RATIONALISATION.

HC Deb 05 November 1930 vol 244 cc947-1000

Mr. PALMER

I beg to move, That this House, recognising the need for increased efficiency in British industries with a view to securing an improvement in trade and the conditions of labour, welcomes schemes of rationalisation to this end, but is of opinion that such schemes to be effective should provide for the reduction of inflated capital values, and to be just should provide that compensation for loss of employment shall include workpeople as well as directors. It will be conceded at the outset that this comparatively new word "rationalisation" means different things to different people, and much that passes muster as rationalisation is the most irrational thing in the world to-day. My hon. Friends on this side of the House who have adopted the slogan "Socialism in our time" will agree with me that the capitalist system is irrational and that Socialism is the only alternative. The correct interpretation to place on rationalisation is Socialism. In any case, no one will deny that Socialism is rational, and the widest application of rationalisation can be the only solution to the great problem of unemployment. We heard the Minister of Transport claiming that his Road Traffic Bill is one of the greatest Socialistic measures of the day. In my view, rationalisation is production for use and not production merely for profit, and, also, it must mean, increasingly, a larger measure of State control in all the great key industries of the country.

In this connection, we have some indications in specific trades. I well remember a large employer of labour, with whom I have personally been associated for many years, saying: "I can make more profits by my economies than I can make on production." That sentence, clothed with its correct interpretation, means that he can by the displacement of labour immediately and directly save a large amount of money on his wages bill. That is the interpretation of the rationalisation which is going on all over the country and accentuating the great prob- lem of unemployment. It is not the kind of rationalisation calculated even to assist and help industry in the last resort. If any credence be given to the Scriptures: If any would not work, neither should he eat, unemployment is absolutely irrational. The economist will come along, I expect, and say, "But there are not enough jobs to go round." Such a statement does not make the position any less irrational. If we look at the first conditions of unemployment we have to recognise that on the one hand we have people who are overworked, and on the other hand people who have no work to do. Rationalisation in its literal interpretation in regard to a problem like unemployment should ration work and reduce the extended hours in the one case and make them meet the case of the man who has no work at all. Take the concrete case of the miners. If 180,000 miners are unemployed surely the rational thing to do is to reduce, and not to increase, the hours of labour. It is equally irrational for 100,000 building operatives to be unemployed when at least half a million new houses are needed in this country. My submission to the House in the terms of this Motion is that a well-defined rationalisation should be applied. I deliberately place a wide interpretation upon the word in order that it shall lose nothing in force and application when I come to the particular.

The word "rationalisation" seemed to have come into use and political significance with what were commonly known as the Turner-Mond Conferences. This was, in my view, Whitley machinery, perhaps extended and enlarged with a big national and international scope, and the greatest organisation of employers and employed met together to see how far they could establish a two-party parliament for industry. It may have been a matter of strategy that the long-cherished word of the workers, "Nationalisation" was dropped and the word "Rationalisation" come into prominent use. I do not object, and, what is more important, I do not admit that rationalisation properly understood and properly applied is necessarily any watering down of a Labour party principle with regard to industry and trade. Rationalisation can be applied, no doubt, in a much wider scope and a greater range to industry than the restrictive policy of nationalisa- tion. The strength of the claim for rationalisation rests upon the fact that it is admitted on all hands that industries are suffering failure because of obsolete machinery and antiquated methods, including the fallacy that reduced wages and longer hours are essential to industrial prosperity.

Industry has suffered and is suffering to-day more from over capitalisation than from anything else. The Government have been forced to recognise the failure of capitalism. Take the chemical industry. There you have a case where rationalisation has been applied on a big national and international basis, though in the process they have obtained a worldwide international monopoly. In passing, I have yet to learn how tariffs can help people who have their tentacles out in every part of the world. But I am bound to say that in the instance of the chemical industry the workers in many instances have been very badly served. Only today I received a letter from which I want to quote. It is from a man who has been in the employ of the Imperial Chemical Industries. He says that he was sacked and that he applied for re-instatement but that his application was not even acknowledged. He says that during his engagement he gained an exceptional knowledge of this so-called rationalisation and the inner working of rationalisation under capitalism. He admits that rationalisation in theory is idealistic, but that in the hands of unscrupulous financiers it is the worst and most atrocious crime against humanity in the history of the world. I can, perhaps, understand the man feeling bitter, but this is only one case out of many where in the process of rationalisation palatial offices are going up and every form of luxury is being flaunted before the workers, many of whom are looking for a job. Take another big merger—the Lever Brothers merger. There is another case where they have interests in every part of the world. They have their whale boats in the Arctic for the purpose of obtaining whale oil, and they obtain palm oil from the tropics.

The Member for East Leyton (Mr. Brockway) said, a day or two ago, that rationalisation means mass production and that, unless it is followed by mass consumption, there is mass unemployment. The purpose of my Motion is that rationalisation shall be applied with a view to extending trade and securing for the workers greater tenure, shorter hours and higher wages. Rationalisation involves the introduction of modern machinery in the place of obsolete plant. The cotton industry is an industry where you find that over capitalisation has been, perhaps, one of the greatest disadvantages. It is not my purpose to-night to go into details with regard to any particular industry, but broadly this is the position: Here is a company owning, say, several mills. They have a modest amount of capital, we will say £300,000, and they are doing a fairly good trade and employing a number of workpeople. Along comes the financier who says, "You want more capital," and the £300,000 undertaking is formed into a limited liability company. The company promoter comes along and the capital is increased to £500,000. The load line of capital is increased and of necessity the rentier class draw from the industry at the expense of the worker.

On the other hand, I want to make it clear that the workers, led by their trade unions, have shown a remarkable disposition to help trade and industry and to make sacrifices in order that trade and industry might improve. But there has not been, under the present-day rationalisation, that reciprocity which would recognise that the worker should have his name and place on the map and should come under consideration. Last year I went to see some automatic looms at work in Lancashire. I was very much impressed by the looms, but the outstanding fact, as it presented itself to, me, was that whereas they used to have one worker for eight looms they required only one worker for 30. Perhaps some hon. Member will correct me if I am wrong, but I know that it is a very extravagant figure. I said to weavers and cotton operatives: "What have we to do as trade unionists in the face of a problem like this? Primâ facie this means the displacement of labour." To the credit of the trade unions, I remember one of the Members of this House, who was leading one of the unions, saying: "The first thing we have to consider is the saving of the cotton industry, and, if we can save the cotton industry, we shall be able to find our place in due course." I mention that because in the schemes of rationalisation there has not been any disposition to recognise the sacrifices made by the workers in industry to save the trade. It, seems to me to be all a matter of the employing class, the capitalists, extracting a return for their money at the expense of the industry or at the expense of the worker all the time. The way in which the workers are displaced by modern machinery is illogical, irrational and cruel and a thing that must be corrected at the earliest possible date. In years gone by there was a period when the workers smashed the machines. The workers are progressing, and my appeal to the House is that, in view of the attitude taken by the workers to-day in sharing in the responsibilities of, and in co-operating in industry, and in many outstanding cases something approaching joint control in industry, they are entitled to expect from the employer class greater consideration than they have had in the past.

Yesterday, the President of the Board of Trade referred to cotton and said that the Government were a minority Government and did not want to introduce stronger measures. Nevertheless, he dropped a hint that in the case of cotton it may be necessary to secure larger powers. As often as there arc glaring cases of displacement in industry for the purposes of rationalisation. I want to see the Government taking greater powers. I am reminded of what the Prime Minister said with regard to the abuse of the unemployment benefit. He said that it is not always the worker who abuses unemployment insurance; it is very often the employer. The general condition of industry substantiates that statement. What happens in a so-called rationalised undertaking? There is a big merger, a prospectus is floated, an attractive dividend is offered for capital, and capital goes in. Every director, every member of the hierarchy of management who cannot be absorbed in the new undertaking is deliberately compensated. On the other hand, the' tendency of the employers is to say: "Why need we compensate the worker? If we- pay insurance to cover him against a period of unemployment, we are under no responsibility to look after him. He can go on the dole." A position like that in so far as it has grown up in this country ought to be corrected. The rule that applies in the case of high-placed officials, directors and others who are compensated should apply to worker, the essential man in industry. He must also be compensated.

Take the position of the motor industry. One cannot think of Ford, Morris or Austin without realising that big schemes of rationalisation have been going on in those undertakings. The moral of what happened in the motor industry is this, that whereas there was a time when Morris would have gone down on his hands and knees, so to speak, to this House to get protective tariffs to safeguard his industry, the reverse probably has happened. The motor industry have been put on their mettle to recondition plant and machinery, to improve their methods of production, and to adopt mass production, which has increased the volume of employment rather than diminished it. The case of Ford is an outstanding one, because when he was challenged with the prevailing tendency of the employing class to cut wages his answer to a cut in wages in Germany was immediately to put 7 per cent. on the wages of all his employés. It is not a. sine quâ non of rationalisation that you should cut wages or that you should cut staffs. For a number of years I have been associated with a big undertaking in this country, on the trade union side, which has dealt with a rationalisation scheme, and I have yet to learn in that big undertaking, where there were something like 20,000 workers at one time, that one man has got the sack, or one woman where women were employed, because of the scheme of rationalisation. They have had regard to the people employed in the industry. It took years to complete the scheme, which has been running now for nearly 18 years. The 20,000 employés have been reduced to something like 17,000 by the process of taking advantage of the natural leakage of staff rather than the sacking of staff. If a man died he was not replaced; if a man went out on pension, he was not replaced; or if' a man left of his own volition and got a better job he was not replaced. Therefore, it is not a sine quâ non of rationalisation that labour should always be the first to suffer and that the great displacements of labour that are taking place should continue.

The purpose of my Motion is not to go into the cases of specific industries, but I would point to the Government policy in respect to coal, transport, agriculture, iron and steel, cotton and fishing. There is an outstanding case where the Government feel that this is a real live issue which is related to the trade prosperity of this country and to the question of unemployment. The Government have travelled the world on this subject and have at last adopted tile Washington Hours' Convention. Rationalisation cannot be contemplated or applied without the obvious consideration of a general reduction of hours, so that the benefits of improved machinery and of a more scientific method of trading should be participated in by the workers as well as the employer class. The Government inquiry into banking, finance and credit promises rationisation in yet another field. Inasmuch as the Government give trade facilities of any description, I urge that they are in a strong position to insist that rationalisation shall not be misapplied by creating mass unemployment. The first charge on industry must be wages; otherwise we are irrational. When that charge against the undertaking has been met I have no objection to the other man getting his share of the profit. On the question of hours, improved machinery must play its part.

8.0 p.m.

