COTTON INDUSTRY.

HC Deb 27 March 1930 vol 237 cc647-719

Sir HERBERT SAMUEL

There will be general agreement that no subject causes greater anxiety among Members of all parties in the House, irrespective of their political opinions, than the gravity of the unemployment problem; and in the country as well as in Parliament, it causes the gravest anxiety to all sections of the nation. But I do not think it is fully realised to what a large extent the recent increase in the numbers of the unemployed is due to the extreme depression—the term is not too strong—which now prevails in the cotton industry. In Lancashire, or in the northwest region of the country, according to the term used in reckoning the unemployment statistics, there are now no fewer than 400,000 unemployed work-people, and of these 100,000 have become unemployed within the last three months. In that division the cotton industry is the predominant industry. There are 160,000 more unemployed there than there were a year ago. Among cotton operatives the rate of employment a year ago was 12 per cent. In old times that would have been considered bad enough, because it is a terrible rate of unemployment, but a month ago the figure was double, it was 24 per cent.; and to-day, although the actual statistics are not available, it is known that the situation is considerably worse than it was last month. Further, a large number of the work-people in the cotton trade, while not actually unemployed, are under-employed working, perhaps, only two looms instead of four, so that their earnings are halved, and the poverty and distress in which these people are plunged is very great. Here are one or two extracts from the Ministry of Labour Gazette. The reports from the spinning centres are very bad. In Bolton nearly 30 per cent. of the spinners worked less than half time in February. From the weaving districts there are similar reports: In Blackburn, 22 mills were stopped at the end of the month"— that is February— 14 firms have closed down in Accrington, and 30 at Burnley. So the reports come in from all the cotton towns, or almost all of them. This sudden increase in unemployment, for it has been sudden within the last few months, and has been intensified in the last few weeks, is in no degree connected with, or almost imperceptibly connected with, recent changes in the law. The Clause relating to people "genuinely seeking work" has no application here. No matter how genuinely a cotton operative might have been seeking work in these towns, his task would have been hopeless. It would be easier to gather grapes from thorns or figs from thistles than for any cotton operative out of employment in one of those towns to have any chance of finding an occupation by going from place to place genuinely seeking employment. Recent events are an intensification of what has been proceeding during the last few years. It is estimated that within the last few years more than 200 cotton firms have closed down altogether, representing, on the weaving side, over 100,000 looms. It is the common opinion to-day that the trade depression is worse than it has been within the knowledge of a whole generation, some think worse than it has been since the days of the American Civil War, and I feel sure the gravity of these circumstances is not yet fully appreciated by the country or even, perhaps, by Members of this House.

The cause of this state of affairs is not to be found in any importation of foreign manufactured goads. I know that some of my hon. Friends seize upon the increase in the importation of cotton manufactures which has undoubtedly taken place in the last two or three years as though that were an important consideration. The imports are an exceedingly small part of the total volume of the trade, and I was somewhat surprised, on looking into the Statistical Abstract a day or two ago, to find that the imports of foreign manufactured cotton goods into this country to-day are considerably less than they were before the War. The piece goods imported into this country in 1913 totalled 125,000,000—that is linear yards, which is what matters from the point of view of employment—and in 1928, the figures for that year being the latest available, 83,000,000 linear yards. That shows that imports now are two-thirds only of what they were before the War, and at that time the Lancashire cotton industry was highly prosperous. Other goods—not piece goods—are quoted only in values and not in quantities, and the amount, measured by value, is the same as it was before the War, in spite of the general increase in values.

Nor is the explanation of the present position to be found, as one hon. Member thought, in the importation of cotton goods from Russia. Rashly a question was put down to the President of the Board of Trade as to the extent of the importation of manufactured cotton goods from that country within a certain period, in an endeavour to show that Lancashire trade was suffering severely from this importation. The answer given was that the value of cotton goods imported from Russia within that period was not £1,000,000—I do not know what the hon. Member was expecting—nor even £100,000, nor £1,000, nor £100, but amounted precisely to 20s. worth.

Sir NAIRNE STEWART SANDEMAN

I do not think the President of the Board of Trade said that £1 worth was all that was imported. He said that was all of which he knew. I believe that if he will take the trouble to make a careful search he will not have to go very far to get the information.

Sir H. SAMUEL

I have no doubt the right hon. Gentleman consulted the ordinary sources of information, namely, the Customs returns, which are obtained for statistical purposes, and if there had been more than £1 worth I feel certain the information would have been there. I am afraid these cotton goods from Russia which are supposed to be invading this country in enormous quantities are like the Russian armies that passed through England in the early days of the War—they are the product only of a bright imagination. The cause of the parlous condition of the industry at this moment, as is well known in 4.0 p.m. Lancashire, is undoubtedly to be found, not on the import side, but on the export side. We have lost, unhappily, an immense proportion of our export trade. Before the War, Lancashire exported more than 6,000,000,000 linear yards of cotton cloth. Last year she exported only 4,000,000,000. In that decline of over 2,000,000,000, of nearly 2,500,000,000 yards, there is to be found the real cause for the widespread unemployment, the closing of mills and the depression of whole districts. Then this country had more than two-thirds of the whole cotton exports of the world. To-day we have less than one-half. The Indian market is the chief factor in this decline. There we have lost half of our trade in the principal market in the world. Our exports have gone down 1,200,000,000 yards, and the fall continues and was intensified last year. It was due mainly to the Indian tariff, under the shelter of which the Indian production of cotton goods has increased by almost precisely the same amount as that which measures our decline, and it is partly due also to the importations from Japan.

Japan sent to India before the War only 3,000,000 yards of cloth, but last year she sent 357,000,000 yards—an amazing increase in a trade in what happens to be our principal market; and that competition is becoming more and more intense. Within the last two years, in the principal product, grey unbleached cotton cloth, the increase in the Japanese trade with India has been no less than 60 per cent., and figures published only this morning show that the competition is becoming more and more severe. Those figures relate to the 10 months ended last January compared with the 10 months ending the previous January, and in those particular commodities sent from Japan the figure has gone up in a single year from 192,000,000 to 332,000,000. That shows the gravity of the formidable problem with which the Lancashire producers are faced. There has been in that period a further, though not a commensurate, fall of British exports of cotton to India.

In these circumstances, with Lancashire struggling for its very economic life, there comes the disaster of a yet further and severer increase of the Indian duties upon imported cotton. There is a preference proposed to be given to British cotton as against Japanese, but that is regarded by manufacturers here as in no degree counterbalancing the effect that will be felt by the large increase of duties on British cotton. As elsewhere, wherever there is a protective system, and there is a depression in industry, recourse is had to another dose of the same stimulant. It is the same in the United States and Australia. Once accept the principle of Protection as being a proper remedy for depression, and whenever depression comes, as it comes to protected as well as Free Trade countries, there is a demand for further and further increases in the rates of tariff, which increases have to be conceded, and the effect upon the consumer becomes more and more disastrous. People are made poorer—it is an obvious economic truth—if you raise the cost of living, just as much as if you lower their standard of earnings, and any measure taken in India which makes clothing dearer for the hundreds of millions of inhabitants of that country has the same economic effect upon it as a corresponding reduction in their earnings.

In this matter the interest of the Indian consumer corresponds with the interest of the British producer. One wishes to buy and the other wishes to sell commodities as cheaply and of as good quality as can be obtained, and the difficulty of the political situation in India arises from the fact that the Indian Government is hampered in protecting the interest of the Indian consumer by the very fact that that interest is the same as the interest of the British producer, and it is exposed to criticism when seeking to prevent a rise of prices to the Indian consumer on the ground that it means assisting the British producer as against the Indian producer. That is the situation in India, and it is difficult for this country, really, to make effective representations in that regard.

The Government when they came into office appointed a committee to examine all these matters, to ascertain more fully than hitherto the facts and to advise Lancashire as to what course might be adopted. We have heard nothing more of that committee from that day to this. A period of seven or eight months has elapsed, and no report has yet been made. I confess that when the committee was appointed I was surprised at its composition, not from the point of view of competence, but from the point of view of the capacity of the members of the committee to give adequate time to a. problem so urgent and so complex. The chairman was the President of the Board of Trade. His principal colleague was the First Lord of the Admiralty. Imagine during these last few months, with the innumerable duties imposed upon the right hon. Gentleman, conferences one after the other on the Continent, a great Bill, the Coal Mines Bill, demanding constant negotiations and attendance in this House for long periods—with these things pressing upon the right hon. Gentleman, how would it have been possible for him to give adequate attention to the question of the cotton industry?

No wonder the right hon. Gentleman found it necessary to resign the chairmanship of that committee, and it was obvious that his colleague, the First Lord of the Admiralty, with all the problems relating to his own Department, particularly in regard to the Naval Conference, pressing upon him, could not give adequate attention to this matter. Both those right hon. Gentlemen naturally elected to withdraw from the work of the committee, and at present the chairman is the Home Secretary. But the fact remains that these changes must have involved great disorganisation of the work, and great delay in the presentation of the report. I should have thought it could have been foreseen from the beginning that the President of the Board of Trade, at all events, and probably the First Lord of the Admiralty, could only regard this as a sort of by-product of their activities, and could not possibly give adequate attention to the question. But I should like to ask the right hon. Gentleman how the work of the committee now stands, when the inquiry will be completed, when this House and the country may expect to receive the committee's report, and whether, as the result of its deliberations as they have proceeded as yet, he can give the House to-day any conclusions that have been reached or any suggestions that have been arrived at?

Is this committee working in conjunction with the new Economic Advisory Council, or what are the relations between the two bodies? The House and the country have a right to be somewhat impatient at the long delay that has taken place in this matter, in view of the gravity and urgency of the problem. I hope that the right hon. Gentleman will be able to tell us to-day if possible how far the committee considers that the troubles of Lancashire are to be regarded as due to temporary causes; how far the sudden increase in unemployment, the constant steep rise in the curve of unemployment on the chart in Lancashire during the last few months, is due to causes which are of a temporary character, and, in particular, to the fall in the price of cotton which may have hindered manufacturers from proceeding with their activities at as high a rate as they would otherwise desire; how far has it been due also, if at all, to the sudden fall in the value of silver? We shall await with the greatest interest any constructive proposals that may be made by this committee.

I do not believe that Lancashire, in spite of present circumstances, will lose heart, will consider that the position is desperate. It was a familiar saying of Samuel Butler that "life is eight parts cards and two parts play," but, in the long run, the good player always wins, and the two parts play are as important as the eight parts cards. Although the cards may be against Lancashire to-day, with skilful play it may, nevertheless, not lose the game. For example, in relation to Japanese competition, it need not be regarded as a desperate position on account of the much lower wages that are paid in Japan. In the cotton industry it is not the same as in the coal industry, where almost the whole of the cost of production is wage cost. In cotton piece goods, when they reach the Far East market, only one-fourth of the value is wage value. The wages of the cotton operatives, the spinners and the weavers, constitute only one-fourth of the final value of the product as it is sold in the markets of the East. The rest is made up of the cost of raw material, freight and other costs of various kinds.

Therefore, even a large difference between wage costs in Japan and this country need not necessarily be a final and a conclusive consideration. Those figures relate to grey cloth. If you are dealing with the bleached and dyed article, the wage price is a smaller percentage. And in Japan there is a counter balancing factor in the very high cost of capital, which is a serious drawback to the success of their industry in competition with that of Lancashire. In this country we would not wish to imitate the low wage rates of Japan, but in the organisation of industry there is a good deal from which we can learn, particularly in regard to rationalisation. It may surprise hon. Members to know, as it surprised me to learn, that 70 to 80 per cent. of the whole of the cotton imported into Japan and 70 to 80 per cent. of the whole of the cotton goods sold out of Japan are handled by three firms. Three firms do three-quarters of the whole inward and outward trade of Japan, and, with regard to production, four firms do 40 per cent. of the cotton trade of Japan. Contrast that with the 1,800 spinning and weaving firms of Lancashire. Contrast it with the 700 or 800 exporting merchants of Lancashire and the large number who are engaged in the home trade.

There is, of course, as we all know, a keen effort being made in Lancashire to-day to organise the industry more effectively. There is the Lancashire Cotton Corporation, which has already purchased 70 mills and is creating a great amalgamation of firms. There is a combination among the Egyptian spinners now proceeding. The quilt manufacturers have formed an amalgamation, and in other directions efforts are being made to rationalise the industry. It is interesting to know that to-day in Bombay also there is a proposal to combine into one organisation no fewer than 50 of the mills in Bombay. There is proceeding, here as elsewhere, what I have called, in a previous speech in the House, the second industrial revolution. The first industrial revolution, of 100 years ago and more, substituted machine labour for hand labour; the second industrial revolution, which is proceeding now before our eyes, substitutes vast scale production for smaller scale production, and that must necessarily proceed in Lancashire and is likely to bear good results.

In this connection, I would like to ask the President of the Board of Trade what we are to anticipate from the proposals of the Lord Privy Seal in regard to finance. When he went to Manchester and told the people there that the City—a vague, possibly an elusive, term—was prepared to finance these amalgamations, and the provision of fresh machinery, and so forth, what had he in mind? Is there anything definite in prospect? Our right hon. Friend the Lord Privy Seal—I say "our" friend because he is the friend of all of us—is a man of sanguine temperament, and if any of his proposals seem possible, he instantly assumes them to be probable, and when they have reached the stage of probability, to regard them as certain is a very small step further. I am not quite sure whether in this particular matter there is anything very specific and definite to be anticipated for the assistance of the Lancashire cotton trade.

Further, I would ask the right hon. Gentleman whether the Committee have examined—and this perhaps is for the moment the most important consideration of all—the changes in mechanical methods and the effect of such changes upon labour conditions. Ring spinning and automatic looms are working very considerable changes in many countries, and other nations have adopted them to a much greater extent and much more rapidly than we have. In Japan, for example, there are no fewer than 20,000 automatic looms already installed, and one company alone in Japan is manufacturing them at the rate of 400 a month. If it is the case that those looms are far more efficient and less costly in the manufacture than the others, that means a still further intensification of Japanese competition against Lancashire. Of course, we know that they are not suitable for many kinds of production, and that there are certain lines of cotton goods for which they cannot be used, but in the great bulk of production it may be the predominant factor; and here we come to questions affecting the interests of labour, which are of great difficulty and often present a most painful dilemma.

If it is the case that the automatic loom, which means the employment of about half the labour, is more efficient and more economical, what is the duty of the operatives' trade unions in regard to their introduction? There is the conflict between the ultimate interests of the industry as a whole, including the workers, and the immediate interests of the operatives who are directly affected—a most difficult and painful dilemma. We here can speak of the matter in the abstract, merely as an economic or a commercial problem, but when you go into the homes of the people in the working class districts of the cotton towns, and realise that this man, and that woman, and the other woman are going to be thrown out of work, with very little prospect of employment elsewhere, you have, as I say, an exceedingly painful dilemma. It is almost as though the industry were called upon to undergo a painful surgical operation without an anæsthetic, but it may have to be done, if it is necessary in order to save life.

