PALESTINE AND EAST AFRICA LOANS (GUARANTEE) BILL.

HC Deb 07 December 1926 vol 200 cc1984-2045

Order for Second reading, read.

The SECRETARY of STATE for the COLONIES (Mr. Amery)

I beg to move, "That the Bill be now read a Second time."

When I introduced the Financial Resolution of this Measure in Committee in July last, I fear that I trespassed considerably on the patience of the House. On that occasion I gave the Committee full figures for all the territories concerned, in order to bring out the fact that their general revenue and their railway revenue afforded ample security for the guarantees which this House is invited to offer. Secondly, I showed also that the prospects of development in these territories were such that the result of the railway and other schemes which the House is asked to sanction wilt he not merely substantial orders for material from this country, but also a very substantial advance in our general export and import trade.

7.0 P.M.

I do not think that I need go over that ground again, nor need I traverse again the whole of the two interesting debates which took place, the first in July last and the other only a few days ago. All I think that is necessary on the present occasion is that I should briefly remind the House of the reasons which have prompted this Bill, and possibly deal with one or two of the misconceptions which have been apparent in the course of our discussions. We are asking the House to authorise the granting, under certain conditions, at varying future dates, of a guarantee by the Treasury simply for the reason that most of the territories themselves are unable as protectorates or man-dated territories to avail themselves of the facilities of the Colonial Stock Act. In no section of the House will there be any disagreement with the point of view already expressed in these debates that it is our duty to do what we can for our protectorates and mandated territories and not to leave them in tiny essential position worse off than those territories which are in the full sense British territories. That guarantee, I am convinced, is not one which will cost the country anything, nor will it involve adding any strain to the general financial position. I do not think on that point I need elaborate the conclusive arguments brought forward by my right hon. Friend the Financial Secretary to the Treasury the other day. My view is not only that the guarantee is amply covered, but that a guarantee of that amount spread over a number of years and with such substantial cover behind, cannot possibly affect, in any sense except to strengthen it, the credit of this country.

May I now pass to the actual subject matter of the Measure, and, if I may, reversing the order I took on previous occasions, I should like to say a few words about Palestine first of all. The position there, as far as the distribution of the loan is concerned, is a fairly simple one. In the Schedule of the Bill it is set out that this £4,500,000 is divided as follows: £1,640,000 is to go to railways; £1,000,000 to the purchase of railway and other capital assets from His Majesty's Government; £1,115.000 goes to harbour construction and port improvements; and £745,000 to public works of various kinds. I would like to make the situation clearer by putting the figures in a rather different way. This loan is to be raised to a very considerable extent for the purpose of repayment. In the first instance for the purpose of repaying something like £2,000,000 which has already been spent in the last year or two after every scrutiny, both by the local government, the Colonial Office and the Treasury, on a number of public works including large extensions and improvements in railway services. That money has been borrowed, some of it from the Crown Agents, by a very usual procedure, by which the Colonies borrow as and where they need a certain amount of money in advance of the loans they intend to raise, the main part of it from the surplus produced by the excess of current revenue over current expenditure which the Palestine Government has been accumulating against emergency. There is a further £1,500,000 which, it is hoped, will be spent in the near future, probably £1,000,000 of it on the thing Palestine needs above all others, and that is an adequate harbour. Some money will be needed to improve the harbour facilities at Jaffa. But there is no doubt that an adequate harbour is needed for that country and the development of traffic across Transjordania to Iraq, and such a harbour can only be found at Haifa. There we are proposing to construct the main harbour of the country. Lastly, there is an item, with which no section will quarrel, of £1,000,000 for the purchase of railways in Palestine from the British Government. I am afraid on the last occasion I unwittingly misled the Committee by suggesting that there was still a large outstanding amount to be paid. That £1,000,000 will in fact pay off the railway debt.

Sir F. WISE

Does that mean that £2,000,000 will come back to the Treasury?

Mr. AMERY

No, Sir. The Treasury will get first of all £1,000,000 which is the assessed agreed value of the Palestine railway. I think it is a thing no one could anticipate a few years ago, that by now it would have been possible for Palestine to raise money effectively to pay off that debt. In addition to that, Palestine will be put in the position, as soon as the loan is raised, of paying the Imperial Government a further £260,000 of which about £200,000 will represent the deficit of the so-called Occupied Enemy Territories Administration, which preceded and handed its assets over to the Civil Administration. This amount was advanced by the Treasury. The balance of about £60,000 represents the value of certain stores taken over from the military authorities. This is in addition to something like £250,000 which Palestine has paid off in the present year for stores and other services rendered. The total which Palestine is paying back to the Imperial Treasury is thus in the neighbourhood of £1,500,000. It is also paying off, but this does not go to the Treasury, certain sums to the Crown Agents for money borrowed from them in advance of the raising of the loan.

Colonel WEDGWOOD

That is about £2,000,000 to the Crown Agents?

Mr. AMERY

No, not so much. The amount to the Crown Agents is between £500,000 and £600,000. The raising of the loan will liberate the surplus of current revenue over current expenditure, which has been advanced to loan funds, to pay off £260,000 to the British Government and to carry out various other public works which may be required over and above the loan. I want to make it clear that we are dealing with a progressive policy of development, not so rapidly perhaps as some would wish, but certainly a substantial policy, and one we would like to see accelerated by the raising of the loan.

Now I come to East Africa. The policy of railway and harbour development there is not new. It was begun with the extension of the Uganda line towards the Nile on to the Kasingisha plateau in the time when Lord Milner was Secretary of State for the Colonies. It was given a very substantial further impetus by the right hon. Gentleman the Member for Derby (Mr. J. H. Thomas) when he was Colonial Secretary, when he secured agreement to a loan of £3,500,000 interest free for five years for further railway extension in that direction, which is at this moment still proceeding. There was, however, a very general feeling in this House that the whole problem of East African development ought to be regarded as one, and that was voiced on both sides of the House in a very interesting Debate initiated by the hon. Member for Blackburn (Sir S. Henn), and received with the greatest sympathy by the right hon. Member for Derby, who, as the outcome of that discussion, sent to East Africa the Commission which was presided over by my hon. Friend the Under-Secretary for the Colonies. That Commission recommended the raising of loans totalling £10,000,000 for East Africa. I would like to ask a question. Why did they recommend a round total of that sort instead of suggesting that individual separate loans should be raised and specially guaranteed by the House from time to time?

The answer I think is a perfectly simple one. It is not that they thought it at all possible to spend £10,000,000 on East Africa at once. They realised that construction in East Africa must be limited by a number of factors. One of the factors is that we are dealing in an economic sense and an engineering sense with an unsurveyed and largely unexplored region. They put forward a series of proposals, not as a final scheme, but as an indication of the kind of thing they thought necessary for the development of East Africa. Those proposals would naturally want to be followed up by an economic survey as to the routes; and an engineering survey to see what routes were feasible. That is not the only factor. You cannot go ahead in East Africa without a skilled supervising staff and a survey staff. The reason why a round sum was suggested was because what is needed is a consistent steady programme of expansion, not going beyond either the staff or the labour supply in those territories nor on the other hand leading to inefficiency, delay and worse by coming to a stop. Work might be stopped because of waiting for legislation in this House which, owing to the exigencies of Parliamentary time, might not be forthcoming. Therefore, the solution they suggested was to indicate a broad general figure to cover the programme of the next few years, and not to ask for an immediate authorisation that this money should be raised, but to get the authority of this House that as and when the Treasury are satisfied after careful scrutiny that each particular schemes justifies action being taken, then, and then only, should the actual guarantee be given for such sum as may be required.

That I think answers a great deal of the criticism that I noticed in the Debate the other day, criticism that this money was being asked for at a time when in some cases even an economic survey had not been carried out. There is another criticism of a very different character. That is the criticism voiced by several Members, and not least by the hon. Member for Peckham (Mr. Dalton) that we have been indulging in gross delay. He suggested we had wasted the whole of the two years which have intervened since the return of my hon. Friend's Commission. I can assure him there has been no delay whatever. That Commission gave a general outline of the kind of thing which they believed to be useful, and this was at once sent out to all the governments concerned and they were invited to offer their suggestions. The moment those suggestions came back, they were placed before the Schuster Committee as well as before the Colonial Office, and while they were under consideration the actual immediate work was still going on. Nobody has been stopped working and no delay has occurred. The Schuster Committee produced its final Report last July, but before that they had produced an Interim Report in March in which they recommended certain obviously necessary schemes. On those schemes work has been going on ever since and the whole of the recommendations of the Interim Report of the Schuster Committee are in process of being carried out.

At this moment the work of completing the Tabora-Mwanza Railway and the work of the construction of the Moshi-Arusha Railway are being carried out, though I regret to say that delay has been caused in each case by the coal stoppage of the last few months. In the same way, other recommendations made by the Schuster Committee in the summer are now being carried out. The two additional wharves at Kilindini have already been sanctioned and the recommendations made with regard to road and bridge work in Northern Rhodesia are in process of being carried out. In Nyasaland, where the Committee advised close examination by experts of the economic and railway situation before the Zambesi railway scheme was started, the Government have been busy collecting the necessary data. A railway engineer is already on his way out there, and an economic adviser on the situation leaves this country next week. Elsewhere, surveys, as recommended, are being carried out by survey parties which have been considerably strengthened and which are all at work. I think there can be no basis for the suggestion that the work has been in any sense held up in the period during which very necessary communications have been passing backwards and forwards with East Africa in regard to future activities. During this time the work of survey and investigation has been going on, and I can assure the House that no time is being lost.

There is just one other point on which I wish to touch and that is the criticism of those Members of the House—largely hon. Friends of mine—who feel that we have fallen short both of the lead which the right hon. Gentleman the Member for Derby (Mr. Thomas) gave us two years ago and also of the recommendations of the Commission which he appointed in not making this loan interest free for the first five years. Certainly if essential developments were being held up for the want of that provision, I should not feel myself in a position to rebut that criticism. I want to point out, however, as the Schuster Committee pointed out, that as far as the £10,000,000 guarantee is concerned there are already more than enough schemes to cover that amount which are on a commercially paying basis. Obviously in the interests of everybody—the Colonies, Protectorates and territories concerned as well as the taxpayers of this country—if you have a great deal of work to do it is better to do the paying part of the work first. By the time it is finished you will have additional revenue to justify the raising of further money for propositions which may then be nearer paying propositions than they are to-day. Further, there is the additional abjection that those particular schemes which are largely vital as the great arterial connections through East Africa are at present necessarily in a vague shape.

Even the broad general lines were not quite clear when my hon. Friend was in East Africa, though I think that problem is now becoming clearer. Thus, we want a main through railway connection from Northern Rhodesia round Lake Nyasa to the Central Railway in the Tanganyika Territory somewhere near Dodoma, but we are still very far from having all the necessary information, and while this information is being obtained, it is much better that we should devote the credit of this House to what is immediately feasible. When we have the report of the surveys we can then tell in the light of the development which has taken place, as well as of the information which has been obtained, how far loans for this purpose will need special financial assistance, and we can then judge of the cases which cal] for special financial assistance on their merits. Meanwhile, I again assure the House that no time is being lost. Two survey parties will in the immediate future start work on the Dodoma-Fife line, beginning from both ends. That really is all I think it necessary for me to say on this occasion, as I have dealt so fully with the subject before. I would only say in conclusion that we are dealing here not with any ambitious visionary scheme or with a scheme which is going to impose any burden upon the credit of the country. Our proposals are essentially modest and reasonable. We only seek to secure from the House such authorisation as will apply to schemes which will bear the closest scrutiny and will enable steady and continuous progress to take place in East Africa, and in doing so we hope to meet what I believe to be the wish of every section of the House, namely, to help the general development of the British Empire and to do our immediate duty to the populations in our charge in those countries.

Mr. WILLIAM GRAHAM

One of the advantages of a Bill which is preceded by a Financial Resolution is that we are afforded four or five opportunities of very fully debating it, and the House will recall that this is perhaps the third or fourth occasion on which we have discussed the broad outlines of this proposal to guarantee £4,500,000 to Palestine and £10,000,000 to British East Africa. There are certain advantages in a form of repetition in a case of this kind, because no section of the House disputes the very great importance of the principle which is now before us, and very few will deny that in all probability at the moment we are laying the foundations of a financial programme which may operate on a large scale in the development of the British Empire. Accordingly, it is vital at this stage that we should use every opportunity to discuss the broader features of the Measure, and, certainly, we should do so on the Second Reading of the Bill. No one can study the Report of the Commission, presided over by the Under-Secretary of State for the Colonial Affairs, without being impressed by the fact that, apart altogether from what we have already done in Palestine—and I am thinking here more particularly of British East Africa—we are to-day coming in to almost violent contact with local conditions of every description. There is the possibility of a substantial Volume of capital being poured into these territories. There are native customs and traditions. There is, undeniably, on the spot, and to some extent in this country, a, certain amount of suspicion. There is the fear that unless these schemes are very carefully guided they may tend, in part, be degenerate into a scramble of vested interests, and those vested interests may be assisted to some extent, perhaps not with intention on our part, by the very guarantee which is being afforded at the hands of the British Government. Any development of that kind it is our purpose and, I think, probably, the purpose of the House, to try to avoid, but, in any case, the difficulties are real and plain to every student of these matters.

