HC Deb 02 March 1926 vol 192 cc1273-327

Order for Second Reading read.

The FINANCIAL SECRETARY to the TREASURY (Mr. Ronald McNeill)

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

I dealt quite recently, in moving the Financial Resolution on which this Bill is based, with the principles underlying the Bill, with which the House was already familiar, and gave the reasons why it is necessary for us to bring in the Bill at this period of the Session, and the amount of money which it is asked to put at the disposal of the Government for the purpose of the loans. I am very reluctant to repeat anything that I said on that occasion, but, really, there is extremely little to be said as to the general principles, which I outlined then, and as the various objections that may be raised in the form of Amendments to the Bill will, I think, be more appropriately dealt with when we get into Committee, I hope to occupy a very short time of the House, and to leave until we get into Committees those specific Amendments that may be raised in different parts of the House. But I ought, perhaps, to remind or inform any hon. Members who have not hitherto given attention to this legislation, very shortly what the purpose of the Bill is. The main purpose is to give employment to skilled men in their own industries, and to do that by stimulating orders for the products of those industries.

The purpose of the Act is to encourage the outlay of capital in productive enterprises, and the object of limiting the scope of the Bill to capital undertakings, as explained when the first Act was passed in 1921, was to prevent it operating to keep up prices. It was pointed out then—and I think experience has justified what was then said—that by the promotion of capital undertakings in this way, the tendency is to increase the amount of goods produced—one cannot say, of course, how far that tendency goes at any one time—and to reduce the cost of their production.

The principle of the method of working these Acts is that the Treasury should have power to guarantee loans to be raised when they are satisfied that the proceeds are to be applied towards the carrying out of any such capital undertaking, or in the purchase of articles produced or manufactured in the United Kingdom, and required for the purpose of the undertaking, and if they are also satisfied that the guarantee of the loan itself is calculated to provide employment in this country. I mentioned, in speaking on the Financial Resolution, that there is, as the House knows, an Advisory Committee to advise the Treasury with regard to these loans, and I referred to the language used by the Chancellor of the Exchequer in 1921, in which he laid down the position of that Committee, and showed the extent to which it was to be given a free hand.

I ought, perhaps, to say a word more with regard to the manner of proceeding under this Bill. I submit that the Government guarantees, covering the spending of large sums of money for the purposes named, ought to have a substantial effect upon employment. Quite obviously, if it does not do that, to the extent that it fails to do that it fails of the purpose for which this legislation was first inaugurated. The undertakings for which the loans are given keep a record, so far as it is possible to do so of the amount of employment given by the works carried out by the proceeds of the loans. They are enabled, no doubt, to do that so far as the effect of the loans upon the undertaking is direct, but that gives a very imperfect idea of the amount of employment which may be-attributed to the system, when, as I also pointed out on the Financial Resolution, it is provided that all the plant, machinery and materials required in connection with the works to be undertaken shall be purchased in Great Britain at the lowest prices on a competitive basis under contracts requiring the contractors to certify on their own behalf, and on behalf of sub-contractors, the amount of machinery or material that has been supplied wholly of British manufacture.

It does not, I think, require very much demonstration that the guarantee of a loan granted to some undertaking, which induces that undertaking either to start works which otherwise would not be undertaken at all, or to anticipate works which otherwise might not have been undertaken for a very considerable time, under such contract as that which I have outlined, must have the effect, I will not say of producing employment which otherwise never would have been produced, but, in the opinion of the Government, it is of very vital importance to accelerate employment, and, possibly, to stimulate it just in those parts where that stimulus to employment would be of the most benefit. The other day I saw an interesting article by the right hon. Gentleman on this legislation. I do not want, as I have said, to anticipate any comment that would be more appropriate to Committee, but if I accept that article as expressing the general views of the right hon. Gentleman, his chief complaint would appear to be the very trifling sum which we are asking for in this Bill; because he spoke rather contemptuously of the paltry £40,000,000, or £30,000,000, or £25,000,000 which had been given under previous Acts. He seemed to think that £150,000,000 was more the appropriate figure. Without going into the article more fully, at all events, the attitude there indicates, I think, that my right hon. Friend is not hostile to the principle of this legislation; the only thing is that he thinks that it does not go far enough.

The reason why I ask the House to give a Second Reading to this Bill to-day is that the existing Act expires on the 31st of this month; therefore, if this legislation is to be continued, I submit to the House that we must pass this particular Bill before the close of the present financial year. As I intimated the other day £65,000,000 out of the £70,000,000 authorised by the Committee last year has been expended or will have been expended by the end of the year. The raising of the maximum figure from £70,000,000 to £75,000,000 places £10,000,000 for the ensuing 12 months at the disposal of the Treasury for this purpose. I think my right hon. Friend opposite thinks this is an utterly contemptible sum and falls far short of his aspirations; yet I hope he will not refuse consent to the Second Reading of this Bill, and that he will advise his hon. Friends to do as he does.

Mr. WILLIAM GRAHAM

The House is indebted to the Financial Secretary to the Treasury for the introductory statement that he has just made in regard to this Bill, but I think that hon. Members in all parts of the House will agree that during the time that this legislation has been under discussion in this Chamber there has been always two very definite points of view. The one was that this legislation was thoroughly undesirable; the other that it should be encouraged with certain safeguards which from time to time might be laid down. It is extremely difficult within the range of our Debate to-day to say anything new upon this subject. I think, however, a very useful purpose can be served if we on the Second Reading of this Bill, review some of the larger problems which are raised by the Measure itself, and by the introductory statement of the Financial Secretary.

The Bill falls into the usual two parts; the provision for the continuance of Export credits, and the other, and larger part, dealing with the scheme of trade facilities. May I say only one or two words about Export Credits. In the controversy which took place in this House yesterday on the Supplementary Estimate, we ascertained for the first time, I think clearly and definitely, the view of at least certain Members of the Government in regard to export credits for Russian trade. The principle of that part of the legislation has always been perfectly plain. Those export credits are provided for guaranteeing at a premium to cover the risk, mercantile Bills for the express purpose of encouraging exports from this country and in order to stimulate employment. While it is true that the Schedule in the original Act of 1920 included a certain number of countries there was an understanding that these would be extended, and in any case we understood that the real test of any application being allowed was the kind of security that should be provided. That matter, of course, was one for the Advisory Committee. While I do not for the moment dispute that the Government of the day must always make up its mind on the broad policy, the matter of the application is to be left with the Committee. In the course of yesterday's Debate the Overseas Trade Department, reinforced by the Home Secretary stated as a broad principle that any application for guarantees that covered Russian trade was ruled out. It will not be entertained at the present time. I do not propose to enlarge upon our views on this side as to the general economic and political policy of the Russian people.

A very important consideration emerges, however, when we assume this afternoon in the House of Commons that a perfectly good proposal coming from some company or firm of repute proposing to undertake trade with Russia is a transaction that will not be approved. As we understood yesterday's statement not only is the present position thoroughly undesirable from any point of view in international trade, but it is perfectly unjust as between individual traders in this country. We come here with legislation of this kind and we provide for these guarantees, in both departments of the Bill, on the broad credit of the British people. They are responsible in the last resource if there is any loss. Under any programme which we put forward in a matter of this kind traders are at least entitled to equality of treatment. Why should they be penalised? Why should they be refused a guarantee because of the political or economic views which the Members of the present Government hold? A situation of this kind is altogether unjust, and I venture to say was never contemplated under this legislation. The House will at once observe that I personally, and I think hon. Members on this side, have not recommended an unsound transaction. I am pleading for a perfectly sound case, and that the guarantee should not be refused because of the particular position, organisation, and practice of the Russian State. That is all I need to say on the purely export credits side of this scheme.

We come now to what is far more important as regard the general finance and guarantee, mainly the large scale provision for trade facilities. As the Financial Secretary quite rightly pointed out, this is designed to guarantee loans, as to principal and interest, which are raised in the open market either by public bodies or private firms embarking upon capital expenditure which, in our judgment, will provide employment in this country. In other words, it is to use our credit, within certain limits, in order to try to help great numbers of people who are out of work at the present time, and at the same time minister to the growth of our general economic capacity. These it seems to me are the principles of this measure. We have had four or five years' experience. Having been once on the other side of the House, and having had the duty which now falls to my right hon. Friend of promoting a Bill of this kind in the House of Commons, I am well aware that this is legislation of a controversial kind, especially as to some parts of it. My hon. Friend opposite the Member for one of the Divisions of Aberdeenshire suggested yesterday that the time had arrived when the whole subject of trade facilities should be subject to review by some competent committee. May I say at once that I am in complete agreement with a suggestion of that kind. The time has arrived when we require something more than a general Debate in this House or even a detailed Debate.

First of all there has been a great deal of debate and investigation as to the classes of guarantee which are covered by this Measure. The whole of the time we were in office there was very strong criticism of the guarantees which -were given to large shipbuilding and other undertakings in this country. Hon. Members pleaded with very great force that inasmuch as much of the shipping could not find remunerative employment this was a dangerous form of guarantee to give. We all knew that guarantees to shipbuilding firms were, as it was thought at the time, likely to aggravate unemployment in time to come by adding to unremunerative tonnage, and on the other hand, there was the very strong pull by hon. Members who represented some of the shipbuilding constituencies, and more particularly the strong opinion of Members in many parts of the House who were face to face with grave unemployment in the engineering and shipbuilding trades. They came to us and said that there should be no stoppage of the guarantees for shipbuilding, but the proceedings should be watched with very great care. That is one case of difficulty under this legislation. There are other large guarantees which hon. Members have on the White Paper which has been issued and I have no doubt further applications will be made in the near future.

What is to be the policy of this House to applications of that kind? How are we to deal with schemes of the sort involving capital expenditure in important industries like shipbuilding, which are subject to active controversy at the present time? I venture to think that able as an Advisory Committee may be in a matter of this kind, the work of the Advisory Committee is necessarily largely confined to individual applications which are presented to it. It is true that they may discuss policy or try to review the whole situation, but, after all, that is in reality a matter for this House. It is a matter for this House instructed by some competent committee which has reviewed the whole situation, and on the broad facts of the case, has presented proposals. Then there has always been criticism to the effect that small men are regarded as being excluded from this scheme and that a certain class of people, who cannot put up perfectly strong security, do not get a guarantee. Quite frankly, I have never been very much impressed by the contention regarding small men, because, after an analysis of many cases, I came to the conclusion that the real test was the security, and that these people very often could not put up a security upon which we should be justified in risking the money of the people, even by way of guarantee. I trust, however, there is no tendency towards excluding people merely because they are small traders, because a fair amount of unemployment is highly local in character and some of the unemployment could be relieved by a form of guarantee to the smaller industries under legislation of this character.

That, however, is not really the large point at issue, which is as to the policy on the broad question of security, which the Government are going to pursue under the Trade Facilities Act. Hon. Members opposite, and, indeed, in all parts of the House, have asked why we give a guarantee under the Trade Facilities Act to a large railway undertaking which would have raised the money quite easily in the open market without this guarantee? Why did we give it to some powerful combine whose name commands universal respect in financial circles? That is a difficult point to meet, and all the more difficult when we plead for equality before the law for all sections of the community. If there was the slightest proof that with the assistance of the guarantee they could raise the money rather more easily in the open market and so facilitate their under taking work, I would be inclined to say the preliminary conditions were satisfied in such an application; but it seems clear to many hon. Members, quite irrespective of party, that, if these firms would go on with the work in any case, we should try to give preference to those undertakings whose security is perfectly good, but who have just a little harder struggle than the more powerful undertakings. It may be a matter of a very delicate balance with them—the guarantee may make all the difference in the world as to whether they undertake the work or not. If they get the guarantee, the work goes on; if they are refused the guarantee because their security is not quite perfect, then, of course, unemployment will not be assisted. Speaking as one who has tried to look into the heart of this legislation, I offer the suggestion to the House this afternoon that we shall best discharge our duty in the matter of providing employment, or maximum employment, if we try to give the benefit of this legislation to those undertakings that are perfectly sound, but are not of the gilt-edged or perfectly secure class of great combines or other undertakings such as have been largely guaranteed so far. That is eminently a matter for the investigation of a Committee, and there are already two or three other point which, I daresay, Members agree are well worth such inquiry.