The problem has arisen in every great change in industrial methods, and it arose most acutely in the previous industrial revolution, when the hand-loom weaver saw his whole livelihood disappear owing to the competition of the factory. It is very much the same now, but inevitably in the long run, if we are to save our trade at all, we must adopt the most efficient methods, and we must endeavour in the process to safeguard as best we can the interests of those workers most seriously affected. I would like the right hon. Gentleman to tell us, if he can, whether the Committee have given their special attention to this very grave and urgent problem, and whether they propose to offer any advice to the manufacturers and workpeople of Lancashire in that regard.

There are two or three other points to which I will very briefly allude. Have the Committee examined the complaints that have been made from the trade with regard to the high cost at the finishing end—bleaching and dyeing—due to a combine that has been brought into existence there, and which has been exceedingly prosperous during all these years when the trade as a whole has been suffering? I believe we shall be obliged to come, in this House, to the conclusion that, while these amalgamations are necessary and inevitable, and indeed economically desirable, in order to produce rationalised industry and production on the best lines, they bring with them very grave dangers to others, very grave dangers to the consumers and to other industries that are not sufficiently organised to cope with monopolies; and we shall be obliged to consider whether it is not necessary to have certain legislation in respect to monopolies of all kinds, whether in oil, petrol, milk, or whatever it may be. That, probably, is a matter which may not be in order on this occasion, but I think I Shall be in order in inquiring of the right hon. Gentleman whether he and his Committee have devoted attention to that side of the question.

Further, when are we to hear more of the Washington Convention, which is an important factor in this matter, and which would really help to reduce the hours of labour in competing countries to those which are already worked here? Year after year goes by, and still we hear nothing of a Measure to permit of the ratification of that Convention. Lastly, is the Dyestuffs Act, which is another grievance of the Lancashire manufacturers, to come to an end next year in the normal course, or is it proposed to extend it? When the Act was first passed, in 1920, the late Prime Minister, who was then in charge of the matter, said that within five years key industries of that kind ought to be able to establish themselves permanently in this country, and that if they could not do it in five years, it was very doubtful whether they ought to be further assisted at the expense of the community as a whole. Eleven years will have gone by before the Dyestuffs Act comes to an end. It lapses in January, 1931, and I sincerely trust that the Committee will make it clear that they recommend at all events that the Act shall not be further extended, but that manufacturers shall be free to buy their dyes where and when they can best do so.

Those are the questions which I would address to the right hon. Gentleman, and I hope that he will be able to answer some of them at all events in a manner which will give hope for the future of this hard-pressed industry—still a great industry, still providing one-fifth of all the exports of this country, still sending out over £130,000,000 worth of goods each year. We speak of the greatness of our iron and steel trade and of the exports of those products, but cotton exports are twice those of the iron and steel trade. We have had prominently before us the importance of the coal industry and of our export trade in coal, but cotton sends out three times as much, as regards the value of exports, as does the coal industry. And there is this consolation to be borne in mind in the present circumstances. We can sometimes take a little consolation in the similar misfortunes of our neighbours, and the cotton industry, if it is seriously depressed here, is also gravely depressed in the United States of America and in India, and it may be that world causes which have operated now to our detriment may operate later to our advantage.

Certain factors at the moment undoubtedly are favourable. The fall in the price of the raw material, cotton, although causing great disturbance to the trade and to manufacturers at the moment, must in the long run work to its advantage, because it must mean a cheaper finished product, and in the long run that must mean a larger demand. Similarly, the cheapening in the rates for money, which has been so striking a feature of the last few weeks, must assist all producers, and the Lancashire producers among the rest. The fall in the cost of living which has been proceeding, though strangely slowly, when taken in relation to the fall in the general values of raw products, must also, help in cheapening production in the long run. On the other hand, we have this continual increase in tariffs here and there, and we have still an enormous burden of taxation, which presses upon industry, which presses upon the whole nation, and from which, I fear, there is little prospect of relief in the near future. However that may be, I am convinced that Lancashire will still display her old qualities of courage and perseverance, and that by some means and some day she will once more restore this industry to its old position, in which the nation can find prosperity and can take pride.

Mr. HAMMERSLEY

In choosing to draw attention to this question of the condition of the cotton industry, I think the Liberal party are to be congratulated. It is difficult to express in figures the real gravity of this problem. To say that one person out of four in Lancashire is now out of a job conveys some impression. but it does not convey the hardship which is taking place throughout the county. Since the beginning of the year over 100,000 new people have been thrown out of work in the Lancashire cotton trade. In my own constituency one-third more people are out of work this year than was the case last year, It does not require any great imagination to appreciate how, when an industry of this character shows a continuous and in fact precipitous decline, such as we have been ex- periencing during the last few months, there is a great danger to the whole of the economic fabric of the country.

The speech of the right hon. Member for Darwen (Sir H. Samuel), if he will forgive me for saying so, had one of the detractions of so many speeches in this House on industrial subjects, and that is that it was to a great extent academic. It was not in any sense of a constructive character, nor did it put forward any proposal that could even remotely be considered as helpful. He referred to the fact that our chief difficulty was our export trade; that was within the knowledge of most hon. Members and students of the subject. He dealt with the bad effect of protective duties on Indian imports. The speech which was made in regard to that particular item could have been much more effectively made by the right hon. Gentleman sitting as the President of an Indian consumers council than in this House. What right have we to suggest that we can control the fiscal policy of those who represent the cotton industry? We have to deal with the facts as they stand, and I suggest that one of the great disadvantages of discussing a complicated industrial problem like this is that we are so apt to indulge in the application of our particular theories. The right hon. Gentleman the Member for Darwen certainly gave a very accurate analysis of the situation when he pointed out that this was a question which could not be dealt with in watertight compartments, that we were suffering from lack of efficient salesmanship, and that in the industry as a whole there were no modern methods. With all those statements and that analysis I am sure that hon. Members in all parts of the House will be in thorough agreement.

There is no quarrel among us as to what is the trouble. We may put emphasis on this or on that, but, on the whole, the main drawback is the lack of organisation, and that is responsible for the bad state of affairs at the present time. If we are going to tackle this question, we must address ourselves to the analysis and put forward remedies. What are the remedies? The right hon. Gentleman the Member for Darwen put forward rationalisation as the remedy, but what is meant by rationalisation? I suggest that rationalisation means much more than a mere reduction of the cost of production. You cannot in the present state of affairs, when every cotton spinning industry in the world is depressed, and when they are all suffering from overproduction, expect to find a solution by merely grinding down the cost of production. That is not the kind of battle in which this country ought to engage.

I wish to confine my remarks to the narrow point of rationalisation. The first remark I have to make about rationalisation is that all our cotton-producing mills are faced with the problem of over-production. They are not profit-earning entities as a whole in these circumstances, and rationalisation cannot be brought into being without a constructive system of finance. How are we going to accomplish rationalisation, how can it be effected, and what progress is being made in regard to it? I should like to say that rationalisation must take a view of the whole industry, and that it must be comprehensive in its character. You are not going to be helpful to the Lancashire cotton industry, or any section of it, if you are going to concentrate your efforts merely upon reducing the cost of production inside one particular section, and ignore the problem of how to sell the product you make in the markets of the world.

You can grind down the cost of production if you like, and use your finance to bring together mills which at the moment are burdened with financial charges; you can cut those charges out, but, if you have potential over-production inside a section, all you are doing is to create a new item of competition within that section, and you are reducing the whole profit-earning capacity of that section. Rationalisation must first proceed through the section and then on to the whole. You have to treat the section as a whole, and not as a number of units inside the section. If you contemplate the units inside the section, you make things worse instead of better.

It is my view that one of the most astonishing facts which we have to deal with is the suggestion that one large amalgamation can deal with the whole of the Lancashire cotton trade. What a farcical and absurd proposal it is that through one large amalgamation you should be able to rationalise over 3,000 different companies. There is outside Lancashire a very wrong view of the magnitude of the Lancashire cotton trade, which is a much bigger industry than most people contemplate. If you are going to have amalgamation, you must produce machinery which will cause your large-scale amalgamations to be formed not only among your financially embarrassed units, but among your strong units. The most inefficient mills are those which have the greatest financial charge.

The only practical proposals for amalgamation before the Lancashire people at the present time are the proposals of the Lancashire Cotton Corporation. In the main, that is an amalgamation of financially embarrassed units. We must deal, not merely with the financially unfit, but we must also make a plan to amalgamate the fit. The proposal of the Lancashire Cotton Corporation is the only practical step open to Lancashire manufacturers and spinners, if they wish to take steps towards real rationalisation. This corporation is financed by the Bank of England, and it consists in the main of mills forced to amalgamate by the pressure of certain joint stock banks in the North of England. Those joint stock banks realise that merely to bring a number of unprofitable units together does not necessarily make them profitable.

Why should these joint stock banks and the Bank of England agree to a scheme which is merely a collection of the lame ducks of the industry? Most of these financially embarrassed mills have uncalled capital, and the Lancashire Cotton Corporation scheme means the calling up of the whole of that uncalled capital. Under that plan, the whole of the uncalled capital is to be called up, and by that means the joint stock banks will be able to pursue a policy which, taken in isolation, they would not care to take. They would be laying themselves open to an accusation of an unconscionable course of action, because the result would cause the ruin of thousands of shareholders, and would do very little practical good to the industry as a whole. It must be borne in mind that in a large number of the mills, as large a proportion as 80 per cent. of the shareholders will be ruined by the proposal to call up all the uncalled capital. By that means the joint stock banks get the whole of the uncalled capital to be called up. One might very well inquire: Why should the Bank of England back up this matter? The reason for the Bank of England support is straightforward; they only propose to provide a debenture of 4s. per spindle when the cost of replacement is 50s. per spindle, therefore it would appear that their proposition is a very sound one.

In backing that proposition, it appears to me that the advisers of the Bank of England have overlooked the important fact that rationalisation, to be successful, must envisage the elimination of the unfit as well as the integration of the fit. In any circumstances the Lancashire Cotton Corporation is not going to be as successful as was hoped, for they are now faced by the competition of more efficient mills, and people are not now so optimistic about it. The Lancashire Cotton Corporation are now forced to look abroad to see how they can get mills which are more profitable industrially into this amalgamation. At the present time, their eyes are turned to the Egyptian section of the trade. That section represents about £18,000,000 sterling, and it has been a profitable trade during the last five years. As a matter of fact, its profits have been greater during the last five years than they were before the War. The House can imagine what is going to take place in Lancashire if the Lancashire Cotton Corporation, on this low basis of 4s. per spindle, takes in mills comprising the profitable Egyptian section. My suggestion is that the whole of the Egyptian section will be brought down to the new basis, and that that industry, what is at present a national profit-earning industry, is going to be made a losing industy; we are going to turn a national asset into a national liability by tackling this problem in a piecemeal and wholly irrational fashion.

If I may recapitulate, the two points that I want to make are, first of all, that rationalisation must be comprehensive, and, secondly, that to enforce rationalisation with this one amalgamation is wrong. There is, however, another factor. The inquirer might well ask why, if there are a number of the better mills to which the Lancashire Cotton Corporation scheme makes no appeal, can they not get together and amalgamate? The answer is to be found in the fact that the normal means of finance at the present time are blocked. Constructive assistance by way of finance is necessary. The Lord Privy Seal, speaking in Manchester, used words to this effect, that, if you had a scheme which was industrially desirable and financially sound, the City would find the finance. That speech was a most misleading speech. The Lord Privy Seal has had in front of him schemes which are industrially desirable, which are financially sound, and which have been "vetted" from every point of view, and yet the finance cannot be found. The explanation of that is very simple. There is only one means whereby the Lord Privy Seal can explain his speech. He can explain it because he said that the schemes must be of such a character as would appeal to our business in the City. We have to assume that the Socialist party now stand for and connive at the industrial dictatorship of what is called the City, in other words, the Bank of England. That is a new role for the Socialist party, and one that they did not advocate in Lancashire. Either they have to stand for the industrial dictatorship of the Bank of England in this country, or they have to repudiate that speech, or they have to formulate a very different line of policy from that which is being followed in Lancashire at the present time.

The Bank of England has produced a scheme which provides £2,000,000 of debentures, and the satellites of the Bank of England—the various issuing houses—are pledged to the Bank of England scheme. Whatever they might like to do in any other direction, they cannot do it. The joint stock banks who normally finance cotton business are full up with frozen credits. Many of them have commitments that they want to get out of. They do not want to have any more cotton business. No comprehensive view of the cotton trade is taken by the joint stock banks as a whole. There are individual joint stock banks which have made advances, but they desire definitely to get out of those advances, and it would appear that the policy which is being pursued at present is to back up the Bank of England in an attitude which is rather like that of a Mussolini, in order to force particular, and to my mind entirely too narrow, lines of amalgamation on a reluctant industry. I am forced to the conclusion that, unless the Lancashire cotton trade is to go from bad to worse in view of the fact that the normal avenues of finance are blocked, the Government itself must intervene. The "Daily Herald" the other day wrote this—[HON. MEMBERS: "Hear, hear!"] I am glad to hear that hon. Members opposite appreciate what is coming. The "Daily Herald" wrote: Day by day it becomes more urgent that something should be done to stop the block in Lancashire. Mills are either working short time or closing down altogether. The export of cotton piece goods for the last three months shows a 13 per cent. fall compared with the same period last year. Cotton, more than any other industry, is driving the unemployment figures up. These are the facts. Pious phrases are not going to get the cotton trade out of its troubles. The action that the present Government have already taken has been to the definite harm of the Lancashire industry. They have done nothing to benefit it. They have pursued an obsolete Free Trade policy at home; they have acquiesced in a weak surrender to the Nationalists in India, which has added an additional burden to our problem; a great deal of time has been spent in endeavouring to negotiate a Tariff Truce at Geneva which would deprive us of bargaining power abroad; the Chancellor of the Exchequer, in a fanatical and wholly gratuituous announcement in reference to the Silk Duties, has made what was a profitable industry extremely uncertain, and has seriously increased the volume of unemployment. Contrast these actions of the Labour party with the statements which they made in Lancashire during the Election. What were they going to do? They were going to have a lightning inquiry into this industry; they were going to have all the resources of the State concentrated cm the examination of this problem; and, when a solution was found, they were going to act, and act quickly. What have they done? They have set up an inquiry, and all that we know about it is that it has continuously Changed its chairman. There is no policy and no result, and meanwhile week by week unemployment increases. The action of this Government with respect to the cotton trade reveals them to my mind as spineless, dilatory and meretricious. They are going to be condemned for what they have done; they are going to be condemned much more for what they have not done; and they are going to be mercilessly condemned for their callous disregard of the interests of those by whose votes they got into power.

