the House and their rights considered. The classes who have misgiving about the Bill are the small shopkeepers and traders. They undoubtedly deserve a great deal of sympathy. It is not easy in these days of large capitalised concerns for the small trader to make a profit, maintain his independence, and earn a livelihood. I am not speaking now of the large trading concerns, they can probably look after themselves. But in regarding the rights of all classes it must be remembered that one outlet for thrift and honest ambition is found in the possibility of carrying on a small business with some hope of success. For these people this Bill has given rise to considerable anxiety. I am not sure that all their anxiety is well founded, but there are some Clauses which I shall strongly press the right hon. Gentleman to explain. Clause 1 raises the limit of holdings from £200 to £300. What is felt by the small trader is that if cooperators are to have the opportunity of possessing as much as £300, they are no longer the class for whom these societies were originally founded. In 1893, when the Act was passed, the total number of members of these societies was 1,057,000; the total share capital was little more than £12,500,000, and the loan capital was £2,110,000. At the present time the share capital has more than trebled, the loan capital may be multiplied by ten, and the number of members has risen to more than two and a half millions. I quite appreciate the approval that is expressed by hon. Members on both sides of the House of the figures that I have just given. We all wish well to these societies. It is a remarkable fact that the principle has succeeded so well that the present number of members of societies doing productive as well as distributive work is 2,785,000.

I now touch upon a point that is giving anxiety to small traders. During the year 1911 the turnover on the sales of goods by these societies worked out at £120,000,000.

Mr. ADAMSON

Is there anything wrong with it?

Mr. POLLOCK

I wish the turnover were as large of all persons engaged in the honest industry of selling goods. But I am not going to overlook the rights of the small traders whose turnover, I hope, will also grow as large. They are entitled to all the rights and privileges that we can give them, equally with other societies. What right has the right hon. Gentleman, turning to Clause 1, or on what ground does he found the necessity to raise the limit from £200, which have proved undoubtedly so successful, to £300?

Mr. ADAMSON

Why not?

Mr. POLLOCK

This £120,000,000 should be accepted with a caution, in a way shown by the Register-General. Because there are three large wholesale societies in England, Scotland, and Ireland, which are responsible for an enormous wholesale trade. The English society does more than twenty-seven-and-half millions worth of trade, the Scottish society, £7,850,000, and the Irish society £133,000—a total roughly of £36,000,000. The Register-General calls attention to the fact that in the £120,000,000 is included some of the trade done by the wholesale societies. In that case some of it might possibly be counted twice. It still, however, leaves about £100,000,000—a startling figure. What about the smaller trader Has not the small grocer and the small dealer in the humbler streets cause to feel some anxiety and ask why this step should be taken? [An HON. MEMBER: "Why not?"] Has not the time conic when the holder of the sum of £300 has ceased to be a person for whom these Acts were intended, and Who was the person for whom this system was designed? It might be said by the right hon. Gentleman that it is so arranged that the small owner should be able to join the society and so have the consequent advantages.

The Chancellor of the Exchequer will probably have a good deal to say about that because the privileges enjoyed by these societies certainly do not make for a large return to the Income Tax. It must be remembered that while you are increasing the limit of capital from £200 to £300—a very substantial sum at least to a great number of people—that if holders of £300 are to be allowed the benefit of the Act then the difficulty of revenue for the Chancellor of the Exchequer must certainly arise. Let me point out the way the members of these societies enjoy special privileges in this matter of Income Tax. There is one that is constantly pointed out. The matter is one with which I am not unfamiliar. It is one we constantly argue and will argue again either on Bank holiday or at three or four o'clock in the morning in the early days of August. Under Section 24 of the principal Act indemnity from Income Tax is granted to members of an industrial provident society, unless it sells to persons not members thereof and the number of shares of the society is limited either by its rules or its practice. What is the exemption? Let me take the case of the small trader. He has to make his return and he is allowed under the scheme of Income Tax, I think very unfairly, but a small deduction in respect to depreciation, and subject to that he has to make his return of Income Tax on his gross return, and he has a right if he can to get back something in respect of his exemption. But he is paying Income Tax on his gross return subject to the slender rebate in respect to depreciation. What happens in the case of the members of these industrial provident societies is that they are exempt from paying Income Tax at all, and, of course, the reason of it was this: That it was supposed those persons who came within the ambit or sphere of these societies were persons who in all circumstances would be well below the limit of anything like an income that would bring them within the Income Tax Acts.

