§ Order for Second Beading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ The SOLICITOR-GENERAL (Sir F. E. Smith)
This is a Bill to deal with the crisis that was produced in reference to cotton associations on the outbreak of war. It will be within the recollection of the House that the Stock Exchanges, both in London and other parts of the country, found themselves confronted with a crisis of the greatest possible seriousness after the War broke out, and a crisis comparable in extent arose in certain cotton associations. After the War broke out the cotton market found itself, and within a few hours, in a condition of extreme financial crisis. Certain steps had to be taken at once with reference to three different cases. There was, first of all, the case of enemy customers and clients in whose case there had either been sales to or purchases from, and those transactions were on a very large scale. If I may take the case most familiar to myself, let me refer to 2222 Liverpool. An enormous business had been done with Bremen by the Liverpool Cotton Association, and a decision had to be taken at once with reference to those enemy contracts as to the proper steps to be taken. Whether or not legal power existed in all cases, that power undoubtedly exists in respect of all direct transactions, but in some cases where transactions were indirect the matter was more questionable.
The course that was adopted, and beyond all question wisely adopted, was without regard to strict legal powers, because it would have been quite impossible to inquire separately into each case, to cancel all contracts which, directly or indirectly, had any association at all with the enemy or had any, even apparently, enemy destination. These were cancelled whether for spot or for future delivery. Great as the difficulty was in dealing with contracts which were suspected of enemy source, the cases where it was clear presented no difficulty. But in questionable cases a difficulty as great at least arose in dealing with contracts for future delivery with customers and clients other than enemies. In dealing with future contracts the course that was adopted was to clear away as many cross sales and purchases as possible so as to reduce the total number to be dealt with, and, unless complete chaos was to be avoided, people acquainted with the cotton market will see the reasonableness of the course the association took. In the second place, they postponed the time when the liabilities on those cross sales and purchases would have to be met, or, in other words, they introduced a moratorium which, in the unanimous opinion of those responsible for this particular association, was necessary to prevent complete chaos in the cotton world. They took all these courses, but since the time when the courses were taken various doubts have arisen as to whether the alterations in the contracts which they recommended and carried through were or were not beyond the powers conferred by the association's rules. I can only say, on behalf of those who have had to consider the question officially, that the most effective consideration has been given to the crisis with which the association was confronted and the steps which the association took to meet these difficulties; and I have no hesitation in saying that no other course 2223 would have saved the situation at the time or prevented widespread misfortune. There is some doubt as to whether the steps taken were justified by the powers which the association enjoy under their rules. The whole effect of this Bill is to make legal the course which the association took under these circumstances, and to make it certain that they will not be pursued by actions or litigation in which their powers would be called into question. I was not present at the time, but I think some discussion took place yesterday in regard to this Bill, and it was indicated that there had been some opposition from Manchester. It is perfectly true that at first some opposition was threatened by the responsible heads of the cotton industry in Manchester; but I am glad to say that at my invitation an influential and representative deputation from Manchester came to my room yesterday and met those responsible for the Cotton Association in Liverpool. As a result of the discussion all their difficulties were met, and the representative authorities for the two cities are in complete agreement on the Bill as it stands to-day with one or two very small Amendments. I warmly recommend the Bill to the House, with the assurance that it will meet a case which the House of Commons ought to meet without delay.
The cotton trade was faced with something like a financial crisis at the outbreak of the War, and the measures then taken by the various cotton associations were such that the Government itself, if it had been asked to interfere, would have taken. If the Government would have taken them at that time, this Bill is simply doing what the Government would have done then. I do not speak for Liverpool so much as for Manchester. I believe that the practical side of the cotton trade in Manchester—that is, the spinners and weavers—are perfectly satisfied with the Bill as it stands, subject to the Amendments which the right hon. Gentleman is going to incorporate. It has the approval of the whole cotton trade, and I hope it will have the approval of this House.
§ Mr. BIGLAND
I should like to say a word on this subject, as I can speak with some knowledge of what took place in Liverpool during the crisis. There was a strong feeling there that the directors of the Liverpool Cotton Association met all objections and all criticisms in the very 2224 fairest way. They consider everybody's interests, and I believe that the action they took was of the very finest and patriotic nature. I have great pleasure in supporting this Bill, and I trust that it will meet with the acceptance of the House.
§ Question put, and agreed to.
§ Bill read a second time.
§ Resolved, "That this House will immediately resolve itself into a Committee on the Bill."—[Mr Gulland.]
§ Bill accordingly considered in Committee; reported without Amendment; read the third time, and passed.