It seems to me we can very largely safeguard ourselves in regard to this probable development by putting the finance of the scheme on the soundest and broadest possible basis. This controversy inevitably suggests some of the lessons which have been derived from the operation of the Colonial Stock Act of 1900. Hon. Members will be familiar with the debate which has recently taken place regarding sums raised by Australia. There has been criticism on the ground that they have abused the privileges of that Act by failing to make proper sinking fund provision and also by failing to give proper publicity to investors in this country for the money which has been raised. There is, at the moment, a suggestion that the House should review that Act of 1900 and bring it up to date and in particular that steps should be taken to find out how far it could be applied to the kind of problem which is now under discussion. As I understand the situation, it is probably only Kenya, under the proposals now before the House, which would be afforded the benefits of that Act of 1900. The other territories in question would proceed with loans raised in the open market in the ordinary way guaranteed as to principal and interest by this Measure. The question arises whether it would not be desirable at this stage, when we are probably embarking upon a very big scheme, to make preparations for it by a review of the Colonial Stock Act, by making safeguards which are undoubtedly necessary in legislation of that kind and by ascertaining how far we can bring territories which are not strictly Colonies in the accepted sense within the operation of its terms.

The Government propose at the present time to proceed only in piecemeal fashion with these guarantees in British East Africa. It is true that while we are putting down £10,000,000 by way of guarantee on paper at the present time, the Treasury will investigate, probably with the aid of some Committee, each scheme as it is put forward. Accordingly it seems to me that the position will be substantially what it was under the Trade Facilities Acts with the operation of an Advisory Committee on each proposal in respect of guarantee or of loan—in that case of course very often by private enterprise but in many cases also by public authorities. Side by side with that the House is definitely laying down another principle. The right hon. Gentleman referred to the £3,000,000 interest-free loan of 1924. It is perfectly true that there was such a loan, but what was also recommended at the Imperial Conference of 1923 and embodied in, I think, the first of our Trade Facilities Acts of 1924? There was a recommendation to give £5,000,000 at the rate of £1,000,000 a year for the purpose of paying three-quarters of the interest on loans raised by public authorities in various parts of the Empire designed to provide employment in this country upon schemes of a public utility character. That seems to have been running in their minds and to have been the early idea of the Commission over which the Parliamentary Secretary to the Colonial Office presided, and apparently the thought was that we should proceed, when this matter came to a guarantee on the Floor of the House of Commons, by giving these territories a loan interest free, or at all events, by giving freedom from any interest burdens during the first five years of the operation. After consideration, apparently, with the Treasury, there has been agreement that we cannot proceed on that basis, and from the very start the Colony of Kenya and these other territories will be expected to put these schemes upon a strictly economic foundation, that is, in this sense, that they would be expected to provide for the interest charges right away.

That lands us at once in the whole problem of the finance of these territories and into the question as to whether they can stand up immediately to an obligation of this kind. I dare not take time to-night, because this is a purely general Debate, to discuss the merits of that interest-free proposal. There are many Members of this House who would like to see the British Exchequer, as an investment within the Empire, embarking upon a scheme of that kind, and there are other hon. Members in different parts of the House who are violently or very strongly opposed to these proposals. But it does riot seem worth while to argue the question of investment or anything else to-night, because we must have regard to the position of the national finance of Great Britain, and whatever may be our private and public views, it is plain to all of us that it is going to be a matter of the greatest difficulty to impose any fresh burden or even credit for this purpose, and certainly a matter of great difficulty to give anything by way of cash contribution while we have this enormous load round our necks and no immediate prospect of a reduction in expenditure or taxation.

If that be the state of affairs, I cannot help thinking it is very much better and a far more practicable course to make up our minds at once that this is going to be, as far as we can humanly make it from this end, an economic proposition, and that these schemes are to carry the load which is inevitable in every economic development, whether in this country or anywhere else. Surely we can best safeguard British East African development if we try to put the whole policy on comprehensive lines. The Colonial Secretary and the Financial Secretary to the Treasury some nights ago indicated the individual character of the proposals, hut most of the Reports which have been published on this subject, and, indeed. some passages in the speech of the right hon. Gentleman himself, indicate quite clearly that there are advantages in taking a long, comprehensive, and unified view, if I may so describe it, of the whole scheme which is now under discussion. The doubt which occurs to me is whether, by proceeding piecemeal within the limits of the paper £10,000,000 guarantee in British East Africa, you are going to raise these amounts on the open market, even with the guarantee of the British Government thrown in, on the best possible conditions. In other words, would you not raise them rather more easily if you could achieve some kind of co-ordination or agreement on economic policy in the territories? I do not for one moment, in reading these Reports, minimise the difficulty of this problem. I have not in mind any question of federation or anything like that. It is plain to all of us that that cannot be entertained, and we also recognise that it is very difficult to get them to agree, even in a matter of this kind, in the interests of their common economic progress, but when one turns to the Minority statement which was made by Mr. Linfield in the Report of the British East African Commission, I am bound to say that more than a passing case was made out for some kind of Development Board, or at all events for some form of co-ordinated effort.

As I understood the speech of the Financial Secretary to the Treasury a night or two ago, he did not look with particular favour on that idea, but it seems important to remember that if it is going to be a question of even one-half or one per cent. above what need be paid, with the Government guarantee thrown in, in the open market, that may make all the difference in the world to the balancing of some of these local budgets when these schemes begin to be properly applied. We are all familiar with the controversy in Kenya at the moment, and there is difference of opinion in other territories. The budgets have balanced in some cases very narrowly indeed, and in a number of eases they have anxiety as to aggregate debt which will exist in 1935. Even when we have made allowance for a very considerable measure of development up to that time, there is still some legitimate doubt with regard to their future financial position. Now we are becoming partners with them in this development, and accordingly it is very important indeed that we should try to march hand in hand, with complete co-operation, to see that we and they are protected to the fullest possible extent. My impression is that, if it were possible to launch these loans on a rather larger and more comprehensive scale, we might get the benefit of better terms, and, if that were so, then we should be taking steps to safeguard the territories and to avoid the grave danger of having our part misunderstood by some failure of a local budget to balance, and of criticism on the ground that we have not been sufficiently-generous with the vast resources which are supposed to be at our disposal. I would beg the Government to-night, on the Second Reading of this Bill, not to close their minds to the prospect of some more comprehensive scheme, by Board or otherwise, of dealing with the proposals now before us, especially when the whole matter is to be put ab initio upon an economic basis, and they are to carry the interest charges right away.

The Colonial Secretary and the Financial Secretary, if I may say so with respect, gave, of course, a perfectly accurate description of the position of the £10,000,000 guarantee in East Africa, and made it clear that the Commission over which the Parliamentary Secretary presided never thought for a moment that the £10,000,000 could be spent at once, and had always in view the fact that a very considerable amount of additional survey would be required. We have had some of that survey at the hands of the Schuster Committee, and the broad fact emerges that out of the £10,000,000, unless we have misunderstood the Report of that body, they are able to point to only about £1,500,000 which can be immediately undertaken. They go on in every other direction to point to the importance of survey and investigation and very far-reaching inquiry in every shape and form. Now what do the Government do in the Schedule to this Bill In the case of British East Africa, within the limits of the £10,000,000 guarantee, they allocate £6,500,000 to railways,£2,500,000 to harbours, and £1,000,000 to roads and other schemes. My difficulty is to find out how, in the light of the Schuster Committee's Report, which calls for all that additional investigation, and which, by common consent in this House, includes scores of matters which are obviously in debate and must remain in debate for a very considerable time, the Colonial Secretary arrives at that allocation in the Schedule, and I would be inclined to say to him that unless the Treasury, for a reason which I do not at present appreciate, want the allocation, or whether it is the case with the Colonial Secretary that the allocation proceeds on the broad terms of the Schuster Committee's Report, because the figures bear a very close resemblance—unless that is the explanation, I am inclined to say that they would be very much better without a Schedule at all. At the moment it might be better to keep this matter in a perfectly fluid condition.

I have no doubt that later on the Colonial Secretary will tell us why these figures have been introduced, hut on the Schedule one further point emerges. Under the heading of the guarantee to British East Africa, there is provision for research. On this side we are quite clear in this view, that unless that research is a reality and has strict regard to education, native labour, morale, production, and all the other factors which are operating in this territory, you are not going to get a basis upon which some of these schemes will proceed with any safety at all. It must be clear to all of us that the provision for research should be generous both as regards the capital expenditure and, I would also suggest, as regards current needs. I am not clear at present as to whether the provision under that head is restricted to capital expenditure in this Bill, and whether these territories will be expected to find the money for current needs in research from other resources, from various schemes which in fact are even now in operation for purposes and objects of that kind. Research is vital in our view, especially if you are going to carry the people in the locality with you and make it plain that you are there for some great and generous public purpose, and not merely for selfish ends.

May I say that we, on this side of the House, are not opposing this Bill, but are very anxious to see that it leaves us in the fairest and the most efficient form, and it is mainly for that reason that I am trying to raise these particular considerations on Second Reading. We want to be parties with the right hon. Gentleman to this scheme of Imperial development for a variety of reasons. No doubt immediately these contracts will provide a certain amount of work in this country, but while we remain, many of us, on this side, Free Traders, and while we are anxious to have a maximum commerce with every part of the world, there is not the least doubt that we have a great deal to gain by special attention to the British Empire and by the development of those resources, abundant and generous, which are found within its borders. For my part, I would be inclined to say that, if we can make schemes of this description a success, we can do a very great, deal to safeguard the standard of life of a considerable section of our people at home, and to improve the prospects and the conditions under which they are to be employed.

Sir ROBERT HAMILTON

There has already been a considerable discussion on this subject when the Financial Resolu- tion was before the House, and now that we have the Second Reading of the Bill it is the fit and proper time on which to offer some general remarks and criticisms on the scheme as a whole. In the first place, I should like to refer to certain remarks that fell from the hon. Member for Ilford (Sir F. Wise) during the discussion on the Financial Resolution. I am sure there is no other Member in the House who is so anxious as he is to protect the interests of the taxpayer—I wish there were more like hiln—but at the same time I think that he allowed his interest in the taxpayer rather to blur his vision when regarding this scheme that we now have to consider. He need not be afraid for the future. The security is perfectly good, and that is the thing that has to be remembered when considering this scheme. There may be criticism of the finance, but the scheme itself is absolutely sound. For this reason the majority of the money that has to he spent under this scheme is to be spent on improving transport. Transport is absolutely the key to the development of Africa. Without transport there is stagnation, the riches that are locked up in that country cannot be reached, and when we are considering how we can best apply our credit for the benefit of Africa, for the benefit of the people in those countries, and for the benefit of the people at home, there is no question that by spending our money and lending our money for the development of transport we are doing the very best that we can to make our security good and valuable to the whole world.

I would like, if T may for a moment—because this matter is, perhaps, imperfectly understood in the House, and is certainly imperfectly understood outside the House—quote one or two figures as an illustration of what I mean. Thirty years ago, it took a caravan of porters six weeks to go from Mombasa to the Great Lakes, which is now done in sixty hours. One trainload of 200 tons would require no less than 10,000 men to carry an equal amount, even supposing it were possible for porters to carry such things as bales of cotton on their heads. It is absolutely impossible. that the riches of that great Continent can be tapped without improving the means of transport, and when I say improving the means of transport, I mean primarily and essentially improving railways. There is always a little danger, especially in these days of motor transport, that great claims may be put in for the building of roads. The building of roads in Africa, although necessary to a certain extent, should never be allowed to get in the way of the building of trunk lines of railways. A road can never carry in Africa, what a railway can, and it is nearly as expensive to keep up as the railway.

