JAPANESE COMPETITION.

HC Deb 29 November 1933 vol 283 cc897-958

Captain FULLER

I beg to move, That this House views with grave concern the increasing inroads made in the trade of this country through Japanese competition, and urges the Government to state its intention, in the event of satisfactory quota arrangements not being made by agreement with Japan, to take immediately all steps within their power to minimise the competition of Japanese imports, both in Home and Empire markets, freeing themselves, if necessary, from engagements which would prevent effective steps from being taken. 3.50 p.m.

I make no apology for utilising my luck in the ballot and putting down this Motion for a discussion on Japanese competition, in spite of the fact that we had a short Debate on the same subject last week on the Address, and that it has been raised once or twice on the Adjournment this year. In fact, the most recent discussion on this matter only served to increase the grave apprehensions which existed in my own mind—apprehensions which I trust the Government will remove to-day—that the policy which they have so far pursued in this matter is not as vigorous as it ought to be and as the seriousness of the present situation demands. I therefore hope that the opportunity that we have to-day of discussing this matter will be used, not in recrimination, although, of course, hard knocks will be given and received—that is the Lancashire way—and not in useless criticism which contains no constructive proposals, but that it will be used wisely and soberly to convince the Government that they are wrong in their somewhat tardy approach to this subject, and by the force of our arguments, based on the facts and buttressed by the persuasiveness of the speakers who will follow me, to move them to the action that is necessary and is demanded now.

This matter is not of special concern to Lancashire either, for the competition of which we are complaining is becoming more and more intensified in an ever widening and increasing range of manufactured goods and at prices which not only reflect unhealthy trade, but, by their very meanness, are a direct threat to the livelihood of those of our work-people who are still fortunate enough to be in employment in spite of this corn-petition., and the high standard of living in this country, which it must be ever our endeavour to maintain and to raise. Of course, our anxieties and our apprehensions are increased with the close contact that we have with those whose lives and fortunes lie within the ever increasing ambit as it were, of this Japanese trade invasion. The right hon. Gentleman the President of the Board of Trade last week exhorted us not to despair, but to have patience. He said that although things were patchy, he hoped they would come right in time, but the only despair which is gaining ground is because the Government have so far shown little sign of directing their policy so that the things that we wish to see happen may happen.

Having said that by way of what I at any rate would consider a reasonable introduction to this discussion, I will address myself for a few moments to a consideration of some of the factors in this problem. I will not weary the House with too many figures, but some certainly are essential if we are to grasp the significance of the extent to which we have lost markets abroad. In the first place, the exports of Japanese cotton piece goods from Japan increased from 1,400,000,000 square yards in 1931 to 2,030,000,000 square yards in 1932; in the last two years there has been an increase of no less than 42 per cent. in Japanese cotton exports; and in the first nine months of this year Japanese cotton exports entering new markets have increased by no less than 96 per cent. Of course, these phenomenal gains have been more than sufficient to compensate her for losses of markets in China and India, and I am bound to say that a commendable liveliness on the part of the Indian Government has lately been evidenced and has led to prompt action there. Moreover, Japan's total gain in world trade in the first nine months of this year is more than £40,000,000, and the greatest increases have been in cotton piece goods, in raw silks, rayon textiles, silk fabrics and hosiery. On this, of course, Japan, in a world trade depression of the greatest magnitude, may well congratulate herself, and this is a question in which we could join with her were it not for the fact that it has been achieved at our expense and under conditions which I think, by no stretch of imagination, can be called fair trading conditions.

Take cotton. Our exports to Malaya in 1929 were 16,500,000 square yards, while those of Japan were approximately the same. Last year ours had dropped to 8,250,000 square yards, a drop of 50 per cent., while Japan's had increased to 37,500,000 square yards, an increase of considerably over 50 per cent. In Ceylon, while our exports have been rapidly decreasing, those of Japan have increased from 23,000,000 square yards in 1931 to 40,000,000 square yards 'in 1932, and this spurt is being well maintained this year. In Kenya and Uganda, while our imports have remained almost constant at 5,000,000 square yards, those of Japan have risen to nearly 30,000,000 square yards. In Nigeria, the Gold Coast, and Sierra Leone, while in 1930 Japanese imports were almost negligible at 20,000 square yards, last year they reached the majestic figure of 2,000,000 square yards. In Jamaica our exports in 1930 were roughly four and a-half times those of Japan, in 1931 she had drawn level, and in 1932 she had outstripped us three times.

That is in regard to silk. In Ceylon, where the Japanese had negligible imports in 1925, they are now 10 times our own, and in the first 10 months of this year Japan's exports to Zanzibar, a British Protectorate, totalled 831,000 square yards of bleached cotton, compared with 592,000 square yards last year, while our trade dropped from 302,000 yards last year to 101,000 yards for the same period this year. In artificial silk, out of 295,800 yards imported, no less than 295,000 yards came from Japan. We had the chairman of the Chartered Bank of India, Australia, and China calling attention recently to price aspects of this competition in the Far East, and he told us that in the Straits Settlements. India, China, and Australia bicycles are offered at 21s., electric light bulbs at 1s. 6d. a dozen, and rubber topped lead pencils at 1s. 10d. a gross; and fountain pens are almost given away at 3d. each. Sir Thomas Ainscough, senior trade commissioner in India, has noticed in his survey the challenge even to India, and he says: Imports from Japan in a constantly widening range of goods continue to pour into the country and are sold at prices with which both Indian industries and European imports are quite unable to compete. Surely no further proof is needed from me, although I have no doubt it will be forthcoming this afternoon, of the extent of this competition which we are called upon to face. While better machinery, superior organisation and the like are legitimate factors in trade competition to which we are not entitled to object, I think it cannot be emphasised too strongly that State subsidies and currency depreciations such as are continuing in Japan are not legitimate factors, and the case I wish to make today and to impress on the Government is that steps must be taken at once at any rate to counteract these things which are ruining the greatest export trade of this country. The Japanese themselves recognise the justice of our case. I notice that at the Pacific Relations Conference in August of this year the Japanese delegates admitted that such things as subsidies and currency deliberations of a deliberate nature are not legitimate factors and never can be.

Let us consider some of these factors. In shipping it is estimated that no less a sum than £18,000,000 sterling has been paid to shipping companies in Japan in the last 12 years, and in fact a great many of the subsidies granted have actually exceeded the net earnings of the companies. The subsidy for this year is estimated at 15,000,000 yen. I cannot help thinking what satisfaction a subsidy of that nature might give to our own hard-pressed shipping interest in this country. Through the operation of the Ocean Lines Bounty Law in Japan shipping companies are able to offer considerable advantages to shippers, from 2s. 6d. per 400 pounds at Bombay to 4s. 3d. per 400 pounds at Karachi. Banking legislation affords considerable help to industry and very considerable losses have actually been indemnified from public funds.

I come to the question of work and wages. This I am afraid is a much more controversial subject, but there is no reason why we should not face up to it, because it represents another important factor. I am aware, of course, that, in the last two years, hours of work in Japan have somewhat lessened, though we have to remember that such statutory limitations as there are apply only to young persons and women, and, although there is a slight difference in the latest census figures in 1927 and the figures of the International Labour Office in its report on industrial conditions in Japan, I think we may take it that 9i hours per day is approximately the amount worked. The Factory Acts permit, overtime, and from the census we learn that no less than 23 per cent. of the workers did overtime. There is, of course, no customary rest day, and the Washington Hours Convention that had a special article—No. 9—for Japan was not ratified by Japan. In Section 4 of the Factories Act the employment of young persons and women is prohibited between the hours of 10 p.m. and 5 a.m., but we are told on page 185 of the report that work is permitted up to 11 p.m. with the sanction of the administrative authorities, and on the same page we are also told that all cotton spinners without exception almost have sought permission to take advantage of this exception.

Apart from the factories in Japan, there is also a very large cottage industry, where factory legislation does not apply and hours of work are longer and wages lower, and this is especially the case in the country districts where goods are made for export to those markets we formerly enjoyed, including Empire markets. I think this explains why Japanese looms have a greater output, especially when we remember that in this country our looms work one shift per day and approximately 48 hours per week, while in Japan not less than two shifts per day and 120 hours per week are worked.

Take wages—and I still base my remarks on the International Labour Office —58 per cent. of the factories and 57 per cent. of the employés in them are paid wages partly in money and partly in kind. Those paying full money wages pay an average for spinners of 1.24 yen per day and for weavers of 0.96 yen per day or roughly 1s. 6d. and 1s. 1d. per day respectively. There has been a further decline in these rates this year, but the decline in the cost of living in Japan which now stands at, 62 per cent. against our own 97 per cent. results in a trifling increase in real wages. Where wages are paid partly in money and partly in kind the equivalent wages for the same workers are 1.27 yen per day or 1s. 7d. and 1.11 yen or 1s. 3d.

I am aware, of course, that Mr. Matsuyama in a book with which he has favoured us states otherwise, but he has taken his figures at par. In this Report to which I have referred there are reasons given for the low wages paid and among them the large amount of female labour in the industry, 80 per cent. of which is relatively unskilled, and the abundance of female labour available for work in the factories. A most interesting and instructive comparison is given in the Mitsubishi Bank Circular for June of this year where a table shows the international rates of labour costs. The average rate paid to a spinner in this country is given as £2 while in Japan it is shown as 1ls. 9d.

So far I have tried to show, not exhaustively and very imperfectly, the extent of Japanese competition and the circumstances in which I think it is possible. Of course, the effects of it we know only too well. I am not one of those who say that nothing has been done for cotton, but I am bound to say that in my judgment it is hardly noticeable at present. Certainly, at any rate nothing much has been done to grapple with this aspect of the problem, with its ever-increasing menace which we are discussing to-day. Since the trade agreements this year there has been some improvement. I am thankful for small mercies, however small they may be, but I would like to point out that these agreements and any others we may make in Europe do not touch the fringe of Japanese competition in the world markets. In most cases any advantages to be obtained are vitiated by the operation of the mostfavoured-nation clause in a large number of treaties. It seems to me that every concession we gain through the efficacy of our tariffs as a bargaining factor is passed on to Japan, and we are not in a position even to ask for a quid pro quo.

I am going to ask the Government to grapple with this aspect of the problem at once and to say that they intend to free themselves from any and every engagement which may prevent them from dealing with this matter. If this is not done soon, we may well lose what trade we have left, even in Europe. Of course, I recognise the desirability of coming if possible to some agreement with Japan and of an endeavour being made for an arrangement first with the Empire where surely we have some right to speak, and then in the markets outside. I do not want a fiscal war, but I would point out with all respect to the Government that it is we who are being attacked and ever and ever more mercilessly, and, if we do not exert ourselves very soon, there will not be very much to defend. In view of the warning of the President of the Board of Trade to France last week, a most timely warning which had our fullest support, I think the President of the Board of Trade should be the last to talk to us of fiscal war. There he showed an appreciation of facts and a courage which I want to invite him to show to-day in dealing with this question which is much more vital to the trade of this country.

Negotiations are now proceeding, and we of course wish well to them and to those who are participating in them, but it seems to me that they may well be useless if they are the only negotiations we are undertaking to deal with this problem. I believe Japan has stipulated —I shall be corrected if I am wrong—that any agreement made must be limited to Great Britain, Palestine, Ceylon, East Africa and the Straits Settlements. Surely we cannot accept these limitations as a basis for a full discussion of this question. Further, I understand that the Japanese Government, although it has signified its intention of co-operating in this matter and in these negotiations, has stated that it kill not necessarily be bound by any resulting decisions. If this is really the case, may I ask with whom we are to treat in such matters as currency depreciation and State subsidies to Japanese industries? Really, this is outside the scope of our industrialists in their discussions with their opposite numbers from Japan, and it must be a matter for the Government.