Mr. LANG

I, too, am very glad that the opportunity has been taken by the party below the Gangway opposite to bring into discussion here, and into public notice, the parlous position of the cotton trade in Lancashire. Every one of us, no matter on which side of the House we may sit, who represents one of the great cotton counties, will be aware, not only of the very great interest that is felt in this matter, but of the real amount of distress and depression that is prevalent. Lancashire has many assets. The cotton towns possess a population that is thrifty, with a skill second to none, and they produce a product which has no real rival. And yet, despite this skill, this thrift, and the excellence of their product, they have found themselves, and they find themselves to-day, with a growing unemployment and depression which is not temporary, but which seems to be well nigh permanently settled upon them.

In the speeches that we have heard this afternoon—difficult speeches to follow, but all suffering in some sense, as I thought, from vagueness in this direction—serious charges have been brought against an industry with, as it were, nobody placed in the dock, until the concluding statement of the hon. Member for Stockport (Mr. Hammersley). He, as I thought, with total irrelevance to all the rest of what he had said, turned and pointed an accusing finger at the present Government. Exactly what the present Government had to do with the matters which the hon. Member very skilfully and subtly introduced, I was not able to see. I should have thought that the one clear thing which issued from his speech was that private enterprise, at any rate, stood roundly and soundly condemned—that he had proved it to be incompetent to manage its own business; and that is what the right hon. Gentleman the Member for Darwen (Sir H. Samuel) so properly and, I thought, so carefully—because there was no exaggeration—said about the position in Lancashire, namely, that there had been a proved failure of private enterprise. I feel, therefore, that, whatever may have to be said from these benches, we are not in the dock, and are not called upon to explain the position which at present exists in Lancashire. The responsibility is not ours, and I am not sure, either, that it is upon the shoulders of the previous Government as a Government, but it is upon the shoulders of right hon. and hon. Members opposite who still cling to a theory of enterprise which in the coal industry, and again in the cotton industry, has produced such deplorable results.

I am glad that the Government took promptly in hand the setting up of a committee of inquiry, because I think that the one thing to be avoided at all costs is that the cotton trade should be made the cockpit of politics in the sense in which the coal trade has been. The coal trade for too long has been a sort of cockpit of politics, and I sincerely hope, for the sake of industry at large and our own people in Lancashire particularly, that the cotton trade will not be similarly mishandled. It is a matter for clear and careful analysis, and, as far as possible, an analysis outside political prejudice. We on this side are as anxious as hon. Members below the Gangway opposite for the Report of this Committee. We are anxious to know exactly what the Committee has to suggest. We have no doubt that the inquiry will be of the fullest nature, and that it will cover every relevant issue; but the problem is one the gravity of which is increasing by leaps and bounds, and some of us on this side, and also, I hope, some on the other side of the House, think that the position has become one of real emergency, a position to which ordinary standards of progress do not any longer apply, but that it ought to be said, and said strongly and quickly, that the position of the cotton trade in Lancashire is so parlous and so serious that not merely must the findings of the Committee be expedited, but nothing must be allowed to stand in the way.

We all of us are interested in and strongly sympathetic towards the very big problems which beset the Government of this country at the present time. The question of the Naval Conference is a very great and vital question. Some of us would say, perhaps, that it is second to none. But alongside of it there seems to me to be the question of the war that he have in our midst, and the poverty resulting from it. The hon. Member for Stockport spoke very fully, and, if I may say so, almost too subtly for me, on the question of rationalisation, and that is a problem which has to be faced. We may or may not like it, we may or may not approve of it, but of its inevitability we can have no doubt. I hope, however, that we on this side of the House who at present constitute the Government will not wait for inevitability, but will see that, alongside this growing process of rationalisation, there is a further rationalisation—a preparation of society for the results which must accrue.

We are frequently told, and it is perfectly true, that the charges for social services in this countruy, amounting, I think, to something over £3 per head per annum, are very much larger than the charges in the countries of some of our competitors, some of them, like Italy, going down to well under 10s. That is true, and I, at any rate, do not repent it. Industry itself has failed to meet its social duties. It has failed to make proper provision for the people engaged in it. We have heard a great deal about falling profits; we have heard a great deal about losses, and losses there certainly have been; but the losses of people who have invested are not the only losses in the cotton industry. There are the losses which the people engaged in the industry have had to encounter—an inability to provide adequately for old age, and an inability to provide for the stormy and expensive periods of sickness.

I am perfectly sure that the position in Lancashire to-day is as grave as the position in many parts of South Wales. What has largely concealed it from the public eye has been the fact that in the cotton industry, unlike the coal industry, the women have been employed alongside the men. If it were not for the fact that women are employed in the 5.0 p.m. industry, so that although the men may be out of work for a long time or may be frequently unemployed at recurring periods, yet the women may be still working and bringing some sort of subsistence to the home, the position of Lancashire would be almost too ugly to bear any kind of inspection. But we are moving swiftly to a graver position still. So I hope that we shall be reassured from the Front Bench that the Government, with an anxious eye and with a concentrated mind, will be watching this process of rationalisation and endeavouring to secure that there is some provision for the people who must inevitably be misplaced. In that respect I am glad that the Government have had the wisdom and the courage boldly to tackle, in the recent unemployment Measure, the question of "not genuinely seeking work." The right hon. Member for Darwen, in sympathetic and true phrase, said that it was not a question of "genuinely seeking work" in Lancashire, as for many people there was no work to be sought. It is literally true that there have been, not merely hundreds, but thousands of Lancashire cotton operatives genuinely seeking work who have been refused unemployment benefit. The abolition of the old provision as from the 13th of this month has been a great boon to these people.

Those of us who represent, as I had the honour to represent, a great industrial cotton town in Lancashire, are determined that upon every conceivable occasion the gravity of the position shall be impressed upon the House and upon our own Government. It is impossible to exaggerate the seriousness of the position. It would be ridiculous to suggest that anything stated here this afternoon can be an over-elaboration of the danger that is before us. I hope that some measures can be found to counteract that danger. We have had cotton fairs. They are still proceeding. But that is not sufficient. I would like to be told—I do not know how far the President of the Board of Trade will be able to give such information—whether it would be possible, either now or as a result of the work of the committee of inquiry, to suggest that there should be some definite mark placed upon the cotton goods produced in this country, and some particular mark put upon our Lancashire goods. I would like to feel that when I went into a shoe to make my modest purchases I would be able to ask for and to see before me Lancashire goods with the Lancashire mark. There is every reason why Lancashire should be proud of its products. I believe that many people would like to be able to purchase more Lancashire goods if they were able to identify them.

I have noticed during the last few days very elaborate maps placed in public places advertising for the Empire Market- ing Board the agriculture and fisheries of this country, rehearsing for us lessons which we had thankfully forgotten years ago of different parts of this country that produce different products. Would it not be possible to have the textile industry similarly advertised and represented, so that people waiting for trains and children on the way to school might learn something of the great industrial and productive side as well as the agricultural side of our country? We know of the depression in agriculture. In this House we have suffered anxiety, embarrassment and hard labour in an endeavour to relieve the depression in the coal industry. I am hoping that something can be done for the cotton industry before we reach that perilous position, and that is why I have ventured to make these suggestions.

There is one other suggestion. It might be a good thing if the Committee now sitting is able to inquire, or if the President of the Board of Trade would order inquiries to be made, into the possibility of the utilisation of waste. I am prepared to put before him experiments now being carried on in my own constituency, where an attempt is being made, I believe successfully, to produce a raw material largely by the utilisation of waste. If, as I am informed, there is a prospect of employing some thousands of people in Lancashire alone upon the utilisation of this waste, it is a matter that might well be inquired into. I am glad that the question of the cotton industry has been raised to-day. I congratulate hon. Members of the Liberal party upon their opportunity to raise it, and upon their realisation of what I consider to be the greatest of our industrial problems to-day. I hope that as a result of this discussion and of what we shall be told from the Front Bench there will be new hope for our people in Lancashire and encouragement to go forward, and that we may see at any rate some possibility of light in the very great darkness over that splendid and loyal and able county.

Mr. E. D. SIMON

Listening to the speeches that we have just heard almost creates the impression that the cotton industry is to-day a highly inefficient industry. I wish to say at once that we have not raised this subject on any such ground. The cotton industry, on the contrary, in many ways we believe to be a highly efficient, and in many ways one of the most efficient industries in the country. Even at the present time we are doing practically half the export trade of the world, in spite of the fact that our wage level is higher than that of any country and that our taxation is the highest of any country. With regard to wages, it is true that even in the Southern States of the United States the wages are actually lower than in the cotton trade of Lancashire. It is true that New England wages are higher than Lancashire wages, but the cotton trade there is suffering far more serious depression that the industry in Lancashire. It is no mean feat that Lancashire has been able to perform with the heavy burden upon it. In many ways the trade is an efficient trade.

I am not going to say anything more about the seriousness of the depression or the suddenness of the increase of depression, except that in the last few weeks reports have been coming in, from Japan, Italy, Czechoslovakia and India, that in all those countries the same sudden and severe depression has been setting in. The depression of the last few weeks is not peculiar to Lancashire; it is a world depression; and we may therefore hope that it is due to temporary causes. Still, we have to face the fact that, quite apart from the temporary depression of the recent period, we have lost 30 per cent. of our pre-War trade and have an appalling problem of unemployment. The hon. Member for Mossley (Mr. Gibson) will no doubt point out that in his Division the unemployment has reached the appalling figure of something over 55 per cent. Nothing could be more serious than the present emergency. The question is what can he make in the way of constructive suggestion.

After the attack of the hon. Member for Stockport (Mr. Hammersley) on my right hon. Friend the Member for Darwen (Sir H. Samuel) for not making constructive suggestions, I naturally listened very eagerly for constructive suggestions from the hon. Member for Stockport. A less constructive speech I never heard. He referred to the Lancashire Cotton Corporation. I am not in the cotton trade myself, and I do not pretend to have an opinion regarding that Cor- poration, but it is a very big thing and an attempt to get something like 100 mills together. I think that the Bank of England is to be congratulated on the initiative shown and the risk taken—there will be some risk—in finding £2,000,000 for this great attempt at rationalisation. The hon. Member for Stockport says that it is not rationalisation because it deals only with one section of the industry. The definition of rationalisation is that of the hon. Gentleman himself, and I am not prepared to accept it.

Mr. HAMMERSLEY

The hon. Member has missed my point. My point was that we must not restrict our methods. My objection to the Lancashire Cotton Corporation is that it restricts other amalgamations.

Mr. SIMON

The hon. Member devoted almost the whole of his speech to raising objections to this particular amalgamation for all sorts of technical reasons which I do not pretend to understand. I merely feel that that amalgamation has been promoted by a large section of the trade, very able people who know a great deal about it, and I think that when we have a trade prepared to put a scheme of that sort into force it is exactly the kind of thing that ought to be encouraged. Apart from the hon. Member's violent attack on the Corporation there was not a single constructive suggestion in his speech. Another attempt at rationalisation by the cotton trade is being made by the Joint Committee of Cotton Trade Organisations. That committee is representative of all sections of the industry, including the operatives, who are taking a very active part in it. The first thing they did five years ago was to set up a cotton trade statistical bureau, which has produced a very large amount of valuable information, on which future rationalisation can be based.

But I think general agreement has emerged in the cotton trade that, while the trade is highly efficient regarding the more specialised branches, it is inefficient as regards the bulk production and bulk sale of the ordinary standard article. It is in that branch particularly that we have been beaten by Japan and other countries, and have lost the largest proportion of our trade. It is recognised throughout the trade that our merchanting system, a very specialised system, which is highly efficient regarding specialised trade, is highly inefficient in regard to the mass production and mass sale of ordinary grey cloth. The Joint Committee of Cotton Trade Organisations has been giving very careful consideration to the question of how it is possible to get back a portion of this mass production and bulk trade. It has already been the subject of large experiments conducted by merchants in China. They did manage to land in China, at very much reduced prices, a large quantity of standard cloth. Unfortunately the experiment, owing partly to the heavy depreciation of silver, has not been altogether a success, but the cotton trade organisations and the cotton trade believe that it is one of the most important steps in rationalisation, and they are trying very hard to get together a special organisation to deal with this mass production and mass sale trade.

It seems to emerge that it is not to the financial interest of any individual firm or group of firms to promote this mass sale and production. I believe that there are serious financial difficulties in the matter. There have been already certain negotiations with the Government. This is the kind of thing in which the Government might seriously consider whether they could not help the trade in a big experiment in mass production and mass sale. It seems to be a matter which the trade is finding very difficult, but it is of the utmost importance, and I hope the Government will investigate it and make it possible to give it some assistance.

Coming to the question of the Committee that has been set up, the right hon. Gentleman the Member for Darwen has referred to the very unfortunate delay that has occurred from the fact that the right hon. Gentleman was not able to give the necessary time to it himself. The Home Secretary will now become chairman. If he could give the whole of his time to the question he would, no doubt, be a very excellent chairman, but he cannot. It really was a mistake to make any Member of the Cabinet chairman of an important committee of this sort which has to deal with a matter of the most frightful complexity. The report of the Balfour Com- mittee a year ago on the cotton trade filled over 160 closely printed pages. This committee has to go through the whole of that matter again and to deal with a vast mass of evidence.

I should like to contrast the work of the committee, which has already been sitting six or seven months, with the work of the committee of one, Lord Macmillan, who has recently reported on the dispute in the wool trade. He was free to go to Yorkshire, and he devoted his whole time to the problem, and in the course of a very few weeks produced a very able and valuable report. If something of that sort could have been done in this case, it would have been far better. The committee has to sit in London, and the leaders of the cotton trade have to waste time coming here. An eminent member of the trade said to me, "When we get before a committee of that sort, we find it impossible to tell them the truth." That is putting it rather strongly, but everyone who has sat on a committee will realise that, when a witness comes before the committee to make a case, you cannot get the facts out of him anything like as well as if you could meet him privately and have a friendly conversation. A man cannot talk as freely, as a formal witness, as when he has a small committee or one person to deal with privately.

It has really been a mistake to appoint a committee of that sort, but it is far too late to change it. I hope the Committee will report at an early date, but it is exceedingly probable they will find that they have not been able to deal in detail with some of the most difficult points. If I may quote the analogy of the Royal Commission on Local Government which reported a year ago, they sat for rather over five years. They said one of the most important things was the question of the municipal civil service. They had not been able to give enough time to that and they suggested that another committee should be appointed to deal with it. It is very probable that this Committee will not be able to deal with some of the urgent points in this immensely complicated and difficult trade.

It seems to me there are three main aspects of rationalisation which will have to be dealt with. The first is the question whether costs are unduly high owing to the level of wages and the machinery used for deciding disputes. The present dispute at Burnley is an illustration of the complexities of that kind of problem. That is one special sphere in which a great deal of thought and investigation is necessary. The second is what the right hon. Gentleman calls the second industrial revolution, the increased scale of different sections of the trade. There is a general feeling that there are far too many amalgamations. There is this big movement for bulk production and sale, and there is the whole question of vertical amalgamation, which some people believe is the only satisfactory solution of the troubles of the cotton trade.