Then, again, take Kenya as an instance of what has been done by development by means of transport. Thirty years ago the revenue of the Colony—Protectorate as it then was— was £30,000. The estimated revenue for 1927 is £2,500,000. That may be said to be almost entirely due to the improvement of means of transport in that country. I emphasise this point to assure the hon. Member for Ilford, and people who think like he does, that the security is perfectly good. I do not think that this country realises the growing interdependence between Africa and Europe, and the great extent to which this country is now relying, and will in the future rely, on the products of Africa. We get all sorts of grain and fibres, oil seeds, cotton—things that are most necessary for our people and for our manufacturers, and we return for those raw materials our manufactured articles in ever increasing quantities, and the first result, as the Secretary of State says, of putting the scheme into force, is no doubt an immediate increase of employment in this country, by the making of rails, machinery, engines and so on, which are necessary for development in Africa. But further than that, we must remember that by opening up Africa we are increasing the wealth of the world, and so tending to make abundance greater at home, and reducing the cost of living at home, while we are improving the condition of the natives in Africa, and thereby improving their capacity to buy from us our manufactures in the future. It is not only immediate benefit that springs from a scheme like this, but we have to take the long view, and see what the conditions are to be in the years to come, as well as in the years immediately in the future.

To look for a moment at the Bill itself, I take it, of course, that is based on the Schuster Report. The right hon. Member for Central Edinburgh referred to the Schedule. Anyone who has read the Bill must have noticed what an extraordinary free hand has been left to the Secretary of State. I think that is an advantage. It is even suggested he might have done without a Schedule altogether, but from another point of view I think it is important that the Schedule should show to a certain extent the lines on which the money is to be spent, particularly with regard to research, because in the item under which research occurs roads are also included, so that it is a little difficult to see what it is intended to spend on research, and what it is intended to spend on roads—very different matters.

With regard to the complaints that have been made as to delay, I think they were answered fairly fully by the Secretary of State, but it is, in my opinion, of the utmost importance that we should proceed with the greatest caution in putting the scheme into effect. Far more harm may be done by undue haste than by, perhaps, a little over-caution. We have to see the effect of building a line in a new country, the drafts that can be made on the labour, and the prospect of the crop which is going to be grown in that country; and, particularly, when we are dealing with the cotton crop, we have to consider the danger of a fall in prices, and it might he a most disastrous thing to spend large sums of money in opening up a cotton country when the market for cotton was falling very seriously. Our railways, as far as they exist in that part of the world, are merely skeletons at present, and they undoubtedly require to have feeder lines attached to them before they can properly become paying propositions, and before they can properly do the work for which they are intended. The items that are scheduled in the Report are undoubtedly such as will be of enormous benefit to the country when the surveys are completed to enable them to be taken in hand. As far as I can offer any opinion from experience of the country, I should say there is not one of them which will not be extremely useful, and, undoubtedly, in time to come the main line from Fife to Dodoma, and from Dodoma to Arusha, will have to be undertaken, although, undoubtedly, that will have to be a costly project, which can hardly be included in the scope of the present scheme. I mentioned just now the item of scientific research in the Schedule. On that, I am afraid, we must all have felt in reading the Report that the conclusions of the Committee in that respect have been left somewhat in the air. They came to one conclusion about Amani with which the Secretary of State did not altogether agree, and I think the majority of the House will be on his side in that respect, and, as regards research, the direction in which, I think, our efforts should be guided, first, is that of native welfare service. That is absolutely important, because, without the natives, we can do absolutely nothing in the country. It is not only for the good of the native himself, but, to put it on the lowest ground, he is the greatest asset to the development of the country. We do not know at the present time whether populations are increasing, stationary, or diminishing. We must have machinery established at the earliest possible moment to ascertain what the position of the native is under our rule in that country, whether his health is improving, whether his strength is improving, and, if not, to see that we take measures that it does. To put it on the very lowest ground, it is absolutely essential in any scheme of development of the country.

I should like to say a word or two about the finance of the Bill, which has been dealt with by the right hon. Member for Central Edinburgh. Personally, I must say I rather regret that the recommendations of the East African Commission were not accepted. I realise that the financial position of the country is exceedingly difficult at the present time, but when we are considering a large scheme of development, if the Committee, whose duty it was to consider that scheme, were compelled to confine their views to those schemes merely which show a prospect of an immediate financial return, they were, obviously, limited in their conclusions, and I suggest to the House that we should have been able to have taken a longer view of the whole proposition if we had not been limited in this manner. Having to consider proposals only that show any immediate economic return, of course rules out other proposals which may be of equal, or greater, importance to the general development of the country, because it may not be for some years, and perhaps many years, that they will be able to show any actual financial return. To that extent, I think it is regrettable that the considerations have been limited. The Secretary of State is no doubt aware of the views of the Joint East African Board on this matter, and the views that they hold are not confined to them, but are widely held outside. In that connection, I should like to draw attention for a moment to the last Clause of the Schuster Report, which is of extreme importance, particularly the last sentence where they say: We venture to express the view that it might prove a sounder method for encouraging development within the Empire to create machinery which would provide for the continuous study of new developments and afford to the various Dependencies an assurance that they would have fair chances at all times to raise money for really sound and carefully prepared projects. I hope that we shall advance in the future on those lines. This is almost what we might call the first step. I do not think it will be by any means the last. I am satisfied myself that the scheme now before us, if carefully carried out, will prove an enormous success, and will be followed by other schemes on a wider basis, and when we have to consider other schemes, I think we might take into consideration the experience that we are gaining in the launching of this one, and not only the launching, but to considerations of the finance of the scheme such as were outlined by the right hon. Member for Central Edinburgh.

8.0 P. m.

There are two matters on which I would like an assurance from the Secretary of State. Those are the money charged on the revenues of the different Colonies and Protectorates concerned. We know that the manner in which taxation is levied in Kenya has been a subject of discussion and comment in this House. In a speech which he recently made, the Governor of Kenya pointed mil that only one quarter of the revenue of that country is raised by Europeans. If they were prepared to finance schemes of importance, they must also he prepared to submit to the necessary taxation for the financing of those schemes.

There is a tendency, and there must be a tendency, in countries such as that, where the sources of finance are inclined to be rather dry, to push the burden of taxation on to the shoulders of the natives. I want to have an assurance from the Secretary of State that, so far as he can control or influence the matter, such a tendency shall not be allowed in Kenya, and that the burdens of taxation shall be as far as possible equally allocated between the native and the European populations. The second point on which I should like an assurance is with regard to the labour conditions for the works which are to be carried out. I hope that there will be no attempt to introduce forced labour in the building of these lines. I believe that the Secretary of State himself considers that this is unnecessary. If labour is properly treated, labour will always be forthcoming, and I do hope that, whether the works are to be undertaken by the Government or by a contractor, under no circumstances will resort be had to forced labour.

After the works are concluded, we have to remember that every fresh area opened up in these countries will mean a fresh demand for labour supply. The Governor recently made a remarkable speech in which he pointed out the very great importance of balancing the necessities and the rights of the natives fairly and fully, and not allowing them to be weighted down by the claims and demands of the settlers. It was a speech for which I think he deserves to be thanked; we know the very difficult position which he holds; and it was a speech which showed the keenest desire that fairness and equality should be dealt impartially as between the peoples living in the country of which he is Governor. The scheme as a whole, whatever criticisms may be offered upon it, will, I believe, receive the general approval of the House. It is the particular duty and obligation of this House to see that in any schemes of this sort, as far as it can, justice is done equally, and that we never forget the duty of our trusteeship to the natives, and not only that we do not forget it, but that we see that what we call our duty of trusteeship is carried into practice.

Mr. E. C. GREENALL

I do not intervene in this Debate as having any knowledge of East Africa or of Palestine, but from certain remarks which have been made on the financial question, during the discussion of the Money Resolution, I feel rather shocked at the somewhat light view which certain Members of the House take of financial questions. I have noticed that, while some hon. Members have spoken with due regard to the importance of the financial position, others have spoken as if the Bill is a stingy one because it deals with only some £16,000,000. The hon. Member for Finsbury (Mr. Gillett), for whose financial knowledge I have the greatest regard, stated when the Financial Resolution was being considered that a sum of £16,000,000 was almost negligible to-day as compared with what it was before the War. Because we have been accustomed to speak in hundreds and thousands of millions since the War, it is surely more important than ever to think of the odd millions to-day. I should like to deal with this Bill as a commercial man would deal with a prospectus. This Bill is to authorise the Treasury to guarantee certain loans to be raised respectively by certain Governments. We are referred to certain particulars which are given in the Schedule on page 4. Speaking commercially, if a prospectus were issued which was based on this Bill, the public would subscribe entirely because it was guaranteed by the British Government, but if you attempted to gild refined gold and paint the lily, and added a description of what the security is which the Government offer in addition to their guarantee, you would add nothing to the security so far as the investor is concerned. At the same time, when you read the Schedule for extra securities, you begin to criticise the security which is given in a totally different manner to the way in which you would criticise the actual guarantee.

This would not make a bad prospectus; it would make a very good prospectus if you left out the Schedule, but it does not make it a bad prospectus when you leave in the Schedule. So far it is good, but from the moment that you were good enough to present us with the Schuster Report, and the moment we observed that these figures in the Schedule of the Bill were connected in some way with the figures in the Schuster Report, at once the public would be filled with suspicion and they would riot subscribe. They would take the figures of the railways, which appear there, figures of £1,640,000, and figures of £6,500.000. They would see figures which are dealt with loosely; they would see £745,000 here, and £1,000,000 there, and these figures mean absolutely nothing. It may be that the returns when they are made after a term of years will justify the £750,000 and the other amounts if by some extraordinary luck, when the surveys are made, the figures correspond with one another. But here it is mere guesswork. Speaking from a, banker's point of view, I can see that these figures mean nothing, and they vitiate any prospectus that is based on this Bill. I think it is a mistake that the Schuster Report was ever published in connection with this Bill. This very able Report definitely states, as the Colonial Secretary has said to-night, that nothing is settled as regards the cost of these railways, nothing can be settled until the survey is made, or nothing can be settled except for a very short distance ahead.

I speak merely as a business man. and in no way because I wish to stop development in the Colonies or in the mandated territories, but I do think this House should he given information which is reliable, so far as it can be given, and should not be given information which is purely and entirely guess work. That seems an entirely wrong conception of the object of this Bill. With regard to the railway security, I take the word of the Colonial Secretary that it is good, and I also take the word of the hon. Member for Orkney and Shetland (Sir R. Hamilton), when he says that transport and railways in these new countries have nearly always paid their way. But I can tell them what happened in 1914. A very large number of important houses in the financial world thought they could establish a net-work of railways over the whole of South America. I cannot say what the figures were, but they ran into £20,000,000 or £30,000,000, and all that was lost. These eminent financiers made mistakes, but it was their money that was invested. They started with £10,000,000 or £20,000,000, which they got from the public and along with which they invested a good deal of their own money, and then it was discovered that these railways could not be linked up without expending, a further very large sum. In East Africa we are quite aware that £10,000,000 does not cover the work. They will probably want £10,000,000, but it is not made clear, and it is not well to disguise the fact that what is set down for transport facilities here is only an estimate. It is useless to deceive ourselves by imagining that £10,000,000 is all that we are going to be asked to subscribe.

The Financial Secretary to the Treasury the other night said we were letting the world know once and for all that the whole cost of these operations would be £14,000,000. If the world thinks that, they will be wrong, and it is very probable that much more will be required. I am not against guaranteeing this loan. I think probably it will be justified, but I feel quite certain that it will be only a matter of a few years when the Governmnt will bring in another Bill to guarantee a considerably larger sum. The reason I object, as a general rule, to such guarantees is this: It may have been reasonable before the War to give guarantees for developing our Colonies, but to-day I think we have many more important uses for our credit. The Chancellor of the Exchequer is faced with a very bad time. He will probably have to face the refunding of something like £800,000,000 or £900,000,000 in the next two or three years. For that purpose he requires to find investors in long securities to replace the short ones. I do not imagine that he will be able to find long-term investors for £800,000,000 or £900,000,000, but the more he can get the better for the country, and the greater will be the load of care that will be lifted from us.