With regard to the profits, capital under State control and State regulation of industry can secure for itself a greater measure of security. In the old days the capitalists used to say: "I have to demand a big price for the money that I lend, because I do not know whether this industry will go under or not." Increasingly under rationalisation, properly understood and applied, capital should be more secure, and if it does get security against loss because business is run more scientifically then the capitalist class ought not to extract the very full toll that they are extracting at the present time. A development of the home market and an increase in the purchasing power of the people is going to help trade more than anything else. For these reasons, I am glad that the Government have set up commissions and committees to deal with the depression in the iron and steel industry, and the cotton industry, and also to consider banking and finance. They have also set up a National Economic Council which is to make a study of the developments of industry and to use national and Imperial resources for the benefit of trade and industry in this country. The Motion refers to greater efficiency in industry as a means of improving trade and the conditions of labour. I am not merely content with an attack on unemployment in industry by means of economy; that is not enough. I think that efficiency in industry, improved trade, the rationalisation of industry, far from displacing labour will improve the conditions of labour all round; but in addition to that there must be a reduction of inflated capital values. Until you provide a solution for this I shall not be surprised to find the industries of this country going down, but when rationalisation is applied, when capital is unshipped, when you get down to actual values, the industries of this country will become more prosperous. In the case of the coalmining industry we had the spectacle a few years ago of as much as £20,000,000 being put into the industry. What for? It was not applied for the rationalisation or reconditioning of the industry, or the improvement of plant or a better organisation of markets. The whole of that money, in the language of the Chancellor of the Exchequer, was wasted. It was granted I understand to maintain profits at a certain level. It certainly was not applied in. any increase in wages. There is a Measure to correct that in the Coal Mines Act, which deals with hours of labour, co-ordinates production, and also deals with the cutting of prices by exporters. It also deals with distribution and transport, and with the disparity between the prices at the pit head and the prices which the consumer has to pay.

All I say is that no Government should allow any industry to reach the parlous condition of the coal industry before rationalisation is applied, or the condition of agriculture and transport before rationalisation is applied. I hope there will he no conflict between the employing class and the working class over the terms of this Motion. What we are asking for is quite plainly stated. It is the need for greater efficiency in British industry with a view to secure an improvement in trade and in the conditions of labour. It welcomes rationalisation as a means to this end. The Motion also says that schemes to be effective should provide for a reduction of inflated capital values, and for compensation for loss of employment for the working people as well as for the directors. I am encouraged to hope that the House will give its full support to this Motion. Rationalisation is very definitely mentioned in the King's Speech, where it says that— My Government will persist in its efforts to develop and extend home, Imperial and foreign trade and to help in measures which will lead to greater efficiency in industry. That is rationalisation. But I should be no less pleased, if it suited this House, to call it nationalisation or socialism, or anything else. I say that the Government have undertaken a process of rationalisation in their efforts to develop and extend trade and to promote greater efficiency in industry. The outstanding indictment against industry is the two million people who are unemployed. It is an indictment against the capitalist system. It is not an indictment, in spite of the debate yesterday, against this Government. It is a product of the irrationalisation which has been prevalent throughout the land for all too many years, and I hope, irrespective of parties, that this House will come to grips with the Motion and unanimously declare in favour of rationalisation with the interpretation and purposes I have placed upon it this evening.

Mr. HAYDAY

I beg to second the Motion.

Its three main points I think are quite clear. First, that there is a need for efficiency in industry, secondly, that there is a good deal of over-capitalisation which places an unnecessary burden on industry and, in the third place, that hardship is inflicted by the present position. I suppose we shall never learn exactly how many of the 2,250,000 unemployed are unemployed in consequence of new plant in industry. I shall have to apologise for using the word "rationalisation" constantly. How that word came to be used in this connection is somewhat of a mystery. I suppose it has just dropped into its place and by constant repetition has been taken as conveying many interpretations. May I put it in this way. In the first place, I suppose we are all agreed that industry cannot remain stationary; it must improve in view of the developments of modern times. The newer ideas, the newer phases of internal and external competition, mean that there must be a rearrangement in this country in order to keep pace with other countries, and, if possible, improve our methods of production so that we may be able to go ahead.

The one thing I complain about is that the principles of this new adjustment are often misapplied. Does efficiency mean the efficiency of the man or the efficiency of the machine? Does efficiency merely mean effectiveness to give a financial return to investors, or does it mean something broader and more general; does it mean the efficiency of the worker within the industry as much as the efficiency of the machine? If we accept that then it naturally follows that you cannot have efficiency in its fullest and most effective sense if, through reorganisation, you waste much of the human material. You would create a loss of efficiency from the point of view of the human element within our great industries. It is to that point that I want to direct my few remarks. You may have efficiency in industry purely from the capital represented in the money invested, or from the capital represented in the plant, but at the same time you may be creating an inefficient body of labour which will not give the country the advantage of the efficiency which it is assumed is to be gained by new machinery.

These new methods are intended, I hope, to so produce articles as to create a greater demand. That can be the only purpose. You hope to create a fuller demand, and you hope in the course of time to reabsorb the labour units which were once associated with the industry, but in the early stages of this new policy you forget to make provision for the efficiency of the human material. You put it on the industrial scrap-heap, and it becomes more or less waste; and when your efficient mechanised instrument is called upon to absorb the increased labour force you will not have made pro- vision for keeping that labour force efficient and effective, and you will lose, the nation will lose in the long run, any permanent efficiency that otherwise could, under a proper method and system, be retained; so that you would have machine, material, and method all operated by your efficient labour rather than by a means of making much of your labour waste.

There are schemes named rationalisation, schemes that have purely a financial aspect; that is to say, speculators loom large in the evolving of the rationalised schemes. Their money is invested without knowledge of the industry. So their interest is purely financial, not national; efficient just so far as their money investment will bring effective interest. It is not unknown that within that type that there is more capital invested than the undertaking can eventually carry. Side by side with that it is not unknown that gambling goes on within the rationalised industry. That leads one to assume that the sole motive is mercenary. Under that method and that system there is a merciless disregard of the human unit. I know of cases where an industry has been the sole means of maintenance for five or six villages, and under some great scheme works have been bought up and shut down. There is no other industry except some small agricultural interest there. Men are thrown out of work and email shopkeepers and all other interests in the villages might well become derelict by the operation of that which has a purely mercenary motive and is operated from a distance by those with no knowledge of the industry.

There is, it is true, another kind of scheme that one should encourage, and that entails the gradual scrapping of obsolete methods in industry, the broadening of the scope of operations by captains of industry, men who by their valuable knowledge can promote and extend schemes and eliminate much petty and wasteful competition and duplication of plants. But even there one wants to know to what extent the human unit has 'had any consideration at all. Reference is made, of course, to the old riots of little more than a century ago, in which the Luddites were engaged. Recently I read a speech made in another place by the then Lord Byron calling attention to the effects of the introduction of machinery in Nottingham. The workman then felt that the machine would take bread from his larder, and he regarded the machine as the enemy. It appears to me that even if in those days there had been less autocratic and despotic action by those introducing the new methods, and more consultation between all the interests involved, the men would have understood that the machine, far from being a burden and a destroyer of their livelihood, would lighten their burden and become a blessing when operating under conditions which took all the units into account.

That is what we are asking for in this connection. It is said that we should avoid throwing workers out of employment because it is not scientific. It is the easiest thing in the world for someone with money for investment to say, "Here is an opportunity," and in his greed want an immediate return for that investment, in such volume that he thinks he would be justified in obtaining a monopoly of the product coming within the purview of large-scale rationalisation. The very first question asked, in some cases, is, "How can we reduce our production costs still further, not by rearranging the hours or the shifts of work or by extending holidays or letting the employés participate in any benefit. How many can we discard and to what extent can we use the science of the machine to intensify the labours of such as are permitted to remain within the ambit of the industry?" Not only is there labour laid waste, but there is increased strain on those who are left in the industry, who have to keep pace with the modernised machine and will be called upon perhaps to perform the work of two men. I would urge that such schemes, before they are brought to fruition, should provide for consultation. With whom? With the trade unions involved.

They should not only consider the matter in terms of money—in terms of what will the machine cost, what will be the overhead charges and so forth. They should not say "The residue, what stands between us and our profit, is the measure of the payment we can give in wages and is the very last rather than the first thing to be taken into consideration." I ask that the human unit in industry should have, at least, equal consideration with the machine. It is not unreasonable to ask that great investors, great captains of industry should consult with the trade union representatives in order that schemes of this kind are brought into operation with a complete understanding on both sides, and with more or less complete goodwill. That, in itself, will be a guarantee that the modernised methods will have full and unrestricted opportunities of fulfilling their purpose, of lightening the burden to the consumer, to the producer and to the nation as a whole. Many investors will ask, "What is to be my return and what are the costs involved?" I suggest that it would not be unreasonable that labour should be able to ask "What are to be the general methods of the rearrangement of work; to what extent can we have shorter hours so as to retain the efficiency of the human unit; to what extent can we have an increased annual holiday that will enable us to maintain efficiency and to keep more people in employment; to what extent can there be a variation in our shift work and matters of that sort?" None of these great rationalised schemes can expect to have the goodwill of the public or of the Government, unless within these schemes, some arrangements are made for those who will in any circumstances be displaced.

The Mover of the Motion mentioned that there had been discussions between representatives of the Trade Union Congress and the Lord Melchett group. As a matter of fact there was agreement on this very point. There was agreement that it would be the right thing to consider to what extent these industries could carry a provision for a labour reserve fund. Instead of all the money going to the financial investor, there should be an arrangement for the creation of a labour reserve fund, in 'order that the rationalised industries shall carry part of their responsibility for the surplus of labour created by their own act in bringing about these great schemes. It is not an unheard-of proposal. Such things have been done. In connection with the arrangements between the State and the Electricity Commissioners there is a provision that upon amalgamations, and the sweeping-out of smaller units, displaced labour is to have compensation for loss of employment.

There is another industry, partly owned by private companies and partly by local authorities, in connection with which I and others have concluded an. agreement for compensation for loss of employment. After thoroughly discussing the effect of amalgamations and absorptions in the gas industry, and. arrangements made between two or more undertakings it was agreed that where men were transferred to forms of occupation which were less remunerative than their former occupations, there should be a balance in the scheme to give compensation for the loss. As regards the others for whom there was no hope of being retained, there would be compensation for loss of employment on an agreed scale. In the case of that industry there is complete understanding because consideration of the human element eaters into the discussions involved in any scheme of the kind. If that is not done, it seems to me that there is another way. If you have this understanding with the trade unions that the human unit is to be given consideration in any arrangements made, so that the workers shall benefit and not have hardship inflicted upon them, you will create such an atmosphere of good will, that the Government of the day can go forward and strive for international agreements such as would prevent cutthroat competition externally, while promoting a greater degree of contentment internally.