I would like to invite them now, first, to take such action as is left to us within our Empire, which we ourselves have done so much to develop and where the favourable conditions now prevailing, which we alone have created, seem to favour every one except ourselves; and, second, to free themselves from all engagements into which they may have entered which may prevent them from taking effective steps to deal with this problem and, above all, to initiate such compensatory measures as will meet the depreciation of the yen. I ask them to act promptly. This is not an endeavour to wring same concession from the Government. so that we can go to our constituents and say. "We have done this, we have got this from the Government." It is a question which surely transcends any personal considerations. The Government should act instead of exhorting us to exercise patience. That is the hope we still have left. We are not despairing of the ability of our people or of this country to make good under fair conditions, but we want the Government to help and to create, as far as they are able, fair conditions for them. I think that I cannot do better than quote from an article which appeared in the "Times" last Thursday, which admirably summarises the issues in this grave problem. The writer says: No industry can by itself counteract the greatest direct advantage at present enjoyed by Japan—the enormous bonus derived from her depreciated currency. That is entirely the province of the Government, and, so far as Empire markets are concerned, lies will within it. The Government through the Ottawa agreements and otherwise is in a position to adopt concerted measures, without hardship to anybody or justifiable complaint on the part of Japan, which will counterbalance any advantages she obtains as a result of her depreciated currency. And this can be clone without vitiating the spirit of existing treaties or even abusing the true meaning of the most-favoured-nation clause. Japan cannot complain if her currency advantage is checked in trading with the Empire; she cannot equitably demand a greater degree of tolerance in others than she herself exercises towards them. Does she permit the entry of foreign goods into her own Empire on the same terms as her own? She should not expect either equality or a better footing in Empire markets than that enjoyed by our own nationals, who alone contributed to their present political and commercial status. The argument is often advanced that if we close our markets to Japan she will attack us in neutral markets: the fact is that most other nations are equally anxious to prevent her taking advantage of their own nationals or of friendly nations on whom they are dependent. In trying to maintain a meaningless sanctity of treaty obligations the British Government falls into the greater error of procrastination, by which encouragement is given to those benefiting by unnaturally low prices, and a sense of injustice may be induced when preventive steps are actually taken. On the broader aspects of this question I have no time to dilate. The House has been good enough to give me an attentive hearing, and I am anxious that other speakers should have sufficient time. It may well be that this is the beginning of a clash in which the low standards of riving in the East challenge those of the West through commerce, and when, in spite of this, efficiency in production may well be equalised. If we adhere to the old Free Trade belief of increasing consumers' surplus at any cost, we may all be living on cheap products with the whole of our industrial population on the dole. Before that comes, is it too much to hope that the statesmen of the West will see the warning and concert their action so that the West may still be able to maintain and even to raise the standards of living which we now enjoy '? Reconciliation of interests has ever been one of the dominant problems of the British Empire. With this emergence of Japan it has become one of the dominant problems of the world. The first requisite for our own salvation is for the Government to save, as far as they can, the cotton industry by creating for it fair conditions of trade.

4.22 p.m.

Major PROCTER

I beg to second the Motion.

I am grateful to my hon. Friend who has moved the Motion for enabling me to second it because it affords the Government the opportunity of allaying the fears of Lancashire that the cotton trade is not receiving their serious attention. I know that this is not true, but it may be due to the manner in which the President of the Board of Trade has dealt with this subject when it has come up from time to time in this House. In applying the doctor's mandate to the cotton industry his bedside manner, to say the least, has been very unsatisfactory. Our constituents know that their hope must lay in this Government. They have no hope in anything that a Labour Government could do to deal with this great problem of Japanese competition, because, on the purely Free Trade theory, seeing that Japan can produce cotton goods at a cheaper rate than we can, we would permit our markets to be flooded, our mills to be closed, and the operatives compelled to find some other means of livelihood. The National Government cannot, and I am sure will not, allow an industry which has contributed so much to the wealth and power of this country to be swept away because of a slogan or to permit our people to lose their livelihood because of a political theory, which in former times may have been true, but which to-day is utterly useless to meet the difficulties of the case.

Serious alarm is felt, not only in Lancashire and the Empire, but throughout the western world, lest the standards of life of the white people or the amenities which we so much value should be lowered or destroyed because of Japanese competition. So dark are the forebodings of Lancashire that some people have lost hope altogether. Mills have been closed and some responsible people have told me that if the Japanese competition is allowed to go unchecked there will be no cotton industry in three or four years time. I have received letters from all parts of the Empire deploring the difficulties that Japan is making in Empire markets. Here is a letter from Malta, whose administration we have completely taken over. It is written to a Manchester salesman, and says: What can we do at present with this Japanese competition? All clients wish to help you, but you must realise that if they bought from you or any other Manchester house they would not be able to sell the goods. Therefore, no serious merchant dare place an order with Manchester or he would be sure to suffer a loss. if there were no such thing as Japanese competition a good trade could be done. Here is another: We are very sorry we have not been able to do business for such a long time owing to the competition of Japan. We have been finding it impossible to continue importing from England and therefore have had to cut our business relations with your good sales. If we look at the Board of Trade returns, we find that during the last eight months of 1932, for the first time in history, Japan exceeded our exports in cotton goods, and yet when we have told the President of the Board of Trade these facts, he has replied by telling us that we should not be discouraged, that we should not take a gloomy view of things. Look, he says, at the increased employment, at our increased exports. In fact, he has told us to try that policy which was first tried by the celebrated Doctor Coué, who said that if you are ill you should say every day, "I am getting better and better." To my amazement the hon. Member for Oldham—and Tokio—(Mr. Crossley) in his last speech, which was commended by the President of the Board of Trade, said, quoting Lord Bacon: Let us stay a little that we may make an end the sooner."—[OFFICIAL REPORT, 23rd November, 1933; col. 320, Vol. 283.] It is because the cotton trade may end sooner by a policy of waiting longer that we say to the Government of which we are loyal Members that the time for patience is past and the day for courage and action has come. There may be reasons for this slow policy of the Government which have not been told us. For instance, the Government may feel that this country is so weak and defenceless that we are unable to back up our moral exordiums by anything more than words. The Secretary of State for Foreign Affairs spoke quite manfully from the pulpit of the League of Nations, and not content with that, he climbed to the very top of the steeple in pointing out what Japan should do, but what happened? Japan virtually told him and this country and the rest of the world to mind their own business. The Foreign Secretary climbed down; he was still protesting, but he climbed down.

I therefore ask the President of the Board of Trade, Are we committed to this policy of negotiations because we are afraid of Japan? Is it the case that we have been so weakened by all the spineless utterances of militant Labour pacifists that, for the sake of peace, we have decided to leave our markets to the Japanese? If our workers are to be crucified on the cross of peace, let us have the satisfaction of knowing that we are entitled to the martyr's crown. But are we going to leave our markets simply because we do not wish to offend the Japanese? Look at our derelict factories and smokeless chimneys, monuments to the stupidity of past Governmental policies. If they continue derelict it will be because we are afraid to take positive action against the Japanese. If the Government say "We have commenced these negotiations, and therefore must continue with them," what then? Are we to understand that if these negotiations break down we shall denounce the Japanese Trade Treaty of 1911 and the 46 other Treaties which tie our hands and prevent the use of the British Empire for the people who made it? What is the position in the Empire market to-day? Here we have a country that, by the mere fact of depreciated currency, has arrogated to herself a position in the British Empire which no other member of it enjoys. Will the Government give a clear answer to this simple question, "What do they intend to do if the negotiations fail?"

But supposing that the negotiations succeed. Does the President imagine that the Government will have finished with the cotton trade and Japanese competition, that everything will go on smoothly, and the responsibility of this Government cease? In my opinion much more will be required. The question goes far beyond the admission of so many yards of Japanese textiles into the British Empire. What is to be the price of those materials, which, no matter how small the quantity may be, will set the price standard for our own manufacturers? Are their goods to be permitted to come into our markets at a price which threatens to lower the wage-level here to the rice standard of the East and defeat the aim of every social reformer in this country? Will the Government tell us what is the objection to putting on a depreciated currency duty, in the same way that France and Canada have done, and as Jamaica at this very moment desires to do? It would not be directed specifically against Japan, it would apply to every exporting country according to the amount of depreciation that has taken place in that country's currency. if that were done it would mean we could advance. We should regain at least 40 per cent. of the advantage which we have lost through Japan stocking her warehouses with raw materials and then paying for them with a debased, depreciated currency. Will the Government inform us this afternoon what is the difficulty about preventing the pirating of our designs, the imitation of our trade marks, and the passing off of inferior Japanese goods as of British manufacture? Is that a matter which is being negotiated now?

The other day the President of the Board of Trade said that he welcomed any constructive proposals, and therefore I, in all modesty, ask him if he will consider the following suggestions: In order to meet Japanese competition rafter these negotiations have been concluded, in order to prevent a competitive struggle for the remaining trade, will the Government appoint a Minister, or at least a director of cotton, who would be answerable to this House and be a means of liaison between the Government and the cotton trade, acting in the same way towards the cotton industry as the Secretary for Mines does towards the coal industry? The Board of Trade has very wide ramifications and has so many trade problems occupying its attention at the moment, that the President is, like Atlas, bearing the problems of the whole world upon his shoulders. Seeing that there are so many intricate and technical problems to be solved is it impossible for him to appoint someone who could devote his whole time to getting the industry out of the morass in which it is at the moment? In my opinion it is as foolish to expect so unwieldy an organisation as the Board of Trade to repair the damage which is done by Japanese competition as it would be to expect that one could repair a watch with a pick-axe.

May I suggest that the Government, without waiting for the negotiations to conclude, should—if they will not give us a man to devote his attention to the industry—forthwith set up an ad hoe committee composed of experts from the trade itself, as men who are capable of making quick decisions, and ask them to hammer out a scheme for effective measures to be taken within the industry which will enable the cotton trade to reorganise itself? Such a committee could explore the proposals for reorganisation already set out by the spinning section of the industry. The leader of the spinning section has said that if we could get that reorganisation, and if we could overcome the problem of depreciated currency, then with our superior quality goods we could beat the Japanese every time. Such a committee could outline the necessary legislation to make more binding what are popularly known as the more-looms-perweaver agreement, which were made with the approval of the Ministry of Labour, and which are at this moment being shamelessly exploited by unscrupulous manufacturers who are getting an unfair advantage by running four looms on the six-looms basis. Such a committee could report on the best way in which the industry could extricate itself from the stranglehold of the bank. Lastly, I suggest that such a committee could lay before us a scheme for the utilisation of Indian raw cotton and thereby remove the moral claim which Japan has to a share in the Indian market. May I remind the President of the Board of Trade of what the Indian cotton delegates said at Ottawa?

It would be useless for them to put forward any recommendations intended to increase the sale of British cotton piece goods in India unless they were able at the same time to show that Lancashire was prepared to increase substantially its consumption of Indian cotton. The British Mission which has just returned from India has emphasised that point, and it is the view of the Indian Government itself. What steps do the Government intend taking to assist Lancashire to fill these requirements? The recent boycott of Indian cotton by Japan, which for many years has been the mainstay of Indian cotton growers, has made it an imperative necessity to find new and improved outlets for one of the principal articles of Indian export. If we expect the Government of India to continue their benevolent attitude towards Lancashire we must take more Indian cotton. Here we have a striking picture of one of the principal units of our Empire crying aloud for an adequate market for one of its principal products, one of its basic industries. It is not able to place those particular goods owing to the lack of a Helping hand. What opportunities we have here for consummating one of the main principles of Ottawa, and fostering trade relationships between two of the most important units of the Empire, to the unquestioned benefit of both. May I ask what are the Government's plans for—

Mr. GIBSON

On a point of Order. Is it in order for an hon. Member to read his speech verbatim?

Mr. DEPUTY-SPEAKER (Sir Dennis Herbert)

It is against the Rules of the House for hon. Members to read out their speeches, but they have been generally allowed considerable latitude in the extent to which they refer to their notes.

Major PROCTER

I know that it will require a great deal of money, but I am encouraged by the speech of the Chancellor of the Exchequer in this House on 8th November last year, in which he said, speaking of unemployment, that the Government were ready to encourage any industry and would help it with gifts of money if it could put forward some scheme which would not be a burden upon industry in general. We have the Japanese boycott of Indian cotton to contend with. Is it beyond possibility for the Government to take out of the market entirely 1,000,000 to 1,500,000 bales, that is, 25 per cent. of the entire Indian crop, and to utilise it with the change over of our mills to this kind of cotton? It can be done. I have reports from a number of experts who say that with Indian cotton they can get the same results as with American middlings. If we do that, utilising our Indian cotton, and thus fostering inter-Imperial trade, we can remove at once the greatest bargaining weapon which Japan has in any negotiations. I hope, if such a plan is considered feasible, that the Indian Government will allow such manufactured cotton goods made from Indian cotton to enter India free of duty, and thus we shall approximate more and more to that great Imperial idea of Free Trade within the Empire itself. By co-ordinating our schemes, by stopping the insane competition going on now, by assisting in the organisation of the industry, by having a committee or a director to advise the Board of Trade, I believe that eventually we can beat Japan, for our goods are infinitely superior.

Mr. BAILEY

Oh, no.

Major PROCTER

Well, that is my opinion. I have here a pencil made in Japan, a propelling and repelling pencil, priced at 1½d. It has got the Woolworth stamp all over it. It is the same with everything I have seen from Japan. We must not let it go out to the world that Japan has anything on us. In skill or manufacturing ability I believe they are inferior, I believe their goods are made with sweated labour, I believe they are challenging our standard of life, and if T had my way—though I know I shall never get it—I would see that their goods were prohibited absolutely from every part of the Empire where our flag flies over decent conditions.

4.46 p.m.