What has been the history of our Governments since the War? They have not husbanded their resources of long securities. Because, and quite rightly, they were disturbed at unemployment, they invented the Trade Facilities Act, and, undoubtedly, that was justified for a time, but it is high time that stopped. Under that Act, some 260,000,000 to £70,000,000 has been taken out of the long market which the Chancellor of the Exchequer himself will badly want in the next three years. Even if the Trade Facilities Act is to cease to operate we have in the last few weeks agreed to the Electricity Bill, and added another £34,000,000 to the long debt, if and when required. We have added £13,000,000 under the Sudan guarantee, and to-day we are adding another £14,000,000. The total of those things I have mentioned—and there are many others—is £130,000,00, and to that extent the Chancellor of the Exchequer and the Treasury have weakened themselves for refunding purposes. I think it would be difficult for the Chancellor of the Exchequer and the Treasury to resist further demands to make them pass guarantees such as the one initiated under this Bill. Once this Bill is passed, although the last word is with the Treasury, it will be difficult for them to resist. I would not suggest that his Bill is inadvisable, but I do warn the House, and the country generally, that the sooner these guarantees are stopped the better it will be, and the better for the restoration of our credit, which is the greatest asset we have.

Colonel WEDGWOOD

This Bill is unfortunate in that it embraces two entirely different questions. All the speeches we have had hitherto have dealt with the East African loans, though, if the House will look at the Bill, they will find that the Palestine loan comes first. The Palestine loan is not what we generally understand by a guaranteed loan. Of the £4,500,000 proposed to be guaranteed to Palestine, £3,500,000, as far as I can make out, is paid back to this country; it is not a loan for the development of Palestine, but a form of refunding to this country moneys owed to us by the Palestine Government. That is an entirely different position from the case of East African loans. I would direct the attention of the House to the Palestine loan. As I understand it, £3,500,000 of this £4,500,000 comes back again. £1,000,000 represents the assessed value of the railway lines taken over from the British taxpayers. The rest represents two things, though in what proportions we have not been told; capital expenditure on various concerns, on telegraphs, telephones, surveys, and also, as I understand it, it represents the repayment to this country of the deficits in the Palestinian Budget during the last eight years, or till the time when the Palestine Budgets began to balance. I have no objection to the funding of this money, and no objection to this Government demanding payment of this money to the taxpayers of this country, but I do want the House to realise that this is the first case of any British Crown Colony and of any Mandated Colony repaying all the money they have received from the British taxpayers since the War.

In the case of other countries there have been deficits year after year, they have not been able to repay the money, and do let us give one word of credit to a Government which has managed first of all to repay money we have advanced, to dear off all debts, to purchase back their own railways and to put themselves in a position of financial security and soundness. It is a great credit to the Palestinian Government, due in no small measure, I believe, to the abilities of the Treasurer of that Colony; but let us remember also that it is due principally to the fact that the Jews of the whole world have been pouring money into that country for the last eight years. The Budget has been balanced, the debts have been paid, owing to the fact that the Jews of the world have been subscribing on positively a gigantic scale to the rebuilding of their own homeland. We ought to recognise that, and to recognise it in a practical way in Palestine by making it easier for the Jews to acquire land in that country, and to rebuild both the agricultural industry and the industrial industries of the country. After all, we have entered into a joint contract to rebuild Jerusalem. So far, it seems to me, the Jews have been doing everything, and we have been content to sit back with the Balfour declaration. In future, in view of this astonishing result in Palestine, I think there might be a little more co-operation in the building up of that country.

As far as £1,115.000 is concerned, that is to be new money invested in Palestine, principally in development of the port of Haifa. I want to know from the Under-Secretary in the first place when the works of construction at the port of Haifa are to commence. Obviously the construction of Haifa Harbour is not a matter which merely interests the people of Palestine; it interests the Admiralty in this country at the same time. I would like to know, also, what steps the Colonial Office are taking to see that the pipe line from the Mosul oil fields to the Mediterranean comes to Haifa instead of going to Alexandretta. If the right hon. Gentleman refers to the files, I think he will find that the decision on this point rests with the British and the French Governments, and I hope he will realise that the security for this £1,100,000 which is being spent on Haifa harbour depends upon the successful development of the harbour and of Palestine, a, successful development which depends more than anything else upon acquiring the pipe line mouth at that place, to provide cheap petrol for industry and large transport facilities.

There is one other word I would say about Palestine. I have just come back from that country, and everybody wants to know whether the Arabs are suffering from the incursions of the Jews; and it is pertinent to this subject, because unless it is possible for the Arabs and the Jews to get together it is obviously unwise to spend this large sum of money on capital development in that country. It seemed to me that the only result upon the Arabs of Jewish immigration into Palestine had been to raise the standard of wages of the Arabs working in the towns, to raise their cultural status; and, so far as the country was concerned, to teach the fellaheen new methods of cultivation, so that to-day he is cultivating more land than before and making bigger profits out of it. It is perfectly true, so far as the Bedouin are concerned—the wandering nomad Arabs who use large tracts of country for grazing purposes—that as agriculture extends, whether it be fellaheen agriculture or Jewish agriculture, the Bedouin has to go back. That has happened in every country on earth, and it cannot be helped if there is to be progressive development. As for the other element, the rich Effendi Arab, very often a Christian, their hostility to any Jewish immigration would be equally marked even to British immigration. They do not want Western ways or the Western population, but they want a docile population that will do as it is told. We cannot allow the development of the country to be checked because a few reactionaries on top prefer Palestine to be in Asia rather than in Europe.

Let me now turn to another section which I do not regard with any enthusiasm. Let me say at once that I am delighted that the Treasury had the strength of mind to stand up against the suggestion of interest free loans to the Colonies. It seems to me that when the right hon. Gentleman the Member for Central Edinburgh (Mr. Graham) spoke, he referred to interest free loans as being an investment by the people of this country, but in that I think he is making a mistake, because it is not an investment at all.

Mr. GRAHAM

I did not say that.

Colonel WEDGWOOD

I am glad to hear that, and I am pleased to near he still has a Treasury mind. Taxing the taxpayers of this country to find money for successful colonists in Kenya is neither sound politics nor sound finance. Let us clearly understand the position. Why is this Bill necessary at all? Why has the House spent day after day discussing these proposals? Simply because the Government completely changed their mind. When the right hon. Gentleman first made his Report these £10,000,000 were to be interest free for the first five years. The result was that each of these Colonies put forward large suggestions as to how they could use the money. Anyone can always find excellent ways of using other people's money. Consequently these Colonies drew up a long list of schemes which were put before the Schuster Committee. Sir George Schuster, possessing the Treasury mind, looked at these things, and I do not know any Report which I read with greater pleasure than the one which showed that there was need for further inquiry before any loan could be sanctioned. I am not quite clear if the Government have approved of the Schuster Report.

The UNDER-SECRETARY of STATE for COLONIAL AFFAIRS (Mr. Ormsby-Gore)

That was very emphatically stated last week.

Colonel WEDGWOOD

I am glad to hear it, and I hope the Government will stick to it. Does that mean that the Government also agreed to the Report on Amani?

Mr. ORMSBY-GORE

My right hon. Friend definitely stated that he disagreed with the Amani Report.

Colonel WEDGWOOD

I am sorry to hear it. Let us see what happened. Every Colony has sent in their claims, and they are very numerous. Afterwards they found out that they were not to have free interest for five years, and at once they said, "This is not what we bargained for." The result is that these various Colonies are not so keen now about borrowing money when they know they will have to pay interest on the loans, and the whole situation has changed. To my mind, the introduction of this Bill is quite premature. We do not know which of these schemes reported on in the Schuster Report are going to be approved by the Colonies concerned. We have no guidance on that point, and the Government does not know what they are going to do.

We are here guaranteeing an advance of £10,000,000 which may not be repaid for 10 years, or even longer. It seems to me that, in spite of the criticism of the hon. Member for Peckham (Mr. Dalton), we find that the Government is actually premature in bringing in a Bill to guarantee a large sum of money which nobody wishes to borrow. The hon. Member for Orkney and Shetland (Sir R. Hamilton) said you could not throw money away if you invested it in railways, but I do not agree with him. At present the railways are going through the unpleasant process which canals went through about eight years ago, and I think we should be very cautious about investing money in railways or roads.

Any hon. Member reading through the Schuster Committee Report will see there are two different items, one is a railway from Dodoma to Nyasaland and the other is for a road from Dodoma to Nyasaland. Until the Government is quite clear as to which is the best method whether by road or by rail I think it would be very unwise to make such large investments of public money in this direction. Let me point out one other matter. I think there are others on these benches who feel that if British capital is to be invested, it should be invested in a country where it will help the natives, and not where there is already too large a demand upon the labour market. In this country we are accustomed to a state of things where there are two men for one job, but in the country where it is proposed to invest this money there are two jobs for every man, and the whole trouble is how to keep down wages in a country where there are two jobs for every man. Sir Edward Grigg said: He regarded with anxiety the further development of crops which made a heavy demand on labour. If that argument is good as applied to the extension of agriculture the same objection will apply to all extensions of railways and roads which demand more labour.

Mr. ORMSBY-GORE

Is the hon. and gallant Gentleman not aware that there are no proposals for any new railways in Kenya and the object of this proposal is not to cover Kenya but the mandated territories and Protectorates?

Colonel WEDGWOOD

The hon. and gallant Member forgets that there are recommendations for roads in Kenya which demand the employment of more labour, and he also forgets the extension of the Uganda railway northwards. He forgets that the labour shortage is notoriously acute in Kenya, but the same also applies to the state of things in Tanganyika. There are quite sufficient opportunities for the natives to find employment on their own land without taking them off and putting them to other work. There should he more caution exercised in selecting the country where capital can be employed most properly. The Under-Secretary has pointed out that that difficulty exists in Kenya and not so much elsewhere. Let me draw attention to the real key of the whole situation. We have a certain amount of capital which we are prepared to invest in Colonial development, but so far we have only considered the East Coast of Africa. The hon. Gentleman has recently been to the West Coast. Is there any reason why the West Coast should not be treated on exactly the same lines as East Africa? Does not the hon. Gentleman know that on the West Coast this form of capital enterprise would not involve a call upon an already over-stocked labour market?

Mr. ORMSBY-GORE

On the contrary, as I have pointed out in my Report, every single mile of new railway in West Africa means nothing but forced labour. Every mile has been built by forced labour in West Africa, and by free labour in East Africa.

Colonel WEDGWOOD

The hon. Gentleman surprises me when he says it is all done by forced labour in Nigeria.

Mr. ORMSBY-GORE

Yes.

Colonel WEDGWOOD

In Nigeria they were certainly paid—

Mr. ORMSBY-GORE

So they were in East Africa.

Colonel WEDGWOOD

The line that the hon. Gentleman draws between forced labour and labour that is not, forced is very difficult to draw. He knows that in East Africa, as well as in West Africa, recruiting takes the form of force, or is very difficult to distinguish from force. The hon. Gentleman himself would be the last to urge that the recruiting, for the purpose of building railways on the West Coast, has been in any way more forcible than it has been in East Africa.

Mr. ORMSBY-GORE

I would like to say quite definitely that it has been much more forced, because it has all been what is called community labour. There is, practically, no free labour supply there, and, when a railway is built, it is invariably necessary to call up the community for so many days in a year to do the work.

Colonel WEDGWOOD

The hon. Gentleman has been there, and must know better than I do, but, certainly, I have never heard any complaints from the West Coast—

Mr. ORMSBY-GORE

There are none.

Colonel WEDGWOOD

But we have heard so many from East Africa, and where there is smoke there may be fire. As we have had complaints from Kenya, and not from the West Coast, it is to be presumed that the force employed on the one side is different from that employed on the other. Apart from, that, would the hon. Gentleman say whether investments in railways or roads are not as economically profitable on the West Coast as in East Africa It is all very well to consider a. long programme in East Africa, but it seems to me that what is really required is an inquiry as to where, in the whole of our Colonial domain, capital can be most profitably invested. This is not a question of giving bribes to good children; it is a question of the economic advantages of alternative investments of capital. What I should like to see would be the Schuster Report applied to demands from the whole Empire, so that we should have a definite selection, by a skilled financial body, of the best possible investment for our money. Several hon. Members have spoken of these loans as though they provided work for people in this country. Of course, every loan made to a foreign country provides work for the people of this country. £1,000,000 lent to China must leave this country origiNally as British goods—whether we get back interest or not is a different matter—and, whether it is made to Kenya or West Africa, it means work for people in this country. The problem we have to face is where, by investing this money, we can get the best return, and for that purpose I should say that we want a. Schuster Committee dealing with the Empire—not giving away our money or guaranteeing any promised payment of interest, but directing the investment, of the money of the British public in the way most profitable for the British Empire. It seems to me that that would be the right method, rather than introducing a, Bill when the Government themselves are not sure that the Colonies concerned will ask for the money, are not sure that the schemes asked for are sound, and, finally, are not sure whether the financial position of the Colony is altogether capable of hearing the burden of the additional debt. I was horrified to hear from my right hon. Friend the Member for Central Edinburgh (Mr. W. Graham) suggestions that it would be desirable to amalgamate and federate the East African Colonies.