I come now to the third and, apart from one larger consideration, the last part of the argument I venture to offer to the House. The Financial Secretary to the Treasury was kind enough a minute or two ago to quote an extract from a newspaper article in which I made some reference to this scheme. May I try to explain the real meaning of the proposals that were then advanced? Whatever view the House takes of this legislation, we are committed to it for 20 or 30 years or, for all I know, a still longer period, because the guarantees cover the period I have mentioned, and the legislation will continue even if we do not increase the aggregate amount guaranteed. Therefore, it seems rather idle for the House to discuss whether the legislation is to be wiped out or abandoned at an early date. In point of fact, we could not do that without a certain violation of our contract or obligation. We are committed to this for a very considerable period.

The real question which faces us is, Are we making the best use of our restored British credit in our own interests within Great Britain? This is a very convenient Bill upon which to base that question. Not only are we shouldering enormous obligations arising out of the War, we are writing off large sums from the amounts owing to us by Allies on the Continent, and we have shouldered all the burdens of the return to the gold standard, which is represented in its acutest form by unemployed men and women and by a price level which undoubtedly introduces difficulties for many sections of British industry and commerce. We have done all that on the broad argument that it is restoring British credit, and I entirely agree; it is probably a perfectly sound policy; but surely the time has come when we are entitled to ask ourselves when we are going to get the benefit of that restored credit for 1,250,000 people who are still out of employment in this country.

The argument is, that we have to choose between some kind of contingent risk, which might be involved in the extension of the guarantees under this legislation, and the continued payment of unemployment benefit, which produces no capital asset at all, and this at a time when the industrial capacity of our people is, by common consent, being steadily impaired. Even if in the last resource we had to pay a million or two of money under guarantees, would not that be infinitely cheaper than the millions we are pouring out now in mere relief? Attention has been drawn to the fact that since the War concluded we have paid at least £250,000,000 in one form of unemployment assistance or another, against which we have to-day no capital asset worth the name. That is a remarkable thing, and if it is a question of credit, we ought to face the issue quite fairly. My view is, that this legislation will not pass away. I am not recommending to the House one guarantee of an unsafe or useless character, because that does not help unemployment in the very least. The real argument here is a plea for perfectly sound guarantees, but on rather more imaginative lines, for the express purpose of trying at an earlier date to reduce the numbers of our unemployed, using the great machinery and strength of British credit to that end.

I have one other point to make, and here I come into sharp conflict with the economic ideas of hon. Members opposite, but the issue must be faced. During the past few years we have been embarking on one form of subsidy after another, and all, guarantees and subsidies, have, of course, been provided at the expense of the public. Under trade facilities and export credits together we have provided by way of guarantee as to principal and interest, about £100,000,000 in all, £75,000,000 being under trade facilities and about £26,000,000 as maximum under export credits. Then we have given something by way of direct subsidy to the sugar beet industry; and we have helped in other directions. Our case is that the time has come when we must ask the country, and endeavour to get a decision from this House, as to whether we can go on giving guarantees or subsidies to privately-run industries without claiming for the public a right in the ownership of the assets they have helped to create. That is the principle we venture to lay down this afternoon. Hon Members opposite may say that this legislation was designed to provide employment, and that the State gets the benefit of such employment as it encouraged; but that is not a complete reply to the suggestion I have made.

Other industries are carrying on without a guarantee, very often in more difficult circumstances, and they are not getting the benefit of this legislation. Moreover, if it is the case that many of these undertakings can raise money on the open market on rather easier terms with this guarantee than they could without it, then clearly the difference is the measure of the subsidy we give to these firms. I agree that they do not get a subsidy in actual cash, but they get the benefit of the cheaper or easier capital accommodation, and there are other advantages attached. This House is the trustee, theoretically, of all the resources of the British people, and I invite hon. Members to put themselves in the position of a trustee for a privately-owned concern, or, indeed, any other property, and ask themselves whether they would be entitled to pledge the credit of the people for whom they were acting unless they had been able to secure some service or right in respect of the risk they undertook. Here we are taking a risk of about £100,000,000 of contingent liability, which to that extent affects our credit, and for which the masses of the people to that extent pay, and yet we do not enter into the capital asset at all.

We raised this issue on beet sugar, when it was before the House some time ago, and I would like to recall the reply that was given to us by the then Minister of Agriculture, now the Viceroy of India. He said, broadly speaking, that he was with us on this principle, he agreed that it was sound that such a claim should be made, but, he said, he was obliged to resist us and he was reinforced by the then Financial Secretary to the Treasury, who said he must resist us because this is public ownership, or Socialism, by a side door. That is an example of the hostility that the mention of such a word conjures up in the House at the present time. We on this side plead for public ownership because we believe it is an inevitable development of the industrial system, and whether hon. Members agree with us or not, they cannot deny the fact that we have no right to use the credit and resources of 44,000,000 people unless we are able to say to them that there is a part of the capital asset belonging to them which their credit and their guarantee have gone to build up. We shall put forward an Amendment on those lines during the later stages of this legislation, but I venture to suggest that the three or four points which have been very briefly, and I fear imperfectly, summarised are sufficient material for the committee of investigation which has been suggested, and that it ought to be undertaken at the earliest possible moment, in order that this legislation may make its just contribution to the relief of the difficulty and, indeed, the tragedy of the British unemployed.

5.0 P.M.

Commander WILLIAMS

I rise to put a point of view which was put the other night very ably by several hon. Members, and which I think, if carried out, would go a long way towards making an end to the necessity for this particular kind of legislation. I know that the Financial Secretary to the Treasury is naturally very fond of this particular Measure. It is one of the relics of the Coalition, and we were all amused at the kindly way in which the right hon. Gentleman has been nursing this Measure from time to time. I sometimes think, when we are looking at this Bill and dealing with questions of this kind, and manipulating British finance, whether one way or another that really British finance as a whole would be much better off if, instead of the Government interfering so much, we went back to the old sound principle of pre-war days. It seems to me absolutely wrong, at the present time, that you should by way of credit give a definite and clear subsidy to this or that firm. There can be no doubt that as far as this Measure is concerned it does enable particular firms and industries to go to the banks and go into the money market and get their money at a lower rate of interest than they would otherwise get it, and that seems to me thoroughly unsound finance. I do not mean to say that we have not a very excellent Committee dealing with these things, but one firm may be able to put a point rather more clearly than another, and there is a very general feeling among a considerable number of very well informed people that, although you have a first-class Committee dealing with these matters, sometimes a firm with a little bit happier advocacy gets in when another firm quite as useful from the point of view of relieving unemployment would be dropped out, and would not obtain any help under this particular subsidy.

Another important point is that you have got in the country to-day, on the whole, a very sound financial position. I know you have got your troubles, as for example the unemployment question, but I do think that while you go on as you are doing to-day, giving these various subventions to industry, it is creating an impression of weakness in the country, whereas if you could stop this you would do a great deal towards strengthening British capital at the present time. Generally speaking, this method is absolutely useless and inadequate for dealing with the real object of this Bill, which is the matter of unemployment. You have to take the men who are out of work, and the men who have money to invest and bring them together and go into some big foreign market, and often embark on a really risky enterprise in the hope that we shall get into those markets with our British goods before the foreigner gets there.

That is the real object of the. Bill. The greatest condemnation of this Measure to my mind is that you have given all these guarantees, and they have gone on all these years and you have had very few losses. I do not want to see losses made and placed on the backs of the taxpayers, but if this Bill is to be of any value, there should be more real enterprise, and more of the old-fashioned British spirit which took us into the Hudson Bay Company and other big companies where you had a real spirit of adventure, and where inevitably you had to have great losses coupled with great gains. From that point of view this Bill has been a real failure.

This Bill as it stands to-day is really rather like someone going to a great reservoir and trying to fill it up with a teacup when you have a very bad leak at the bottom. You have in this country the supply of capital which is absolutely essential to these enterprises, but it is necessary that that capital should increase. I know you are proposing to help it to the extent of one-half or one per cent. but at the same time you are taking away the capital and expending something like £50,000,000 or £60,000,000 in capital taxation. What is the use of encouraging capital in a small way on the one hand, and taking great blocks out of the capital of this country and expending it on the other hand? It would be wiser if the Chancellor of the Exchequer would lay down that he was going to gradually drop this Measure and eliminate all taxation on capital, and that would do more to encourage industry to-day than anything else. [An HON. MEMBER: "Carried unanimously!"] A large number of hon. Members opposite do not want to encourage capital, but there is also a large number who realise its value. Every time you attack capital, you are attacking the wages of the workers. That is why the Conservative party wishes to see very much greater development of industry everywhere, not for the sake of one side, but for the sake of everyone in the country.

The next point was that a suggestion was made the other day in a Resolution to the effect that, if the Government could not see their way to withdraw this Measure now, or to announce clearly when it should be withdrawn they should at any rate consider the possibility of taking steps towards the withdrawal of this kind of legislation. The first step which some of us thought might be taken was that the Government could announce that after next year, or even now, they would go on guaranteeing this new £5,000,000 or £10,000,000 we are asked to guarantee, but that we should not guarantee the interest upon it after next year. That would be a step towards getting rid of this system) and that is why I ask the Government to seriously consider the whole position again. This is a subsidy and it is not one of the best sort. It is diverting capital sometimes unwisely and sometimes exceedingly well, as in the case of sugar beet, but it is not doing anything like enough in the direction of encouraging the development of industry, and nothing like as much as we thought it was going to do when these proposals were first made.

Mr. RUNCIMAN

The speech of the Ex-Financial Secretary to the Treasury on this Measure was logical. It led up to the point that this kind of assistance given to industry has one inevitable end, that is, the nationalisation of the means of production, distribution and exchange. I think my right hon. Friend was quite justified in that statement, and I should support him in any proposals which were reasonable and likely to be effective for securing to the State some of the advantages which it is claimed are actually created by giving guarantees under the Trade Facilities Act.

Meanwhile, may I point out some of the disadvantages under which we have already laboured owing to the advances or guarantees made during the last four years? In the first place, the selection of concerns was not done on any settled principle, and it could not be done on any settled principle. It was quite sporadic. Applications were sent to the Treasury and transferred to the Advisory Committee, and they said whether or not a particular application complied with the requirements of the Act. Then the Treasury issues its certificate, and there is a flotation on the market. There is a selection of those concerns with no immediate relation to the trade of the country as a whole. In many cases the advances made benefit one particular firm and do injury to another firm, and they create new forms of competition of all sorts quite uncalled for by the necessities of the trade of the world. Therefore, these advances, whilst conferring an advantage on those who get State assistance, put a good many concerns who wish to be free from the restrictions placed upon them under a grave disadvantage, because while many of them were struggling just as gallantly to get over the depression, they have to pay now for capital 1 per cent. or l½ per cent. more than the privileged concerns which have run the gauntlet of the Treasury and the Advisory Committee. That can only be justified by taking every case on its merits. But in doing that no general principle was adopted by the Treasury or the Advisory Committee. It is true the accepted firms complied with certain conditions laid down in the Act, but by acting in this way a broad survey could not be taken of the necessities of British industry and commerce, and the Treasury were not able to look very carefully after British interests broadly.

Let me give an instance. The Treasury sanctioned two advances to an Italian shipping company. They did this at the very time when the Italian Government, by decrees, was making it impossible for British ships to exercise their proper functions in regard to the carrying of Italian emigrants, and British ships were put under a disability in that way. It is rather remarkable that, at that very moment, the Treasury were sanctioning a very large sum, of money to an Italian company which was allowed to trade from Italian ports under favoured conditions, and which was receiving an advantage in regard to their capital of something like 1½ per cent. or more as compared with British shipping companies. That is not fair to the British concerns which have been carrying on as well as they could under most difficult circumstances caused by bad trade and Government Regulations in other ports without as much assistance from our Government as they had every right to expect.

Moreover, there has been a spreading out of these advances into industries such as the one approved by the hon. Gentleman who has just sat down. It is a remarkable fact that in regard to the sugar-beet industry the subsidy comes to about twopence for every twopenny-worth of the produce. At the very time when we were doing that we gave an additional advantage to the company promoters, who naturally took advantage of such a handsome offer, and we gave them the privilege of getting the capital for their factories under the Trade Facilities Act. They might have gone into the market and taken the ordinary market rates, and financed those concerns themselves. I do not suggest that either the Treasury or the Advisory Committee played knowingly into the hands of company promoters, but that was the effect. Company promotion in this connection on such a scale will not relieve unemployment, although it will put large sums into the pockets of all those who are not directly concerned with the employment of the people.