Mr. RHYS DAVIES

As a Lancashire Member and, to all intents and purposes, a Lancashire man by this time, I desire to make a few observations in this very interesting Debate. I want to say, between brackets as it were, that I have lived longer in the county of Lancashire than some of hon. Gentlemen who. represent Lancashire in this Parliament.

Every hon. Member of every party must be very much disturbed and alarmed at the keen and unfair competition, affecting Lancashire in particular, from cheap Japanese goods. There is no difference whatever about our alarm; where we differ is as to the causes of the calamity which has befallen Lancashire. There is no doubt that we shall also differ as to the remedies for getting over the difficulty. Conservative Members representing Lancashire constituencies are very diligent in bringing this problem before the President of the Board of Trade, and we want to join them in pressing upon the Government the urgency and the seriousness of it. The hon. and gallant Member for Accrington (Major Procter) suggested that there should be a sort of county dictator appointed to manage the Lancashire cotton industry. If that proposition matures, I hope that the President of the Board of Trade will not forget the hon. and gallant Member for Accrington in his final choice.

Before I go any further with this subject let me refer to a statement made by the hon. and gallant Member to the Press the other day, about Members of the Opposition. He gave an interview to the "Manchester Evening News," in regard to the cotton Debate last Thursday, and he said: Imagine my amazement when a number of Labour Members began to speak. as if we are not entitled to speak here at all.

They made only the slightest reference to cotton and turned the Debate to one on coal. Why should we not speak on coal? There are several textile factories in my own division, and the textile industry there is suffering very badly indeed. Some of the mills in the town of Hindley have been closed down for several years. But however terrible the economic conditions may be in the textile mills in my division, the condition of the millers is very much worse. Indeed, 65 per cent. of the insured population in the township of Hindley, which was mainly dependent upon coal, have been unemployed for some years past. Nothing could be very much worse than that. Let me just correct the hon. and gallant Gentleman about what happened last Thursday. He blames Members of our party for turning the Debate on the King's Speech on to coal. He should rather blame the Members of his party for turning the Debate on to the House of Lords, a subject which was far less important than coal or cotton.

Lieut.-Commander ASTBURY

Hear, hear!

Mr. DAVIES

I very much prefer the advice of the hon. Member for West Salford (Lieut.-Commander Astbury) upon textile matters than that of the hon. and gallant Gentleman for Accrington. Having made good our claim to speak on coal, cotton, shipping or the House of Lords, I want now to return to the subject of the textile industry of Lancashire, as it is affected by Japanese competition. Hon. Gentlemen must look at this problem in a very much broader way than they have done up to now. Not one of them has said a word to-day about one of the chief causes of the calamity that has overtaken the Lancashire textile industry. That distress in the county has not been brought about exclusively by Japanese competition. What happened during the boom period in Lancashire? That is what some of the manufacturers themselves are asking. Let me quote one of them: The foolish boom finance is responsible for very large overhead charges in the shape of interest. Mills were floated in 1919 and 1920 at from four to five, nay even eight times, their intrinsic value. I cannot conceive, therefore, that the Japanese textile industry is as heavily burdened with interest charges as is our own. Our mills were, in fact, bought, pawned and mortgaged during that boom period, in the financial markets of this country. I do not for one moment minimise the effect of Japanese competition, but the other important factors which I mention must be borne in mind when we are discussing it. I could give a great number of similar quotations on that score, but I will not do that this afternoon. I will deal with another point put forward by the Mover and Seconder of this Amendment.

The case for Lancashire has been put very well by hon. Members, but let me point out to them the dangers of their propositions. The President of the Board of Trade knows very much more about this side of the sub- ject than I do, and so I am sure does the hon. Member for Stockport (Mr. Hammersley). He knows more about the international aspect than most private Members of this. House. Hon. Gentlemen say that we must take up the cudgels and join with all Western countries at once to blockade Japan in the markets of Europe. That is what it means, and we must be quite clear about it. I hesitate to think what would be the consequences in diplomatic circles, between Western Europe and the East, should that aggressive policy be pursued. What is to happen in the countries within the Empire? Hon. Gentlemen say in addition that the Dominions and the Colonies should be told from Whitehall what action they ought to take about Japanese competition. I have been in Canada twice and I know a little of the attitude of mind of the Canadians on this subject. If I understand anything about our Dominions and Colonies, it is that there has been a growing desire among them of late to be masters in their own households, without any dictation from the Mother Country. I do not think I am exaggerating when I put it that way.

Let me ask the President of the Board of Trade one question. I have noticed in the Press that some hon. Gentlemen and leaders of the cotton industry in Lancashire have been abroad to try and secure arrangements and agreements between Japan, India and ourselves, in order to deal with the difficult problem which we are now discussing. I am astonished—the Leader of the Labour Opposition mentioned this point in the House the other day—that they should ignore the International Labour Organisation at Geneva. I have always thought that the International Labour Organisation was established by the Governments of the world to undertake the task which these gentlemen have tried to do in India recently. I know that some hon. Gentlemen will smile when I speak of the International Labour Organisation. They may criticise that organisation as much as they like. Although Japan has given notice to leave the League of Nations, she cannot do so until two years after giving notice, and, in any case, she has not even given notice to leave the International Labour Organisation. The question I wish to ask is: Do the Government intend to use the machinery of the International Labour Organisation to deal with what is agreed, upon all hands, to be the low standard of life of the operatives in the textile industry of Japan?

I have been a trade unionist and a trade union official for a long time, and I know that it is no use hiding the fact that conditions of employment in Japan are lower than they are here on the same job. The Labour Organisation in Geneva was established for the purpose of standardising conditions of employment in all the industrial countries of the world. I hope that I shall get a reply to my question as to whether anything can be done in that direction. I spoke a few days ago in the House of Commons about the low wages that prevail in the Lancashire textile industry. I hope that Members of all parties will agree that, whatever conditions prevail in the textile industry in Japan, we shall not lend our aid in any way whatever to demoralising the conditions of our own workpeople down to the level of those of the Japanese workers. We must not do that even for the purpose of meeting the competition of Japan in the markets of the world. I very much doubt whether, even if the textile workers of Lancashire worked for nothing, Lancashire could compete successfully in world markets against Japan. I remember Mr. Vernon Bartlett saying over the wireless recently that Japanese bicycles were now being sold in Holland for 12s. a piece. If that is so we have indeed reached an extraordinary stage, and the problem is not therefore quite so easy to solve as some hon. Members seem to suppose.

Turning to the industry itself, he would be a very foolish man who would say that all is well with the Lancashire textile industry itself. It is no use blaming outside conditions, and complaining that Japan is competing against us in the markets of the world, and then allowing our own industry to lag behind in plant and machinery. I venture, on my own behalf, to make one or two observations as to what I think ought to be done. First and foremost, I would venture to say, on behalf of the textile workers themselves, that they are very dissatisfied with the treatment meted out to them by some employers who have not implemented the agreements made between the trade unions and the employers.

I trust that the Government will take heed of the complaint of these men, and women also. There has been some speeding up under the six-looms-per-weaver system which has been recently introduced. I asked the Home Secretary the other day whether lie would call upon his Department to make inquiries into the physical results of the introduction of this new system, and the reply that I received—I am not complaining about it —was that the system had not been in existence long enough yet to warrant an inquiry. I am assured, however, by girls and women who live in my Division employed under it, that it is one of the most cruel systems that has ever been introduced into the textile mills of Lancashire.

Sir NAIRNE STEWART SANDEMAN

Can the hon. Member say how many looms are run per weaver in Japan?

Mr. DAVIES

I hope the hon. Gentleman does not suggest that what they do in Japan we roust do here. In any case, I will tell him that, if I lived in Japan, I would willingly fight the employers there for better conditions for the workpeople. But, as we are living here, our duty is to see that our country does not fall down to the low conditions of the Japanese workers. There are one or two further observations which I think I am entitled to make. The hon. Member for Oldham (Mr. Crossley) put the case in a nutshell the other clay. The Lancashire textile industry—and all hon. Members know this—is packed with petty jealousies. Manufacturers and salesmen in the industry not only compete among themselves in the market at home and undercut each other—and the undercutting is reflected in lower wages for the workpeople—but I believe I am right in saving that they compete with each other in markets abroad, just as Japan is competing with them in the very same markets.

Has not the time arrived when, in this great industry—I believe it is still the biggest exporting industry in this country so far as values are concerned—the Government should undertake, in conjunction with the owners, steps to unify the industry? Why should it not be unified? Why should every individual mill-owner send a man to buy raw material, and send two or three other men to sell the products at the end of the journey? The hon. Member for Oldham, who seems to know more about the matter than I do, made this statement about Japan: Seventy per cent. of the raw cotton is imported by three firms, and those same firms export 40 per cent. of the finished cotton goods."—[OFFICIAL REPORT, 23rd November, 1933: col. 317, Vol. 283] I am assured in this document which I have here, the Bulletin of the International Cotton Spinners' Association, that practically all of the 8,000,000 spindles in Japan are under one control. Even if the Japanese textile employers paid wages equivalent to our own, and even if the textile industry of Lancashire were on the same footing with regard to conditions of employment, I believe that the unified control of Japan would still beat us in the markets of the world so long as disunity continues among our own manufacturers in Lancashire. I leave that suggestion for consideration by hon. Members.

During the War there was in being a scheme of unification; there was a control board in the cotton industry. We are not at war now, but I am sure, looking at the mills and textile operatives in Lancashire, that the conditions under which they live at the moment are quite as terrible as, if not more terrible than, the conditions which prevailed during the War, when that board controlled the industry. Surely, if a control board which licensed manufacturers to carry on their work was good enough in war-time, it ought to be good enough now, when war of a different kind is proceeding in world markets for those goods.

We are living in a competitive world, and I must confess I am a little annoyed when I hear hon. Gentlemen complaining of competition abroad. If hon. Gentlemen who have spoken in this House could beat Japan in the markets of the world by underselling her, they would do it; there is no doubt about that. Taking the capitalist system as it stands, Japan is playing the game just as our own capitalists would play it if they could. We suggest, therefore, that we must do two or three things, and I think the Government will probably adopt this policy in preference to some of the 'policies which have been adumbrated, especially by the hon. and gallant Member for Accrington. Nothing can come of this business unless we take swift action. Negotiations must continue; the Government must make the best bargains they can for trade purposes; and the home market must be developed. The people of this country want more money in wages in order to buy the commodities that they manufacture. Indeed, I feel sure that one half of the problem might be settled in Lancashire if the majority of the people of this country had sufficient money to buy the commodities produced in that county. I would say, therefore, that the policy of the Government ought to be to try to get all these conflicting—

Mr. CHORLTON

May I ask the hon. Member if he really means what he has just said? Seeing that the cotton trade is about four times as big abroad as in this country, how could that possibly be the case?

Mr. LANSBURY

We could do four times as much business.

Mr. DAVIES

I say that one half of the unemployment problem in Lancashire might be solved if our people had more money to buy these goods. The hon. Gentleman knows very well that there is no limit to the requirements of men and women as regards the goods produced by the Lancashire textile industry. If they had a sufficient supply of money, I think our girls would probably get a new dress every month, and why should they not? [Interruption.] I do not want to be understood as saying that we could live entirely on our home market; I never said that. What I wanted to say was that this home market still needs developing, and, therefore, I would plead with the right hon. Gentleman to help to raise the wages of the population as a whole. Lancashire people of every party are definitely disturbed at the situation, and I, for one, although I belong to the Opposition, shall be very happy indeed if the right hon. Gentleman can give us something this afternoon to warrant our saying that the textile industry of Lancashire is not to be allowed to perish.

5.9 p.m.

Mr. RICKARDS

As a very new Member, I rise with the utmost diffidence, and must at once crave the indulgence of the House for someone as new and inexperienced as I am. I have really but one qualification for speaking at all, and that is that I have spent the whole of my business life in the textile trade, and that we fought and won the recent by-election at Skipton on this question of employment and Japanese competition. We in our Division owe a great debt of gratitude to the Government. I think I am not exaggerating when I say that, before tariffs were installed, not one single firm in my constituency was running full time. Now, since the tariffs, in several of the towns, and especially those that deal with wool and fancy cotton goods, unemployment is a thing of the past. In fact, with firms, big and small, in those towns, the great difficulty at the present moment is to get sufficient hands to cope with the numbers of orders that they have in. I think there is no doubt that that is due to two things —the introduction of tariffs and our going off the Gold Standard. But, supposing that this country had gone off the Gold Standard, and had had in office a Government who were either unable or unwilling to put the finances of the country on a firm footing, what would have been the result? I think I can answer that question in one word—chaos; and that would have been absolute death to us manufacturers. Therefore, I do not think it matters in the least what percentage of improvement we put down to our going off the Gold Standard or to tariff reform, as both are directly or indirectly due to the present Government.

