§ Amendment made: In page 13, line 18, after the word "and" insert the words "the charge."—[Mr. Guinness.]
§ Motion made and Question proposed, "That the Bill be now read the Third time."
§ Mr. BUXTONI wish to refer to a subject which you, Mr. Speaker, ruled could not be raised in the form of a New Clause, but which is important when we consider the Bill as a whole. I think I shall have the sympathy of the House and of the Minister, in urging that the whole field of co-operative credit ought not to be ignored, but that the Minister ought to take every possible opportunity of informing the farmers of the opportunity which they have under the Bill of forming credit associations and taking further advantage of the facilities offered by the Government. We all want to get the maximum progress out of that part of the Bill which commands general assent. It is true that we find the greatest fault with Part I, but Part II has our warm support, and indeed the method of it is advocated in the Agricultural Report of the Labour Party. It is to be noted that the system of assistance of credit, in connection with agriculture, in every part of the world where organisation exists at all, takes the co- 2178 operative form. Even in America, where individualism is so powerful, you get both on the long-term credit side and the short-term credit side, an elaborate system of associations and societies and the Federal Reserve Bank gives special advantages to the agricultural credit corporations, and to co-operative societies of that kind in particular. In Europe the case is very much stronger. Where you have small cultivators, credit facilities, in the main, take the co-operative form.
The Minister has indicated his belief that the power to take shares in such co-operative societies is already possessed by the Ministry. That is a very important statement on which small cultivators will have to rely. Perhaps before the Bill passes through another place, the Minister will satisfy himself that the Ministry has power to take shares in co-operative societies which can be organised under the existing law. I would ask him to make quite certain that that power exists, as otherwise the machinery for co-operative credit will not be complete. In our view the Bill is very much vitiated by Part I, but of course the clearest distinction must be drawn between Part I and Part II. In foreign countries the distinction is so great that entirely different organisations deal with the two matters. In France the Credit Foncier deals with the mortgage system, and on the other hand, the Banque Agricole deals with the short-term credits which supply the co-operative societies in a highly subsidised form. We, therefore, feel cold about the Bill on account of the unfortunate elements—unfortunate from our point of view—which we have detailed this afternoon. In face of the overwhelming evidence that occupying ownership has not contributed to the improvement of agriculture, we are unable to feel any enthusiasm for the Bill as a whole. But Part II represents a system on which all must agree, especially in view of the Minister's undertaking to make clear the point raised about publicity.
The chattel mortgage is not a European but an American invention. It has become known through the Enfield Report, and it certainly appears to be a form of mortgage which satisfies the peculiar temperament and circumstances of the English farmer. It ought to be valuable because, in the first place, our farmers have been seriously hampered by the system which has prevailed up to 2179 now, and which, I gather, the hon. and learned Baronet the Member for East Grinstead (Sir H. Cautley) would like to perpetuate. I think he is almost alone in that desire. Another grave defect of the existing system, not only from the individual farmer's point of view, but generally, is that it has led to the inadequate use of the credit facilities afforded by the assets which our farmers possess. Some figures have been given, but nobody knows exactly what amount of credit is utilised, or to what extent farming assets are mobilised. We have lately learned that the output of our agricultural industry represents about £260,000,000, and the bank advances upon that, when last ascertained, were about £25,000,000. In America, bank advances upon movable agricultural stock are more like one-sixth; and, certainly, our farmers should, under the new system, be very much better supplied than they have been hitherto. We on this side have been urging strongly that means must be found to enable the farmers to get free from the grave disadvantage of owing their credit to the dealer. Therefore, while we are strongly against Part I, we see so much advantage in Part II that we do not propose to divide against the Third Reading of the Bill, and it ought to be the general hope that this diversion of agricultural credit in this country from its old channel to a new one will, in not too long a time, lead to a very great reform in our agriculture.
§ Mr. GILLETTI entirely agree with what my right hon. Friend has said with regard to the need for more co-operative work among the farmers in regard to the provision of credit, but I do not blame the Minister for not having attempted in this Bill to propose anything on co-operative lines, because anyone who has had even the smallest connection with the working of that system in this country must have been filled with disappointment in regard to those societies connected with the farming world and the failure of the farmers in any way to seem to appreciate what has been done in other countries or to be willing in any way to sink their own individuality in the common cause and make the co-operative societies a real success. Therefore, while I feel that other countries have been very successful and to some 2180 extent have provided their credit by means of the co-operative system, in this country even the small attempt that was made a few years ago when the last Conservative Government passed a small Bill dealing with the provision of credit proved a complete failure and received no measure of support when any proposals were made to farmers to follow lines which have been successful among the small farmers of Germany. But why I wished to say a word or two before this Bill passed elsewhere was that I did not feel that some of the fears that I had at the beginning had been in any way removed by the discussion to-day.