Let me point out another disadvantage under which industry has laboured under this arrangement. The trades which have been selected in some cases have been selected at the expense of other trades. The case of shipbuilding is very much in this position. There seems to be very little doubt that some of the orders placed on the Clyde and elsewhere, assisted by the credits of the Trade Facilities Act, were ahead of the programmes which would have been in prospect in the ordinary way in the various shipping companies and lines. There may have been some advantage, undoubtedly, given to the shipbuilding industry at that moment, but what has been the effect? The immediate effect was to produce more ships than the traffic of the world could justify—there are far more ships in the world than are necessary at the present time for the carriage of the goods which are available to be carried between country and country. There have been produced, quite artificially and ahead of the natural demands of the world, vessels that are not required. That, naturally, meant a postponement of that prosperity in the shipping trade without which there cannot be the regular flow of orders into the shipyards on which we must depend. It is far more important to get that regular flow of orders going to the shipyards on the North-East Coast of England, to the Clyde and to Belfast, than it is to have a few spurts given here and there, and those spurts themselves have the direct effect of delaying the orders which would come naturally to the yards. Whatever good may have been done by this artificial means, it is counterbalanced, and more than counterbalanced, by the delay in the orders which would have been given in the ordinary course had the trade been allowed to recover its own equilibrium in its natural way.

The disadvantage of this system is that the Government really cannot perform the ordinary functions which the ebb and flow of trade itself regulates. Any satisfying of the demand ahead of what the world requires is bound to do harm; any selection of individual trades, to the injury of others, while giving employment on the one hand, may take it away on the other, and I was a little surprised to find so good an economist as my right hon. Friend the ex-Financial Secretary to the Treasury suggesting that this scheme had in any way aided employment. He is taking for granted that this scheme has actually produced credit where it did not previously exist. The sum total of credit in this country is fairly well fixed, within limits that are, comparatively speaking, ascertainable. There is nothing under this scheme that has done anything whatever to add to the total amount of credit available for either Government direction or the direction of trade as a whole. If credit is pledged in one direction, it is not available in another. It may have provided employment in one direction; it may have withheld it in another. The sum total of employment remains very much the same, whether you do this or not; the disadvantage about it, from the point of view of the unemployed, is that the unemployed in some parts will foe kept longer out of work, while the unemployed in other parts are receiving a temporary benefit. The prime necessity of our time is to see the whole disturbance and oscillation' set up by the War pass away, and a regular flow of trade once more becoming the effective means of providing us with a remedy for our economic ills. If that be done, if things be allowed to take their course, as they are taking it now, under sound conditions, there is very little doubt that the trade of the world will gradually recover, but the scheme to which we are asked to give an extension to-day, so far from hastening the return of that happy time, will tend to delay it in many ways.

Let me say, in conclusion, something about the proposal that was made by my right hon. Friend on the Front Opposition Bench. He suggests, as I think quite rightly, that, if the advantage of British credit is to be given to concerns which otherwise would not be able to get their money so cheaply, that is a gift which is handed over to the proprietors of those various concerns, or, as sometimes happens in the case of new concerns, to the promoters rather than to the ultimate proprietors. If that gift is made, the State is at least entitled to say that it should have some return for it. It is not enough to say that as a result of that gift a certain number of men in one trade receive employment—it may be to the detriment of others in another trade. What we are entitled to say is that, having given to this concern credit which may be represented by, perhaps, 1, or 1½, or even 2 per cent. on the capital involved, the State may justly claim a full share in the benefits it has created. I see no answer to that, and I would suggest to the Government, and to those hon. Gentlemen on the other side of the House who regard this as beneficent legislation, that they should watch carefully its logical development. If it goes on much longer, it will certainly lead, it must inevitably lead, to these concerns being taken over in part or in whole by the State. For my part, I do not believe that that would be a good thing. I believe it would be a bad thing, but it must be the inevitable result of going on permanently with this scheme of presenting to these various concerns 1½ or 2 per cent. on their capital year by year out of the pool of British Government credit.

I see no answer to the argument which has been put from the Front Opposition Bench, and I do not know what the Government are prepared to say on the subject, but I am certain of this, that the sooner they are able to get up and say they are done for good with all subsidies of every kind—whether of the kind that finds its prime example in the case of sugar-beet, or of the kind provided under the Export Credits Scheme, or the kind provided through this Bill—the better it will be for British industry, and the sooner we shall return to a condition of prosperity.

Mr. HERBERT WILLIAMS

I have listened with the very greatest interest to the speeches which have been made so far this afternoon, and, in particular, to the last speech. I find myself in a very considerable measure of agreement with the right hon. Gentleman who has just sat down, although I think there is a very definite reply to the suggestion which was put forward by the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham). The effect of the guarantee under this Measure is to induce money to go into enterprise where otherwise it would not go at the present time. The guarantee is merely to ensure that you will get the same reward in that enterprise that you would be able to get elsewhere at the present time. The people who, because of this, put their new savings into an industry which has a guarantee, are not any better off than they would be otherwise, but what does happen is that that particular enterprise comes into being where otherwise it would not have come into being.

I want to raise the whole economic question which underlies this and corresponding Bills. All these Measures—whether Trade Facilities, Export Credits, Unemployment Grants, or, in the days before the War, the Right to Work Bill, or, now, the Prevention of Unemployment Bill—have running through them what may be a great truth or a great fallacy. I do not believe any of us know whether it is a great truth or a great fallacy. I remember the hon. Member for Bridgeton (Mr. Maxton) saying one night, in a few words, perhaps more truth on unemployment than has been said by many others. He said that we all approach this problem with too much party prejudice, the Conservatives thinking solely of Protection, the Labour party thinking solely of Socialism, and the Liberal party regarding it as an act of God, as to which, therefore, nothing could be done. I think the hon. Member will recollect the occasion on which he indulged in these great truths. But, by a Government guarantee under this Measure, do we, in fact, bring into action any new savings, or any credit which would not otherwise be available? Do we, in fact, give employment to one single, solitary person who would not have got employment if the guarantee had not been given? I do not think anyone can answer with certainty on that point.

It is perfectly obvious that, by means of selecting your guarantees, you can change the direction in which new capital may be invested; you can change the direction of people's purchasing power. By such a change in direction you may create employment in one area where conditions are very bad, and you may gain the advantage for that area by diminishing employment in another area. That may be the case, but I am afraid it is true to say that none of us can speak with certainty on this question. Is it the case that a guarantee under this Bill will, in fact, increase the total amount of credit available? Will an export credit grant to Russia, if it be desired to grant export credits to Russia, have the effect of reducing the amount of credit available for financing trade to other countries? This legislation was introduced, if I remember aright, in 1921. The Coalition Government of that day, face to face with the gravest unemployment situation with which any Government has been faced in modern times in this country, felt it necessary to attempt certain things. I think they were perfectly right in making the attempt, and succeeding Governments have continued that legislation; and each Government, where it has continued that legislation and increased the amount of the guarantees under these Bills, has proclaimed to the country at large that it has provided so much extra for the solution or alleviation of the unemployment problem.

I should very much like to see this whole problem inquired into on entirely new lines. The suggestion that has so far been made with regard to inquiry has been merely that we should inquire into the particular methods adopted, rather than that we should inquire into the fundamental principle involved. It may be, and I think that possibly it is the case, that during periods of acute trade depression there is lying idle so much purchasing power which may be brought into action by a Bill of this kind, and that there is some definite small advantage in the provision of employment from the fact that you have a scheme like this. I think we ought to balance that advantage, if it really exists, by the disadvantages which have been pointed out by some other Members. It is clearly the case that an inflation of currency or an inflation of credit can stimulate trade activity up to a point. Unfortunately, it is always difficult to stop the inflation, which always leads to a disaster in the end. I am asked by the hon. Member for Bridgeton, why should it? I am afraid it is more a psychological than an economic problem. It is difficult to find—

Mr. MAXTON

Is not the whole problem a psychological problem, and is it not a psychological problem with which we are dealing here?

Mr. WILLIAMS

In part, the whole of our political economy is a branch of psychology, but, on the other hand, there are certain very material questions. While the price that you can obtain for a sack of potatoes is partly a psychological problem, the existence of the potatoes is not psychological, but material. Therefore, I think we must bear in mind both the material aspect and the psychological aspect. There is another psychological aspect of this problem. If, during a time of acute depression, there are large numbers of people in certain areas to whom nothing is offered, I think the chances are that the demoralisation of spirit which those people suffer will be greater than if an attempt is made, even though it be not a very successful attempt, by certain classes of legislation, to divert the available purchasing power partly to them, so as to stimulate some economic activity in their area. It may be the case that the provision of an export credit, or the guarantee of a public issue, leads to some temporary measure of credit inflation, to be replaced afterwards by real goods, and, therefore, balanced; but I am not going to suggest that any of us know for certain whether that will be so. The whole of the few remarks I am making this afternoon are a plea to the Government, because the responsibility lies with them, and not only with them but with all of us, to apply our minds much more exhaustively to studying the fundamental problem underlying unemployment, rather than going on with one palliative or another, or raising one party battle-cry or another. I believe that, by real careful study of some of these problems, we might arrive at economic truths which are hidden from us at the moment, and that by doing that we should be laying a foundation for the future prevention of some' of the economic crises which have affected us in the past.

Mr. PURCELL

I am afraid the discussion on the financial and economic side of this question will leave me exceedingly cold. What I am concerned about is to what extent has credit been granted and to what extent employment has been secured, in accordance with the views expressed by the Financial Secretary to the Treasury. The point with me is that if it is a good thing to set up legislation of this type and to use a large amount of State funds for the purpose of assisting industry, the proper thing to do is to carry it a step further and endeavour to see how far trade can be promoted in all parts of the world. I have every sympathy with regard to Russia. I think it is a foolish thing for us to stand aside as we do. I do not think so far there has been a good case made out against developing trade with Russia at a far more extensive rate than is the case at present. In fact, there seems to be some sort of spite or spleen against a great race of people who seem to be attempting to work out their own salvation in their own special way. But apart from that, what I wanted to draw attention to was the fact that we have our friends of the Liberal, Labour and Conservative parties, in this House and in the country, most of them declaring that they are in favour of an expansion of trade with Russia, and yet, singularly enough, we do not seem to get any great distance with it and while we are, as it were, quarrelling as to whether we ought or ought not, what is happening in the world? I see according to the Press, and I observed it while I was in New York, that the New York Press are stating very clearly that the money market, whatever sort of institution or animal that may be, is engaged at present in considering the advisability of granting further loans to Germany, and side by side with that we get the statement that much of this would be used for the purpose of supporting credits for German, or Russian trade.

Singularly enough, on looking over the figures of the last few days, I observe, according to some of these Press reports, that the American-Russian trade has far exceeded the Anglo-Russian trade, and I cannot but think that if the objection that we have heard frequently from Members of the Government acid others, that the Russians do not pay their debts or are not bona fide traders, or whatever it may be, was a good one, how comes it that this great trading community of the United States can trade with them on such a large scale as they are doing, and indeed can promote loans which will mean assistance to Germany and use the same money for those whom we thought we defeated in the Great War, and whom we would never touch for the future, and whom we regarded as something un touchable, and yet singularly enough in our own country, when a loan was promoted, I see it was over-subscribed by a tremendous sum. I am not concerned with the exact figures, but I am concerned with the fact that the countries that we are assisting through the ordinary exchanges and so on from the financial point of view, by way of loans and so on, are manufacturing for Russia. Czechoslovakia is another case in point. She is sending large batches of workmen to Russia to complete certain undertakings. I have seen them where this work is being undertaken, side by side with the limited amount of work that people like Vickers, the British Thomson-Houston Company, and the English Electric Company are doing. The whole thing seems to me to be such a botch potch and zig-zag affair that, to do justice to ourselves, it would be far better if we could get Members on all sides of the House to go into the matter and see if something cannot be done to piece up this business. After all, it is a matter of securing work for our men. For example, we are told on many sides there is an order waiting for £15,000,000 of work for the electrical industry. I have no means of proving that or of disputing it. You can see the details all set out for the large amount of equipment required for electricity undertakings, for light vessels for the River Volga, a large amount of motor equipment, transport equipment, steel rails, and so on.