Unfortunately, however, in certain parts of my constituency there are firms —the firms who are employed on ordinary plain cotton weaving and in the real silk trade—who are having to meet the full brunt of Japanese competition, and their story is a terrible one. Hundreds of men and women, the best textile weavers in the world, are walking the streets and drawing the dole; and I think that hon. Members above the Gangway, and, in fact, every hon. Member in this House, will agree that to be on the dole is not living—it is merely existing. That is what we want to save our fellow country-people from. I know there has been some talk, in the great party of which I am a very humble member, about what will happen at a General Election—whether there will be a great swing of the pendulum. My opinion is that, if this or any other Government will face this question of Japanese competition bravely and quickly, that Government will sweep the textile North of England.

There is one other point that has crossed my mind. I am not speaking as a politician, but as an Englishman. I believe that the employers and the employed up in the North of England are drawing more together than they have ever done. I believe they realise more than they have ever done before that their interests are more or less identical, and I honestly think that, if only the employers and the employed can get together, with the help of the Government, an enormous lot can be done to bring back prosperity to the textile industry, which, after all, supports, I suppose, about one-eighth of the population of this great country of ours. May I thank the House for its courtesy in listening to a very new and very inexperienced Member.

5.15 p.m.

Sir HERBERT SAMUEL

I am glad that the opportunity falls to me to voice what, I am sure, is the general feeling of the House, of appreciation of the maiden speech which has just been delivered by one of our newest Members. Though, naturally, there may be differences of opinion in some quarters as to the substance of parts, at all events, of his argument, there will be no difference of opinion as to the manner of its presentation. We hope he will often take part in our Debates.

I think the House should be grateful to the hon. and gallant Gentleman the Member for Ardwick (Captain Fuller), who used his good fortune in the ballot to bring before it a Motion on a matter of great national importance, and also that we should thank him for the able and persuasive manner in which be stated his case. I intervene in the Debate partly because during the Recess I had the honour to be a member of a delegation from this country to a conference in Canada held under the auspices of the Institute of Pacific Relations, consisting of unofficial. representatives of all the great countries interested in the Pacific with the exception of Russia. The subject of that conference was economic questions affecting the countries surrounding the Pacific Ocean, and we had the task of spending a great part of our time on this very question of the development of Japanese trade, and particularly the competition of Japanese trade with other countries. The hon. and gallant Gentleman mentioned that Conference, and it led inc to make an even more intensive study than I had done before of the factors that arise in connection with this problem.

Furthermore, like the hon. Member for Westhoughton (Mr. R. Davies), I am also a Lancashire Member but, unlike him, I am a Lancashire man by birth, in fact a Lancashire man, as the old theologians would have said, by grace as well as by election. My constituency is mainly devoted to the manufacture of cotton. At present rather more than 40 per cent. of the operatives in the cotton trade in the Darwen Division are unemployed, and great numbers of them have been unemployed for a period of a year or in some cases even two years. Others are only partly employed and, as the result, there is in that district, as in so many in Lancashire, extreme distress among large numbers of a most self-respecting and highly respected industrial population—thrifty, hard-working, never accustomed to look to any outside sources for assistance—who find themselves plunged into the gravest depression. In addition, there are also many old manufacturing families in Lancashire who find they have lost almost all that they possessed. Mills are unsaleable and the whole of the towns are suffering in their finances and in other ways from this grave depression. The main reason is, of course, well known to everyone. Before the War Lancashire sold abroad about 7,000,000,000 yards of cotton cloth.. She has lost five-sevenths of that trade, and instead of 7,000,000,000 the rate now is in the neighbourhood of 2,000,000,000. For that there are two main causes, the collapse of the Indian trade and the effects of Japanese competition.

With regard to India, which is not the subject of the Motion, I will only say that it is undoubtedly one of the main causes of the distress in Lancashire, due to the great increase of protective tariffs, and also until recently to the severe boycott, which greatly affected our manufactures; that, in turn, due to the political antagonism which existed between large sections of the Indian population and this country. But there has been a great improvement in that respect owing to the greater good will between the two countries—and political good will brings with it commercial improvement. If the campaign of the right hon. Gentleman the Member for Epping (Mr. Churchill) and those who support him on India were to be successful, in addition to many other disasters it would probably be deadly to Lancashire. We are all glad to know that there are conversations proceeding between the cotton interests of this country and India. The more Lancashire could use Indian cotton the better it would be for all parties concerned in this matter, and the experts say that India now is producing cotton of better quality than hitherto, which gives a further opportunity to Lancashire to buy more Indian cotton. In Japan the use of Indian cotton, which is much cheaper than American, and the skilful blending which they have succeeded in securing in the Japanese cotton mills, are undoubtedly important factors in the success of the Japanese industry at this time. There is every reason, therefore, why the Lancashire trade would be well advised to make every effort to consume larger and larger proportions of cotton from the Indian Empire.

With regard to Japan, it is essential that we should see things frankly as they really are. Statements are made from time to time which somewhat misrepresent the actual facts. It is no use overstating our case. We have a very strong case and it is an error to exaggerate it in such a way as to give our competitors a very easy reply. For example, with regard to wages, statements are frequently mane, and have indeed been made to-day, which exaggerate. It is said that the Japanese worker receives so many yen per week. The yen now is worth only is. 2d. instead of 2s., therefore, he receives so much less. Contrast that with British operatives, who may be receiving £2 per week or whatever it may be. In the first place there is no reason whatever why you should calculate the Japanese operative's wage on a gold standard. The fact that Japan went off the gold standard at a particular date and the yen fell from 2s. to 1s. 2½d. does not affect the real wages of the Japanese operatives except after possibly a very long period of time, much as in the same way, when we went off the Gold Standard and the pound dropped from 20s. to 13s. and a few pence, the Lancashire operative is not conscious of that except in a small degree in respect of his real wages. Therefore, it is not really a just comparison to take the Japanese wage, reduce it by 40 per cent. because the yen has depreciated, and contrast it with the British wage, and not reduce that by 30 per cent., although the pound has depreciated. You must treat the two alike, and there is no reason for reducing the Japanese wages by 40 per cent. in order to make that comparison.

Major PROCTER

If you increased the Japanese operative's wage by 40 per cent. it would only mean that it would be 8s. a week and that is so low that it does not matter.

Sir H. SAMUEL

I am coming to that. I am only anxious to get the thing on a proper footing. The hon. and gallant Gentleman is making a great mistake in weakening his case by putting it in such a way that any Japanese controversialist could give an immediate and unanswerable reply on a point of that kind. It is no good calculating the Japanese wages in gold and ours in sterling.

Captain Sir WILLIAM BRASS

Surely the right hon. Gentleman agrees that Japanese wages are definitely very much lower than ours?

Sir H. SAMUEL

Of course, I do. I am coming to that. Secondly, it is sometimes represented that the Japanese money wage is the remuneration of the operative. Most of these Japanese workers are employed on the living-in system, and their total remuneration includes their food and their housing. That is sometimes not stated. It is as though we were to take the wages of a domestic servant in London and say she is receiving so many pounds a year, as if that were the payment for her services, omitting the fact that she also has board and lodging. With regard to currency depreciation again, the hon. and gallant Gentleman the Member for Accrington (Major Procter) in a statement the other day said that Japan has an advantage because her currency has depreciated 40 per cent. He does not mention that British currency has depreciated 30 per cent.

Major PROCTER

It was 623 per cent. on the Gold Standard, and now it is 40 per cent. On sterling it has no effect.

Sir H. SAMUEL

I think the hon. and gallant Gentleman is mistaken. The yen has depreciated from 24d, to 14d. That is 40 per cent.

Major PROCTER

On sterling.

Sir H. SAMUEL

I beg pardon. The hon. and gallant Gentleman is right on that point, but, in a general comparison we have to remember that our currency is depreciated by 30 per cent. and that has to be allowed for. When we complain bitterly that other countries are competing unfairly with us because their currency is depreciated, we must remember also that our currency is depreciated to some extent and, if that is regarded as illegitimate competition, we have to beware lest other countries which are now on the Gold Standard complain in somewhat the same degree. Still there is that great difference, and it is a most important factor in the position. In fact, there are three main factors which account for the sweeping success of the Japanese textile trade in competition not only with ours, but with that of other European countries. In the first place, wages are very much lower than ours. When all the factors are taken into account wages are still very much lower. That, however, is not the sole factor in the competition, nor even the main factor. For example, Lancashire, paying about twice as much wages as the Indian cotton mills pay, could easily compete against the Indian cotton mills if only there were no tariffs and there had been no boycott. Most Lancashire manufacturers would say that, given a fair and equal field, they could compete in price against the Indian cotton mills in spite of the great difference in wages. [HON. MEMBERS: "No!"] I think they often say that.

Mr. HAMMERSLEY

It would be unfortunate if the right hon. Gentleman's statement went out to India as a statement of fact. In certain qualities it is true that without tariffs Lancashire could beat India; but in coarse qualities India needs no tariffs to be able to compete with Lancashire.

Sir H. SAMUEL

I have often heard Lancashire manufacturers say they could, and the reason why they have been driven out of the market is mainly tariffs. If those tariffs had never been imposed, they could have held their trade, with the greater skill of the operatives, better management on the part of the manufacturers and better financing. Furthermore, it must be remembered that in Japan, with the automatic looms that are employed to a very large extent, the labour cost is very much less, although, of course, they need to employ a larger number of operatives on the highly finished articles. Again the cost in Japan is to some extent offset by the very high cost of the mills themselves and the much dearer money which the manufacturers have to obtain for their business.

However, the fact remains that Japan has a considerable advantage from the lower standard of living of the workers. Secondly, there is the currency difference. There is this very considerable advantage which, even set off against our currency depreciation, is considerable in itself, and worst of all, this last year, no doubt by arrangement between the Japanese Government and the cotton industry before Japan went off the gold standard, the industry bought, it is stated, 300,000 bales of raw cotton with the yen at a gold value, and then manufactured the cotton and sold the manufactured products for paper yen. That fact accounts, more than anything else. for the extraordinary development during the year 1932. In fact, the investigators of this question say that the fall in prices in Japanese products in 1932 corresponds almost exactly to the fall in the value of Japanese currency in that year.

Thirdly, there is, of course, the question of organisation. The hon. Member who moved the Motion referred in terms of praise and approval to an article which appeared lately in the "Times," and which appears to me also to be a very thoughtful and able article, in the course of which the writer, who is anonymous, says: The all powerful interest in Japanese progress is the immense driving power of its organisation and direction. This embraces complete knowledge of every requirement of the productive side of the industry, combined with instant contact with demand in all parts of the world, relating the one to the other in the manner hest suited to Japan. Absolute control is in the hands of the Japan Cotton Spinners' Association, which governs the industry's entire spindle-age and 60 per cent. of its export looms, and, by dominating the entire yarn output, has a scarcely less effective control of the independent looms. That is a fact of enormous importance. Substantially the whole of the Japanese cotton industry is in six or seven hands, and the Cotton Manufacturers' Federa- tion is immensely powerful and efficient. We were told at Banff, at the conference to which I have referred, by one of the very able Japanese delegates there, the method by which they obtain control, for example, in territories in Africa. The Japanese Cotton Federation representing the whole industry sends a highly skilled and highly salaried commercial agent to some particular country. He spends some time there and plans out a campaign of salesmanship for the whole of the area, acting on behalf of the whole Japanese cotton industry.

Mr. LEVY

The right hon. Gentleman has forgotten the very important factor of the long hours that the Japanese employs his workers.

Sir H. SAMUEL

Perhaps the hon. Member will allow me to complete my argument. When this organiser has completed his work he is followed by a very large number of agents at lower salaries who carry out the plan of campaign which has been set before them by the first agent. In that way territory after territory is covered by a most efficient organisation of salesmanship, backed, of course, by the very low prices of the goods which are tendered, and the result is most successful from the Japanese point of view. Contrast that with the organisation, or lack of organisation, of the British cotton industry, with its literally thousands of people, wholly independent people, engaged in the trade—spinners, manufacturers, finishers, dealers and merchants. It is a conflict between highly efficient concentrated organisation and a loose mass of independent entities hardly worthy of the name of organisation at all.

This same organisation, apart from its salesmanship, has perfected the technique of the industry in a remarkable degree. There was a private report, drawn up by interests in Lancashire, which mentioned, among other things, that between 1926 and 1932 the production of cloth per operative in Japan had more than doubled. Within a period of six years, say these experts in the report, the output per person employed in that industry has doubled. In the presence of that fact these differences of wages sink almost in the background. As to the quality of the goods produced, there are differences of opinion, but no doubt the quality has been rapidly improving and is improving to-day. Further, there are the long hours of labour and the practice of working two shifts per day. If you have two cotton mills, exactly the same in all respects, in equipment, in labour and everything else, but one of them is working two shifts, and they are producing the same amount of goods, one of them with two shifts and one with one shift, obviously the one working two shifts has only half the buildings, machinery, and running expenses of the mill, and half of most of the overhead costs, compared with the other. That one fact alone must make it impossible for the one mill working one shift to compete with the other which differs from it only in respect to the fact that it is working two shifts.