When you have done that, you come up against what perhaps the right hon. Gentleman would call the third industrial revolution. You have to have all these amalgamations, they all have monopolies and they are inclined to put the costs up too high and you have to set to work to find out methods of controlling these monsters that you have created and preventing them charging unduly high prices. There are many people in the trade who believe that some of the finishing trades, which have practically a monopoly, are charging unduly high prices and are very seriously hampering the development of the trade. So that you have those three broad sections which include most of the main possibilities of rationalisation, first of all wages and conditions of labour, secondly the importance of larger units and, thirdly, the importance of controlling the large units when you have got them.

It seems to me possible that in some aspects of these three questions the Committee may find that two, three or four things are really essential and that they have not been able to deal with them as fully as they would like. If that is the case, rather than go on sitting like the Royal Commission on Local Government, for five years they should appoint separate committees, preferably committees of a single commissioner, send them to Lancashire to negotiate with the interests concerned in the trade and try to come to a solution and then come back and report to the right hon. Gentleman. I hope he will bear that in mind. I know the suggestion has been made in other quarters as one method of enabling him to get the committee to report more quickly and to stop this state of uncer- tainty in which the trade is now. So far the Government has done nothing for the cotton trade except to make promises, first of all to appoint this Committee, indicating that something will be done, and then the promise of financial aid made by the Lord Privy Seal at Manchester the other day.

An able member of the cotton trade said to me the other day that the difficulty with an old trade like this is that it adheres to old-fashioned methods. People have been born and have grown up in certain methods. He said there is too much conservatism in the trade. Some people think there is too much conservatism in this House but everyone will agree that too much conservatism in a trade is bad and dangerous. He suggested that many employers were too conservative about the adoption of new methods and new machinery and many operatives were conservative in adhering to traditional methods of working which might well be improved. He suggested, too, that the banks were conservative in considering the part they might play in the rehabilitation of the industry. I appeal to the right hon. Gentleman not to give anyone an opportunity, when the Report is published, of adding to that list of complaints that the difficulties of the trade in the future may be due to the timidity or the conservatism of the Government. We are at a time when new types of action are needed, I am a firm believer in individual enterprise, and I believe the cotton trade can only flourish under something like the present system, but old-fashioned individual enterprise by itself is not sufficient. Certain monopolies require Government control, but in some ways they want Government assistance and stimulation. Perhaps the main fault of the cotton trade is the excessive individualism of many Lancashire people, and that is the difficulty the hon. Member for Stockport referred to, that you have not been able to get men into amalgamations except by the sheer threat of bankruptcy.

It may be that the Government can, in other ways, help to bring forward rationalisation. I hope it will not be necessary to adopt compulsory measures. As the result of discussions and negotiations, it is at least possible that the Government may be able to devise methods of helping the more progressive sections of the trade and securing a kind of rationalisation which they may find to be useful and stimulating. I beg the Government to get this Report out at the earliest possible moment, not to adhere too much to tradition but to take their courage in both hands, make up their minds what are the right lines of action, to act courageously and help the trade to get rid of this decline and get back to a period of prosperity and increasing employment.

Mrs. HAMILTON

In the course of the Debate one has noticed a kind of change coming over the subject. Arranged, perhaps, in the first instance as a day of mortification for the Government, if not of mourning for the cotton trade, it is developing into a kind of funeral of individualism. Different as are the views taken by speakers representing various constituencies, no one so far has produced anything that can be called a whole-hearted defence of individualism. Indeed, there seems to be general agreement that, provided we qualify it with the useful word "excessive," individualism is what is wrong with the cotton trade, and generally there is an amplitude of evidence for the view that the severity of the distress from which Lancashire is suffering is indeed due to the fact that for the last seven or eight years there has been the steady downward movement that we are now witnessing, the disintegration, the falling to pieces of the individualistic system, which has been unable to stand the successive shocks, first of decontrol after the War, then of the orgy of speculation and the subsequent changing conditions. In the speech of the hon. Member for Stockport (Mr. Hammersley) which interested me particularly, I seemed to hear two voices. At one point Dr. Jekyll proclaimed a rather uncertain faith in Safeguarding Duties and horror at the surrender to Indian nationalism of the Government. In other parts Mr. Hyde in much more serious tones made a speech which must have reminded the President of the Board of Trade of many of the speeches made on this side in defence of the Coal Mines Bill. The upshot of the hon. Member's remarks was to produce an argument more clear and definite and coherent than has hitherto been heard in the House for that which many of us are actually inclined to some form of organisation resembling a cotton control board. The whole force of his criticism was an argument for a larger measure of comprehensive control such as could only come under a control originated in a department which has the sanction and the authority of the Government behind it.

I seemed to hear echoes of that same, though more unwilling, recognition in the speech of the hon. Member for Withington (Mr. Simon), who admitted that control, assistance, and supervision might be necessary in certain directions I want to urge that point of view from a slightly different angle. Like any other Member of a Lancashire constituency, I feel, as we have all felt in the last three months particularly, haunted, depressed, and shaken by the knowledge of what is going on in the way of real suffering in our constituencies. Conditions in the coal trade were not worse than the conditions are now in most Lancashire towns. The suffering which is now being endured comes on top of a long period during which hardly any householder has known what it is regularly to bring home anything like a full-time wage. Short time by the weavers and others has exhausted every kind of reserve and left some of the proudest, most patient, most self-respecting people in the world with almost nothing to fall back upon.

I do not want to exaggerate those sufferings, but I want the House to realise them sharply, because, for Heaven's sake, let us in our political wisdom save cotton from having to go exactly on the same road as coal. Let us also realise that perhaps in the case of cotton an exceptional edge is given to the suffering by the fact within the knowledge of all Members of this House that a very large proportion among those unemployed workers are women, and a very large proportion of them are married women. According to the last monthly issue of the Labour Gazette, 90,000 women are unemployed in the cotton industry, and they represent over 70 per cent. of the unemployed women in this country. The point I want to make with the greatest emphasis of which I am capable, is that while it is true, on the one hand, that the existence of our social services system has made it possible for these people to tolerate the conditions during the past months and past years and manage with things as they are, there has not been a time over the last seven or eight years when the standard of living of a working Lancashire family has really been satisfactory.

The point I want to stress for the attention of the Committee and the attention of any body of people, whether in this House or anywhere else, considering how rationalisation may most usefully be introduced, is that it should in the future not be based, as, in the case of Lancashire in the past, the introduction of steam was based, on the exploitation of the workers engaged in the industry. It surely is necessary at this stage, when we are considering how this industry can be re-organised, to lay it down as an absolutely vital part of a satisfactory re-organisation that the standard of living of the working family should be satisfactorily established. The low level of consuming power throughout Lancashire is no small factor contributing to the present distress. If you recall that in 1924 and again in 1928 the Ministry of Labour census showed that the average full-time earnings in the cotton industry were 37s. a week, you have there the measure of the social difficulty and of the protracted economic distress from which the industry is now suffering. Members familiar with Lancashire constituencies cannot help feeling that while accepting rationalisation and recognising fully that re-organisation, co-ordination, and unification are the only conditions on which the industry can be restored, it is vital that the new power which scientific invention and discovery has put within our control, should not be used as the old power was in the nineteenth century to waste and to destroy human lives, and that when the mills are at work again, as we hope they may be, it may not be so necessary in future as it was in the past, to think of them as dark, satanic mills.

Sir N. STEWART SANDEMAN

I should like to associate myself with what the hon. Lady the Member for Blackburn (Mrs. Hamilton) has said about the terrible conditions in Lancashire. I think that they are going through a very much worse time than was ever experienced in the coal trade and that they are bearing it with a patience from which the miners might take a lesson. I think that it would have been very much better, from the point of view of the right hon. Member for Darwen (Sir H. Samuel), if he could have postponed this Debate until the Report had come out, because he was extraordinarily badly briefed. He had not got up his subject at all. I used to come into the House and listen to the right hon. Member speak, and I used to think what wonderful stuff it was, but when he speaks on something one happens to know something about, one begins to wonder. I am afraid his words will not carry the same weight with me in the future as they may have done in the past. He spoke about Russia and twitted me on the answers which I received from the President of the Board of Trade on the subject. The first answer which I received from the President of the Board of Trade was not really a bad one for a beginning. It was £5,000, but it dropped very rapidly to £1, which related not to a red cap, but to lace from Russia. I would hazard a guess that perhaps the President of the Board of Trade has some information which he has obtained in a roundabout way, that it is not a question of £5,000 or of only £1,000 which has come into this country.

The right hon. Member for Darwen was singularly lacking in any constructive policy for the cotton trade. He did not even analyse what was wrong. Evidently he has no practical experience of cotton spinning, cotton mills and the cotton trade, and I do not think that Lancashire will give him very great thanks for his contribution to this Debate. I would say to the hon. Member for Oldham (Mr. Lang) that, even if the cotton trade were socialised to-morrow, you would be up against exactly the same difficulties which we have to face to-day. No matter whether you socialise it or run it under the existing system, you have to find out what is wrong with the trade and then put it right. I do not propose to throw blame upon anyone, either upon the system, the owners, the operatives, the trade unions or the Government, because I think that it is much more a national question, and one to which we really want to get down and try to the best of our ability to find out what is wrong with the trade. Until quite recently the only portion of the trade really prospering was the fine spinning, and we all know that of late that has had a set-back. One of the reasons for that is the question of the price of silver coming down; and the other is that everybody is hard up and trying to buy coarser stuff.

Our export trade has gone down. One reason for this is the enormous tariffs put up against us, and another reason is the dear cost of production. Why is our cost of production so dear? First of all, we have the social services. If the social services were not there, I think that wages would be higher. These services amount, probably, to about 1 per cent. on the cost of yarn. You cannot have it in wages and in social services. To begin with none of the other countries producing cotton yarn and cotton goods have the same weight of 1 per cent. to carry I think that probably the worst of the causes of this dear cost of production is the enormous amount of short time. I know from past experience what short time has meant in our works, and I know perfectly well that when it comes to be a question of short time, you do not know what your on-costs will be and the price at which you will be able to sell. There are certain trade union regulations which are different—we may as well face the facts—from the regulations in any other country. There is the question of the number of looms, hours, this, that, and the next thing. I will give the other side a "hit up." There are far too many directors in the cotton mills. I have heard of people who were directors of 10 and 15 cotton mills. If they had stuck to one or two and had worked hard, there might have been a different story to-day. We have a certain amount of restrictive legislation compared with what exists in countries abroad where they are manufacturing cotton. We have restriction of hours, factory laws, and other things. I am rather a believer in very stringent factory laws, because, even from a mercenary point of view, if the people are healthy, they will work more happily and harder.

There is another very vital point to consider in the Lancashire cotton trade, and that is excessive handling. Just picture the position. The cotton comes into Manchester and is put on to a lorry or into a train and sent out to the cotton mills. After it has been in the mill it is put on to a lorry again and sent away, so many miles, to a weaving shed, and then it may be sent on again for dyeing and finishing. I do not know how many miles a pound of cotton may travel before it gets into the warehouse at Manchester where it is re-examined, packed up and taken on again. Surely there could be some intermediate stage which would save these cotton goods being taken into the warehouse in Manchester and re-examined. Every additional one-sixteenth of a penny makes the cost mount up. On the top of all this we are going to have dearer coal, and this will not help the Lancashire cotton trade. You cannot fix prices for Lancashire cotton goods or give some sort of dole to Lancashire cotton goods so that they can be exported by making the people in this country pay more. I am certain of that, and I believe that the President of the Board of Trade is aware of it, too. I think that the selling is excessively dear. You have far too many different merchant houses. It may be said that they are competing with each other. They are not really doing so, because one or two houses would save any number of agents. I believe that if we had fewer selling houses, fewer merchants and fewer middlemen, we might be able to get a very much lower cost of production.

There is the question of over-capitalisation. I understand that the Lord Privy Seal has that rabbit up his sleeve, and that the bankers are all squared. I always find bankers extremely difficult persons to square. Probably in the East there is the worst question of all in the enormous drop in the price of silver. The cotton trade in Lancashire, taking it back to 50 years ago, was built up on right lines. It was one man to one job. They put down a spinning mill, they spun certain types, and they went to another place and did the weaving and to another place and did the dyeing. That was all right in those days, but the cotton trade developed very fast, and then people came along to Lancashire and said, "Now we can see a saving straight away. We can do this more or less under one roof." When I happened to be in Mexico, I saw a cotton mill which was believed to be the largest in the world. It was all under one roof. The cotton goods were brought in in bale and the finished goods were sent out. So it can be seen what a huge saving there was in handling there. They, more or less, have a monopoly in Mexico. They do not need so many agents, and the cost of selling is therefore very much reduced.

I should like to quote a few figures to show what has been happening in the East, and how extraordinarily grave the position is. In 1911, we had 62 per cent. of the exports of cotton goods to China, and Japan had 11 per cent. In 1927, which are the last figures that I have, and they will be worse now, we had 15.6 per cent. and the Japanese 69.2 per cent. That is a very serious state of affairs, and one that will be very hard to get the better of. Take the question of spindle comparison. The spindles in Great Britain in 1928 totalled 57,000,000 odd, in the United States of America, 35,000,000 odd, and in Japan 6,000,000 odd. Our consumption of cotton was 1,383,000 bales, the United States of America, with a far fewer spindles, 3,180,000 bales, and Japan 1,200,000 bales, nearly as much as ours, with about one-sixth of the number of spindles. One cause of that was that we were spinning much finer counts than the Japanese were spinning, but that was not the whole reason. The other reason was that they were running two shifts.

Two shifts is not a system that any of us want to introduce if we can possibly help it. I do not want people to have to go to work at 6 o'clock in the morning, if I can help it, but people would far rather go to work at 6 o'clock and have a full day's work, than have no work at all and draw the dole. I am certain that the people of Lancashire would gladly go to work at 6 o'clock until 6 p.m. if they could have a full week's work. [An HON. MEMBER: "why not make it from 6 a.m. until 5.30 p.m., as it used to be?"] I am thinking how to get in the two shifts and I understand that it would save 3 per cent. If a saving of 3 per cent. will make the difference between having work and not having work, we ought to consider it.

Mr. PERRY

In regard to the point that the hon. Member is raising, how many of the finest and best equipped mills in the world, in Japan, have been built by Lancashire firms?

Sir N. STEWART SANDEMAN

That has nothing to do with the point. They probably buy machinery in this country.

Mr. PERRY

Those mills are now using British Empire cotton, and capturing the Indian market.