Mr. GRAHAM

I assure my right hon. Friend that I never made such a suggestion.

Colonel WEDGWOOD

I hear that gladly. What we want to avoid is any suggestion of passing on the heavy burden of debt in Kenya to the other surrounding Colonies. I know there will be a strong movement presently, particularly if the Kenya debt rises as it has recently risen, to federate in order to spread that debt. Let us see in future that we do not overburden any Colony with debt, and that the investment of our money in any particular Colony is used to increase the prosperity of the country; and does not go straight into the pockets of a few fortunate landlords who got in on the ground floor.

Mr. RAMSDEN

I am afraid I cannot follow the right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) in many of the things that he has said, and more particularly in regard to what he calls the Treasury mind and in regard to the Schuster Committee. It seems to me that, if we had sufficient Schuster Committees, and if we only used the Treasury mind sufficiently, we might put such a brake on the development of the British Empire as to stop it very effectively indeed. I am one of those who regret very much that the financial conditions of this loan do not permit the interest to be dealt with by the Imperial Government for the first five years in any case, and I feel very strongly that this provision is going materially to hinder the development of the weaker parts of the African Territories. It is all right as far as the richer colonies or protectorates are concerned, but when you come to some that are not quite so fortunately situated from the financial point of view, you are, in effect, telling them that, because they happen to be weak, we can do nothing for them, and cannot help them in any way. As two instances of such colonies I would mention Nyasaland and Tanganyika. These, undoubtedly, are two of the weaken brethren, and it is suggested that, because they will not be able to guarantee and pay the interest on any loans for the first five years, nothing can be done for them at present.

I am afraid that the Schuster Report, which, with the Treasury mind, seems unfortunately to dominate the whole of this Bill, has placed pathetic faith in surveys and forecasts. In a number of cases the Committee suggest that surveys should be made, and also that nothing should be done until it can be proved that in a certain number of years such-and-such an amount of trade will take place, and such-and-such an amount of produce will be ready to leave the country. I am of opinion that, if this Treasury mind and Schuster Committee idea had been in operation 50 or 60 years ago, when the Dominion of Canada was being developed, and railroads were being run right across that great Continent, it would now be in a very different position from that in which it is at the present moment. I am sorry that a very much longer view has not been taken—one that would say that this money is worth while spending, because we shall certainly get back the benefits many times over in the years that are to come.

I am afraid, too, the Report on which so many seem to pin such great faith is not as accurate as one would like. I could point out quite a number of inaccuracies in it, and I will instance one or two. Take, first of all, page 16, paragraph 38. It says: We understand that a site for the bridge crossing has been examined and reported upon by Messrs. Livesey, Son, and Henderson, acting on behalf of the Central African Railway, and that designs have been prepared and estimates framed, but that no survey of the coal line or of any connection which will have to be constructed between the bridge and the Trans-Zambesia. Railway has yet been made. That is inaccuracy No. 1. As a matter of fact, a flying survey of this coal line was made some time ago—a sufficiently good survey to enable a contractor to quote a price for the construction of the line. Again, on page 17, paragraph 46, it is pointed out that a. survey should take place. In this instance, again, a topographical survey was made which would really be practical enough for all ordinary purposes. We must remember that in a country like East Africa we are not dealing with one that is thickly populated, like a European country, and that the question of surveys from a technical point of view does not possess the same necessity as it would here. As another instance of the mistakes that occur and the wrong impression they create, may I point to paragraph 50, where they say: These are five links in the chain each under separate control. namely, the Shire Highlands Railway, the Central African Railway, the Trans-Zambesia Railway, the Beira Junction Railway, and the Port of Beira. It is rather a curious thing that they should not know that the first three railways are managed by the same individual, are under exactly the same management, and have in London the same secretariat. I bring to your notice these three cases in order to show that we must not take this very unfortunate Schuster Report as being really indicative of conditions as they exist, in East Africa. I sincerely hope the Government will deal with the problems they will have to attack under this Bill in a very practical way. They must look at it with a long view and not simply consider the amount of money we are going to expend, and the necessity for economy, the necessity for which no one urges more than I do. We must economise as much as we can, but it is not true economy to hold up the development of any part of the Empire which can be made very valuable indeed to us.

Mr. SAKLATVALA

I beg to move to leave out the word "now" and at the end of the Question to add the words "upon this day three months."

I am certainly opposed out and out to the whole of this transaction of guaranteeing loans. On previous occasions I opposed just as clamorously the very nature of these guaranteed loans, as affecting the working classes of this country. I know it is rather difficult when the whole of my friends on this side see no objection to agreeing to this loan but for a few detailed comments here and there, I feel confident that from the Socialist or Communist point of view this loan is bound to do the greatest possible harm to the workers of the country in the long run. In the first place, let me offer my objections on general grounds. If private enterprise has all the virtues which are claimed for it, let it go on and build the railways, harbours, bridges, and roads and carry on all those mediums through which they hope to make further profits in land and other industrial development alongside the railways and harbours, but if private enterprise says, "No, I am afraid of this harbour in Palestine; I am afraid of these railways in Palestine or East Africa—the right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) said the Jews of all countries of the world are simply pouring money into Palestine, and that is a fact. Just imagine those Jewish friends of ours, who always have a reputation for shrewdness as to the safety or unsafety of investments, who are free to pour in money but are not willing to pour in £1,000,000 to build this harbour. What is the meaning of it? If our friends are not reluctant to find money for the welfare of their new homeland, why do they trouble the British Government to ask for a guarantee? If private enterprise runs away and declares itself unable to move in a certain direction it is a wrong policy for the Government to give a guarantee. In effect it amounts to this, that if profits are made, not only directly from these investments but owing to harbours and railways and other concessions and improvements, they belong to the private speculator.

Mr. ORMSBY-GORE

Does the hon. Member realise that they are all State railways?

Mr. SAKLATVALA

Does the right hon. Gentleman realise that I am telling him in clear words that, owing to the State railways, which will lose money, the landowners and other industrial investors and speculators will make money? That is the position, that the landowners, the merchants who deal in raw products, the people who will set up industrial organisations either in Africa or Palestine, will get rich in their industries by the existence of railways and harbours, for the sake of convenience called State railways and State harbours, but if they saw a chance of making a profit they would invest their own money and not let them be State concerns. What will now happen is that all the profits which will accrue to the landlords and industrialists in the neighbourhood of the State railways and harbours will belong to them, and whatever losses are to be incurred on supplying this medium of profit to them will have to be borne ultimately by the taxpayers of this country or their own country. I would much prefer to make it a bona fide State concern. I would prefer that if English credit was to be given, it might be just as well that these railways and harbours should be constructed directly by English money, and that adequate taxes should be levied and adequate charges made on these concerns so as to provide profit, or remuneration, to the taxpayer who finds the money. But what else can a guarantee mean except "the profit is yours, and the lose is mine"?

We are always told, whenever this sort of demand is made, that there is no real danger, It is a mere formality. Surely everyone is agreed that the danger must be a very real one. There are financiers not only in Great Britain but in America who do not know what to do with their money, and if there was anything financially sound in it, these schemes would not go begging for want of money. But the very fact that they are finacially not so sound as to make the speculative, gambling public put their money in them causes the Government to come forward with a guarantee, and they always say, "It is perfectly safe, it is a mere formality." It is not a formality. I will give a parallel illustration. Not long ago in this House we were told that the Government were making a temporary loan to McGrigor's bank which had failed, that the Government were helping bankers who had failed in order that the higher paid Army officers might not lose their money, although at the same time the Government were unable to pay the ex-service men. If right hon. Members opposite will read the speeches made from the Government Benches on that occasion and will notice how reassuring they were that it was merely a temporary loan and they would now render an account of the winding-up of McGrigor's bank, and where that safety has gone, there would be a lesson, and this House would not be so ready to believe when the Government talks about things being perfectly safe when they want money.

There is another serious matter, and here I speak unhesitatingly as representing the revolutionary elements and forces of this country or anywhere else. Loans were granted to the Czar of Russia. The people of Russia were innocent; they knew nothing about it. Loans were granted to the bankers of Russia. The people of Russia had no voice in the Government of that country or in those loans. Now, the Government feel very hurt that the people of Russia say, "We knew nothing about these loans. Go to the Czar and the Grand Dukes and take the loans back." Something similar is happening in China. We shall be told that the British investments are repudiated there.

Mr. DEPUTY-SPEAKER (Captain FitzRoy)

The hon. Member asked my permission to give one example. He has given that example. He did not ask my permission to give others. Had he done so, I should not have given permission.

Mr. SAKLATVALA

I am not pursuing the argument. The point which I am submitting is that the people in whose Country monies have been invested by this country, when they begin to recover their political consciousness have repudiated their indebtedness, and very rightly so. The people of China may do so, the people of India may do so and the people of Palestine may do so. That is no longer an abstract theory; it is a concrete fact. The poor Arabs, the poor negroes, the poor Jews, the voiceless people of Palestine and East Africa, are certainly not responsible for these financial transactions that are being carried through to-day, and when they recover their political consciousness and their political power and independence they will be perfectly right in refusing to pay back any of these loans, which are being spent on objects not from their point of view. The danger from the historical events which are happening day after day is not a mere temporary danger but a real one. If we were granting the loans to any of our self-governing Dominions, where every citizen is a conscious citizen, that would be quite a different way of granting a loan, because it would be to citizens who are directly held responsible, but to make a loan in the name of poor negroes and Arabs and then expect them to pay back when they no longer will be as foolish as they are to-day, is expecting too much.

With respect to the Palestine loan, the wording in the Schedule is unfair. In the Schedule, the Government put No. 2 as Purchase of railway and other capital assets from His Majesty's Government, £1,000,000. 9.0 p.m.

That wording gives the direct idea to Members of this House that this is paying back for something which is already created. That gives the idea that other items not so expressly described do not fall in a similar category. No. 1 Item says, "Railways, £1,640.000." In view of the description of Item No. 2, it would appear that Item No. 1 meant that new railways were to be constructed for that amount. A similar comment might be made with respect to Item No. 4. It would appear that these items are put down as entirely new amounts which are to be spent for new construction, whereas we learn from some of the speeches that that is not so. Some of our friends from Palestine believe that most of this money, more than 50 per cent. of these loans, is for payment back to Great Britain. If Great Britain has spent some money, or has advanced some money or has given it already, why not wait in a straightforward, honest manner until the Palestine Government pays it back in the usual course? Why should there be this farce of loaning money and getting yourselves paid back by it? There must be some underlying motive.

With regard to the harbour construction, the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) pointed out that the Admiralty is very anxious about the harbour at Haifa. I have put that question but I have received no answer. Is the Admiralty anxious about it or not? I pointed out during the discussion on the Financial Resolution that there were people in Palestine who were desirous of having the harbour at Jaffa, while some people wanted it at Haifa, and that some of the people who wanted the harbour at Haifa wanted it not for the benefit of the rich and poor Jewish population in Palestine, but with an eye to the future, that Haifa was a great natural pipe-line for oil development. If that be so, why should not a future oil company undertake the construction of the harbour at Haifa? Why have a guaranteed loan, putting a burden upon the taxpayers of Palestine and creating a running sore of guarantee upon the taxpayers of this country. As regards the interests of the Admiralty, we are not quite sure whether Haifa is chosen as more suitable as a future Singapore to overawe the Ægean Sea, the Red Sea and the Black Sea.

Mr. ORMSBY-GORE

These are mandated territories.

Mr. SAKLATVALA

I know that it is mandated territory, but that is another name for enslaving people and cribbing other people's land through that hypocritical body the League of Nations. Under the term "mandated territory," you find a new means for enslaving other people and interfering in other people's countries and dominions.

Mr. ORMSBY-GORE

Does the hon. Member know that there is an Article in the Mandate which prohibits the establishment of naval bases in mandated territories?