What is said upon the other side is that the trading societies now instead of confining their attention solely to their members do in fact sell to persons who are not members thereof, and that by reason of their selling to all and sundry they are taking away a large amount of trade which ought to go to the small traders, and they are not confining themselves to the terms on which alone they were granted exemption from Income Tax. The small trader pays Income Tax and gets back what he can afterwards, and we all know that to obtain a return of money from the Revenue is not an easy thing. That is a point the small trader feels and his position ought to be considered and he has a right to be considered as fairly and justly as the trader in the industrial and provident society. This Bill, so far as I understand it, is giving the members of these societies still further privileges. I ask the Chancellor of the Duchy of Lancaster how he can justify the raising of this limit from £200 to £300 in face of the facts and figures I have given. At the present time this movement is prosperous and successful and is one in which a very large number of members of the community take part, and it is a movement which certainly does not require any artificial assistance from the State. If we desire to do justice between one class and another and not to overlook the rights of the small trader, then Clause 1 ought to be deleted from the Bill. There is no necessity for increasing the amount which could be held by members of these industrial societies. The sum of £200 is large enough, and there is really no need, if you wish to have regard to the views of others for including this Clause.

12.0 M.

I also ask the Chancellor of the Duchy to give us some explanation of Clause 2. I suppose this is a Clause which Clause 2. I suppose this is a Clause which ordinary way of industrial and provident societies, but I do not quite see why you are to permit registration of a society consisting of two or more other societies. That is probably a matter of domestic concern and I pass on. As to Clause 3, on the whole I think it is a very fair Clause, and perhaps it will tend to a better audit in the future, because the persons who will be the auditors will no longer be members of the society and in that sense the probability is that they have adopted a system which will tend to the good management of their affairs and raise themselves free from any possible criticism against the value of the audit. Clause 5 is one I wish to offer some criticism upon. I do not see why the return should be only a triennial one. Why should it not be an annual return? Again, if the return is made at all to the Registrar, why should it not give the names of members of the society? I understand the reason why, in the locality itself, a number should be used in the place of a name, because it may be that there is a desire that matters of personal concern should not by any possibility be discussed locally. Once a return has to be made of the shareholders, I do not quite see why the return should not be made in the name of the person who is the shareholder. I do not see why the number and not the name should be transmitted. Acknowledging the importance of the number in the locality, I see no need for it when it is transmitted to the central office. Clause 6 is one upon which if it is claimed to be necessary I have no criticism to offer nor have any of my Constituents. Clause 7 is probably a matter for arrangement between the Exchequer and the socieites; but, if I might in all humility offer sonic criticism in regard to Clause 8, I should say that it was a Clause which was certainly somewhat unfortunate. Section 29 of the principal Act enables a sum of money in case of the insanity of any member to be paid over to any person whom the society shall think to receive it, and that power extends up to £100. Now this limit is to be removed with the result that the society will have power to pay any sum whether £100 or upwards to anyone it pleases. Once the sum becomes larger than £100, I think that it would probably be wise even in the case of insanity to have some provision to protect more carefully the property of members, and I very much doubt therefore whether Clause 8 is in the interest of the industrial societies themselves.

I can conceive many cases in which it would be found to be unfortuuate and where serious difficulties would arise. If you take power to pay over to all and sundry sums above £100, it seems to me that you will be applying a very good principle beyond its natural limits and beyond the point where you have got any safeguard. Clause 9 is one for which I can see no reasonable justification. What says the small trader? The small trader says "I am competing with a co-operative society which really has abundant capital and a great number of customers all interested in coming to this particular centre, and I have to cut and cut my prices in order to attract customers." Then follows the difficulty that I have pointed out about the Income Tax. He adds under Clause 9 there is another privilege which is given to members of co-operative societies. How does it affect them? It is an attraction to draw people into the industrial and provident societies. It may be good in one sense, but the small trader does not feel that it is to his advantage. What one wants to do in all these Bills is not so much to be quite sure that in a world where rough justice must prevail that there is such justice and that you should have real justice meted out, but one wants to prevent any sense of injustice arising. I do not think, from the point of view of the Chancellor of the Duchy, that Clause 9 matters at all, but when you are trying to see if you can prevent a sense of injustice arising, I contend that Clause 9 is one which equally with Clause 1 ought to be deleted.