Sir N. STEWART SANDEMAN

My point is, that they are running two shifts. Of course, I am not at all keen that they should capture our trade, and I am trying to explain that we must look for every possible avenue by which we can cut down our cost of production. I am told by reliable people in Lancashire that the saving on a two-shift system would be about 2½ per cent. If we were running full-time, we should run our machinery down in half the time, which would mean new machinery, and any practical man knows that from new machinery one gets more efficiency and better work. If I am asked what I would do to get things going along better, I would at once go in for vertical combines. I am certain that horizontal combines are apt to become watertight compartments: they hold the price for themselves, and it does not seem to matter about anyone else. It is the whole people of Lancashire that I am concerned about. I want us to buy and sell our cotton goods as near to the consumer as possible, in the hands of one combine. A friend of mine in Lancashire came here, not long ago. He was in a bad temper. When I asked him what was wrong with him, he said: "I have been walking down Bond Street, and I saw some cloth in a shop window, priced 16s. 11d., and I sold it to them for 4s. 3d." Some of that money ought to have gone to the workers, and some of it ought to have gone into improving the machinery and the mill. [HON. MEMBERS: "Come over here."] I am not coming over there, I should be the last man to go to that side of the House. We know that the cost of shops in Bond Street is very high, and that they employ a great many people, but if I were running a cotton combine, I should have multiple shops, and I would let Bond Street buy my stuff if they wanted it.

Mr. ARTHUR LAW

I can find shops in Manchester displaying goods at equally extravagant prices.

Sir N. STEWART SANDEMAN

If they can get the silly fools to buy the goods, can you blame them for charging the price? I do not blame the shopkeepers, but I do blame the manufacturers for not being able to undercut them. They could do it if they used their brains. The next thing I would do would be to protect the home market. I would make perfectly certain that no goods were coming in, even from Russia, in £1 driblets. I would not have these goods coming in at all. Last year, £10,000,000 worth of cotton goods came in.

Mr. BROTHERS

Will the hon. Member repeat that statement?

Sir N. STEWART SANDEMAN

I understand that last year £10,000,000 of cotton goods of one sort or another came into this country from abroad.

Brigadier-General Sir HENRY CROFT

Including hosiery, it was £12,000,000 worth.

Sir N. STEWART SANDEMAN

So far as I can get an estimate, it would mean about 30,000 people in the cotton trade working full time if we manufactured the cotton goods that came in from abroad last year. My hon. Friends below the Gangway on this side of the House may think that 30,000 people working full time is not very much, but I wish it meant 30,000 of my people in Oldham and Middleton who were getting that employment; they would be glad enough of it. Whenever you begin to have a protected market and you are running full time, your own costs go down, while in the country that has been dumping goods the costs go up, and you are put in a better position for your export market. If we had had Safeguarding Duties, the Indian tariff would not have been put up against our goods, because we should have had something with which we could bargain with the Indian Government. At the present time we have absolutely nothing for bargaining purposes. If we were in a position to give some preferential tariff or otherwise, and we could say, "We are going to put a tax on something that you make—India ships a good deal of certain classes of manufactured goods to this country—the Indian Government would think twice before they put up the rate of tariff on cotton goods.

Another matter to which more attention should be given is that of Empire-grown cotton. I would like to see the day when every pound of cotton used in Lancashire came from our own Dominions and Dependencies. I believe that we should then get very much cheaper cotton, and we should put our exchange in a very much better position in the United States. I would like to say a few words about another trade in Lancashire with which I happen to be familiar, and that is the artificial silk trade. I was speaking to a man who is very much interested in the artificial silk trade, and who has a great deal to do with the weavers and the merchants. Our conversation took place about Christmas time, and he remarked, "We do not know what is going to happen in regard to the Budget." [HON. MEMBERS: "Oh!"] I am telling hon. Members what he said. They may say that what he said is wrong, if they like, but he happens to be a very able business man, and he was telling me what he found. He said that people would not place orders for artificial silk until they knew exactly where they stood. If I were in the position of the Chancellor of the Exchequer I would waive my dignity and would say, "I am going to do so and so. "It is far better to know what is going to happen than to be in a state of wondering all the whole time. I hope that the President of the Board of Trade will very soon let us have the Report on the cotton trade. We are all anxiously awaiting it. The idea of appointing one Cabinet Minister after another to the Committee in order to make the Committee feel that it is very important, may have that effect, but the actual effect has been that we have not yet had the Report, and we have no idea when we are to have it. I hope that something will be done to hurry along the presentation of the Report.

Mr. PHILIP OLIVER

I have been much interested in the speech of the hon. Member for Middleton (Sir N Stewart Sandeman), one of my near neighbours. When he began his speech he must have been rather like that Lancashire friend of his, in a bad temper, because he started with what seemed to me a singularly unnecessary and ill-grounded attack upon the right hon. Member for Darwen (Sir H. Samuel). There was no reason for him to say that the right hon. Gentleman had been badly briefed. The right hon. Gentleman is not briefed; he does not require a brief. Anyone who has had the experience of the right hon. Gentleman and who knows Darwen and elsewhere in Lancashire, re- quires no brief. The hon. Member then proceeded to complain, as did the hon. Member for Stockport (Mr. Hammersley), that the right hon. Gentleman was able to give no constructive proposals. I listened to the hon. Member for Middleton, as I listened to the hon. Member for Stockport, in order that his constructive proposals might bring enlightenment to me, but I heard nothing until the end of the hon. Member's speech, except what had been advocated by the right hon. Member for Darwen—amalgamations, vertical and horizontal. The hon. Member for Middleton laughed at my right hon. Friend, but he followed his example in that respect. I am willing that the hon. Member should laugh at the right hon. Gentleman provided he will continue to follow his example.

The only other constructive proposal which was not advocated by my right hon. Friend was, of course, Safeguarding. I am not going to follow the hon. Member for Middleton into that path, except to say that the ratio of our retained imports to our exports is 7.5 per cent., whereas before the War, in 1913, it was 5.7 per cent. The right hon. Member for Darwen has pointed out that so far as lineal yards are concerned, the imports into this country in 1913 were more than they are now, but I do not think that we solve the problem of our great export trade simply by concentrating on a comparatively minor question of Safeguarding. In regard to the export cotton trade, we have to consider the position of our various competitors. We have been told that our trade is something like 49 per cent. of the export trade of the world, that our next biggest competitor in the export trade of the world is Japan, with 16 per cent., that France comes next with 8 per cent., which leaves one-quarter of the export cotton trade of the world to be handled by the rest of the world, and of those competitors those that we have most to fear are, I think, Italy and Belgium.

I am going to please the hon. Member for Middleton by referring to Russia, because I want to say a few words about Russia. I am not troubled about the £1. Russian imports which came into this country last year, but there is one of our markets which is being seriously threatened by Russia, and that is the Persian market. There, we are face to. face with a very considerable, and I think a very intense and growing competition from the Soviet Republic. Of the merchant houses in Manchester which deal with this market, during the last few years at least half have failed and gone out of existence. The larger and stronger houses remain, but the smaller houses have gone under. It does seem that in this market, which was a very lucrative and productive market for us, we are face to face with what our merchants believe to be an organised attack by Russia upon our Persian trade. On 14th September of last year Persian merchants were entertained at Moscow by the Soviet Government and evidently some arrangements were made at that conference. Although we can 6.0 p.m. not ask our Government to interfere with our trade in the way the Soviet Government interferes with Russian trade we can ask, I think, that the Board of Trade shall be especially vigilant in looking after our interests in the Persian markets, seeing that we are faced with this intense competition from Russia. After all, it is not Russia, or Italy or Belgium, that we have to fear most. It is Japan. Certainly a very great part of our troubles has arisen through the immense strides which have taken place in Japan. The right hon. Member for Darwen has pointed out the tremendous difference in the organisation of the industry in Japan as compared with the organisation here. He has pointed out the tremendous concentration in spinning and weaving and in the purchase and sale of the raw material and of the finished goods. Another remarkable thing is, that when you come to the finishing trades, the bleaching and dyeing, you find that in Japan, so far from these being coordinated and concentrated, there is an immense diversity of houses. In Lancashire the position is completely reversed.

The trade which is concentrated in the Lancashire area is spinning and weaving, and although there has been considerable amalgamation going on, it is still largely in the hands of small concerns. Some 70 per cent. of the spindles and 80 per cent. of the looms are held by small concerns, whereas when you get to the merchanting of the goods there is an infinite variety. It has been calculated in an interesting paper read before the Royal. Statistical Society by Mr. Barnard and Mr. Hubert Ellinger that in Manchester there are no less than 740 houses exporting cotton goods, and that of these 740 one half have an average capital of £5,400. They are quite small concerns. Many of them are very expert and highly efficient, and for the normal Manchester trade they are perhaps the best units. But if we are competing with Japan, if we are to market our goods, if we are to take the risk of the market, then in addition to these small concerns we want something very much larger and more powerful. We want something in the nature of rationalisation. We have heard a great deal to-day about rationalisation as we have in every debate on commercial matters. I hope we are not going to bow down and worship rationalisation as we have worshipped other names we have invented.

Rationalisation can be carried too far. There is a story told of a man in Lancashire who was one of our great rationalisers. I had better call him Mr. So-and-so. A man was seen running down the street in a great hurry. He was asked, "What is the matter?," and he said, "Oh, Mr. So-and-so is ill." "Then I suppose you are running for the doctor?" "No," said the man, "we do not run for the doctor. We cut out the middleman. I am going for the undertaker." Rationalisation can be carried too far, but rationalisation and more rationalisation in the weaving, spinning and merchanting sections is very desirable. I should like to follow and amplify something which has been said from these benches and also by the hon. Member for Stockport with regard to the speech delivered by the Lord Privy Seal in Manchester on 10th January. It was an important speech delivered on an important occasion to an important audience. It was somewhat vague, and I think we are entitled to request further and more detailed information. These are the words in which the right hon. Gentleman concluded his speech: Those, in the City who have been studying this matter are convinced that a number of our important industries must be fundamentally reorganised and modernised in order to produce at prices which will enable them to compete with the world. Industries which in the opinion of those advising the City conform to these requirements will receive the most sympathetic consideration and the co-operation of the State in working out plans and finding the necessary finance. I should like to know whether we can be told who it is that is advising the City in this matter. Have the Government, or any Government Department, taken any part? When it is suggested that we should amalgamate, is the amalgamation to be vertical or horizontal, or both? Do the Government, does the Lord Privy Seal, still think of amalgamation for merchanting also? Who is to take the initiative? Is the whole initiative to rest with Lancashire? There are firms which have absolutely no personal advantage in amalgamation at all. It is far better for them to remain out of amalgamation; but the good of the industry as a whole demands that they should come in. What are you going to do about good substantial and prosperous firms which are required to come into any amalgamation? Is it proposed to give them any incentive?

What is the City going to do? Is the City only going to float these amalgamations, with considerable commission, or is it really proposed that some additional finance is to be given to the industry? As to the Lord Privy Seal's speech, I find nothing new in it on this problem. That is really what we want to know, and I hope we shall get some sort of a reply. There are people who have been willing to promote amalgamations, people who have expressed to the City and to the Government their willingness to promote amalgamations. Yet, as far as I can make out, no concrete offer has been given to them different from what the City would have offered to similar proposals a year or two ago. I think we are entitled to ask for some further elaboration of this important pronouncement of the Lord Privy Seal. That is the chief point I want to stress. Undoubtedly there has been considerable pessimism, but it is only right to remember that the cotton trade has had its misfortunes before. There was a speech delivered by a great ornament of the Conservative party, Lord Randolph Churchill, in 1884. He said: Your cotton trade is seriously sick. We are suffering from a trade depression extending as far back as 1874. Ten years of trade depression; and the most hopeful amongst our capitalists or artisans can discover no sign of revival. After 10 years of trade depression the revival came. We have had 10 years of trade depression, and the revival will come again. I trust that the Government, whatever it may be, will do something to help and assist the cotton trade.

Mr. HERBERT GIBSON

This Debate was opened by the right hon. Member for Darwen (Sir H. Samuel) with a very able speech. He always treats the House to a very lucid and clear speech, and lifts the subject far beyond the ordinary mundane level. He was followed by the hon. Member for Withington (Mr. Simon) who mentioned a policy which has been mentioned many times in connection with these Debates—mass production. Unless you have organised mass consumption along with organised mass production you are going to make the situation infinitely worse. That is the point which this House up to now has refused to face. We hear of the speeding up and the improvement of industry, but immediately we get to the consumer we do not get any light from hon. Members opposite. I take part in this Debate with a very heavy heart. I represent a division which has no less than 55.8 per cent. unemployed. It has troubled me enormously. The people of Mossley are going through a period of starvation, and they are facing the situation splendidly. There is not a town in the whole of England, Scotland or Wales, which has suffered the same intense unemployment as Mossley is suffering at the moment.

We have gone through hard times before, but this is the hardest period Mossley has ever experienced. Out of 28 mills, large and small, there was only one mill working full time a week ago. All the rest are on short time, or halftime. Nine concerns, representing 16 mills, are closed down indefinitely, and the remainder are on short time. We have come to this pass, that our chief exporting trade, cotton, which used to employ over 500,000 people and was at one time a national credit, is getting gradually into the position of being a national deficit. My first observation is this: We have in this industry 3,000 separate firms all struggling for existence in the face of a keen and highly organised competition abroad. In Mossley, where thousands of pounds have been made out of cotton, the people are being left high and dry at the moment with nothing to sustain them beyond the enlargement of the unemployment pay given by the present Government. It is a very sad reflection on so-called private enterprise. It is nothing less than capitalism run riot; and how anybody on the benches opposite can defend a system like that in the manner in which it has been defended to-day I cannot understand. They say that we need State help and State assistance. And these are the people who are always scorning State assistance! They say, leave industry alone, let them fight their own way through.

What has been the chief remedy offered by tile employers? There is only one, and it has always been wage reduction. I would rather pin my faith to a definite reorganisation and improvement of method of production, which all the leading industries must face, out of the results of which there will be a fair return for all who depend upon the industry and give something to it in the way of service. One of the chief things that has been depressing the cotton trade has been the fact that there are so many middlemen in it who give little or nothing in service to this great industry. Reference has already been made to a case in which the cost of the finished product was 4s. 3d. and it was sold in London at 16s. 11d. Where is the difference going? It is going, in the main, to middlemen who could easily be eliminated, and, if we do not sooner or later take steps to eliminate them, we shall be eliminated as an industry. The direct cause of the immediate difficulty in Lancashire, briefly is this. Lancashire has always been an exporting county and the cotton trade is an exporting industry. Some 80 per cent. of our product has always been exported and four-fifths of the product is now being sent abroad. In 1913, Lancashire sent abroad 6,500,000,000 yards. Last year we sent abroad 4,000,000,000 yards. One-third of the trade has gone.

This is the point to notice—that the world consumption of cotton goods has increased by 10 per cent. in the same period during which we have lost one-third of our trade. Countries like Japan, Czechoslovakia, Italy and India have been increasing their trade in cotton goods, and, if anyone were to ask me the main reason for the development of the trade in Japan, I should attribute it to the fact that in Japan they have organised the industry far better than we have done in this country. They have paid more attention to eliminating the middleman and, consequently, they can sell cheaper. That is one of the main reasons why Japan has forced and is forcing herself into the Indian market. One of the chief remedies recommended to us has been reorganisation. Nobody can feel more the need for reorganisation than we do on this side of the House. We realise that if the sections of this industry are so stubborn that they will not come together voluntarily, then they should be forced together—though I hate to use that term—because this is not a matter which concerns a few people only. It concerns the largest export trade of this country. It is Britain's industry and Britain's concern.