My last point is this: To what extent the present figure of unemployment has been swollen by recent schemes of rationalisation, no one can say with any degree of certainty. We hear of works being shut down, of 2,000 or 3,000 people being thrown out of work, of one-third of the employés of a particular concern being "stood off." We hear of trade in certain industries being 25 per cent. in advance of the 1914 trade, and yet under the new schemes 30 per cent. less labour is being employed. We can only conjecture that quite a large number of people are unemployed to-day because of the new schemes for creating greater efficiency in industry. Whose responsibility are they? They are discarded in the march of industrial progress. Does no responsibility attach to these great rationalising schemes? We say that there is such a responsibility. If the industries refuse to accept that respon- sibility and to negotiate with the trade unions, they have no cause of complaint at the Government feeling compelled to maintain such people in some degree of efficiency. It simply means that where industry fails, the nation must take the responsibility.

If the nation thinks it unfair to have to undertake the whole of the responsibility, then the nation must point out to industry that it has its responsibility. If industry does not accept and shows no desire to accept, to such an extent as is possible, its share of the responsibility, I should say to the State, "Because you allowed the growth of these schemes regardless of the human element, you will have to pay the price which the employers have refused to pay. You must pay that price to the full and enable the human element to retain its proper status and not go to waste and keep it ready and available, in a state of effectiveness, until rationalised industry has created a new world demand and asks for its re-absorption." Those people must go back completely equipped, as fully efficient as the machine which they will be called upon to handle and which was originally the instrument that caused their unemployment.

Lieut.-Colonel MOORE

I feel sure the House—what is left of it—will not wish me to follow the line which was taken by the Proposer of this Resolution, who, if I may say so with all deference, introduced a class bias into his remarks which was unworthy of the greatness of this subject. There is no one, on whatever side of the House he sits, who does not want to see all the three participants in industry get their proper reward out of it, or proper compensation for displacement, whether it be capital, manual labour or brains.

As regards the Seconder of the Motion, the hon. Member for West Nottingham (Mr. Hayday), he is, as we all know, a very prominent figure in the trade union world, and naturally everything he says is accepted with the greatest respect. I was very much taken with the moving way in which he appealed for more protection for the class that we all want to see more adequately protected, where a merger or a scrapping takes place, and that is why I think there is much to be said for the subject in which he and Lord Melchett are so interested, namely, co-operation in industry, because it will ensure that where such merging or scrapping takes place in a plant, factory, mill or yard, there will be something left to each participant in the industry to compensate them for what they have lost. One of the things that I would like the hon. Member to do, since he is keen on this great subject of rationalisation, is to preach it, and to cause his colleagues to preach it, with more assiduity in the constituencies. From a personal point of view, if the hon. Member will do that, he will save me a lot of unnecessary heckling in my constituency.

I do not want to pass from this subject without commenting with some regret on the empty benches all round, not because of what I am going to say, but because the subject is one of such vital importance at the present time. I cannot conceive what keeps people out of this Chamber under present conditions. I can only believe that those who are here are present because they want to speak, and not because they want to listen. Fortunately, I am not addressing those who want to speak, but that placid and patient occupant of the Front Bench opposite, the President of the Board of Trade, who, I know, receives every suggestion in the spirit of good will, even though he does nothing to meet it. That brings me to the point of my remarks.

Rationalisation is so interwoven with the question of unemployment that my mind is recalled to an offer made by the President of the Board of Trade a few days ago, when he said he was desirous of receiving suggestions, but one feels a little bit restricted about accepting that offer when one remembers that queer complex in regard to suggestions that inhibits the right hon. Gentleman. He goes to the nations of the world and says, "Let us discuss a means of standardising or reducing tariffs," and at the same time he ties his own hands by the Tariff Truce from being able to carry out any suggestions that may be made. The day before yesterday he made a suggestion that we should give in some suggestions to increase employment, but he tied our hands by refusing to accept any suggestions beforehand which would involve either a tariff or a subsidy, so that one feels diffident about making sugges- tions, in spite of the good will with which he invites them. However, I will overcome that reluctance and make two or three.

I do not suppose there is anyone in this House or in the country but regretfully acknowledges that rationalisation has to come. It is with regret that acknowledge it and accept that position, but what are we going to do about it it we do not? We cannot stand still. We must either go back or progress, and where there is a plant, a mill, a factory, or a yard—and I am particularly interested in shipyards—that is badly placed, perhaps from a transport point of view, possibly equipped with old-fashioned machinery, possibly inadequately helped by local resources, undoubtedly such a shipyard must go, because it is not contributing its fair share to the quota of output and, therefore, is not contributing its fair share to the general progress and prosperity of the country.

We have to recognise that the position with regard to shipping particularly is not as good as it was before the War, when, taking one point of view alone, 25 per cent. of the value of the shipping produced was in warships. To-day there is not one-seventh of that 25 per cent. in shipping in ships of war. I am very glad of it—it shows that we are marching in the right direction—but nevertheless it shows how essential it is that the shipping industry especially must be rationalised. Then 'another point which is of particular interest and, I think, is probably unknown to many of my listeners, is that the average size of merchant ships, particularly in breadth, has increased very definitely during the post-War years, and that means that there are fewer berths now required for the same tonnage. In fact, where before the War 500 berths would be required for X quantity of tonnage, to-day only 350 berths are required, so that whatever feelings of regret we may have about it—and we all share them—rationalisation of the shipping industry must proceed.

Now here are my suggestions. While that is admitted, nevertheless it seems to me that discrimination, and a very meticulous discrimination, should be used in this question of rationalisation. Where you have small shipyards—I have four of them in mind of which I have some little knowledge—that are adequately equipped for the type of ship that they build, where they are situated on the sea, as in the yards that I have in mind, where they have all those facilities in the way of transport and natural resources, railways, water, and so on, to make easy the process of output, then I think something should be done to maintain those yards as a national asset against the time when the turn of the tide will come and prosperity will again come too.

These will be assets which the nation can ill afford to lose. I speak with knowledge. These are yards—and there are many like them all over Great Britain—well and economically managed, with the highest skilled workmen in the world, with natural resources and with suitable equipment and plant. Are we going to let these go because of the depression, not only in shipbuilding but in all trades, because all their reserves have been used up, and they have nothing with which to carry on, nothing with which to get contracts, and nothing with which to keep up their establishments? Therefore, I suggest to the President of the Board of Trade that a similar corporation to the National Shipbuilders Securities Corporation should be formed with Government support or under Government supervision, to advance money to such shipbuilding companies as I have described, to enable them to carry on, to get contracts, to pay their way, and to keep their men employed until the better time to which we optimistically look forward.

Mr. McKINLAY

Will the hon. and gallant Gentleman say who owns the major portion of the share capital of one of the firms referred to?

Lieut.-Colonel MOORE

I do not think that that question arises. I do not say that anything that is inefficient should be subsidised, but, if the Government were satisfied that a yard were not redundant to the anticipated requirements of the nation, and if it were not obsolete, either in machinery or equipment, it might receive from such a corporation as I have suggested a loan at a definite and reasonable rate of interest to enable it to carry on, to keep the men employed, until the nation can again call upon their services. Another suggestion is that there should be a closer contact between the President of the Board of Trade and this National Shipbuilders Corporation. I would like to see the Government as a sort of liaison officer between the Corporation and the newer industries, so that when a yard is bought up, as some have been by the Securities Corporation, they should be in such close touch with the Government so that, prior to the dismantling of the yard, other industries in need of premises may be given the opportunity of taking the yard, and at the same time be enabled to put men who have been displaced into the new work that would be carried on in the yard. The only thing is to get the contact, and the President of the Board of Trade seems to be the only person who is equipped for that purpose.

Think what this would mean. We see on the Great West Road at Slough great factories from abroad and elsewhere being erected which need plant not totally different from shipbuilding plant. We see factories for new industries being started even in these depressed times, and if the President of the Board of Trade would be a liaison officer in constant touch with new industries and with the Corporation who are dismantling yards, there would be tremendous savings, because when a yard is dismantled stuff is sold at any old price. I saw a canteen at a yard being sold off for nothing at all, but that might easily have been taken over by a new industry, such plant as was appropriate being made use of. A yard in my constituency has been bought; it was a new yard built for the emergencies of the War, magnificently equipped, well managed and in thoroughly efficient condition, with the latest machinery and the best equipment in Scotland, and that means the best. This yard has been taken over by the Corporation. The result is that 800 men have been displaced. At an average of a week their wages came to £2,400 a week, or £1,000,000 a year going into that town. That meant £1,000,000 spent in the shops, on housing and on the amenities and happiness of life, and all that has been stopped by this process of rationalisation. I am not blaming rationalisation, but chances are being lost of starting some fresh industry, some fresh means of employment in that locality.

My third suggestion is with regard to the question of the life of ships. It involves money, but money and human life are things that do not enter into competition. Why not scrap, break up and dismantle altogether all merchant ships of over 20 years, and at the same time bring in warships, but make them 15 years? Warships must be brought in earlier, because they are out of date long before merchant ships. The ships must be broken up, for there is no use selling merchant ships to Greece or one of our foreign competitors, where the Board of Trade regulations are not nearly so stringent. We should only get further competition against our own shipping. To break up the ships needs some form of compensation in respect of the ships that are dismantled, but what of that? After all, it is the natural desire of the present Government to spend money and create employment. Suppose that it cost millions of pounds, and that a special loan had to be established to pay the compensation, surely the return would more than pay for the interest, even from the commercial point of view, in the development of the shipping industry and the large distribution of money and wealth which would take place as the result. I advance these suggestions to the President of the Board of Trade, and if he can see his way even to consider them, he will have done something to advance the general good and welfare of this country.

Mr. T. SNOWDEN

The Mover and Seconder of this Motion dealt with rationalisation in a most comprehensive and useful manner, and as the hon. and gallant Member for Ayr Burghs (Lieut.-Colonel Moore) has said, whatever might be our opinion, we have to face what seems to be the inevitable fact and deal with things as they are. Reference has been made to the fact that industry did not apply itself as it ought to have done having regard to the present situation. It has been stated that machinery in the textile and other industries is obsolete, and that, as a consequence, we are unable to get the best out of the machines. It is so obsolete that we are unable to compete with foreign countries, and that accounts for our inability to find employment that would be found if the machinery were more efficient. It is obvious, of course, that if our machinery is not up to date in every way we shall not get the production which otherwise would be possible.