Those are the stark facts, and Lancashire and this House must face them. To quote again from the article to which I have referred, I would mention two other sentences, because they are fundamental to the whole of this discussion: To counteract the fundamental advantage held by the Japanese—their direct drive and perfection of control—there is only one remedy: to emulate or surpass it.… There can be only one means of resuming our legitimate place in international trade—by concentrating on the reduction of costs to such levels as will assure ability to compete with the most efficient producers elsewhere. Not by lowering the standard of living here, but in the long run, and permanently, there is no alternative to putting our industry on a competitive basis in quality, in price, and in salesmanship. The first thing to be done is to strengthen the trade associations in Lancashire and, to a greater extent, to unify the industry. After the conference at Banff we came to the conclusion, and the Japanese representatives, America, Australia, and all the various countries represented there agreed, that in matters such as these the important thing is to try to distinguish between methods of competition which are fair and those which will be generally regarded as unfair. If a country is beaten in trade by better organisation and better technique on the part of its rival it can only blame its own inefficiency, but if it is beaten by causes which may properly arouse resentment, then the matter stands on a completely different footing.

In this Japanese competition there are four points on which, I think, there is legitimate ground of complaint. The first is the unequal working conditions to which I have referred. Cheap labour does not always mean cheap production. No trade unionist would agree that it did. But if the working conditions are bad, if the hours are long and the remuneration is low, then other countries may complain, and rightly complain, that if they are compelled by that competition to lower the standards of life of their own people that is no advantage to civilisation or to the world. It is a detriment to the progress of mankind, and in Japan there is no doubt that the conditions are such as we should resent having to imitate here. think that British industry has been very short-sighted in not making more use of the International Labour Office and in realising the advantages of such a convention as the Washington Convention. British industry ought to have seized hold of that weapon and made. the utmost use of it, because our conditions are better than those of most other countries. We ought to try to get other countries up to our standard and endeavour to secure the enforcement of conventions in other countries of the world.

It so happens that, at Geneva 26 years ago, I had the privilege of signing on behalf of the Government of this country —I was then Under-Secretary at the Home Office—the first international convention ever signed regulating conditions of labour. It dealt with the night work of women and young children. It is that convention which, having recently been applied to Japan, has induced some little mitigation of the excessive hours of labour. It is a very small one, but it has, at all events, done something to bring Japanese conditions of labour towards a level with the more progressive countries. We should endeavour to make further use in every direction of that weapon. But we have a grievance so long as Japan does not sign these conventions and come up to European standards. Then the competition is in some degree unfair.

Secondly, the depreciation of currency is an illegitimate form of competition, and particularly the manipulation of currency which has enabled them to buy raw materials at gold prices at a certain moment, and to sell the commodity at paper prices. Thirdly, shipping subsidies are a form of unfair competition. To draw funds from the taxpayers and devote them to a subsidy places the country which does it at a commercial advantage over other countries, and if every country did that all countries would be the poorer. It is a form of competition which should be generally condemned. Fourthly, a very obvious form of illegitimate competition is the imitation of British trade marks, designs, and labels, to which the Seconder referred in the course of his speech. I should like, in passing, to ask the President of the Board of Trade if he will tell us whether this matter has been brought specially to the attention of the members of the British Consular service, and whether any steps are being taken to assist the British merchants in the troublesome and difficult business of suppressing that fraudulent practice.

These four elements are what may be termed unfair competition. They do not affect us only. They affect all European countries which are engaged in this trade. Anyone who has read the report of the International Cotton Committee at its meeting in Alsace last month will realise that the other countries concerned are also very much perturbed at the present situation. I should like to know whether His Majesty's Government in any action they are taking, contemplate any form of common action. I suggest that the right hon. Gentlemen should not wait until he gets agreement, but I should like to know whether it is contemplated to induce all other countries suffering in the same way from these four factors to make parallel representations.

The House to-day is waiting with much anxiety to know what action the Government are going to take. I would beg the right hon. Gentleman the President of the Board of Trade not to give us to-day a speech of complacency—of which he has given us many, one last week, and the Parliamentary Secretary to the Board of Trade gave us another yesterday—which arouses all our worst instincts. Speeches in that tone infuriate Lancashire, and I hope that the right hon. Gentleman will not say, that, "After all, things are very much better; it is true that our exports are worse this year than they were last but, at any rate, they are better than they were the year before, and therefore it is absurd to say that there is reason for grave anxiety." The right hon. Gentleman is reported to have said in a speech on October the 12th that: We still feel anxious about the position in Lancashire,… but we are going to make a big effort to place that vastly important industry upon a satisfactory footing. To-day we shall expect to hear from him just what form the big effort is to take. The Government are engaged in discussing the matter with those who are responsible in Japan. In Japan there are many able, far-sighted, efficient statesmen and they must look upon the situation of their country with great anxiety in connection with the general situation of the world. In regard to Manchuria, Japan has found herself in a position of diplomatic isolation. On armaments, she may find that she will be in some degree antagonising the moral opinion of a large part of the world, and if the various countries regard the Japanese as using methods of unfair competition in trade then she may find herself also in a position of economic isolation. We who have had long friendship with Japan and desire to maintain it, would view with deep regret any tendency further to increase that resentment in the world. It is rather an act of friendship than of anything in the nature of hostility that we should express well in advance the ideas which are growing in the public opinion of this country, for any general resentment against Japan or any country is greatly to be deprecated, in her interests, in the interests of ourselves, and in the interest of the peace and tranquillity of the world.

5.47 p.m.

Mr. GORDON MACDONALD

It seems to be the fashion to justify one's intervention in the Debate. Previous speakers have told us that their justification is that they were born in Lancashire; others have said that they represent Lancashire. I was not born in Lancashire, but I was brought there in Lancashire cotton goods before I was two years of age. Furthermore, I have the honour to represent a Division of Lancashire which is mainly concerned with coal, but is partly concerned with cotton. It is sufficiently concerned with cotton to teach me that the cotton workers of Lancashire are suffering very much. Before dealing with the Motion I should like to call the attention of the President of the Board of Trade to some of the remarks that are being made about him in the Lancashire Press. This Debate has done one thing: it has brought the President of the Board of Trade into prominence in Lancashire. In the "Daily Dispatch" of yesterday I noticed an article with very big headlines— We win the first round. The article proceeds to say that— The Government are going to accept the Motion on Japanese competition which will be moved in the House of Commons to-morrow afternoon. There is further reference to-day in the same newspaper. It says: The fact that the Government will accept Captain Fuller's Motion, which means that they will be prepared to take action if the pending Anglo-Japanese negotiations fail, will not diminish the vigour with which the case of the cotton industry will be presented. In some quarters there is a suspicion that the Government, under the terms of the Motion, may not be committing themselves to more than a pious expression of good intentions. The leading article in the same newspaper also makes mention of the right hon. Gentleman. It is just as well that the President of the Board of Trade should know what Lancashire is saying about him. The leader says: We sincerely hope that Mr. Runciman himself, to say nothing of his colleagues in the Cabinet, will have acquired a more decisive outlook by the time he has heard the arguments of the Lancashire speakers this afternoon. It is Mr. Runciman who is the Minister responsible for action or inaction, for enterprise or complacency. So far he has given the impression of complacency, of a wait-and-see attitude; and this despite the fact that the gravity of the situation has been set before him from the moment he took office, and was made public long before that. It is his duty to defend and explain his attitude—an attitude inexplicable to the unemployed operatives of Lancashire. I thought it my duty to let the President of the Board of Trade know what is being said about him in Lancashire, so that he may be ready with his reply to the remarks that are being made. Those remarks are not made by the "Daily Herald" but by the "Daily Dispatch.'

The Resolution does two things. It states what is taking place now and what ought to take place in the future. I agree with the right hon. Member for Darwen (Sir H. Samuel) that it is of vital importance to view this question in its proper perspective. The Motion deals with rather more than we expected, having regard to the Notice of Motion that was given. We thought that it would have been confined to the cotton industry, but it has been widened, I will not say worsened. In the widening the Motion refers also to the whole of the trade between this country and Japan. It is an important fact that in the provisional figures for last year we still have a favourable balance of trade with Japan. Our imports from Japan last month were valued at 139,000,000 yen, whereas the exports to Japan were valued at 170,000,000 yen. When we find a favourable balance of trade with another country we feel proud of ourselves, but when we have an adverse balance we become agitated. It is well for those who are supporting the Motion to realise that we must not pursue a policy which may endanger our trade balance with Japan, and therefore I have thought it wise to call attention to the fact that last month, whatever may happen in the future, we had a favourable balance of trade with Japan.

When we take the textile exports I find, taking my figures from a reliable Conservative source, the Daily Dispatch, that our exports of textiles in 1923 were 3,866,000,000 square yards, whereas Japan in the same year exported 1,418,000,000 square yards. We have to compare those figures with 1932, when Great Britain exported 2,198,000,000 square yards, and Japan 2,031,000,000 square yards. What has happened in those nine years is that British exports have declined by 1,668,000,000 square yards, and Japanese exports have increased by 613,000,000 square yards, leaving a difference of over 1,000,000,000 square yards which we have lost and which have gone elsewhere. We have lost in the nine years 1,600,000,000 square yards and Japan has gained in those nine years 613,000,000 square yards. Therefore, we have to account for some other country taking away 1,000,000,000 square yards from us. If we had restored to us the amount of textile trade taken by Japan from us in the last nine years we should still be 1,000,000,000 square yards less than we were in our exports of 1923.

I am not pretending that the position is not serious. It certainly is very serious, but I agree with other speakers that the reasons for the success of Japanese competition are well known— lower wages, working conditions not as good as here, trade efficiency, better marketing, better buying and better selling. The hon. Member for Westhoughton (Mr. R. Davies) referred to a speech which I thought merited the compliment which was paid to it by the President of the Board of Trade, namely the speech by the hon. Member for Oldham (Mr. Crossley) who dealt with a number of causes of the Japanese success and gave as one reason, and a very powerful one, that they have by far the best organisation in the world, pointing out that 70 per cent. of the raw cotton is imported by three firms, and so on.

The Japanese representatives themselves have something to say about this matter. I hope that every hon. Member will accept the testimony of the Japanese on the question. Speaking on the 16th October at a meeting of the International Cotton Committee on the Continent, the Japanese representative, Mr. Okada said: On the question of low prices the conditions in Japan were very different from those obtaining in Europe. The reasons Japan was able to produce at a lower cost were many. The perfect oganisation, good management, the system of buying raw materials and selling the manufactured products, and more intensive efforts made in rationalisation, improvement of efficiency, and various other means combined to bring about the low cost. But is not right to maintain that if wages were low the goods were produced cheaply. We know the cause of the Japanese menace and we have to ask ourselves the question, are the British people themselves in any degree responsible for that menace? I put a question to-day in good faith to the President of the Board of Trade and it was answered by the Parliamentary Secretary. I wished to ascertain to what extent British money is invested in the textile industry in Japan. I am told, unofficially, that British money is very heavily invested there. The answer that I received, although precise figures cannot be given, was that it was small. I accept that answer. If, however, there is any British money invested in Japanese textiles those investors are not helping the President of the Board of Trade to deal with this very difficult situation. Surely British money, British machinery and British engineering skill ought not to be used in Japan to the extent we are told it is being used to defeat the cotton industry of Lancashire. I was rather sur- prised at a statement by the hon. and gallant Member for West Salford (Lieut.-Commander Astbury), who told us that British manufacturers were pushing Japanese textile products. He said: Merchants in Manchester are to-day buying Japanese and Russian prints and sell-mg them, through Hamburg, to our Crown Colonies and overseas Dominions. He went on to say: I do not blame them. They are doing it because they cannot get the stuff at home at a price which those markets will pay."—[OFFICIAL REPORT, 23rd November, 1933; col. 295, Vol. 283.] At the last election my Division was placarded by my opponent with the words: "Buy British." That placard carried weight, but it failed to keep me from coming to this House. When we are told by an hon. and gallant Member of this House that the merchants of Manchester are going out of their way to push Japanese cotton goods—[HON. MEMBERS: "No!"] Then let me read what the hon. and gallant Member said. If it is nonsense I would point out that the nonsense has been stated by one of the colleagues of hon. Members who are interrupting me. He said: Merchants in Manchester are to-day buying Japanese and Russian prints, and selling them, through Hamburg, to our Crown Colonies and Overseas Dominions. If hon. Members take exception to my words, "going out of their way," let me say that I know they are forced to do it. What happens? A trader in Lancashire has his shop full of Lancashire cotton goods. His customers are so impoverished that they are unable to buy those goods. If he cannot place something before them which is cheaper and within reach of his customers, then he must close his shop. He has no choice, and rather than close his shop he takes in these cheap Japanese goods. I am not blaming the trader. I agree that he has to live. But will hon. Members tell me that the Japanese have not to live? If we agree that the Japanese have to live, then the Japanese can come forward and make the argument that they have to live. The point is that if anyone in this country is making it difficult for the Lancashire cotton industry this comprehensive Motion intends that the Government shall deal with him. It means that no Britisher will be allowed to do anything which handicaps the cotton industry. Does anyone suggest that the pushing of Japanese goods is not a handicap to the cotton trade? No one, I believe, will object to it being dealt with drastically.