As to the rest of the Bill that is a matter which really concerns the mechanical working of the societies. I think Clauses 11, 12 and 13 might be left in. The result of the observations I have endeavoured to make is this, that I press upon the Chancellor of the Duchy what I may really call the injustice of Clause 1. It is a Clause which raises this movement into a different plane, and is for the advantage of men who have reached the point which all hope as many as possible will reach—i.e., the possession of £200 or nearly,£300, but when they have reached that point the small trader naturally feels that they ought not to be invested with the privileges that industrial societies get, and if the members of societies are to have relief from burdens then the same relief should be given to the small traders from burdens which, in their case, press far harder and which they, being mere members of the general public, see no possibility of getting relief from. I hope that the Chancellor of the Duchy will take this matter into serious consideration, because, when the Bill comes up for Second Reading, while there are a great number of the Clauses I should like to see passed in the interests of the smooth working of industrial societies, I have at the same time to submit that the two Clauses I have pointed out invade the rights of others beyond what is necessary to safeguard the liberties of industrial societies and enlarge the limit of societies beyond their proper sphere, thereby creating among a large number of my own constituents a sense of injustice which is not easily removed and which, I think, if the two Clauses were deleted from the Bill, would pass away. Then the co-operative societies and small traders would each be able to do their own work and prosper, as we all hope they will, in the interests of the community at large.

The CHANCELLOR of the DUCHY of LANCASTER (Mr. Hobhouse)

I very willingly accept the invitation of the hon. and learned Gentleman opposite to give some explanation of the Clauses of this Bill. I should like to point out to the House that it is substantially the same Bill of which I got a Second Reading in 1910, and which passed the House of Lords without alteration and without comment so recently as 1912, and to the general principles of which, therefore, there can be no objection. The hon. and learned Gentleman has pointed out that the greater number of the Clauses deal merely with domestic arrangements which are for the convenience of co-operative societies generally, and, therefore, I need not trouble the House with comments upon them. These Clauses are Nos. 2, 3, 11, 12, 13, and 14. I come at once to Clause 1, to which the hon. and learned Member more particularly objects. He said—I am sure quite truly—that he did not wish to put the hands of the clock back, but I am afraid that, with the best intentions in the world, if the view which he has advocated were allowed to prevail, at all events the clock of co-operation would go rather more slowly than it does at present. In passing the hon. Member referred to the anxieties of the small trader. Those are anxieties which all of us must share and with which we all sympathise. The question, however, is whether the provisions of Clause I would really operate to the detriment of the small trader in the way and to the extent he stated. I pass by, for the purposes of this evening, the question of Income Tax, upon which he dwelt, although I would point out to him that the difference between the operation of the Income Tax in respect to co-operative societies and the ordinary trader is that in the case of the ordinary trader it is collected at its source, and in the case of the co-operator it is collected from the individual, if it is otherwise due. No cooperator, as a co-operator, escapes Income Tax if his income is over the £160 level, and he is subjected in that respect to all the penalties and pleasures of the Income Tax.

I come to the point with which the hon. Gentleman dealt more particularly. Under the principal Act, the Act of 1893, it is laid down that no person who is a member of a co-operative society may have a larger interest in that society than is represented by the possession of £200 of shares in the society. That limitation does not in any way apply to another cooperative society, which may have as large a holding in the society as it likes. The restriction is upon the individual, not upon the total capital of the society. That is a very important point for the reason that societies have no difficulty in getting all the capital they want, and upon reasonable terms. The hardship, if there is any hardship involved, is that a co-operator may not invest as much money as he likes in the society, although the society may have as much capital as it likes in excess of an average of £200 per member who invests in the society. The restriction to £200 at the present moment, therefore, does not limit the activities of the society or the competition of the society with the small trader. The individual co-operator, who may not have in the society more than £200 of capital, may lend to the society as much money as he possesses or chooses to lend. He may not invest more than £200 in it, but, if he is the possessor of £10,000, he may lend it to the society. The result is that this Clause operates not to restrict the activities of the societies but to restrict the investment of the individual co-operator who wishes to invest in a co- operative society. Although the individual co-operator may not invest £1,000 in any one society, there is nothing to prevent him from investing £1,000 in five different societies. When that fact is stated, when it is perfectly well known that the societies can get as much money as they like▀×

Mr. POLLOCK

At interest.

Mr. HOBHOUSE

There is no difference at all so far as the society is concerned between interest and dividend. The operation of the existing law does not limit the competition of the societies with the small trader, and it does not limit the activities of the society, but merely restricts a particular investment of a particular individual in a particular kind of industrial undertaking.

Mr. POLLOCK

Why have they it in at all?