In the textile industry, with which I happen unfortunately to be associated— unfortunately for the present, because there have been good times and there have been indifferent times, though now they are bad times—it would not be strictly true to say that the machinery is any worse than in any other industry. In recent years industrialists have done remarkably well indeed in that respect, particularly having regard to the financial difficulties in front of them; but I am prepared to admit, and it is a fact which ought to be faced, that there is in the textile industry a considerable amount of waste which might usefully be eliminated, though I will not stop to describe it now, because it would mean going into technicalities. There is another factor which the Mover, and particularly the Seconder, emphasised, namely, that of the human element. I was pleased to hear the hon. and gallant Member for Ayr Burghs make reference to the possibility of closer contact between industrialists and employés. I know that there are Members on this side of the House who are not very favourable to such a proposal. It is looked upon—at least, it was looked upon until recent years—with a considerable amount of suspicion. It was felt that it would stave off the time when industry would be nationalised, and would perpetuate a system which we on these benches think ought to be eliminated. But in spite of the fact that some of my friends may differ from me, and having regard to the note struck by the President of the Trade Union Congress, I must say that I think there is a good deal of common ground; and without being dogmatic I would say, that in our industry we have not taken enough advantage of the potentialities of the human element by giving workpeople the opportunities which they ought to have had.

9.0 p.m.

It used to be thought that if workpeople were given greater responsibilities and brought into closer contact with management, they would lose their head, and that as a consequence employers would not be able to do as formerly. Opinion on that point is changing to a large extent among employers, and that is all to the good; and I can say from my own practical experience that it is a paying pro- position, from any angle, to take workmen and workwomen more into your confidence and give them greater responsibilities than they have enjoyed up to the present. Unfortunately, a good many of them, through tradition and association, and because their parents did not occupy certain positions, have been far too prone to show an inferiority complex; but the experience of a number of them in certain firms has demonstrated beyond a shadow of doubt that there are latent in the workmen and workwomen of this country a skill and ability in administration which have only not been manifest before through lack of opportunity. Although machinery may be brought up to date, if rationalisation is to be successful we must reckon with the human element far more than we have hitherto done. It is a mutual proposition. In spite of what the hon. and gallant Member for Ayr has said, I do not think it can be maintained that the results of industry so far have been of a mutual character. If the employers of 30 and 40 years ago had shown the spirit manifested by employers at the present time, we should have been far better off than we are. When we talk about rationalisation we should think more about the human element and not regard workmen and workwomen as mere cogs in the industrial machine.

The Mover of the Motion referred o what is happening in other industries, and particularly the motor industry. With great respect to him, the analogy between the motor industry and the older industries is not a good one. The motor industry is a comparatively new one, and it is impossible for anyone to talk about standardising things in say, the textile industry as they are standardised in motoring or engineering. I do not think either the Mover or the Seconder of the Motion would like to see everyone going about in the same kind of suit. There are many productions of the textile trade which cannot be standardised in the way that machinery can be standardised. All the same, I am prepared to admit that there is a considerable amount of waste in the textile trade. For instance, I should say that, in the aggregate, millions of pounds are wasted in Lancashire and Yorkshire, in the West Riding particularly, in producing a thousand and one different samples from which one hardly gets any response at all. The industry could be reorganised to eliminate that waste without impairing business in in any way—I am not talking of home trade—and we could meet foreign competition in a far better manner than we are doing. There can be rationalisation, though it may not be capable of effecting so much as in other industries.

We are not able to do that in the textile industry. There are other factors to be considered. One of them is that up to the present time we are trying to develop on lines which have not been tried before as they ought to have been tried. Men and women have made suggestions of a character that might have been tolerated far more than they have been up to the present time. There must be more tolerance in industry than has been shown in the past. Another feature is that people are beginning to ask: "Who is going to benefit by rationalization?" I am satisfied that the consumers are going to ask, as they have never asked before "Are we, as consumers, going to benefit by rationalisation along with the workers?" That factor is of such a character that we shall have to face it sooner or later.

It is becoming widely known that the President of the Board of Trade is going to introduce a Bill which is likely to deal with that question. One thing ought to be mentioned at this juncture, and it is something which we, as Socialists, ought not to forget. We have been working these things out, and when these remedies were suggested 20 or 30 years 'ago by old Socialist agitators they were met by the reply: "Impossible. This competition in industry is good for the workers because it finds work." Socialists many years ago prophesied that in time to come this competition would have to go, and that rationalisation would have to be substituted. Although that word was not used at the time, they suggested that there would have to be co-operation instead of competition. What is being proposed at the present time is on all-fours with the prophesies that the Socialists made years ago. When we remember that banks and the coal and cotton industries have been rationalised to the extent which they have to-day we ought to pay a tribute to the Socialist agitators who prophesied years ago what would happen.

Another important matter is the human factor. It cannot be gainsaid that there is a spirit abroad which suggests that such a desire ought to be consummated, because, whether we like it or not—I am not here to speak for employers—unless there is a better spirit engendered right through industry and we face facts I am certain that, although things are very bad indeed, they are likely to become much worse. So long as we can discuss these questions in the temper which has been shown this evening by the Mover and Seconder, this Motion will not have been moved in vain, and the country, as a result, will profit by the suggestions which have been made, and the human element must not be overlooked.

Sir ALFRED LAW

We have had a very interesting discussion upon this Motion. When I read the Motion I it, quite impossible to disagree with the passage which reads: To call attention to the question of rationalisation; and the sentence recognising the need for increased efficiency in British industries with a view to securing an improvement in trade and the conditions of labour. The assumption seems to be that there has not been any rationalisation, but I would like to point out that throughout the country rationalisation has been going on. What is the reason for rationalisation, and what has caused the necessity for it? One reason is the increasing keen competition which we have to meet from foreign countries. It has already been mentioned that there is a disparity between the price of manufactured articles and the price charged to the consumer. In order to keep our mills going—I happen to be engaged in manufacturing myself—we have had to do our utmost to keep down prices, so that the middleman and the retailer will be able to have their profit. I agree that there is a great disparity between the manufacturer's price and the price paid by the consumer. The Mover of the Motion said that in order to bring about more rationalisation we should provide for the reduction of inflated capital values. I happen to be connected with a firm which has reduced its capital —I am one of the shareholders—and others have done the same thing. That process has been going on for some time. What is the alternative to rationalisation? What would have happened if, instead of introducing rationalisation in industry, nationalisation had been adopted, because that seems to be in the minds of the Mover and Seconder who believe that nationalisation would be a good alternative. My view is that nationalisation would be one of the worst alternatives you could adopt, because it means that you would establish hordes of Government officials with the result that business could not be managed in the same way as it is managed at present, and the people would be no better off than they were before. I wonder if the trade unions, in advocating nationalisation, have really studied what would be its effect— whether they have taken into consideration the intricacies of trade, the difficulties of manufacturing and management, of dealing with customers, with hankers and so on. I think they have hardly gone into all these questions, and, therefore, that part of the Resolution would not meet with our approval.

Mr. PALMER

I do not want to interrupt the hon. Member, but I took pains to point out to the House that I was rather spelling "nationalisation" with an "r"—that it was rationalisation that we were advocating, and that in its operation, it would become national and comprehensive. It was in that sense only that I used the word "nationalisation."

Sir A. LAW

I am much obliged to the hon. Member. Again, the human element is a very important problem. The hon. Member who spoke just now said that a better understanding had come about between employers and employés, and that is vastly to the good. We do understand each other better than we did 30 or 40 years ago. No one is more anxious about the human element than I am. I quite agree with hon. Members opposite that the human element should be more considered, and, in the firms with which I am connected, we do consider the human element. I have in mind one company where, on attaining a certain age, the employés become shareholders, not by having been told to purchase shares, but by being actually provided with shares.

Mr. McKINLAY

Deferred wages!

Sir A. LAW

Also, in a company which I have in mind, employés on reaching a certain age who have been engaged long enough in the particular mill in question are given pensions—not pensions to which they have been asked to contribute, but voluntarily granted pensions for life. It is very seldom that I trouble the House with any remarks; I prefer rather to listen; but to keep silence may sometimes be failing in one's duty, and that is what prompted me to add a few words to what has been said already. With most of the Resolution I agree, and I think it is a very happy idea. The hon. Member for Greenwich, by introducing this topic, has, as the last speaker said, provided us with the opportunity to have a friendly and, I hope, useful debate, which I think will do good.

Mr. BOWEN

This subject is one which, in my opinion, will require more frequent discussions than can be obtained by a chance vote in the Ballot, and those discussions must come in the very near future. I think that very few people can deny, on giving the matter a moment's thought, that this subject is bound up with the question of unemployment so seriously that consideration of the question of reconstruction is required side by side with everything that can be said in regard to rationalisation. It is quite true that, as the hon. Member for High Peak (Sir A. Law) has said, rationalisation has been going on. There are discussions occasionally as though this were quite a new theme, but in our trade union movement we have known rationalisation all our lives, and the best part of our duty has been to prevent men being discharged from work in order that employers might adjust their staffs more nearly, in their opinion, to the requirements of their factories. Rationalisation, therefore, is not a new thing at all. The word is a new one, coined, I think, in Germany, and we have adopted it here in order to have some kind of new slogan which is hurled at the workers very frequently, as showing the necessity for a reduction of their numbers in a given industry.

The hon. Member who has just spoken referred to the necessity for rationalisation, by which, I suppose, he meant a more accentuated rationalisation. He referred to our competition with foreign countries, and to the difference between the cost of manufacture and the price that the consumer has to pay. Although I should not regard this necessarily as a controversial question, I respectfully suggest that the question might be put to manufacturers and traders as to why some attempt has not been made to adjust that difference in prices, which makes a real difference to the consuming power of the working classes. The hon. Member fears, as an alternative, nationalisation, and the creation of hordes of Government officials. Are Government officials such dreadful persons that they need be feared? Some of them may be; it just depends on what you have done yourself. A policeman, perhaps, may not be a very welcome person to come near you, but an inspector of factories is a very necessary person, in my submission. I have no fear at all, however, that, if the alternative is nationalisation, a horde of Government officials will walk about unnecessarily with their hands in their pockets. Work will be needed, and, under nationalisation, more service will be demanded than can be obtained under the existing system.