It am not going to argue whether it is a bona fide order, correct in all its details. All I can say is that if they make the statement that there is need for the supply of that mass of equipment, in view of the large number of men and women we have unemployed it is the duty of the House to sit down and calmly consider, regardless of party politics and ordinary orthodoxy, and find out whether that is true, and if it is true how it can be met, at no matter what cost, so far as bringing our people into employment is concerned. That seems to me to be the practical way of handling the problem. I am bound to say if this legislation is intended to promote trade, if you like, to promote employment, if the idea is, as was hinted, to keep certain people in their industries—the boiler makers and ship builders in their industries, the metal workers in theirs, and so on—it seems to me under existing circumstances we must go somewhat further than a mere sort of agreement to back up the financial side of this enterprise.

For example, in Mexico there is a great field for our industry and a great opportunity, certainly for large firms. I understand that whereas in 1917 our proportion of the foreign trade of Mexico was 27 per cent., in the latter end of 1925 it had shrunk to 3 per cent. It seems to me, then, that if it is a good thing to use our standing for the purpose of giving these guarantees we ought to see to what extent we can extend the opportunity to trading throughout the world for the purpose of getting a minimum number of unemployed rather than the large number we have at present. Looking round the cotton mills, and particularly the undertaking with regard to the great irrigation works in Mexico and the improvements so far as the oil wells are concerned, it occurred to me that this was the very place where trade ought to be done, and to be secured as early as possible, because of the tremendous amount of work lying there waiting to be done by men who have been unemployed for three, four, or even five years. We have a large army of the most highly-skilled men the world has ever known, but if ever they got started back at their old jobs it would be difficult for them to get up to their old posts.

Leaving all that out of account, here is a case where there should not be merely the backing, the supporting and guaranteeing of credits, but we ought to find out whether we can extend it so as to bring within its ambit a larger number of men who are available for employment. I would not regard for the moment whether it is a good, bad or indifferent firm from the capitalist point of view, much as I detest capitalism. What we are all more anxious about is to get our people into employment. It is far better to have them working than to be drawing what is termed the dole, the most insulting phrase ever used to working men. But leave out of account again, we ought to be able, and I think it is the duty of the Government to explore all the avenues they possibly can for the purpose of seeing not only that this backing is given to substantial cases where an in crease of employment for our men would take place, but they ought to look further ahead and see how by the use of this same financial machine we can bring a greater number into employment and create a larger mass of trade abroad. I am satisfied that there is work for us in Mexico.

Notwithstanding whatever may be said to the contrary, we could get back our trade if we made a reasonable and decent attempt. Having said that, I am bound to admit that we ought to have a larger amount of information in connection with the matter. To say that so many millions out of £15,000,000 have been disbursed, or that we have not lost more than so much, or have not lost anything at all, is not sufficient to lay before the House. My view is that you ought to tell us to what extent your guaranteeing credit has made an improvement in the number of unemployed. If that was done we might be able to promote greater interest in this business to some extent. I am not concerned with what has been said with regard to the Tightness or wrongness of the method. Whatever is done, wherever we get the money from, under whatever Act we get it, the principal thing is that we could use all these means for the purpose of securing employment for the great army of men we have unemployed.

Sir FRANK SANDERSON

It was not my intention to take part in this Debate, but I should like to add a few words to what has been said by the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham). I should like to refer to the class of security that is normally demanded where credit facilities are granted. Sufficient care is not always taken, and I doubt very much whether the credit of our country is granted always to the best advantage. Under the present Act, credits are granted without any particular reason, with the result that some industries derive a very material advantage over other industries. Recently we had a case of credit facilities being guaranteed to a large industry, whereas I have in mind another industry of precisely the same nature who when they found it necessary to raise money had to pay a rate of interest at 8 per cent. I fail to see why one firm should be able to borrow money at, say, 5 per cent., with the guarantee of the Government behind it, whereas another has to pay 8 per cent. for their money. The firm I have in mind had to raise on short term notes an amount of £3,000,000. The difference between 8 per cent. and 5 per cent., at which rate it would have been possible to borrow the money under the Trade Facilities Act, means a difference of £90,000 a year in interest to be paid by that firm which is competing with the other firm which secured credit facilities. The Act works unfairly, and it gives a distinct advantage to one firm, as against another firm who may be interested in precisely the same industry.

The Government when they establish these credits are mortgaging the credit of the country, which means that they are mortgaging the credit of the people. Credit is a commodity which is traded in every day in the same way as any other commodity. If the Government are to continue giving these trade facilities, I suggest that they should make a charge for the credit facilities which they offer. Let me give a practical illustration of what I mean. If a private firm or a private individual is prepared to offer credit to a firm or an individual it is customary for the firm or individual who are providing the credit to make a charge for that credit. If a business firm goes to an individual and asks that individual to guarantee a loan from the bank, it is customary for that individual to charge a commission of ½ or 1 per cent. for guaranteeing the loan, because he is mortgaging his credit. Similarly, I see no reason why the Government, in effecting guarantees under the Trade Facilities Act, should not charge some rate of interest, say, ½ per cent. That may not sound very much, but ½ per cent. on the total amount of guarantees which the Government have already effected under the Trade Facilities Act would amount to not less than £350,000 a year. That £350,000 could be set aside to build up a fund which could be utilised for the purpose of meeting any losses which they might ultimately have to face in this direction.

Generally speaking, I am against the facilitating of these loans. They are one-sided, they are biassed in favour of a few and they place one firm or individual at a distinct advantage over another. It is not sound finance, and it is unwise in principle. I hope the Government will seriously consider withdrawing the facilities under this Act at the earliest possible opportunity, and meanwhile I hope they will seriously consider the suggestion I have made, that for any further credit which is offered under this Act there shall be charged a small commission on the amount of the credit guaranteed.

Colonel WEDGWOOD

The Government cannot complain of the time spent in debating this subject. It has been extraordinarily interesting to hear tie different points of view put from each party in turn. The principal importance of this Debate depends upon the House itself making up its mind, not remitting to a Committee something on which it cannot make up its mind, but making up its own mind. The question upon which we have to make up our minds in connection with the Trade Facilities Act and the Export Credits scheme, is whether these schemes do in reality increase employment in the least. It is not denied that by either of these schemes you can increase employment in those particular trades or in those particular firms that are assisted. That is no more denied by those of us who oppose these schemes than that Protection involves more employment in certain definite industries. What we fall foul of, is the idea that it means more employment in the sum total.

You are by these schemes directing the investment of capital into certain directions by giving them greater credit. By the setting up, say, of electric lighting in the town of Athens, you are directing more employment into the engineering trades in this country, but you are by directing capital into that particular form of investment depriving other forms of investment and enterprise either in this country or elsewhere of capital which they might otherwise obtain. Let me, for the sake of argument, say that one of us had £500 to invest: a very hopeful proposition. If we have that sum to invest, we have a choice of investments. We could put the money into a Trade Facility scheme, say, the Benguela railroad. The money would then be assisting in the production of railroad material in this country. If I do not want to do that with this problematical money, and I do not put it into that particular form of investment or the Government does not guarantee the capital if it is invested in that way, perhaps I might buy a new motor car with it.

If I buy a new motor car, am I not providing employment in the motor trade to exactly a similar extent as I might be employing men in the engineering trade in making rail-road material for the west coast of Africa? I am not arguing that it is not more usefully invested in developing the railways in Africa than it would be in carrying me more rapidly between London and my constituency. I am only showing that the same amount of employment is involved, it may be more parasitic employment, but it is employment to exactly the same amount. Suppose, instead of investing the money in a Government guaranteed scheme, or putting it into a motor car, I put it into an extension of the pot factory at Etruria. In that way I should be assisting in finding employment in the building trade and in the machine trade by the extension of the factory. In either case the same employment is involved by the investment of that capital sum.

All that we are doing by these schemes is stimulating the investment of capital in certain directions rather than in other directions. When the right hon. Gentleman tells us, after having listened to all the Debates we have had on this subject, that he believes that this scheme will increase employment in this country, and that it has increased employment in this country, he is either impervious to economic argument or so obstinate as to refuse to listen to argument. That seems to me to be a common method of hon. Members opposite when schemes which they must know in their heart of hearts are thoroughly unsound are put forward, as this one is to-day.

The real humour of the situation is that most of these schemes of Export Credits, and schemes under the Trade Facilities Act, are to facilitate loans for the investment of money in foreign or colonial countries-We have had big credits given to Poland, Greece and Africa, both East and West Africa, to Finland and elsewhere. These credits have been given in order to facilitate the employment of people in this country in the export trade. Yet the same Government, even the same Member of the Government, the Minister responsible for the Treasury, put an embargo on loans to foreign countries to prevent exactly what they are now proposing, namely, the investment of British capital abroad. That embargo was imposed upon the export trade of this country for the best part of nine months. During that time no money might be loaned to foreign countries or to the Colonies. The Government were absolutely prohibiting what with the other hand they were seeking to encourage, and this is supposed to be a Government of all the talents! The embargo on foreign loans inevitably prevented money being lent abroad, and consequently prevented goods being manufactured in this country and sent abroad. Everybody knows that if we lend £1,000,000 to Poland, sooner or later every penny of that £1,000,000 must leave this country as goods manufactured in this country. We do not export paper money and we do not export gold. In the long run, although the gold balance may vary, that million pounds must leave this country as British manufactured goods. Therefore, by stopping the money in that way being lent abroad they deal a blow at the export trade far more heavy than the benefit conferred upon the export trade by the particular measure now before the House.

The Government, all along, have had two ideas of export trade. They have hampered it by making the widows' pensions a burden upon the export trade and industry, instead of the pensions being raised, according to the means of the community, from everybody in the community. They have hampered them by the restoration of the gold standard by pushing up the value of the pound sterling by 10 per cent., making manufacture dearer, and making it more difficult for us to compete in neutral markets. By placing an embargo upon foreign loans they are putting difficulties in the way of our sending goods abroad. While they are doing this, apparently in sheer ignorance, they are at the same time bringing forward these Trade Facilities Acts and Export Credits Schemes in order to encourage the very trades they are kicking.

6.0 P.M.

There is one other point in this scheme to which I should like to call the attention of the House. Under the Trade Facilities Act it is stipulated that three-quarters or two-thirds of the money must be spent on goods made in this country. How much longer are we going to put a Clause of that description in an Act of Parliament? Is it not perfectly well known to every economist that whether you have such a Clause in or not every penny of the loan is spent on goods manufactured in this country. It is true they may not go in the first instance to the country which gets the loan. You may make a loan to Athens, but it does not translate itself at once into goods sent to Athens. Some of the goods they buy may be bought in Germany, but it is certainly in the end balanced by goods going from this country abroad. Can hon. Members suggest any other way in which a loan raised in this country can leave this country except as goods? [An HON. MEMBER: "Gold!"] In that case we should soon drain away the gold in this country, and the hon. Member will observe that when gold is drained out of a country the natural result is a rise in the bank rate, which draws the gold back to this country in exchange for our goods. If you have a bank rate depending on your gold reserve, the ultimate effect of any foreign loan must be goods sent from this country. That is one more additional point of economic unsoundness about this legislation. The idea that it means additional employment is utterly false. What it does is to direct into certain channels the investment of money on Government credit, and that merely keeps going certain industries at the expense of other industries, exactly in the same way as a protective tariff does. And when we on this side of the House urge that the employment of Government credit, of public money, in this way should be accompanied by some control over the particular firms which enjoy the benefit of this cheap credit, hon. Members on the other side agree with us that that certainly is a first condition in any sound schemes. I think the Government might have got much better terms in the way of rate of interest than they have in many of these schemes. Neither the Grecian nor the Polish scheme could have gone through without the assistance of Government credit which they got at five per cent. They would willingly have paid seven per cent. in order to get these schemes. But in any case, whether we make a larger present to these particular firms than necessary we do make a present of some description, and as long as that present is made we maintain that the people who make that gift ought to have a direct voice in the conduct, management and profits of the company.