Mr. HOBHOUSE

I am trying to answer to the best of my ability the very reasonable argument of the hon. and learned Gentleman. Is it not better to let the individual co-operator invest a little larger sum in his co-operative society, in a regular form, rather than force him to lend his money to the society, if he wishes to extend his interest in its operations? There is one more point made by the hon. Gentleman. He said, "If you allow £300 to be put into shares of the society by the co-operator instead of £200, which he may invest at present, you make a difference between that class and the original persons who invested in co-operative societies for whose benefit they were established, and you get a wealthier class associatd with them." I do not think that is altogether so. The hon. Member will recollect that there is a fall in the value of money. When these societies were started forty or fifty years ago £200 would purchase as much as £300 would to-day. [An HON. MEMBER: "That is not so."] I think that is so, in comparative wealth—I do not mean, of course, £200 in one hand and £300 in the other; but fifty years ago £200 purchased not much less than £300 would to-day.

Let me deal with the question of Clause 5. The hon. Gentleman asked me why the special report provided for in that Clause is not made annual. I would ask the House to remember that there is all the difference in the world between the special return which is mentioned in this Clause and an annual return of income and expenditure. All that the Clause provides for is this: A society at the present moment may advance, and does as a matter of fact issue to its members, a biennial report showing the balance to the credit of each member of the society, indicating him not by name but by a number. Under the Census Act of 1908, I think Section (6), individuals are protected from having anything known about their business by their competitors or neighbours, and they are in fact indicated by numbers in the Board of Trade returns. It is for precisely the same reason that co-operators have asked that their identity should be distinguished by number instead of by name. The incidental advantage to the society, is, perhaps, a small saving, but in many cases there is a large saving of clerical labour. Members of societies see their credits which, if small, are important to them, and without checking over the items they know generally what stands to their credit. Sometimes, unfortunately, officials are not as successful or as honest as they might be, and there have been lapses on their part. This Clause will protect the societies against any possibility of that sort, and, in fact, it is the general wish of the co-operative societies that it should be inserted.

The hon. Gentleman dealt with Clause 8. The principal Act says that where a person has become insane and where someone else claims on his behalf to have a transfer made of the money which stands to his credit, the society may, when it is proved to the satisfaction of the committee that it is just and expedient so to do, pay an amount not exceeding £100 over to some person whom they shall judge proper to receive the same on his behalf. If you may pay over £100 to his credit why should you not pay over £105 or £120 or £150? It is only a reasonable extension of the law which is made after all for the fit and proper representative of the insane person and it is to the common advantage of the society and the person who invests. Then there seemed to be some general objection to the Inland Revenue Clause, Clause 9, which I should have thought would be acceptable. If it is not acceptable I will not press it and am prepared to withdraw it. I do not attach very much importance to it. It would be convenient to the Inland Revenue to have it but if the hon. Member and his friends object and if they will assist me to get the Bill through without undue delay, certainly before the end of the Session, I should have no inclination to press it.

Sir F. BANBURY

I am sorry the right hon. Gentleman did not say he would withdraw Clause 7 as well as Clause 9. Speaking for myself, if he will withdraw both Clauses I shall be very happy to assist him. He has made a great point, which is also made in a circular I received to-day from a co-operative society with which the hon. Member (Mr. Barnes) is acquainted, that £200 twenty years ago were the same as £300 now, only the circular says twenty-five years ago and not fifty years. The original co-operative Bill was only introduced some twenty years ago, and in 1894 and 1895 £200 invested in first-class English trustee securities would have produced about £5 a year; but £300 at present would produce not £5 but £12. The result is that instead of £300 now being only worth £200 the reverse is the case. Where the right hon. Gentleman is making a mistake is this: While it may be that the prices of bread, meat, and other articles have risen, the return on capital has also risen, and if you are in the fortunate position of having money uninvested, you can get a far better return for it than before. Therefore, that argument falls absolutely to the ground.

There remains only the other argument about the clock. The right hon. Gentleman said my hon. Friend did not wish to put back the clock. But if Clause 1 was omitted, the clock would go as fast as at present, because matters would be exactly the same as they are now. My hon. Friend says that during the last fifteen or twenty years co-operative societies have increased enormously, and that, therefore, there is no necessity to do anything more in the direction of providing capital, because experience has shown that they can get as much capital as they want. Therefore, we can in no way injure the cooperative society movement if the right hon. Gentleman should decide to drop Clause 1. All that would happen would be that the small trader, who has suffered very much, not only from co-operative societies, but from big combinations of other traders, would, at any rate, be assisted if the Clause was dropped, and, at, the same time, the co-operative societies would be in no way injured. I hope the right hon. Gentleman will meet the request which has been made by my hon. Friend. I do not know whether he attaches much importance to my evidence one way or the other, but if he will get up and say that he will drop the Clause, we may go home to bed feeling satisfied to some extent.