Mr. SAKLATVALA

I would reply that politics are more often dishonest than honest, and because there is that Clause in the mandated agreement that is why the Government have artificially used the word "harbour" instead of "fortification." Hon. Members laugh. It is no use trying to laugh the matter away. The Government's ultimate intention, despite anything in the mandated agreement is, one way or another, to create a future Singapore at this place. It is for that reason that Jaffa has been set aside and Haifa selected. After I spoke on the last occasion, a. certain Jewish organisation wrote me a strong letter saying that I was a friend of the Arabs, of the aristocracy, as against the Zionists. I am against nobody, and I am for nobody. I am against every capitalist exploiter, whether he is a Zionist or an Arab. I am against every land grabber, whoever he is, and in favour of everybody who is dispossessed and struggling to get the people's land back for the people. They point out that I was wrong, that the harbour at Jaffa is asked for not only by the. Jews but by the Arabs as well. I never disputed that. But how wrong it is, when the Arab and Jewish population, almost the entire population, desire Jaffa to be the chief harbour of Palestine, that they are told no, it will be at Haifa; and the people of Jaffa, as taxpayers, will have to pay for the harbour at Haifa which they do not want.

I would not object so much to these loans if the general revenues of these Colonies were not charged. If arrangements were made for a charge on the goods passing on these railways and through this harbour, if arrangements were made to levy a tax on the land which is going to improve in value because of these roads and harbours and railways, if the taxes were placed on the companies who are going to profit by the creation of these railways and roads, that would be all right, but to tax the poor citizens in these Colonies in order to provide a profit for a few inhabitants in that land is altogether unjust. The Government have not made it quite clear how much of this £4,500,000 is merely a repayment and how much is going on new construction. They have not made it clear whether this harbour at Haifa has been recommended, directly or indirectly outside, the Mandated Agreement as being a. more favourable spot for a future oil company rather than a help for the poor Arab and Jewish inhabitants of Palestine. I put it that the Admiralty believes that Haifa is going to be a better fortification and naval base for the future than Jaffa, no matter what the Mandated Agreement says about it. These agreements can be altered, and as soon as the harbour at Haifa is constructed and the military possibilities are there, the Government will be more able to laugh at the agreements and the clauses in the Mandated Agreement.

I want the Government to make this point quite clear. It does not seem like a common business transaction that the Government should sink money on railroads and roads constructed for war purposes during war time, and certain other buildings which were constructed, and which during times of commotion had their full economic and market value. The Government now say, "We do not wish to wait until the Government of Palestine pay us back, some day, we want them to take this loan and give it back to us to-day." I want to ask whether it is true, as the people of Palestine say, that this is a sort of bribe offered to Great Britain to permit the Palestine Government to break the pledge to the Arabs and enable them to create a Second Chamber of nominated members on which the Arab population will have no voice at all. I understand that it is in return for that bribe that the Palestine Government says, "Take up your rotten unremunerative railways, and we will let you have your money back." Let me put forward my general argument against this loan from the purely Socialistic and working-class point of view. It is all very well for this country to facilitate this loan and guarantee that there will be orders for railways, harbour, materials and bridges, and so on. That is quite true, but has it not been the case in the past that, after these developments have been constructed, they have become a source of permanent unemployment in this country, and what guarantee have we that this Measure, which is simply the advancement of Imperial capitalism in other countries, is not going to produce further unemployment in our engineering, textile and other trades in this country.

I put it to the House that when railways and roads and harbours are constructed, they always train a large number of the natives of the land to become industrial workers. We have seen it all over the East. Large numbers of people who were employed on road and railway construction became a trained population suitable for factory work immediately these constructions were finished. Once you construct harbours and railways and roads you offer a tempting invitation to the manufacturers of this country to plant their factories where these roads and railways are available and near the raw material. I want to know why the Government ignore the fact that this development, this training of native labour for industrial work, the African negro and the Jew and Arab of Palestine, is going to create further industrial rivalry against the workers of this country. I am advanced enough to hold this point of view, and I hope my colleagues in the Labour party will wake up in another five years and hold it too, that whenever we help and assist in the industrial awakening of other countries we must make up our minds to take the natives of these countries into the entire brotherhood of the industrial population of this country. If we are not prepared to take them into the entire brotherhood of the industrial population of this country they become the prey of the capitalistic exploiters of labour, who would destroy the trade unions of this country by supporting these rival factories and harbours and docks in these other countries, It is on this account that I want the whole of the Labour party to make this a principle, as I have made it a principle, that wherever we have any financial control, our first demand shall be that the human beings who will be employed in the utilisation of this money will be looked upon as people thrown out of the ordinary life into our Western industrialism, and as soon as that is done that their standard of life, their hours of work and wages, shall no longer be in a progressive ratio to their old nomadic life but in a more reasonable and intelligent ratio to the industrial workers of this country.

I say emphatically. that it is a betrayal of the great working-class interests of this country for any hon. Member in any part of the House to vote for these loans unless we can get a definite guarantee that no human being is to be employed under these schemes for more than eight hours a day or for less than 3s. 6d. a day. We should not vote for a single pound of money without such a guarantee. We shall be told that the Arabs do not need it, that the Palestinian Jews do not require it, and that the African negroes may live on much less. All these arguments are good only as long as these native races are left untouched in their ordinary life. If they are to be drawn alongside the families of western nations for hard industrial work, such as engineering, road, railway and bridge construction, which are very good things for creating factory labour in the future, then I submit that from the first day that the Arab and the negro, the Indian or the Chinaman, are employed, they should be considered as part and parcel of the industrial family of the West, and their wages and hours should be regulated from the first hour in ratio to what goes on in the West. If that is done there will be permanent work and permanent prosperity, and a permanent demand for the goods of this country; but if we pay only 7d., 8d., 9d. or 10d. a day, and work the negroes and Arabs for 10 to 14 hours a day, and then say, "We have now developed this country," and then make it easy for the capitalist to start factories, to get hold of these ready-trained natives, with raw products close at their doors, and then start cotton and jute and engineering works, and do ship repairing at Haifa and Jaffa and on the East Coast of Africa, that is inviting a veritable graveyard for the workers of this country and of the world.

Amendment not seconded.

Captain FOXCROFT

It has been said that adversity makes strange bedfellows. Evidently Palestine makes rather strange bedfellows too, for I never thought for one moment that in any conceivable political circumstances I could agree with the hon. Gentleman who has just spoken. Although I do not desire to assist his Amendment, yet I do feel that a good deal of what he said had some substance in it. I believe that the Zionist Jews of Palestine should receive financial support as much as they need, but I feel also that the native Jews and Arabs of Palestine should likewise receive such financial support as they need. From personal experience I cannot say that British Governments think quite as much of the native Palestine Jew or the native Palestine Arab as they do of the imported Zionist Jew. I ask the Secretary of State very seriously to see to it that the Government of Palestine does its absolute duty by the Arabs and by the native Palestinian Jew. The latter has been for generations living in Palestine, while the Palestinian Arab is descended from the oldest inhabitants of that country, and is not by any means the ordinary Nomad Arab, but has been for centuries seated in Palestine. I hope that the Government and those responsible in Palestine will see that while the Zionist Jews are given all that they should have in the way of financial assistance, the native Jews of Palestine and the Palestinian Arabs, who helped us very much during the War and who in their religion represent tens of millions of our most loyal subjects in India and elsewhere, shall have as much justice done to them as is done to the Zionist Jews whom, under the Balfour declaration, we have imported.

Mr. HADEN GUEST

I agree very heartily as to the importance of what was said by my right hon. Friend the Member for Central Edinburgh (Mr. W. Graham) as to laying down a. financial policy for Empire development, and I am, therefore, all the more disappointed that in this particular Measure the foundation that has been laid does not seem, to me at any rate, to be one upon which we can hope to get a very strong policy of Empire development developed. Let me first of all draw attention to a fact which seems to have been rather overlooked with regard to the Schuster Report. The decision not to pay the interest on loans raised for the purpose of development in East Africa was not made after an inquiry into the details of the proposals put forward in the Report on East Africa, was not made after a detailed examination, but was made actually before the appointment of the Schuster Committee. In fact, if hon. Members will turn to page 5 of the Report they will see these words at the top: It had been decided, before the appointment of our Committee"— the Schuster Committee— not to adopt the recommendation of the East African Commission that interest on loans from the £10,000,000 fund should be met by the Imperial Government … That is to say, that as a matter of general financial policy, apart from the particular schemes in the Report of the East African Commission, the point had been decided—one would like to know by whom. Was it by the Treasury independently, or by the Cabinet, or by whom? Was this imposed on the Government from outside, or was it a. decision in which they fully concurred, or was it a decision to which they were dragooned by Treasury pressure? That seems to me a rather important aspect, and I cannot help feeling that it is rather regrettable that in establishing a policy, not the financial policy, but the general policy of Empire development, the Treasury should have such a very large and over-large share. May I refer to a very remarkable speech from the hon. Member for the City of London (Mr. E. C. Greenall). My constituency adjoins his; we are separated only by London Bridge. I am glad to find that Empire ideas are so much better represented in Southwark than in the City of London. The hon. Gentleman said that we had very much better—I do not know his exact words—employment for our money than by investing it in the Empire, or words to that effect. In effect he said, speaking with the authority of the City of London, he wished to discourage investment in the Empire. I regret very much that the hon. Member is not here to reply. That is in fact what it means. A gentleman who was examining this Bill, as he said, purely from a business man's point of view as a company prospectus, turned down, not this particular Bill, although he did not think much of it as being a prospectus, but he turned down the general proposition of Empire development as not good enough at the present, time, or as something beyond our resources.

In this the hon. Gentleman was joined by the hon. Member for North Battersea (Mr. Saklatvala), who has also something of the same kind of ideas with regard to Empire development. It is rather interesting to notice that in the extremes of the Capitalist and Communist spectra you get an identity, or at all events a similarity, of view. The real interest of the Empire is not in the particular commercial schemes such as were mentioned by the hon. Member representing the City of London, but in a general improvement of the trade of the Empire and in the general leveling up of the prosperity of Africa, particularly tropical Africa, as a whole. It is that which is going to be at real advantage to us in this country. If the schemes are limited to only that which can be done according to the narrow limits of a purely commercial proposition such as would recommend it to a financier looking for an immediate return on capital, then we are going to get very serious limitation of the possibilities of Empire development. The possibility of Empire development is going to be entirely overshadowed by a very cheese-paring variety of Treasury finance. I would suggest that at the present time the Dominions Office and the Colonial Office should break free from this thraldom of the Treasury, and that they should say quite boldly and definitely that just as in business of every kind at the present time it is necessary to think big, and to have big organisations, to deal with all the important substances which we are using in our lives, so it is also necessary to have a big conception with regard to Empire development if we are going to get a really serious result in the way of the big expansion of activities.

Let me remind the House of this, that one of the great and urgent necessities is Empire research. There is no doubt about that. What is going to happen under these provisions? As the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) pointed out, and I think everybody will agree, with those Governments in East Africa working on a very narrow margin on their budgets, if they are saddled with having to pay interest or loans for development purposes in the early stages, they will be debarred from spending money on research. It is no use putting up capital expenditure on research if you have not the current cash to pay your running expenses. I very much hope that in the reply, which I hope will be made by the Under-Secretary, he will deal with that, and tell us how we are going to get the urgently required money to carry on the particular kinds of research which are so badly needed.

I want to stress further the point of native policy. There is nothing more unsatisfactory in the Schuster Report than its reference to research into native welfare. On page 35 of this Report you will find a paragraph headed "Research into native welfare" which states that the Governor of Kenya has telegraphed asking that the sum of £100,000 may be provisionally reserved, and stating that a despatch from him giving full explanation of his proposals is on its way to this country, and that consideration of these proposals must necessarily be deferred until after its receipt. If one weighs what that means in a document surveying a programme of very considerable development in East Africa, that the most serious part of the critical Schuster Report dealing with native welfare can only base itself on a telegram received from the Governor of Kenya stating that we must await the receipt of that before laying down the lines of policy, one can only think that the Government are very ill-prepared indeed with the lines of a native policy. I suggest that this very inadequately conceived native policy is the turning point, or should be the turning point, of the whole question of the development of East Africa. We want something very much more than a telegram from the Governor of Kenya. We want a well-thought-out native policy, worked out, not from the narrow sense of what is called native welfare, but also from the standpoint of men with some economic imagination of what is going to happen in the future when these countries are opened up. We have to think of what civilisation is going to do to the black man. What is going to happen when our railways, our roads, our commerce, the movements of people, telegraphs and posts, and perhaps wireless come into that great continent of 40,000,000 and wakes this people up, and brings them into contact with Western civilisation? What is going to happen to the black man? It is a very much bigger question than the question of whether we are getting a sufficiency of labour in one place or another.