The Socialist party would not deal with the position in the same way as the Government because our conception of the position differs from theirs. The position in the cotton industry, like that in the coal industry, is the outcome of the present economic system. The Government do not agree. But that is our contention and, therefore, our remedy is different. We say that there should be no Government action until the industry has reorganised itself. If individualism is rampant anywhere it is rampant in the cotton trade. My hon. Friend has referred to the divisions and jealousies which exist, but every employer, I am sure, will admit that a certain amount of unification and co-ordination must precede prosperity. When an industry has done all that it can do to put its house in order, and has failed, then the Government should assist it.

The policy outlined in the Motion is not the best policy and will not make for any real prosperity in the industry. We agree that the Japanese menace must be dealt with, but we think it must be met in a different way from that suggested in the Motion. The hon. Member for Accrington (Major Procter) seemed to fear that the negotiations with Japan might succeed, that the President of the Board of Trade might secure an agreement. Speaking for myself, and I think for the Socialist party, I should be pleased if it were found possible to allocate the cotton markets of the world in such a way that Lancashire would know her future, but when that has been done it will be essential for the cotton industry to have stability and certainty of work, and to get that you must get far better relations between employers and workers. Agreements must not be dishonoured. I agree that they are dishonoured only by those outside the federation, and that employers inside the federation do their best to get every employer into the agreement. But they are not always honoured; and it inevitably produces ill-feeling on the part of the workers.

Co-operation and good will are essential in this industry, and the right hon. Gentleman the President of the Board of Trade might exercise his good offices along the line of making it compulsory on all employers to honour agreements made between the two sides. The hon. Member for St. Helens (Mr. Spencer) who is an expert at ineffective interruptions, referred to the Labour party and its policy for dealing with this problem. Of course it is not the policy of the Government. If you have a thorough reorganisation of an industry and it then finds it difficult to carry on in the face of international opposition, then the Government must take action. That is our policy; it has been explained in this House before. It is a policy of import boards, of the regulation of exports and imports. That policy is not accepted by the Government, but until it is put into operation we shall not deal with this or any other exporting industry in the way that it should be dealt with. On the question of the lack of good will and the refusal to honour agreements, let me quote the opinion of one who is not a Socialist. In the "Stock Exchange Gazette" of 24th November, 1933, there was an article on the cotton trade, in which it was said: The more-looms agreement proved to be a failure because so many manufacturers taking advantage of the unhappy surplus of labour, and its tendency to work at any price, filled to comply with the agreement either in spirit or letter. Admittedly these firms were mainly non-federated concerns, but the low wages they have paid have led to serious internal competition. Mr. Grey, on behalf of the Masters organisation, has made strong appeals for universal support of the agreement, but the net result has been that the operatives' leaders have been unwilling to proceed any further without a guarantee that the manufacturers would hold to existing agreements. No one will suggest the the leaders of the operatives are asking too much when they ask that agreements should be honoured. We in the coal trade have our agreements, but we have never had any difficulty in getting the coal owners to honour agreements when made, and I would ask the President of the Board of Trade, therefore, to use his influence to see that agreements in the cotton industry are honoured. Lancashire is a very important part of Great Britain. Its condition at present, owing to the state of the cotton industry, the coal trade and the iron and steel industry, is deplorable; it is a condition which no Member of this House would like to continue for a moment longer than is neces- nary. In the evidence submitted to the Joint Select Committee on Indian Reform there are some words which correctly summarise our views of this matter: Of the total population of Great Britain more than one-tenth reside in Lancashire. Of these, a high percentage are directly employed in the cotton trade, and a still further number, such as those engaged in packing, transport, distribution in its various phases, coal mining and engineering, and so on, are indirectly dependent on the prosperity of the cotton industry. Any further serious diminution, much less a cessation in exports to India, would strike a vital blow at employment with consequences of the gravest character. The well-being of Lancashire is an essential element in the economic structure of Great Britain as a whole, and quite apart from the human suffering of those dependent upon the cotton industry, there can be no question that a further intensification of unemployment in the North West of England would entail calamitous results for the nation at large. Hence we gladly support the terms of the Motion.

6.10 p.m.

Mr. NALL-CAIN

I cannot remember a Debate in which such a national and county spirit has been shown. Speakers in all parts of the House have contributed in no party spirit, showing plainly to the Government and to the President of the Board of Trade the gravity of the situation as it presents itself to hon. Members from Lancashire. I want to voice the feeling of what, I think, is the most important part of Lancashire, the City of Liverpool. I know it is not usually voiced in cotton Debates, but Liverpool is dependent on the prosperity of Lancashire and on the prosperity of the cotton industry. The hon. Member for Westhoughton (Mr. R. Davies) may regard the City of Liverpool as the capital of Wales, but that is not the case, and I think it necessary that the opinion of Liverpool should be heard in this Debate. No one is more competent to carry through an agreement than the right hon. Gentleman the President of the Board of Trade, and if an agreement is carried through I am sure that he will not lose sight of shipping, on which Liverpool depends. Liverpool is the largest raw cotton market in the world, and lately it has been having a very bad time indeed.

I have fought two elections in Liverpool, and the chief theme in each was to keep up the standard of living. We have heard something about the Japanese standard of living. The Japanese are on what may be called a rice standard. We are proud of our standards of living, and it is up to the Government to maintain and improve them. 1 agree with almost everything that has been said this afternoon, and I am sure that the President and the Parliamentary Secretary will not fail to use. any measures in their power to improve the position of the cotton trade. We hope that the negotiations which are proceeding will be successful. At the same time, there are many Members [...] this House, and many people outside, who do not like the spectacle of Great Britain negotiating with a foreign country over her colonial markets, or over her home markets. Those people who Founded the Empire visualised trade between Great Britain and the Empire, and, therefore, in these negotiations I hope that the right hon. Gentleman and the Parliamentary Secretary will take any steps that are necessary, tariffs or quotas or anything else, to do the best for the trade of Lancashire and for Great Britain as a whole.

6.14 p.m.

Mr. FIELDEN

I have avoided taking any part in previous Debates on the cotton trade because I wished to learn the opinions of those directly connected with the running of this great industry as to the proper methods for meeting conditions which are accepted by everybody as disastrous. We have not had these opinions yet, but a committee has recently returned from a visit to India and is now in touch with a committee in Manchester, and there is no doubt that when these views have been considered we shall hear the opinions of the leaders of the industry. I rather deprecate these discussions until we know what it is that that Lancashire wants. Personally, I am as much in the dark on that subject as any other Member of this House, but I venture, with the indulgence of the House, to intervene in this Debate for a short time, as I belong to a family connected with cotton spinning and manufacturing for 150 years, and I have been personally connected with the industry for 40 years.

It has been said on many occasions that the reason why Lancashire cannot keep her position in the cotton markets of the world is that her machinery is out of date and that her equipment is wrong. I can only say as a manufacturer and spinner that I believe that statement to be entirely incorect. In the case of the undertaking with which I am connected, our machinery might be described as old. It is not new, but every new invention that has come out in the last 30 years has been carefully considered by us. Where we think that such an invention would be of advantage, it has been introduced and our only consideration in reference to the subject of machinery is: "Will the new machinery reduce the costs of production and at the same time not let down the quality of the cloth?" It is extraordinary how little new machinery and how few inventions have been found by us after experiment to be really helpful, and I believe that our costs of production are quite as low as those of our competitors.

The cotton trade, as the House knows, is composed of many different parts concerned with the production of many different sorts of cloth and yarn, and I only speak of what I know personally, but I am certain that in the district in which my firm carries on business all the other manufacturers have viewed the subject in the same light as us, and are quite prepared to scrap old machinery and put in new machinery if they are satisfied that the new machinery will reduce costs without lowering quality. We have machinists in Lancashire who are still second to none and they have equipped, not only the Lancashire mills but also the Indian mills. I do not know what the Japanese do at the present time in that respect, but, undoubtedly, a few years ago an enormous amount of Lancashire cotton spinning machinery went to Japan. Therefore, in considering our competition with India and Japan it should be remembered that the equipment of the industry in the three countries comes from practically the same source.

Where we suffer is in the difference of wages. The lower wages in India and Japan do not produce the same efficiency as the higher wages in Lancashire, but, undoubtedly, there is a saving in costs by the payment of the lower wages in those two countries. It is interesting, however, to consider that although the machinery of the industry in the three countries comes from the same source and although the wages in this country are higher than the wages in India or Japan, yet it is necessary in India—apart from the question of employment—in order that Indian manufacturers may continue to produce, to put on a heavy duty against Lancashire cloth. At the same time Japan, with machinery from the same source and with wages lower, I believe, than the wages in India, is able to undersell both this country and India, not only in India but in all the markets of the world.

The question that has to be solved is: What is the secret of this success in the production of cotton cloth in Japan? I am not in a position to inform the House what that secret is. We can only make a surmise. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) spoke of the organisation of the industry in Japan and of the way in which they had been able to buy, I think he said 300,000 bales of cotton, though I am told it was probably more like 3,000,000 bales. It is reputed that Japan two years ago bought enormous quantities of American cotton at the bottom of the market. Then Japan went off gold and the yen depreciated and she was in an extraordinarily advantageous position to sell her goods in competition with any other producers. Japanese are an extremely clever and able people. They wanted an outlet for their production. They had no markets of their own such as we had acquired through many years and therefore they had to push themselves into foreign markets. They knew the value of a market once they got it. They knew the difficulty of getting into a market where they were not established, and being clever business people they took, as I believe, the opportunity of having the production of their mills at an extremely low level of cost owing to the successful buying of cotton and the depreciation of the yen as well. I believe they used that opportunity to force their way into the foreign markets. That is only supposition on my part, but if it was not for some reason like that, I cannot understand how Japan could possibly produce the cloth which she does produce, knowing the cost of the cotton which she has to buy and which she uses in that production. I suggest that it is possible that Japan, in order to obtain a footing in those markets, has been selling her cloth at something less than it has cost her to produce it. As I say, that is only supposition but I do not see how otherwise she could produce cloth at the price at which she puts it on the market.

The cotton trade of Lancashire is an old-established trade, built up year by year. We find it to-day organised in a certain way. It may be that that organisation is out of date. It may be that we must follow on the lines of Japan by having large units which can buy the raw material, manufacture it, finish it, bleach it, dye it, and ship it to the markets of the world. That may be a solution, but I would like very much to hear the opinion of those experts in the trade who are now sitting in Manchester considering this subjecct. If they come to the conclusion that we must scrap our present system and start on new lines we shall have to face a great upheaval in the trade, but the interests of the people, the interests of Lancashire, are such that I am certain, if we are convinced that that prospect has to be faced, we have sufficient courage, sufficient brains and driving power to face it and to come through our difficulties. If we do so, I am certain there is still, if not as big a trade as formerly, a very big trade for the Lancashire cotton spinning in the future.

6.28 p.m.

Mr. CROSS

I intervene only for the purpose of pleading, with the greatest possible brevity, that special Consideration might be given to one factor which at the present time is, I believe, undermining the competitive efficiency of the cotton trade. I refer to the undercutting of wages. There are instances of it in my own Division and I believe that other hon. Members will know of instances in their Divisions. In my case we are losing a large trade to a neighbouring area simply and solely because in that neighbouring area less favourable conditions of labour obtain. Owing to the decline in trade and consequent unemployment, operatives are at the present time ready to accept lower rates of wages and to give way in matters of overtime, double shifts and so forth. That is not because they regard it as a fair deal but because any wages are regarded as better than insur- ante benefit and transitional payments. In this way the efficiency of good firms is being reduced without providing any corresponding benefits in other sections of the trade.

We must all realise that variations in wages from time to time are inevitable, variations upward in good times and variations downward in bad times, but this is an entirely different thing. There could be nothing more deplorable, socially and industrially, than that the firm which gets the orders should be the firm which is most successful in imposing inferior labour conditions upon its people. And, furthermore, there can be no doubt that in certain cases it is simply a means of compensating for inefficiency of management. I believe that at the present time there is a real desire throughout the whole of the industry that wage agreements which have been arrived at by the representative organisations should be made effective. If these wage rates could be made effective, there would be some advantages in addition to the removal of the evils which I have already outlined. To begin with, it would be a first step in the reorganisation of the industry which many observers have held to be so necessary. Further, it would be a first point of cohesion in which, if the experience of other industries is any guide, we might expect that further steps of reorganisation would be taken; and any such reorganisation has all the advantages of natural growth over the ready-made schemes which otherwise, sooner or later, will probably be clapped on to the industry, fitting possibly at some points and inevitably misfitting at a very large number of others.