Mr. DICKINSON

I hope, in view of what the hon. Baronet has said, that we shall not go home to bed to-night under any misunderstanding that this Bill is going to be altered materially in Committee. Of course, I have nothing to do with deciding that, but at the same time I consider that the measure has had most careful examination already, and it is presented in the form in which I should hope to see it passed. My excuse for speaking on the question to-night is that I introduced a Bill on these lines at the request of the co-operative societies some seven years ago in company with two hon. Members on this side of the House and two or three very much respected Members on the other side. Since then the measure has passed into the hands of the Government, and almost every year the proposals have been submitted to various Government Departments. As a result, every criticism that could be levelled against the Bill has been made by the Government Departments, and I venture to say that no Committee of this House could go into its details without arriving at the conviction that in regard to every one of them the co-operators have a very good case, whilst the opponents of the measure, who have made their views well enough known outside, have no case at all. I do not wish to detain the House at any length, but there are just three or four matters which I should like to put before them. I am certain, whatever the general competition of co-operators with the private traders may be in the country, that there is no provision in this Bill which can have a disastrous or damaging effect on any private trader. I can certainly say that when the Bill was proposed the cooperators had no sort of idea that they were putting forward any proposals which could meet with the legitimate opposition of the private traders of the country.

If the House will permit me, I should like to take three examples. First of all, there is the example of Clause 1. The right hon. Gentleman explained that very clearly, and there is only one thing that I can add to the statement he has made on the subject. The point with the co-operators was this: They sound that their own members came and invested up to £200 in the concern, but that if those members had a further sum of £20, £30 or £40 which they wished to invest they had either to turn them away, or else allow them to invest it, as they actually do, by simply loaning the sum to the society. It was thought advisable that this restriction should be withdrawn, and accordingly the suggestion was made to allow them to extend to £300. Why was this proposal made? I will tell the House. It was because, a year or two before, the same considerations had arisen with regard to friendly societies, and the limit in the case of these societies was raised from £200 to £300. As has been said by the right hon. Gentleman and admitted by the hon. Baronet the Member for the City, the cooperators have no reason whatever to put forward this proposal from a financial point of view. They do not want to raise money in this way. It costs them more to do so. They raise an enormous sum of money already by loans from members and elsewhere. The wholesale co-operators, I may point out, pay for shares 5 per cent. and for loans 3½, per cent. The distributing societies pay for shares 4¾ per cent. and for loans 3¾ per cent. I would ask the House this question: Why should we step in and prevent poor people putting their little savings into these concerns? What good object can there be, what public policy to serve, in preventing these poor people investing £250 instead of £200?

Take the other point—the Income Tax objection. In the first place this is not in the Bill. The objection has been raised by people outside who want to kill cooperation. What they try to show—and they are attempting to do this every day—is that co-operators are free from the payment of Income Tax. The right hon. Gentleman has explained already what really is the case. But even apart from the fact that 98.8 per cent. of the members of cooperative societies have less than £160 a year, and will not, therefore, in the ordinary course of things, be called upon to pay Income Tax, it must be borne in mind that there have been decisions in the courts with reference to mutual societies which have shown that in any system of a division of profits in mutual assurance those profits are not to be taken as profits for Income Tax. The co-operators work on a system of buying goods at market prices. They pay for them in their shops the same prices as other people are paying, but then each individual is credited with the particular sum which represents the profit on his own transaction. In that way he gets a little bit credited to his account each time he goes to the shop to purchase goods.

As regards Stamp Duty, let me say that I cannot imagine any case that could have been more misrepresented than this has been. Here is one of the objections:— The societies which carry on business with the public should be subject to all the ordinary incidences of such business, and should not be exempted, as is proposed by this Bill, from Stamp Duties or any other contributions to the Exchequer. What is the exact position of this matter? Under the Clause the Stamp Duties are very limited in number. There is only one document that co-operators are exempted from paying Stamp Duty upon, namely, that for the release of a mortgage. That is to say, if a society has lent its money to an individual member in order that he may buy his house, when he pays back the whole amount he has borrowed, then he is entitled to have the release signed without paying a tax. That is already the case in Scotland. It is not the case in England, and I will tell the House shortly what is the reason of the difference. When the Act of 1893 was going through the House it contained a Clause with reference to this question of the paying off of mortgages, and inasmuch as the mortgages in England and in Scotland are totally different this Section had two Sub-sections, one relating to England and the other to Scotland. In the Scottish Sub-section there were words which exempted the societies from the payment of this particular Stamp Duty.