Sir FREDRIC WISE

I agree with a great deal that has been said by the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), but there is one thing he left out in his argument, and that is this, that if money from flotations is going abroad in the way he suggests there is the possibility of the reinvestment by the country who receives the goods of that money in this country. With regard to what he describes as the embargo, I am afraid it was only a voluntary embargo, and, if he bad watched the financial market closer, he would have seen that investments were coming from New York to this country. The hon. Member for the Forest of Dean (Mr. Purcell) referred to the money market, and the difficult details of the money market seemed to flabergast him. It is a most difficult subject undoubtedly, and it is only by years of practice that it can be understood. He mentioned about money going to Mexico, and Russia and elsewhere, but I should like him to realise this, that only a certain amount of money can go abroad. Last year the actual investments in overseas loans was about £88,000,000, and our balance of trade, which he must watch as well if he wants to understand it, was £28,000,000. This is very small for a country like ours. The amount should be closer, and I think the President of the Board of Trade may at some future date alter the amount of our balance of trade for 1925. If you have over-invested abroad, your exchange will go down unless you equalise it by gold or by investments of the foreign countries in your country. The Financial Secretary to the Treasury gave us a clear outline in regard to the Trade Facilities Act. He stated that the Treasury had a free hand. When the right hon. Member for Hillhead (Sir R. Horne) introduced the Trade Facilities Bill in this House I understood him to say that the Treasury did not appear in the picture.

Mr. R. McNEILL

Those are the words which the then Chancellor of the Exchequer used, and which I quoted.

Sir F. WISE

I am sorry I did not hear this quoted. The principal point I want him to consider is in regard to the advisory committee. It is very difficult to criticise an advisory committee, especially when it is made up of men who are experts, but I should like to ask the Financial Secretary to give me the terms of reference to the committee. It is difficult for the House to criticise in a constructional way unless they know the actual terms of reference. Some of the issues undoubtedly should not, in my opinion, have been made. Two years ago when the hon. Member for Central Edinburgh (Mr. W. Graham) was Financial Secretary to the Treasury I suggested that reports should be handed in to the Treasury every, three or six months in regard to the various companies which received these credits, and the reply I received then—I should like to ask the present Financial Secretary whether these reports do some in—was to this effect: The actual position is that first of all the auditors are approved by the Treasury "— We shall all agree with that— and there may be and is a call for periodical reports from time to time, it may be every six months, in order to point out exactly what the undertaking is doing. I am sure we all agree that where credit is given reports should be handed in to the Treasury, and I should like to know whether they are handed in regularly. A question was asked this afternoon; unfortunately, I was not present to hear the reply, being on a Committee upstairs, with regard to the Appleton Iron Company, and I noticed in a north-country paper to-day that a resolution has been passed by the Tees Conservancy Commissioners protesting against this credit being granted, because it was increasing the number of plate mills on the northeast coast to the detriment of the trade on the river Tees. I did not hear the answer given, but it is important when such credits are given that they should be given in the right and proper way.

I hope the Financial Secretary will look into these questions and realise the importance of proper credits being given in the right direction. Another serious question is the effect on Government maturities that will become due in the next three years if the Trade Facilities Act be greatly expanded. I cannot impress upon the Financial Secretary too strongly the necessity for protecting our credit which is limited, indeed very limited, and that these maturities when they become due are exchanged into lower interest-bearing securities with a longer date of redemption. The amount in 1926–27, that is in next year's Budget, is £110,000,000; in 1987–28 £335,000,000, and in 1928–29 £492,000,000. These are vast sums, and they exclude external loans. I feel confident that if this vast sum of nearly £1,000,000,000 could be converted at 1 per cent. less interest, it would be better for the unemployed than anything else we could do. It is a reduction of taxation, and the protection of the taxpayer that we want. Conditions have changed since this Bill became an Act in 1921, but I believe it is dying slowly. I firmly wish it would die faster, and I feel confident it would be better for the nation and the unemployment problem.

Mr. MARDY JONES

I do not propose to follow the hon. Member who has just spoken, and discuss whether the Trade Facilities Act is sound or not. What we want to know is whether the administration of the Act does produce employment; whether it is being wisely administered. I want to deal specifically with one proposal. The Government are asking the House to agree to a guarantee by the Treasury of £2,000,000 to Messrs. Pearson and Dorman Long and Company for the development of the Kent coalfields. I listened very carefully to the Financial Secretary the other day, and also to-day, in the expectation that he would give the House some information why this £2,000,000 should be guaranteed to this large, wealthy and apparently efficient film. He has given us no information. We are treated like a lot of schoolboys; we must not be naughty. A Committee has gone into the details of this claim for a guarantee, and decided that the money can be wisely spent as it will give employment to British labour; and we are to accept his assurance and ask no questions. If that be the position, there is no use in this House sitting at all; the whole Government of the country can be put into the hands of similar experts to decide for us how we shall raise and spend our money. The Government owe it to the House to give us as full data as possible, so that we may judge whether this £2,000,000 guarantee is sound policy in the national interests. The Financial Secretary to the Treasury assured us that the sole object of these Acts is to give work. I submit that in this case, while they are giving work on the one hand, they are taking it away on the other.

We have been given no reason whatever why the Government should pursue this policy of developing new coalfields in Great Britain at this particular time, when there are over 200,000 skilled miners in the established coalfields of the country who are out of work and unable to get work. The Government have given us no evidence that, if this money is spent for the development of this new and untried and very speculative Kentish coalfield, the extra output of coal from that coalfield will be secured new markets. There is no prospect of an expanding market for British coal anywhere in the world. If the output is to be increased by this development very substantially in the coming year, it can be done only by reducing the output of British coal from existing coalfields. Certainly, all the coalfields in England, in particular those in the Midlands and on the North-east coast, will suffer very seriously, exactly in proportion to the development of the Kent coalfields, because they to-day find a great deal of their market for coal in London. London, with its enormous population and its countless industries of every kind, consumes enormous quantities of coal. That market will be lost to the Midlands and the North of England in so far as Kent will be expected by this development to provide coal in years to come.

It is very difficult to get any information from the Government or from any publication of the Government dealing with this project. We want to know whether it is true that, outside Government circles, experts in the coal industry, and particularly on the geological side of coal mining, estimate that during the next 20 years, on the lines of this development in which the £2,000,000 guarantee is involved, Kent will increase its output to not less than 10,000,000 tons a year, and possibly to as much as 15,000,000 tons a year. Ten million tons a year is equivalent to giving employment all the year round on the average to 40,000 coal miners, and 15,000,000 tons is equivalent to the employment of 60,000 miners. It is also intended by this development of the Kentish coalfield not only to develop the coal seams which have been discovered, but to develop the large deposits of a fairly good quality of iron ore which is super-imposed above the coal measures. That development of iron-ore mining will also be accompanied by a corresponding development in the building and working of blast furnaces in Kent If these allied developments take place together, the present population of East Kent in the area of the coalfield, now estimated at about 300,000, will certainly be doubled within the next 30 years.

This policy may be a sound policy, and I am not going to quarrel with it before I know more about it from Government information. If, as a result of this development, we can be provided in London and in the South of England with a substantial output of cheap fuel of good quality, and there is to be a utilisation of it on more scientific lines for the generation of power, light and heat, that will undoubtedly be a step in the right direction from a national standpoint But it will not be a step in the right direction if it is left as an isolated development. I submit that at the present juncture of the country and the British coal industry, the Government would be much more wisely advised if they spent this £2,000,000, and even more than £2,000,000, not in helping private enterprise to develop this highly speculative Kentish coalfield, but on very large and very wide scientific experiments in the proper utilisation of the energy which we know exists in every pound of good quality coal. We ought to help the fuel research experiments at Greenwich and the private experiments up and down the country, one of which is in my own Division conducted by Professor Illingworth. All of them have reached a stage where they are at least on the verge of being a commercial success, provided that experi- ments continue, not merely on the existing small scale, but on a huge scale. £2,000,000 of money spent in this direction during the next five years would produce far better results, even for London and the South-East of England than would this particular experiment m Kent.

If the Government will persist in this Kentish experiment, we are entitled, and especially the 50 odd Members of Parliament who come directly from mining constituencies in England, Scotland and Wales are entitled, to press upon the Government that, in so far as this new coalfield is to be developed in this way, it carries with it the responsibility of mitigating the evil effects of the lessened output of coal in all the older coalfields, which will result from the using of Kent coal in the London and South of England market. Also it is going to affect to some extent, and possibly to a very large extent, the export demand for coal from the coalfields. The Kent coalfield is at least 200 miles nearer our foreign markets in the countries of Europe than are the Midlands and the North and South Wales. If this development takes place, we want to be quite sure that the Government are alive to the counter-problem that will be created. We want to be quite sure that the skilled miners in the older coalfields, many of whom have been in mining generation after generation—grandfather, father, son, and the rest of them, many of them having given their lives and left many dependants as a result of the risk of mining—we want to be quite sure that the Government are prepared to see that the miners affected in the older coalfields are migrated into the new Kentish coalfield and are found adequate employment at living wages.

Then we want to be quite sure that the Kentish coalfield is developed on the right lines with regard to housing and health. I am pleased to learn, as a result of questions and otherwise, that the Ministry of Health is keeping an eye on this necessity, and that 17 local authorities in the area concerned have accepted in principle the excellent recommendations made by Professor Abercrombie with regard to the future town planning of this Kent coalfield. But I regret to inform the Committee that lip sympathy towards town planning in the development of these areas is not enough. As yet there is no compulsory power to see that town planning is carried out or that adequate housing conditions are provided as a matter of course in the newly constructed cottages in the coalfields. I have the bitter experience of knowing, in my own division in South Wales, that although we have large housing powers vested in the local authorities, and although the Ministry of Health has large powers, many of our so-called up-to-date and progressive colliery companies are not entering into the spirit of the need of having proper housing in the newer districts of the coalfield.

I have in my division the richest colliery company in Great Britain. It is developing two sets of large collieries similar to the Kent coalfield and on the edge of the South Wales coalfield. The company is spending millions of money. I refer to the Powell-Duffryn Colliery Company. It is deliberately putting up houses for the people, not in the best positions from a health and social amenity point of view, but in the positions where it will have to pay the lowest rates on the houses when occupied. At present, at one place, the cottages are within a couple of hundred yards of the new pits. As the coal will be produced at the rate of practically one million tons a year from these pits, those houses will become an abomination to the people who have to suffer in them. In a neighbouring district the same company is putting down another set of large pits. It has built what at the moment appears to be a decent type of village. But the village is far too near the pits—it is within 300 yards of the pits—and because of the massiveness of the machinery that drives our collieries to-day, the people in those cottages—there are a couple of hundred of them—cannot sleep at night because of the vibration caused by the winding machinery shaking the earth for a distance of over half a mile from the pithead.

The time has come, in Kent and elsewhere, when no houses should be built within a mile or two of any set of collieries. They should be built on garden-city lines. While the local authorities of Kent have been committed so far to the principle of town planning, they will find by bitter experience that when they attempt to put the principle into practice all kinds of vested interests will arise to put a stop to proper town-planning developments in that area. Therefore, we ask that the Government should carry out the pledge of the Prime Minister that we should have peace in our time, and that they will practise the precept in this particular case by insisting that all the interests that are concerned with the development of this Kent coalfield carry out town planning properly, and that garden-city villages are established on proper lines. If the Government do that they will have the goodwill of every one of us.

There is something else to which I wish to draw attention on this point, and that is that the Kentish coalfield is not likely to develop on proper lines, even as a commercial concern, unless something drastic is done in regard to royalties and super-royalties. Already the landlord classes in this new coalfield are able to get a higher royalty for a ton of coal than is paid in any of the established coalfields of the country. Not only are the landlords paid a royalty but the pioneer companies, which did the original boring by means of which the seams were discovered, are getting from Messrs. Pearson and Dorman Long in this particular case 1½d. per ton on every ton of coal that is produced. These collieries, when fully developed, are estimated to produce 1,000,000 tons of coal per year for at least 60 years to come. That means that a pioneer company, which has spent £10,000, £20,000 or, perhaps, £50,000 in putting down one or two bore holes, will get, in 60 years, on that basis alone one-third of £1,000,000 for the expense of about £20,000. When you allow for adequate interest on the money, extended over a period of years, it will be seen that they are going to get a very high return, and that will be charged on to the working expenses and the output of those collieries every year during the period of the lease, whether it be 60 years or 100 years. That means it is going to reduce the capacity of the colliery companies to pay the miners an adequate wage.