The first point which I never feel that the Minister has recognised is that the problem that we had before us was the fact that private enterprise, as represented largely by the great banks, had not, quite naturally, met the needs of the farmers for long-term credit. The explanation is quite simple, that the bankers do not want to make loans of the length required and which the Government are suggesting. Therefore, no criticism can be made in regard to the failure of the banks to meet this need, but when the Minister came face to face with the problem he, with his views, naturally turned down what has been the usual system in other countries, namely, the provision of a State bank dealing with this special need. Private enterprise has distinctly proved that it was unwilling or unable to meet this need, because I need hardly remind the House that there are one or two societies that have specially laid themselves out for providing this kind of credit, but their measure of success has been limited, either because they could not raise the necessary funds or for reasons of which I am not aware. It is obvious that in the opinion of the Minister at any rate, or he would not have brought in this Bill, the banks and these societies have not met the need.
Then the Minister could only face the problem in two ways. He could have gone in for the system followed in other countries and have had State banks to provide credit on lines that would have met the needs of the farmers, or he could have done something on the lines suggested in this Bill. The first criticism I wish to make is that why I feel the scheme may probably fail is that he has 2181 gone to the bankers, who, as a matter of fact, do not want to nave anything to do with this kind of credit. That, we virtually understood from the right hon. Member for West Swansea (Mr. Runciman), who is a director of one of the so-called "Big Five," and we heard him say to-day, what was always my opinion, that the banks did not want to deal with this matter, but that, in order to oblige the Minister, they had agreed to his proposals. What I want to suggest to the Committee is that if you want a scheme to be successful, it is better to put it in the hands of people who are really keen about it than to force it into the hands of people who are only doing it to oblige.
I cannot help thinking that as time goes on, the Minister will find that an hon. Member sitting here was justified when he informed us that he did not believe that Part I of the Bill would to any extent be of very great use, except in a few special instances. The reason that private enterprise failed was because it could not offer terms that were sufficiently attractive to the farmer, and also to the man who was going to lend his money. In other words, the farmer did not want to pay the high rate of interest which was wanted by the person who lent the money over a long period of years. That was only a natural reason why these schemes failed.
If the Minister really thinks that it is essential for the assistance of agriculture that something should be done, he should face the difficulties on what I call unscientific principles. He should make some provisions which, from a business standpoint, could not be considered sound, and give something that private enterprise could not give; and he ought to agree in some way to cover the corporation which he is starting by saying that he would agree to what was an unbusinesslike proposition in regard to the size of the loan. On the other hand, instead of making these contributions of £10,000 and other figures of that kind, he should have said at once that he knew that the corporation could not make this a success unless he came in and made a definite payment towards the interest, so that the corporation could lend at a less rate of interest than could be done on an ordinary business footing. My belief 2182 is that the scheme will fail because the Minister has not dared to go away from what I acknowledge are sound business principles. But if he had wanted to do anything on these lines, he would have found that it was exactly the same thing as giving a subsidy to sugar beet. No one considers that that subsidy is a sound business principle, but the Government gave, it because they said that it would help for the time being. At the same time, the Minister might have said that the needs of agriculture were so great that he must indirectly give a subsidy, and if he had wanted to make this scheme a success, he would have had to do something on the lines I have suggested in order to help bring together the two sets of persons, the lender and the person who wanted the loan, who at the present time, on sound business principles, do not come together.
The only thing I want to say in regard to the second part of the Bill is that, while I agree that it may be of some use, I suggest that it is quite possible that the advantage will not be as great as the House thinks. When the banker lends money to a farmer, he does not always insist, when he agrees to an overdraft, on having a definite security. The farmer has known the banker, he has talked to the banker about his fields and his land, he has spoken about his stock, and the banker has perhaps agreed to an overdraft conscious of what the man has on his farm. To-day you are going to make it a legal arrangement by which these things can be secured for the banker. I think it is possible that in some of the loans which have been made this has been taken into consideration, perhaps consciously or unconsciously. An hon. Member sitting below the Gangway asked whether it was not possible to have a consultative committee. I think be has overlooked the fact that Part II of the Bill has nothing to do with the Corporation, dealing with ordinary banking business as it exists to-day. One could hardly ask Barclays or Lloyds or the Midland Bank when they were deciding upon an advance to a farmer to say that the decision was to rest in the hands of some outside committee.
§ Sir W. WAYLANDNot in dealings in the ordinary way. The loans are lent by 2183 the Corporation and not by the banks. The banks are only acting as agents.
§ Mr. GILLETTAs I understood the Minister of Agriculture, Part II of this Bill is dealing with the ordinary banks. It is not intended that these advances on stock which are being made by the banks are connected in any way with the Corporation. They are just ordinary business transactions. The hon. Member was mistaken in thinking it has anything to do with the Corporation. It is a new power which is given to the farmer when he goes to a bank. It would be quite impossible to bring in outsiders in dealings with the private banks. If there were to be interference by the Government, we should come up against a scheme which would be distasteful to hon. Members opposite. If it wishes to control things the State must take them under its own care. We cannot have the best of both worlds. We can have Socialism or we can have private enterprise, but we cannot do very much by mixing the two together. Looking at the Bill as a whole I cannot feel that any of the fears I had in the beginning have been removed. I think Part II may be of some service to farmers, but I cannot help feeling that many who are counting upon this Bill to be a great help to agriculture will find in a few years' time that it has not had any very great effect in helping to solve the problem.