The hon. Member for High Peak asked a question which must be answered. He asked, did trade unions study the effect of nationalisation, and all these other difficulties which traders and manufacturers have to consider 4 Their whole lives are taken up in considering these questions, and probably they know as much as, if not more than, many manufacturers know themselves about the difficulties. Indeed, the trade union movement to-day must be regarded as a study of industrial conditions, owing to the need for preserving industry, not only in the interests of the workers, but in the interests of industry itself. Therefore, while I appreciate the hon. Member's suggestion that there are employers who give thought to their workpeople—and I am glad to hear of it; I know of a good many who provide pensions for their workpeople—the simple fact is that industry as a machine, in this and every other country, has not yet taken sufficiently into account the fact that people have human lives to live, and that they are in industry to make the best of them. Therefore, the subject is one which is so closely bound up with reconstruction and unemployment as to demand the whole attention of every person connected with any party in the House.

It is a sad commentary on the interest taken in this subject that we should see such empty benches, but we must make the best of our case and present the Resolution as one that is entitled to consideration from every point of view and, if necessary, spur on the Government to take more and more interest in this subject with a view to seeing how far it can be put right. In dealing with the subject of rationalisation, there must necessarily come into the picture the effect of introduction of new machinery. We have heard from our own Government Bench the statement, with which I entirely agree, that in order to restore industrial competency it would be necessary to do away with obsolescent plant and introduce new machinery, in order to compete with foreign countries and to produce more efficiently ourselves, but all our efforts will entirely fail if a cold and soulless machine is to be regarded as of more importance than flesh and blood. It is this side of the subject which concerns me more.

I heard with great interest the statement of the hon. and gallant Member for Ayr (Lieut.-Colonel Moore), and his sympathetic regard for the condition of the workpeople in industry in his constituency. He spoke of the shipyards being empty and without work. In my own constituency I can see something, too, of that, where they make locomotives and have to repair them. There is a big railway company concerned with the wellbeing of the town in the constituency I represent. We see that big company, having a monopoly of all the amenities of the district for industrial purposes, finding themselves in difficulties in maintaining industry in full strength. We have hundreds of people discharged from the Crewe works without any prospect at all of other work. The point must naturally arise that if we are to consider the reconstruction of industry we must not consider only the effect in a given area or given industry, as suggested by the Seconder of the Resolution. He said that in the gas industry it was possible for his trade union and for employers to arrive at conclusions and decisions which mitigated a good many of the hardships, but if you have in a small town, like that to which I have referred, where there is no other industry and where work entirely fails, as also in the case of Ayr, consideration must be given, in reconstruction or rationalisation, or anything you like to call it, to the question of the transfer of the workpeople from one part of the country to another. That must necessarily affect industry.

Germany, I suppose, may be called the most rationalised country in the world, and she has 3,000,000 men out of work. I read the bulletin of the International Management Institute, published in Geneva in June a couple of years ago, which gives an illustration of rationalisation in German mines. Between 1924 and 1927 the output per man rose by 60 per cent. The total coal output and sales rose by 10 per cent. and the number of men employed fell by 31 per cent.—from 6,942 men in 1924 to 4,815 men in 1927. Thus you have more work done by fewer workers, or unemployment resulting from greater efficiency in industry. Similarly, if I may take agriculture, owing to various causes, called rationalisation, the number of men forced out of agricultural employment in the United States has been enormous. Nevertheless, the supply of wheat is in excess of the effective demand, and wheat growers have been faced with the greatest slump of modern times. In this country we have been told that the decline in wheat and other arable cultivation can be offset by the development of dairy farming. That, in itself, means a vast decrease in the number of men per acre as arable is put under grass. It must inevitably mean a reduction in the number of men employed.

The output of agriculture in England and Wales in 1925 was £225,000,000 or £282 per person employed. Alter allowing for numerous changes, this was the same as in 1908, and yet there is a decline of workpeople on the land. It is an indication that wherever changes take place—and there have been enormous changes in agriculture—the inevitable effect is that there are fewer men employed. Indeed, if you compare the number of men in agriculture with the number of machines used, you will find some very illuminating figures. Between 1910 and 1921 the number of men and boys over 15 years of age decreased by 55,000. Between 1908 and 1913 the number of employés, excluding farmers' sons, decreased by 71,000. As another illustration, between 1921 and 1924 the number of employés, including farmers' sons, decreased from 869,000 to 802,000, a decrease of 67,000. On the other hand, the number of agriculture engines in use in England and Wales rose from 17,331 in 1908 to 83,535 in 1925. The number of petrol or oil engines rose from 6,911 to 56,744.

In those circumstances, it is a matter for considerable alarm that when we talk about rationalisation, we give very little thought indeed to those people who are displaced as the result of the introduction of machinery. The employer does not consider it his business, though I know there are exceptions. I know of some industries where the employers provide schemes whereby men are considered for pensions and so on, but if it is a question of balancing costs or of reducing costs, there must be an introduction of machinery to save overhead charges, and with the provision of better and more efficient machines in the production of a commodity, the workers displaced as a result are given very little thought, if any at all. I may refer to the Civil Service and the Department with which I am familiar, the Post Office. There we see what we call the adjustments of staffs to traffic, which is nothing else than rationalisation going on day by day. Incidentally, I would say that the people who are clamouring for a reduction in the number of civil servants in the Post Office employ need not be alarmed. I question whether they could have reduced a single one more effectively than the administration is reducing them. Foot postmen have been replaced by a smaller number of motor cyclists and vans. The extent and variety of work in the Post Office have been increasing more rapidly than the size of the staff, and the output per head has risen just as it has in the mines and factories.

The machinery that is revolutionising banking is also being introduced into Government Departments, because if a Government, in its desire to be effective and efficient, introduces new machines it is praised for its efficiency, but it has not been given any credit up to now by the critics of those Departments that they have, not perhaps dismissed people to any large extent, but have substantially stopped the number of people recruited, which is bound to have a very considerable off-setting effect upon employment generally in the country. In those circumstances, I would suggest that, on the question of rationalisation and all that it implies, the Government or, if you like, any portion of the Opposition are called upon to give close study to the subject, because it must relate in every particular to every walk of life and industry, whether the industry is sheltered or unsheltered. It really reflects the life blood of the industrial nation.

When my hon. Friend who preceded me referred to capital and labour and brains, I must enter a caveat against any suggestion that all the brains are on the side of those representing capital. On the contrary, I would suggest that industry is entitled to have consideration given to the brains of the workpeople, and the amount of energy that they put into industry, to a very much greater extent than appears to have been given up to the present. I should like to see the Motion much more definite in form than it is. I could support it in some measure as a principle, but I ask those who are going to be responsible for further study of the subject, and particularly our own Government Bench— the President of the Board of Trade, I know, is always studying these great questions—that, in any reconsideration of the proposals that may be made to industry, the manufacturers, and employers of all descriptions, must have brought home to them the necessity of recognising what has been described as the human factor in industry as well as the machine.

Mr. BENSON

Such remarks as I have to make on this subject I make with a great deal of diffidence, because what I have to say runs counter in a large measure to the general opinion as to the effect of rationalisation. With some of the remarks of the last speaker I very heartily agree. When he says rationalisation is no new thing, he is entirely correct. It is merely the name of rationalisation that is new. Rationalisation is at the moment in the limelight, and when any thing or person comes into the limelight there is a tendency first of all to magnify the importance of the person or thing and, secondly, to blame it for everything that happens, even including the weather. At the present moment it is the custom to suggest that rationalisation is very largely responsible for the rising unemployment figures. The last speaker gave me the impression that he put a very large amount of blame upon rationalisation for that. Whether he intended it or not I do not know. One certainly at the first blush would get the impression that rationalisation is responsible for a very large amount. One reads of villages which have been turned entirely derelict owing to some great industrial amalgamation which has removed the whole of the production from one area of the country to another. One hears repeatedly of machines applied to industry which cut down the labour of a particular process to a fraction of what was employed before. I was told only a fortnight ago by a large employer in my constituency that he had put in a machine which enabled three girls to do the work of 23. One hears instances of this kind in every industry and in every department of industry. It is true that unemployment in individual cases is due to rationalisation and under the umbrella of the term rationalisation at present I include the whole question of tightening up and improving and developing industrial processes. It is true that there are innumerable men who a few years ago were engaged, say, in the chemical industry who are now out of work owing to the rationalisation of that industry by the changing of the districts where the processes are carried on. But although one may take individual unemployed men, or great groups of unemployed men, and say they are undoubtedly out of work because of some process of rationalisation, I think there is a distinct case to be made out against the suggestion that rationalisation has caused a bulk increase in unemployment.

I wish very diffidently, because the subject is one of vast complexity and certainly requires very careful consideration, to give one or two reasons which suggest. that rationalisation is not entirely, or to any great extent, responsible for unemployment in bulk. In the first place, rationalisation is not a new process. It has been going on under different names, not for 10 or 20 years, 'out ever since our industrial system com- menced. One of the most important steps in the rationalisation of industry was the application of steam to industry. Nor is there any evidence that at present the process is being applied with increasing rapidity. Mr. Karl Schneider, the statistician to the Federal Reserve Bank of New York, calculated that for the last 50 years the United States productivity has increased with extraordinary stability. There has been a pretty steady increase of efficiency and industrial productivity of about 4 per cent. compound per annum. He also calculates that for the rest of the industrial world the increase in productivity has also been very steady round about 3 per cent. compound. The League of Nations, in a Memorandum on Industry and Trade, made a calculation which suggests that between 1923 and 1927 world productivity went up roughly by the same amount, about 3 per cent. per annum compound.

Apparently there has been no very great extension of this process of rationalisation during the past few years. Sir Henry Strakosch says very definitely that the process of industrial development was just as rapid and just as extensive in the first 15 years of the present century as it has been during the past 10 years, approximately the same amount, about 3 per cent. per annum. It may interest my hon. Friend the Member for Crewe (Mr. Bowen) to know that some years ago I was talking to the Postmaster at Manchester and—it is rather a peculiar coincidence—that he informed me that he was under the impression that the Manchester Post Office, at any rate, was improving its efficiency steadily every year, and the figure he put down was 3 per cent. per annum. So that whatever hon. Gentlemen opposite may say or think, the Post Office is holding its own in increasing its efficiency with the industrialists who claim for themselves the monopoly of business efficiency. If it is true that the increase of industrial efficiency has not greatly accelerated during the past 10 years, and if there has been a fairly steady increase in efficiency over the past 50 years, as Mr. Schneider suggests, obviously., at any rate, until the War came, there had been no great increase in unemployment owing to that efficiency, for unemployment figures remained stable with their usual fluctuations up and down during the whole of the last 50 years. Furthermore, there were far more people engaged in industry at the end of 50 years than before industrial efficiency had increased. But it had not thrown people out of employment.