We have every reason to believe that the Kentish coalfield, in spite of its good geographical position, close to the London market and the Continental market, will have serious disadvantages in actual working compared with any other coalfield. It is already known that the seams are very deep and that they dip steeply, which means high working costs. It is also known that the cost of drainage will be heavy and the quality of the coal is very doubtful. Many of the seams, so far, have proved inferior in quality, and the heavy charges for royalties are simply a national scandal at this period in the development of the British coal industry. South Wales coal is admitted to be the finest quality of coal in the world and hitherto it has paid the highest royalty per ton. The average royalty paid by South Wales coal to-day—according to the Mines Department's quarterly return—is 9.17d. per ton, but in Kent the royalties will be 9.76d. per ton, actually higher than the royalties paid for the finest coal in the world.

I submit that, before voting this money, it is our duty as Members of the House, to seek more information from the Government than they have given us so far. We want assurances along the lines which other hon. Members have indicated already. If the Government are anxious for a settlement of the coming mining crisis on right lines, here is a golden opportunity to prove the sincerity of their attitude. This Kent coalfield has been developed, not by the capitalists, but by the scientists. The scientists discovered this coalfield in spite of the sneers of the capitalists two generations ago. It is a great triumph for mining science that the coalfield has been discovered. In 1846, De la Beche suggested there was coal there, and, in 1855, Goodwin Austen read a paper before the Geological Society giving data to show that coal was there, and ever since, we have had experiments in boring. I admit the boring company ought to be paid their expenses and reasonable interest, but nothing more. Under the terms of this agreement with Messrs. Pearson and Dorman Long and Company, the public and taxpayers of this country are going to be fleeced, and I think the Government ought to take over this coalfield themselves and run it as an experiment.

Mr. SANDEMAN

I think the former Financial Secretary to the Treasury made a perfectly good case when he argued that if the nation is going to use this money to help in financing trade, the nation has a perfect right to say, "We ought to have a share in it." That is the reason why I dislike Trades Facilities Acts and all kindred Acts, very heartily. I have tried to get trade facilities in the past myself and I could not succeed. [HON. MEMBERS: "Is that the reason?"] No, that is not the reason, and it is just because such suggestions can be made that I think there is a great deal to be said against trade facilities. I urge upon the Government to inquire into all these Trade Facilities Acts and similar Measures; I think the sooner they are brought to an end the better, because in my view they are purely Socialistic. We have heard ad nauseam about the question of trade with Russia. I traded with Russia not so very long ago, but I got cash before delivery and that is the proper way in which to do trade with Russia. A trader should be sure of his money and before shipping his goods the first thing necessary is to have the money to pay his employés. He is naturally going to send his goods to the market where he is surest of getting his money, unless he can get somebody else to take the risk.

I ask, is it fair to get the Government to take these risks? Personally I do not think it is. I do not care whether it is for the herring industry or any other industry. I do not think the taxpayers of the country should be called upon to undertake any risk in such matters. Besides, the question arises whether these schemes are creating any real credit at all. I have grave doubts on that point. The hon. Member for the Forest of Dean (Mr. Purcell) spoke of increasing these credits with the idea of helping to solve unemployment. If he will use his influence with the left wing of the trade union movement, to bring about industrial peace I am confident it will do more good than the voting of all the industrial credits and trade facilities that could possibly be devised. What we want is a better understanding and trade union readers with whom capital can come to some arrangement, knowing that the agreements made will be carried out. Thus, capital will get a little confidence with which to go forward. It is the want of confidence on both sides which is causing a great deal of unemployment, and I am certain if the lines I have indicated were followed it would do much to settle the unemployment question.

Mr. GRIFFITHS

I am not going into the general question, but I wish to follow the hon. Member for Pontypool (Mr. Mardy Jones) who dealt with the coal trade, and I want some information about this amazing sum of £650,000 which is being given to the Appleton Iron Company for the purchase and installation of additional plant and machinery. I take it that will be a loan to the steel trade. I do not know whether members of the Government or the members of the Advisory Committee, know the position of the steel trade in the country to-day. If you go down to the Blaenavon and the Ebbw Valley district you will find some of the best machinery in the country standing absolutely idle. In Blaenavon there are 2,000 men who have only done about three months' work during the last two years. If you go to Cwmbran you will find Guest, Keen, Nettlefold and Company's rolling plant standing idle and 600 men out of work for the last six months. Go down to Port Albert where there is the finest plate mill in the whole country and you find the same condition of affairs. There may be some plate mills in Scotland and the North of England, but for output and up-to-date machinery you will find none to excel Port Albert, and this is a works connected with the Prime Minister himself. Here you have a plant that has been idle for five months and there are men walking the streets now, not because there is no capital in the Baldwin Company, not because they are not skilled men, but because there is no demand for the goods which they produce. If that is the case the districts I have mentioned—

Mr. WALLHEAD

And in Dowlais.

Mr. GRIFFITHS

Yes, and in Dowlais also, if you have men walking the streets, if you find the same condition of things in Middlesbrough in the North of England and in Motherwell in Scotland, then why should the Government propose to expend this money in this way. I have 45,000 men of my trade walking the streets throughout the country, yet the Government are going to loan £650,000 to the Appleton Iron Company for the erection of new plant and machinery. Who advised the Government to give the loan of this money? I think I am entitled to know. When all the works I have mentioned are standing idle, why should £650,000 of the taxpayers' money be put into the erection of new works. When I have had an answer I will have several other questions to raise in the Committee stage. I am connected with one of the most important trades in the country, namely the steel trade, and before the Government followed the advice of the Advisory Committee to loan this money our officials ought to have been consulted on the matter.

The PRESIDENT of the BOARD of TRADE (Sir Philip Cunliffe-Lister)

It may be convenient if I attempt briefly at this stage to deal with some of the points which have been raised in the Debate. There are questions of detail, which I agree are more conveniently dealt with in Committee, but questions of principle have also been raised in the course of a very interesting and instructive discussion. The right hon. Member for Central Edinburgh (Mr. W. Graham), who opened the Debate, delivered a characteristically lucid speech and criticised this Bill on the ground that we had not been bold enough. The right hon. Gentleman the Member for West Swansea (Mr. Runciman) criticised us because we were too bold. The criticisms which have been made against this Bill—and they followed the criticisms made on previous occasions—have been directed either to encouraging us to greater activities or to encouraging us to bury these Measures more rapidly. Each set of speeches is applauded. It shows that it is a difficult position, and probably the very fact that we are subjected to that two-fold kind of criticism shows that we are taking the least dangerous, though perhaps not the most couragous path.

The right hon. Member for Central Edinburgh approached this Bill from the point of view of one who wants to make the use of Government credit a permanent and a growing feature in industrial development in this country, and if you start from that point of view, you certainly envisage an entirely different conception of what you ought to do for British industry from that which we, on this side, could accept. The right hon. Gentleman wants a large use of Government credit; I want the smallest possible use of Government credit in industry. Here I agree with my hon. Friend that unless you mean that the whole of industry should in future be carried on on Government credit, and that the Government should practically monopolise all credit and apply it either for Governmental services or industrial purposes, it is true, I think, that the field of Government credit and the supply of Government credit is limited, and that you have got to be very careful how you use it, moreover, if you use Government credit prodigally, you are going to make it a less valuable article than it is, and you will find that you raise the rates at which the Government are able to borrow—and that is going to be a very serious thing, not only for the taxpayer and for the financial position of this country, but for industry as well.

The right hon. Gentleman went on to say that the State ought to have a share in any business which it subsidises or guarantees. I think there are two answers to that contention. The first is that if Government assistance is going to imply Government control, there are many firms who would decline to take Government assistance on those terms. The right hon. Gentleman is really up against the two alternative conceptions of which I have already spoken. Our conception of what we are trying to do under Trade Facilities or under Export Credits is to use the minimum amount of Government interference, but to give, where it is absolutely necessary, just the amount of help that is going to get the wheels of industry turning, and to withdraw it as quickly as possible. The right hon. Gentleman's conception is different. He wants to continue and increase, as I understand it, the Government intervention, so that these Measures like Trade Facilities or Export Credits or the Sugar Beet Bounty may become avenues down which he may march to the complete Socialisation of British industry. That is for him a legitimate, and possibly a logical, ambition, but it is not one which I propose to help him attain, and if I felt that I was on the horns of a dilemma, and that the Government had to accept a completely logical position, I would much rather follow the right hon. Member for West Swansea and say that the quicker we withdraw from action of this kind the better. But I believe that we can and at this moment ought to pursue the middle course and for a very temporary period continue this Bill.

The right hon. Member for West Swansea raised the question of guarantees to shipowners for the building of ships. That is a matter upon which, so far as I can gather, shipowners and shipbuilders are never likely to agree. In all cases where guarantees have been given, not only was the Committee satisfied that the undertakings were financially sound in themselves, but, of course, it was the shipowners who came forward to ask for the guarantees. In regard to the case he quoted, I think he knows that the instructions laid down by the Treasury for the Trade Facilities Committee when subjected to guarantees for the building of ships for a foreign firm are these, that no guarantee should be given unless the Committee is satisfied that the ship is going to be built in any case, and that the difference that a guarantee would make would be that with the guarantee the ship would be built here, and that without the guarantee the ship would be built outside. I think that is a fair working rule, though there may be difficulties in applying it, I admit. The hon. Member for the Forest of Dean (Mr. Purcell) said that the test we ought to apply in ascertaining the value of this Bill was: How far have Trade Facilities or Exports Credits in the past represented employment? While it may be difficult to say whether none of the employment which has arisen under the operation of these Acts would have been found but for their assistance, this certainly is true, that all the credit given, whether under Export Credits or under Trade Facilities, has gone to the financing of new works of one kind or another, that every single guarantee has represented new work, and that none of it has been given for carrying stock or for working capital.

The hon. Member for Darwen (Sir F. Sanderson) suggested that a commission ought to be charged in the case of the Trade Facilities as in the case of Export Credits. That was considered on more than one occasion, I know, in the Treasury, but the practical difficulties were found to be too great. I do not think the hon. Member suggested it as an indemnity or as an assurance against loss—I do not anticipate that the risk of loss is going to be great—but as a deterrent, to prevent firms from applying for guarantees, an argument which is ingenious and disingenuous at the same time. What he really means is that he does not want Trade Facilities Guarantees at all, but if he cannot have that, he says: "Let us make it as difficult as possible." That is not a reasonable line to take up. It is one thing to say that this Bill is wrong in principle and that we ought not to have it, but what I am sure is unreasonable and impossible to do is to say: "Let us pass this Bill and have guarantees, but let us make them so difficult and expensive that nobody will take advantage of them." That, I think, is not an attitude which would commend itself to the House.

There were various criticisms made as to the different guarantees which have been given. Of course, it is always possible to criticise, and I admit that one of the difficulties of operating, not so much the Export Credits as Trade Facilities, is that you may be encouraging one firm apparently to the detriment of another. That is a possibility, but, of course, that happens equally where any firm with new developments in hand goes on the market for new money, and what really their criticism amounts to is that you ought not to have a Trade Facilities Act at all. That criticism I can understand, but on the other hand, the criticism of particular transactions has been advanced by hon. Members who are very keen on having a Trade Facilities Act. If you are to have that Act—and it has undoubtedly been a help in giving employment—then, I think, you must give your guarantees to the soundest, the most up-to-date, the most efficient enterprises.

Mr. WALLHEAD

The point for the House, I think, is this: Could the firm to which my figures referred, in the present state of the metal trade of this country, without the Government giving them the money, raise it in the open market at all?

Sir P. CUNLIFFE-LISTER

I would not like to answer that question for certain. I do not know.

Mr. GRIFFITHS

Baldwin's and Guest, Keen, and Nettlefolds could.

Sir P. CUNLIFFE-LISTER

The hon. Member for Pontypool (Mr. Griffiths) has answered the hon. Member for Merthyr (Mr. Wallhead). I think very likely a firm could have raised the money, but, of course, it would have to raise it at a higher rate of interest, I agree. But if you are to give these guarantees at all, surely you must give them to the most efficient firms. It is quite true, if you take the case of steel, that you have plants which are either idle or only partly working. On the other hand, the criticism constantly advanced as regards the steel trade is this: Concentrate on the most up-to-date plants, get your plants as up-to-date as possible, and then you will be more able to compete as against your foreign competitors. A case comes forward where a firm which has had a new works partly constructed, and partly, I think, at the suggestion of the Government during the War, says: "We apply for a guarantee." As a result, they satisfy the Committee, and we believe that they will have as up-to-date a plant as they can get. If this Act is in operation at all, I do not think it would have been reasonable for the Government to say: "We intend to interfere with the discretion of the Committee, and we are going to refuse a guarantee in such a case." It seems to me that you must give your support to those cases which are found financially sound, which are found to lead to an increase in employment, and which are of sound capital value.