When the Bill took the form of an Act the one Section and the two Subsections had been transformed into two separate Sections. The result of this was that the words which were intended to exempt both England and Scotland remained in the Section which applied only to Scotland, and England was left without the exemption. That was a pure mistake. So much was it a mistake that since then the Government have not insisted on the payment of this Stamp Duty. They felt, as anybody must feel who knows the circumstances, that the payment of Stamp Duty was not intended by Parliament, and that, therefore, it ought not to be insisted upon. In this Bill we propose simply to amend that and to put matters right in accordance with what was the evident intention of Parliament. I ask the House to note that, because we do, that the suggestion is made outside. [HON. MEMBERS: "Divide."] If hon. Members will have patience, I shall have finished in one minute. Because of that simple proposal it is said that co-operators are asking to be relieved from the payment of a particular Stamp Duty. If the House will allow matters to be discussed fairly and freely in Committee, then, should there be any real opposition to proposals which are contained in the Bill, the right hon. Gentleman will listen to the arguments in favour of any alterations that may be thought desirable. I trust that by passing the Bill, the House will do this small measure of justice to the co-operators, who represent a very large section of the community, and, moreover, some of the poorest people in the community, and who are striving to carry on their business without competing unduly with private traders.

Mr. HICKS BEACH

I want to make one observation about Clause I. I gathered from the speech of the right hon. Gentleman that there was no reason at all for placing any limit on the amount of shares any individual might hold, and that was the interpretation I put upon his speech. But there is some reason for putting some limit on the amount of shares an individual might hold, because otherwise you might have a society with only half a dozen members, and surely the purpose of limiting the amount of shares individually held is to extend the number of members. I happen to be a chairman of two cooperative societies, and I do honestly think that if you extend this limit of £200 it will be a serious obstacle in the way of a number of small people belonging to these small societies. I think this point should not be lost sight of, and, speaking as one in favour of co-operation and who likes to take an impartial view, I do not see any real reason myself for the extension of this limit, and I hope the Government will give much more consideration to the matter before allowing this Clause to become law.

Mr. BARNES

I rise for a moment to appeal to the Government to stick to this Bill. So far as we have gone I understand that Clause 9 is now given up, and therefore I need say no more on that point, but I hope nothing else will he given up, for the simple reason that this Bill is regarded by co-operators, who, as some hon. Member has just said, form a very large section of the community—as a matter of fact about one-fifth of the community—and a very important Section as well. Therefore, apart from Clause 9, I hope the Bill will be stuck to in its entirety. The hon. Member who has just sat down has founded some argument against an unlimited amount of shares being allowed. That is not the Bill. The Bill simply proposes that the amount should be raised from £200 to £300. So far as I gather, everyone has admitted that the co-operative societies can now get their money. There is no difficulty about that. That being so, I should like to ask the hon. and learned Member who first spoke where does all the hardship in regard to the small trader come in? The small trader is usually the widow in this particular case, but it seems to me there is absolutely no ground for it at all.

I believe the hon. Baronet the Member for the City of London (Sir Frederick Banbury) admitted that co-operators now get their money. As a matter of fact, they get their money cheaper by loan than by shares, and, that being so, the small trader cannot possibly be injured. On the contrary, from the mere money point of view, if this Bill were passed and co-operators put their money in shares instead of loans it seems to me that co-operative societies would be to some extent hampered in their operations. Some may ask, why then should co-operators ask for this Bill? So far as I gather—and I have been a cooperator for thirty years, and have been in close touch with co-operators pretty well all my adult life—the reason co-operators ask for this is largely a matter of sentiment. They feel that, although co-operative societies get sufficient money, it is not fair that a limit should be placed upon the desire of the individual co-operator, who is a working man and knows nothing at all about investing money in other ways, but who has a sentimental affection for his society, which society enters very largely into his life—they feel it is unfair that any unnecessary and arbitrary restriction should be placed upon his right to put his small savings into his co-operative society in the ordinary way.

Lord ROBERT CECIL

I am very anxious to understand this. May I ask why £300 is suggested as a better figure than £200?