We have heard much use made of the word "rationalisation." Rationalisation is very fashionable at the moment, but I suppose that, in the last analysis, rationalisation means reorganisation with a view to the introduction of efficiency. No sensible person can object to the introduction of efficiency, and I have not heard one speaker on this side object to it in the case of this industry. We have always pressed for the introduction of efficiency but that word "rationalisation" has a sinister meaning to the worker in this country. To him it usually suggests that he may lose his job and, as self-preservation is one of the first laws of life, no man or woman looks kindly on a prospect like that. I believe this apprehension is not without justification, because, in the earlier period of industrial rationalisation, the introduction of machinery brought fabulous wealth to the manufacturers but no corresponding advantages to the workers who helped to create that wealth. There is a haunting fear on the part of the majority of workers in this country that those mistakes may be repeated, and that human life and human personality may again be cheated under rationalisation. I would remind the hon. Member for Withington (Mr. E. D. Simon) that, in Germany, the profits in the coal industry, the steel industry and the chemical trade have run into many millions under rationalisation, but it has been asserted that the German workers have a lower standard of life than they had before the War. We do not want that to happen in this country because we love our country and want to see it as prosperous as ever it was. We do not want to see here the state of affairs which has resulted from rationalisation in Germany if it can possibly be helped. The aim of rationalisation should be that the community in general, and the workers in particular will share fully in the economic results achieved.

There are three aspects of this problem which require steadfast and sympathetic consideration. The first is the strain on the workers who are called upon to take part in the more speedy, more efficient, more mechanised system of production which rationalisation brings with it. The second is the redundant workers; and the third is the effect on the consumer who looks anxiously and not always hopefully for a fall in prices as a result of the economies effected by rationalisation. To whom are these unfortunate people to look but to the State? The displaced worker needs the help of the State to direct him into some other channels, and, in my humble opinion, a well-planned large-scale programme, with a Socialist outlook, extending over a number of years, offers the best hope for the workers of this country in the present situation. I ask the President of the Board of Trade to expedite the work of the committee which is considering this subject. In the past we in Lancashire have been inclined to be too quiet about our troubles. We shall have to emphasise our troubles more, and, I am sure I speak on behalf of all Lancashire Members, when I say that, as far as we are concerned, the Government will get no rest until some step has been taken towards giving this industry the consideration which it deserves.

Sir PHILIP CUNLIFFE-LISTER

It would not be difficult for anybody on this side of the House to score a debating point by contrasting the speeches which were made by Members of the present Government when they were in Opposition, with their action as a Government in relation to the cotton industry. It will be within the recollection of the House that on more than one occasion in the last Parliament, Debates were initiated on this subject by the then Opposition, their chief spokesman being the present Secretary of State for War, in which the then Government were taunted with not having taken immediate and effective action. We were told that when Labour came in immediate and effective action would be taken. What is the immediate and effective action which has been taken by the Government in this matter? The Government have certainly not been harassed on this question by either of the sections of the Opposition. A considerable time has passed and the immediate and effective action which has been taken up to the present is the appointment of a committee—not even a Royal Commission as was promised in "Labour and the Nation." That committee has sat from time to time. It changes its personnel with almost alarming frequency, and the President of the Board of Trade, in the intervals of his occupations in this House and of his migrations to Geneva, is enabled from time to time to pay a visit to that committee. I am all in favour of the Government thinking, and I am all in favour of the Government calling to their assistance anybody who can help them to think constructively and consistently. But it hardly lies with those who, a year ago, were challenging us for not having taken immediate and effective action in regard to the cotton trade, to throw any bouquets at the present Government for the immediate and effective action which they have taken up to the present.

The truth of the matter, of course, is that on this, as on many other questions, hon. Members opposite are finding that it was very easy to make speeches in Opposition and at the General Election, as to what they would do and what changes they would bring over the face of this or that industry, but it is quite a different thing to-day. They certainly have succeeded in bringing considerable changes over a good many industries, but not for the better. All that, as say, was very easy when hon. Members were in Opposition or were fighting an Election, but as the President of the Board of Trade knows—and I do him the justice of saying that he was a good deal more moderate both in his attacks and in his promises than most of his colleagues—when hon. Members opposite got into office they found that the propositions which they had to face were a great deal more difficult than they had pretended either to themselves or to those whom they induced to vote for them. They find now that it is not only difficult but impossible to fulfil the promises which they made or satisfy the hopes which they raised.

I do not wish to follow that point further, nor do I wish to hunt the Russian hare which was raised at the beginning of this Debate, beyond saying that I think many of the speakers have misunderstood the position in that respect. I have been informed—and I think the President of the Board of Trade will confirm the information—that the position is, not that there has been any large amount of importation of Russian goods into this country, but that Russian manufacturers of cotton goods were going to merchants with world-wide connections and saying, "We will quote you Russian goods at a very low price for you to sell in competition with English goods in neutral markets." That is what has been happening and I am told by Eastern merchants, with very large connections, that they were offered large quantities of Russian goods for sale in this way. It is perfectly reasonable for anyone on this side of the House to say that, in so far as we give credit to Russia, instead of making Russia pay cash for the goods which she buys, that credit can be used and is being used by Russia to compete with us in neutral markets.

The right hon. Gentleman the Member for Darwen (Sir H. Samuel) and other speakers have been pleased to point out that this is one of the industries for which a tariff can do nothing. In a comprehensive review of this industry, based upon the present position and the testimony of those who are responsible for the industry to-day—and who are certainly not prejudiced Protectionists—it would be very ill-advised to suppose that tariffs play no part. There is competition, and growing competition, and the House has probably noticed that, not a few men, who have been staunch Free Traders in the past, men who claim that they are the sons of Liberals and the grandsons of Liberals, are saying to-day that they have had to take a new and truer view of the situation, and that they are by no means content to see foreign competition coming into this country un-hampered.

In that review the right hon. Gentleman has to bear in mind another thing. The Manchester Chamber of Commerce passed a remarkable resolution asking that no change should be made in the existing duties. That was done, as I understand it, because they found—and this is undoubtedly the fact—that, so far from the existing duties which are imposed in this country being any handicap to them in the cotton trade, the protection in these industries was giving to the cotton trade a larger market, and making for the cotton trade new clients. That applied to tyres and to artificial silk also. For that reason, because the duties were giving more work to the cotton industry, the Manchester Chamber of Commerce were anxious that the duties should not be removed. No one knows better than the President of the Board of Trade that when it comes to making commercial treaties, Lancashire is always anxious to get as good terms as she can in foreign markets. The hon. Member for Mossley (Mr. H. Gibson) pointed out what a serious situation it was when the world consumption of cotton had increased and the exports of this country and the production of this country had gone down. Does that not convey any suggestion to his mind?

Consumption has increased and our export trade has gone down, because we are less able than we were to get into those markets where consumption to-day is not less, but greater than it was before. The President of the Board of Trade will find himself far better able to assist Lancashire to get into her former markets if he will consider the possibility of using some weapon of retaliation, some means of negotiation rather than giving way and offering a one-sided Tariff Truce. He will also do well to remember that the British Empire is a very good market for textile goods, and that the closer he can draw the Empire together in the rationalisation of its production and in a real partnership, the better chance there is for the exports of Lancashire within the whole field of the British Empire. In these circumstances, he would indeed be an inaccurate and wall-eyed man who said that tariffs played no part in Lancashire, and that nothing can be done by action to help Lancashire in this matter. There are other problems which concern this industry. There is, of course, the problem of reorganisation. On this, I can say very little that is new, but I put it again to the House to-day, because I have been challenged on my attitude in the past when I was responsible, as the right hon. Gentleman now is; and I should be interested to learn whether the right hon. Gentleman, with the responsibilities of office upon him, takes a very different view of what is necessary in this industry from the view which I not only take to-day, but which I have expressed to the House on previous occasions, as to the lines on which I have tried to guide and help this industry in the past. It is very easy to talk about all the crazy finance that there was in this industry in former years. I sometimes wonder whether the facile critics of to-day, who so easily criticise the faulty finance and the undue optimism which there was in this industry, would have been quite such accurate prophets if they had made the speeches which they make to-day in 1919 and 1920 during the time of the boom. I think that the real truth was that nearly everybody was entirely misled, and nearly everybody misread the position, and I doubt whether those who criticise to-day would have been very much wiser if they had been in control of the position.

Without a doubt, it is necessary to write down capita], but you do not solve the problem of the cotton industry merely by writing down capital. Is there anything in the right hon. Gentleman's mind about finding Government finance? That is an important question, particularly in view of the speech of the Lord Privy Seal, which was quoted by an hon. Member on the Liberal benches. I hold a very definite view as to what is the function of the Government in finding finance in these cases. I am perfectly clear that it is no part of the business of the Government to find easier finance than people can get outside. No industry has any business to come to the Government and to say, "Give me finance on easier conditions than I can obtain elsewhere." If they do that, it means that they will discourage people from doing that very writing down of capital which is so necessary, and that creation of an efficient organisation which is necessary, and ought to be necessary, to command capital. Therefore, the State should exact from industry, if it is to finance it, just as drastic terms for financial reconstruction and efficient organisation as any private investor would insist upon. I sincerely hope that that is the policy which the Government will pursue; I believe that that is their intention.

If it should happen that money is required for the re-construction of an industry, and that, owing to a shortage of credit, it is impossible for that industry, having set its house in order, to obtain the necessary capital, I think that a very good case may be made out for the use of Government credit; but I cannot conceive that, as a matter of fact, that is the position in the cotton industry to-day. I know a good deal about the negotiations for financing the Lancashire Cotton Corporation. I was asked, as I have no doubt the right hon. Gentleman has been asked, to find finance right and left for the cotton trade, but I always laid down the position which I am putting to the House now, and I found that, in fact, it was not necessary when credit was tighter than it is to-day. I found that it was quite unnecessary for the Government to advance the money. There was a criticism advanced by one of my hon. Friends, who said that the Lancashire Cotton Corporation was not the best kind of amalgamation, because it included a large number of the worst concerns which were in the lowest water, and did not include the more prosperous concerns. If it were possible for the Lancashire Cotton Corporation to obtain their finance to the full amount of their requirements at a time when credit conditions were stringent without recourse to the State, I should have thought that it was reasonably possible for other amalgamations, with greater resources of their own, to obtain private finance, provided, of course, that they are ready to put their house in order, that their management is efficient, and that their business is a sound and progressing one.

Therefore, I would put it to the President that, if Government finance be necessary, he should certainly insist upon just as drastic conditions as any private investor would. Financial reconstruction is not everything. You have to get much closer co-operation, and I believe that we are getting it. I see great signs of advance in this industry. They want a much closer co-operation between all sections in the industry. I have never been in the cotton industry, but, with some acquaintance of other industries where one is accustomed to have the buying, manufacturing and selling in a single organisation, it was a most surprising thing to find in the cotton industry—at any rate as it used to be—how extraordinarily divorced the different sections are. Therefore, I would put as the object which any great amalgamation ought to seek to put before itself, efficient production which must include the full fruits of co-operation.

I do not think anyone would deny that in this industry in the past there has been an amazing lack of efficiency in the purchasing of raw cotton. They seem to me to have bought cotton as housewives buy tea, and yet the moment you get large-scale buying—[An HON. MEMBER: "Hear, hear!"] The hon. Member who said "Hear, hear!" will agree that it was found possible to get large-scale buying in the cotton industry without the intervention of a Government purchasing board. I agree that large-scale buying of raw material in cotton is a very wise thing, and I know that it is a subject to which these new amalgamations are devoting particular attention. In addition, you want the economical distribution of production between the different mills. I am told, and it is obvious as soon as it is put, that there has been a tremendous increase in cost in the past by a single mill shifting from type to type of manufacture. The whole balance of the mill is upset, and mills were not only producing lines for which their machinery was primarily unfitted, but producing endless varieties at excessive cost. Once you get combinations and aggregations of mills that are large enough for the purpose, you can distribute your contracts to much greater advantage between the different mills.

But have you nut to go a great deal further than that? I believe that this industry cannot rest satisfied by an efficient distribution of its production—I mean distribution among mills—as it exists to-day. I believe that it has to carry standardisation a great deal further, and here I agree with one or two other speakers that you can learn great lessons from Japan. It is obvious that you can carry standardisation a long way in yarn, but is it not also certain that you can carry standardisation a great deal further than it has been carried in this country, not only in yarns but in cloths? I understand that in the Eastern markets the Japanese are selling standard cloths while we are selling hundreds and hundreds of different cloths almost of the same quality, varying in no essential way, varying only because this mill has taken an order from one merchant and that mill an order from another merchant. The result is that, we produce hundreds of different types where three or four would do. I should not give the House my own observations in this matter. I have always tried to get the best men in the trade to advise me, and I believe it is recognised among the ablest men in the trade that we can carry standardisation not only in yarn but in piece goods a great deal further than we have yet attempted to carry it in this country.

If that is done, we should solve half the question of price. What is beating us is price; and the commoner the type of cloth we are trying to sell, the more important does the element of price become. I believe that standardisation and price must go hand in hand, but is it not true that in order to get this standardisation we must have a much closer relationship between the manufacturer and the seller than we have had hitherto? Indeed, the manufacturer must, if necessary, control his own sales. We cannot get this standardisation and this mass production unless the manufacturer is in control of his own selling organisation. That does not mean manufacturers will not use the existing selling organisations, the existing merchants, all over the world, but if we are to get standardisation and to sell cheaply, as Japan is selling cheaply, we cannot allow lines of production to be dictated by 1,600 different merchants, as is done at the present time whenever any one of them, any merchant in India, comes and orders the smallest parcel. We have to achieve standardisation for common types in order to get this large output and these large and cheap sales. By doing that, we shall not be less able, but better able, to produce the higher classes of goods and the novelties and variety which the market requires. My first condition was efficiency in the purchase of cotton; my second condition the economic distribution of manufacture amongst the mills; and the third condition the closest possible relationship between the production and the selling end of the business. I see great advances being made towards all those three objects. Now I put a fourth condition which, the House will agree, is absolutely essential, and that is co-operation between the employer and employed. There is no industry in which one can look for that with more certainty, because there is no industry where the workmen have in the past shown so great a faith in their own industry; and though I am not a Lancashire man or a Lancashire Member—I am of Yorkshire—I should like to re-echo all that has been said about the way in which Lancashire has been bearing her privations.