7.0 P.M.

I may say in that connection that there is no discrimination against the small firms. The Committee are just as ready to entertain the applications of small firms which put up a sound proposition as of large firms, and I daresay my right hon. Friend will remember that a few months ago—some six or nine months ago—the Treasury and the Trade Facilities Committee issued a notice to firms, drawing their attention to the fact that it was open to them, whether they were large or small firms, to put forward proposals to the Trade Facilities Committee for guarantees for the replacement or the renewal of plants. That could be taken advantage of by the small firms just as well as by the large firms. There are various other points which hon. Members said they would like to have the opportunity of discussing on the Committee stage, but those are details which I think are appropriate to the Committee stage. There remain also the other stages, and I now ask, after the full Debate that we have had to-night and on the Financial Resolution, that the House should allow us to get this Bill.

Mr. MARDY JONES

Will the right hon. Gentleman answer as to policy. Is the policy in this case to develop a new coalfield which is bound to put men out of work in the old coalfield?

Sir P. CUNLIFFE LISTER

I really do not think that it would be in Order, and I do not think the hon. Gentleman should ask me to undertake a discussion of that magnitude on the Second Reading of this Bill. There will be an opportunity again to have it discussed, and to discuss the whole future of the coal industry.

Mr. SPENCER

Can the right hon. Gentleman say that the Nottingham and Yorkshire districts will get the same treatment as that meted out to Kent?

Sir P. CUNLIFFE-LISTER

It is open to any company to apply to the Treasury under the Trade Facilities Act.

Sir F. WISE

May I ask whether the Treasury receive reports from the various companies that receive credits?

Mr. MAXTON

I have listened each day to the Debates on this and allied subjects with a greater and greater feeling of absurdness. I have never seen a Bill brought before this House in the three or four years that I have been here that has been so absolutely friendless as the Bill now before the House. I am inclined to agree that it does not deserve any friends if the biggest impression it would make on the problem of unemployment is to leave the figures of unemployed men and women standing still at about a million and a quarter where they have been for the last two years. What is more distressing than the figures is the absolute helplessness, hopelessness and lack of any guiding line shown by right hon. Gentlemen who one after the other voice the Government's policy on these matters. Here we have a White Paper showing us a long list of grants that have been made undirected, unco-ordinated towards any national purposes, but, as various speakers have brought out, all seemingly dependent only on the consideration of what private companies know the ropes sufficiently well or have the necessary influence to get their particular scheme put through the Advisory Committee.

The right hon. Gentleman who is in charge of this Measure may impress some people that this Advisory Committee is absolutely out-with the range of all human influence and that it sits like a cherub away up aloft where no earthly thing ever touches it, but I, personally, do not believe that we have a transaction like that referred to by the right hon. Gentleman the Member for Swansea (Mr. Runciman). We have sugar-beet companies drawing a subsidy which is going to more than compensate them for any capital they invest and, in addition to getting that subsidy, they are able by some device I do not know of, by some machinery which is not inside, but which may be hovering round about the fringes of the Act, to get a sure guarantee of almost £500,000 behind their capital and behind their interest on that capital. It seems to me that the whole operation of the Act savours very strongly of Tamany, and, if this is the best that can be done, if the results for the unemployed people are so very slight, then I, for one, would join the murder party that is out to lynch this particular bit of legislation.

I believe very much better results can be achieved. This was supported to-day by the hon. Member for Reading (Mr. H. Williams) I know it is always pleasant to be quoted by someone else in this House. Even if you are quoted unfairly, still it shows people are taking some little notice of you. Each political party, in turn, has failed to solve this problem of unemployment, and each, in turn, falls back on its own particular fundamental theory of State organisation. The Tories fall back upon Protection, and say there is no cure for unemployment till we get Protection. The Labour party says there is no cure for unemployment till we get Socialism. The Liberal party's attitude is "God help us, because there is no help elsewhere." While that has been the attitude of the political parties in turn, it is not the right and proper attitude for this House to adopt. We hear remarks made here about the inefficiency of the working man or about the inefficiency of members of the capitalist classes or about this section or the next section. There is no more evidence of inefficiency in any section of the community than has been displayed in this House by the Governments who have occupied that Front Bench; than is displayed by the standing steady example of 1,250,000 unemployed people, and we who are supposed to solve it, instead of finding a solution, have absolutely failed to make the faintest impression on the number. There have been seasonal variations and, whenever the figures were up, we shouted "Hurrah!" When they were down the Government shouted "Hurrah, we did that!" But the fluctuations have gone steadily backwards and forwards along one steady line. Some definite act of statesmanship, some conscientiously directed effort has got to be made if we are to get away from this dull dead load of unemployment.

I have listened with profound interest, and I have no doubt some instruction and enlightenment, to the various persons who have told us just exactly what were the economic laws governing the situation. I understood that the best of the modern economists had quite made up their minds that there are no such things as economic laws nowadays and that the strongest thing we could say was that there were certain economic tendencies. I am still in doubt as to whether credit is a fixed quantity or an expandable quantity. I am certain that the credit of a nation which has 1,250,000 people standing idle and without purchasing power is a lower credit than that of a nation which has all its men and women employed with wages which they can spend week by week. There are great financiers in this House I have been told. As one cannot tell from outward appearances which are the great financiers and which are the less great and which are the completely ignorant, I am asking one of them to volunteer and tell me why it is that the money can circulate all round the place at various rates, and yet we cannot give to the unemployed men and women the purchasing power that will make effective buyers in the national market and effective stimulators of the national trade.

I cannot understand that any credit has been consumed. If 1,250,000 people who have only on an average £1 a week to spend have £4 to spend as employed people, there is going to be £5,000,000 of purchasing power in the hands of the people. It is only going to be in the hands of these 1,250,000 workers for something like two days. It will come out of the bank on the Saturday morning, and at least 75 per cent. of it will be back in the bank on Tuesday or Wednesday. I know a town in Ayrshire where men used to write their names on the back of their notes, and have a gamble as to when they would get their own notes back again. If they did not get their own, then they got the pound that the fellow next to them had the week before. Where is this disaster coming to the national credit by a working man and his wife being allowed to have the loan of £4 between Saturday evening and Wednesday afternoon? The banks have only let it out for a very short period, and it is back in their clutches once again. I may be all wrong. I am not suggesting that I was going to teach the House anything, but to make an appeal for somebody in the House who does know—and from the certainty with which statements are made some of them seem to know—to tell us how credit operates and how purchasing power operates. Perhaps they will on some occasion either publicly for the benefit of the whole House, or privately for my own personal benefit, enlighten me on this particular matter.

Do not let me, Mr. Speaker, put you to the painful necessity of rising to your feet, because while this might be apparently considerably away from the Second Reading of the Trade Facilities Bill I was just coming to the point. I would connect the argument with the points I want to drive home particularly on the Bill. I have raised those things to show that, quite obviously, there are a whole lot of people here who are entrusted by the country in the operation of the financing of various towns who are held responsible by the people for stimulating, encouraging, and developing national trade who are quite ignorant of the big economic laws underlying, if there be such things as economic laws underlying. And in those circumstances the duty of this house is not to sit down with folded hands, but to do what any other earnest worker desires to do where he is not quite sure where he is going to start experiments, to make trials. The one thing that ends nowhere is to sit doing absolutely nothing. I am not suggesting that the right hon. Gentlemen sitting on that bench. should adopt Socialist methods. I do not think they were elected to adopt Socialist methods, and I do not expect them to break their pledges that they gave to the electors to that extreme extent. I know they will break most of their pledges. A wholesale breakage like that would, I think, not be confined in those very wide limits of toleration which politicians allow themselves, if they do not allow them to other people. On the other hand, I do not think that national action is barred out to a Conservative Government to the extent that it is barred out to the one or two right hon. Gentlemen below the Gangway who are still individualists.

It is the duty of the present Tory Government to use every power they legitimately can use for the development of unused resources in this country and throughout the Empire, and particularly to make full use of the million and a quarter people that they have not been using just now. In my view all the boasting about special love of Empire that is not shared, as they suggest, by hon. Members on these benches, is all so much humbug—utter humbug, unless some definite organised attempt is made under this Bill to develop the undeveloped parts of the Empire. I listened to an hon. Member below the Gangway on this side last year going over a whole list of capital outlets for development in Calcutta, Bombay, and various parts of India that would have stimulated our iron and steel and shipbuilding industries in this country. I have listened to schemes of others to make developments in British East Africa and Nigeria, and I have heard my hon. Friend the Member for Dundee making suggestions for the development of agriculture by providing the peasant worker with some new, simple, mechanical device. Each one of these schemes would not merely give work to the people of this country, but tend to develop the purchasing power of the people resident in various parts of the Empire, and there is absolutely no power for the Government to say, "Yes, we are going to do some of these things." The Trade Facilities Bill is the only weapon they have, and they have got to wait until some private capitalist comes along to the British Empire and says, "Look here. We see a profit in it, and are prepared to develop the Empire." That is not Imperialism, but petty capitalism of the worst type.

What we want to do is to build up a great Empire that shall house and develop a free people, a people that shall be economically, socially and politically free. That is an object we on these benches can share with any hon. Member in this House. Our only objection is that it is too limited. We do not want merely an Empire of free people united like that, but a world of free people united. An Empire which is merely going to be a place where certain individuals, British capitalists, can grind down poor people to an even lower level than they are ground down in this country makes no appeal whatever to us, and I put it to this Government that they have got an opportunity under this Trade Facilities Bill to go out really for the full development of the Empire outside this country. They have an opportunity for developing the waste places, the undeveloped places in our own country, and, above all, the opportunity of giving to our people here and in other parts of the Empire an opportunity of a decent standard of life. Yet they have sat callously toy, or come inside this House day after day and poured cold water on any bit of enthusiasm expressed by anyone. If any suggestion comes from this side they pooh-pooh it, and show how absolutely impossible it is. They say they have got to pursue this line cautiously, and give long consideration to it before they can do anything, because they are afraid of what they might meet on their tramp forward.

But they are not the least bit afraid or ashamed of the horrible state of affairs existing in this country to-day, where men and women, and the children dependent upon them, are being deteriorated in body and soul, are having their hearts broken, are being deprived of the joy and the hope of life, and Cabinet Ministers day after day, week after week, make no suggestion that is going to bring any hope to anybody. I am going to support the Second Heading of this Bill, and in the Committee stage I hope to move an Amendment that will give not merely the power but the duty to see that these great public schemes shall be definitely co-ordinated and directed to a definite national end, that we shall not be dependent upon the individual greeds of a loosely connected group of individuals, that the nation as a nation will definitely use this legislation to initiate the various schemes that can be initiated in various parts of the Empire, and that the Government directly shall promote and directly shall see the job put through to a satisfactory conclusion. I hope before the Committee stage is reached the right hon. Gentleman and the hon. Gentleman will consider whether it is not their duty that benches.

Mr. R. McNEILL

rose in his place, and claimed to move, "That the Question be now put."

Question put, "That the Question be now put."

The House divided: Ayes, 239 Noes, 124.