Let us take the last 10 years. Is there any evidence that unemployment has been caused by the growth of efficiency'? During the past 10 years, from 1920 to 1929, approximately 10 years, assuming that there has been a growth of 3 per cent. in efficiency compound, it means we shall get 30 or 40 per cent. at the very least increased efficiency in our industrial system. During that period there was no serious increase in unemployment. The figures moved up and down seasonally and for short periods, but, as far as this country was concerned, there was no steady increase of unemployment until the present industrial world-wide causes came. There is at the moment a tendency to blame the whole of our present unemployment, our 2,000,000 unemployed to rationalisation. Obviously, the increase in unemployment which has come suddenly and overwhelmingly is due to world-wide causes which are temporary, and which came rapidly. It is not due to the steady growth of industrial efficiency which has been proceeding during the past 10 years, aye, and during the past 50 years. If we are going to take a balanced view of rationalisation, we must isolate and we must take a broad statistical view of the subject, and realise, as I have- tried to show, that there is a very strong case to be made out to suggest that rationalisation in itself does not cause the bulk increase in unemployment. I am fully aware that it must cause changes of employment. It must cause dislocation in the labour market. Labour is thrown out here and there, and I am speaking I know for the whole of the Labour party when I say that there is no question about it as far as we are concerned that labour must -be insulated against those shocks of change of employment.

I would furthermore suggest that this change in employment is in itself desirable. Obviously, as our productivity increases, our requirements vary to a very large extent. We require, not a steady increase in the production of the same type of article. We require some articles to remain more or less stable and stationary in the market, and the production of other and newer ones to be developed. At the present moment the poverty of the bulk of the people of this country does not consist primarily of the shortage of the bare necessities of life. It consists very largely in what one might term the secondary necessities of life which go to make life interesting, happy and full. If we are going simply and solely to increase our products of the same type of articles, it is going to get us nowhere. What we want is to enable industrial efficiency to employ less and less labour on the basic necessities in order that more and more labour may be employed on luxuries which are not necessary for the few but for all.

The human element has to be considered. I hold that rationalisation is really a blessing. In fact I am certain that part of our trouble is due to the fact that other nations have rationalised somewhat more than we have. I have here a quotation from the Balfour Committee: It is abundantly clear that the first step towards putting British industry in a position to compete successfully in the overseas market is to subject their organisation and equipment to a thorough process of reconditioning. In other words it is not rationalisation which has caused unemployment in this country, but the fact that other nations have been rationalising more rapidly than we have. It is essential in the interests of the nation, in the interests of trade and in the interests of all concerned that rationalisation should be pushed on as rapidly as possible. If the Resolution could be acted upon one factor, the hostility of working people towards rationalisation, would be removed. Quite apart from questions of humanity or questions of common decency I suggest to hon. Members opposite that upon purely business grounds it is desirable that the workers should not be allowed to suffer even temporarily by industrial reorganisation and that every hindrance and every block in the way of efficient reorganisation of industry should be removed and that if we do so we shall he rewarded handsomely, over and over again.

Captain BOURNE

In listening to the interesting speech of the hon. Member for Chesterfield (Mr. Benson), I gathered that, on the whole, he is in favour of rationalisation, and, further, that he regards the argument that rationalisation causes permanent unemployment as distinct from temporary unemployment, as an argument that has no more basis than had the argument used against the introduction of machinery something like 100 years ago. One of the difficulties in discussing rationalisation is that it is a word of somewhat vague meaning. We have discussed the advantages of horizontal trusts and vertical trusts. Exactly what is meant by the word "rationalisation," a hideous word, which came from Germany, it is rather difficult to say. If hon. Members mean that we want to bring our machinery up to the most modern pitch, I do not think that there is anyone who would disagree, but I would suggest to the House that if you mean by rationalisation that you are going to organise industry on a very large scale and to have that industry interlocked, you are running a very considerable peril. We passed in the last Session a Bill to rationalise the coal industry. I do not want to enter into the merits of that Bill, but I gather from the Press that it is going to put men out of work in certain places. It is also going to do something much more dangerous. It means that we are going to have a large group of pits, so far as I can understand, under a more or less, I will not say joint control, but unified control. Should something occur in the world's history, a greater use of electricity for instance, or should someone discover a new form of storage battery it is going to be far more difficult for that unified industry to compete against new conditions, because not only have you got a vast amount of capital sunk in this combination, but you will have, instead of the gradual dislocation by the closing of one pit after another, the whole of a big group of pits thrown out of work simultaneously. That is one of the things in discussing rationalisation from any point of view that we have to hear in mind.

Every one of us in this House and every person in the country desires that we should have the most efficient industry and one that will give, not only good wages to the workmen, but reasonable security of employment, because that is equally important. I have been wondering in the discussions to which I have listened on this subject whether necessarily amalgamating all the different branches of industry is not putting large sections of our population in very great peril of being thrown out of work when some change in world circumstances, changes which we cannot possibly control, occurs. Let us take coal as an instance. Twenty years ago there was no competition with coal. To-day, there is competition from heavy oils, light oils, and electricity in this country and in different parts of the world, so that coal has no longer its old monopoly. Putting whole masses of workmen and whole masses of capital into an industry when some change in the fashions of the world or the introduction of some new invention in other countries, over which we have no control and cannot alter, may bring the whole of that industry suddenly to a termination and put all those people out of a job and that machinery without any possibility of being used, is a peril which we must not face lightly.

10.0 p.m.

There is one further thing in regard to rationalisation that needs to be watched. I had a little difficulty in following the line of argument of the hon. Member for Chesterfield, but I gathered that he wanted rather less labour put into our basic industries and rather more labour into what he regarded as the luxury trades. I am not quite certain whether in that he wanted mass production. I have seen mass production in one factory which is close to my constituency, and it struck me that mass production as I saw it done was a marvellous performance, but it was the most soul killing thing for a man that I have ever seen. To expect any human being to go through life turning out nut 132, unless you either pay him highly so that he can get necessary relaxation elsewhere out of his working hours, is really enough to cripple enthusiasm and to destroy any man's interest in his work. I am old fashioned enough to believe that a man should be interested in his work and take a pride in his job, but to think that any human being can be interested in his job in taking up a spanner and doing it so many times a minute is something that I cannot understand.

If you have mass production to such an extent that you have, say, cutlery in five different sets that anybody can buy, and you have nothing else, and if you have dinner services of very limited range and pattern turned out by the million, you will do a very great deal to destroy the artistic sense of the nation. We talk and read a great deal about the merry England of our ancestors. What was it that made that spirit of merriment? It was due to the fact that the people in those days were not limited to a narrow range of employment or a narrow range of choice. They had a choice that was expressed in colour, and they could gratify it. They were not bound by what somebody else thought were the proper canons of taste. That is a matter which we need to watch as a nation. We do not want to force people to have a standard pattern of everything in life. If we do that, we shall make life mechanical, even more mechanical than it is to-day. The nation really depends upon its soul, and if it lives for mechanical things, things turned out by the million, one exactly like the other, the soul of the nation will be like the machine that turns these things out; it will become mechanical, and I do not think that any great country can exist on a soul like that.

Mr. MILLS

The hon. and gallant Member for Oxford (Captain Bourne) has made to this debate a contribution which would have been very valuable if it had formed part of yesterday's debate. I can only wish that some of the 20 or 30 young Members of Parliament who interrupted without any attempt at decorum or restraint when the Prime Minister was making his speech, could have sat through this debate to-day and have listened to the varying contributions that have been made by different speakers on the subject of rationalisation. The terms of the Motion are so drawn that it does not begin in a partisan spirit and it need not necessarily end in the division lobby. What it does is to make hon. Members of all parties think over and discuss the varying aspects of a very great change. The hon. Member for Crewe (Mr. Bowen) was right when he said that rationalisation to us in the trade union and labour movement is no new thing. I remember the dock workers discussing rationalisation a few years ago as a result of the Melchett-Turner conferences and I re- member a dock labourer describing it as a new name for an old disease.

In my association with the engineering trade we have been face to face with the rationalisation of industry in the sense of the machine age. The hon. and gallant Member for Oxford having walked into it from a cultured life and cultured atmosphere, recoils at the idea of a man becoming an automaton day after day, just waiting for the next Morris car to come his way. In the engineering field in Coventry, Sheffield, Leicester, Middlesbrough, there has been such a development that men who 20 years ago were producing machines are now watching their daughters and their granddaughters turning out 50 times the amount they used to turn out, whilst they themselves are looking for a job and are being insulted by a rationalised Press for drawing something for which they have paid in unemployment insurance contributions. The terms of the Motion draw attention to the fact that such schemes to be effective should provide for a reduction of inflated capital values. I wonder how many of the Tory Members of Parliament who barked at the Prime Minister yesterday at Question Time have read the volume on the Survey of Industries, Parts 3 and 4, of the Balfour Committee on Industry and Trade. If they had they would know what is said about values and the overcapitalisation of the cotton industry by a committee of experts. It says: In connection with the economic condition of the spinning section of the industry, it is necessary to refer to the effect of the re-capitalisation or financial reconstruction of numerous mills which took place during the post-War boom of 1919–20. At that time large profits were being made in the industry, the general level of prices was far above either the pre-War or the present level, and on the basis of replacement costs the mills were worth several times their original capital cost. This state of affairs prompted many companies to increase their capital by distributing bonus shares, while company promoters seized the opportunity to buy up mills and float them upon the public as new companies with a very much increased capitalisation. … The subsequent slump in the cotton industry left these recapitalised and reconstructed companies in a much worse position from the dividend paying point of view than was the case with the companies which had retained their original capitalisation. Hon. Members from Lancashire know from actual experience what I myself have seen from sporadic visits to that distressed area. In four years 130 of these reconstructed companies never paid one penny in dividend, but the most thrifty of industrial working classes in Great Britain, the Lancashire operatives, when they wanted jobs in these reconstructed companies were offered a job if they put something into the mill on loan. In the days of depression some of these directors cleared out and sold their shares, and when the poor devils of operatives tried to cut their losses they were faced with the threat of discharge if they attempted to do so. They had to work on until the mill closed and had to see their savings slowly drained away. In that same period, while no dividends were paid for four years, they made calls on these poor devils of operatives, on their life savings, of over £11,000,000.