I do not believe anybody wants to see a further reduction of wages, but, on the contrary, to see wages increased and the arrival of better times; but while the workmen are entitled to ask, and to demand, efficient organisation on the lines I have indicated, and to say the mill-owners must set their house in order, yet, given that reorganisation, the machinery must be used to the best advantage. There must not be unnecessary restrictions on the use of that machinery; new machinery must be introduced wherever it is required. I am certain that in a county where the relations existing have been so good, and where so clear an understanding has existed as to the needs of this industry, we may look with confidence for co-operation between all sections in it, and I for my part do not think it necessary to ask the Government to do a very large number of things, because I believe that Lancashire knows better than anybody else what needs to be done in Lancashire, and if her people are given more chances they will work out their own salvation.

The PRESIDENT of the BOARD of TRADE (Mr. William Graham)

I think I speak for all sections of the House, after a Debate so admirably conducted, and with a desire to ascertain the facts, when I say there will be no complaint that this subject has been raised again, having regard to the undoubted gravity of the conditions in Lancashire. I need not detain the House by recalling the figures, because they have been put with substantial accuracy by hon. Members in different parts of the House. This is an industry which depends overwhelmingly on its export trade, and the broad simple fact is that whereas in pre-war times we exported about 6,700,000,000 linear yards of cotton goods, the total has fallen in the last period of one year for which there are complete figures to round about 3,800,000,000 linear yards. That is a very serious state of affairs. Side by side with that, and more particularly in recent times, there has been a great growth of unemployment in Lancashire. The latest figures indicate that there are 134,000 of these workers registered as unemployed. While it is true that there is some measure of comfort in the fact that 84,000 of them are registered as being temporarily unemployed, the figures are so serious that it would be better for all of us in no way to under-estimate their importance. I know also, on evidence tendered to me at the Board of Trade within recent times, that there is anxiety regarding the future of the industry, as to whether its markets have been permanently lost or can be partially recovered. The savings of enormous numbers of people have been seriously diminished, and the whole economic strength of the county seems to have been undermined. Therefore, no one standing at this Box with a responsibility towards industry and commerce would take other than a grave view of the situation.

I must at this stage indicate the position of the Cabinet Committee, the Sub-Committee of the Committee of Civil Research or of the Economic Advisory Council, as it is more accurately described, which was appointed very shortly after we came into office. It is quite proper that Members should ask what has happened, and what progress it has made, and whether it has suffered because of the change in personnel which was ultimately necessary. I regret in many ways that it was not possible for me to continue longer in the chairmanship of the Committee, but I do not think my right hon. Friend the Member for Darwen (Sir H. Samuel) will complain of that, because part of my difficulty in remaining in that chair was due to the accumulation of problems in the coal mines industry, some of which grew up unexpectedly in this House. Originally, the committee was composed of my right hon. Friend the First Lord of the Admiralty, Sir Alan Anderson, an eminent shipowner in this country, Mr. Joseph Jones, a member of the Yorkshire Miners' Federation, and Sir William McClintock, the eminent accountant. Thus there were two Cabinet Ministers, one trade unionist, and two men representative of industry and commerce, which I think on the whole, excluding the chairman, was a not inappropriate body for a task of that kind. It was only when it became perfectly clear that I could not continue the work personally that my right hon. Friend the Home Secretary, who has a wide knowledge of Lancashire conditions, took my place. I think the change in personnel is perhaps not very important, because the essence of the case is whether there has been any delay in taking the evidence and whether there will be any delay in the presentation of the Report.

The Committee was appointed towards the end of July last year, but it is not easy to get evidence from, business men during August and September, and we had to wait until the end of the autumn before the witnesses were available; but they were asked to prepare their evidence at once, and many individuals and many bodies proceeded to do so; and when the autumn came the Committee commenced its sittings, and between that time and now a large volume of evidence has been taken. I need not tell the House that the documents submitted in a problem of such complexity require in themselves a very long time for consideration, and a much longer time for their detailed analysis. I hope the Committee wilt complete the taking of this evidence within a week or two at the outside, and that almost immediately afterwards it will prepare its report. That report will be submitted to the Government, and in due course the Government will make a statement to this House. While I admit that I have been in some respects optimistic regarding the time the Committee will take over its task, I do not think the period of four or five or six months—that is, in actual operation—is too much, having regard to the great volume of the evidence and to the importance of getting an accurate solution.

Sir H. SAMUEL

Will the Report be published?

Mr. GRAHAM

The Government have given no promise of that, for one very obvious reason. This is a sub-committee of the Committee of Civil Research, and a Cabinet Committee, and a large amount of the evidence has been taken on the express understanding that it will be regarded as confidential. In fact, much of the evidence would never have been obtained on any other basis. In the last Debate I indicated that it, would be our desire to give as complete a summary of the evidence as we properly could, but without binding myself to the exact form of that summary. I think the report may be expected at a very early date, and I can assure the House that every effort will be made by me to avoid any delay.

Other considerations which have been raised by hon. Members are of very great importance. First of all, it is suggested that the industry suffers to a 7.0 p.m. minor extent from some Russian goods which have been put upon the market in recent times and perhaps to a larger extent from the importation either of cotton yarns or of cotton piece goods. On both of these points in recent times I have given a good deal of information to the House, but it is perfectly clear that any imports from Russia under either head are the most infinitesimal character, and the figures of one pound sterling and so forth which have been given, which actually related rather to lace than to cotton in the strict sense, were worked out and they were within very narrow limits. That is all that the Board of Trade with its machinery and with the co-operation of the Customs authorities could ascertain. Hon. Members have suggested that cotton goods are reaching this country under other heads. I have asked them if they could supply the slightest information and I would immediately have it investigated, but so far, to the best of my knowledge, no concrete information, and indeed no information at all, has been submitted either to the Board of Trade or to the Customs. What appears to be more important, so far as I could ascertain, is the offer from Russia of certain cheap cotton goods, manufactured goods I understand, to wholesale and other houses in this country at admittedly very low rates. I gather the question before these houses was whether they should not accept these goods at all and refuse to trade with Russia, in which case they would simply have been sent to other European centres and placed upon the market. I believe that, on balance of the considerations, a number of these houses decided to take certain quantities of these goods for re-export markets. In any case, that is a very small part of the problem of any import into this country.

Passing to more substantial considerations, it is true that, taking the last years, from 1926 to 1929 inclusive, because we have no complete figures beyond that, in those four years there has been an increase in the amount of cotton yarn imported into this country and also in the amount of cotton piece goods, but the figures are not as high as stated in the Debate. I gather hon. Members have included hosiery, but, in the strict class I mentioned, the cotton yarn and cotton piece goods, they do not appear to be very much more in the latest figure than about £6,500,000. Be the precise figure as it may and taking at the moment piece goods, they are not, as regards quantity and value, 2 per cent. in the one case and 5 per cent. in the other of the export trade. That is, as my right hon. Friend said, a very small part of the problem. Even if I were a Protectionist—which the House may have gathered I am not—I should not suggest that anything was to be gained by putting a tariff on those goods, or indeed, as my right hon. Friend suggested in his final speech for the Opposition, in using the retaliatory weapon of the tariff in other directions, because, frankly, I do not believe that the use of a weapon of that kind would increase the volume of British commerce one iota, and I am satisfied it would lead to such retaliation that it would seriously damage our commercial prestige. That is the position as regards the various classes of import goods.

Hon. Members, as anybody would expect in a Debate of this kind, have raised the question of the new Indian tariff. I shall not detain the House to-night by elaborate explanation, because the Secretary of State for India has dealt with the problem on the constitutional side, but I shall endeavour to bring certain information from the point of view of the Board of Trade. Of course, the broad facts are known, and, taken over a period of years, they throw a fierce light upon the export problem in Lancashire. Before the War there was an ad valorem duty of 3½ per cent.; in 1917, that was increased to 7½ per cent.; in 1921, it was increased to 11 per cent. From the start there was a counter-vailing Excise of 3½ per cent. Originally, the duty was for revenue purposes, but then it took a protectionist character in 1917, which was increased in 1921. The Excise was abolished in 1925, and we come to the situation in 1930, when a new 15 per cent. ad valorem rate is proposed. The House will recollect that, some time in the late summer or the early autumn of last year, reference was made to a Customs Officer in India as to the expedience of replacing the ad valorem duty by specific duties, which of course raised very great alarm in Lancashire when it was known. The decision was against a general change over, but later there was proposed an increase to the 15 per cent. ad valorem which is the subject of this present Debate. We made from the very start all the representations which, as a Government, we could make. I want to assure the House, my right hon. Friend opposite, and my right hon. Friend the Member for Darwen, and others speaking for their respective parties as well as interested friends on this side of the House, that I have been in constant touch with the industry all along since we took office, and, as the House is aware, in particular on the increase in the Indian tariff. We made these representations, and I think it is true to say that more complete representations were made than on any previous occasion. In the result, they suggested that, while they could not modify their tariff of 15 per cent., they would impose an additional tariff on foreign goods—

Sir H. SAMUEL

Who suggested it?

Mr. GRAHAM

It was suggested in India. An additional tariff on foreign goods involving a preference to this country, namely, that we should be left on the 15 per cent. basis and that a 20 per cent. rate or an additional 5 per cent. for a period of three years covering all classes of cotton piece goods should be applicable to those of foreign manufacture subject to a minimum specific duty of 3½ annas per lb. on plain grey goods applicable again to foreign production.

Mr. TOUT

Is that within the 20 per cent.?

Mr. GRAHAM

It is a minimum specific duty of 3½ annas on that class of grey cloth.

Mr. BROTHERS

Or 15 per cent., whichever is the higher.

Mr. GRAHAM

3½ annas or the ad valorem duty whichever is the higher.

Mr. TOUT

That is within the 20 per cent. The 3½ annas is in addition to the 15 per cent. on Lancashire.

Mr. GRAHAM

No, I understand that is a specific minimum, namely that 3½annas per lb. is a specific minimum on those plain grey goods. Since that time, it has been indicated that an amendment will be accepted in India which takes away that part of the preference to the British goods, and extends that 3½ annas per lb. to them. The result which we must recognise quite frankly in Debate to-night, is that it may modify the preference of 5 per cent. which we were to have got. I can only say to the House that the fullest representations were made, as indicated in replies to questions from various parts of the House, and, frankly, I do not think the Government can do more, because, as the House is well aware, there is the Indian Fiscal Autonomy Convention, which places this matter quite clearly within the competence and jurisdiction of the Indian Government. In addition to that, they have pointed out, first of all, that they have to raise additional revenue for Budget purposes, and in the second place, that they depend very largely on customs. The ad valorem duties generally were 15 per cent., whereas the cotton goods were only 11 per cent., and they are raising them to the general level. Finally, they plead the position of the cotton manufacturers in India, and the depression in the Bombay mills, and other reasons are indicated why they are quite unable to go back on the decision that they have reached. So I should gain nothing by suggesting to the House that, grave as the difficulty is and large as is the problem it presents to Lancashire, we can make any further representation or carry our appeal beyond the stage to which it has already been carried.

May I turn to two other points bearing on the investigation of this committee and on what has been done in Lancashire at this stage to put its own house in order before I pass finally to the largest question of all, that is the future reorganisation of this industry. The House is aware that there is in existence a consultative body, representative of different sections of the industry, including the trade union interests, which within recent years has dealt with innumerable problems, such as standardisation of the technical processes, winding looms, and other questions within the competence of this committee. The committee has achieved useful results and will play its part until this more comprehensive committee's report is available which the Government hope to present. Side by side with that there has been at work, especially since the early part of last year, the Lancashire Cotton Corporation, and that aims for the time being at the amalgamation of those mills which are on the spinning side. At the present moment it has covered about 7,000,000 spindles in the American section. Indeed, without anticipating the merits of amalgamation, that has represented, with the aid of the Bank of England, an effort in Lancashire to reduce the far too large number of separate undertakings, to get rid of those separate boards of directors, and to be done with the duplication, and worse than duplication, of a good deal of Lancashire's energies.

It is no secret to-night to tell the House that the Lancashire Cotton Corporation has had to contend all along with the extreme individualism of the cotton industry, and has only been able to make what I suppose some of its pioneers may regard as rather disappointing progress. At all events, it has covered a fair part of the field, and it is continuing its work. The work of the Joint Committee and the work of the Lancashire Cotton Corporation, and indeed any other enterprises of that kind bearing directly or indirectly on this industry, are all material for the Sub-Committee of the Committee of Civil Research, which is considering the problem. I should like to remind the House also that not only is this the appropriate Committee for the purpose—and, after all, our predecessors in office had a very powerful Committee, including many Cabinet Ministers, on the iron and steel industry—

Sir P. CUNLIFFE-LISTER

I do not want the right hon. Gentleman to think I am objecting to this Committee on Civil Research—I think it is excellent—but I drew attention to the fact that he was doing the very thing that we were told, when the party opposite was in opposition, was a futile thing to do.

Mr. GRAHAM

No; if I remember, there was a definite undertaking that immediately we would institute inquiries into the iron and steel industry and the cotton industry, and that was carried out to the letter, because in fact these two Committees were appointed before the conclusion of 1929. It is the appropriate Committee for this purpose. It has made the progress which I have described, and it has not duplicated the work of the Balfour Committee or any other body, because that material has been submitted to it very largely prepared, and it has facilitated its task.

I pass, in conclusion, to what is perhaps the most important question of all. Hon. Members will clearly recognise that I am in no way anticipating the Report of this Committee. I am not saying anything to-night in the way of a direction or hint to the Committee or anything of the kind; I am only expressing a view regarding these proposals for amalgamation and financial support which have been raised from time to time in this Debate. As regards finance, it has been indicated by the City that if sound schemes are prepared, they are willing to give the most sympathetic consideration. The extent to which the Bank of England is behind the Lancashire Cotton Corporation is already known, and I have not the least doubt that so long as need in the industry continues these facilities will be available.

The real point is the future organisation of the Lancashire cotton industry. It is true, as hon. Members have pointed out, that you have here a remarkable segregation; that is, you have the original raw material, and then you have the spinning and the weaving, and finally the finishing trades, and to any outsider familiar with other great industries in this country it is remarkable that that separation should have survived such a very strenuous time, and that it should be so very difficult, even with all the pressure on Lancashire within recent years, to find a bridge between one section and another. The extreme individualism of this county has been, of course, one of its great characteristics, but we find two hon. Members on the benches opposite, the hon. Member for Middleton (Sir N. Sandeman) and the hon. Member for Stockport (Mr. Hammersley) both emphasising, in the one case the importance of comprehensive amalgamation, and in the other the importance of vertical amalgamation—that is, going through the various processes of this industry from raw material to finished article—and directing attention to what is undoubtedly one of the biggest questions, namely, this gulf between the price of that article, leaving the industry, and the retail price at which it is sold over the counter to consumers in this country.