I believe the Government will find on investigation that there is a real desire throughout the industry that these wage agreements should be made effective in every quarter; and I should like to ask my right hon. Friend if he can give us any assurance that if there was an expression to him by the representative organisations of a joint desire that these wage agreement should be made effective he would give them sympathetic consideration. I hope that I may also ask that my right hon. Friend will be willing at all events not to close his mind to the idea of introducing legislation for this purpose. I am no lover of Government intervention in industry, and indeed in asking for anything of the kind I would plead that the Government should approach the matter very tentatively: with that instinctive caution which will enable them to steer between helping and interfering. I should like to add, in conclusion, that I believe that if my right hon. Friend could give any such assurance as that for which I have asked, it would be a very great and real encouragement to all the best elements in the industry: those who are most anxious to play a worthy part in world cotton production.

6.35 p.m.

Mr. HAMMERSLEY

The problem of Japanese cotton production month by month bulks larger in the minds and lives of the people, and I think everybody here must congratulate the hon. Member for Ardwick (Captain Fuller) on using his good fortune in the ballot in choosing this subject to-day. Japanese competition is a matter bristling with difficulties and complexities: a maze from which no easy egress is visible or even possible, but a way out of which must be found. We should be lacking in common sense if we failed to appreciate the difficulties as we should be in statesmanship if we were not determined to find a solution. Concerning the character and magnitude of Japanese competition, it is unnecessary for me to say anything. The facts have been explained adequately, not only in this Debate but in previous Debates. It is ruthless and devastating in its character. In the past, empires have been built up by the sword. Present day commerce is a no less potent instrument. At the forefront of what I should like to describe as the army of economic penetration, the spearhead, as it were, of this advance by Japan, is the ability of Japan to put into the markets of the world cotton goods at prices which are, in fact, unprecedented. The simple fact that for the first time in the history of the world Japan is now exporting more cotton goods than are exported from Lancashire tells its own tale.

It is desirable to examine where these cotton goods are being sold. The latest figures which are available to me are the figures for last year, but I believe the figures for this year will be even more interesting. Taking last year's figures, in India Japan sold 650,000,000 yards; in the rest of the British Empire, 400,000,000 yards; in Egypt 200,000,000 yards. The House will observe that 60 per cent. of these external sales were in markets which, if not controlled by us, are markets over which we have some influence. If you add to these markets the markets of the Dutch East Indies where the sales were 350,000,000 yards, and bear in mind the fact that Holland would be very willing to co-operate with us in any measure touching Japanese competition, we come to the conclusion that 80 per cent. of the external market of Japan for cotton goods is of a character which might be described from the Japanese point of view as being vulnerable.

The purchasing power of the British Empire is the highway along which this army of economic penetration is marching. A conception which, I think, is common to nearly all Members of this House, the conception of the direction in which the future prosperity not only of this country but of the whole Empire lies, is one which is very frequently put into the words Imperial Economic Co-operation. We believe, as a Parliament, that if we are to maintain our position in the world and to maintain our stability, we can only do so by linking the Mother country and the outlying parts of the Empire by economic ties, by ties of self-interest. The most prominent factor in that policy has been the agreements arrived at Ottawa. But while we are tying the ties and strengthening the bonds of Empire at Ottawa, they are being weakened, lessened and destroyed at Tokyo. Japanese policy is a policy of capturing our Empire markets. The present industrial policy of Japan and the economic security of the British Empire are incompatible. I use these words in no spirit of hostility. I am trying to state what I believe to be, and what I believe the House will recognise as, mere economic facts. The standard of life in the East and the standard of life in the West, are rill a contrast which has been demonstrated quite clearly. Conditions which in this country we should describe as intolerable are in Japan not only bearable but even pleasant. What does concern us is the overwhelming fact that Japanese goods are driving our goods out of Empire markets and driving our men on to the streets. And this seems to me to point to one clear conclusion—that there should be a fundamental change in the conditions under which Japanese goods are admitted to the Empire markets.

I should like to remind the House that in the past, when Japan was building up her country and developing her industries, she found it necessary to protect her markets and to protect those markets over which she had control. As long ago as 1911, when the Anglo-Japanese Treaty was signed, you will find the Schedule of that Treaty laid down the terms of duty on British cotton goods; terms which on certain classes of goods were of such a character as to be in fact prohibitive. When Japan obtained control of Korea, she practically made that market a closed market to external goods. We made no protest. In 1928, Japan prohibited the importation of rice from India. As recently as last year, Japan increased her duties on the importation of pig-iron from India to such an extent as to be prohibitive. Another example is in connection with the tobacco trade. Although many firms were well established in Japan in the tobacco trade, yet Japan carried through an Act making the tobacco business a State monopoly. That was done, not only in Japan itself, but in Formosa. I bring these examples to the notice of the House in order to make this point, that during all this time when these developments were taking place, we in this country never looked upon those actions as requiring any recrimination from us. Therefore, I think Japan will have, and can have, no cause to complain if we in fact find it necessary, in the economic circumstances which supervene, to take a leaf out of her book. The point before the British Government and the British people is: How, can these changed conditions of entry by Japan into the Empire markets, most effectively he brought about?

No reasonable individual will object to negotiations in the first instance. No reasonable person will seriously contend that to bring in industrialists who are particularly affected by what is a very complicated matter of trade negotiations is not a wise policy. Therefore, there could be no cavilling at the Government's decision, when the textile mission recently went to India, that an opportunity should be taken for the members of that mission to engage in tripartite discussions, not only with the Indian industrialists but with the industrialists of Japan, with a view to reviewing the whole situation as far as they were entitled or empowered to do so, and to see what could be done in respect of the Indian market and the external markets with which India was concerned.

I was a member of that mission as the House knows. I think that mission did very valuable work for Lancashire in obtaining a better atmosphere, an atmosphere in which it is now possible to look forward to the future with some hope of increasing the volume of Lancashire trade with India; yet in respect to our negotiations with the Japanese textile industrialists, very little progress was made. The question of examining the external markets of India was not even raised, and my right hon. Friend the Secretary of State for the Colonies will probably be aware that although it was suggested in this House that we might be able to discuss, say, a market like Ceylon, such discussions have never, in fact, been held. The Japanese textile industrialists appeared to be very restricted in their powers, and we felt that we were fortunate in being able to obtain the limited agreement that we did obtain. The only conclusion we could come to on those negotiations in respect of the textile industry was that the responsibility lay with the Government, and that only the Government could decide. While we were away during those four months the situation, so far as Lancashire was concerned, went from bad to worse, and those who are closely associated with the industry feel that, if there is much further delay as to what is the proper procedure or the proper prescription, the patient will be dead.

The main obstacle to any rapid method of dealing with the problem is, of course, the Anglo-Japanese Treaty. Some 12 mouths ago I pressed the President of the Board of Trade to denounce that Treaty. Nothing that has happened since that time makes me inclined to change that view. One fact stands out as a lighthouse, and it is that time is working in favour of the Japanese and that time is working against us. It is essential that our negotiators should be reinforced by the knowledge that if the negotiations fail, the Government will be free to act, otherwise there will exist during the whole of these negotiations a constant incentive to delay. My view, which is a purely personal view, is that this Treaty will have to be denounced sooner or later, and it seems to me that to denounce it purely as a matter of form, in circumstances, I mean, in which there is no crisis, would probably be better than being driven to denounce the Treaty under circumstances which might be very critical, if negotiations were not going satisfactorily. I put that forward as a personal view.

We must not be blind to the present mood of the Japanese. They have made such progress in their export trade during a time when all other nations are finding their export trade depressed, that they may be said to be in a state of industrial auto-intoxication. They quite genuinely believe that their organisation, their perseverance, and what they describe as their honest, hard work are factors which will lead them a long way ahead in the race for world trade. For my part, I discount to a great extent some of the remarks which have found expression in this House in respect of more organisation. I believe that without a practically endless supply of docile, cheap, efficient, female labour, accustomed by tradition to handling textiles, and inspired by a philosophy which premises the requirement of a minimum amount of material wants, Japan would not have made the progress that she is making.

The right hen. Member for Darwen (Sir H. Samuel) talks a great deal about organisation, bulk buying, and so on, and various arguments of that kind run frequently through these Debates. It is true that those facilities give an advantage to a new country which is prepared to supply bulk lines to a world which has a low purchasing power; but the time must come when the world will have a higher purchasing power, and it will then demand variety. The attributes of taste and variety in materials will come into demand, and then the organisation which exists in Lancashire will come into its own. I think the arguments in connection with organisation are very frequently over-stressed, and the proof of my contention can most clearly be given by the simple fact that the Japanese have bought a mill in India. If their organisation were so good and effective, you would find that that mill was doing wonderfully well, but in point of fact it is not doing anything like as well as many of the Indian mills. The mill I refer to is in Bombay. Its record proves that, without this supply of cheap, docile labour, under conditions that are quite satisfactory to that labour, Japan would not be making this progress.

I am aware that by denouncing the Anglo-Japanese Treaty we shall not completely unravel all this tangled skein or remove the obstacles in the way of dealing with the problem, but we shall certainly cut the Gordian knot. In the next few days the industrial negotiations will be commenced, and it is perhaps inadvisable to say too much, but there are three points that I would like to emphasise. First of all, and most important, no solution of this problem which merely dealt with the question of quantity, no solution which imposed some mere volume control, would be satisfactory. That volume control must be combined with some factors which will maintain prices in various markets. Quite clearly, if you have 100 bales of piece goods to sell at a low price, the price of those 100 bales controls the price of 1,000 other bales, and it would not be satisfactory to find that, although the quantity was restricted, the price at which they could be imported into the foreign market was to be still lower. That brings me to the point that it is necessary to introduce some compensating factor to deal with the problem of yen depreciation.

The second point is the question of artificial silk. It would be unsatisfactory if the cotton position were to be dealt with and a loophole left whereby the Japanese could substitute artificial silk textiles for cotton textiles. The problem is essentially one, and quite clearly it would be almost childish for the textile negotiators to enter into the negotiations, to deal with the general textile position, if there was a great loophole of artificial silk left uncovered. The third point is that there is no necessity, in my view, to wait for the beginning of these negotiations until the end of the present Indo-Japanese negotiations which are taking place in Delhi. I see no reason at all why they should not begin forthwith. There must be a great deal of preliminary work, and the sooner they are got on with the better, from our point of view.

I do not believe we shall do a great deal of good to Lancashire by attempting to bully the Government. The Government can be of the greatest help to the Lancashire cotton trade by working and acting resolutely behind the scenes. I would like to pay a tribute to the great help that the Government gave to the textile mission to India at all points. The mission was supported by the good will and active assistance of the Government, and it is only right and proper that that tribute should be paid. I should also like to appreciate the fact that the President of the Board of Trade takes a very great interest in this matter, and his presence here this afternoon is a symbol of that fact. It is by obtaining a firm and resolute Government background and the knowledge that the Government are determined to act that Lancashire will get the greatest help.

Lancashire can do its part. Many Members have spoken about the necessity for a greater use of Indian cotton, and I saw in the papers to-day that in India certain suggestions have been put forward that Lancashire's intentions to use greater quantities of Indian cotton are mere pious platitudes." I can assure the House that that is not the case. Lancashire has been using, and is determined to use, more Indian cotton. These intentions of Lancashire to use more Indian cotton are practical intentions, committees are now sitting, and these intentions are to be carried out. My final word is that this Japanese competition affects every trade, every class and every section of the community. Through trials and tribulations, civilisation in the West has won through to our present. standard of living. We look to the Government to make it plain that what we have, we hold.

6.59 p.m.

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

The time at our disposal is all too short for a full discussion of this very important subject, and if some other opportunity were to arise a little later in the Session, I think we might very well return to the subject and thrash it out from our various points of view and with a degree of knowledge which I hope will increase as the months go by. Meanwhile, I would say how useful it is that in the course of this Debate we should have heard two such speeches as we have heard in the last half-hour, one from a veteran of the House, one of the old guard of the cotton industry, who still shows the same courage and virility that characterised him in early life, and the other from one of the younger generation, fresh from his travels in India and with a knowledge of the negotiations there which is unrivalled by any other Member of the House. It is easy to describe the growth of the Japanese cotton industry. It is equally easy to describe the effect that that competition has had upon the Lancashire cotton trade. We are all pretty well alive to the dangers of things growing worse rather than better, but I hope that the House does not imagine that, because we do not debate this subject every day in the week, we are therefore neglecting any aspect of it or anything that can be done by Government Departments either here or in any other part of the Empire.

