HC Deb 23 February 1920 vol 125 cc1267-70

asked the President of the Board of Trade if his attention has been drawn to the net profits of the Imperial Tobacco Company and Messrs. J. and P. Coats; and what action, if any, it is proposed to take in view of the revelations therein contained?

16. Lieut.-Colonel MALONE

asked the President of the Board of Trade if his attention has been called to the findings and decision of the Sub-Committee appointed by the Standing Committee on Trusts to inquire into the alleged existence of a combine amongst the manufacturers of sewing cotton; whether it is intended to put these recommendations of the Committee into force; and what action he proposes to take?


asked the President of the Board of Trade whether he has considered the Report of the Profiteering Act inquiry into the trading results of Messrs. J. and P. Coats; and what action, if any, it is proposed to take in view of the revelations therein contained?


asked the Prime Minister whether he has seen the Report of the Profiteering Act Sub-Committee appointed to inquire into the alleged existence of a sewing-cotton combine; whether ha is aware that when the Committee was appointed the price of sewing-cotton per reel was 7¼d., and that the Committee reported that a fair price for the reel in shops would be 6d.; whether he is aware that on the eve of the publication of the Report, Messrs. J. and P. Coats, Limited, with which firm the Committee's investigations were mainly concerned, announced an advance to 10d. per reel; and what action the Government propose to take?


I will answer these Questions together.

Extremely difficult questions of policy are raised by these reports. In the first place, it is obvious that profits made by British companies overseas and brought to this country contribute effectively through taxation to the British Exchequer. In the second it is also obvious that the existence of such profits is a powerful factor in maintaining the flow of food and raw materials to this country. The proposal to subsidise the British home trade section of such businesses out of export profits and overseas businesses is undoubtedly attractive, and has been adopted in the case of coal, the distribution price and export of which are controlled, and in which we are dealing with a mineral that may fairly be regarded as a national asset. Such a policy, however, brings in its train serious difficulties and might have very unpleasant results for this country if widely extended. It is clearly not profiteering under the existing Act to sell goods made in this country at a reasonable profit on the cost of their manufacture. Not to subsidise home prices out of overseas profits is also clearly not profiteering. On the other hand, for such a firm as Coats' to reduce their profits overseas would clearly not benefit the thread users in this country or indeed any one in this country, least of all the general taxpayer. The whole matter of prices is one of great difficulty and complexity and cannot be profoundly affected by the action of the Government of any one country, however energetic that may be. The whole matter is engaging earnest attention.


My question relates to the increase in the price of cotton from 7½d. to 10d. Messrs. Coats made a profit of £3,800,000 on the 7½d. reel. Will the Government suggest to them it is unwise to increase the price from 7½d. to 10d. unless they can prove before a competent tribunal that their profits will be adversely affected?


I know the point raised, but we cannot look at this as an isolated case. Messrs. Coats' profits, as I understand the position, are, in the main almost entirely made in their export business, from businesses situated overseas and from subsidiary companies in Canada and America and elsewhere. The proposal to keep down the prices of reels of sewing thread is in practice a proposal to subsidise the British spool out of the profits made in Canada and America and other places. These profits appear from the Coats return to be made mainly from these sources. They have profits also from their export trade at the present time as I understand it, if the full price was to go on to the reel that price would be not 10d. but nearly a shilling, and at least it will be so as soon as the cotton now being bought comes into manufacture. Therefore, as I said, it is not profiteering not to subsidise the home section of the trade out of the foreign trade.


Will the Government appoint some competent authority to ascertain whether it is justifiable for Messrs. Coats to increase the price of the reel of cotton from 7½d. to 10d.?


We have a Committee appointed which is doing that.


Is it the fact that the cost of raw material and labour peculiar of Messrs. Coats business has increased so much, that although they could before the War show a profit on the reel at 2½d., they must now charge 10d. if they are to sell it without loss! Will the right hon. Gentleman consider the advisability of endeavouring to trace the profiteering not by the reel of cotton but by the value of the pound share?


Has the right hon. Gentleman any information as to the number of millions sterling that these two firms contribute by way of taxation to the national revenue?


Is it not the fact that if the millions of working classes have to pay more for their reels of cotton they have so much less to spend otherwise, and that that will prevent our home industries being developed?


Of course, that is quite true, but where you have the value of currency changing rapidly of course the prices of commodities also change. We are here dealing with one of the most difficult questions in the whole realm of economics. We have money changing in value and we have firms making profits, not in this country, but in other countries, and the suggestion is that because they are making those profits in other countries they should devote them for the benefit of the population here. That might be a very wise and politic thing to do, but suppose they cut off their home trade what would be the position then? It would pay them if they were losing on it to cut it off, or suppose they cut the trade which connects the parent business with the subsidiary businesses overseas, where are we then?

Lieut. - Commander KENWORTHY

Has the Government suggested any international action in view of this widespread unrest?


When will the Report of the Committee which is investigating this question be ready for publication, having regard especially to the misunderstandings about it?


The Committee have investigated the point I was asked about, the mere question of increasing the price from 7½d. to 10d. a reel. That Committee's Report will not give any information upon the big broad general question on which, etc. A little later on I have little doubt that conversations will take place with our Allies and other countries to see if we can find any way out of it.

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