Division No. 58.] AYES. [7.24 p.m.
Acland-Troyte, Lieut.-Colonel Erskine, James Malcolm Montelth Lord, Walter Greaves-
Agg-Gardner, Rt. Hon. Sir James T. Evans, Captain A. (Cardiff, South) Lougher, L.
Albery, Irving James Fairfax, Captain J. G. Lucas-Tooth, Sir Hugh Vere
Alexander, E. E. (Leyton) Falle, Sir Bertram G. Luce, Maj.-Gen. Sir Richard Harman
Allen, J. Sandeman (L'pool. W. Derby) Fanshawe, Commander G. D. Lumley, L. R.
Applin, Colonel R V. K. Fermoy, Lord MacAndrew, Charles Glen
Atholl, Duchess of Ford, Sir P. J. Macdonald, R. (Glasgow, Cathcart)
Baldwin, Rt. Hon. Stanley Forrest, W. Macintyre, I.
Balniel, Lord Foster, Sir Harry S. McNeill, Rt. Hon. Ronald John
Barclay-Harvey, C. M. Fraser, Captain Ian Macqulsten, F. A.
Bellairs, Commander Carlyon W. Fremantie, Lieut.-Colonel Francis E. MacRobert, Alexander M.
Benn, Sir A. S. (Plymouth, Drake) Gadie, Lieut.-Col. Anthony Makins, Brigadier-General E.
Bentinck, Lord Henry Cavendish- Galbraith, J. F. W. Malone, Major P. B.
Berry, Sir George Ganzoni, Sir John Manningham-Buller, Sir Mervyn
Bethel, A. Gates, Percy Margesson, Captain D.
Betterton, Henry B. Gee, Captain R. Marriott, Sir J. A. R.
Birchall, Major J. Dearman Gibbs, Col. Rt. Hon. George Abraham Mason, Lieut.-Col. Glyn K.
Blades, Sir George Rowland Gilmour, Colonel Rt. Hon. Sir John Meller, R. J.
Blundell, F. N. Glyn, Major R. G. C. Merrlman, F. B.
Boothby, R. J. G. Grace, John Meyer, Sir Frank.
Bourne, Captain Robert Croft Grant, J. A. Mitchell, S. (Lanark, Lanark)
Bowyer, Captain G. E. W. Grattan-Doyle, Sir N. Mitchell, W. Foot (Saffron Walden)
Boyd-Carpenter, Major A. Greene, W. P. Crawford Mitchell, Sir W. Lane (Streatham)
Brass, Captain W. Gretton, Colonel John Moore, Sir Newton J.
Bridgeman, Rt. Hon. William Clive Grotrian, H. Brent Murchlson, C. K.
Briggs, J. Harold Guinness, Rt. Hon. Walter E. Neville, R. J.
Briscoe, Richard George Gunston, Captain D. W. Newman, Sir R. H. S. D. L. (Exeter)
Brocklebank, C. E. R. Hacking, Captain Douglas H. Newton, Sir D. G. C. (Cambridge)
Brooke, Brigadier-General C. R. I. Hall, Lieut.-Col. Sir F. (Dulwich) Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Broun-Lindsay, Major H. Hall, Capt. W. D'A. (Brecon & Rad.) Nield, Rt. Hon. sir Herbert
Brown, Col. D. C. (N'th'l'd., Hexham) Hammersley, S. S. Nuttall, Ellis
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Hanbury, C. O'Neill, Major Rt. Hon. Hugh
Buckingham, Sir H. Hannon, Patrick Joseph Henry Percy, Lord Eustace (Hastings)
Bull, Rt. Hon. Sir William James Hartington, Marquess of Perkins, Colonel E. K.
Burman, J. B. Haslam, Henry C. Phllipson, Mabel
Burney, Lieut.-Com. Charles D. Hawke. John Anthony Price, Major C. W. M.
Butler, Sir Geoffrey Headlam, Lieut.-Colonel C. M. Radford, E. A.
Cadogan, Major Hon. Edward Henderson, Lieut.-Col. V. L. (Bootle) Raine, W.
Caine, Gordon Hall Heneage, Lieut.-Colonel Arthur P. Ramsden, E.
Campbell, E. T. Henn, Sir Sydney H. Rees, Sir Beddoe
Cassels, J. D. Hennessy, Major J. R. G. Reid, D. D. (County Down)
Cautley, Sir Henry S. Herbert, Dennis (Hertford, Watford) Remer, J. R.
Cecil, Rt. Hon. Sir Evelyn (Aston) Herbert, S. (York, N. R., Scar. & Wh'by) Robinson, Sir T. (Lanes., Stretford)
Cecil, Rt. Hon. Lord H. (Ox. Unly.) Hogg, Rt. Hon. Sir D. (St. Marylebone) Ruggles-Brise, Major E. A.
Chamberlain, Rt. Hon. N. (Ladywood) Hohler, Sir Gerald Fitzroy Salmon, Major I.
Chapman, Sir S. Homan, C. W. J. Samuel, A. M. (Surrey, Farnham)
Charteris, Brigadier-General J. Hope, Sir Harry (Forfar) Samuel, Samuel (W'dsworth, Putney)
Christle, J. A. Hopkins, J. W. W. Sandeman, A. Stewart
Clarry, Reginald George Howard, Captain Hon. Donald Sanderson, Sir Frank
Cobb, Sir Cyril Hudson, Capt. A. U. M. (Hackney, N.) Sandon, Lord
Cohen, Major J. Brunel Hudson, R. S. (Cumberl'nd, Whlteh'n) Savery, S. S.
Colfox, Major Wm. Phillips Hume, Sir G. H. Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W.)
Cope, Major William Hume-Williams, Sir W. Ellis Shaw, Capt. W. W. (Wilts, Westb'y)
Couper, J. B. Hurd, Percy A. Sheffield, Sir Berkeley
Ccurthope, Lieut.-Col. Sir George L. Inskip, Sir Thomas Walker H. Shepperson, E. W.
Croft, Brigadier-General Sir H. Jackson, Lieut.-Col. Rt. Hon. F. S. Skelton, A. N.
Crookshank, Col. C. de W. (Berwick) Jacob, A. E. Slaney, Major P. Kenyon
Crookshank, Cpt. H.(Lindsey, Gainsbro) Jephcott, A. R. Smith, R. W. (Aberd'n & Kinc'dlne, C.)
Cunliffe, Sir Herbert Jones, G. W. H. (Stoke Newington) Smithers, Waldron
Curzon, Captain Viscount Joynson-Hicks, Rt. Hon. Sir William Somerville, A. A. (Windsor)
Davidson, Major-General Sir J. H Kidd, J. (Linlithgow) Stanley, Col. Hon. G. F. (Will'sden, E.)
Davies, Maj. Geo. F. (Somerset, Yeovll) Kindersley, Major Guy M. Stanley, Lord (Fylde)
Davies, Sir Thomas (Cirencester) King, Captain Henry Douglas Stanley, Hon. O. F. G. (Westm'eland)
Dean, Arthur Wellesley Kinloch-Cooke, Sir Clement Steel, Major Samuel Strang
Eden, Captain Anthony Knox, Sir Alfred Stott, Lieut.-Colonel W. H.
Edmondson, Malor A. J. Lamb, J. Q. Streatfeild, Captain S. R.
Elliot, Captain Walter E. Lane Fox, Col. Rt. Hon. George R. Stuart, Crlchton-, Lord C.
Elveden, Viscount Lister, Cunliffe-, Rt. Hon. Sir Philip Sueter, Rear-Admiral Murray Fraser
England, Colonel A. Locker-Lampson, Com. O. (Handsw'th) Sykes, Major-Gen.' Sir Frederick H.
Erskine, Lord (Somerset, Weston-s.-M.) Looker, Herbert William Tasker, Major R. Inigo
Templeton, W. P. Watts, Dr. T. Withers, John James
Them, Lt.-Col. J. G. (Dumbarton) Wells, S. R. Womersley, W. J.
Tinne, J. A. Wheler, Major Sir Granville C. H. Wood, B. C. (Somerset, Bridgwater)
Titchfield, Major the Marquess of White, Lieut.-Colonel G. Dalrymple Wood, E. (Chest'r, Stalyb'ge & Hyde)
Tryon, Rt. Hon. George Clement Williams, A. M. (Cornwall, Northern) Wood, Sir Kingsley (Woolwich, W.).
Vaughan-Morgan, Col. K. P. Williams, Com. C. (Devon, Torquay) Wood, Sir S. Hill- (High Peak)
Waddington, R. Williams, Herbert G. (Reading) Yerburgh, Major Robert D. T.
Wallace, Captain D. E. Wilson, M. J. (York, N. R., Richm'd)
Warner, Brigadier-General W. W. Wilson, R. R. (Stafford, Lichfield) TELLERS FOR THE AYES.—Major Sir Harry Barnston and Mr. F. C. Thomson.
Warrender, Sir Victor Windsor-Clive, Lieut.-Colonel George
Waterhouse, Captain Charles Wise, Sir Fredric
NOES.
Adamson, Rt. Hon. W. (Fife, West) Hardie, George D. Shaw, Rt. Hon. Thomas (Preston)
Alexander, A. V. (Sheffield, Hillsbro') Harris, Percy A. Shepherd, Arthur Lewis
Attlee, Clement Richard Hartshorn, Rt. Hon. Vernon Shiels, Dr. Drummond
Baker, Walter Hayday, Arthur Short, Alfred (Wednesbury)
Barker, G. (Monmouth, Abertillery) Henderson, Right Hon. A. (Burnley) Simon, Rt. Hon. Sir John
Barnes, A. Henderson, T. (Glasgow) Sinclair, Major Sir A. (Caithness)
Barr, J. Hirst, G. H. Sitch, Charles H.
Batey, Joseph Hirst, W. (Bradford, South) Slesser, Sir Henry H.
Briant, Frank Hopkinson, A. (Lancaster, Mossley) Snell, Harry
Broad, F. A. Hore-Belisha, Leslie Snowden, Rt. Hon. Philip
Bromfield, William Hutchison, Sir Robert (Montrose) Spencer, George A. (Broxtowe)
Bromley, J. Johnston, Thomas (Dundee) Stamford, T. W.
Brown, James (Ayr and Bute) Jones, Henry Haydn (Merioneth) Stephen, Campbell
Buchanan, G. Jones, J. J. (West Ham, Sllvertown) Stewart, J. (St. Rollox)
Buxton, Rt. Hon. Noel Jones, Morgan (Caerphilly) Taylor, R. A.
Cape, Thomas Jones, T. I. Mardy (Pontypridd) Thomas, Rt. Hon. James H. (Derby)
Charleton, H. C. Kelly, W. T. Thomson, Trevelyan (Middlesbro., W.)
Clowes, S. Kennedy, T. Thorne, W. (West Ham, Plaistow)
Clynes, Rt. Hon. John R. Kenworthy, Lt.-Com. Hon. Joseph M. Thurtle, E.
Collins, Sir Godfrey (Greenock) Kenyon, Barnet Tinker, John Joseph
Compton, Joseph Kirkwood, D. Townend, A. E.
Connolly, M. Lawson, John James Varley, Frank B.
Cove, W. G. Lindley, F. W. Viant, S. P.
Davies, Evan (Ebbw Vale) Lowth, T. Wallhead, Richard C.
Davies, Ellis (Denbigh, Denbigh) Lunn, William Walsh, Rt. Hon. Stephen
Davies, Rhys John (Westhoughton) MacDonald, Rt. Hon. J. R. (Aberavon) Watson, W. M. (Dunfermline)
Day, Colonel Harry Mackinder, W. Watts-Morgan, Lt.-Col D. (Rhondda)
Dennison, R. MacLaren, Andrew Webb, Rt. Hon Sidney
Duncan, C. Maclean, Nell (Glasgow. Govan) Wedgwood, Rt. Hon. Josiah
Edwards, C. (Monmouth, Bedwellty) MacNeill-Weir, L. Westwood, J.
Fenby, T. D. March, S. Whiteley, W.
Garro-Jones, Captain G. M. Maxton, James Wiggins, William Martin
Gibbins, Joseph Montague, Frederick Williams, David (Swansea, East)
Gillett, George M. Morris, R. H. Williams, Dr. J. H. (Lianelly)
Gosling, Harry Morrison, R. C. (Tottenham, N.) Wilson, C. H. (Sheffield, Atterchffe)
Graham, Rt. Hon. Wm. (Edin., Cent.) Naylor, T. E. Wilson, R. J. (Jarrow)
Greenall, T. Owen, Major G. Windsor, Waiter
Grenfell, D. R. (Glamorgan) Paling, W. Wright, W.
Griffiths, T. (Monmouth, Pontypool) Potts, John S.
Groves, T. Purcell, A. A. TELLERS FOR THE NOES.—Mr. Allen Parkinson and Mr.Warne.
Grundy, T. W. Richardson, R. (Houghton-le-Spring)
Guest, J. (York, Hemsworth) Robinson, W. C. (Yorks, W. R., Elland)
Hall, G. H. (Merthyr Tydvll) Scrymgeour, E.

Eighth Resolution read a Second time.