I am glad to say that in the Division I represent, the Dartford Division, the engineering trade has so far responded to the need for reconsidering the financial aspect. They did not pursue the lunatic policy of the cotton trade in Lancashire. Messrs. Vickers, who have works all over the Dartford Division of Bent, and in many other parts of Great Britain, wrote down their book assets by something like £12,000,000 in 1925, and in 1927 Armstrong Whitworths wrote down their book assets by £11,000,000. We who represent the working classes ask that in any consideration of these things the point of view of the workers should be taken into consideration. For my sins I have known what it is to tramp the country looking for work before the Employment Exchanges were established and when the 10s. per week benefit of the trade union was the only thing an unemployed man had. We resent strongly the insinuation, made by people who ought to know better, that we should in some way or other cut down the allowance for men in the industrial army who are not wanted. This nation trains men to become physically fit to die, in the Army, Navy and Air Force; they are well fed, well clothed, and well housed, and in some cases there is a pension for them at the end of their days. As regards the police force, we are only too glad if nothing happens to need their services. The municipalities provide fire brigades, and we are only too glad to give them a week's holiday with pay, with their equipment, food and wages. Nobody cavils at this.

In the industrial army it is the capitalist who gives or withholds employment, and we consider that in this question of rationalisation you should consider the point of view of the worker. We flatly deny that the limits of necessity have been even half-way reached in this world of our. Look around, in India, Russia, Poland, Turkey, and you will find that in terms of rebuilding bridges and factories, clearing land, in terms of relaying railway lines and locomotives, the world to-day can do with the labour of hundreds of thousands of skilled engineers. If we could co-relate human energy to human need we need not be discussing unemployment in terms of millions. We are a minority Government, operating temporarily, with little political power, which has no relation whatever to economic power. I hope that the tone of this debate, which has been free from rancour and the scoring of petty points, will be maintained in subsequent debates, so that we may reach a more or loss common level of agreement and search into the causes of the various troubles that beset us.

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

The Rouse will agree with one remark which was made by the hon. and gallant Member for Ayr Burghs (Lieut.-Colonel Moore), when he expressed regret that on an occasion when my hon. Friends had used private members' time to raise a very important subject, there was such a small attendance of Members. Not a single one of us present would suggest that anyone should stay to hear our speeches, but the hon. and gallant Member struck the right note when he said that this was a matter of great public importance affecting the industry and the commerce of this country and the lives of many millions of people. The subject is certainly of even greater importance under post-War conditions. It is my duty to summarise one or two points in the debate and to give the House certain information. I should like to pay a tribute to my hon. Friends on this side of the House, and also to hon. Members opposite, for the temper and the spirit in which the subject has been discussed. There are really three parts of the Motion—one which indicates that the step to which we give the rather ugly name "rationalisation" is necessary to the efficiency and progress of our industry; the second that rationalisation should proceed in terms of sound financial practice; and the third that in the process there should be provision for the workers who are displaced until they can again be absorbed in remunerative occupation.

Taking the three points in order, it will not be disputed that this process is very old. But new terms have been applied to it, and particularly since the War period. As the Balfour Committee pointed out, we have seen a remarkable growth of manufacture in different parts of the world—in the great markets in the Far East, in textiles, within our own Empire and elsewhere—and there is not the slightest doubt that these parts of the Commonwealth and these foreign countries are determined to build up their industries in such a way as to present a new state of affairs for the manufacturer in Great Britain. Then, of course, there are the great changes which have come about as a result of the burdens flowing from the War, the very heavy loan which has been saddled upon this country, and the manner in which, in France and in Germany, the liabilities resting upon industry have to a considerable extent disappeared.

Without proceeding further by way of summary of the changed post-War conditions, we must realise that this process is not only old but necessary and in some way requires to be accelerated if this country is to recover and if remunerative employment is to be provided for a substantial portion of the 2,000,000 people who are out. of work—to which section this part of the question immediately applies. Of course, in pre-War times we used to hear a great deal about cartels and syndicates and trusts. We heard also a great deal about simplification of methods and standardisation—in short rationalisation. It is nothing new that we are discussing. It is rather the post-War phase of an old problem, but, at the present time, we see the problem in an acute form in the great industries in the State. For example, in coal-mining it is assumed that there may not be again remunerative employment for, perhaps, 200,000 men who were formerly engaged in the mines unless there is, in connection with some process like hydrogenation, or in some other field such as the extraction of oil from coal, some new development which may give to this industry a new lease of life and enable it to re-absorb those men—even with progressive amalgamations the industry and the improvement of its internal efficiency by the use of coal-cutting machinery and the rest.

There is very much the same problem in many of the aspects of the Lancashire cotton trade. As I indicated in this House two or three days ago, there are four or five sections, beginning with the raw material and going through the spinning, weaving and finishing trades to the merchanting branch. In all these there is a certain amount of organisation. There is a considerable degree of organisation in the three sections of the finishing trades, covering perhaps 60 per cent. of the field in each section, always with a minority but nevertheless including some form of price regulation. There is a certain fusion between parts of the merchanting and parts of the finishing trades, and there is a certain fusion within narrow limits in the spinning and weaving sections but, broadly speaking, there is a segregation of the four or five sections in that industry, and the great problem confronting both the Government and the Lancashire cotton trade to-day is the form which the new organisation, or what we call rationalisation, is to take, in order that the markets at home and abroad may be recovered, and in order to provide for as many as we can possibly cover of the 250,000 people out of work in Lancashire representing one-half of Lancashire's operative population. So I might continue round many other industries in the State. There is the question of regional organisation in the iron and steel trade and the extent to which further organisation is possible in an industry already highly organised. There is a similar problem in the woollen trade in regard to which we are in great difficulties at the present time, in agriculture and, indeed, in almost every field that one could mention. But underlying all this process which is, of course, inevitable, there is the desire to put the commodity on the market on such terms as will recover our markets at home and abroad remembering the changed conditions.

If that is a fair summary of the situation, the choice which confronts us is comparatively simple. It means that we have either to approach a solution by way of ordered progress, seeking so far as we can to direct this reorganisation, or to allow the reorganisation to take place by the ordinary events of industry itself, which events will be very largely those of bankruptcy and the exclusion of the weaker elements in existing conditions, with very great loss and probably even more unemployment and distress than an ordered reorganisation, as I should like to describe it, would involve. So the Government, from the first hour that we took office, has bent its mind to the position of the leading; industries in the country and has been actively engaged on the coal industry and closely associated with cotton, iron arid steel, and many other industries. That is being done to some extent in the field of compulsion under the Coal Mines Act, but in the rest of the field very largely in terms of voluntary effort, and the underlying principle of that point I described to the House quite briefly, but I trust sufficiently, in the debate on Monday afternoon.

I should like to say also to hon. Friends, particularly on this side, that all that process is not inconsistent with the view that they and I hold regarding the future of our industrial system. Strongly as we believe in the extension of ownership to the people of this country, we have always held that that must be in terms of efficiency in industry, that forces which we believe to be unnecessary should be eliminated, and that producer and consumer should be brought together, the producer in fair and generous terms as to the contribution that he makes and the consumer protected in the standard and quality of the article and the price at which it is offered for his consumption or use.

In the second place, hon. Members have raised the question of the financial terms or methods under which this policy must proceed, and my two hon. Friends who put the Motion on the Paper directed attention to the danger of inflated values in any form of industrial reorganisation. We have always been aware that there has been in recent times probably a good deal of purely paper amalgamation, that is to say, the fusion of a large number of industrial undertakings with a capitalisation which bore very little relation to the strict assets involved and, I am bound to add, very often little relation to the capacity for production. To some extent that accounts for the aggravation of unemployment in existing conditions. We remember the post-War boom period in Lancashire and the grossly inflated figures at which a considerable number of those factories were recapitalised. Disaster was apparent to every student of the problem, and, although I am not going to suggest that it is more than a part of the field of difficulty in Lancashire, there is not the least doubt that the adverse influence has extended very far beyond the factories which were immediately involved. So to-day it is idle to speak in terms of industrial reorganisation unless we mean by that that the new capital is approaching the assets and the earning capacity of the changed structure.

There is a good deal, I am afraid, of public and other misunderstanding regarding the policy of the banking authorities in this country. That bears to some extent, though indirectly, on some of the points put to me by the hon and gallant Member for Ayr Burghs. On the general point, the Bankers' Industrial Development Company and the Securities Management Trust have stated that for all sound schemes of industrial reorganisation the necessary capital will be forthcoming; but they have also stated quite definitely—and this goes to the root of a considerable part of the Lancashire cotton industry— that they are not prepared to find money to replace capital which should be regarded as irretrievably lost. Nobody could stand at this Box and withhold sympathy from the very large numbers of people—very often comparatively poor people—who have sunk their resources in these undertakings, hut it is equally plain to every one of us that if new money is provided merely to make good losses which have been incurred, that money is diverted from the real task of reorganisation, which is to equip these establishments and to make certain that they can be conducted on something resembling sound and remunerative terms. So there is to-day a certain conflict of opinion between the people who are arguing that there should be resources for the replacement or for part satisfaction of what has been lost, and those who hold the principle that the money should only be provided for a reconstituted and reorganised industry capable of being conducted on economic lines.

The hon. and gallant Member raised what was a narrower but still important point, and asked, particularly in the case of shipbuilding, whether there was not some kind of provision that the Government could make to keep shipbuilding yards running, to cover, so to speak, for the time being, the personnel until again ships were constructed or orders were placed for ships such as would enable them to come back to the ordinary processes of industry. Of course, the Government in the past have done a certain amount in that field, hut as I understand it, what the hon. and gallant Member suggests is really some form of temporary accommodation. That raises a very large and important issue. In that field, the National Shipbuilders Securities Trust has surveyed practically the whole of the shipbuilding industry in this country. It has bought up a considerable number of yards; I do not know on what terms, but I imagine on comparatively low terms in many cases. On being satisfied that these yards cannot be run on economic lines, they have dismantled and closed them down, the general object being to concentrate the future demand for shipbuilding upon the smaller number of efficient units in shipyard construction. With that general principle, I do not think that there can be any particular quarrel, but there is the problem of the immediate displacement of men, and how those men are to be again absorbed either in the shipping industry or some other industry to which they can turn.

Mr. KIRKWOOD

What about the yards that are being closed and that are highly efficient? We have a case just now of a highly efficient yard at Old Kirkpatrick which is going to be demolished.

Mr. GRAHAM

I cannot pronounce officially to-night on the conditions in that case; but, taking the position as it is stated by my hon. Friend, I have not the least doubt that there are certain efficient yards which in a newly-laid-out industry redistributed on the lines I have just described might have to be closed. That does happen. I have not the least doubt that that may be true of certain coal mines under the scheme for the amalgamation of collieries when the amalgamation commissioners get to work. It merely bears out the familiar truth that in the process of trying to lay down a regional scheme, whether for coal mining, iron and steel or shipbuilding, certain efficient concerns here and there will be closed along with less efficient ones, because of the desirability of concentrating likely future production in certain parts of the country or in certain groups of yards. The question which the hon. Member raised was whether the Government can make any contribution, temporary or otherwise, to that state of affairs, which, of course, would be a contribution apart from anything which is done by the National Shipbuilders Securities Trust. I am not in a position to-night to promise any Government money for that purpose, for a reason which I think will be obvious to hon. Members. If by any chance the promise of compensation or temporary funds were held out for this industry, the importance of which no one denies, similar help could not be withheld from a very large number of other industries, and that would speedily involve the State in an enormous outlay, the value of which as an investment would be a highly debatable proposition.