Mr. BARNES

As a matter of fact cooperators never objected to £500. The £300 has been imposed upon them. The first Bill, introduced five or six years ago, had £500 in it, but co-operators found that there was a great deal of opposition to their Bill. The private traders' friends were then at hand just as they have been during the last few weeks. The cooperator, desiring to have the limit raised for the reason given by the right hon. Gentleman on the Front Bench, and for the other reasons I have just stated, placed the limit at £500, but in order to placate the opposition they made a compromise upon £300, and that is the simple explanation why £300 figures in this Bill. They would desire more. Besides the sentimental reason, there is another reason why co-operators want this. At present the society gets plenty of money by loan, but that means a complicated system of book-keeping. They want to have all their money, so to speak, in one basket and to avoid the confusion that arises now as a result of having part of their money in share capital and part in loan capital. Those two reasons are in the mind of the co-operator in wishing to raise the amount from £200 to £300. I want again to repeat what has been said by almost every speaker, that the co-operative societies find no difficulty at all now in getting plenty of money, and that being so, all these weird arguments about the poor small trader absolutely fall to the ground.

Just one other observation in regard to sales to outside people. The hon. and learned Member founded an argument upon what he called co-operators' privileges, but I fail to see any privilege at all, because the small trader is just as open to competition next door by another small trader as by the co-operative society. As a matter of fact, I was going to say that the small trader is being squeezed out to-day snore by the multiple shop, but let that go. The argument was founded on the statement that co-operators no longer simply form a body by themselves, but that they are doing a large amount of business outside. I wondered if the hon. and learned Member had any information on the point. There were some figures got out some little time ago by the general secretary of the Co-operative Union as to the amount of outside sales in a considerable number of societies, though not all. It came out at 41—that is to say, less than one half per cent. of the sales of that particular group of co-operative societies were to outside people, and it is absolutely certain that if you took the whole of the co-operative societies throughout the entire country you would find that the sales to those who were not members would come out at considerably less than 1 per cent. All that is done in co-operation with the outside world is simply to attract those who are not members to begin to buy, and who, as they say, eat themselves in. As a matter of fact, persons who buy from a cooperative society are very often so poor that they cannot become members, and therefore an arrangement is made with the co-operative society so that a half-dividend is put to their credit until £1 has accumulated.

Under those circumstances, I appeal to my hon. and learned Friend, who, I know is a very fair-minded man, not to object further to this Bill going through, because I think he will find that although the small traders have made a great fuss during the last few weeks, and have shown a great deal of opposition to the Bill, it arises, not from any really solid argument, but simply from the general attitude of mind on the part of the small trader towards co-operation. I can quite understand that feeling, and I can quite sympathise with it. We all know the extreme and growing difficulty with which the small trader now gets a living. I would, however, appeal to my hon. Friends to recognise the fact that it is not because of co-operation, it is because of the combination of capital in few hands—in the hands of your Home and Colonial Stores, in the hands of Lipton's, and many others, who are planting down their shops at every street corner all over the country, and squeezing out the small trader. That is what is the matter with the small trader, and not co-operation, which, in so far as it does compete with the small traders, competes with them on much fairer lines than Lipton's, because it does not undersell, as Lipton's and others do, but it gives to those in its employ far better conditions of labour than are given by other firms.

Mr. SANDERSON

I desire to detain the House but a very few minutes at this hour of the night, but I want to support what has fallen from my hon. and learned Friend, and from the hon. Baronet who sits in front of me, in regard to the Clause of this Bill, which I may call a domestic arrangement. I am most anxious to see this Bill pass, and so far as I can understand, from the letters I have receved, those are the Clauses which the cooperative societies principally want. It seems to me that if the right hon. Gentleman (Mr. Hobhouse) is anxious to help the co-operative movement he will be very well advised to see if he cannot get through the Clauses of the Bill which are really wanted by the co-operative societies, and getting rid of the opposition, by abandoning Clause 1. I am certain that there. is a good deal of opposition to what is represented in Clause 1 throughout the length and breadth of the country. Hon. Members on the other side must be just as well aware of that as I am, and therefore, if they are anxious really to benefit the co-operative societies, by getting the, material Clauses, and those Clauses that the co-operative societies really want, the best way of doing that would be to disarm opposition by withdrawing Clause 1. It now appears, from what the hon. Member for the Blackfriars Division of Glasgow has said—and I have no doubt he is voicing the opinion of the cooperators, because he knows so much about them—that Clause I is largely a matter of sentiment, and that if it were rejected it would not hurt the co-operative societies materially in any sense whatever. If that is so, I submit that that is not a sufficient reason for altering the amount which has been fixed by Parliament, namely, £200, and increasing it to £300.