This question of what is going to happen to the negro, especially in tropical Africa, is one of the two or three big questions which the British Empire will have to face and try to solve in the next 25 years. We have not begun to get to the solution of the problem yet. It is beginning to dominate the politics of all countries which come more closely into immediate touch with it than we do ourselves. The politics of Australia are dominated with this question of the relationship between the coloured and the white man. In South Africa, the most urgent and burning questions centre about this question of the method of treatment of the coloured man and his relation with the white man—using "colour," as meaning for the moment, negro. In tropical Africa they are speeding up this development and we are speeding it up without providing adequately for the future. Every time we build railways and roads and improve the public health, we are uprooting native habits and upsetting native traditions, and one wants to know exactly where we are going. It has been said today that we do not know very definitely what the populations of these countries are and whether they are increasing or decreasing. I do not think it is quite as bad as that. We do know a little. There are in the "Abstract of Statistics," published a short time ago, certain facts with regard to the population of Uganda, Kenya and Somaliland; in fact, all parts of the British Empire are published. I have extracted some figures, and they show broadly that from 1901 to 1921 there, has been, if the figures can be relied upon, a decrease in the population of Uganda, and of Kenya, a slight increase in Somaliland, a, considerable increase in the Sudan, and a steady increase in Northern Nigeria and in Southern Nigeria.

The point is that where the government has been best, where the state of things has been most settled, and where our influence has endured for the longest time, you have the best social conditions and a steady increase of population, and it seems inevitable that as a result of this Measure we shall bring about a state of things in which the population of tropical Africa may very largely increase. What are we going to do with this vastly increased number of people? Are we to allow them to remain an uneducated mass or are we to educate them If we are to educate them, how are we going to pay for it? Are we to allow these people to be used, without any safeguards, in factories and other ways to compete against white labour in other countries? Are we to allow the standard of life of the white workers of the world to be degraded by the competition of the black workers? All these questions ought to be considered, not, of course, in detail but in broad outline, before we go very much further on the path of the development of these East African Colonies.

I believe these problems can be solved but I believe it is very urgent that we should not go forward blindly and without a plan. It is possible to draw up a plan which will gradually incorporate the native peoples into the type of civilisation in which we are living. "Organisation" has been said to be the dominant word in Empire development for the immediate future. I believe in no field is organisation more necessary than in that of our native policy towards the peoples of tropical Africa. Up to the present we have not had any clear statement of that policy. I do not think this particular guarantee is on a sufficiently large scale, to do much harm —in fact I believe it is going to be of very great good. I think at the same time it is urgently necessary that at the earliest possible moment we should have a carefully and fully considered opinion on the means of bringing about good relations between the immense black population of Africa and the great white populations in other parts of the Empire, so as to maintain, on the one hand, a decent standard for the white man, and on the other, enable the black man to climb gradually from his present standard up to that of the white man.

Mr. MORGAN JONES

This Bill outlines a considerable measure of development both in Palestine and East Africa. With the first portion, which refers to Palestine, I am not to-night concerned, but before the Under-Secretary replies I should like to say a few words on the East African part of the Bill. It has already been indicated that we on this side propose to give the Bill general support, but it is fair to say that in the case of some of us at any rate that general support will be tempered or qualified by some doubt regarding certain aspects of the problem. A great deal of public money is to be expended upon these projects, and this proposal has been submitted to the House and backed in the House on the ground that there is the possibility of a favourable reaction from this expenditure of public money upon the condition of affairs in this country. That is undoubtedly true, in a degree, and, so far as it is true, none of us will have any regrets whatever, but I do not think the reaction of that expenditure upon our own country ought to be the prime consideration. We might very well take for our guidance in this matter the principle underlying the declaration of the Duke of Devonshire when he was Colonial Secretary, that the interests of the natives of these areas should be paramount in our minds.

The question therefore arises: What is to be the reaction of this proposal upon the areas concerned, and particularly upon the conditions and outlook of the natives of those areas? Doubts have been expressed by the hon. Member for the City of London (Mr. E. C. Greenall) and by the hon. Member for Ilford (Sir F. Wise) as to the effect of these loans upon the financial conditions of these areas. The Colonial Secretary has assured the House that there need be no misgiving upon that account and I should not presume to intrude upon an argument between the Colonial Secretary and one of his principal supporters. But whatever may be the ultimate effect upon the financial future of these areas, it is quite clear that these proposals will cost a good deal of money. That money must ultimately be repaid and obviously the repayment must be borne in some measure by the Europeans in those areas and in some measure by the natives. The problem then arises—how is the native to shoulder his share of the burden. He can do it in one of two ways. He must either provide the money to pay the taxes, by his own industry on his own land, and with the crops which he grows himself, or else he must secure his share out of wages which he earns by working for somebody else.

It is on this question of native labour that I wish to ask some questions. I do not feel that the point has been thoroughly met in previous speeches from the Treasury Bench. What is the view of the Government in this matter? Is the native to be regarded as a free man in an economic system; is he to be a free citizen destined sooner or later to control his own government, or is he a person who, at any given time, through the exercise of some form of economic or political pressure or otherwise, may be called upon to render service to the European settlers? In other words, is he to be liable to some form of conscript labour?

There would seem to be differences between the point of view of settlers in places like Kenya and elsewhere, and Members on this side of the House, in regard to the proper status of the native. That may be disputed, but in order to fortify my position, I have provided myself with two quotations, which, if they represent in any large measure the point of view of European settlers who exercise any measure of control over Government decisions in those parts of the world, show that we are entitled to feel no small degree of misgiving. I quote first a speech delivered by Lord Cranworth to the Boyal Colonial Institute at the Hotel Victoria, reported in the "Times" of 14th April of this year: Dealing with the future, Lord Cranworth said that the area available for white settlement was not vast. It was doubtful if as much as 5,000 square miles remained to be allocated to Europeans. It was unlikely that another 20 years would see a white population of more than 100,000, unlees minerals in unexpected quantities should be discovered. … But in saying that one stipulation must be postulated. Never must the interests of the white population be allowed to he swamped by the interests of natives, however numerous, and that applied especially to the highland of Kenya, where the people of our own race had built up and fought for a heritage in the face of every difficulty. That heritage was their own, and could never be taken from them. Up to a point, of course, one is bound to agree. In so far as they have used certain social and economic advantages as a result of their own personal labour, they are entitled to a share of it, but I very much question the proposition that the rights of a few hundred or a few thousand white settlers are to be supreme over the interests of many, many more natives, however numerous they may be. That is the first point of view, and here is another on the same line of thought: In May, 1924, at a farmers' meeting at Songhor, in Kenya Colony, the number of natives working for white employers was said to be 12,200 less than the demand. Mr. Conway Harvey, a member of the Legislative Council, in an address, estimated the number of potential workers for white settlers and Government Departments at 519,000, one-fifth of the total population, as against the 134,000 actually working. The difference between the number of potential labourers and those actually working is in the region of 300,000, and the problem is how to get these slackers out. That is the expression of a member of the Legislative Council. I do not suggest that it is so, but if it be the fact that those statements indicate the point of view of people who are able to exercise some measure of control over the legislative powers of the areas with which we are now concerned, surely we are entitled to feel some misgiving as to the future of these natives. On the other hand, one is entitled to say, as one ought to say in fairness, that we have the assurance of the Duke of Devonshire in his famous despatch concerning the inherent rights of the natives as such, but though we have the assurance that that was the view of the Government of the day, we have since then, in a document issued by the Government, entitled "Compulsory Labour for Government Purposes," Command Paper No. 2464, on page 14, dispatch No. 4, a dispatch from the acting Governor of Kenya, in which he speaks of the problem of getting compulsory native labour and says: I consider it essential that the pay of compelled labour be slightly lower than for Voluntary labour; otherwise the whole value of the lesson will be lost. I admit that the present Colonial Secretary pounced upon that phrase and promptly asked what was its meaning or significance, but in the reply that was given to the question of the Colonial Secretary, there was very little reassurance to be got, for in that reply I read the sentence: It must be remembered that little economic pressure or inducement to earn money at present exists. The reply also states a little earlier: By 'the whole value of the lesson' reference was intended to the general impression which would be created in the native mind if it were found that the Government pays to men who are called out the same rate as it offers to men who are accustomed to seek and obtain Voluntary employment. What is, in fact, the actual attitude of the Government concerning compulsory labour, for it is vital in reference to this problem? If it be true, as I gather is the fact, from a report of the Governors' Conference held this year, that the reservoir of native labour is very limited in quantity, then obviously, if we are going to spend a vast sum of money on public improvements in these areas, the question arises as to how the native labour is to be obtained. Is it to be done by some form of compulsion, or is it to be done by offering attractive terms to the native labourers, so as to induce them on economic grounds to offer their services Voluntarily? I would very much like to have an answer to that question. And there is another question that I would like to ask. I notice from the Reports of the Governors' Conference one or two other somewhat difficult and, to me, un-understandable proposals. They speak of limiting in certain directions the energies, or the initiative, indeed, of the natives in regard to certain crops. For instance, there is a certain type of coffee, called Arabica, which, according to the Governors' Conference decision, the native is not to be allowed to grow. What is the use of telling this House that the native is going to be encouraged to develop his land in his own way, and from his own point of view to he stimulated to follow the lines of European civilisation, and so on, if, when a certain rivalry develops between the native and the European settler, the native is given a sort of feeling, which may or may not be justified, that such rivalry is to be stopped by the imposition of governmental authority? That may he a right view or a wrong view to take of the Governors' decision, but I would like to have it made quite clear to-night.

The right hon. Gentleman the Colonial Secretary, when he first spoke on this question, justified this loan on the ground partly that the money was to be spent upon what he called complementary services. I think it is my duty, as representing a mining constituency, to ask the hon. Gentleman a question to-night. In the Schuster Report, he will find, on page 16, a reference to the Tete coalfields. As I understand it these coalfields, as my hon. Friend the Member for Dundee (Mr. T. Johnston) pointed out last week, are not being worked by British capital at all. They are being worked by Belgian capital, and they are not in British territory. They are on Portuguese territory, and the proposal, as I understand it—I may be wrong, but I think I am right—is to take a railway up to the confines of the Portuguese territory for the purpose of bringing this coal, which is in the ownership of a Belgian company, to the sea. May I say, in passing, that no one, apparently, knows how much the output is going to be, but I think the total is expected to be in a few years 300,000 tons. No one has made an adequate survey of the area, but it is quite clear that at the back of the minds of people who have considered this proposal is the idea of bringing this coal into competition with the coal of South Africa. What I want to know is, seeing that Welsh miners depend upon the export trade and Durham miners depend upon the. export trade, can you justify this proposition that you are guaranteeing a loan which will develop coalfields owned by Belgians, by building a railway to bring that coal to the sea, thus bringing that coal to the market at a time when the market is already overstocked with coal?

The other question I want to ask is as to the expenditure upon research. It is no use our being blind to the fact that, there has been no clear statement adduced here at all on this occasion or on previous occasions as to how much money is to be spent on research. It is lumped in with other things in a certain amount of money. The Report of the hon. Gentleman himself gives overwhelming evidence as to the shameful way in which research has been neglected. I quote a short passage on page 155 of his Report. It refers to a state of things of which no one can be particularly proud: We were informed that, in the Kitui district of the Ukamba province, where there are 110,000 Akamba natives, the only assistance received from the Agricultural Department in 10 years has been the issue of a few bags of seed. That is a pretty eloquent commentary upon the starving policy which has been followed in regard to research in that particular part of the world. On page 156 we find: The Animal Husbandry Department, which embraces the veterinary services, seems to devote the greater part of its time to the care of European cattle and the setting of quarantine boundaries about native cattle areas where disease is known to exist. 10.0 p.m.

I admit it may not be entirely fair to life two single passages like those out of the context, but I think the general trend of these passages indicate that the hon. Gentleman himself is convinced that research has been very largely starved in that part of the world. I plead that we shall be told to-night what part of this money is to be spent on actual research, and particularly upon the agricultural side. I would specially implore the hon. Gentleman to develop in some measure—indeed, in a large measure—the educational services of that area. I was surprised to read in a passage in the same Report that even the children of European settlers are not over well-treated in this matter. They visited, he says, no European School where there was a science laboratory or where instruction in agriculture or handiwork was given. To my mind, it indicates a hopeless state of affairs, and if, as we all agree, educational development is the first step in the direction of preparedness for self-government, to say the least of it, we must obviously do far more than we are now doing to endow those people with educational opportunities. I beg the hon. Gentleman, therefore, to be so good as to give us assurance on the matter of native labour, and especially on the general question of research.

Mr. ORMSBY-GORE

The hon. Gentleman has only given me two minutes in which to reply, as I understood this Debate was to finish at 10 o'clock.

Mr. MORGAN JONES

I thought you were to start at 10 o'clock.