I have for a long time past been kept very fully informed in detail of the position in Lancashire, and with the fall in the sales of Lancashire goods in various parts of the world and even within our own Empire. I have been well alive to that fact. It became necessary for the Government last year to decide what they thought was the best and most effectual way in which we could approach these problems. I said, the last time we debated this subject in the House, that I favoured the attempt being made by the industries themselves in the first place to provide solutions of these very difficult and complex subjects. I think that we have been justified by what has happened in India. During the last four months Sir William Clare Lees went with my hon. Friend and his colleagues to India; they were given every opportunity of seeing whatever was open to the Englishman to see in India; they were able to confer on a footing of friendliness and candour with the heads of the Indian cotton industry. Do not let us under-estimate the value of those conversations. India has been one of the markets on which Lancashire has depended in the past for a great deal of her prosperity, and the fall in the import of English cotton cloth and materials into India during the last few years is one of the gravest problems that Lancashire has faced. If that is so, it has been well worth bringing the industrialists—men of knowledge, men who knew what they were talking about and were not easily satisfied—into close touch with the actual facts of the markets of the East. That was one of the first advantages of that delegation that went to India.

Then we have had to deal in India with two very difficult factors outside the cotton organisation. One was the low standard of living of the Indian operatives who provided the Indian cotton mills with their chief form of production; and the other was the political spirit which until this year appears to have been so bad as grievously to interfere with the prospects of the expansion of British industry in India. Now, thank goodness, the boycott is over, and we are able now to regain some portions of the market which we lost during the boycott. Very fortunately the reception of the industrialists who went out to India was so generous and sympathetic that they were able to arrive at an agreement with the Indian representatives. We owe a debt of gratitude to Mr. Mody and his friends for the way in which he met the Lancashire representatives and for the arrangement which was made with his help.

There are other parts of the world, however, where it is not so easy to deal with the situation. Even in India itself we have not disposed of the whole problem by making arrangements as between our producers and theirs. Japan has been a very large importer into India, and the imports have been going up from year to year. The Indian Government are very well alive to these facts, and they are already in close conversation with the representatives of Japan at Simla. Whether the conversations will have been concluded or not in the immediate future I cannot prophesy, but at all events they have been pressed on with as much facility as possible in the circumstances. If there is any delay in the conversations here it is not the fault of this Government. We have acted promptly in every respect, and if there is delay we must say that the explanation is to be found elsewhere.

We cannot get away from the fact that the problems of Lancashire to-day are not purely economic and are not purely industrial. There is no doubt that the whole history of the cotton industry provides us with a good many reasons for shaking our heads. What happened after the War—the inflation of values there and the amount of speculation that took place—did not do the cotton industry very much good. Do not let us altogether misinterpret what happened owing to the over-capitalisation of these concerns; it added to their standing charges, with more inflation of their ordinary shares, preference shares and debenture shares. Do not let us exaggerate that. Nevertheless, it left a very nasty taste in the mouths of investors, and it has not made it easy to bring back capital into the Lancashire cotton trade at a time when it certainly sorely needed re-equipment. I do not share the view of the right hon. Member for Darwen (Sir H. Samuel) with regard to the lack of organisation in Lancashire. It may be that the organisation of the Lancashire cotton trade is difficult to understand, but it none the less exists. As my hon. Friend below the Gangway pointed out to us, as the opportunity offers there is an organisation, and a complete network of organisations, in Lancashire which are prepared for the requirements of trade in various parts of the world.

Sir J. NALL

Ever in Darwen.

Mr. RUNCIMAN

My right hon. Friend is prepared to admit that.

Sir H. SAMUEL

I do not know what it means.

Mr. RUNCIMAN

That is unfortunately one of the very great problems with which so many people who talk of "planning" are faced. They do not know what it means. Do not, however, let us take an entirely jocular view of the value of these organisations. Do not imagine that all is well in Lancashire. There is a great deal that ought to be organised there, as anyone can see who has made a survey of the Lancashire cotton industry. My hon. Friend behind me pointed out a very short time ago how far we were from complete organisation even as regards wages and hours in Lancashire. The last arrangement that was made there was largely the work of the best of our civil servants, whose name I am proud to mention in this House—Mr. Leggett. Very largely owing to his efforts, arrangements were made between employers and employés which reflected much credit on both sides. Unfortunately, however, some individuals have gone behind these arrangements. My hon. Friend asks me if anything can be done to bring them to book. I do not wish to say anything on that subject this afternoon; I would rather leave it to my right hon. Friend the Minister of Labour. But I can promise that, if any representation comes from those affected in Lancashire both employers and employed, they will receive sympathetic consideration by my right hon. colleague.

The hon. Gentleman opposite who spoke for the Labour party asked me whether more could not be done through the International Labour Office, and I think the same point was raised by the right hon. Member for Darwen. I should like to remind the hon. Gentleman that it was on the initiative of the British Government that the necessity of providing protection for wages was coupled with the question of reducing working hours at the last International Labour Conference. It was also indicated that the Government would do everything in their power to co-operate with the International Labour Office with regard to wage standards throughout the world. That is still our policy, and we shall certainly be ready to cement what was done in the past and to repeat it in the future. Do not let us run away with the idea that it is possible to go to the International Labour Office and to get them to solve the Japanese wage question. We should be going a very long way from the truth if we thought that all we had to do was to go to Geneva and make representations in the appropriate office, and we should at once induce the Japanese to come to an agreement with us and other industrial countries in the world. I am all for using the International Labour Office to the full, but we cannot expect it to bring about a revolution in the attitude of the Japanese towards the great economic problems of the world.

While I am dealing with these various points, I must say something in passing about that form of unfair competition which is based. on the infringement of designs and trade marks. This is a matter which gives us a good deal of trouble, not in this country so much as elsewhere. In this country, the machinery for dealing with the infringement of trade marks or copyright and designs is fairly complete; at all events the legislation is there and the courts can deal with the cases as they arise. There are always some which crop up every year. I do not remember how many have been dealt with this year already, but the machinery is quite efficient. What about other countries? Unfortunately, we have found that even in some portions of the British Empire goods appear to have been imported direct from Japan bearing British names and certainly bearing British trade marks. I can only say that that appears to me to be a form of dishonesty which any Government in the world, whether East or West, ought to do its best to suppress. I can see nothing that can be gained ultimately by the Japanese if any of their manufacturers are guilty of the infringement of these laws, which are now almost universal. If it is necessary to take steps —that is to say, if we can be given definite material on which we can take definite steps, for instance, by drawing the attention of the Government of Japan to instances which have found origin in their own country, we are quite prepared to take them up, and, I hope, make the necessary impression upon the minds of those who are in control of Japanese commercial affairs.

What is it that my hon. Friends, who have addressed the House on this the third occasion and demanded the Government's immediate attention and action, desire the Government to do? As far as I can gather, there appears to be a fairly general view that we should gain a good deal if we abrogated the Anglo-Japanese Treaty. Let us see what we could gain by it. We should gain a freedom of action which at the present moment is limited by the undertakings into which we have entered. Do not, however, let us forget that the Anglo-Japanese Treaty affects not only this country, but some 28 or 30 other countries within the British Empire. I need not read out a long list; I gave the full list in answer to a question only yesterday; but it covers the case of Canada, the Irish Free State—I am sorry to say that we are not able to act on their behalf—Newfoundland, Ceylon, the Straits Settlements and a very long list of the Crown Colonies and so forth, the most recent addition to that list being Palestine in 1930. But if we were to abrogate that treaty, we should have none of the advantages which come from a commercial treaty between two great countries which still have a large trade conducted between them.

The House was no doubt pleased to hear this afternoon from one hon. Gen- tleman that the amount of the exports from Japan into this country were rather lower than the value of the exports from this country into Japan during this year. There are some ways in which the Japanese market is of very great advantage to us. I am well aware of the difficulties under which a good deal of this trade is conducted, but while it is there we must take it into account. I cannot quite feel that, balancing the present advantages and disadvantages, we should gain very much on behalf of the textile trade of Lancashire if we began by abrogating those Treaties.

Mr. HAMMERSLEY

Over the whole range of the countries which are affected by the Treaty, is it not a fact that the balance is overwhelmingly in favour of Japan?

Mr. RUNCIMAN

Yes, that may be so, taking the whole range. What I was drawing attention to in speaking of the relative amounts of imports and exports was the balance between Japan and this country. I was only putting the point that we would make a mistake if we began by denouncing that Treaty. I would rather take the line which is suggested in the Motion. I would rather take the line of seeing if we could reach agreement first, and then, if we could not reach agreement, seeing if we could free ourselves from engagements which would prevent effective steps being taken. If we found that such effective steps were interfered with by the Treaty, a new consideration would arise. It is rather in the order of procedure than in the fact itself that I differ from my hon. Friend. We should first exhaust all other means before we embarked on the denunciation of the Treaty, and if it became necessary to do that, I should view the whole subject from a different point of view and with a different intent. I hope the House will not overlook the fact, which seems to be forgotten, that we have done a great deal for the cotton trade already so far as its home production is concerned. There are hon. Members who do not think that our home trade is worth protecting when it is compared with our foreign trade. It is true that the export trade is much more important in the cotton industry. But even in the cotton industry the home trade is a matter of importance to us. That is why the cotton trade has a protection over the whole of its categories of about 20 per cent. Do not let hon. Members forget that fact.

If we had not embarked on the fiscal policy which is generally in operation, Lancashire would have received no protection at all. Whatever we did about Japanese competition in other parts of the world, we should have found that even in Lancashire itself, in the great cities of Liverpool and Manchester, cotton goods made in Japan were selling over the counter—[HoN. MEMBERS: "There are !"] Perhaps hon. Members will allow me to point out that it would have been a, great deal worse but for the 20 per cent. protection. [An HON. MEMBER: "It is bad enough!"] I will point out what the figures are. The imports of cotton piece goods into the United Kingdom are now at a very low level. The figures for the 10 months from January to October in the last three years are: 1931, 68,400,000 square yards; 1932, 11,000,000 square yards; and 1933, 15,400,000 square yards —a very considerable reduction in the course of two years—and under the direct influence of the policy of the Government

Mr. THORP

Has the right hon. Gentleman figures of English cotton imports into Japan for the same period?

Mr. RUNCIMAN

May I point out to the House that these facts are not in dispute. It all depends on the emphasis you lay on them. I am not prepared to lay so much emphasis on the disadvantages under which we labour as to give the world the impression that we are being defeated by Japan. We speak too often on this subject with tears in our voices. I do beg hon. Members not to say, when we give encouraging facts, that we are guilty of complacency. The right hon. Member for Darwen actually lectured me on complacency. I know what he means by complacency. He means expressing no satisfaction with an increase in British trade. If only he can say that trade has gone down for the time being, on that point, at all events, he is happy. If it goes up he thinks somehow or other that those of us who sit here on this bench are getting an unfair advantage. I know what the troubles are very well. They are brought to me every day in the week. I have seen some samples of it; they come in all sorts of forms. Only yesterday one of our hon. Friends was showing in the Lobby a beautiful fountain pen. Three-halfpence was the price of it, with 2½ per cent. discount off. There were brought to me only recently some garments sold in the East End of Landon at ridiculously low prices. I am not going to say what they are, because I am not going to give Japan a cheap advertisement.

Do not let us give the impression in the world that Japan has beaten us. We have troubles with her as a competitor, and it may be that the whole of the Western countries are going to have trouble. It may be necessary that we shall all have to stand together in a common economic cause. That is one of the reasons why we are trying to impress on the Japanese mind the fact that it is well for them to be on a friendly footing with the rest of the world rather than to carry their movements so far that they arouse, not only in this country, but elsewhere, feelings of enmity. Those of us in particular who believe in the cause of peace ought to aim at bringing home the necessity for getting on the best terms with all of her people, not only with her Government, but with her industrialists and with the people themselves. I hope that the time will never come when the working-people of this country get it into their heads that their misfortunes are due, not to the Government of the day—after all, we have to take our chance—but to the movements, say, of the Japanese in the Far East or to the operatives in India. We have solved our own problems in the past, and I hope we can solve this problem by intelligence and ingenuity. believe we can improve the position, and, in the attempt, to defend ourselves from calamities. If Governments can influence the position one way or the other you can be perfectly sure of the support of this Government.

Question put, and agreed to.

Resolved, That this House views with grave concern the increasing inroads made in the trade of this country through Japanese competition, and urges the Government to state its intention, in the event of satisfactory quota arrangements not being made by agreement with Japan, to take immediately all steps within their power to minimise the competition of Japanese imports, both in home and Empire mar- kets, freeing themselves, if necessary, from engagements which would prevent effective steps from being taken.