Why do I make that statement? As the hon. and gallant Member himself pointed out, there has been a great change in post-War conditions in shipbuilding construction. There is the larger size of the tonnage of ships, the reduced demand for ships of war, the doubt as to the part which the mercantile marine of this country is to play in the aggregate of world tonnage. It is a matter of the very greatest debate as to what would happen to any such sum, the provision of which could only be justified if there were a reasonable certainty that it was a temporary accommodation, and that in any case it was applied to those yards which were substantially efficient.

Lieut.-Colonel MOORE

My suggestion was that the two proposals which I made should be taken together, that is, that by the scrapping of mercantile marine ships of 20 years and of warships of 15 years you would be insuring that the industry would come back; and, therefore, the advance which the Government might make towards the efficient yards would be justified.

Mr. GRAHAM

I was just approaching the very point which the hon. and gallant Member has mentioned. Statistics show a very large surplus of world tonnage and it is common knowledge that freights have sunk to a very low point, and there is, accordingly, very great doubt as to the remunerative use of a great deal of new shipping construction. But passing to the other point, that of the obsolete tonnage, very strong representations have been made by trade union colleagues and by a certain section of the industry that that problem should be reviewed, and that we should find out whether, by scrapping the tonnage in the different classes at earlier dates, a. contribution could be made to the relief of the undeniable distress in the shipyards. I am happy to be able to inform the House that so soon as we had received these suggestions and discussed them I appointed a representative committee at the Board of Trade, covering both sides of the problem—the industry and the trade unions—for the express purpose of reviewing the question of scrapping obsolete tonnage. Even now they are engaged on that task, and I trust and, indeed, believe that it will not be one of the interminable and prolonged inquiries which shatter the hopes of bon. Members, but will be conducted expeditiously and on businesslike lines. I hope that we shall have the report at an early date, and then I think my hon. and gallant Friend opposite (Lieut.-Colonel Moore) will see that at least that part of his ease is met. I will indicate the result to the House as soon as it is in my possession.

All these questions relate to the method of meeting a temporary situation. It is on my third point that, with a further few minutes, I will conclude this reply. It is, of course, a matter of intense human interest. I have already alluded to the displacement in the coal mines of Great Britain; to the fact that Lancashire cotton is probably carrying too much personnel; to the fact that in the iron and steel industry, on a reason able re-organisation, the numbers to be employed in the future, even with greatly extended facilities, may well be less than they are to-day., Much the same may be true of other industries in this State. How is that problem to be faced? In substance it is the problem of the time-lag between the immediate displacement in our organisation for the purpose of making the industry more efficient, recovering its home and export trade, and the date at which those men will be absorbed in whole or in part in the reconstituted industry, regaining those markets and presumably getting in some cases, as I hope, an even larger volume of business than those industries had in the past, and certainly larger than they enjoy to-day. In a time of normal business activity when things are even moderately prosperous there is over a large part of the industries and commerce of this country not too long a time-lag, but a time-lag exists. That time-lag tends to be extended as we sink into the depression, or, as I prefer to put it, as we do not emerge from the depression, a phrase with a slightly more optimistic note.

That is the immediate problem we have to face to meet the situation. It is met to some extent at the present time, but it is only met, so far as our industries are concerned, where you have a public utility and some form of State co-operation, or where the industry is operating in terms of an Act of Parliament which means regulation by the State. That is particularly true of the great national and local government enterprises, where there is provision, mostly at national or local expense, for compensation for displaced employes, either by way of a lump sum or gratuity, or a pension for the remainder of their days. That has found an extension under the Electricity Acts, and as applied to gas companies and to certain large industries which are very nearly in trust, or in quasi-monopoly form, at the present time. Plainly, those industries are able to undertake that task of providing for displacement, because they have something in the nature of a monopoly; they are not really in fierce competition, they are working under regulation, and, in so far as they are upon public utility terms, they have the means of passing on to the consumer some part of the charge which they have to carry under this head.

I should like to see that principle very considerably extended, and I entirely agree with hon. Friends on this side of the House, and, indeed, elsewhere, who have said that in these and other industries the workers and the trade unions should be taken into regular consultation in problems of that kind. In fact, they are taken into consultation in a great many problems in, for example, the gas industry at the present time, and only recently I received a representative deputation from both sides of the industry, including those engaged on the side of manufacture and my hon. Friends the Members for West Nottingham (Mr. Hayday) and for West Ham (Mr. W. Thorne), as representing the employes, making a united appeal to the Government on matters which were of fundamental importance to the progress of that great public utility of gas manufacture and distribution. Therefore, I give the warmest commendation, if I may, to the extension of that principle, and these are particular industries in which it should be applied under existing conditions.

Mr. HERBERT GIBSON

Would the right. hon. Gentleman explain what policy the Government have in connection with women who are being displaced, particularly in the cotton industry

Mr. GRAHAM

I was about to approach, on the second heading, the question of the displacement of women, and the different state of affairs which is found when we pass to those industries which are now in difficulty and are the subject of reorganisation schemes. I do not think I can give a better illustration than by referring to the problem presented by an Amendment promoted on this side of the House during our discussion of the Coal Mines Bill. There, in the schemes for regulated output at the pithead and the fixing of minimum prices, hon. Friends of mine said that there should be some scheme of compensation for the miners displaced; but, while I, personally, had the warmest sympathy with that Amendment, I was not able to incorporate it in the Bill for a very sufficient reason, more particularly as applied to coal, and it would work out in very much the same way in other industries as well.

The effect of that proposal in the coal industry would have been to add an obligation to a trade which was, beyond all dispute, in deep depression, which had lost a great deal of its home market, and was struggling terribly in its export trade; and, as it would have worked out, it would have diminished the proceeds available, which, in turn, regulate the remuneration of the miners. Consequently, in so far as the cost was borne by the industry, and there was not recourse against consumers, the only effect at that stage would have been to diminish the amount available on the ascertainment for the miners in the 21 wages ascertainment districts in the country; and, since all those districts were already on the minimum, or practically on the minimum, I had, with very great regret, to reject that proposal so far as the Coal Mines Bill was concerned. That is the principle running through other depressed industries, and, accordingly, it becomes a question whether you can put that charge upon industries in that position unless you give them a pretty complete form of regulation, unless they have some guarantee of price and the rest, and unless they are so far in a position of monopoly. Even under the Coal Mines Act the coal industry will not be in a position of monopoly, at all events as far as the export trade is concerned.

Mr. KIRKWOOD

Why compensate the owners and not the miners?

Mr. GRAHAM

Not even the mine-owner is compensated. As regards the home market there is no such guarantee, and the amount of export trade, as such, has such a close bearing on the matter that it becomes a big factor. That is the kind of difficulty we have to face. I should be misleading the House if I said that in the reorganisation of these depressed industries there was any immediate prospect of incorporating schemes of this kind covering displacement.

Mr. BROOKE

Will the right hon. Gentleman say if in the case of a shipyard which is being closed, where the new trust has bought out the yard, there is to be compensation?

Mr. GRAHAM

It all depends on the terms on which the yard is being bought out. I have no knowledge of these terms, but if the practice is being applied there which is being applied in other sections of our industry, then we may assume that something very much less than the amount of capital sunk in the undertaking by the investor is being repaid at present. That is a large scale problem in Lancashire, and the extinction of existing interests can only be in terms of literally disastrous losses to the investors. There is no other course, because any other course would involve the recapitalisation of the industry, which is something which the industry cannot carry. The loss which affects the investor and those who hold the capital must be faced. It corresponds to the losses which fall, unfortunately, upon the great mass of working people at the same time, in so far as they have been investors, in the loss of occupation.

I should like to say a word about the other field. There is at the moment the provision of Unemployment Insurance. I am not going to suggest that is the way in which cover of this kind should be provided, but at the moment in the large scale of unemployment it is the compensation which the State offers through it contribution for the loss of employment, which may be due not only to schemes of reorganisation but to the ordinary loss of trade, or whatever cause absence of work may be due. It is very far from being the end in the solution of a difficulty of this kind. If we assume that even in a recovering trade that time-lag between displacement and reabsorption will be considerable, then we have all to ask ourselves whether there cannot be some more comprehensive form of insurance to cover all risks to which the great masses of our people are exposed. It does not fall within my department to make a pronouncement on such a very large and controversial field, but if I may speak personally for a moment, I have always had a plain, and I hope, clear view of this problem of insurance. The central principle of insurance is that it must be comprehensive as to the number of people who are included, as only on that basis can you provide any kind of fair or reasonable payment whilst displacement continues.

The Government's views on the insurance scheme of this country have already been indicated. Insurance may be designed to cover sickness and displacement, workers' compensation, industrial displacement of this kind, old age, and, in short, all the vicissitudes and all the risks to which millions of people are exposed. We are in a time of very great financial difficulty. The outcome of that investigation I cannot forecast, but I can say to the House that we are alive to the importance of the problem and that, while there is immediate cover in Unemployment Insurance for payment for this displacement on industrial reorganisation, it may be that that view will suggest other better and wider methods of treating the problem, and it will have to take into account the extent to which those industries themselves, more particularly monopoly or quasi-monopoly industries, can contribute. We have discussed tonight a great and important question of re-organisation. I believe it to be necessary to the industrial recovery of the country, and I should like to appeal to Members in all parts of the House for a fair and sympathetic consideration of this matter, believing, as I do, that very soon we shall begin to see an upward movement and, unless a contribution is made, Great Britain may not participate to the full extent in world economic recovery.

Lieut.-Colonel MOORE

Would it be possible for the Government to act in the capacity that I suggested as a liaison officer? It would be far better to give these men employment than doles.

Mr. GRAHAM

That is exactly what we are doing over a wide range of industries. I did not refer to it as time was passing rapidly, but I shall be delighted to indicate personally to the hon. and gallant Gentleman or to any Member of the House the scope of our work.

Question put, and agreed to.

Resolved, That this House, recognising the need for increased efficiency in British industries with a view to securing an improvement in trade and the conditions of labour, welcomes schemes of rationalisation to this end, hut is of opinion that such schemes to be effective should provide for the reduction of inflated capital values, and to be just should provide that compensation for loss of employment shall include work-people as well as directors.

The remaining Orders were read, and postponed.