I am reminded, and I was just about to say that, that the small trader may have his sentiments, too, and are we not entitled to consider his sentiments just as much as those of the co-operators? This is the point I wanted to put to the right hon. Gentleman. Assuming that this is only a matter of sentiment, as the hon. Member for the Blackfriars Division has pointed out, why not abandon Clause 1 at once, and let us get to work with the other Clauses which are desired. It is said that the co-operative societies can now get as much money as they want, therefore, by abandoning Clause 1 you are not going to hurt them financially. Then it is said that if a member of a society has got more than £200, he can loan some money to the society and get his rate of interest. If he has got £300, he can invest £200 in shares, and lend his other £100 to the society, and get interest on that. Therefore, you arc not preventing poor people from investing their money, by abandoning the Clause, you are not hurting the societies themselves, nor are you hurting the individual members of the societies. Therefore, when it does appear, during this Debate, that it really is a question of sentiment, from the co-operative point of view, and that, by abandoning Clause 1, you are not going to hurt them in the least and, when you remember also that there is a considerable amount of opposition throughout the country, as I am certain there is, to this part of the Bill, surely the right hon. Gentleman would be well-advised to abandon that portion of the Bill.

EARL of RONALDSHAY

May I make an appeal to the right hon. Gentleman? I am bound to say that I have been very disappointed in the way he has met us in regard to this Bill. I understood, from what the Prime Minister said this afternoon, and last week, that this Bill was not to be pressed through the House, unless agreement could be come to on these Clauses in dispute. There are three Clauses to which we on this side of the House particularly object, namely, Clause 1, Clause 5, and Clause 9. To what extent has the right hon. Gentleman met us? The hon. Member for the Blackfriars Division of Glasgow assumed that Clause 9 had been jettisoned. Have we got an assurance from the right hon. Gentleman that that Clause is no longer to have a place in the Bill? I do not know whether or not we have such an assurance.

Mr. HOBHOUSE

After the Noble Lord has finished what he has to say, I will answer.

EARL of RONALDSHAY

I understand the right hon. Gentleman has expressed a willingness to jettison Clause 9. We should like Clause 1 and Clause 5, also, to be left out of the Bill. There is very strong opposition to both these Clauses, and I can speak with authority because I have many small traders in my Constituency, who feel, very deeply indeed, that these Clauses are likely to inflict grave injuries on them. If the right hon. Gentleman cannot see his way to abandon Clause 5 and Clause 9, cannot he at least meet us by abandoning Clause 1? This is the Clause which has aroused the greatest amount of apprehension, with Clause 9, in the minds of the small traders. If the right hon. Gentleman wishes to pass his Bill—and we all wish to assist in passing it, if we can—surely, he will meet us in dropping these two Clauses, especially in view of the fact that it has been shown to-night that the co-operative society movement will be in no way interfered with by such action.

Mr. HOBHOUSE

I can only speak again, by leave of the House, for one moment. The Noble Lord who has just sat down, and various other hon. Members opposite have asked me what I can do to assist them, and to meet their views, so as to enable us to get this Bill through. We have had an equally urgent appeal from my hon. Friend (Mr. Barnes), to stick to the whole of the Bill. I confess that my inclination goes out to him, and not to hon. Gentlemen opposite, but I am faced with two facts. The first is that we are within fourteen days of the end of the Session—I think we have only ten or eleven working days in front of us—and that there is a very sincere desire on the part of a great number of hon. Members, in all parts of the House, to get the main parts of the Bill. Well, I have got to make a choice. If I cannot have the whole of my Bill, I prefer to get the major part of it than to lose the whole of it.

In regard to what was said by the Noble Lord opposite, I really cannot give up Clause 5. I attach great importance to it, and believe it to be of the greatest possible convenience to the co-operative societies, and while I am willing most reluctantly, and only because I am face to face with opposition and the end of the Session, to give up Clause 1 and Clause 9, it is upon the distinct understanding that I get assistance from hon. Members opposite in passing the rest of the Bill with great celerity. [HON. MEMBERS: "Hear, hear."] In those circumstances I am willing to do that.

Bill committed to a Committee of the Whole House for Monday next, 4th August. [Mr. Gulland.]