Mr. ORMSBY-GORE

No, to stop at 10 o'clock, to enable the House to finish two other Bills. Therefore, the hon. Gentleman will excuse me for being extremely brief in my reply. The object of the proposal is primarily in the interests of British Nyasaland, and the population of Nyasaland, because owing to the fact of the break at the Zambesi, and the inability of transport to cross that river, except during certain months of the year, when there is neither flood nor the opposite of flood, namely, sand banks, which block the ferrying of anything at all, it means that the whole standard of life of the native population of Nyasaland is lower than other parts of East Africa. It is true things are much cheaper because they cannot be exported. None the less it is perfectly clear that all the more energetic members among the people are being driven out of Nyasaland simply because the communciations are inadequate and you find all over that country and Kenya, as pointed out by Dr. Jesse Jones, the communications are inadequate. The Zambesi Bridge is one way—I do not say the only way which has been suggested—for enabling British Nyasaland, with its increasing population which is extremely industrious, to get a chance of exporting something and buying something. When the Schuster Committee, however, came to examine the finance, they discovered it was a work of gigantic proportions. It was a very big river, liable to tremendous runs of water, and they doubted without further inquiry whether the million people of Nyasaland and their production could, with the conditions laid down by the Schuster Committee, pay from the start. So they examined to see whether there was any project not in Nyasaland but nearby that would aid the Nyasaland traffic passing over such a bridge, and they were informed that the Portuguese Government has given that concession to a Belgian company for the development of Portuguese coal in Portuguese East Africa. It has nothing to do with us, and we could in no way interfere with the Portuguese Government or the Belgian Government. If they do develop that coalfield—whether they will or not I do not know—it will, of course, be of material use for traffic over that bridge, and it will enable that bridge to pay and the roads to be used by the native production of Nyasaland.

On the general question I think I ought to make it clear both to the hon. Member for Caerphilly (Mr. Morgan Jones) and the hon. Member for North Battersea (Mr. Saklatvala) that you cannot lay down a proposition that in the interests of this country you are to lock up the resources of any part of the world or the possibility of the advance—social, economic and industrial—of any race of the world. The idea that you can say to East Africa, "You have to be kept primitive and the resources and minerals of your country are to be kept out," is a proposition which, I for one, would never subscribe to.

Mr. SAKLATVALA

I never suggested that. I said that when we introduced industrial capital we must also introduce the wages and the hours of labour in proportion to the trade and conditions in this country.

Mr. ORMSBY-GORE

That is a secondary matter. If the impression got about that in the interests of one particular country we could keep back the other there would be a great deal of resentment felt on the part of many people. I am very glad that that matter has been cleared up. Let me congratulate the hon. Member for North Battersea on his vigorous attack on Socialism to-night. After all, it is proposed to get people with savings that may be invested in profit-making concerns at a higher rate of interest, to put those savings at a lower rate of interest in Government expenditure—Government railways and Government harbours—carried out by Departmental work. Usually, on these occasions, I am accused not of propping up private interests and private enterprise, but on the ground that His Majesty's Government are being unduly Socialistic in their methods of developing these undeveloped countries. The hon. Member, I understand, on the last occasion received representations, I think from the representatives of Jaffa, when he made a vigorous attack on Zionism and the Jews, but, overawed by the greater knowledge of his hon. Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood), he has rather dropped that in this Debate and now says that both Jew and Arab at Jaffa are very anxious that the harbour works should be carried out there. Of course they are. The Jews at Jaffa and Haifa are anxious that it should be carried out there, but the decision of His Majesty's Government is that there shall be made the best harbour in the interests of the country as a whole and on that alone will the decision he taken. The pipe line does not enter into the discussion of the matter, which is being looked at entirely from the point of view of Palestine and Transjordania. Whatever happens even if Haifa—as is the more probable—develops into the principal commercial harbour, the country and the ground being more fitted for it than the reaches of Jaffa, it is not proposed to neglect Jaffa altogether. A certain sum of money will be spent in endeavouring to improve the landing at Jaffa which, as everybody knows who has been there as I have been, now leaves much to be desired.

Colonel WEDGWOOD

Did I understand the hon. Gentleman to say that the pipeline does not enter into the question at all?

Mr. ORMSBY-GORE

The question may be raised in the future but it is not an immediate practical proposition. The other point that the hon. Member for Caerphilly raised was when he was talking about conscript labour and the prohibition or the discouragement of the growing of certain crops. We have had a great many questions on these matters for many months, and I thought that the policy of His Majesty's Government had been declared so often and had been made so clear that I am sorry it has been raised again. We have laid it down again and again that neither in East Africa nor in West Africa nor in any British colony will His Majesty's Government, as long as they retain power, allow the compulsory recruiting of labour for private profit on private estates of any kind. I renew that pledge to-night. But with regard to public works and services, there are occasions when it is necessary to call upon local labour to assist in those works.

Our policy is to dispense with that necessity as soon as we possibly can; as soon as a free-labour population grows up in those countries, and it is a matter of very slow growth in West Africa. It is faster in East Africa, by the existence of a certain number of capitalistic enterprises. We shall dispense with that necessity, as I have said, if we can get free labour to come forward and to work. We have only used compulsory labour in Kenya once. In Uganda we have had to use more compulsory labour. A great proportion of the roads, for enabling cotton production to take place, have been built by communal labour. Twenty-eight days is the limit in a year, and it is remarkable with what speed the natiyes construct the roads and how cheerfully that labour is performed, especially as they see that it inures to their benefit. It is true that in the West Coast of Africa we do find it necessary to call upon compulsory labour for the construction of both railways and roads, but that is strictly limited by law to so many days in the year. It is properly rationed, and is properly organised under suitable officers.

The matter has been under discussion. Those conditions obtain in various parts of that continent which have only recently come out of slavery or where there is no industrial population—practically no white labour of any kind. There it is necessary to have recourse to this system for essential work such as I have mentioned. In places like Kenya and the more developed parts of East Africa we are getting to the point where the use of forced labour is becoming rarer and rarer, and will in the end be eliminated. With certain of the tribes whose sole occupation in the old days was military service and fighting, it is very desirable that the male part of the population should be adapted to undertake agricultural work for themselves, or to work for the Government, or to learn something useful on a plantation. I do not say in large areas of Africa, but in some areas of Africa, we have stopped the tribal wars, and have broken up the old customs, and the male section of the population are doing absolutely nothing, and that is bad for them and bad for the tribes, and the sooner it comes to an end the better.

On the question of taxation it is quite true, as the hon. Member for Orkney (Sir R. Hamilton), who has spent so many years in East Africa, has said, that the white population in Kenya is estimated to pay a quarter of the taxation, and the native population—or, rather, the Indian, the native and the Arab population—pay about three-quarters. I am not in a position to confirm or dispute his exact figures.

Sir R. HAMILTON

I was quoting from the Governor's speech. For myself, I made the figures somewhat different.

Mr. ORMSBY-GORE

I have not checked them but, taking them from the Governor's speech, look at the immense disproportion in numbers as instancing the difficulty of making such a comparison. There are between 10,000 and 11,000 Europeans all told, including officials, and there are 2,250,000 natives and 30,000 Indians, and some thousand Arabs. The European quarter of the taxation has to be divided by 10,000, and the non-European three-quarters has to be divided by 2,000,000 odd. I do not think any European in Kenya would ever suggest for one moment that he should not pay in direct and indirect taxation a great deal more per head in proportion to the members of any other race, but the working out of a fair and equal incidence of taxation amongst many races, with varied elements in each race, is by no means an easy task, for any Government, however much alive to this problem, and I do assure the hon. Member that the present Government are alive to it.

The right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) said that the railways had meant a great strain on the Kavirondo labour. I can assure him that no Kavirondo labour has been used in the construction of railways in East Africa. Uganda does provide its own labour supply. Take the very plan of the railways, such railways as the Schuster Committee foreshadow as among the earliest of those which it has already agreed to. The Tabora-Mwanza line runs through a district where there is not a single European settler, and the general line of development of railways in East Africa has been based upon an endeavour to reach areas where there is the densest and most native population. White settlement takes place in East Africa only in small patches. It is perfectly true that there is only a comparatively small area in that part of the world which will ever be available for European settlement. Land under 5,000 feet above sea level, which comprises the greater part of that country, will always be a country for native population. The bulk of the native population does live and work in the lower areas, and in the highland areas where Europeans go, there are comparatively few natives, although there is there in many cases actually the richest soil for the purposes of production. After all that has been explained before and it is a considered opinion of the African Government that the natives should be encouraged to grow robusta, although arabica coffee is worth more than robusta. The reason is that robusta coffee grown in Java is a fairly hardy plant with a fairly regular yield and does not require perpetual pruning and attention and that is not so in regard to the very high-grade arabica coffee which is required. When they do get a good year they do not get a tremendous yield. In Ceylon where they grow arabica coffee it was all destroyed in one year by one disease. In a wide country like East Africa, unless you have the natives growing that crop in a ringed fence, and unless you have perpetual inspection you may have the whole of the industry in a very short time stamped out by the spread of diseases. In the neighbourhood of Arusha the plots producing this kind of coffee were carefully inspected and the conclusion was arrived at, that they were very dangerous, that they were already diseased and that they should be grubbed up. At Kilimanjaro, where we have a Government officer in control there is a place where the arabica coffee is being grown, but robusta coffee growing is much safer everywhere else and is more successful, and it makes a very much better crop. That is all I need to say on that point.

One final word in regard to the main question, which is finance. In this connection may I say a word about research? Proposals are coming forward in regard to research, and I may say that nobody is more anxious than the Colonial Secretary and myself to get every penny we can to promote scientific research within the Empire. I have spent a great deal of my life pointing out the shortcomings of my fellow-countrymen in regard to the matter of scientific research. I have found many glaring instances all round the world, and I find that I have had to preach to a lot of very unconverted people, and I shall continue to do so. I agree that research should be interpreted in its widest sense. It is not merely the investigation of the diseases of plants and animals and human beings, but the problems we are up against are such that we need a very much greater staff than we have had in the past. The more fundamental research on these economic and social relations in the higher ranges of policy and development is quite as important as all the other fundamental sciences, and, in the intimate relation of these several things, it is absolutely necessary, if we are to avoid making mistakes, and if we are to get the maximum pro- duction in the interests of the world and of the people of these countries.

As to finance, I was profoundly sorry to hear the line that was taken by my hon. Friend the Member for the City of London (Mr. E. Greenall). I had thought that, after the speech of the Financial Secretary the other day, and after what my right hon. Friend the Secretary of State has said on more than one occasion, he would have been converted, but it appears that he was not. It seems to be said that we have many better means of using our credit, but, speaking for myself Personally, it seems to me that this particular use of credit is a really productive use, and that that is the only way in which we can get more credit in the years of the near future, when we shall want it most. Credit seems to me to be entirely bound up with the Volume of production and the Volume of trade, particularly on a sterling basis, and the produce that is obtained on a sterling basis in the British Empire seems, to my mind, to be the foundation of our whole credit system. Credit is not a thing apart from trade or development; they are mutually inter-dependent. Looking round the world, I say quite frankly that, although my hon. Friend may know more about the City than I do, I am absolutely convinced that Great Britain, and British finance and British trade, will depend for their continuance on the development of tropical countries, of which the greatest are the British Colonies.

The twentieth century is only just beginning to realise the dependence of industry upon trop cal raw materials. Industry in temperate countries cannot be developed as it is developing to-day without an increasing supply of all the tropical raw materials, not confined to fibres, oilseeds, and things of that kind. It is the marriage of tropical production with temperate industry that will give a new impetus to industrial development in the temperate countries, and, if one looks around the world, one sees that there are no two richer areas awaiting development than British West and British East Africa. I am perfectly convinced that the future prosperity and standard of life of the working people of this country are bound up with increased markets and increased purchasing power of overseas customers, and that every £1 of increased purchasing power that can be created, say in Uganda on the part of the native growing cotton, or in Nigeria on the part of the native producing palm oil, would be an immense increase in the purchasing power—

Mr. BROMLEY

Increase the purchasing power of your own people!

Mr. ORMSBY-GORE

Yes, it would increase the purchasing power of every British subject under the King, not only white men, but black men and yellow men and all our fellow-subjects. The hon. Gentleman may take the little England view, but we on this side of the House are determined, in using our credit and our energy to regard the Empire and its productive power and its purchasing power as one, as a great group in the world, and not to be narrow, parish-pump little Englanders, but people who do realise the dependence of the people of this island on the greater world outside.

Bill committed to Committee of the whole House for To-morrow.—[Mr. Amery.]