That is one of the most serious problems confronting, not only Great Britain, but, I believe, almost all the leading industrial countries in existing conditions. The great fall in raw materials, the fall in commodity prices, in the sense of production and wholesale disposal, and the great lag between that fall and the prices at which they are being sold to the consumer, has been intercepted by various forces that I dare not take time to describe to-night; but all these things leave one clear impression on my mind. I do not think this industry can escape comprehensive amalgamation, and I agree with the hon. Member, whether he puts amalgamation on a comprehensive basis or on a vertical basis, it must go through the various processes of this industry, because there are sections of the industry which financially and otherwise are in a better position than others. The finishing trades, for example, have been in a relatively better position than the other sections, and I suggest, in the gravity of conditions in Lancashire to-night, that it is idle for anyone of us, whatever may be our economic faith, to segregate those forces. This industry has got to be united if it is to stand together in the face of what may be fierce world competition and in the face of a determination to produce these cotton goods in permanent manufacture in other lands, and to replace the supplies that they formerly took from us by the goods that they themselves can turn out. If that is the state of affairs, I think Lancashire will be forced to this comprehensive combination.

My right hon. Friend the Member for Darwen raised this point in a previous Debate. He seems to regard it as inevitable, as all of us do on these benches, and then he indicated, as he has indicated before in regard to other industries, that it is necessary to protect the consumers in this process when industry moves on to that large-scale production from a smaller scale. I entirely agree. My right hon. Friend referred to two stages of industrial revolution. He said there was the industrial revolution of a century ago, when we passed from small-scale manufacture, very often in the individual home, to the factory, and now he says there is another industrial revolution going on in the introduction of all those processes of rationalisation, and combination, and so forth. But why did he stop there? There is a third revolution beyond that. Whenever we pass to these great amalgamations, we lead inevitably to the next problem, it may be the next industrial revolution, which I call public corporations. I ask my right hon. Friend and his colleagues to look a little ahead, and I will repeat the invitation that I gave on a previous occasion, if they look ahead that step further—the Floor of this House is narrow, and the welcome will be warm.

Dr. VERNON DAVIES

We owe a debt of gratitude to the Liberal party for initiating this Debate on the cotton industry. When I saw that Motion down, I felt happy that the extremely grave position of Lancashire was at last going to be put before the Members of this House. But I must confess that during the Debate I have been woefully disappointed. It has seemed to me as if we had a patient in extremis—almost at the point of death—and a number of hon. Members of this House have got up, one after the other, trying to diagnose what is the matter with the patient, and in the meantime the poor patient is dying, and almost dead. We have had suggestions of vertical combinations, amalgamations, this, that, and the other, no two quite agreeing, and yet, when all is said and done what we have to consider in this House is that we are up against one of the most important and vital problems affecting the lives of hundreds of thousands of people in Lancashire.

They are not concerned with your amalgamations, or your vertical combinations. What they say is this: "For the last nine years we have gradually but surely lost every penny piece of money that we have saved; we have had short time; we have watched oar industry gradually but surely decaying; we have noticed mills closing temporarily and then permanently; we have watched the machinery from those mills being taken out, sent abroad, and sold to our competitors; we have known of cotton mills worth at least £200,000, which could not be sold for £10,000; and in the meantime we, solid, hard-working, honest, decent Lancashire folk, who have given our best to our industry and our country, see our livelihood being taken away from us, and nothing is done."

The right hon. Gentleman, in an extremely lucid speech, such as we expect from him, has analysed the situation very fairly, but still he has simply come here as the final specialist, and he has told the House that the patient is suffering from so and so and so and so, and that the only thing we can do is to cut off his head. Because what does he mean? He says that Lancashire must amalgamate, that it must be forced to do it, and yet, on the other hand, he draws attention to the fact that it is the most individualistic county in the country. He says that Lancashire will have to come to it, but they have been doing it for nine or 10 years, and they are no nearer to a solution yet. How is the Lancashire Cotton Corporation getting its units in? By bankruptcy. Is he going to wait till all the mills are bankrupt before they can be forced into this Lancashire Cotton Corporation? What will happen to the people in the meantime? Is he going to sit on that bench and watch half a million people in Lancashire gradually starve? Will he watch them lose their means of livelihood? Will he see our largest export trade in this country absolutely wiped out? Is he going to see the revenue of this country so diminished that it will bring us from our present proud position into the condition of a secondary State? Is that all they can do, to sit on that bench, appoint Committees, and say, "This is the decision made. You must do this, and in the course of time you will be forced to do it by economic circumstances"? [HON. MEMBERS: "What would you do?] I am not looking at this from a political point of view. The matter is too serious for that.[Laughter.] It is all very well for the hon. Member to make a sneering laugh. Does he think this is a political question, when we are dealing with half a million lives?

Mr. PYBUS

I heard the hon. Member denouncing the party opposite for doing nothing. I quite realise the gravity of the situation, and I was anxious to hear what was the hon. Member's remedy for it.

Dr. DAVIES

It is my hope that we should look at this question purely from an economic point of view, and I suggest to the Government that what they have before them is, first, to consider that they have the Lancashire man, who has been brought up and trained in a strict economic school, who has been a stern individualist, who has had his ups and downs, his periods of prosperity and of depression, and who has always come up again, but who has throughout been a strong individualist. We have to recognise also that we have lost a great deal of our export market because the cost of our production is too high. Therefore, with our limited market, we have had overproduction, and with this strong individualism in Lancashire, we have had each man outbidding the other, cutting prices, and cutting each other's throats, and each man has said, "Well, if we are both bleeding to death, I hope he will die first, and then perhaps the doctors can cure me at the last moment." This has been going on for nine years, and unless the Government step in—I am speaking solely for myself—and force the cotton trade to take action, they will gradually get the trade decaying, until ultimately they get what is called the survival of the fittest, when they may have a small industry, which will then hope, by the smallness of its units, and its large market, to make a profit and regain all that it has lost.

I suggest that Lancashire has shown itself to be very obstinate and even in the parlous condition of the cotton industry to-day, you are only getting amalgamations by force. This kind of thing is going on week by week and ultimately the cotton trade is likely to be ruined. What concerns me most is what is going to happen to the Lancashire people who are out of work and who have not the slightest chance of getting work at the present time. Is the Socialist Government going to do nothing and are they going to say, "We must allow economic forces to have full play and trust to the principle of the survival of the fittest." I suggest that the Government ought to regard this as a most serious and urgent matter. I have heard several speakers state that although things in Lancashire are bad they are not so bad as they might be and practically they say, "Let us hope for the best and in course of time all these things will come right." [An HON. MEMBER: "Who said that?"] It has been said by more than one speaker

Mr. LANG

Will the hon. Gentleman tell us who made that statement?

Dr. DAVIES

I believe that the right hon. Gentleman the Member for Darwen (Sir H. Samuel) said that the position in Lancashire is not desperate and I have heard other speakers in this Debate say that Lancashire was not in extremis and all that they wanted to do was, "To keep their pecker up." The Lancashire cotton trade is in an extremely serious position. What has happened during the last few weeks? Lancashire is now brought almost to the breaking point and if something is not done you will have something approaching a landslide and unemployment in Lancashire may go up to 200,000 or 250,000. This country cannot afford to allow that to happen, because we cannot afford to allow our principal export industry to be destroyed. Consequently, it is of vital importance that the Government should hurry up the work of the Committee which has been sitting for such a long time and when their report is issued, I think the Government should tell Lancashire that unless it puts its house in order and unless it does it quickly, the Government will have to step in, first of all on account of the serious position of the people and secondly on account of the State. I have lived among Lanca- shire people myself and I am able to recognise their good and bad points, and I have no hesitation in saying that there is no man more obstinate in this country than the Lancashire cotton employer. I am anxious that the Committee which is investigating the state of the cotton industry should report as soon as possible and when we get their recommendations, the Government should say to Lancashire, "You must carry out these recommendations quickly and if you do not do so yourselves, we shall do it for you." [HON. MEMBERS: "Come over to this side."]

I am concerned to see that Lancashire people get work and not lose their livelihood. With regard to the Lancashire Cotton Corporation, that Corporation only represents about 7,000,000 spindles of mills whose shareholders have already lost nearly all their money. The only people who are going to get anything out of that Corporation are the banks. The danger is that when you get the Lancashire cotton trade going again under this Corporation, they will establish a cut-throat competition with the people who are not in their amalgamation and instead of the Corporation saving money by economy, they are more likely to lose money in the same way as has been done in the past. The Lancashire Cotton Corporation with their huge overhead expenses cannot compete with those firms outside the Corporation, and there can be no advantage by establishing a huge monopoly of this kind. The Government should take up this matter and they should not allow these people to sell goods at a loss in actual competition with those who are outside the Corporation. I implore the Government to recognise the extreme gravity of the position in the Lancashire cotton trade and not wait any longer before taking the matter in hand for the safety of the people of Lancashire, and to save the people from ruin.

Mr. BROTHERS

I am glad to have this opportunity of saying a few words about the situation in Lancashire. I agree with 75 per cent. of what was said by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), but there is about 25 per cent. of his speech with which I do not agree. With regard to what the right hon. Gentleman said about the cost of producing cotton goods in India and Japan, I would like to say that I am quite satisfied, from personal investigation, that the actual wages cost per yard of cloth is equal if not more in India and Japan than it is in Lancashire. With regard to the question of rationalisation and amalgamation, hon. Members have asked what are the trade union leaders going to say on that point and are they going to face the situation. I have in my hand the quarterly report of our organisation which they are considering to-night and which I myself drafted. It says: Schemes of amalgamation and rationalisation are being formulated and put into operation by those who have financial interests. This may result in an improvement due to the lowering of the cost of production, and be in the interests a both shareholders and workpeople. During the experimental and transitory period, the unemployment figures will be increased and the earning capacity of the operatives reduced. That is bound to follow. Other speakers have made different points. Lancashire is sick, but Lancashire is not dead, and if I, as a Lancashire man, want a doctor to do me any good, I shall go to one with a brighter and more cheerful spirit than the hon. Member for Royton (Dr. Davies). In Lancashire, we believe that this country is doing itself a serious injury by stating that Lancashire is finished, and is not able to compete in the markets of the world, because other countries take advantage of our position when we parade that too openly. It has been said, "It is all very well to make statements but nobody has suggested a remedy for the present condition of things in Lancashire." We have been asked, is there any possible means of tackling this particular question and I contend that there is? We were able to deal with the cotton trade during the War, and the Government at that time set up a committee of control. The trustees of that committee are alive to-day, and they are looking after the money of the Cotton Control Board. If it was necessary to have a cotton control board to stipulate on what conditions the cotton mills should run and on what conditions the mills should stop, if that could be done during the War surely it could be done to-day. The men who have had that experience during the War were drawn from he employers, operatives and merchants and the Secre- tary of the committee was Mr. Henderson. That committee has all this business at their finger ends and if they could function to-day they would be able to advise the Government as to what was necessary to be done in regard to the cotton trade.

At the present time, there is a sum of about £500,000 lying dormant in the funds of the Cotton Control Board. Why cannot some of that money be used to help to revive the cotton trade? I suggest to the President of the Board of Trade that he should recommend to the trustees of the Cotton Control Board that they should finance and select a trade deputation for the East. The hon. Member for Oldham (Mr. Lang) suggested that we should try to persuade the people at home to wear more cotton goods, but what we want to do is to concentrate more on foreign countries, and let the people of other countries know the class of goods we are making. If we spent as much energy and time advocating our goods in foreign countries as we spend in advocating them at home, I believe we should have much better results than we have to-day. It is not correct to say that Lancashire people do not understand these problems, and that they are unwilling. The hon. Member for Royton says that the Lancashire people are obstinate people. We may be obstinate people, but we are not stupid people.

Dr. DAVIES

I was referring simply to the cotton spinners—the employers-—and not to the workpeople.

Mr. BROTHERS

I am not going to admit that even the employers are stupid—

Dr. DAVIES

Obstinate!

Mr. BROTHERS

I am not going to admit that the employers are stupid. I believe that the Lancashire employer and the Lancashire operative are quite as intelligent and quite as capable of managing their business as any other employer or operative in this country. The conditions of Lancashire to-day are just part of a world-wide condition. When I heard the hon. Member for Stockport (Mr. Hammersley) asking what this Government had done, and trying to shift the responsibility from that side of the House to this side, I thought I had never heard a weaker argument in all my life. If the position of to-day were to be reversed, the conditions would be just as difficult, because they are world-wide conditions, and neither Protection nor Free Trade, nor any similar measure, will alter the situation that obtains in both Free Trade and Protectionist countries. It is a condition of economies far more deep-rooted than either Free Trade or Protection, because all countries have to contend with it.

We have been talking about rationalisation and the Cotton Corporation. In my view, the rationalisation should come as the result of the intervention of the Government. If it comes from those organisations which are only going to take the weak mills, we shall not be any better off than before. What we ought to do is to take the trade as a whole. There is another matter that must be considered. If you are going to rationalise, it means that the shareholders in those mills which are allowed to run are going to make a bigger profit, because the people who are compelled to go under cannot produce and compete with them; so that those people who are allowed to manufacture, or who can manufacture, at a profit, owing to rationalisation, should be levied on their profits in order to pay for the unemployed workers in those mills which are closed down.

It is said that Japan rationalises. Quite so. But what is the size of the cotton spinning and manufacturing trade of Japan or India as compared with Lancashire? There are as many spindles in Bolton or in Oldham as there are in the whole of India put together, and, when you are talking about rationalisation or amalgamation in Japan and in Lancashire, you have to consider the proportion with which you are dealing Japan is, comparatively speaking, a new nation in the cotton spinning sense, It is quite easy for a new nation to adapt itself and gain by the experience of old nations. Just as new countries can formulate an education system that we cannot get in this country, because we have grown up under certain conditions, so Lancashire cannot in a moment adapt itself to what I would term ideals. There is a difference between ideals and practicability, and, unless we as a Government and as a trade get the whole question under review, there will be no satisfactory solution.

I should like just to say a word to the Chancellor of the Exchequer in regard to the cost of social services. There is no doubt that the cost of social services is a very severe burden on the industry, but I am not going to ask the Minister of Health to curtail his activities, nor am I going to ask the Minister of Labour to curtail her activities, because I believe that social services are essential, and that it is money well spent. There is, however, the question as to how this charge is levied on the textile trade. Owing to the peculiarities of the textile trade, when there are periods of depression, part of the workpeople will be working 48 hours a week and part will be working 30 hours or less. In the weaving section during bad times they run down the beams, and it eventually comes about that the costs of production are relatively higher, because there are only two or three looms working where there ought to be four looms working.

It is the same in the spinning section. Carding workers are only working 30 or 40 hours a week, and never have a full week. That means that the employer may work his mill for one day, but he has to pay the full cost of the social services for one week by working that one day. The operative also has to pay the cost. In Lancashire at the moment this is a very serious matter. I am informed by a manufacturer on a large scale that the cost is 5¼d. per loom per week, equivalent to £1 per loom per year. I must content myself with saying that I am pleased to have had the opportunity of saying a word or two on this subject, though I feel that I have done myself justice. I am new to the business, and have been sitting here till I got nervous and did not want to speak at all, and now I do not know whether I have been wise in doing so.